The Rector's Lecture (1)

"Why corruption is a problem?" Laluna conveyed a topic after reciting Basmalah and Salaam. "Corruption impacts upon individuals, groups and organizations—including the state—in numerous ways, "she continued, "While many of its negative effects are obvious, others are less so. In the real world, the impact of particular acts of corruption is often on several areas simultaneously, among others: society, environmental, economic, politico-legal, security-related, and international implications."

"And one night," says Laluna, "My light was focused on a campus located in the southernmost part of Suvarnabhumi. All eyes were on a Rector who was giving his lecture. He said, "There are so many ways in which corruption can negatively impact on society. Corruption tends to create a greater sense of ‘us’ and ‘them’ in society, both vertically and horizontally. The gap between elites and the public is often wider than necessary because corrupt officials are perceived to be creaming off a country’s wealth at the expense of ordinary citizens—i.e. a vertical divide. At the same time, corruption can increase divisions between citizens themselves—horizontal divide, as those unwilling or unable to pay bribes to obtain what they need become resentful of those who can and do.

A related fact is that corruption can increase inequality. While many citizens will tolerate reasonably high levels of inequality if this appears to be based on merit, they will resent it if based more on personal connections and bribery to obtain prestigious jobs and promotions. The problem is exacerbated if growing inequality is accompanied by higher levels of poverty, which is often the case.

If corruption means increased distrust of the state and its officers, there can be a widespread ‘return to the family’ and increased attachment to kinship. A potentially negative effect of this is that enhanced identification with ‘kith and kin’ can result in reduced social capital and growing estrangement between groups in society, which can lead to ethnic conflict.

High levels of corruption and the consequent low levels of trust in the state can increase the sense of insecurity in society. For example, if citizens do not trust their law enforcement officers because of the latters’ corruption, they will be less willing to report crimes to the authorities and to cooperate with those authorities; this typically leads to higher crime rates, and hence a greater sense of insecurity among the general public.

Officials themselves can feel more insecure because of corruption. If the political elite decides to clamp down heavily on corruption, even honest officials may be concerned that actions not currently seen as corrupt may in the future be classified as such, with the concomitant penalties; this can lead them to hesitate in fulfilling their normal and proper duties, or even to refuse altogether to perform them. In an ideal rule-of-law state, in which no legislation is ever retrospective, this problem would not arise; but few states nowadays, even in the West, adhere strictly to the notion of no retroactive laws.

Corruption can also endanger lives. This assumes various forms, one of which relates to flooding. Among the many advantages trees have is that they can bind soil; but in some countries, corrupt officials have on occasions turned a blind eye to the logging of trees along riverbanks in return for bribes. This has sometimes resulted in riverbanks collapsing following heavy rains, with the destruction of thousands of properties built at the water’s edge, and many lives lost in the floods.

The reporting of corruption can also have a negative effect on the public, since it can increase a general sense of disappointment, even despair. Finding the optimal amount and type of reporting is difficult, however; to cite a truism, ‘bad news is good news’ for the media, and few can restrain themselves from reporting as many scandals as they can, whether or not allegations have been thoroughly investigated. Irresponsible reporting of corruption can make people suspicious of the ‘watchdog’ role of the media, which has negative implications for the development of civil society.

Arguably the greatest long-term issue facing humanity is the environment. Unfortunately, corruption generally compounds the already existing problems in this area.According to the United Nations Office on Drugs and Crime (UNODC), environment-related corruption includes, 'Such practices (as) embezzlement during the implementation of environmental programmes, grand corruption in the issuance of permits and licenses for natural resources exploitation, and petty bribery of law enforcers.' The UNODC has also identified sectors most at risk: they include forestry, oil exploitation, the trafficking of endangered species, and hazardous waste management.

The most researched and reported aspect of the impact of corruption is the economic. In an oft-cited analysis published in the mid-1990s, economist Paolo Mauro argued against those who had in the 1960s claimed that corruption—for instance, in the form of facilitation payments or ‘speed money’ to state bureaucrats to accelerate the issuance of permits—could actually increase economic growth rates. On the basis of a considerable amount of data, he compared growth rates with subjective assessments of the level of corruption in various countries, and concluded that corruption discouraged investment, which in turn decreased growth rates. While some have challenged this argument, the majority view is that Mauro was basically correct. For instance, in an article published in 2000, Shang-Jin Wei argued that foreign direct investment (FDI) is lower in countries with higher rates of corruption, as potential investors are deterred by it.

Perceptions of high levels of corruption in a given country can render it either difficult or impossible for that country to be admitted to international ‘clubs’—notably the EU—that it is hoping to join precisely because it sees substantial potential economic benefits in such membership. Even once in such supra-national groupings, perceived high levels of corruption can have serious economic repercussions: Bulgaria, Romania, and Czechia are three relatively new members of the EU (the first two since 2007, the third since 2004) that have suffered major funding cuts from the EU since joining precisely because of the latter’s concerns about their corruption levels. In addition, both Bulgaria and Romania were blocked in their attempts to join the Schengen zone (an area comprising twenty-six European countries, between which there are no border controls) because some West European EU member-states—notably Germany and the Netherlands—were concerned that these South-East European countries had excessively porous frontiers with their non-EU neighbours, largely because of high levels of corruption among border guards and customs officers.

A serious economic problem the EU itself has experienced has been partly blamed on corruption. A 2012 TI report entitled Money, Politics, Power—Corruption Risks in Europe identified corruption in several EU states (with Greece being seen as a major culprit) as a significant factor in the emergence of the Eurozone crisis that erupted in 2010.

Corruption leads to decreased revenue to the state, as corrupt officials exempt citizens and firms from fines, taxes, etc. in return for bribes. In the EU’s first ever anti-corruption report, published in February 2014, it was claimed that corruption costs EU states collectively some 120 billion Euros a year. This was a rather similar amount to the sum (US$150 billion) the African Union estimated in 2002 was lost each year to corruption among its fifty-three member states—though the EU figure, while substantial, did not account for approximately one quarter of the total GDP of the region as the sub-Saharan African one did.

Several states, mostly transition ones, have in recent years introduced flat-rate income and corporate tax systems, often precisely to reduce the risk of lost state revenue. The rationale is that progressive tax systems involve more discretionary decision-making by tax officials, and hence provide more corruption opportunities, than flat-rate systems; both individuals and companies can declare lower income in progressive tax systems than they actually receive, so as to be taxed in a lower tax bracket (i.e. a form of tax evasion). Unfortunately, flat-rate systems are not watertight either, since individuals and firms can still collude with corrupt officials to report less taxable income than they should, thus depriving the state of legitimate revenue.

Corruption can result in reduced economic competition, as corrupt officials favour firms that pay them bribes—for example, to give them unfair preferential treatment in acquiring factories that a state is privatizing, or to secure contracts from the state. Reduced competition typically leads to higher prices and costs, as well as less choice, all of which are detrimental to both consumers and the state itself.

A factor with potentially serious negative economic ramifications for the development and well-being of a country is that social corruption (nepotism, cronyism, etc.) can discourage honest, well-qualified people, who become frustrated at not securing good positions or being promoted. Some simply stop working hard and using their initiative, while others emigrate to a less corrupt and more meritocratic country. Corruption can thus encourage a brain drain, depriving society of the people best suited to run the country and its economy. This phenomenon, sometimes called human capital flight, has been a particularly acute problem for countries such as Iran.

But conventional capital flight is also a corruption-related problem. Shortly after becoming President of Russia for the first time, in July 2000, Vladimir Putin convened a meeting of many of Russia’s wealthiest individuals, the so-called oligarchs, at which he informed them that he would not scrutinize the origins of their fortunes as long as they abided by four rules; one was that they repatriate the considerable sums they had sent overseas. While it is a moot point whether or not most oligarchs should be labelled corrupt, the meeting is noteworthy for clearly revealing the senior leadership’s concern about capital flight. This has been a problem for many other states in recent years, and corrupt officials at all levels, including the highest, are a major source of the problem.

It is not only the public and the state that can suffer economically from corruption. Corporations that bribe officials to secure contracts are sometimes exposed, with serious negative consequences. In 2013, the Independent Commission Against Corruption (ICAC) in the Australian state of New South Wales (NSW) deemed certain mining licences in the Hunter Valley to have been corruptly acquired. In light of this, the NSW government announced in January 2014 that the licences were being revoked.

[Part 2]

Bahasa