Centre for the Study of Corruption

Swaziland doesn’t appear in the western news that often, but when it does it’s rarely for the ‘right’ reasons. And, once again, that’s been the case in recent days. In similar fashion to a celebrity whose life is plagued by narcotics and alcohol abuse, the Swazi government continues to frame itself as a victim of circumstance rather than being responsible for its own demise. On New Year’s Day the country’s textile industry suffered a serious blow when the USA, a major recipient of textile exports from Swaziland, decided to withdraw its trade agreement with the nation (see here).

The reasons behind such aggressive action are to do with the non-compliance of the government in establishing legal sanctions protecting its labourers. Although Prime Minister Barnabas Dlamini states that the country will not suffer as a result, the predicted outcome is a loss of over 17,000 jobs, a devastating blow to a population of approximately 1million, which is already suffering from a high unemployment rate. Ironically, the King has also recently authorised a project worth US$90million, to build an oil storage facility in the country (see here). He proudly stated that it would “have a 90 million litre fuel capacity to last Swaziland 90 days. It [will also] store 42 million litres of diesel and 38 million litres of petrol and result in the creation of at least 300 jobs”. The tender for this project was not open, and neither was it approved by parliament. The contract has been given to the South African company, Kantey & Templer Consulting Engineers, which was also contracted to build a new airport in the country. Naturally, rumours of malpractice and patronage have begun to circulate amongst the political elite. What interests the monarch has with Kantey & Templer have yet to be uncovered. Such extravagance is viewed as unnecessary, particularly at a time when the nation will most likely require such funds to deal with the inevitable unemployment crises.

Quite what is going on here is not clear.  But it is something that certainly merits further attention as Swaziland struggles to keep its economic head above water.

NS

How best should political life be funded? The question is hardly new, and it should come as no surprise that it’s received coverage on this blog before (see here and here). For some the introduction (or expansion) of the state funding of politics is one way of fighting the influence of big business in political life. For others state funding brings with it more problems than it solves, and it’s subsequently viewed more sceptically. The more interesting work moves beyond this and tries to work out how different funding regimes can lead to different types of corruption (see here). Be all that as it may, debates as to how politics should or shouldn’t be funded have taken on a peculiar new dimension in Germany in recent weeks. And this debate has done plenty to muddy the decidedly murky waters yet further.

Germany has a system of party funding that comprises three basic elements. Party members pay subscriptions, individuals and corporate entities can donate money directly and parties that poll above 0.5 per cent of the vote in national elections receive subsidies from the state. Some parties rely particularly heavily on membership dues, others do better in terms of the donations they receive whilst some are particularly reliant on state funding. Table 1 illustrates the balance per category for each of the main parties represented in the German parliament (as of 2011).

Table 1

Party Funding in Germany

Who gets what and how (in per cent)?

Source; Bundestags-Drucksache, 17/12340

* Most of this money (around 55m Euro in total in 2011) is made of by contributions from elected officials such as MPs, MEPs, local councillors and members of regional parliaments (MdLs).

Germans (and Germany-watchers) regularly dissect the traditional arguments about the virtues of this system (see here for a good summary of the main issues). Are smaller parties over compensated? Does the not inconsiderable state subsidy make life just a little too easy for the parties? Do parties with free-market ideologies (such as the FDP in this case) benefit unduly from donations from business? And so on. The focus none the less tends to be on the traditional parties. Every once in a while there will be a piece in a Sunday supplement about the challenges that micro-parties face, but the attention of both the popular and academic world tends to remain on the big six. Two rather peculiar developments in the Autumn of 2014 have changed that just a little.

In October 2014 the Alternative for Germany (AfD), a new and spikey right-wing anti-Euro movement that entered the European Parliament in 2014 (having narrowly missed entering the federal parliament in Berlin the year before), began selling gold in its online shop. They sold it in the form of gold coins (the 490 Euro replica German Mark coin was particularly popular – it sold out within days) and gold bars. In the first 11 days of business the party had managed to persuade over 800 people to part with their cash to the tune of around 1.6m Euro (see here, in German, for more on this).   Even the AfD was surprised by the uptake.

The AfD’s metamorphosis in to a gold-selling business has had a direct and an indirect effect on its coffers. On the one hand the profits flow directly in to the party’s bank account and help it carry out its activities. On the other hand it also means that it can claim more money from the state.  Why?  The party is currently entitled to claim around 5m Euro on account of the votes it has received in recent elections, but it can only get that if it can illustrate that it has raised the same amount of money itself.  If it can’t, then it will only get funds proportionate to what it has raised (so, if the AfD raised 4m Euro from members’ contributions, donations and other business, it could claim 4m of the 5m it is theoretically due from the state). So, the more gold it sells, the more money German taxpayers give the party.

It didn’t take long for a reaction to the AfD’s money-making wheeze to materialise. Protests were lodged, investigations were undertaken. Indeed, the Bundestag’s administration conducted a thorough enquiry in to whether the AfD’s behaviour in any contravened Germany’s ‘Party Law’. Much to the consternation of the President of the Federal Parliament (effectively the Speaker), Norbert Lammert, it didn’t and the gold-selling continued. Cue lots of head-shaking from the German political class. Lammert, meanwhile, called for the Home Affairs Select Committee to change the law precisely to outlaw this type of shenanigans.

If that wasn’t enough, the current law was made to look even more ridiculous in early December. Another party, ‘Die Partei’, found an altogether different way of getting the state to fund its activities. The ‘Partei’ is rather like the Monster Raving Looney Party (MLP) in the UK, taking a light-hearted, satirical look at all things political. The major difference to the MLP is that on account of Germany’s electoral system the ‘Partei’ only needs relatively few votes to make it in to parliaments – and this it did in 2014, sending Martin Sonneborn to the European Parliament after polling a mere 0.6 of the vote.

‘Die Partei’ is well known for coming up with schemes and ideas that are aimed at making others look just a little silly.  So we perhaps shouldn’t have been surprised when the Partei announced that if the AfD could sell gold, then it could sell money. The Partei announced that for 105 Euro you could buy 100 Euro from them, for 25 Euro, meanwhile, you’d get 20 Euro. Much to the Partei’s surprise, 80,000 Euro has already landed in the party’s account, and orders totaling over 163,000 Euro have come in. Following the same logic as the AfD, the 5 Euro profit on every transaction moves the party that little bit closer to claiming the 240,000 Euro it claims it has access to from state coffers (see here for more on this).

Whether the ‘Partei’ actually sees any of that money remains to be seen, but one thing is for sure; ingenious actors can make even the most well-thought through system look like the proverbial ass. The German party-funding regime is short on neither laws nor judicial attempts to interpret them, but that hasn’t saved it from two parties trying (successfully) to ‘play the game’. What can we learn from this? Firstly, party funding regimes never stand still as rational actors do their level best to get the most (in financial terms) out of them. Secondly, normative assumptions about what is and what isn’t appropriate behaviour will differ considerably; for some the AfD and ‘Die Partei’ are chancers bringing the system in to disrepute, for others they are simply quicker and more nimble than their bigger, more established opponents who may well be unhappy simply as they themselves didn’t think of similar schemes first.  Is, in other words, selling a victoria sponge at a summer garden party any different to selling gold on the open market (or indeed cash to those who want to pay more for it than its face value)? The method (selling something for profit) and the end product (that profit flows to your party of choice) are the exactly same.  One thing is none the less for sure – it’ll be worth watching how the German political class deals with these unconventional challenges to the party funding regime.

Dan Hough

Another year, another CPI.  The world’s most well-watched measure of public sector corruption was published on 3 December and the usual suspects were in pretty much their usual places.  Denmark (92 out of 100) pipped perennial rivals New Zealand (91) and Finland (89) for the top spot, whilst North Korea and Somalia once more share the dubious honour of coming joint 174^th and therefore last.  A number of countries can be celebrated as apparent success stories; the Ivory Coast, Egypt, Saint Vincent and the Grenadines, for example, all improved on their 2013 performance by five points, whilst Afghanistan, Jordan, Mali and Swaziland added four points to their previous totals.  At the other end of the spectrum Recep Tayyip Erdoğan’s Turkey dropped five points (from 50 to 45, and with that from to 64^th from 53^rd), whilst Angola, Malawi and most notably China – despite an ongoing and high-profile anti-corruption campaign from leader Xi Jinping (see here and here for more on that) – dropped four places.

So much for the nuts and bolts of the results, which can be dissected in all their glory here.  What can and should we read out of all this?  In order to answer that question it is worth stepping back and remembering how the index works and what TI is trying (successfully and unsuccessfully) to do with it.  The CPI is a composite index and a variety – 12 in 2014 – of data sources are used to create what is effectively a poll of polls on perceptions of public sector corruption in a given country.  TI provides a detailed account of where its data comes from (see here) and also how it uses it.  The CPI was first published in 1995 when it included 41 countries, with New Zealand achieving the best score (i.e. nearest to 10, as it was then) and Indonesia the worst (nearest to 0).  By 2014 the CPI had expanded to 175 countries.  The data produced is used, in varying ways and for varying purposes, by journalists, other anti-corruption organisations and not least politicians, and the CPI has undoubtedly developed into the key brand name in the study of corruption worldwide.

The CPI’s prominence has certainly not shielded it from criticism.  Indeed, criticising the methodology that underpins the CPI has become very commonplace.  Steffan Andersson and Paul Heywood, for example, see a number of basic problems (see here).  Firstly, the CPI measures perceptions of corruption rather than corruption itself.  Secondly, there are fundamental definitional problems that should lead us to be very unsure of what respondents actually understand the term corruption to mean.  Indeed, frequently it appears that the terms bribery and corruption are used interchangeably and are for many one and the same thing.  Thirdly, the CPI suffers from ‘false accuracy’ and there is no way of knowing what the real difference between scores that are closely grouped together is in practice.  A difference, in other words, of just a few points can lead to countries being a fair distance apart in the league table and yet we are not at all sure that these differences actually reflect what is happening in the real world.  Finally, responses to the various surveys are very likely to be shaped by – whether directly or indirectly – the assumptions and attitudes of the western business community; for the simple reason that the majority of people asked have roots in this particular milieu.

Other analysts have also not been slow in coming forward with their criticisms.  Steve Sampson, speaking for many in the development studies community, is sceptical of what he regards as “corruption becoming a scientific concept” as measurement tools like the CPI can, and have, easily become objects of political manipulation (see here for Sampson’s at times biting critique).  Even fellow quantifiers such as Theresa Thompson and Anwar Shah from the World Bank have criticised some of the statistical techniques that TI have employed (see here). They leave no one in any doubt as to how grave they think the CPI’s methodological shortcomings are when they state that “closer scrutiny of the methodology … raises serious doubts about the usefulness of aggregated measures of corruption” and “potential bias introduced by measurement errors lead to the conclusion that these measures are unlikely to be reliable, especially when employed in econometric analyses” (Thompson and Shah, 2005, pp-8-9).  Stephen Knack’s careful dissection of the CPI (here) also makes uncomfortable reading for TI defenders; he argues, for example, that scores are frequently not based on the same set of sources that were used for that country in the previous year.  This is evidence, he claims, of the unreliability of scores even within one country, let alone on a cross national basis. He also raises further significant issues about the independence – in a statistical sense – of the data used, claiming that many of the ‘statistically significant’ changes that TI claims to have uncovered would not in reality be so if “appropriate corrections for interdependence” had been made.

For its part, TI has certainly tried its level best both to be open about the methodological shortcomings of the CPI (as well as its other corruption indices) and also to adjust them wherever possible.  The founder of the CPI index, Johann Graf Lambsdorff, for example, is careful to acknowledge some of the methodological issues inherent in all composite indicators and he is always careful to describe changes in country scores from year to year as changes in perceived corruption rather in actual corruption levels.  TI has also tacitly admitted that the CPI has its limitations by the very fact that it has developed a whole host of other indices – such as the Bribe Payers Index and the Global Corruption Barometer – looking at both the perceptions and experiences of specific groups of stakeholders (ranging from businessmen to households).  One of TI’s founders, Jeremy Pope, has been rather more explicit, claiming that “the CPI’s major usefulness is in the past” and the TI has to be “a lot more sophisticated these days” (quoted in Andersson and Heywood, 2009, p.755).

And yet, all these criticisms not withstanding, the CPI has done one indisputable thing; it has put the issues of corruption and anti-corruption well and truly on the policy map.  Indeed, as Andersson and Heywood astutely observe;

“We should not underplay its significance in the fight against corruption: its value goes beyond the stimulation of research activity, since the publication of the CPI each autumn has generated widespread media interest across the world and contributed to galvanising international anti-corruption initiatives, such as those sponsored by the World Bank and the OECD” (Andersson and Heywood, 209, p.747).

Even staunch critics of the quantification of corruption have begrudgingly admitted that “whatever its limitations” the development of the CPI has “undoubtedly done much to promote the anti-corruption agenda” (see here).  It is also doubtful that any of the more nuanced second and third generation indices that both TI itself and other organisations have developed would have seen the light of day if the CPI hadn’t existed before them.

So, with all that in mind, we should be careful of perhaps reading too much in to the data that has been produced.  But we should also perhaps be wary that cynicism gets us nowhere and that TI, for all its sins, continues to push the analysis of corruption to the forefront of our thinking.  And that alone should be reason enough to cut the CPI just a little slack.

Cui Lianhai is a name that next to no one in the UK will have heard of.  Until recently Mr Lianhai was a CCP (Chinese Communist Party) apparatchik, minding his own business in the nondescript town of Qinjiatun in Jilin Province, North-East China.  That changed in June, when Mr Lianhai was sentenced to 20 years behind bars (see here).  His crime?  He was revealed to have claimed an average of 278 Yuan (approximately 28 pounds) a day in travel expenses.

Mr Lianhai’s commute may not cost him quite the same as it does each of the thousands who cram in to commuter trains around cities like London everyday, but from the outside looking in, and putting it decidedly diplomatically, no matter how much he’s added on to the true cost of his daily journey, the punishment still looks a little on the heavy side.  Mr Lianhai’s case is also not unique; Xinhua, one of China’s most well-known news outlets, has revealed that more than 6,000 CCP officials are currently under investigation by CCDI (China’s anti-corruption agency) inspectors for fiddling their travel expenses, with 2,350 in the state of Heilongjiang (in Manchuria) alone.  Padding the expenses account can certainly get you in to trouble (as British MPs know better than most), but, still, 20 years in prison?  This is heavy duty stuff.

The anti-corruption drive being pushed by China’s leader, Xi Jinping, has not been slow to put the indiscretions of both heavyweights (known as ‘tigers’) and no-names (‘flies’) like Mr Lianhai under the microscope.  By the end of August 2014 nearly 75,000 of the CCP’s 86 million members had been investigated for corruption, with over a quarter found guilty of their alleged indiscretions.  Xi’s strategy for rooting out corrupt practices has been two pronged; publicly prosecute a small number of big names as well as a much greater number of lower officials down the bureaucratic hierarchy.  The aim?  Send a message to everyone else that they could be next if they don’t buck their ideas up.

Impressive though all of this sounds, the chances of it prompting long-term change are slim.  Anti-corruption campaigns in China are nothing new, and CCP leaders have regularly used them as flimsy cover for either stabilising their own positions and/or as a tool for purging political opponents.  Indeed, there have been no less than four such discernible campaigns since Mao passed away and all of them have followed largely similar patterns; scare your opponents, show you’re in charge and punish a significant number of people with either fines or jail terms.

If Xi were serious about tackling corruption, then prosecutions would be only one part (and a relatively small part at that) of a much bigger package.  In practice, the structures that underpin Chinese public life are the problem, and tackling them is much more difficult.  In practice, Xi needs to move China, however slowly, in three broad directions.  Firstly, Xi needs to make an effort to limit the amount of bureaucratic discretion available to Chinese public servants.  In a system where transparency and openness don’t come naturally, the more discretion you give individuals the more you should expect them to take personal advantage of it.  Tackling the kickback culture that pervades much of China’s regional and local government is not easy, but creating rules based systems that shape decision-making would be one way of making a start in terms of tightening things up.  That doesn’t have to undermine one-party rule, but it does have to – slowly but surely – mean that rules shape decision-making.

Secondly, the CCP may well keep internet usage on a tight leash, but if it really wants to root out corrupt behaviour then it needs to support rather than curtail the right of the media to investigate allegedly corrupt acts.  Turkeys, you might argue, may also vote for Christmas, but if the CCP is serious about tackling corruption it needs to find a way to channel the not inconsiderable public discontentment with their corrupt elites in to the anti-corruption process.  Sina Weibo, China’s version of Twitter, is one tool for doing this (for more on this, see here), but there are others.  The CCP needs to show it’s moving with the times and aware of that.

Finally, and even more fundamentally, the Chinese government needs to find a way to increase the role of citizens not just in reporting corruption when they see and experience it, but also of having rather more say in how they govern themselves.  This does not by any stretch mean the implementation of democracy a la the West; on the contrary, the CCP would have an opportunity here to develop new ways of bringing citizens in to the discussion in ways that it finds appropriate.  Small steps are likely to be better than no steps at all, and there is some evidence that the CCP is aware of this.  Not that we see radical change happening, but local elections, for example, already take place in more places than many in the West probably realise.

Xi’s problem is that these challenges have as much to do with the quality of governance as they do with directly tackling corruption.  The former comes before the latter, and that remains true no matter how many low level expenses cheats end up in prison.  If you’re not on this journey, in other words, for the long haul, you’re not on it at all.

Dan Hough
University of Sussex

Corruption is defined as the “the abuse of entrusted power for private gain” by Transparency International and is charged with various ills afflicting any one nation. The presence of corruption means that public resources are being used for private benefit, undermining the state’s ability to pursue gains for the greater population and has been described as an obstacle to the process of democratisation, as slowing down economic growth, increasing socio-economic inequalities, creating disrespect towards governing institutions and fostering a culture of non-compliance with laws and regulations.

With so many charges at its door, corruption seems like the ultimate evil, preventing good governance, democratisation and economic welfare of nations. However, to treat corruptions as the sole cause of problems with statehood would be a mistake. Indeed, some academics are now challenging the treatment of corruption as something bad altogether.

Developing countries face many problems other than corruption. These include lack of experience in writing good laws and developing achievable policies with clear objectives and coherent strategies. Many suffer from a lack of trained and experienced workers to staff the civil service, the regulatory agencies and the judiciary to provide that compliance, monitoring and the rule of law. Some are wrought with conflict between key elites, which hold the power to stimulate economic growth and social development. And a few states have had little or no experience of statehood whatsoever for much too long to be able to do a good job, like those nations that emerge through independence from a larger state.

These are contexts that also often suffer the most from corruption but to assume a linear, unidirectional relationship between corruption and the other problems listed above would be wrong. This is because one does not necessarily lead to the other and the relationship may exist both ways, or indeed be circular.

For example, existence of even widespread corruption, does not necessarily indicate that the state has weak regulatory/monitoring capacity, or that its legal institutions are inadequate. The number of court cases initiated by members of public against state officials on charges of corruption has increased in countries like Russia, for instance. And these are not just a formality with no practical retribution. These court cases are being won against the state 70-80% of the time, and prompt (and significantly large) compensation is indeed being paid to the victims. So, despite the fact that the number of overall cases (those won and lost) is increasing, it would be wrong to say that formal institutions are inadequate at monitoring or punishing corruption.

This brings us to the second point – corruption can buy loyalty and support, necessary for large-scale reforms, which would not happen otherwise. In particularly rigid and hierarchical systems or sectors corruption can consolidate the interests of opposing elites and act as the grease in the wheels to facilitate important socio-political and economic change. In this sense, corruption can actually aid the development of high state capacity by giving the state a way to fulfil its functions – such as providing physical infrastructure, monitoring the private sector and ensuring political stability.

All that is good, but corruption breeds corruptions. The reforms that take place with the help of corruption end up benefiting someone or other (and usually not the broader public). Otherwise, there wouldn’t be support for them, right? So even though we go through with reforms and have a level of stability within a country, the new system just becomes more and more laced with corruption. Well, even here we now find critics. It would seem that even corruption has a tipping point, and when it gets too much it rallies people to complain, rise up and change the regime. Some critics claim this is what took place in Ukraine earlier this year.

Lastly, a bit on definitions. Corruption doesn’t have to be bad is we don’t call it ‘corruption’. Let’s take elections as an example and talk about ‘lobbying’ and ‘campaign donations’. In 2010 an amendment to the US election law was made, which removed limits on election campaign spending by corporations and unions. In 2014 this was followed up by removing limits on individual donations. Many critics voiced serious concern for the effect these amendments would have on democracy, since the changes effectively allowed for political support to be bought. Speaking with your rouble in Russia (or any other currency anywhere else in the developing world) is a definite no no – it is perceived as corrupt and undemocratic. But when making his decision to vote in favour of the changes to the US law, Justice Roberts of the USA Supreme Court was convinced that speaking with your dollar has become a part of free speech and is completely democratic. With a majority of 5-4 the amendments were passed on both counts and provided food for thought for Corruption Studies.

Elena Gorianova

Three Sussex students on the MA in Corruption and Governance course took to the conference stage in the first week of May. Felicitas Neuhaus, Francisco Valenzuela and Michael Badham-Jones talked to policy-makers about the fruits of their own labour, a research project with the Overseas Anti-Corruption Unit (OACU) on civil society movements and anti-corruption. In this blog post Michael Badham-Jones talks to us about their experience.

“At the beginning of May we were given the very exciting opportunity to present the findings from a research project that we are doing as part of our MA in Corruption and Governance. We presented our ideas at the International Foreign Bribery Taskforce conference at the London Museum. Our research is looking into what effect civil society movements (CSMs) can have on attempts to tackle corruption. The prospect of presenting was a daunting one. And for several reasons. Firstly our project is still in a fairly early phase, so although we have a lot of questions we have very little in the way of concrete answers. Secondly the room was full of very senior members from organisations such as the United Nations, World Bank, FBI, UK/Canadian/Australian police and the Department for International Development (DFID). These two previous concerns mixed with the fact that none of us had ever presented to anyone apart from a group of our peers at university. Nerves were on edge.

Although the prospect of presenting in front of such people was a very daunting prospect, we all came away with a brimming feeling of pride over presenting to such an esteemed group. I would like to stress here that if ever you are to get the opportunity to present in front of such a room bite off the hand that gives you the opportunity, for me at least it is probably my proudest achievement in my four years at the University of Sussex. The opportunity to speak at the conference came about because of the exciting opportunity that the MA in Corruption and Governance offers in being able to do an internship. Our internship is with the Overseas Anti-Corruption Unit (OACU), a division of the City of London Police. The internship that they offer isn’t traditional in the sense that we are not up in the office 3 to 4 days a week, but rather as mentioned previously a research project. The beauty of this was that as a trio we were allowed to within reason pick a corruption related project of our choice, the only limitation being that the OACU and DFID had to have an interest in our project. As a result of requiring an interest we have for example had to include how useful CSMs can be to law enforcement.

In concluding this blog post I would stress that pushing yourself outside of your comfort zone academically is very rewarding, and the post-presentation response that was extremely warm and encouraging. The result of this was the offering of help and support from the United Nations, DFID, and perhaps most importantly some great exposure for ourselves. Our names were included in the conference pack under speakers, which considering all three of us are presently looking for employment post-MA can do no harm. Being realistic that this probably won’t lead to employment it still looks fantastic on a CV and I was able to use the experience just the other day in a cover letter for a job that I have applied for as one of the requirements was experience presenting and talking in front of large groups. University is all about seizing the opportunities that present themselves and this is a lesson the three of us learnt last week, I won’t lie to you at first we all felt too inexperienced and ill prepared to be speaking at such event, but after talking it through with one another we felt it was too big an opportunity to miss out on, and as such are incredibly great for to Sanjay Anderson Chief Inspector at the OACU for giving us this amazing opportunity.