Modern-day corruption: A primer

Modern-day corruption: A primer
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The rise of the internet had embedded corruption risks even deeper into the governments of developing and developed nations alike.

Earlier this month, the first ever anti-corruption summit met in London to address one of the most long-standing political risks in society — corruption.  It exists in many forms all over the world, in some countries more than others.

For some countries, such as India, graft is part of the societal fabric itself. In others, like the U.S., it is seen in less blatant forms. The recent Panama Papers have revealed that, in the age of the internet, corruption can now transcend national boundaries — making it even harder to combat.

Corruption in developed countries

While the western world is less obviously affected, it still falls victim to graft. For example, the current U.S. presidential election has already been labelled as corrupt in the way that influence and subsequent votes are gained through large amounts of money — namely advertisements, Political Action Committees (PACs) and corporate backers.

Bernie Sanders has made a point out of the power and influence of Wall Street, accusing his Democrat opponent Hilary Clinton of being in the pocket of big corporations. The fact that concerns have been raised about Republican candidate Donald Trump’s ability to raise enough money for a full presidential campaign indicates the importance of money in U.S. politics.

On the other side of the world, Japan’s Economic Minister Akira Amari resigned in January 2016 following allegations of bribery. Even in the world’s most developed and stable economies, money still talks.

Corruption in developing countries

In the developing world, however, corruption is felt much more widely and in much more direct forms. In India, for example, many everyday traffic incidents can be quickly brushed under the carpet through a quick bribe to law enforcement. Nigeria, a country labelled by UK Prime Minister David Cameron as “fantastically corrupt,” has seen $15 billion of government money stolen through corrupt arms contracts.

Attracting even more attention is Brazil, which faces a high profile corruption scandal with President Dilma Rousseff now impeached after allegations of manipulating government accounts. Ultimately, the developing world faces many obstacles that the developed world does not — but corruption is one that is unfortunately shared.

Modern corruption

Worse yet, corruption now transcends national boundaries with the ease of moving money instantly over the internet.

The Panama Papers revealed how powerful figures from all over the world have been able to avoid taxes by storing money in offshore bank accounts. International corporations such as Facebook, Google and Starbucks have been able to keep more of their money out of the hands of their governments through both the transferring of profits across the world and loopholes in national laws.

FIFA, the international body governing football has had its reputation absolutely destroyed as a result of the corruption scandal engulfing it, its former president and many of his cronies. As the world has become ever more connected, so has the concept of corruption.

How can risks be mitigated?

So what can be done to combat this issue in society? As it turns out, education is the best means of mitigating the risks posed by graft. While much of the population in the developed world can identify corruption when they see it, that is not the same case in other parts of the world. If more emphasis is put on educating the youth as to what behavior is corrupt and what is not, children in developing countries will view corruption as a risk that needs urgently addressed.

It is important that corruption is viewed from an economic perspective, as it forms a powerful barrier to investment, reform, and aid. Opposition to foreign aid is growing in developed countries where giving large amounts of money abroad has long been utilized for the goals of international development and influence.

It will continue to grow if those countries receiving aid continue to face problems of corruption. When foreign aid is provided to graft-laded governments, it hurts rather than helps the population by keeping the corrupt in power.

The recent anti-corruption summit itself resulted in a number of measures being introduced to this end. A global plan to help recover stolen assets, known as The Global Forum for Asset Recovery, will bring together governments and law enforcement agencies next year to discuss returning assets to Nigeria, Ukraine, Sri Lanka and Tunisia.

Additionally, proposals to get foreign firms that own property in the UK to declare their assets in a public register was also discussed. Finally, plans were discussed for a new anti-corruption coordination center in London and a wider corporate offensive against executives who fail to prevent fraud or money laundering inside their companies.

Thus, it is clear that corruption is an age-old problem which still exists in all corners of the world. Although it is not as prominent as it once was in many parts of the world, it still is well alive in many countries — and more present than expected in others.

Whether it can be stopped in an age where technology and globalization have entrenched the problem further remains to be seen, but a growing campaign against corruption, as shown by the Anti-Corruption summit, is a welcome start.

Categories: International, Politics

About Author

Rayhan Chouglay

Rayhan Chouglay is a GRI Analyst. He holds a BA in History from the London School of Economics with a particular focus on Hindu-Muslim relations in South Asia. His main political risk interests concern relations between India and Pakistan.