Why the world must fight to end corruption

It is the root of many evils, from poverty to environmental damage

Corruption has probably existed from the dawn of human civilisation. With steadily increasing population, accelerating economic activities and intensification of global inequalities, corruption has become more and more commonplace and pervasive.

Mr Alan Greenspan, former chairman of the United States Federal Reserve, has observed: "Corruption, embezzlement and fraud are all characteristics that exist everywhere. It is regrettably the way human nature functions, whether we like it or not."

The magnitude and extent of global corruption are difficult to estimate because such activities are always covert and invariably done in secret. The World Bank estimates that annual worldwide bribery alone now exceeds US$1 trillion (S$1.4 trillion). The World Economic Forum estimates corruption costs now exceed 5 per cent of the global gross domestic product, a very significant sum by any account.

Considering only top leaders of some countries, Transparency International has estimated that former president Suharto of Indonesian embezzled between US$15 billion and US$35 billion, and former president Ferdinand Marcos of the Philippines, Mr Mobutu Sese Seko of Zaire and Mr Sani Abacha of Nigeria may have embezzled US$5 billion each.

Examples of corruption abound in different parts of the world. Last year, former president Otto Perez Molina of Guatemala was forced to resign after Congress stripped him of his legal immunity. India is currently embroiled in the "choppergate" scandal, where bribes were alleged to have been paid to procure 12 helicopters for the transport of VIPs. The contract was for €556 million (S$870 million), of which 5 per cent to 10 per cent may have been used to grease the palms of corrupt politicians and bureaucrats.

A World Bank survey in 2009 found that 70 per cent of Brazilian businesses considered corruption to be a major problem.


Former Guatemalan president Perez Molina arriving at a court in Guatemala City earlier this month to face charges of conspiracy, bribery and customs fraud. He is one of many government officials in the world who have been accused of corruption. ST PHOTO: REUTERS

As for Africa, the continent has long struggled with this scourge. In 2014, Mr Lamido Sanusi was ousted as the chairman of Nigeria's central bank for observing that some US$20 billion of oil income had gone missing and could not be accounted for. Not surprisingly, on a recent visit to Kenya, Pope Francis urged young Kenyans not to "develop the taste for that sugar called corruption". US President Barack Obama noted in his address to the African Union that "nothing will unlock Africa's economic potential more than ending the cancer of corruption".

Corruption is a de facto tax on foreign direct investments amounting to some 20 per cent.

It also seriously hinders poverty alleviation in developing countries. In Asia, for example, where according to the Asian Development Bank, some 320 million people live in absolute poverty, with close to 30 per cent of them in South Asia and about 25 per cent in South-east Asia, poverty alleviation can at best be incremental when corruption siphons away significant amounts of development funds. Asian countries like China, India, Bangladesh, Pakistan, Indonesia, Malaysia and the Philippines, which together account for half the world's population, all face pervasive corruption.

A World Bank analysis indicates that if developing countries could control corruption and the rules of law were properly enforced, per capita income could increase fourfold over the long term. On average, the business sector can grow faster by about 3 per cent a year. Socio-economic indicators like infant mortality could be reduced by some 75 per cent.

More perniciously is how the costs of corruption are disproportionately borne by the poor, as shown by several studies. That means corruption not only deprives the poor of public goods but also increases income inequality.

Corruption encourages public officials in developing countries not to enforce environmental laws. Projects are approved fraudulently even when they may not meet environmental standards. That indirectly worsens the lot of the poor, and leads to disastrous environmental consequences, a condition which some scholars have referred to as "environmental poverty".

In China, corruption and non-compliance of regulations have often been one of the main causes of rising pollution levels. Illegal discharge of hazardous industrial and mining chemicals, as well as agrochemicals, has rendered nearly 20 per cent of China's non-arable farmlands unusable for growing edible crops. In all Asian developing countries, the quality of water in lakes, rivers and aquifers has deteriorated progressively because of corruption-linked non-compliance of laws. The long-term health and environmental costs of such corrupt practices are going to be very significant.

With corruption a way of life in most Asian developing countries, what is regrettable is that it seems to be getting more entrenched with time in many places.

A survey by Transparency International in 2011 found that 66 per cent of Bangladeshis and 54 per cent of Indians paid a bribe during the previous 12 months. In addition, 62 per cent felt that corruption had worsened in their countries over the past three years.

In countries where corruption is rife, providing gifts, bribes and free services to public servants is often part of the local culture, and seen as ways to show gratitude and maintain good relations with them. Honest civil servants often encounter intensive and sustained peer pressure if they want to shun corrupt practices.

But corruption can be controlled by strengthening institutions and upholding the rule of law, as some countries have shown.

Consider Singapore. It is an excellent case study of how strong political will can ensure clean governance. The late Prime Minister Lee Kuan Yew recounted in private discussions that corruption was commonplace in Singapore's civil service in colonial times. When his party came to power, its leadership enshrined anti-corruption as a development priority because it was considered a prerequisite for good governance. Absence of corruption provided a hospitable and sustainable environment for foreign direct investment and economic development, two items the city state needed to reduce its high unemployment rates and accelerate its economic development.

China is another example. President Xi Jinping has declared a war on corruption which has targeted both "tigers and flies". It has made considerable progress.

However, China is a vast country, with a population of nearly 240 times that of Singapore. Because of its huge size, the fight against corruption will take a much longer time in China than in Singapore. Furthermore, to succeed, there must be sustained interest at high levels of political leadership in controlling corruption. Many powerful Chinese politicians and bureaucrats are now behind bars because of corrupt practices.

In contrast, in India, as the eminent economist Jagdish Bhagwati has noted, the main problem is that no one gets punished for corruption, even in very serious cases. This has given many powerful politicians and senior bureaucrats a free licence to steal.

As President Obama has noted, "a strong, more inclusive, more accountable and transparent" governance structure is needed, which could strengthen national institutions and laws.

This will reduce corruption and contribute to economic development and poverty alleviation in developing countries.

•Asit K. Biswas is the Distinguished Visiting Professor at the Lee Kuan Yew School of Public Policy, National University of Singapore; Augustin Boey is a research associate in the same school; and Cecilia Tortajada is a senior research fellow at the Institute of Water Policy.

A version of this article appeared in the print edition of The Straits Times on May 13, 2016, with the headline 'Why the world must fight to end corruption'. Print Edition | Subscribe