Sunday, March 31, 2013

Corruption: A trillion dollar question.


This morning while driving across Auckland listening as is my habit to National Radio Vijay Anand was interviewed. It was fascinating. The scale of corruption worldwide  is astonishing. From the World Bank.
How large is the 'Global Corruption Industry', measured in terms of financial amounts per year worldwide?

Corruption is a very large 'industry'. Yet until very recently, it was virtually impossible to venture an estimate of the extent of corrupt annual transactions. In fact, only a few years ago, corruption was regarded as impossible to measure. Thanks to the 'explosion' in measurement approaches and actual data in this field, at least it is now possible to estimate rough orders of magnitude. Our focus is on measuring the extent of bribery from the private sector (firms and individuals) to the public sector.

A conservative approach to such measurement gives an estimate for annual worldwide bribery of about US $1 trillion dollars (US $1,000 billion.). We obtain figures on bribes from worldwide surveys of enterprises, which ask questions about bribes paid for the operations of the firm (licenses, regulations, etc.), as well as bribes paid to get favorable decisions on public procurement. Further, an estimate on bribes paid by household users of public services is derived from governance and anti-corruption diagnostic surveys.

There is a margin of error in all these estimates, so we should regard them as preliminary orders of magnitude. But the main point is that this is not a relatively small phenomena of a few billion dollars - far from it.

How do you fight something on this scale ?

The Telegraph reports

Zero rupee note tackles India's corruption culture



The protest note - literally worth only the paper it is printed on - is being promoted by 5th Pillar, a group that campaigns on behalf of ordinary Indians who are forced to grease the palms of millions of civil servants.
Vijay Anand, head of 5th Pillar, said the bill, which looks similar to a real 50-rupee note, was first distributed to students in the southern state of Tamil Nadu to encourage them to reject India's "baksheesh" culture.
"The corruption prevailing in the common man's life is painful and it can be dealt with by the zero-rupee note," said Anand.
Many Indians are resigned to having to pay extra for government services and to smooth daily transactions such as registering a birth, getting a driving licence or avoiding the attentions of an unscrupulous traffic officer.

It is an excellent idea and one that despite having been around for some time I was unaware of. It was an excellent interview with Anand and he reported that the zero rupee note was having excellent results. His point was that you don't need to be well educated to use the note. You hand it over when the demand for a bribe happens. Shame it would seem still has its place in the discourse of human affairs. 

But Manmohan Singh, the prime minister, has often spoken out against the damaging effect that bribes, extortion and fraud have on all levels of life, and said that the problem threatens India's economic prospects.
In its latest annual report Transparency International stated that each year almost four million poor Indian families had to bribe officials for access to basic public services.
In the same report, India slipped further in its corruption index from 72nd to 85th in a list of 180 countries.
Anand said the zero-rupee note, which was conceived by an Indian professor living in the United States, gave people the chance to register a grassroots protest against low-level corruption.
"We are confident it will change the way people think and act in the coming years," he said.

The proof will of course be a noticeable improvement in the corruption standings for India. Looking at the 2012 Transparency International figures that has not happened in fact India has slipped to 94 position. However I think it is important to note that this is a grass roots initiative and it is probably hard for the Transparency figures to reflect such impacts. A project like this needs time to build.

The bill, which like all Indian notes is graced with a picture of independence leader Mahatma Gandhi, carries 5th Pillar's email address and phone number and the solemn vow "I promise to neither accept nor give a bribe".
Volunteers hand them out near places where officials are often on the look-out for a backhander, such as railway stations and government hospitals.
Though questions remain over whether it is legal to print the fake - if worthless - money, more than one million bills in five languages have been distributed.

Who cares.

Anand said they have even had a practical effect, often shaming officials into getting business done efficiently without using real cash.
"There has not been one incident where a zero-rupee note has created a more serious situation," said Anand.
Ravi Sundar, an IT recruiter in the southern city of Coimbatore, said he used the notes whenever he had government business to sort out.
He gave one example where a tax official refused to process documents unless he paid her 500 rupees.
"I handed over the zero-rupee note which I always keep in my pocket," said Sundar.
"She was afraid and didn't want to take it. She completed the job immediately and said she was sorry and asked me not to take it forward."

That is returning power to where it belongs. Civil servants must serve the public not themselves. 

Parth J. Shah, president of the Centre for Civil Society think tank, said the root of the problem lay in state-run companies and their vast bureaucracies.
"Unless we remove monopolies and the kind of licensing system that we have in many areas of life to create more competition, we're unlikely to get rid of low-level corruption," he said.

In the core government sector there is no possibility of competition however New Zealand has many state run business and they operate as  SOE's or State Owned Enterprises. They are subject to competition. The crown is the shareholder and appoints the directors but has no involvement with management theoretically. ( this is starting to come a bit unstuck with one called Solid Energy and it is looking like there has been substantial interference by Ministers of the crown ) . It is unfortunate because New Zealand is the least corrupt place on earth according to Transparency. 

Anand said he hoped to introduce the zero rupee note across India, but he insists he remains an optimist about human behaviour.
"We haven't given up on officials. There are honest ones in every department," he said.

This project is screaming out for replication. As a primarily African blog I would be interested to know if any African movement has sprung up. 

2 comments:

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