The Growth of Corruption Nepotism and Inefficiency - Essay Example

The Growth of Corruption, Nepotism and Inefficiency Introduction As part of globalization, international trading is considered as a common business activity. Today, with the purpose of cutting down their operational costs, a lot of businesses coming from developed countries are subcontracting raw materials or finished products from developing countries. There are also cases wherein these companies would consider investing in a foreign land in order to enable them to compete with the global market. In general, corruption, nepotism, and political inefficiency are harmful in the economic development, political stability as well as the social welfare of the people living in the pacific island countries. Poverty and greed are often the main reasons why a lot of government officials based in developed and developing countries are very much into the practice corruption. There are many ways in which corruption may occur. Such illegal act could manifest in different form and nature such as grand and petty corruption; bribery; active and passive corruption; embezzlement, theft, and fraud; Extortion, abuse of discretion, favouritism, nepotism, and clientelism, conduct creating or exploiting conflicting interests, and/or improper political contribution.1 (See Definition of Terms on page 11) This study will focus on discussing the possible negative effects of corruption, nepotism and inefficiency in many Pacific Island countries. It will be observed particularly in the way it could contribute to the people’s loss the confidence in the politicians as well as in civil service. In line with this matter, this study will gather several reported news events such as the culture of accepting bribe or ‘gifts’ in Solomon Island and under-the-table and red tape activities in Fiji. The study will also explain the effect of nepotism in the growth of inequality and the practice of corruption within a country. Eventually, this study will prove the negative impact of corruption, nepotism, and inefficiency in the Pacific Island countries by highlighting the harmful effects of each case in relation to the countries’ economic and political stability as well as in civil service. Concept of Corruption In many countries, the concept of corruption is very broad and has not clearly received much clarification in terms of its meaning.2 Considering the definition of corruption by Joseph Nye (1967), “it is the abuse of power by a public official for private gain.”3 Corruption is not only limited to the public offices who are searching for some private gain. For instance, there are also some cases wherein individuals who work for a private firm who are abusing their authoritative power in exchange of something that can be beneficial to them personally. For this reason, the definition stated by Thompson (1995) is much better since it clearly acknowledge the difference between a private and public corruption.4 He defines corruption as “like all forms of corruption, the institutional kind involves the improper use of public office for private purposes.” The Harmful Effects of Corruption in the Development of the Pacific Island Countries The Culture of Accepting Bribe or ‘Gifts’ in Solomon Island The logging industry in Solomon Island (located in the Southwest Pacific) is very prone to corruption particularly the culture of being offered and receiving monetary gifts as a bribe to the country’s ministers of the Government including the landowners, provincial ministers, and chiefs.5 A lot of logging companies operate in the Solomon Island due to the fact that a lot of their government officials and businessmen accept ‘gifts’ as part of doing business. In the process, more people are accepting ‘corruption’ as part of their business culture and will eventually make corruption morally acceptable and normal. Considering the fact that some high ranking officials believe that the money they receive is merely a ‘gift’, it would be uneasy to break the habit of these individuals who have been very much at ease with accepting bribe or gifts from other people. Due to the growth in corruption in the logging industry, it is possible that the future generation of the Solomon Island could suffer due to the foreign loggers who are benefiting from the rich forest of the country. In the end, Solomon Island may experience flooding, lands slides, global warming effects due to the absence of adequate rain forest. It is also possible for the local businessmen to experience insufficient raw materials for their local consumption. Thus, economic crisis may result eventually due to business process inefficiency caused by inadequate supply of raw materials. The culture of receiving gifts may also result to tax evasion which is considered as one of the major factors that contributes to the unequal distribution of wealth among the business people and the average income earners. Aside from the Solomon Island, similar cases of corruption are also evident in other Pacific Island countries such as Australia, New Zealand, Tonga, Cook Islands among others.6, 7 In the process that there is a wide gap between the rich and the poor, those who are unemployed and are experiencing an intense need to earn huge amount of money would often result to committing criminal acts such as stealing, killing, kidnapping, drug pushing, and other related illegal activities. Under-the-Table and Red Tape Activities in Fiji For many years, it has been observed that many of the international trading transactions between two different countries could open some cases of ‘under-the-table’ or red tape activities involving some government officials who are working with a partial or full government authority related to taxation, business licensing, and other necessary legal documentation. Considering the fact that international investors are left with no choice but to pay bribes and deal with official extortion, developing countries are at risks of losing a long list of potential foreign investors. In the case of Fiji, the country is very much dependent on the exportation of sugar and tourism industry as its major sources of foreign exchange. In 2006, it has been reported that Fiji’s sugar industry is very much unstable and is already at the point of danger without the support of foreign investors. The major reason that makes Fiji’s foreign investment very low is due to its corruption and red tape. According to Fiji’s armed forces chief Commodore Franl Bainimarama, it is necessary to reassure all foreign investments to have full confidence in doing business in Fiji in order to accelerate the pace of its economic activities.8 For this reason, the government of Fiji seriously needs to clean up the red tape and corruption in order to encourage European Union to continue extending its financial aid to Fiji’s sugar cane industry. On the other hand, the country’s tourism has decreased by up to 80 percent during the last quarter of the same year. The country’s economic recession, poor public security as well as the negative publicity related to corruption are some of the main causes of the sudden fall in Fiji’s tourism. In fact, a high level of criminal acts within a society is a sign of an unstable society. In other words, there is a domino effect in the practice of corruption. A country that practice corruption often leads to losing a lot of business opportunities coming from foreign investors. As a result, the country is deprived of job opportunity for its people. It is expected that a country with a high unemployment rate often experience high cases of crime related activities. It is the news reports concerning the Poor public security in Fiji that causes a huge decline in its tourism. Papua New Guinea headed by Corrupt Prime Minister Papua New Guinea, one of the Pacific Island countries, has been very much controlled by a very known corrupt Prime Minister Somare also known as ‘the chief’.9 Since the country is being ruled by ‘the chief’ who have been facing a lot of social challenges including criminal activities and corruption; it is expected that many or almost all the members of the government officials are also involved in a lot of corruption. In October 2003, particularly in the National Capital District Commission of Papua New Guinea, a staff member of the Inter-Government Relations Minister Sir Peter Barter has been very much involved in bribery, abuse of the office power, as well as in an outright theft.10 Tracing financial transactions based on cheques, cheque requisitions as well as some computer printouts of false claim payees, it was reported that Sir Barter is behind abusing millions of dollars of public funds. Another similar abuse of the public fund and charges was reported concerning Peti Lafanama – the Eastern Highlands Governor who happens to misuse a sum of five thousand dollars that came from the Gaming Board revenues.11 Aside from abusing public funds, Papua New Guinea’s electoral commissioner Reuben Kaiulo has also recently faced an allegation for misconduct in the public office. It has been reported that Kaiulo have personally benefited from selling of excess stationery supplies to a family-owned company between the years 1997 and 1999.12 Concept of Nepotism Favouritism, nepotism, or clientelism is basically referring to the act of abusing discretion or authoritative power for the interests of other people who are close to officials in the government or civil service. Therefore, nepotism is not the actual act of corruption but is one of the major factors that could lead to corruption. The Effect of Nepotism in a Country’s Equality and the Practice of Corruption Fiji is a very good example wherein nepotism and favouritism has been very evident in the country’s Public Service Commission during the term of Rabuka government.13 It is said that the 1990 Constitution in Fiji were made only in favour of the indigenous Fijians in the sense that only the indigenous Fijians were qualified for the top government positions without considering their qualifications. In this example, it is very clear that nepotism could result to so much inequality among the basic human rights of the local citizens. Considering that Fiji’s 1990 Constitution simply disqualify those who are highly competitive individuals for the top government position due to racial discrimination, the said government policy is also preventing the opportunity for those highly qualified individuals to improve the political and economic activities within the country. Since quite a number of Fiji’s top government officials are not even qualified to take the top government positions, the people’s and investors’ could easily lose self-confidence in the capabilities of the government officials in handling serious challenges related to politics and economics. It is also highly possible for the government and civil service officials who strongly practice nepotism to be engaged with money laundering activities for the sake of other people who would request for their assistance. Based on historical report, other Pacific Island countries that are very much known for tax scam and money laundering such as Nauru can be found in Cook Islands.6 Conclusion Corruption in Pacific Island countries significantly plays a crucial role in the impediment of each country’s political and economic development. This study enables us to have a better idea about the adverse effects of corruption and other related activities in the growth and development of a nation’s economy by simply observing each different type of corruption that have been heavily exposed within the some of the Pacific Island countries over the past few years. In general, a country with good governance is a country that is free from the practice of corruption, nepotism and political inequalities. The practice of corruption, nepotism and political inequalities as we have discussed in the case of the Solomon Island, Fiji, and Papua New Guinea generally reflects the immoral character of the politicians and the officers in civil service within each particular country. For this reason, the public is losing their confidence on politicians and officers of civil service who belongs to a country that is known for the practice of corruption, nepotism, and political as well as economic inefficiency. Even though corruption or doing illicit and unethical business acts could temporarily improve the economic rates of return and benefit a few individuals; such actions would eventually generate a bigger opportunity lost as well as a higher economic costs more than its benefits. According to Robert Klitgaard (1988), the problem with corruption in developing countries is the fact that it could generate a lot of negative externalities that could degrade the overall performance of the system as a whole.14 In the end, a county’s economy has to compromise its long-term dynamic efficiency over the few corrupt officials of the government and civil service. In line with this matter, studies have shown that the practice of corruption would eventually devaluate the currency of their money causing the government and its local citizens to pay 20 to 100 percent more for goods and services.15, 16, 17, 18 *** End *** Definition of Terms: Abuse of Discretion – involves an abuse of discretion that is vested in a person for the purpose of a personal gain. Active Corruption – refers to the action of offering or paying out bribe. Bribery – refers to giving money to influence the outcome of an action or decision. Embezzlement and Theft – refers to the act of taking property by entrusted individuals. Extortion – refers to the use of coercion such as threat to induce cooperation. Favouritism, Nepotism, and Clientelism – the act of abusing discretion for the interests of other people who are close to them. i.e. family, tribe, political party, or other group. Fraud – refers to the use of false and misleading information to induce the owner of the property to surrender the property voluntarily. Grand Corruption – corruption that passes through the highest level of a nation’s government. Improper Political Contribution – i.e. failure to practice transparency in taxation, etc. Passive Corruption – refers to having received a bribe. Petty Corruption – involves the exchange of small amount money in exchange for a small favour such as service. Source: UNODC.org References: 1 ‘You Can Stop Corruption’ Summary extracted from the UNODC website and the Global Programme against Corruption’s Anti-Corruption Toolkit. < http://www.unodc.org/ > 2 Heidenheimer, AJ. and Johnston, M. (2002) ‘Political Corruption: Concepts and Contexts’ 3rd Ed. London: Transaction Publishers, 2002. 3 Nye, J. (1967) ‘Corruption and Political Development: A Cost-Benefit Analysis’ American Political Science Review. 61(2):417 – 427. 4 Thompson, D.F. (1995) ‘Ethics in Congress: From Individual to Institutional Corruption’ Washington, DC: Brookings. p. 7 and 195. 5 Barry, G. (1996) ‘Solomon Island Forest Crisis: Unofficial Transcript Background Briefing Radio National Australian Broadcasting Corporation’ January 14, 1996. < http://nativenet.uthscsa.edu/ > 6 Campbell, I.C. (2005) ‘The Quest for Constitutional Reform in Tonga’ The Journal of Pacific History. June 2005. Vol. 40, No. 1:1 – 14. 7 Aid News (2003) ‘Nine Out of Ten Developing Countries Urgently Need Practical Support to Fight Corruption, Highlights New Index’ < http://www.news.vu/ > 8 International Herald Tribune (2006) ‘Fiji Sugar Industry Says it Faces Collapse if EU Cancels Aid Package’ December 12, 2006 < http://www.iht.com/ > 9 BBC News (2007) ‘Leaders’ August 15, 2007 < http://news.bbc.co.uk/ > 10 Tomlinson, S. (2004) ‘Papua New Guinea Orders Bribery, Corruption Probe’ BBC Monitoring Service. February 6, 2004. < http://www.fordham.edu/ > 11 Balakrishnan, A. (2001) ‘Ombudsman Commission Hauls Up Yet Another MP for Misappropriation of Funds’ ABC Online. September 26, 2001. < http://www.fordham.edu/ > 12 Tomlinson, S. (2003) ‘PNG Electoral Chief to Face Corruption Inquiry’ ABC Net. February 6, 2003. < http://www.fordham.edu/ > 13 Radio New Zealand International (2004) ‘Fiji Public Service Accused of Nepotism and Corruption under Rabuka Government’ Sept 14, 2004. < http://www.rnzi.com/ > 14 Klitgaard, R. (1988) ‘Controlling Corruption’ Berkeley and Los Angeles: University of California Press. p. 32. 15 Klitgaard, R. (1988) ‘Controlling Corruption’ Berkeley and Los Angeles: University of California Press. p. 39 – 40. 16 Wade, R. (1982) ‘The System of Administrative and Political Corruption: Canal Irrigation in India’ Journal of Development Studies. 18(April):287 – 328 17 Gray, Clive (1979) ‘Civil Service Compensation in Indonesia’ Bulletin of Indonesian Economic Studies. 15(March):85 – 113. 18 Nakata, Thinapan (1978) ‘The Corruption in the Thai Bureaucracy: Who Gets What, How and Why in Its Public Expenditures’ Thai Journal of Public Administration. 18(January): 102 – 128. Read More