The Taxonomy of Corruption
TR Raghunandan, ipaidabribe spokesperson and ex-bureaucrat takes a look at and defines the various types of corruption in this post.
Taxonomy is a hateful subject. Anybody who has studied biology will vouch for that. Those afternoon classes where ancient teachers droned on about phyla, orders, genus and species, as you look longingly out of the window, still send shudders up my spine. Am I glad to be out of college forever!
Yet one has to grudgingly accept that classification is important. It helps you identify the characteristics of each type and segregate them. This goes for corruption too because it takes many forms where each manifestation requires a distinctively nuanced treatment.
When one looks at corruption from the aspect of whom it touches and where it manifests, it is either wholesale or retail corruption. Most of us have experienced petty corruption, the kind that one experiences in over-the-counter transactions with the government – for obtaining a ration card, a passport, a driving licence, for registering properties, for filing FIRs and for a host of other services that citizens are to get from the government as a matter of course or a matter of right. To call this petty is a misnomer; it touches almost everyone; ‘retail’ corruption would be more appropriate. Then there is the corruption that takes place at a higher level, the corruption in procurements, in assignment of land and issue of licences, the use of insider information to gain an unfair advantage, the granting of a business favour, a tax rebate to a favoured business house, granting an import or export licence, permitting large-scale evasion of taxes and duties due to engineered policy loopholes, or the purchase of political support. We could term such grand corruption, as ‘Wholesale’ corruption.
Retail corruption is typically prevalent at times when services to the public are delivered by large and indifferent monopolies in a climate of shortage. In such situations, people sitting at the counter command a lot of clout. They take bribes to give you your ration card, or to jump the queue in allotment of a telephone line. Anyone above forty will remember the days when you had to pay a `baksheesh’ to the Telephones department chaps or wait for hours in the railway station queue only to have to the poky booking counter window closed in your face just as you reached it. This was as immutable a part of Indian life before the nineties, as permanent as Doordarshan’s take-it-or-leave-it fare of two channels. Those ‘good old days’ that we would like to reminisce about now that we are at a safe distance from them. Could this be calleds ‘Socialist’ corruption, too?
But in the nineties and later, as India liberalised, we saw capitalist corruption, the large scale gaming of the system. We saw the Harshad Mehta scam, the Hawala scandal, and of course, the 2G scam. This is corruption that was born out of the opportunities that arise following liberalisation.
I can see my free-market friends chafe at this classification. After all, liberalisation is expected to reduce corruption by de-monopolising service delivery to people and giving them a choice of products. Capitalism spurs competition. This drives efficiency and lowers costs, improves access and betters the quality of services. Yes, that does happen, but alongside we have another phenomenon that raises its ugly head; of cronyism, of oligarchs, cartels and others who thrive in a climate of poor regulation.
Liberalisation could, in the short term increase, rather than reduce corruption. This is because contrary to popular notion, good competition is a result not of ‘freeness’ of the free market, but of careful and nuanced regulation. However, a robust regulatory system that ensures quality, fair competition and restriction of monopolies takes time to stabilise. Till that happens, capitalist economies cannot prevent rogues from making piles of money through corruption – sometimes, the very same that made a killing in the socialist era. At the very border, the line that separates corruption of this kind and business sharp practice is a blurred one. Thus, a TRAI was not able to prevent a 2G Scam; or a SEBI, a securities of IPO scam.
India is particularly hard hit by both socialist and capitalist corruption. On the one hand, poor Indians do not have access to good quality of essential services. So they suffer the shortages that ought to have died with the waning of socialism. Yet, even as they do, we see the birth and growth of capitalist corruption.
Worse still, is the linking of the two into one daunting phenomenon, which can be termed ‘Syndicated’ or ‘Hyper’ corruption. This is when corruption stops being the act of a few corrupt freelancers, but becomes a well-oiled chain of business with linkages that run from the top to the bottom. Retail and wholesale corruption are interlinked and syndicated into networks where money collected below moves up the political and bureaucratic chain. For instance, the money collected from the Ration Card system or while registering your property is governed by specific rates, accepted by all, promoted by middlemen and distributed at all levels through quotas. These powerful syndicates have devised means of passing tainted money upward and hiding it. In such circumstances, the elimination of wholesale corruption cannot be undertaken if we are tolerant of retail corruption.
Systems reforms of the kind advocated by ipaidabribe.com can only tackle hyper-corruption up to a limit. Policy making is a natural monopoly and discretion exercised in the highest echelons of the government can tend to be very wide. Therefore, there is a much greater role for accountability mechanisms to play in curbing it. Currently, India’s oversight of higher level government, including high level bureaucrats, politicians, the political executive and the judiciary is weak and fragmented. The result – very few politicians and bureaucrats have lost their jobs or faced criminal action for corruption. Not one Judge has been impeached yet for corruption. As regards MPs, a few sting operations (such as in the MP’s local area development fund case) have forced some to resign, but corruption prosecutions have not succeeded. One of the reasons is a weak investigation mechanism. The Central Vigilance Commission and the CBI together are unable to provide the deterrence to curb wholesale corruption.
There is no doubt that we need strong laws that empower investigating agencies and provide for deterrent punishments. This is what Anna Hazare and other civil society representatives have been advocating and ipaidabribe.com supports the idea. However, many more measures are required to build an effective anti-corruption regime. A strong Lokpal alone will not suffice if the definition of what constitutes corruption under the law is narrow. India’s Prevention of Corruption law has a very narrow and restricted meaning of the word ‘corruption’. This law only recognises a few acts of public servants, such as the taking of bribes or the misuse of public office to amass wealth, as corruption. We need amendments in this law to ensure that the wider definitions of corruption, as recognised in the UN Convention against Corruption 2005, is operationalized in India. This is a legal reform that is of equal significance as having a Lokpal Act. If we do that, then several acts to be corruption that are not considered crimes in India, such as (i) bribery in the private sector, (ii) an Indian bribing a foreign national in another country (iii) concealment of wealth, (iv) exercising undue influence and (v) obstruction of justice will be punishable.
If we want to control capitalist corruption, we will also need to tackle the corruption rampant in the private sector. Examples of such corruption are (i) taking of bribes for admission of students to schools (ii) bribes for appointment of teachers in private institutions (iii) contractors in private companies having to pay bribes to procurement agencies within companies. We have some chilling experiences of these reported on ipaidabribe.com.
“My manager at a very professional accountancy firm bribed me to do work by buying me a packet of minstrels.”
“I was asked to give a commission/bribe for securing an order to supply stationary and office supplies in a public limited company. I was shocked as the company promotes itself as helping the poor.”
“It is now most common for companies to get a good stock audit report and get the fund diverted taken through loan from banks. We paid a bribe of Rs. 100000/- to the stock auditor just to continue our bank loans. If no bribe would have been paid, it would surely have resulted in a closure of our units.”
“For getting my company registered under the PPF act to remit PF for my employees which is statutory, I approached the PF office in Shimoga. I was asked for a bribe of 10k finally with a gracious gesture ( it was reduced to 8k only ) to provide registration to remit the provident fund for the employees of my firm. God bless our system.”
Why addressing ‘retail’ corruption is important
Tackling wholesale corruption has hogged the headlines to the extent that many see the enactment of the Lokpal Act as being the end game for corruption. Some even go to the extent of saying that lower level corruption can be tolerated, but corruption at higher levels cannot.
However, ipaidabribe.com believes that the two cannot be separated and treated with two different yardsticks. When citizens do not demand public services as their entitlements and look upon them as favours dispensed from above, the tendency is for retail corruption to persist.
Pernicious retail corruption destroys national character. As citizens face corruption at every step in their daily lives, they cultivate passive acceptance as a survival strategy. This even evolves into a perverted justification of corruption as an essential thing, to keep the wheels of the economy moving. This attitude destroys the quality of citizenship. People who tolerate corruption also tolerate injustice. They accept bad quality of government services. They look away when their environment is plundered. They tolerate and even collaborate in the debilitating of a nation.
Tackling retail corruption is a very important step in building our national character. Citizens, both as a group and as individuals must become intolerant of corruption. They must overcome the fear factor and be very firm that they are not going to bribe, even if they have to face considerable inconvenience. They must report the success and stories of good government officers and systems so that good lessons can be drawn and upscaled.
Hyper corruption can die quicker if we build a sense of community amongst the honest and a culture, not of isolation, but of standing up for each other and fighting together.
-TR Raghunandan