A Delicate Governance Problem

When considering corruption as an important issue in the study of leadership, the initial difficulty with which we are faced is one of definition. There are many different kinds of corruption, depending on the political, economic, social, and cultural environments in which the corruption takes place. Moreover, what may constitute corruption in one culture may not do so in another. For example, while it may be standard practice in some countries to accept ‘facilitating payments’ for services provided by officials as part of their day-to-day work activity, such transactions would be considered examples of corruption in other cultures. In most Western cultures, for example, the act of ‘tipping’ is an acceptable expression of satisfaction for a job well done, but if the person who accepts the tip is already being paid to provide the service as part of their job responsibilities, might this also be considered as a bribe in some cultures? When cultural differences are added to the consideration of what constitutes corruption, then the challenge of defining it becomes much more complex. The real issue becomes one of where to draw the line.

Transparency International (TI) defines corruption as the abuse of entrusted power for private gain. Recognizing the generic nature of this definition, the TI qualifies it by making the distinction between corruption ‘according to rule,’ which would cover instances where a bribe is paid to receive preferential treatment for something that the bribe receiver is required to do by law, and ‘corruption against the rule,’ which would cover instances where a bribe paid to obtain services the bribe receiver is prohibited from providing.

This qualification is important since it highlights a critical element in determining whether or not behavior should be deemed as corrupt. As such, behavior shall be deemed corrupt if it transgresses the commonly accepted rule or ethical code by which an organization conducts business. Therefore, and as a baseline, one could assert that corruption will occur where people, as participants in a wider social community, such as an organization or society, behave contrary to the universally accepted ethical norms (or laws) of that community. Moreover, and in order to ensure such ethical norms are upheld and that transgressions do not become norms themselves, corrupt behavior must also include instances where people try to cover up transgressions, as well as instances whereby leaders fail to investigate potential corrupt behavior and sanction transgressors appropriately. This must surely be a key leadership responsibility.

Corruption of the mind is like a virus; it spreads slowly but surely. The individual fails to realize that even one slight compromise of the ethical code leads to another, and then another in a continuing downward spiral until corruption is endemic. Indeed, it becomes so pervasive that the individual, in many cases, is not even aware of what’s happening. He or she is convinced that the transgressions are so minor as to be irrelevant. Over time, if not checked, the act of transgressing becomes a norm in itself: ‘This is the right way to act!’ The worst example, of course, is the corruption of a leader

However, there is further ambiguity with the TI’s definition, and it is of critical importance since it is quite common: If we are to define corruption as the abuse of entrusted power for private gain, should we not clearly define what we mean by ‘private gain’? While it may be relatively easy to compile a Corruption Perception Index on the basis of ‘under the table’ cash payments or other illicit payments, and then declare a handful of the world’s poorest countries as the most corrupt, it is rather more difficult to take account of other forms of ‘private gain’ that could also be adjudged corrupt.

For example, what of the instance whereby a political leader agrees, at the request of an outside interest, to facilitate the passing of laws that will disadvantage his electorate, on the understanding that when he or she relinquishes office, the foreign interest will ensure he or she is ‘looked after.’ Perhaps the leader in question is promised a major role in the development of world affairs, or a seat on the board of a major corporation, or lucrative consultancy contracts. Obviously, this leader will not disclose such details to the electorate, but may then proceed to use the system in whatever way is necessary to push through the required legislation. This is something that goes on as part of daily business in most ‘first world’ Western democracies; in some cases, such practices are endemic, yet rarely are questions raised.

Therefore, perhaps it is worth refining the definition. In considering the importance of fundamental acceptable shared norms and the meaning we wish to attribute to the concept of corruption, perhaps it is worth looking back to the derivation of the word corruption itself to assist us. The word springs from the Latin corrumpere, meaning to destroy; corruption, or corrupt behavior is, therefore, behavior that is carried out for personal gain but will also pervert the integrity of a social system, be it a nation state, region, organization, or other community.

But let’s face reality: Every human being is susceptible to corrupt behavior; it is an essential part of the human condition. There have been many experiments over the years exploring the human being’s penchant for behavior that is corrupt, cruel, unethical, and transgresses the accepted code of conduct and, in many cases, the fundamental rights of the individual. For example, Stanford University’s Professor Philip Zimbardo’s famous studies in the early 1970s underline for us how willing we humans are, given the right circumstances, to act in a corrupt and tyrannical way, even when we are all too aware that our behavior transgresses what we might otherwise consider to be basic ethical standards. The results derived from Zimbardo’s studies were born out in stark horror in the corruption of Bagram, Abu Ghraib, and Guantanamo, where the basic norms and standards of international law were cast aside with utter contempt by leadership in the US and UK, societies that profess to be standard bearers in the fight against corruption across the civilized world. Are we to think then that corruption is something which should only be attributed to the behavior of leaders in poor, third world communities?

In summary, from a leadership perspective, corruption occurs when a recognized and well accepted social and/or legal norm is broken and is:

• in favor of an individual’s, or group of individuals’, interest;
  
• at the expense of other people, who may or may not know what is happening; and
  
• not, in most cases, for the greater good; something which those responsible often endeavor to cover up.

Why is corruption unacceptable?

Most ‘civilized’ societies are forthright in their declaration that corruption is unacceptable and must be exposed where it occurs and eradicated immediately. In many cases, corrupt behavior is illegal and the perpetrator can be dealt with through the legal process and punished accordingly. Of course, instances may arise whereby behavior may not necessarily be legally corrupt but nevertheless may be morally corrupt, such as the recent ‘expenses scandal’ in the UK in 2009 in which members of parliament were using the system to deprive the tax-paying public of their own resources. The experience underlined the importance of having regulatory systems in place that are designed to promote ethical behavior, particularly among those in positions of authority.

The fight against corruption is a fundamental characteristic of our evolution. The process by which we address it is critical for insuring that we live in healthy communities and avoid the dreadful impact that corruption of the mind can have. But to succeed in this fight requires strong, smart leaders with integrity. They must be strong because it requires courage to go against the natural trend to seek individual advantage through corrupt behaviors. They must also be smart since the forces of corruption in human social systems can prove so strong as to threaten the very survival of the leader who has set out to address it

Although determining cause and effect when trying to assess the effects of corruption on the economic system is difficult, many experts recognize that the negative effects of corruption include:

• Reduction is growth rates
  
• Insufficient capital formation
  
• Capital diverted towards private profit rather than public good
  
• Reduced foreign investment
  
• Inefficient public spending allocations
  
• Reduced tax revenues
  
• Poor decision making
  
• Ineffectiveness of international aid programs
  
• Poverty, injustice, and social unrest

It is quite a commonly held assumption that corruption is a characteristic restricted to underdeveloped societies, and while the link between corruption and poverty is well established, we must acknowledge the fact that most social and political systems tolerate it. Even in instances where corrupt behavior is exposed in systems where the behavior is explicitly contrary to accepted norms, there is often a reluctance to adequately sanction the transgressors. Such tolerance is perhaps due to the fact that usually those people in positions of power whose responsibility it is to eradicate corruption are those who stand to benefit.

People in positions of power whose behavior may be seen to be corrupt put forward some justifications in mitigation. For example, some leaders maintain some degree of corruption is an acceptable necessity so that society and the organizations within it function properly. A more common justification put forward by leaders these days to justify corrupt behavior is referred to as the precautionary principle. The principle was born out of the environmental movement, but when applied beyond that field, the principle holds that any behavior may be justified, no matter how corrupt, if the leader feels there is good reason. While it may be shown that some degree of corruption in any complex society may be necessary, it certainly doesn’t mean it is right.

On an organizational level there are three major reasons why corrupt behaviors must be openly discouraged.

1. Contrary to what some people may think, it renders people’s collective life extremely difficult as it attacks the very fabric of our social survival. Corruption kills trust in the system and violates the idea of equality before the law and commitment to a common code of conduct.

2. In a system where bribery is a method of corruption, those who are in a position to offer bribes are at an unfair advantage. Those who cannot provide bribes become frustrated, a sense of injustice develops, and the system disintegrates.

3. Corrupt behavior jeopardizes the performance and effectiveness of the economic system when the accumulated wealth of the corrupted is not reinvested for the benefit of the system as a whole.

At the level of the individual, research has shown that corruption of the mind leads to behaviors that are both pathological and destructive. People who become accustomed to transgressing accepted norms for their own self-interest lose the sense of what is proper and lose their own self-esteem as an individual in society in the long term.

Corruption of the mind is like a virus; it spreads slowly but surely. The individual fails to realize that even one slight compromise of the ethical code leads to another, and then another in a continuing downward spiral until corruption is endemic. Indeed, it becomes so pervasive that the individual, in many cases, is not even aware of what’s happening. He or she is convinced that the transgressions are so minor as to be irrelevant. Over time, if not checked, the act of transgressing becomes a norm in itself: ‘This is the right way to act!’ The worst example, of course, is the corruption of a leader. The impact on others in the human system is extremely negative and contagious.

Types of corruption

There has been much research on the subject of corruption, and studies have tried to categorize common behaviors that constitute corruption. Here is a sample of the most common corrupt behaviors:

1. Conspiracy/collusion – It’s a fact of daily life. We regularly witness two or more persons or organizations working together with evil intent to disrupt the legitimate state of affairs against the common good. The activities of Monsanto and its collusion with regulatory authorities in many parts of the world is a good example, as they eliminate diversity and control the global food supply in opposition to public interest.

2. The abuse of power – It is not uncommon for those in positions of power to use their authority to serve their own interest or the interests of a minority group without consideration for the interests of the majority. Power and the impact on a person’s sense of self can prove overwhelming. The leader becomes intoxicated with their own importance, and the interests of society and people within it become irrelevant. President Nixon and the Watergate scandal provides an excellent example, as do the Indonesian Suharto regime in East Timor and the Pinochet government in Chile.

3. Bribery – It is also common practice in many cultures for people to accept or give something of value in order to seal a deal or secure a commercial advantage. The practice of bribery was a standard method of business carried out by BAE Systems for many years in Africa and Eastern Europe.

4. Favoritism or cronyism – It is not an unusual practice in both the public and private sectors for leaders to favor particular individuals when distributing rewards on grounds other than merit. For example, perhaps the individual in question is prepared to massage the leader’s ego or is a member of the same golf club, etc. Whatever the reason, the point is that the individual who is given the reward does not deserve it. The issue of cronyism was something which Greek Prime Minister George Papandreou admitted was a problem to be addressed in the wake of his country’s financial crisis.

5. Lying or hiding key facts (corruption of data) – This is arguably the most prevalent form of corrupt behavior throughout the world today. In fact, in recent years in particular, it has become a key characteristic of Western democratic systems as leaders, both corporate and political, have sought to exploit people’s fears to strengthen their grip on power.

6. Spreading rumors and disinformation – This is a form of corrupt behavior that we encounter on a daily basis if we consume any form of mass media. The invention of Al Qaeda as a global network of highly trained and committed terrorists with the means to attack our communities and threaten our very existence is an example of such a drive used by many public leaders in recent years.

7. Threats and intimidation – Again, this is a very common form of corrupt coercive behavior, employed to great success by Monsanto to force farmers across the globe to submit to their will. It is quite common for large corporations to use the legal process as a weapon of intimidation, particularly when their practices are called into question.

8. Illegitimate use of power – It is not uncommon for individuals around the center of power to manipulate the system to further their own agenda. Sometimes we fail to realize that the leader herself has become an instrument of a power that is wielded by others lurking in the shadows. It may be a legally legitimate part of the political game, but the intent is questionable and power is exercised in a way that may not be in the interest of the majority.

There are many different kinds of corruption, depending on the political, economic, social, and cultural environments in which the corruption takes place. Moreover, what may constitute corruption in one culture may not do so in another. For example, while it may be standard practice in some countries to accept ‘facilitating payments’ for services provided by officials as part of their day-to-day work activity, such transactions would be considered examples of corruption in other cultures. In most Western cultures, for example, the act of ‘tipping’ is an acceptable expression of satisfaction for a job well done

Prevention and fight

The identification, understanding, and handling of corruption is a never-ending task. Corruption has always been a characteristic of the human social system. The evidence will always bear witness to its existence at every level in society. However, we must continually strive to recognize it and deal with it appropriately if we are to counteract its destructive forces.

We believe that the fight against corruption is a fundamental characteristic of our evolution. The process by which we address it is critical for insuring that we live in healthy communities and avoid the dreadful impact that corruption of the mind can have. But to succeed in this fight requires strong, smart leaders with integrity. They must be strong because it requires courage to go against the natural trend to seek individual advantage through corrupt behaviors. They must also be smart since the forces of corruption in human social systems can prove so strong as to threaten the very survival of the leader who has set out to address it.

There is a need now to explore the issue of corruption in our social systems, improve our understanding of the dynamics involved, and generate tools and techniques for dealing with it. Therefore, we advocate the creation and implementation of factual and transparent pieces of research to further probe the challenge, highlight its sources, and advocate effective and realistic solutions.