Wednesday, September 24, 2008

When corruption turns into a shadow government

When corruption in government is the rule, honesty becomes the deviant behaviour. Everybody already knows why a public official takes bribes, steals from the public coffers, or distributes administrative advantages in return for material gain. No one will disagree that this constitutes a misuse of public office for private gain.

There are others who would even argue that there are circumstances in which illegal practices like bribery, embezzlement, kickbacks, etc., can enhance the ability of state leaders to achieve compliance with their commands.

Under this logic, the president as commander-in-chief of the army could be justified to allow his or her generals to use public funds for their personal gain or get kickbacks from government contracts with the private sector in order to keep them at bay, or from being restless and antsy about usurping political power. In the Philippines, the sheer number of retired high-ranking military officials in sensitive government posts indicates the effectiveness of this practice of rewarding loyalty to the commander-in-chief. If corruption, in this sense, promotes institutional integrity or effective command, treating corruption as merely a specific set of illegal practices becomes not just debatable, but very misleading as well.

This twisted significance of corruption in promoting a sense of equilibrium in public affairs applies to all levels of government, and not simply to rewarding a loyal military. Consider the electoral process by which voters select their representatives. As voters, they entrust their representatives to act on their behalf. When representatives use the resources of government, which voters bestow upon them so that may function effectively, to serve their special interests rather than the public that they have been entrusted to represent, they are no longer acting as agents of the people who voted for them. This form of corruption is pervasive. Politicians accept money or favours in exchange for advancing legislation. Politicians award government contracts or sell off enterprises in exchange for kickbacks rather than seeking the lowest bid. Politicians raid state coffers or draw on state resources for personal use. In many such cases, we speak of the state as having been captured by private interests, so that government no longer represents the public’s interest.

The bitter irony is that democracy does not also help in curbing corruption. It appears that the electoral mechanism does not work as expected: corrupt politicians are not severely punished at the polls, and regularly they stand good chances for re-election. A study made in 2007 finds that on average deputies of the Italian legislature charged with corruption under the post-World War II period have enjoyed a re-election rate of 51 per cent, compared to 58 per cent for their putatively honest counterpart.

As an institution by itself, corruption could be used to sustain or even extend leaders’ authority over their subordinates. The receipts from corruption serve as an additional incentive, like an informal second salary granted to subordinates in exchange for their continued loyalty. Under such arrangement, some degree of bribery and embezzlement would be condoned. The rule of law becomes compromised, but the discretionary capacity of the state, i.e., its capacity to impose the will of the leader, is not. Indeed, the probability of compliance with leaders’ licit and illicit directives is enhanced.

So long as corruption, therefore, enhances the capacity of state leaders to secure compliance with their directives in exchange for loyalty and obedience, corruption becomes an effective tool in reinforcing the government’s vertical hierarchy. Command is secured, therefore the state will always be stable and its institutional integrity remains intact. If there is any opposition left, it has been reduced to a level of ineffectiveness. In other words, the subversion of democracy has been complete.

Hence, addressing the problem of corruption simply through incentive schemes, stricter regulations and lofty policy reforms will always be ineffective and inadequate in these circumstances. Such measures are less potent in rooting out the real causes of corruption.

Let’s take the Philippines, for example. In an effort to fight corruption, the government through the Office of the Ombudsman has invested in youth and value formation programs under the Corruption Prevention Units and Junior Graftwatch Unit Programs. These programs are composed of students and community volunteers who serve as active collaborators of the Ombudsman down to the local barangay (administrative village) level—involving the community, as it were, in the fight against graft and corruption in the hope of creating a graft-intolerant culture in the future.

But the real benefits of such value formation programs could only be promising, not immediate, and even arguably doubtful. So the government continues to rely on prosecution, which unfortunately has not served as an effective deterrent to corruption. The conviction rate of the Office of the Special Prosecutor (OSP) at the Sandiganbayan (the Anti-Graft Court) is a dismal 6 per cent.

Put differently, this means that a high-ranking government official accused of graft and corruption has a 94 per cent chance of walking away scot-free. In other words, persecution of corruption is not working because the OSP does not have the number and quality of legal manpower to match many of those accused before the Sandiganbayan. In many instances, those accused are powerful public officials who have at their disposal the services of highly-paid private lawyers and have retained their close links with powerful politicians who support them.

The OSP has also engaged in law reform initiatives and campaigned before the leaders of Congress for the passage of legislation allowing private practitioners to appear as prosecutors before the Sandiganbayan to help remedy the Office’s severe current lack of prosecutors. It has lobbied Congress to upgrade the salaries of its prosecutors and graft investigators with the end in view that a more competitive salary scale would enable it to recruit from the best law schools and hire more competent legal personnel. In addition, the OSP has requested the Supreme Court to consider the feasibility of designating, among the regular courts, special courts that will try graft and corruption cases committed by low-ranking officials, which will also provide opportunities for proper training to the presiding judges of these special courts and the prosecutors handling graft cases.

But overall, corruption in the Philippines has remained unabated. Corrupt behaviour continues to be not the exception to the rule; it is the rule. The woeful experience of the OSP and the Sandiganbayan in prosecuting corruption in the Philippines reflects only those cases committed at the higher echelons of government.

If all instances of corruption from top to bottom of government are considered, the state of corruption in the Philippines would probably indicate that it has blossomed into another branch of government by itself, or perhaps even a shadow government.

In 1999, upon the request of the Estrada administration, the World Bank developed a national strategy for fighting corruption in the Philippines that focused on reducing opportunities for corruption and making corruption a high-risk, low reward activity. Again, this strategy approaches corruption as an identifiable specific set of practices which are then targeted by an incentive structure and reform-oriented policies all aimed to achieve a quick-fix of the problem.

We all know now that Joseph Estrada was ousted from the presidency because of corruption, and it was not just the popular people’s revolution that removed him from power but his own behaviour that was linked with widespread corruption during his short-lived term. President Gloria Macapagal-Arroyo, who succeeded Estrada, may also suffer a similar fate and only time will tell when the pervasive corruption in her government will burst at its seams.

Perhaps, we should start to veer away from the traditional concept of corruption as simply an illicit form of behaviour that can be made to disappear by fixing the incentive structure or the institutional setting that has dominated most current strategies to combat corruption.

It is about time to see corruption through another lens --- to regard corruption as the subversion of democracy and the capture of the state. Describing corruption as a principal-agent problem does not provide us with effective answers because the solutions this approach offers tend to be limited to law enforcement, compliance, and the limits to the capacity of the state.

We can now almost infer from various studies about corruption that practices such as bribery and embezzlement in government do not merely provide evidence of the breakdown of state authority. More importantly, such studies also indicate that when such practices are permitted as means to ensure compliance of subordinate officials to state leaders, the existence of an informal state apparatus or a shadow state is engendered and is used by state leaders to extend their power beyond the limits of their legal authority.

When another arm of government is established, such as a shadow state, in all probability it will undermine the formal institutions of a democratic regime. This may explain why corruption is so pervasive in less politically mature constitutional democracies or countries of the post-Communist and developing world, and may also account for why corruption has been so difficult to eradicate in certain countries.

If the pervasiveness of corrupt practices only signals a breakdown of political authority, then political leaders would have clear incentives to overcome it, but if corruption plays an important role in the informal institutions of political domination, then leaders have every incentive to sustain it.

So, wherein lies the solution to corruption?

In 2005, the Concerned Artists of the Philippines presented a very interesting paper to the National Study Conference on Corruption. They argued:

“Any anti-corruption campaign by the government will result in merely superficial effects, because it is contradictory to the nature of its existence. With the present system, how political and economic power is gained and maintained is at the root of corruption. Pervasive corruption promotes the culture of corruption among the elites and reinforces the disempowerment of the masses. The cycle continues, as the culture of corruption and a disempowered people perpetuate elitist political and economic power.

“Corruption benefits the political and economic elites as it facilitates their sell-out and exploitation of our country's human and natural resources. The victims of corruption are the Filipino masses. This is the reason why we should persist in countering corruption.

“However, it is of utmost importance to extend our efforts to actively resisting unequal treaties, foreign dictates, the exploitative political and economic system, and the corruption of culture. These actions nurture love of country, honesty, integrity, and other positive values based on pursuing the interest of the people and our nation. This is a concretization of a holistic anti-corruption drive.”

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