Corruption

Nota:

• Based on the Fraud Triangle

1. Opportunity
   1. Control over state apparatus
      1. Authoritarian states
         1. But authoritarian ruler can also control corruption
      2. Regulatory capture by powerful interest groups
         1. Example: Drug syndicates in Hong Kong
   2. Weak or uncertain political institutions
      1. Rapid political and economic liberalization process
         1. Unclear or frequently changing laws
      2. Weak/ corrupt law enforcement agencies
         1. Inadequate police force
         2. Poor investigative abilities
      3. Weak political will
         1. Little resources dedicated to fight corruption
         2. Little/ poor anti-corruption legislation
      4. Complex and complicated regulations or legal processes
      5. Unclear delination of responsibility or accountability
         1. Corrupt/ complicit judiciary
         2. Poor supervisory oversight
         3. Lack of checks
   3. Government monopoly over certain legal or political processes or outcomes
      1. Ability to extract Economic Rent

         Nota:

         • Myint, Asia-Pacific Development Journal Vol 7. No. 2 (UNESCAP, 2000), Page 36
   4. Discretionary powers

      Nota:

      • Myint, Asia-Pacific Development Journal Vol 7. No. 2 (UNESCAP, 2000), Page 38
      1. Judgment required in deciding
         1. WHO rules apply to
         2. HOW rules are applied
         3. WHEN rules can be changed
   5. Ease of hiding tracks
      1. Technology
         1. International financial markets
            1. Money laundering
            2. Ill gotten gains hidden offshore
2. Rationalization
   1. Payment deserved for services provided
   2. Everyone else is doing it (Systemic Corruption)
      1. "Why should I not benefit too?"
      2. "I will lose out if I don't do it"
   3. Low probability of being caught
   4. Personal consequences of getting caught are not serious
   5. No one is directly harmed
   6. Part of culture
3. Motivation
   1. For government official (demand-side)
      1. Endangerment of personal and family safety
      2. High level corruption

         Nota:

         • Myint, Asia-Pacific Development Journal Vol 7. No. 2 (UNESCAP, 2000), Page 40
         1. Greed
         2. Stay in office
      3. Low level corruption

         Nota:

         • Myint, Asia-Pacific Development Journal Vol 7. No. 2 (UNESCAP, 2000), Page 40 
         1. Promotion depends on complicity
         2. Peer pressure/ brotherhood
         3. Supplement income for living expenses
   2. For private party (supply-side)
      1. Influence outcomes of a decision
         1. Approval status of a business transaction
         2. Judgment of a court case
         3. Get ahead of business competition
      2. Regulatory avoidance
         1. Save transaction time and costs
         2. Illegal activities

1. Economic
2. Political
   1. Lose legitimacy
   2. Counterproductive towards other policies (E.g. poverty alleviation)
   3. Reduce transparency in policymaking
   4. Reduce political competition
   5. Political instability
   6. Reduced interest in political participation
   7. Increase income inequality and reduce social mobility