Corruption is global. From Lagos to London, it affects the entire world. The misuse of authority – by business, government and public officials – happens anywhere, anytime, any place. But it hits mainly the poor.
Corruption – that ubiquitous greaser of wheels and liner of pockets – is a global phenomenon. Wherever you go – from multinational backhanders made to governments to the international banks holding the stashed Abacha billions – corruption makes its presence felt.
But the other side of this is to note who’s paying the bribes. In a transaction, there are givers and takers. And where there are takers of bribes, there are companies, individuals and governments willing to make them in exchange for lucrative contracts.
Either way, it’s the poor who lose most.
Why corruption matters
Corruption affects the giver and the taker, the low and the mighty. It undermines the quality of life. In the aftermath of Hurricane Katrina, the US witnessed several corruption scandals. Even America’s Federal Emergency Management Agency (FEMA), responsible for providing relief after natural disasters and man-made catastrophes, was being managed, in the words of Jeffery Sachs, ‘by inept political cronies rather than professionals.’
The United Nations Convention against Corruption (UNCAC), which the UK ratified in February 2006, is the principal international mechanisms designed to fight corruption. Says UNCAC in its preamble: ‘Corruption presents serious problems and threats to the stability and security of societies, undermining the institutions and values of democracy… and jeopardising sustainable development and the rule of law.’
Corruption thrives when public accountability is weak. Its greatest victims are the most vulnerable groups in society – the poor, women and children, the sick and the old. It distorts public spending and undermines efficiency. It violates political and civil rights by rendering ineffective political institutions and processes, weakens the judiciary and law enforcement agencies and perverts the media.
It infringes on economic and social rights by denying equitable access to public services such as health and education and creates obstacles to earning a livelihood, thereby further impoverishing the poor.
Corruption facilitates abuse of the environment and misuse of natural resources. It denies people the benefit of clean and healthy environment and of dividends from natural endowments such as oil and minerals.
Poverty reduction
Corruption is a major cause of poverty as well as a barrier to overcoming it. International actors – including northern governments and multinationals – can promote institutional corruption in developing countries. Add to this that many such countries have weak domestic governance institutions (such as the judiciary and oversight bodies) and leaders, who are more accountable to donors than their citizens, and you have a system that further impoverishes millions of people.
This by no means exonerates those leaders who steal from their people. Still, they often illegally export public wealth to western banks that are more than willing takers.
For example, about £25 billion flow into Africa in aid and loans each year while an estimated £200 billion flows in the opposite direction - to UK and northern banks - through corruption, money laundering and other criminal means. According to the UK’s All-Parliamentary Group on Africa, London banks are believed to hold $6 billion from Kenya and Nigeria alone.
Banking secrecy and trust services provided by globalised financial institutions operating offshore provide a secure cover for laundering the proceeds of political corruption, fraud, embezzlement, illicit arms trading and the global drugs trade.
Who pays?
With powerful global institutions like the International Monetary Fund and the World Bank – not national governments – determining the ceiling on local wages in poor countries like Mozambique, light-fingered public servants are using that as an excuse to help themselves. A study, from the African Development Bank, says corruption in developing countries can cost many governments as much as 50 per cent of tax revenues. Another study estimates that as much as $30 billion in aid for Africa in 1996 ended up in foreign bank accounts. This is twice the annual gross domestic product of Ghana, Kenya and Uganda combined.
Who pays? The African Development Bank (ADB) estimates that in Africa lower-income households spend an average of two to three per cent of their incomes on bribes, and rich households an average of 0.9 per cent. Everywhere we work, in poor communities worldwide, the story is the same: the poor pay the price.