History is full with story about corruption scandals but the academic study of corruption is mainly a twentieth century phenomenon (Doig & Williams 2000, p. ix). The academic study on corruption which started since 1950s/1960s revealed negative impacts of corruption particularly as they become significant development impediments. In addition to the traditional recipes, this paper will argue that anti-corruption measures must put serious attention on the promotion of personal intrinsic value that support anti-corruption measures.
Why corruption is bad?
Although there are many logical explanations rationalize the negative correlation between corruption and economic growth, the data analysis lead to a puzzle. Analysis of investment, economic growth and corruption (bureaucracy efficiency) data from 67 countries shows that corruption found to lower investment and thereby lowering economic growth (Mauro 1995, p. 705) . However, the subsequent analysis with updated data conducted by Svensson suggests that at macro level corruption does not affect growth (2005, p. 39). One possible explanation of this puzzle is that the type of patron-client network within which the corruption located influences the effect of corruption to growth (Khan 1998, p. 15).
Apart of the puzzle of corruption-economic growth relationship, economic growth is not the only thing that matters for society (Rose-Ackerman 2006, p. xvi). Other important aspect for society apart of economic growth, for example, is inequality. Corruption is clearly bad for equality. Income inequality has expanded most in corrupt countries (World Bank 2000, p. 21). This could happen because corrupt bureaucracy tends to neglect the poor and the powerless who cannot offer material benefit to bureaucrats and politicians. One concrete example from Indonesia shows there were 71 per cent of service users indicate differences treatment from service providers at the service units (KPK 2009, p. 55). Other negative impacts of corruption include increasing poverty (Kaufmann & Dinino 2006, p. 15; World Bank 2000, p. 20), reduce the government credibility (Rose-Ackerman 1999, p. 26; World Bank 2000, p. 23), and reduction of government expenditure on education (Mauro 1998, p. 277).
Why anti-corruption?
Public sector must fight corruption even it is costly. This is because public sector business involved tax payers’ money and public mandate. Petty corruption is still bad in morality and could reduce government's credibility which could end up with something much more serious impact such as public disobedience to public rules. In public sector, bureaucrats and politicians are demanded not only to be effective, but also to be clean (Harris 2003, p. 201).
Analysing corruption
Behavioural approach
People could be tempted to corrupt when they perceive they are not treated equally. Societies with more economic inequality are less trusting which lead to high corruption (Uslaner 2004, p. 14). However, what Uslaner means with trust is a general trust as contrast to in-group trust. In-group trust supports corrupt conducts thorough the establishment of bonds of reciprocity (Uslaner 2004, p. 9). This explains why corruption is associated with multiculturalism particularly when it comes to 'affirmative action' program (Larmour 2008, p. 235). Equity issue brings to the concern on the role of low incomes in causing corruption (see, for example, Montinola & Jackman 2002, p. 147; Banfield 1975, p. 600; World Bank 2007, p. 104; Kaufman & Dininio 2006, p. 16).
Corruption conducts happen because rational calculation suggests to do so. Corrupt practices in public service units in Indonesia are associated with low anti-corruption measures (KPK 2009, p. 55). The major considerations of political corruption are the likelihood of apprehension and the penalty if caught (World Bank 1997, p. 104; Harris 2003, p. 202)
Culture plays important roles in social acceptance. That is because culture influences people's decision (Larmour 2008, p. 237). Culture is a standard values and a pattern of shared assumption which influence the group members of their perception, thinking, and feeling towards their behaviour (Schein 1993, pp. 373-374). Corruption survey in Indonesia shows 59 per cent of public service unit clients stated that giving additional charges was a common practice in procuring services (KPK 2009, p. 55).
Organizational approach
The bigger the government means the higher corruption risk because of more transactions. However, research findings are inconclusive; see for example Montinola & Jackman (2002, p. 147) and Gerring & Thacker (2005, p. 233). One possible explanation is that the small government has fewer resources which would bids up the ‘decision price’ and increase corruption temptation (Rose-Ackerman 1997, p. 41). Another possibility is that reducing government size that made through not-credible-privatization will increase corruption (Black et al. 2000, p. 1747).
Organization with unclear line of responsibility or lack of sufficient monitoring increases corruption risk. That is because the loose monitoring creates opportunity. This may explain why decentralization and federation has positive correlation with level of corruption (Goldsmith 1999, p. 879; Kunicova and Rose-Ackerman 2005, p. 597). The decentralization and federation have a fragmented organization; this support corruption conducts because the potential corruptor needs to influence only a segment of the government, and because in fragmented system there are fewer centralized forces on monitoring and enforcement (Banfield 1975, p. 600).
The corruption risk is higher in an organization where its work processes are ambiguous or not clearly understood. This is because employee may be able to manipulate the process for his/her own benefit particularly in a high risk job such as procurement. Unclear procedure could be used by the public servants to delay the service time, which then attract the clients to bribe (Rose-Ackerman 2006, p. xviii).
Political approach
The politic institution architecture and the quality of policy and regulations determine the corruption risk. The more power the public officials have, the more space for discretion, the higher risk for corruption (Klitgaard 1998, p.75). One characteristic of political corruption is the dominant of executive that combined with weak of judiciary (Harris 2003, pp. 202). Quality of policy and regulation are also important determinant. Corruption is more prevalent in countries with highly distorted policies (World Bank 1997, p. 103). Country with complicated regulation has high corruption risk because complicated regulation requires interpretation which leads to centralization of power to person in charge rather than to the regulation itself.
Democracy is like two-sided sword. On one hand it forces the politicians (agent) to follow the interest of their principal (the citizen) (Lambsdorff 2006, p. 10), on the other hand election requires resources which could force the politicians to corrupt (Moe 1984, p. 762). Therefore, democracy will only inhibit corruption in country with complete democratization which reflected by the nature of the election and the effectiveness of the elected legislators (Montinola & Jackman 2002, p. 147). Complete democratization may require experiences. Country with long exposure to democracy predicted lower corruption (Treisman 2000, p. 399).
Anti-corruption framework
1. Promote intrinsic anti-corruption values
This is a foundation of all anti-corruption measures. The obsessively admiration to wealth is one inner factor that support corrupt behaviour of individual (Watson 2006, p. 50). Economists and criminal sociologist believe that human being is a rational actor who making choice according to cost and benefit analysis (Keel 2005). Therefore some scholars have ideas to apply penalties (cost) and rewards (benefit) in order to prevent people commit in corruption conducts (Rose-Ackerman 1997, pp. 46-50; Harris 2003, p. 202; Klitgaard 1998, pp. 69-71). While this "carrot and stick" approach makes sense according to the rational choice way of thinking, that will not sustainable in the long run. That is because the value of rewards will be diminished from time to time and people will learn how to use certain tactics to avoid detection and "stick”. Explicit incentives schemes may sometimes backfire because it undermines people's confidence (Bénabou & Tirole 2003, p. 516).
For a long term effect, it is important for everyone in a nation to embrace certain values which in line with anti-corruption. The individual must embrace the value as intrinsic value; that is something that could make particular attitude conducive and productive (Lemos 1994, p. 5). The idea is how to make personal values are more than just materialistic things.
Anti-corruption measures must convince people to embrace anti-corruption values. This must be beyond religion. Some religions will not succeed on promoting intrinsic values because they apply "carrot and stick" approach (external force) by threatening bad people with hell and awarding good people with heaven. The promotion must be laid on the basis of self-determination. Self-determination can effectively create intrinsic motivations (Choi et al. 2010, p. 967). Self-determination can be created through promoting rationality (high internal locus of control) behaviour, improving competency, and relatedness (Ryan & Deci 2000, p. 68). Those self-determination drivers could be achieved through improving the quality of education, public services, and national leaderships.
2. Political institutionalization
The state institution architecture must be sufficiently power-balanced, not too dispersed but also not too concentrated. The credible institution is most likely found in the country whose political architecture is located toward the center of the dispersal decision making range (MacIntyre 2003, pp. 32-36). Horizontal accountability is important which can be created by making institutional restraints through creating the separation and independence of the three branches of power i.e. executive, legislative, and judicative (Kaufmann & Dininio 2006, p. 19). In addition, vertical accountability is also important. This can be developed through the strengthening of civil participation and watchdog institutions, whistleblower protection, freedom of information, and strengthening the role of media (World Bank 1997, pp. 106-108; Macdonell & Pesic 2006, pp. 111-116; Kaufmann & Dininio 2006, p. 19).
The regulations must be streamlined and clarified and avoid conflict among them. It must be allow some flexibility but also effective to restrain corruption. Anti-corruption measures are often creating a multi-layer monitoring which not only increase inefficiency but also make the monitoring itself not effective (Anechiarico & Jacobs 1996, p. 28). 'The fundamental challenge is to devise institutional arrangements that sustain a workable balance between flexibility and restraint' (World Bank 1997, p. 108).
A series of check and balance procedures must be established. Code of conducts must be applied to all public officials. An experience from the House of Commons in the United Kingdom shows the effectiveness of code of conduct application in reducing corruption (Mawer 2006, p. 212). Asset declaration is also important to enable public to watch the development of personal assets of public officials during their period of power. Reversal of the burden of proof is another idea to overcome the issue of the difficulty to proof corruption crime (GTZ 2007, p. 10).
Political parties must strengthen their membership. They must rely on their members, rather than depending on the lobbyists, for their financial need. The legislator and party members must apply ethical standard and code of conduct on campaign fund raising through party institutionalization (Pelizzio 2006, p. 181)
3. Bureaucracy reform
Bureaucracy reform must be conducted in integrated way. Three pillars from the Ministry of Finance of Indonesia can be used as a reference; they are: organizational restructuring, business process improvement, and human resources development (MoF 2010).
The aim of organizational restructuring is to make the organization structure fully support the the strategic of the organization. The structure must be efficient by slashing all positions that irrelevant to the strategic. This may help to cut unnecessary authority which would reduce corruption risks.
Business process improvement aims to clarify all the work processes particularly of those with high corruption risks such as procurement. Analysing work process and creating standard operation procedure (SoP) would increase certainty on procedure and clarify responsibility, not only for the public officials but also for the clients. Automatization of some particular work processes (e.g. through computerizing) would help to reduce corruption risks (Perrow 1979, p. 23; KPK 2006, p. 82).
Human resources development aims to increase competency and motivation of agents and reducing corruption motivation. This can be done through education and training. However, for public officials in developing countries where the salary is usually low compare to private sector, education and training would not be sufficient. Apart of intrinsic value promotion as suggested before, improvement of salary/income is also important to reduce corruption risk. The rise of income must be combined with performance assessment and credible monitoring (KPK 2007, p. 49; World Bank 1997, p. 104)
4. International support
Corruption is part of economic issues which cannot be separated from globalization. The characteristic of corruption in natural resources abundance countries is associated with multi-national corporations who work on extraction business. The money laundering practices and international drug trafficking are few examples of why corruption cannot be viewed simply or even mainly as bounded by the nation state (Harris 2003, p. 199). The availability of international lenders with integrity would help to provide alternative sources of financing for free-corruption international business (Rose-Ackerman 1997, p. 53). And finally, the presence of international anti-corruption campaigner, such as Transparency International, helps to break the circle of corrupt power. The idea is not to force the country by external power such as loan conditionality, rather to pursue the country and to create self-determination on anti-corruption measures (Larmour 2006, p. 96; Bukovansky 2006, pp. 91-92).
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