Corruption in Contemporary Politics

Corruption in Contemporary Politics Edited by Martin J. Bull and James L. Newell

Corruption in Contemporary Politics

Also by Martin J. Bull ITALIAN POLITICS: The Return of Berlusconi (co-editor with Paulo Bellucci)

Also by James L. Newell PARTIES AND DEMOCRACY IN ITALY THE ITALIAN GENERAL ELECTION OF 2001

Corruption in Contemporary Politics Edited by

Martin J. Bull Professor of Politics University of Salford, UK and Visiting Fellow, European University Institute, Florence

and

James L. Newell Senior Lecturer in Politics, University of Salford, UK

Editorial matter, selection and Chapters 1, 4 and 18 © Martin J. Bull and James L. Newell 2003 Chapters 2–3, 5–17 © Palgrave Macmillan Ltd 2003 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2003 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 0–333–80298–5 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Corruption in contemporary politics/edited by Martin J. Bull and James L. Newell. p. cm. Includes bibliographical references and index. ISBN 0–333–80298–5 1. Political corruption. 2. Democracy. 3. Comparative government. I. Bull, Martin J. II. Newell, James. JF1081.C6734 2003 364.1⬘323—dc21 10 12

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Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham and Eastbourne

Contents List of Tables and Figures

x

List of Contributors

xi

List of Abbreviations 1

Introduction James L. Newell and Martin J. Bull

Part I 2

3

4

xiii 1

‘Quite Corrupt’ Countries

Political Corruption in Spain Fernando Jiménez and Miguel Caínzos Newness, scale and varieties of corruption Causes and peculiarities of political corruption in Spain Anti-corruption laws and campaigns, remedies and solutions Impact of political corruption and exposure of political corruption Conclusion Political Corruption in Greece Kleomenis S. Koutsoukis Newness, varieties and scale of corruption Causes and dynamics of corruption: from socialism to liberalism and vice versa Anti-corruption laws and campaigns, remedies and solutions Party financing and allegations of corruption Impact and exposure of political corruption Conclusion Political Corruption in Italy James L. Newell and Martin J. Bull Newness, scale and varieties of corruption Causes of corruption Dynamics of corruption Anti-corruption laws and campaigns, remedies and solutions Impact of political corruption and exposure of political corruption Conclusion

v

7 9 10 15 19 20 21 24 25 27 30 31 33 34 37 37 39 42 44 46 48

vi

Contents

Part II 5

6

7

8

9

‘Somewhat Corrupt’ Countries

51

Political Corruption in Germany Joanna McKay Newness, scale and variety of corruption Causes of corruption Dynamics of corruption Anti-corruption measures Impact of political corruption and exposure of political corruption Conclusion

53

Political Corruption in the United States Robert Williams Newness, scale and varieties of corruption Causes and dynamics of corruption Anti-corruption laws and campaigns, remedies and solutions Impact of political corruption and exposure of political corruption Conclusion Political Corruption in France Jocelyn A.J. Evans Political corruption: the historical context Causes and dynamics of corruption Anti-corruption laws and campaigns, remedies and solutions Impact and exposure of political corruption Conclusion Political Corruption in Belgium Lieven De Winter Newness, scale and varieties of corruption Causes of corruption Anti-corruption laws and campaigns, remedies and solutions Impact of corruption and exposure of corruption Conclusion Political Corruption in Japan Albrecht Rothacher Corruption as an endemic feature of Japanese politics Causes and dynamics of political corruption Impact: anti-corruption measures, exposure and scandal The role of organized crime Conclusion: a decade of purges, but business as usual

54 55 58 60 62 64 66 66 67 70 75 77 79 80 81 87 88 90 93 94 96 101 103 104 106 106 107 110 116 117

Contents vii

10

Political Corruption in Portugal José M. Magone The difficult establishment of democratic governance in Portugal Causes of corruption: the persistence of patrimonialism in a context of democratic consolidation The dynamics of corruption: the patrimonial labyrinth revisited Anti-corruption laws and campaigns, remedies and solutions: new laws, but weak control Impact of political corruption and exposure of political corruption Conclusion

Part III 11

12

13

‘Least Corrupt’ Countries

Political Corruption in Sweden Staffan Andersson Newness, scale and varieties of corruption Dynamics of corruption: the danger zones and types of corruption Anti-corruption laws and campaigns, remedies and solutions Impact of political corruption and exposure of political corruption Causes of corruption Conclusion Political Corruption in The Netherlands Petrus C. van Duyne, Leo W.J.C. Huberts and J. Hans J. van den Heuvel Newness, scale and varieties of corruption Causes of corruption Dynamics of corruption: the leadership disease Anti-corruption laws and campaigns, remedies and solutions Impact of political corruption scandals Conclusion Political Corruption in Ireland Neil Collins and Mary O’Shea Newness, scale and varieties of corruption Causes of corruption Dynamics of corruption Anti-corruption laws and campaigns, remedies and solutions Impact of political corruption and exposure of political corruption Conclusion

120

121 122 124 129 129 130

133 135 136 138 140 142 143 145 149 149 150 152 155 160 161 164 164 166 169 172 173 176

viii Contents

14

Political Corruption in the United Kingdom Alan Doig Historical roots of political corruption in Britain The 1970s – corruption interlude or corruption evolution? Old habits, new contexts: the significance of Thatcherism and new public management Members of Parliament: the self-regulation of corruption Nolan: sleaze and standards Standards in perspective – controlling corruption Conclusion: corruption, control and complacency

178 179 180 181 182 186 188 189

Part IV Comparative, Supra-National and International Perspectives

191

15

193

16

17

Political corruption in Central and Eastern Europe Leslie Holmes Newness, scale and varieties of corruption Causes of corruption Dynamics of corruption Anti-corruption laws and campaigns, remedies and solutions Impact of political corruption and exposure of political corruption Conclusion International Corruption Jens Christopher Andvig Anti-corruption: the Foreign Corrupt Practices Act (FCPA) The economic and political consequences of FCPA Why the regulation of international corruption has become ‘fashionable’ Recent efforts to contain international corruption by the OECD Global trends in international and global corruption International openness, corruption and trade Corruption at the political level Conclusion Political Corruption in the European Union David Nelken EU fraud and its control The link with corruption: defining the problem Official, unofficial and anti-official accounts The future of EU fraud

194 196 199 201 203 204 207 208 209 211 212 213 215 216 217 220 221 222 224 232

Contents ix

18

Conclusion: Political Corruption in Contemporary Democracies Martin J. Bull and James L. Newell Newness, scale and varieties of corruption Causes of corruption Dynamics of corruption Anti-corruption laws and campaigns, remedies and solutions Impact of corruption and exposure of corruption Conclusion

234 234 236 240 241 242 244

References

248

Index

263

List of Tables and Figures Tables 2.1

2.2 2.3 2.4 2.5 2.6 3.1 3.2 11.1 11.2 11.3 11.4 11.5 12.1 12.2

12.3 17.1

Headlines concerning political scandals and corruption appearing on the front pages of Madrid-based newspapers, 1990–94 Recent events and news items attracting public attention Citizens’ perceptions of the extent of corruption among public officials The main problems confronting Spain Distribution of public spending by administrative sectors Degree of agreement with possible causes of corruption in Spain Public servants convicted of corruption, 1959–94 References to corruption and scandals appearing in headlines in the Athens press, 1986–97 Legally and normatively defined corruption Types of corruption Numbers of persons found guilty of criminal offences by principal offence Confidence in local government politicians and public servants in 1996 (balance measures) Acceptability of bribe-taking Public corruption and fraud in The Netherlands Expert panel views on the causes of public corruption and fraud (% of Dutch respondents who consider the causes important or very important) The ‘National Integrity System’ and The Netherlands European Agricultural Guidance and Gurantee Fund (EAGG) irregularities in 1998 (selected countries)

10 11 12 13 16 17 26 29 136 136 137 143 145 150

151 159 225

Figures 2.1 2.2 7.1 13.1 13.2

Corruption Perception Index scores for Spain, 1980–2000 Problems and objectives of Spanish society Levels of political interest among the French electorate The Tribunals Recent anti-corruption legislation

x

9 14 88 165 175

List of Contributors Staffan Andersson is a Doctoral student in the Department of Political Science, Umeå University, Sweden. Jens Christopher Andvig is Senior Researcher, Norwegian Institute of International Affairs. Martin J. Bull is Professor of Politics at the University of Salford and Visiting Fellow in the Department of Political and Social Sciences, European University Institute, Florence. Miguel Caínzos is Associate Professor of Sociology at the University of Santiago de Compostela. Neil Collins is Professor and Head of Department in the Department of Government at University College, Cork. Lieven de Winter is Professor of Politics at the Université Catholique de Louvain and part-time lecturer at the Katholieke Universiteit Brussel. Alan Doig is Professor of Public Services Management, Teesside Business School, University of Teesside. Jocelyn A.J. Evans is Lecturer in Politics at the University of Salford. J. Hans J. van den Heuvel is Professor of Policy Sciences in the Department of Public Administration and Communication Sciences at the Vrije Universiteit, Amsterdam. Leslie Holmes is Professor of Political Science at the University of Melbourne, Australia. Leo W.J.C. Huberts is Professor of Police Studies and Criminal Justice in the Department of Public Administration and Communication Sciences at the Vrije Universiteit Amsterdam. Fernando Jiménez is Associate Professor of Political Science at the University of Santiago de Compostela. Kleomenis S. Koutsoukis is Professor of Political Science and Director of the Centre for Political Research at Panteion University, Athens. xi

xii List of Contributors

José M. Magone is Senior Lecturer in European Politics, Department of Politics and International Studies, University of Hull. Joanna McKay is Senior Lecturer in Politics at the Nottingham Trent University. David Nelken is Distinguished Professor of Legal Institutions and Social Change at the University of Macerata, Italy; Distinguished Research Professor of Law at the University of Wales, Cardiff; and a Visiting Professor of Law at the London School of Economics. James L. Newell is Senior Lecturer in Politics and Contemporary History at the University of Salford. Mary O’Shea is Lecturer in Irish politics in the Department of Government at University College, Cork. Albrecht Rothacher is Director for Public Affairs at the Asia Europe Foundation, Singapore. Petrus van Duyne is Professor of Empirical Penal Science at the University of Tilburg. Robert Williams is Professor of Politics at the University of Durham.

List of Abbreviations AACC AIB AIMA BSE CAP CDU CEE CEVIPOF–CRAPS CGTP-In CIDSP CIME CIS CIRES CGPJ CPI CSU DC DCCCFIEF DIRT DPJ DTI ECU EAGG EIMA EU FBI FCPA FDI FDP FECA FN GDP GDR GNP IGA IMF

High Authority Against Corruption (Portugal) Allied Irish Bank Ministry of Agriculture Intervention Agency (Italy) Bovine Spongiform Encephalopathy Common Agricultural Policy Christian Democratic Union (Germany) Central and Eastern Europe Centre for the Study of French Politics–Centre for Research into Administration, Politics and Society General Confederation of Portuguese Workers Centre for Electronic Archiving (France) Committee on International Investment and Multinational Enterprises (OECD) Centre for Sociological Analysis (Spain) Centre for Social Analysis (Spain) General Council of the Judicial Authority (Spain) Corruption Perceptions Index Christian Social Union (Germany) Christian Democratic Party (Italy) Directorate for the Fight Against Corruption, Fraud, and Economic and Financial Infringements (Portugal) Deposit Interest Retention Tax (Ireland) Democratic Party (Japan) Department of Trade and Industry (UK) European Currency Unit European Agricultural Guidance and Guarantee Fund (EU) Ministry of Agriculture Intervention Bureau (Italy) European Union Federal Bureau of Investigation (US) Foreign Corrupt Practices Act (US) foreign direct investment Free Democratic Party (Germany) Federal Election Campaign Act (US) National Front (France) gross domestic product German Democratic Republic gross national product Ian Greer Associates (UK) International Monetary Fund xiii

xiv List of Abbreviations

JSP LDP LP MITI MNEF MOF NATO NDPBs NTT OAS OECD OLAF PAC PASOK PAYE PDS PDS PCI PP PR PSI PSOE RPF RPR SPD TD TI UCLAF UGT VAT VRIND VVD WTO

Japanese Socialist Party Liberal Democrats (Japan) Liberal Party (Japan) Ministry of International Trade and Industry (Japan) National Association of French Students Ministry of Finance (Japan) North Atlantic Treaty Organization non-department public bodies (UK) Nippon Telegraph and Telephone Corporation (Japan) Organization of American States Organization for Economic Co-operation and Development European Anti-fraud Office (EU) Public Accounts Committee (UK) Pan-Hellenic Socialist Movement (Greece) Pay-as-You-Earn (UK) Democratic Party of the Left (Italy) Party of Democratic Socialism (Germany) Italian Communist Party People’s Party (Spain) proportional representation Italian Socialist Party Spanish Socialist Worker’s Party Rally for France Rally for the Republic (France) Social Democratic Party (Germany) Deputy to the Dáil (Ireland) Transparency International Coordination of Fraud Prevention Unit (EU) General Workers’ Union (Portugal) Value Added Tax Flemish Regional Indicators (Belgium) Party for Freedom and Democracy (The Netherlands) World Trade Organization

1 Introduction James L. Newell and Martin J. Bull

This is a book about political corruption, one whose writing has been stimulated essentially by the apparent growth in the phenomenon over the past decade. Prior to the 1990s, political scientists had tended to think of corruption as something largely confined to the developing countries, where economic hardship means that norms of ‘due process’ tend to be less deeply rooted than they are in the wealthier liberal democracies. This is not to say that the latter countries were viewed as being entirely free of corruption – far from it. But when cases were exposed, the intensity of the scandals tending to result was seen as evidence that due process norms provided a guarantee of the low tolerance thresholds necessary to ensure that the phenomenon would remain incidental and sporadic. From the late 1980s, political scientists were forced to abandon this cosy assumption. Felipe González in Spain; Neil Hamilton in Britain; Bettino Craxi in Italy; Helmut Kohl in Germany; Edith Cresson of the European Commission: these were only some of the most well-known politicians caught up in a wave of scandals that seemed to touch an ever-increasing number of democratic countries and institutions as the subsequent decade progressed. Far from viewing corruption as necessarily incidental in the liberal democracies, political scientists were now forced to consider whether democratic arrangements might not actually harbour institutions whose functioning itself tended to stimulate corruption. Among these institutions, the political party seemed to be an obvious candidate. After all, parties are not public, but private institutions – meaning that their continued existence is not guaranteed by the state, but is wholly contingent on the ability of their staff to acquire the necessary financial resources. But citizens can only be expected to fund parties to the degree that they perceive their activities as making some relevant difference to them. Therefore, since parties are formed for the purpose of competing for public office, the risk that they will exploit incumbency, exchanging favouritism in public decisions for the resources necessary to keep them in being, is something that is inherent in their very existence. 1

2

Introduction

With this awareness, however, political scientists were immediately confronted with the problem of how to define the phenomenon whose causes they sought to understand. After all, what it is that separates the political donation made by a Company to a party in the hope that it will result in business-friendly legislation, from the payment made for help in obtaining a licence to which one is not entitled, is not immediately obvious. True, the former may be perfectly legal; the latter will probably not be. But using legality as a defining criterion of corruption makes the concept useless for the purposes of cross-national comparison. As Williams has noted, ‘in the British House of Commons, MPs routinely employ their spouses as secretaries and researchers at the taxpayers’ expense. In the United States this would be corrupt but, in the UK, it is seen as a perfectly proper, practical and convenient arrangement, at least by MPs themselves’.1 Unfortunately, most other solutions that have been proposed to deal with the definitional issue come up against similar problems. Proposed solutions seem to fall into one or other of three categories. First, there are the approaches (such as the ones taken by Morris (1991) or by Rogow and Lasswell (1970)) that see corruption as being tied to acts that in some way violate the ‘public interest’ or infringe the ‘common good’. The obvious problem with these approaches is their dependence on the values of the researcher. Who is to say what the ‘common good’ is? It is even possible to argue that corruption may sometimes actually promote the ‘common good’ – as teleological functionalists have occasionally maintained, taking their point of departure from Durkheim’s (1938: 67) argument that deviance ‘is a factor in public health, an integral part of all healthy societies’ because the emotional reaction against it serves to reinforce the norms it challenges.2 Given such difficulties, a second group of writers tie the phenomenon to infringement of the values not of the researcher, but of the society in which the presumed corruption takes place. In this category belongs Heidenheimer’s famous distinction (in Heidenheimer et al., 1989) between ‘white’, ‘grey’ and ‘black’ corruption according to whether the acts in question are regarded as corrupt by elites, masses, both or neither. While overcoming the excessive narrowness of approaches that tie the phenomenon to the infringement of legal norms, works in this second category share the same basic problem: norms and values vary between societies, so once again, one is forced to conclude that acts that are corrupt in one society may not be so in another. Consequently, a third approach is one that takes its inspiration from principal–agent models. Here, ‘political corruption’ is seen as the violation of a contract (usually involving the delegation of responsibility and the exercise of some discretionary power) by an agent who, against the interests or preferences of the principal, acts in favour of a third party from whom he receives a reward, and where the principal is the state or the citizenry (della Porta and Vannucci, 1997: 231–2). This definition arguably has the virtue of allowing the comparison of specific acts across countries regardless of

Introduction 3

differences in the predominant legal or societal norms that characterize them. It also allows one to distinguish corruption from seemingly similar abuses such as fraud and embezzlement. Implicitly, it tends to be the definition that informs most of the contributions to this volume. On the other hand, it could be argued that it only apparently solves the comparability problem for it remains for the principal to decide what is to be permitted and what not (Bull and Newell, 1997: 173). For this reason, and because ultimately there appears to have been no definition advanced so far that is without any weaknesses, as editors we have chosen to leave contributors free to work with those understandings of the term that they think are most suitable for their areas of study – rather than tie them down to one definition. We believe that this flexible approach will (even if resulting comparisons may be slightly more difficult) be more useful to the student than one that is dogmatic and exclusionary. The chapters that follow consist of 13 country chapters, one comparative chapter on central and eastern Europe, one international chapter, one chapter on the European Union (EU) and a conclusion. In order to enhance the comparability of corruption, most chapters seek to cover (even if not always in an identical format) certain common topics, including: ●

●

●

●

●

Newness, scale and varieties of corruption. To what extent has the phenomenon grown in recent years? What is its perceived scale? To what extent has the nature and variety of corruption changed? Causes of corruption. What is the relevance of potential common conditions (such as the financing of parties, institutional change, restructuring of the economy, changes in values and public morality) as well as causes that appear to be distinctive to the country under study? Dynamics of corruption. Who are the main practitioners? What are the resources they wield? What are the ‘secret exchanges’ based on? Anti-corruption laws and campaigns, remedies and solutions. To what extent have there been legal and political attempts to thwart the practice and growth of political corruption? To what extent have they been successful and corruption been exposed? Impact of political corruption and exposure of political corruption. What has been the impact of political corruption on the functioning of the political system, and what has been the impact of the exposure of corruption on parties and the political system?

There are, of course, huge obstacles in the way of answering most of the above questions with certainty. Such obstacles arise from the fact that, though inadequate as a criterion for defining corruption, illegality does nevertheless tend to be a de facto characteristic of the kinds of acts most observers would regard as corrupt – at least in the countries examined in this volume. And of course the fact that corruption is illegal makes it extraordinarily difficult to measure. One can only get access to known cases, such as

4

Introduction

those that have come to the attention of the judicial authorities or those that are reported in the press. Yet movements up or down in either of these indicators may reflect, not increases or decreases in the underlying phenomenon, but changes in legal norms; changes in the likelihood that, once discovered by someone, given acts are brought to official notice; changes in the reporting practices of the press – and so forth. A number of contributors to this volume have chosen to deal with the measurement problem by making use of Transparency International’s (TI’s) Corruption Perceptions Index. TI is an international non-governmental organization based in Berlin, whose aim is to counter corruption in international business transactions by broadening awareness of the damage caused by the phenomenon and encouraging governments to adopt anticorruption measures (Lancaster and Montinola, 1997: 195). One of the ways in which TI seeks to do this is by publishing, on an annual basis, a Corruption Index purporting to show levels of corruption in large numbers of countries. The index is compiled by combining the results of multiple surveys of business people, academics and financial analysts who are asked to rank countries according to how corrupt they perceive them to be. The resulting index ranges from zero to ten where the closer to ten a country’s score is, the ‘cleaner’ it is presumed to be.3 Few would want to argue that the TI index comes close to extinguishing the problems involved in corruption’s measurement. Indeed one might even go as far as to suggest that the index is not a solution to the problem of empirical measurement at all but a substitute, one that (to echo a point made in the chapter by van Duyne et al.) involves replacing measurement attempts by opinions, which may reflect shared feelings and beliefs as well as knowledge of facts. In view of all these difficulties, students might well understandably conclude that the study of political corruption is a forlorn enterprise and that their intellectual resources are better invested elsewhere. We would disagree. The assertions one can make about political corruption will not be ones that can be made with the same degree of confidence as those that can be made about many (and perhaps most) other forms of human behaviour. But the tentativeness with which hypotheses must be advanced is not a good reason for abandoning the search for them altogether. And in the case of political corruption, indeed, a compelling case can be made that the resources devoted to its understanding should, if anything, be increased. For political corruption is a serious matter. First, as we have written elsewhere (Bull and Newell, 1997), it involves the suspension of normatively defined criteria for the allocation of resources, in favour of an allocation mechanism – market exchanges – whose distributive consequences in turn depend on the arbitrary and unequal distribution of money and other resources. In other words, it results in an arbitrary and unequal distribution of precisely those resources – planning permission,

Introduction 5

licences and permits, public works contracts and so forth – whose distribution, by common consent, should rather be governed by non-arbitrary considerations and considerations of equality. Secondly, by undermining the principle of equality, corruption is by that token subversive of regimes called liberal democratic, whose authority rests precisely on the claim that they are successful in ensuring, through the franchise and political accountability, that every member of the electorate can have a say in public decisions – which are therefore made to conform to the wishes of the electorate as a whole. Corrupt exchanges entail the replacement of these wishes by considerations of private gain as the determining factors in the making of public decisions, thus undermining the very rationale for liberal democracy in the first place, and with it the trust and confidence of citizens in public institutions. Thirdly, corruption creates a large number of far more immediate-term and tangible costs. These include the waste of tax-payers’ money involved in the efforts of contractors to recoup, through the inflated bills they present, the cost of bribes they have had to pay to obtain public works contracts. Yet another example is the perpetuation of the administrative inefficiency that forms the basis for demanding bribes in exchange for the application of special, ‘fast-track’ procedures. Fourthly, there is, built into corruption, a significant self-generating mechanism, so that beyond a certain point it tends naturally to feed upon itself and so to spread. If we assume that persons are more likely to engage in corrupt exchanges the more likely the anticipated benefits are to outweigh the anticipated costs, then it is apparent that the more widespread such exchanges have already become, the more likely this condition is to hold. Among other things, the more widespread corruption is the more thinly will the authorities have to spread the resources available to investigate it. The more this is so, the lower the material costs will be (in terms of the likelihood of getting caught). The lower the likelihood of getting caught, the more likely it is that still others become involved in networks of corrupt exchanges. In extreme cases corruption may spread to the point that it becomes systemic – a situation in which due process norms have been more or less completely undermined and bribery has become largely unavoidable even for the unwilling. In short, corruption is something to be feared and fought against. Fed by private greed, it flies in the face of all those features of conduct that we use as yardsticks by which to measure human progress: universalism, fairness, impartiality, rational–legal authority. It is in the light of this awareness that, as editors, we have sought to bring together the collection of studies that follow. Aimed especially at students, the volume will, we hope, provide an appreciation both of the scale and importance of political corruption, and of its significance for the challenges facing the advanced industrial democracies. In this way, by assisting in the task of raising awareness of the phenomenon, we also hope to make a modest contribution to the fight against it.

6 Introduction

Acknowledgements The seeds of this book were first sewn at an international conference organised by the European Studies Research Institute (ESRI) at the University of Salford back in 1996 on ‘Corruption in Contemporary Politics’. The idea of a student-oriented text, however, was, at that time, somewhat premature for most publishers. Developing the exact structure and themes of the book, and, through them, securing the support of a publisher, took, therefore, longer than expected. It is to the credit of Palgrave Macmillan that they finally took the risk, and we hope that the results justify their faith in our idea and their patience with our production of the book. We also thank the contributors for their patience with us (and each other) in what at times must have appeared to them as a never-ending cycle of editing. Finally, thanks go to ESRI for its continued support of this project and to Liz Dew for her sterling editorial input work, without which this book would have been much longer in the making.

Notes 1. Private communication. 2. Interestingly, a similarly ‘functional’ line of defence was not infrequently taken by Italian politicians caught up in the Tangentopoli (Bribe City) scandal when they sought to defend themselves by arguing that corruption had been essential to the financial viability of political parties and that these, in turn, were essential to the viability of any healthy democracy (della Porta and Vannucci, 1999a: 10). 3. For further details concerning TI and the Corruption Perceptions Index see Lancaster and Montinola (1997) and the TI Web site: www.transparency.org.

Part I ‘Quite Corrupt’ Countries

2 Political Corruption in Spain Fernando Jiménez and Miguel Caínzos

In 1995 Spain appeared among the ‘most corrupt’ countries according to TI’s Corruption Perceptions Index (with a score of 4.35). However, as shown in Figure 2.1, after 1995 and 1996 Spain’s score improved notably, reaching 7.0 in 2000. This was very similar to the scores for Ireland (7.2) and France (6.7), and rather higher than those for Portugal (6.4), Japan (6.4) and Belgium (6.1). Does this mean that Spain is less corrupt now than in the mid-1990s? 8

6

4

2 CPI Scores

1980–85

1988–92

1995

1996

1997

1998

1999

2000

6.82

5.06

4.35

4.31

5.9

6.1

6.6

7

Figure 2.1 Corruption Perceptions Index scores for Spain, 1980–2000 9

10 ‘Quite Corrupt’ Countries

The hidden nature of corruption makes this question impossible to answer in a definitive manner. Nevertheless, we will argue that it is unlikely that political corruption was a much more generalized phenomenon in the first half of the 1990s than it is now. Spain’s low scores in 1994 and 1995 have more to do with the higher visibility of the problem of corruption in public debate as a consequence of a tough opposition strategy followed by the conservative Partido Popular (People’s Party, PP) than with an actual worsening of the problem. This argument invites one to pay particular attention to the evolution of public perceptions of corruption during the 1990s.

Newness, scale and varieties of corruption Political corruption came onto the agenda of Spanish politics in the 1990s (Jiménez, 1998) as a result of the emergence within the PP of a new generation of leaders who, in opposing the governing Socialist Party, sought to maximize the potential offered by political scandals. This strategy was favoured by the appearance of a new daily newspaper, El Mundo, that was very critical of Felipe González’s government and that took to publicizing all kinds of scandals affecting the Socialists. The commercial success of El Mundo and, particularly, its wide circulation among young readers, changed the way political corruption was usually dealt with in the media. Table 2.1, summarizing the results of two studies of the media’s treatment of corruption in the period 1990–94, shows the prominent place occupied by El Mundo. The second study (CECS, 1995) presents data showing that the regional and local press too paid substantial attention to the phenomenon. Table 2.1 Headlines concerning political scandals and corruption appearing on the front pages of Madrid-based newspapers, 1990–94 Period

Newspaper

No. of headlines concerning corruption

% of total no. of headlines appearing on front page

% of total no. of headlines on Spanish politics appearing on the front page

1990–93

El País ABC El Mundo Diario 16 Total

98 81 210 156 545

6.1 6.1 13.2 9.8 8.8

18.2 16.6 31 22.2 22.7

1994

El País ABC El Mundo Diario 16 Total

276 196 375 321 1,168

20.4 17.4 30.9 25.1 23.5

48.9 35.8 58 51.2 49

Sources: For 1990–93, Andréu Abela (1998: ch. 4), percentages computed from the data in tables 17 to 22. For 1994, CECS (1995), percentages computed from the data in table 1.

Political Corruption in Spain 11

Hence, about one-third of front-page headlines regarding political matters concerned news about scandals and corruption. Given such intense coverage by the press, it is not surprising that corruption reached high levels of visibility for Spanish voters. Table 2.2 presents data concerning the percentage of people who cited events related to corruption among the three news items that had most caught their attention in the period immediately prior to the survey. The table shows the particularly high levels of public awareness of corruption in 1994 and 1995 and especially in the spring of the former year. In that period, in the space of just a few weeks, there was an overlapping series of scandals affecting the former Director General of the Guardia Civil, Luis Roldán (who left the country after a court sentenced him to prison), the Governor of the Bank of Spain, Mariano Rubio (who was jailed during the course of a judicial investigation) and the Minister of Agriculture Vicente Albero (who had to resign once it became known that he had evaded income tax for the three years prior to his becoming a politician). These events led to the resignation of two ministers and two MPs who were former ministers. Things became even harder for the Socialists once Baltasar Garzón resigned his seat in Parliament. Garzón was a well-known former judge who had played a salient role in the general election of 1993 when he had been a Socialist Party candidate in order to symbolize the strong commitment of Felipe González to the fight against corruption. In resigning from Parliament he also resigned his post in the Ministry of the Interior as Director of the national agency against narcotics, and returned to his legal career stating that the Socialist government had no real intention of fighting corruption. As a consequence of these

Table 2.2 Recent events and news items attracting public attention Date

May 94 June 94 December 94 February 95 December 95 February 96 April 96 June 96 March 98

% citing news items and events concerning corruption 91.2 75.2 59.3 61.0 40.0 9.1 5.0 21.0 4.0

No.

2,130 1,826 1,457 2,108 2,478 1,867 1,727 1,662 1,561

Notes: Open-ended question and maximum of three answers (except for March 1998, with a maximum of two). The bases on which percentages have been computed exclude ‘don’t knows’ and refusals. Sources: CIS, survey studies 2100, 2110, 2127, 2133, 2201, 2208, 2212, 2217 and 2283.

12 ‘Quite Corrupt’ Countries

events, the PP emerged victorious and almost 10 per cent ahead of the Socialists in the European election of June 1994.1 Despite a sceptical attitude towards opposition allegations – about a half of respondents interviewed in December 1994 and February 1995 agreed with the assertion that opposition parties were using accusations of corruption as a political weapon against the Socialist government2 – the high visibility of political corruption and the intense coverage of the phenomenon by the press in the first half of the 1990s was taken by most Spaniards as a sign of the seriousness of the problem. Thus, as early as April 1992 (Demoscopia, Spring 1992 barometer) an astonishing 85 per cent of Spanish citizens thought that there was a great deal (39 per cent) or quite a lot (46 per cent) of corruption in Spain. In May 1993, another poll estimated at 88.1 the percentage of people who thought that there was a great deal (44.7 per cent) or quite a lot (43.4 per cent) of corruption.3 CIRES asked three times in three different years about the number of public officials involved in corruption (Table 2.3). The slight improvement registered in June 1996 is probably due to the change in the national government brought about by the general election of March 1996. The clear salience of political corruption in the Spanish media between 1992 and 1996 does not seem however to have brought about a change in the importance Spaniards give to this problem when it is compared to other public concerns. A revealing series of data show the real place of political corruption when some other problems are taken into account. Two polls asked respondents to indicate how concerned they were about each of a number of problems.4 In February 1993 corruption in politics was one of the issues of least concern to citizens, its average placement on a 10-point scale being 7.89. Much more concern was shown about unemployment (9.13), opportunities for youth (8.82), terrorism (8.76), inflation (8.67), law and order (8.66), health (8.40), damage to the environment (8.34), assistance to the elderly (8.31) and the workings of the justice system (8.04).5 In December 1994, the relative importance of corruption as compared to other problems appeared to have increased slightly. Thus, its score was significantly higher than that given to nationalist feelings in the Autonomous Communities, to the number of foreign immigrants, to the international situation, to labour conflicts Table 2.3 Citizens’ perceptions of the extent of corruption among public officials Date

June 94 June 95 June 96

Almost none (%)

Some (%)

Most (%)

Almost everyone (%)

DK/refused (%)

No.

1.8 2.8 2.3

38.2 37.1 43.3

38.0 34.0 32.9

19.3 22.3 15.8

2.7 3.8 5.7

1,200 1,200 1,200

Sources: CIRES, survey studies 37, 46 and 52.

Political Corruption in Spain 13

or to social inequalities and pensions. Of greater concern than corruption were narcotics, terrorism, unemployment and law and order. Thus, though concern about corruption appeared to have increased relatively, it was not ranked at the same level of importance as a significant number of other problems, which citizens found even more worrying.6 While corruption is a problem that causes concern, then, it is not one that is placed at the top of citizens’ agendas. Nor has the high visibility of the problem and its intense politicization in the first half of the 1990s been translated into a substantial modification of the priorities defining those agendas. This conclusion is confirmed by a CIS poll carried out some years before corruption came onto the public agenda – March 1988 – where the same kind of question was asked and similar results were obtained. More important than fighting corruption were other objectives such as full employment, full health coverage, law and order, a good state education for children and youth, decent housing for everybody, and a faster and more efficient system of justice.7 Table 2.4 shows that concern about corruption as compared to other public problems has not remained the same but has declined from a peak in 1995. Figure 2.2 is based on different data,8 but reflects the same trend in public opinion. It seems to us probable that Spain’s TI score has been influenced by Table 2.4 The main problems confronting Spain Date

Sept. 93 Dec. 94 Feb. 95 Apr. 95 Nov. 95 Feb. 96 (1) Feb. 96 (2) Apr. 96 July 96* Dec. 97* Mar. 98** July 98 Dec. 98* Mar. 99

% who cite corruption

No.

8 32.8 35.5 27.1 23 19.9 21.7 13 3.7 1.5 2 2.1 1.8 1.9

2,496 2,399 2,388 2,423 2,393 4,847 2,403 2,499 2,437 2,390 2,497 2,486 2,396 2,499

Notes: Open-ended question with a maximum of three answers. Bases on which percentages computed exclude ‘don’t knows’ and refusals. * Closed question, only one answer. ** Open-ended question with a maximum of two answers. Sources: CIS, survey studies 2066, 2127, 2133, 2156, 2197, 2207, 2208, 2212, 2218, 2270, 2283, 2294, 2312 and 2322.

Oct. 91 Nov. 91 Dec. 91 Jan. 92 Feb. 92 Mar. 92 Apr. 92 May 92 June 92 July 92 Aug. 92 Sep. 92 Oct. 92 Nov. 92 Dec. 92 Jan. 93 Feb. 93 Mar. 93 Apr. 93 May 93 June 93 July 93 Aug. 93 Sep. 93 Oct. 93 Nov. 93 Dec. 93 Jan. 94 Feb. 94 Mar. 94 Apr. 94 May 94 June 94 July 94 Aug. 94 Sep. 94 Oct. 94 Nov. 94 Dec. 94 Jan. 95 Feb. 95 Mar. 95 Apr. 95 May 95 June 95 July 95 Aug. 95 Sep. 95 Oct. 95 Nov. 95 Dec. 95 Jan. 96 Feb. 96 Mar. 96 Apr. 96 May 96 June 96

% of people who mention corruption 30

25

20

15

10

5

0

Date

Figure 2.2 Problems and objectives of Spanish society

Political Corruption in Spain 15

this trend in public opinion. However, the current situation in Spain still presents some worrying aspects. In December 1997, after more than one and a half years of conservative government, 92.3 per cent of respondents said that corruption was a serious or very serious problem in Spain.9 What might have been of even greater concern to the government was that one year later, in December 1998, one half thought that the problem of corruption had become somewhat or a lot worse during the previous year.10 What are the worrying aspects that, despite its lower media profile, still make corruption a serious problem in Spanish politics? We shall try to answer this question in the next section.

Causes and peculiarities of political corruption in Spain It is frequently suggested in the literature that corruption often results from the coexistence of three kinds of factors: ill-defined borders between the state and markets (thus affording opportunities for corrupt exchanges when economic benefits depend on political decisions); some level of tolerance of corruption by citizens (thus providing an incentive to take advantage of the opportunities); and the malfunctioning of the (political, administrative or judicial) mechanisms of control limiting the discretionary power of public decision-makers. In this section we highlight the features of these structural, ethical and institutional factors that are specific to the Spanish case. Structural factors Regarding structural factors, the considerable growth in size of the state since World War II and particularly the subsequent processes of re-privatization of some state sectors since the 1980s have afforded opportunities for corrupt exchanges in most Western countries. What has been peculiar to the Spanish case is the rate and form of growth in the number of state decisions having an economic impact. State intervention in the economy has increased dramatically since the beginning of the current democratic regime. Since the final years of the dictatorship, public spending has more than doubled (it was just 22.4 per cent of gross national product (GNP) in 1970, but over 47 per cent in 1995). But this rapid growth in size of the state sector has run parallel to a significant decentralization of power, which has multiplied the political centres of decision making and, thus, the opportunities for corruption. Today the regional governments of the seventeen Autonomous Communities control about 30 per cent of all public spending and more than eight thousand town councils 13 per cent. The evolution of the decentralization of public spending is summarized in Table 2.5. Furthermore, the long Socialist incumbency coincided with a period of rapid and relatively sustained economic growth. After the long and deep economic crisis initiated by the oil shock of 1973 (when Franco’s regime was

16 ‘Quite Corrupt’ Countries Table 2.5 Distribution of public spending by administrative sectors Years

1981

1985

1990

1997

1999

Central govt. Autonomous govts. Local govt.

87.4 2.9

73.1 14.2

65.8 20.2

61.1 25.9

54 33

9.7

12.7

14

13

13

Sources: For 1981–97: Aja (1999: 236, table 14). For 1999: data estimated by the central government in MAP (1997). Percentages for central government include military spending.

decomposing) and which endured until 1984, there began a period of strong recovery which extended until the end of 1992. This long economic boom provided many opportunities for enrichment and gave rise to the increasingly widespread impression that it was relatively easy to get wealthy in a short period of time. This helps to highlight the importance of the other factors. Ethical factors Lamo (1996: 533) suggests that the evolution of political control of the economy in Spain was not accompanied by any parallel modernization of the legal and ethical framework needed to supervise the new power. In particular, he argues that the aforementioned changes in the economy were not accompanied by necessary changes in economic ethics. For example, he offers some poll data showing that, in 1991, 75 per cent of Spaniards thought that ‘most businessmen just try to earn as much money as they can at the expense of workers’ (Lamo, 1996: 535, data from a CIRES survey study). Other poll data stress the importance for Spanish citizens of factors that have to do with public ethics. In a CIS survey of May 1994,11 respondents were asked how much they agreed with a number of statements on the causes of corruption in Spain. The results are shown in Table 2.6. They make evident that ethical factors are regarded as very important by Spaniards. However, in any explanation of corruption, we think it more useful to look carefully at its institutional dimension. Institutional factors The malfunctioning of the agencies that supervise the use of discretionary power by the different centres of decision-making in the state is a key element in explaining the spread of corruption. It is usual to distinguish between two types of these agencies: those internal to the different areas of the civil service and those external to the state administration, especially the judiciary and Parliament. The loosening of traditional mechanisms of internal control of decision making in the civil service was a generalized phenomenon across all western countries in the 1980s. The search for greater efficiency in the functioning

Political Corruption in Spain 17 Table 2.6 Degree of agreement with possible causes of corruption in Spain

% who agree % who disagree Difference DK/Refused Mean* S.D.

The culture of rapid enrichment in the years of economic boom

Spanish society’s traditional tolerance of dishonest practices

The system of funding of political parties

Too many years of a Socialist majority in Parliament

73.2 10.2 63 16.2 3.16 0.66

61.2 21.6 39.6 16.9 2.85 0.72

56.3 14 42.3 29.1 2.93 0.68

56 30.2 13.7 25.8 2.78 0.83

Note: *Four-point scale from a maximum of 4 to a minimum of 1. Source: CIS survey 2100 (May 1994).

of the state caused the abandonment of a large number of the old bureaucratic controls and the introduction of more flexible techniques of private management. As a consequence, the discretionary power of many public decision-makers increased and this led, in many instances, to a misappropriation of vast areas of the civil service by the political parties. The breakdown of the traditional relationship between civil servants and politicians undermined the traditional safeguard against use of political power for personal or party gains. What has been distinctive in Spain is that this process has taken place in parallel with the consolidation of the new and decentralized democratic regime. When the Socialists won the election in 1982, they did so against the background of an initial period of democracy in which central government had for the most part been staffed by people with strong ties to the authoritarian regime. Consequently, the Socialists began to implement a policy towards the civil service that was aimed at securing the primacy of elected officials against bureaucratic elites. Based on a deep mistrust of the commitment to democracy of most professional civil servants, the policy dismantled most of the traditional bureaucratic controls. It was a policy that affected not only the administration of the central state but the territorial administrative units as well. Some years earlier, the first democratic local elections of 1979 had given control of the larger towns to left-wing parties that at once clashed with civil servants belonging to the then powerful National Corps of the Local Administration (whose responsibilities were to monitor the legality of municipal authorities’ decisions). After the Socialists took office in 1982, the role of these non-elected officials was gradually weakened to the extent that in 1993 an act of the Congreso de los Diputados allowed the larger town councils to appoint such officials themselves. Thus, the controlled were allowed

18 ‘Quite Corrupt’ Countries

to appoint those whose responsibility it was to control them. Non-elected public officials do not therefore work in the best conditions of impartiality and independence, and clientelistic relationships in the recruitment of town-council personnel – at a time when numbers have more than doubled with the creation of almost 200,000 new jobs – have become more evident. This weakening of the traditional system of control of local government has been complemented by a lack of supervision by the central state administration. Sánchez Morón (1997: 200) maintains that it is not possible to find such an absence of supervision in any other decentralized country. The Constitutional Court has stated in a number of rulings that local autonomy should not be confused with an absence of checks on the legality of measures by other, higher, administrations; but successful lobbying by the associations of town councils has dissuaded central government from carrying out such checks. It must not be forgotten that local elected officials are very important in the internal organization of the main parties. The resulting autonomy of elected officials creates a significant risk of the spread of corruption. Town councils have a decisive role in such ‘at-risk’ areas as town planning.12 A recent Organization for Economic Co-operation and Development (OECD) report commented negatively on the considerable discretionary power of Spanish mayors in this policy area (in particular, in the granting of building permits) and warned that the usual lack of transparency created a favourable atmosphere for corruption (OECD, 2000).13 The other protagonist in the process of decentralization was a creation of the 1978 Constitution, namely, the Autonomous Communities (or regional governments). Within a very short space of time the regional governments found themselves having to provide a large number of public services without a minimally structured administration. This led to substantial improvisation and to the development of clientelistic relationships (especially through the recruitment of new personnel to these bureaucracies). Moreover, the Autonomous Communities have had little interest in controlling spending as they have lacked fiscal responsibilities until recently. In addition, as in the case of local government, the central state administration has exercised a negligible supervisory role. What has happened meanwhile to external controls? After the experience of the dictatorship, the Constitution of 1978 stressed the need to reinforce external control of the different levels of government. The Tribunal de Cuentas (Court of Accounts) is a body that has responsibility for auditing the accounts of all the administrative units of the state and all political parties with parliamentary representation. The annual reports of the Tribunal de Cuentas are frequently critical of the lack of effective controls in the areas of public contracting and the funding of parties. As political parties are mainly funded by the state, Spanish law forbids private contributions over ten million pesetas a year per person or corporation, and bans all contributions by state enterprises or by private enterprises benefiting from public contracts.

Political Corruption in Spain 19

Political parties are obliged to keep accounts to show that they are not violating the law. However, the Tribunal de Cuentas has long complained that there is no legal sanction to punish those parties that are not financially transparent. Moreover, the improper funding of parties only becomes a criminal offence if the money involved is used in an election campaign. If it is used to pay for the day-to-day expenses of the party organization instead, the only possible sanction is the imposition of a fine. According to the annual reports of the Tribunal de Cuentas, such a benevolent legal framework has led to routine violation of the law by almost all parties. The other actor in the external control of government is the courts. The Constitution of 1978 sought to reinforce the role and the independence of the judiciary. In doing so, it followed the Italian example of the Consiglio Superiore della Magistratura and set up an institution of self-government for the judiciary: the Consejo General del Poder Judicial (General Council of the Judicial Authority, CGPJ). However, since 1985 all members of the CGPJ have been appointed by Parliament on the basis of qualified majorities of three-fifths. As the Constitutional Court had warned would happen in the ruling that confirmed the constitutionality of the 1985 law, the new system of appointments to the CGPJ has resulted in the available places being distributed among the parties proportionally according to their strengths in Parliament. This outcome has damaged the prestige of the CGPJ. This does not imply that Spanish judges have been absent from the fight against corruption. On the contrary, they have been quite prominent, especially since the early 1990s. As a consequence, the growing sensation that involvement in corrupt activities would go unpunished began to dissipate from that time onwards. On the other hand, the heightened activism of judges in the 1990s also played its part in stimulating perceptions of heightened levels of corruption at this time. For parties have a tendency to try to resolve a large number of political disputes in court, and most of the cases of corruption that reached the courts did so as a consequence of accusations made by political parties.

Anti-corruption laws and campaigns, remedies and solutions Besides the inclusion in the Penal Code of a number of new types of offence such as insider trading, the most significant institutional reform that has been made in order to fight corruption was the creation, in 1995, of a special office for the ‘repression of economic crimes related to corruption’, popularly known as the Anti-corruption Prosecution Office. This office is responsible to the Attorney General14 (who decides which specific cases will be prosecuted) and it is assisted by economic and financial experts from the Ministry of Finance. It is still too early to evaluate how effective the Anticorruption Prosecution Office has been.

20 ‘Quite Corrupt’ Countries

Despite the central role of the illegal financing of political parties in many cases of corruption and the widespread recognition of the need for reform of the system, nothing has as yet materialised to change the current legal framework. Thus, the improvement in Spain’s position in TI’s Corruption Perceptions Index has not been strongly related to any specific institutional innovations aimed at fighting corruption. As noted in the introduction, the low scores of 1995 and 1996 more likely reflect a higher visibility of the problem due to party and media strategies rather than a real increase in the number of corrupt exchanges in Spanish political life. Similarly, the recovery from 1997 onwards has more to do with the loss of salience of the issue than with an actual decline in levels of corruption.

Impact of political corruption and exposure of political corruption Although it is unlikely that the real level of corruption has changed much in Spain, the wave of scandals during the first half of the 1990s has had an impact on at least two aspects of Spanish political life. These are the public images of the main political parties, on the one hand, and electoral behaviour on the other. The effect on the former has been much greater than the effect on the latter. The Socialist Party has been strongly associated with the problem of corruption while the image of the PP has benefited despite the fact that some scandals have touched it as well. CIRES asked in three surveys what respondents disliked about the main parties.15 In June 1994, 20.4 per cent of those interviewed cited corruption as one of the Socialist Party’s weak points. One year later, the percentage was 27.6 and in June 1996 it rose to 41.3 per cent. In all three cases corruption was the most frequently cited feature. In contrast, less than 1 per cent cited corruption in connection with the PP in each of the three years. This difference between the PP and the Socialist Party is even more striking if we take into account the images of these parties some years earlier. In October 1984, a CIS survey16 asked respondents to name the party ‘most involved in scandals and corruption’. 21.3 per cent chose the conservative party (then called the Popular Alliance), while just 13 per cent mentioned the Socialists. The same survey asked respondents to name the party with the ‘more honest and better trained leaders’. 36.4 per cent mentioned the Socialists, while only 16.1 per cent mentioned the conservatives. The other effect of political corruption scandals regards citizens’ voting behaviour. Working with poll data gathered in the spring of 1994, Barreiro and Sánchez-Cuenca (2000) found that concern about corruption, and about the government’s responsibilities in fighting corruption, had a clear effect on voting intentions. The considerable effect they found was related to an hypothetical election as the actual election took place two years later. In other

Political Corruption in Spain 21

studies (Caínzos and Jiménez, 2000a,b) based on poll data derived from a survey carried out 15 days before the 1996 election, we found that the wave of scandals had an impact on the vote, but that there were other issues which had a larger effect. These were concern about the future of pensions, economic perceptions (that is, perceptions of the negative trend in levels of employment) and fears of shrinkage in the welfare system if the PP won the election.17

Conclusion Although there are many disturbing elements in its political system, it would be unfair to say that Spain is a very corrupt country. The key elements necessary to an understanding of the spread of political corruption are the simultaneous occurrence of: a considerable increase in size of the public sector of the economy; rapid economic growth in the second half of the 1980s; a successful but at the same time awkward process of democratization which has, to some extent, neglected the institutionalization of an efficient system of accountability. Control of the different administrative units by political parties that are as greedy as the political forces of almost any other democracy (probably as a result of steadily rising election campaign costs) has done the rest. The lack of transparency in many processes of public decisionmaking in order to maximize the discretionary power of elected officials (and in some cases to hide illegal funding of parties) has resulted not only in institutionalized forms of corruption but also in many episodes of personal illegal enrichment: many people who have personally benefited from corrupt exchanges had previously acted as brokers for one or other of the parties. The improvement in Spain’s Corruption Perceptions score from 1997 onwards suggests that the high visibility of corruption in the first half of the 1990s may have helped curb its growth thereafter. The scandals set in motion some minor institutional innovations. However, the change of government in 1996 brought about a much calmer political climate and much more moderate strategies on the part of opposition parties. Therefore, it is more likely that the improvement in Spain’s rating has been due to a change in perceptions of the problem rather than a change in the extent of the problem itself. It is unlikely that Spain was a much more corrupt country during the first half of the 1990s than it is now. On the other hand, there is a risk that the loss of salience of corruption as a political issue, together with the political situation brought about by the general election of March 2000 (which gave a majority of seats to the PP while leaving the Socialists in deep crisis), will lead to a postponement of any real efforts to fight the corruption that exists.

Acknowledgements The authors should like to acknowledge the financial support of the Xunta de Galicia (grant no. XUGA21301A97). We are grateful to the personnel of

22 ‘Quite Corrupt’ Countries

the CIS Data Archive for their kindness and to Jesús Ceberio and José Ignacio Wert for allowing us to use data from Demoscopia.

Notes 1. The Socialist leaders linked their defeat in the European Election to the wave of scandals (Heywood, 1995). According to a CIS survey (2108, June 1994), nearly 40 per cent of those who had voted PSOE at the previous General Election but changed their vote in the European Election pointed to corruption as the reason for their decision. 2. CIS studies 2127 and 2133. 3. Poll carried out by José Ramón Montero and Richard Gunther as part of the DATA ‘Comparative National Election Project’. 4. CIS, surveys 2048 (February 1993) and 2128 (December 1994). The lists of problems are different in both questionnaires, although there is some overlap. The measurement scales are also different: a scoring from 0 to 10 in the first poll; a qualitative scale of four values, from ‘not at all’ to ‘very concerned’, in the second. We have mapped the data from the second study onto the scale used in the first to produce values between 0 and 10. This means that we have to be very cautious in comparing the two studies, but it does not affect the relative importance of given problems as compared to others mentioned within each survey. 5. All differences between the scores for corruption and those for the other problems are statistically significant at the 0.5 per cent level with the exception of the difference between the scores for corruption and housing. 6. In order of decreasing importance the scores were: narcotics (8.54), terrorism (8.43), unemployment (8.41), law and order (7.92), corruption (7.79), the working of the health system (7.78), the environment (7.75), the global economic situation (7.71), pensions (7.40), social inequalities (7.26), labour conflicts (6.38), the international situation (6.20), the number of foreign immigrants (5.54) and nationalist feelings in the Autonomus Communities (5.45). 7. CIS survey 1737. All differences are significant at the 0.01 per cent level. This is not surprising given the huge size of the sample (27,377 individuals). An interesting feature of the poll is that the standard deviation of the scores for ‘fighting corruption’ is not particularly high. The most likely explanation for this is that the problem was less politicized then than it was in later years. 8. CIRES surveys 11 to 52 (October 1991 to June 1996). The question was: ‘Thinking about Spain, we all know that there are many problems that should be solved, but which are the three objectives that you find most important nowadays: reducing social inequalities, combating drugs trafficking, protecting civil liberties, protecting the environment, promoting economic growth, combating terrorism, reducing unemployment, fighting corruption, expanding social welfare programmes, fighting crime, stopping inflation, protecting national security, or none of these? 9. CIS survey study 2270. 10. CIS survey 2312. 11. CIS survey 2100. 12. See, for instance, Nieto (1997). 13. See El País, 6 July 2000. 14. That is, the Fiscal General del Estado, the chief public prosecutor.

Political Corruption in Spain 23 15. CIRES survey studies 37, 46 and 52. The question was open-ended, so answers were spontaneous. 16. CIS survery 1430. 17. Our own research leads us to think that corruption scandals had a greater effect in the 1993 general election. In a study of economic voting in the 1993 and 1996 general elections, Fraile (2001: 191–2) provides evidence that also tends to support this view, although she does not use the same indicator for both elections.

3 Political Corruption in Greece Kleomenis S. Koutsoukis

During the 1960s when the behavioural movement in the social sciences was at the height of its influence, Carl Friedrich used the term ‘political pathology’ to describe a range of phenomena from political corruption to political violence, spying, secrecy, and so forth (Friedrich, 1972: 1–15). Corruption is the symptom of a crisis in the relationship between society and politics, a phenomenon that points to a lack of commitment to certain ethical standards. Therefore, empirical research into, and theorizing about, corruption may contribute to desirable change in society and thereby to the elimination of the gap between ethics and politics. The phenomenon of corruption is not new. Human societies all over the world have lived with petty corruption of one kind or another since time immemorial. What is particularly new is the type of corruption that is linked with international organized crime syndicates. Corruption of this kind has led more and more countries to attempt to co-ordinate their anti-corruption efforts through such international institutions as the United Nations, the OECD, the Council of Europe, the European Commission, Transparency International, and so forth (Punch et al., 1993; Huberts, 1996). Whenever someone who is holding a public position exploits it in order to gain private profit in breach of the written or unwritten rules governing the performance of their duties, they can be said to be practising corruption. Systems designed to monitor the behaviour of officials may be more or less successful in eliminating such acts. In classical Athens euthenoi (or ‘accountables’) monitored the income resources of public functionaries after they had resigned from public offices, the latter usually being filled on a rotation basis. In modern Greece, one of the first laws against corruption dates back to the War of Independence in the 1820s and provided for a range of sanctions against public officials (such as judges and ministers) found guilty of the crime. Investigating the causes and dynamics of corruption in a country requires taking account of the contribution of the country’s culture to perpetuation of the phenomenon. This may require one to examine attitudes towards the 24

Political Corruption in Greece 25

state administration and the system of justice, to examine perceptions of collective interests and so forth. The way a person understands such matters affects their orientation and attitudes towards society, and especially towards the ways and means they consider appropriate for achieving certain goals. In the final analysis, the existence of corruption speaks to a deficit of those norms and values that promote social solidarity. This suggests that the principles that ensure that political systems function democratically, also tend to contribute to the elimination of corruption (Holmes and Roszkowski, 1997). Students of southern European society and politics, and particularly of corruption, tend to utilize concepts such as patrimonialism and/or cleptocracy to explain corruption and scandals (Heidenheimer et al., 1989; Berlinsky et al., 1994). Both of these phenomena were characteristic of a specific stage of development through which Greece passed some time ago. Greek society today is in the midst of an intense process of modernization and social transformation as a result of which a number of traditional institutions and norms of behaviour are under attack. This has given rise to a new social reality, one that is worthy of special attention because, as we shall see, the process of change itself seems to have been a factor promoting corruption in the Greek case. That said, an understanding of corruption in Greece today is not possible without reference to its roots in the processes of state formation in the nineteenth century (Petropoulos, 1968). The new civil institutions imported by European officials and Greeks returning from abroad were foreign to the bulk of the indigenous population, and therefore failed to overcome widespread distrust between ordinary people and the state. If corruption was also fed by poverty, economic inequality, unemployment and so forth, it was further encouraged by an inherited culture of rousfeti, a system of bribery widely practised under the Ottoman empire. Despite the fact that illegal activities such as bribery alienated many people from the political system, corruption seemed to play a functional role, also keeping people tied to the system and thereby contributing, to a degree at least, to the integration of society and the political system. The blurring of the boundaries between public and private sectors in the new state in the nineteenth century meant that in its most extreme manifestations corruption took the form of cleptocracy.

Newness, varieties and scale of corruption Owing to the pride contemporary Greeks feel for their society, they are deeply disappointed when their country or compatriots are portrayed as corrupt in the European or international press. They consider it the worst possible defamation of their country, of its glorious past and profound virtues as well as its democratic values. These cultural barriers constitute significant obstacles in the way of the empirical study of corruption in Greece. Public servants may comment,

26 ‘Quite Corrupt’ Countries Table 3.1 Public servants convicted of corruption, 1959–94* Period

No.

1959–62 1963–66 1967–70 1971–74 1975–78 1979–82 1983–86 1987–90 1991–94

505 414 436 339 270 244 137 341 346

Annual average 126 104 109 85 68 61 36 85 87

Note: *Figures are for convictions resulting in at least one month’s imprisonment and, in addition to active and passive bribery, also include crimes covered by the law relating to ‘crimes committed while on duty’. Source: National Statistical Service of Greece.

among themselves or in confidence, on the ethical impropriety of corruption or other deviant forms of behaviour. However, when they are asked to cite instances of corruption they tend to decline to do so or, if they do agree to respond, to do so unwillingly and with reservation. The cultural connotations that make corruption such a sensitive subject to discuss also, naturally, make it very difficult to deal with. The history of corruption in Greece shows that few cases are discovered, much less taken to court. Among the cases that do get taken to court, only a very small number of the perpetrators get punished. Having all the characteristics of a modernizing Mediterranean country, Greece today finds itself in the middle of the developed–developing country continuum. Its efforts to achieve higher levels of development and to consolidate a civic culture have led to a number of institutional reforms designed to combat corruption. Recent efforts to root out the phenomenon are reflected in the figures shown in Table 3.1. These show a declining trend in the numbers of public servants convicted of corruption between 1959 and 1962 (when the annual average was 126) and between 1983 and 1986 (when the equivalent figure was 36). However, over the last decade a considerable increase can be observed, with the number of convictions rising to an annual average of 87 in the period 1991–94. The post-war period can be broadly divided into three phases from the perspective of political corruption. Bureaucratic corruption, 1946–66 During the initial decades following the Second World War, corruption in Greece could be considered a symptom of development (Myrdal, 1968; Huntington, 1968; Theobald, 1990). Development was fuelled mainly through

Political Corruption in Greece 27

the investment of foreign capital. Although several institutional arrangements were made in order to facilitate the influx of capital and investment, investment plans could normally only be implemented after they had been processed through traditional, legalistic and bureaucratic procedures and structures. These, combined with the operations of a clientele system, helped to perpetuate a centralized, irrational bureaucracy whose inflexibility could be overcome only by corruption. In these circumstances corruption functioned to facilitate the advance of investment plans but at the same time encouraged the perpetuation of anachronistic and time-consuming legal procedures (Koutsoukis, 1989). ‘Cynical corruption’, 1967–74 Despite the fact that the colonels who seized power in 1967 abolished political parties and were determined to put an end to the corrupt practices associated with the clientele systems operated by the civilian politicians, they managed to create for the citizen a climate of insecurity concerning rules of behaviour in the public sector. By depriving citizens of the mediators who had been available to them (in the shape of the former politicians able to find their way through an authoritarian, anachronistic bureaucracy), they promoted a degree of confusion and obscurity that promoted more direct forms of corruption. Among persons of wealth and power, corruption became a means of achieving social elevation and distinction, not least because of the regime’s need to acquire legitimacy in society. Structural corruption, 1974–2000 The restoration of democracy in the 1970s marked a new era of social change and transformation in Greece. By meeting the per capita income criterion, Greece was very soon considered to be among the developed countries. The period was also marked by a number of contrasting institutional and structural changes. For example, during the 1980s, the state took over a number of private industries while the 1990s were characterized by important privatization measures. The period also saw Greece join the European Community. Changes such as these gave rise to a conflict between traditional and new values, between traditional and modernising forces. While such conflict was itself conducive to the perpetuation of corruption, the latter was also facilitated by the greater priority given by the modernizing forces to market efficiency rather than to the new rules concerning public ethics that had been implied by the restoration of democracy (Koutsoukis, 1989).

Causes and dynamics of corruption: from socialism to liberalism and vice versa With the exception of the first Code of Laws (1824) promulgated during the War of Independence, the term ‘corruption’ as such does not appear in any law or legal code today in Greece. The penal code, however, provides for the

28 ‘Quite Corrupt’ Countries

punishment of bribery (active or passive) defined as a criminal act that takes place when public servants accept benefits in exchange for the performance of their duties, or services in excess of, or in conflict with, their duties. As a type of crime, such acts are more frequently analysed by lawyers, judges and legal experts than by social scientists. There is therefore little available research on them from the perspectives of sociology or political science and even less research on corruption in specific sectors. However, information provided by the press and the other mass media provides clues as to the sectors in which corruption probably takes place most often. Prima facie, the probability of corruption taking place seems likely to vary positively with the degree of discretion or authority at the disposal of the public functionary in question. These qualities give the holder of a public office the power to act or not, to add or subtract bureaucratic prerequisites and preconditions. Public officials and sectors vulnerable to corruption in Greece can thus be listed as follows: (a) Services provided by officials with the authority to issue licences of various types such as those for driving, construction, trading and so forth – provided that applicants have to meet certain criteria or have certain qualities. (b) Customs services, found at seaports, airports and border-crossing points.1 (c) Tax inspectors and other officials charged with monitoring the underground economy and prosecuting tax evaders. (d) State prisons, where those with multiple convictions, especially drug dealers, attempt to bribe guards, lawyers, and even judges in order to avoid imprisonment, to have sentences reduced or quashed or even to improve their personal conditions of life in prison. (e) State hospitals, where bureaucrats and physicians belonging to the National Health Service can be bribed as a result of a scarcity of hospital beds, lengthy waiting lists for hospital admittance, the desire to obtain prescriptions for controlled drugs, and so forth. In this sector, corruption is referred to as fakellitis, meaning envelopes containing bribe money. (f) The Immigration Services: several hundreds or even thousands of illegal immigrants enter the country every year looking for better places to live and work. Their entry is usually managed by people, especially truck drivers crossing borders, who mediate with the competent authorities, namely, the police, prefectures and so forth.2 (g) Banking, especially state banks where loans are provided to certain large enterprises in defiance of certain rules and regulations. (h) The area of state bids and procurements. (i) Justice and Education. Cases of corruption have been noted, although they are rather rare. Corrupt practices in the above areas may most often be attributed to a scarcity of resources or to a lack of effectiveness in tackling the wide-ranging problems that beset almost all sectors of contemporary urban life. For a long

Political Corruption in Greece 29

time, the clientele system provided a measure of relief for these problems. Despite the recently observed elimination of clientele systems (Featherstone and Katsoudas, 1987: 274–6), Greeks remain suspicious of, at times even hostile to, the state. During the 1980s, generous welfare policies were insufficient to overcome this hostility which was, indeed, reinforced by the involvement of a number of government officials in a series of scandals.3 Thus the image of a corrupt state still persists in the minds of large numbers of Greek citizens. After the fall of the Pan-Hellenic Socialist Movement (PASOK) government following the involvement of a number of its members in scandals (most notably the Koskotas scandal involving the Prime Minister himself), a government staffed by New Democracy took office. Between 1990 and 1993, the new Prime Minister, K. Mitsotakis, completely reversed government policy, shifting it from an emphasis on public ownership to an emphasis on privatesector ownership, and initiated extensive privatization in several areas of the public sector. However, these measures of economic liberalization appear to have been accompanied by similar, if not higher, levels of corruption and scandal. The figures in Table 3.2 show the number of references to corruption and scandals in Athens daily newspapers in each of three periods, each of which corresponds to a different cabinet, Prime Minister and policy orientation in terms of socialization/privatization. The first period (1986–88) under the

Table 3.2 References to corruption and scandals appearing in headlines in the Athens press, 1986–97 Frequency of appearance Prime Ministers

An. Papandreou

Key headlines* (corruption or synonyms)

Period 1986–88 No.

Corruption Bribery Greasing Kick-backs Gifts Cash bribery Fraud Subtotal Scandals

455 255 5 2 11 113 304 1,145 2,032

Total

3,177

Annual average

382 677

K. Mitsotakis

K. Simitis

Period Annual Period Annual 1991–93 average 1995–97 average No. No. 851 271 17 61 82 359 627 2,268 2,883

756 960

5,151

673 142 11 91 55 226 633 1,831 964

610 321

2,795

Note: *The terms listed in the first column are taken as synonyms of corruption. Source: Information taken from Botsis Foundation Archives.

30 ‘Quite Corrupt’ Countries

socialist cabinet of Papandreou shows the lowest annual average number (382) of headlines referring to corruption or its synonyms. By contrast, under the New Democracy cabinet of K. Mitsotakis, at a time of liberalization and privatization, this average is almost double (756). Under the socialist cabinet of Simitis, headlines referring to corruption reach almost the same number (610). What seems to be suggested, therefore, is that regardless of whether a policy of socialization or liberalization is pursued, it is the process of change itself that drives corruption levels. Confusion and uncertainty were characteristic of both processes, which allowed those with close involvement in them to exploit their situations. Both processes were implemented by state officials whose awareness of existing inefficiencies may also have encouraged corrupt practices. References to scandals are at their fewest under the Simitis cabinet (only 321). They are twice as numerous under the Papandreou cabinet (677), while reaching their highest under the liberal Mitsotakis cabinet (960). The smaller number of references to scandals under the Papandreou as compared to the Mitsotakis cabinet may be explained by the fact that the Koskotas ‘mega scandal’ was only just beginning to unfold at the time, while the larger number of references under the Mitsotakis cabinet was due to the AYET-Heracles ‘mega scandal’ (Koutsoukis, 1996). The decline in the number of references to both corruption and scandals in the more recent period, 1995–97, can probably be attributed to the fact that under pressure from public opinion and discussion in Parliament, the Government introduced a number of institutional reforms designed to eliminate corruption. It is worth mentioning that TI’s index also suggests a shift to lower levels of corruption, moving from 5.06 in 1996 to 5.35 in 1997 (TI, 1996a, 1997).

Anti-corruption laws and campaigns, remedies and solutions In spite of their mutual hostility, the two large parties, PASOK and New Democracy, seem to have reached agreenment on a strategy to reduce corruption in the public administration. This strategy has two broad aspects. The first is an attempt to reconcile the citizen with the state in such a way as to transform mistrust and suspicion into understanding and cooperation. The second is an attempt to enhance citizen participation in, and social control of, public services. The socialist government, before its fall from power in 1989, introduced ‘social monitoring’ of the public administration by establishing the ‘Service of Public Administration Comptrollers’. Particular emphasis was given to its responsibility to investigate cases of improper behaviour towards citizens, or a refusal to provide services, or violations of the principles of equality and meritocracy. Galvanized by the experience of a number of devastating corruption scandals, New Democracy was induced, once in office, to broaden the PASOK

Political Corruption in Greece 31

strategy described above. Thus, law 637/90 divided the work of the Service of Public Administration Comptrollers into four broad areas, namely, social policy (covering health and social welfare); quality of life (covering the environment, communications, education and culture, city planning and public works); economic policy (covering the national economy, tourism, energy, industry, tax and customs, trade, state procurements, agriculture, forests, farm policy, etc.); and relations between the administration and citizens (covering justice, defense, domestic and foreign affairs, etc.). By 1997, 90 per cent of the investigations being carried out by the service had been initiated following complaints by ordinary citizens. Encouraged by this, the government introduced social control committees in each ministry and penalties for delaying answers to concerned citizens. It also attempted to streamline bureaucratic procedures and to modernize the civil service by monitoring the application of recruitment procedures so that they became more meritocratic. All this encourages optimism that the conditions favouring corruption will gradually be eliminated. Optimism is also encouraged by a number of additional institutional changes. These include: (a) the Bill that established the social control committees and which, by requiring a ‘certificate of transparency’ to be produced by those companies seeking to participate in tenders for public contracts, established more transparent procedures in the critical area of procurement; (b) the establishment of a new organization to combat economic crime, money laundering, narcotics, the gun trade and fraud connected with EU subsidies in the area of argircultural exports; (c) the introduction, in 1998, of the institution of the ‘Ombudsman’; (d) a new law on party and campaign financing. The latter requires more detailed analysis.

Party financing and allegations of corruption In several studies party financing is related to corruption because it is considered to be the litmus test of political honesty and ethics, especially as the functioning of party politics is related to the proper functioning and effectiveness of democratic political institutions overall. Party finance in Greece was made subject to specific provisions of the Constitution of 1975 but was in fact completely unregulated until 1984 when public funding of parties was introduced for the first time. However, there were no strict regulations concerning, or sanctions applied to, improper use of state funds. Nor was private support for parties regulated. Hence, there is a widely held impression that public decisions are often influenced by private interests in exchange for support provided to specific parties or politicians. In 1994, a survey of citizens’ attitudes towards party financing and its consequences indicated that regardless of sex, age, education or party affiliation,

32 ‘Quite Corrupt’ Countries

at least half the respondents believed that both parties and politicians were funded by private interests. Of these respondents, 77 per cent believed that private funding created obligations both on the part of politicians as individuals and on the part of parties as organizations, while 80 per cent thought that party decisions were influenced directly or indirectly by private sponsors (Livanios, 1994; Lytras, 1994). Two years later, in 1996, before passage of the new law that regulates party finance fully, another poll revealed that 52 per cent believed that corruption was the same in all parties, 28 per cent that there was more corruption in some parties than in others, 17 per cent that corruption existed only in some parties but not in others (Elevtherotypia, 1996). Thus the overall impression held in the period prior to the parliamentary elections of 22 September 1996, was that there was an interdepedence between parties, politicians and private interests, and that this was responsible for certain kinds of unethical or illegal exchange between political parties and politicians on the one hand and private interests on the other. A new party finance law came into force on 10 July 1996. It is still too early to judge how well this law is functioning since it will take some time before its effects are fully felt. Nevertheless, it may be of interest to mention some of its provisions and arrangements here. It distinguishes two kinds of party financing: (a) organizational funding, provided on an annual basis and amounting to 0.12 per cent of the regular income revenues of the state budget; and (b) election funding, provided every time general elections are held for the national or the European Parliament. This amounts to 0.05 per cent of the regular income revenues of the state budget, a proportion which remains the same regardless of how many elections there may be in the year in question. The bodies legally entitled to receive the funds are political parties and party coalitions. They are entitled to funding regardless of their success in electing representatives to the national or European parliaments as long as they field candidates in at least 70 per cent of the electoral regions of the country, and as long as they manage to command at least 1.5 per cent of the votes. The actual allocation of the funds is carried out by an interparty committee. Eighty five per cent of the available funds are distributed among parties or coalitions of parties that have succeeded in electing representatives to the national parliament. Five per cent goes to parties or coalitions of parties that have succeeded in electing candidates to the European Parliament. Ten per cent goes to those which have fielded candidates in at least 70 per cent of the constituencies and have been able to command at least 1.5 per cent of the votes. From the above it is obvious that individual candidates are unable to receive state funds for election purposes unless they join a party. It is worth mentioning that the aforementioned bodies are entitled to financial support for the creation and maintenance of relevant research and study centres.

Political Corruption in Greece 33

The law defines in detail what constitutes ‘income’ and ‘expenditure’ on the part of both political parties and individual candidates. It places restrictions on the provision of funds by local government organizations, bodies regulated by public law, public utilities, agencies and organizations, radio and TV companies, journals and newspapers, enterprise owners and shareholders. It places several restrictions on the quantity of political advertising that may be undertaken by parties while also placing limits on election expenditure – which for political parties and coalitions cannot exceed their total incomes by more than 40 per cent. As far as individual candidates are concerned, funding depends on the number of voters in the constituency in question (amounting to €0.29 per voter for the first 50,000 voters, €0.12 per voter for the next 50,000 and €0.09 for every voter over 100,000 voters). Aside from these detailed provisions concerning income and expenditure, the law establishes an inter-party committee on which each party in Parliament is represented. One of the vice chairpersons of Parliament acts as the committee’s chairperson. The importance of this committee lies in its power to apply sanctions in cases where violations are certified by special comptrollers (appointed by the Minister of the Interior and Public Administration). Detailed procedures specify the penalties to be applied to the parties and the individual candidates concerned. Finally, it is worth noting that the same law attempts to ensure the probity of public officials by requiring them periodically to submit statements detailing property, partnerships and financial support from whatever source. Among those obliged to submit such statements are politicians, state functionaries and the owners of mass media companies. The law requires that statements be submitted every year and that they be checked by the deputy prosecutor general of the Supreme Court with the assistance of two comptrollers of the Court of Auditors. Their report is then submitted to the State Commissioner General who, in cases of certified infringements of the law, forwards it to the competent authority which will apply the proper sanctions. Among the sanctions provided for are: – a minimum of three years imprisonment plus a fine for anyone abusing their position to the benefit of themselves or a third party; – two years imprisonment plus a fine for anyone failing to submit a statement or submitting a statement containing false information; – withdrawal of political rights for between one and five years from anyone found guilty of either of the above-mentioned infringements.

Impact and exposure of political corruption Due to the massive appearance of corruption and scandals in Greece during the 1980s and 1990s two phenomena may be observed. The first is the ‘institutionalization’ of corruption (Scott, 1972). There has not yet been published

34 ‘Quite Corrupt’ Countries

any serious, extensive research concerning corruption and its impact on Greek society. However, several investigations of a small scale and journalistic nature suggest that a large majority of people tends to accept corrupt practices in their dealings with the public sector. They do so either because they see the practices as necessary if they are to do their jobs successfully, or because they see them as necessary in order to by-pass excessively bureaucratic administrative procedures. Generally, there is still a tendency to believe that it is only through a recourse to corruption that tasks can be fulfilled (Ethnos tis Kyriakis 2001). The second phenomenon is related to public attitudes towards politicians and politics in general. People seem to be influenced by the cultural atmosphere described above, because of the behaviour patterns of state functionaries. As far as politicians are concerned, people tend to believe that, regardless of party affiliation, they enter politics for their own benefit rather than to alleviate the harsh reality of people’s everyday problems. Thus, a survey of the Greek public (carried out in June–July 1998 and based on a stratified sample of 1375 individuals) shows that while 20.8 per cent ‘agree’ with the proposition that politicians enter politics for their own benefit, 62.5 per cent ‘agree strongly’. Similarly, 60.0 per cent and 24.6 per cent respectively, ‘agree’ or ‘agree somewhat’ that ‘political parties aim only to get our votes’ (Andreas Papandreou Institute, 1999: 19–20, 96). The above results seem to substantiate the suggestion that the view that politicians ‘are all the same’, frequently heard in everyday discussions, is widely held. It is not surprising, given such attitudes, that people tend to feel alienated from politics, a feeling that is usually manifested by abstaining or by casting a blank ballot in general elections. Political leaders do not seem to be indifferent to such attitudes. Thus, from time to time they take the initiative of promoting general debates in Parliament on corruption and its impact on the political system and society. Two such debates – one in 1995 and another in 1999 – were of considerable significance. While the latter focussed on the negative effects of the collusion of political and economic interests, especially as it manifests itself in public tenders, the former concentrated on ethics in politics. Party leaders stressed the need for all politicians to avoid giving the impression that they constituted a ‘club of the privileged’ owing to the various benefits associated with their legislative and executive roles. Instead, they should work harder on behalf of better public services and the interests of society as a whole. Their words sounded very promising but have yet to be translated into action.

Conclusion Perusal of Transparency International’s annual Corruption Perceptions Index reveals that countries considered as developed (such as Canada, Australia, New Zealand and the Scandinavian countries) regularly occupy the highest

Political Corruption in Greece 35

positions on the scale (the scale ranges from 0 to 10 where the higher a country’s score, the lower the levels of corruption it is perceived to have). Developing countries along with several countries of the former socialist bloc occupy the lowest positions on the scale with scores ranging from 1.4 to 3.9. Southern European countries (such as Greece, Italy, Portugal and Spain) tend to occupy positions in the middle of the scale with scores ranging from 4 to 7. This supports the view that corruption is to a large degree a phenomenon of the developing countries, which have not yet achieved the higher levels of social, economic and political development of the developed countries. By contrast, the developed countries, with their sophisticated political cultures and advanced civil societies, tend to be more sensitive to those practices of corruption that often provide the substance for scandals. It is significant in this context that in a compilation of about 200 scandals, about 90 per cent of them appeared in developed countries such as the United Kingdom and the United States, while only 10 per cent appeared in less developed or former socialist countries (Allen et al., 1990). Dobel (1978), in attempting to construct a theory of corruption, focuses on the interrelationship between ethical, economic, political and social factors since they all tend to appear in several patterns of corruption. He sees corruption as an ethical inability on the part of citizens who lack the ethical ties, symbols, institutions or practices that would benefit the common interest. We consider a deficit or lack of such ties as constituting the defining characteristics of the so-called ‘idioteles society’. Such a society is characterized precisely by an unwillingness on the part of citizens to submit themselves to whatever promotes the common interest. One of its main features is the illegal satisfaction (through a black economy) of needs of a collective character such as housing. Another feature is the satisfaction of particularistic interests through institutional channels. While the first of these two features owes its existence to an ineffectiveness of state structures, the second is established and reinforced through institution building. The more that political elites, in occupying a dominant position in the political system, tend to promote particularistic interests, the more they reinforce the ‘idioteles society’. What might be considered as new in the campaign to combat corruption described above, is the strategy of attempting to harness the conscience and sense of responsibility of both the citizens and politicians. From this perspective, the most significant example is the government’s call to citizens to help the state to reduce tax evasion and the size of a ‘black economy’ that accounts for about 30 per cent of the national income. The state’s campaign betokens a radical change in its attitude towards citizens. It marks an abandonment of the state’s long-standing paternalistic attitude and its replacement by a more co-operative spirit. If this co-operative spirit continues, and citizens’ consciences continue to develop, civil society will undoubtedly grow and hopefully this will contribute to the reduction, if not elimination, of corruption.

36 ‘Quite Corrupt’ Countries

Notes 1. The observations of a French traveller to Greece at the end of the nineteenth century are indicative: ‘The customs control men are the doormen of a nation, but again we should not judge the kingdom of Greece by its door keeping services’ (Dechamps, 1992: 33). 2. The extent of this phenomenon recently become so serious that it gave rise to a political scandal associated with the outcome of the general election of 9 April 2000. The opposition party alleged that several thousands of immigrants (coming mostly from the former Soviet Union) had been provided with legal documents which allowed them to vote in the elections in favour of the winning party. The issue is still under investigation. 3. The statements of several high-level government officials exemplify the degrees of cynicism often felt. Thus, in 1988 the deputy Prime Minister declared in relation to the so-called ‘Yugoslav corn scandal’: ‘Though we may have cheated, we did so for your benefit’. Again, in referring to the Electric Power Authority Scandal in 1985, Papandreou said: ‘It might be expected that an official would offer himself a present, but not one as big as 500 million drachmas’ (Koutsoukis, 1989).

4 Political Corruption in Italy James L. Newell and Martin J. Bull

As Pizzorno (1992) points out, the potential for corruption is inherent in all liberal democracies because in such systems the function of political intermediation between electorate and government is largely carried out by private agents (that is, parties) using private resources and because the activity of inter-mediation is not separable from activities designed to gather the resources necessary to carry it out. But if corruption can thus arise in democracies, it is also subversive of democracies (della Porta and Vannucci, 1999a: 9), this by virtue of its tendency to undermine confidence in the application of universalistic criteria in the exercise of power and therefore, ultimately, its tendency to undermine confidence in democratic institutions themselves. From the latter point of view, corruption in Italy presents something of a paradox. On the one hand it is perceived as extensive. In the mid-nineties, for example, Paul Ginsborg (1995: 3) branded the country as ‘one of the most corrupt democracies in Europe’; and more recently, in 2001, Italy achieved the relatively low score of 5.5 points (and twenty-ninth out of 91 nations) in TI’s Corruption Perceptions Index.1 On the other hand, notwithstanding its extent, there is plenty of evidence of the sense of public outrage from time to time provoked by the revelation of individual episodes of the phenomenon, while judicial attempts to combat it continue. Paradoxically, therefore, corruption scandals in Italy actually bear witness to the strength of democracy in that country and to the vitality of at least some of its public institutions (della Porta and Vannucci, 1999a: 11).

Newness, scale and varieties of corruption There is consensus among observers of the Italian case concerning both the newness and the scale of corruption, at least in broad terms. And that is that while corruption has been a more-or-less salient feature of politics in Italy for many decades, the 1950s and 1960s were a rather quiet time in this respect. There was then a significant acceleration in the spread of political corruption from about the mid-1970s so that when Tangentopoli (Bribe City) 37

38 ‘Quite Corrupt’ Countries

was at its height two decades later it was possible to say that corruption had become systematic and routine. Mauro Magatti (1996: 33–4) suggests that there were at least four factors involved in the spread of corruption from the mid-1970s. First, in the 1950s and 1960s corruption had been an elite phenomenon involving small numbers of large firms and the leaders of the political parties – petty corruption involving public officials and local administrations being still a relatively isolated phenomenon. Later, the places of the old administrators were gradually taken by new arrivals of a lower moral calibre. Secondly, networks of connivance were initially restricted and lacking in solidity, thus making illicit transactions difficult to undertake and hence correspondingly rare. Later, networks of entrepreneurs and politicians socialized in the practices of corruption spread and gained in solidity. Thirdly, the Cold War-induced ideological conflict between Christian Democrats and Communists placed heavy restrictions of an ethical–normative nature on corruption and on the ends to which it could be put. Later, ideological conflict declined in intensity. Finally, rates of economic growth in the initial post-war period were sufficiently high as to ensure that demands for improvements in the quality of life would be channelled into entrepreneurial activities that involved few contacts with the political parties. Later, rates of economic growth slowed down, with demands for improvements in the quality of life as a consequence being increasingly directed at the state and increasingly satisfied by the parties staffing the state. Figures given by Cazzola (1988) show that from the mid-1970s, reported crimes of corruption and embezzlement involving the public administration rose significantly, going from 412 in 1975 to 1065 in 1985. Meanwhile, annual averages rose from 514 in 1963–75; to 681 for 1976–78; to 808 for 1979–86. As regards press reports of corruption, the influential national daily, la Repubblica, carried reports of 117 separate cases of political corruption between 1976 and 1979; 110 between 1979 and 1983; and 208 between 1983 and 1986 (Cazzola, 1988: 67). This growth appears to have touched the entire spectrum of relations between the state’s politico-administrative apparatus on the one hand, and civil society on the other. Adapting the conceptual framework suggested by Rose-Ackerman (1978), Magatti (1996) deploys a four-fold categorization to describe the varieties of corruption that contributed to the overall growth in the phenomenon from the mid-1970s. First, there is the corruption that arises as a result of the power to take decisions concerning the allocation of public money – what to buy, from whom to buy it, according to what criteria and so forth – that is typically deployed in the area of public works contracts and that of tendering for the supply of goods and services. These two types appear to have accounted for about a third and a quarter respectively of the recorded cases of corruption between 1976 and 1992 (Cazzola, 1993; Magatti, 1996: 39). Secondly, there is the corruption that arises from the power to supply resources, public services and permits for the carrying on of a range of

Political Corruption in Italy 39

economic activities. Particularly significant within this category seems to have been that range of activities associated with town planning, building permits and planning permission all of which can have a dramatic impact on the value of private land holdings and which appear to have accounted for some 16 per cent of the recorded cases of corruption between 1976 and 1992 (Cazzola, 1993; Magatti, 1996: 39). Thirdly, there is the corruption that arises from the power of public officials to investigate private conduct and impose penalties where such conduct is discovered to be illegal. Particularly significant in this category seems to have been the area of tax and tax inspection. Here corrupt exchanges were given significant encouragement by the complexity of the relevant legislation (Magatti, 1996: 52). For, by making both inspectors and inspected aware of the near certainty that some irregularity could be found if it were searched for, the laws thereby gave the two sides a ‘built-in’ incentive to deal with the situation by reaching some mutually beneficial accommodation. Finally, there is the corruption that arises at the level of Parliament and its members when in exchange for items of legislation of benefit to single firms and/or powerful economic groups, individual politicians personally, or their parties, receive payment for their role in securing such legislation. The extent of corruption among parliamentarians that was uncovered by the Mani Pulite (Clean Hands) investigations produced one of the most striking and frequently cited sets of statistics concerning corruption in Italy, revealing, as it did, that by the time the scandal broke, the sphere of public policy making had to a large degree degenerated into a market place for mutually profitable exchanges and the construction of alliances between economic and political potentates willing to stop at nothing to achieve their objectives (Magatti, 1996: 55). Hence, by November 1993, requests for the lifting of parliamentary immunity had been issued against over half the members of Parliament, while almost all the members of the government that had held office at the time the 1992 election was called found themselves under investigation – as did the leaders of all the governing parties along with significant proportions of the parties’ administrative officials and local-level leaders. If these data testify to the degree to which corruption had, by the early 1990s, spread to the highest levels and become systemic, then the declarations of politicians seeking to defend themselves by arguing that ‘since everybody was corrupt, no-one was corrupt’, were revealing of the degree to which, when corrupt practices become routine, they fail any more to arouse any sense of culpability on the part of those who engage in them.2

Causes of corruption The individual moral failings revealed by the absence of such feelings of culpability are, however, inadequate for the purposes of explaining corruption and its spread. A key concept here is that of partitocrazia (literally ‘partyocracy’), referring to a considerable degree of overlap between the personnel

40 ‘Quite Corrupt’ Countries

of the parties on the one hand, and interest groups and administrative positions on the other, making it difficult to draw clear boundaries between these entities and to know, in any given case, in what capacity individuals were acting. This implied recruitment to positions primarily according to the criterion of political party-affiliation and only secondarily, if at all, according to technical competence to perform the job in question. It also implied that political power was exercised through the party leaders more than through an executive accountable to Parliament (Partridge, 1998: 69). The importance of partitocrazia lay in its role in sustaining and perpetuating a clientelistic mode of managing power relationships. Clientelism in turn fed corruption by virtue of what it has in common with the latter, namely, the fact that it represents an exercise of power that is unrestrained by rules embodying the value of universalism. Clientelism has for long been a well-established feature of Italian political culture, but two factors in particular were important in its post-World War Two manifestations. One was the establishment of universal suffrage in the specific economic circumstances of the immediate post-war years. Clearly, possibilities for the development of organized political parties would always be limited until the suffrage extensions immediately prior to, and following, the fascist period, so it was not until after the war that mass-membership parties could develop on a long-term basis. At the same time, these parties found themselves operating in a country significant parts of which were poor. Unemployment was high and traditionally, much economic activity, especially in the South, had been beholden to the state for its implantation and development (Allum, 1973: 166). In the South in particular, suspicion and mistrust frequently made collective action difficult. The immediate post-war years thus saw the emergence of a new class of party politician who, once elected to public office, found, on the one hand, that he controlled access to the principal source of wealth, and on the other hand, that he was faced with a mass of isolated individuals (electors) each in search of a protector. In such circumstances, the nature of the post-war party system created a definite incentive for the parties to seek to outdo each other in the supply of the kinds of protection (favour) electors sought. First, the Cold Warinduced ideological conflict saw the permanent exclusion from any potential role in government of the second-largest party, the Italian Communist Party (PCI), while the fascist legacy ensured that the extreme right would likewise be excluded from any role in government. If this ensured the permanence in office of the centre-based Christian Democratic Party (DC) and the smaller parties in their orbit, it also meant that clientelism became an effective substitute for competing on the basis of policy programmes – which would have undermined that minimum degree of coalition solidarity necessary permanently to exclude left and right extremes in the first place. This in turn facilitated the development and consolidation of partitocrazia by stimulating the parties to engage in the lottizzazione (sharing

Political Corruption in Italy 41

out), on the basis of relative bargaining power, of ministerial and administrative posts, to be exploited for patronage purposes. Partitocrazia and the clientelism it sustained are central to an understanding of corruption in Italy because of the way in which, in the management of power, clientelism undermines incentives to remain within the confines of what is lawful and because of what it has in common with corruption. As far as the first of these issues is concerned, clientelism allows power to be exercised in an arbitrary fashion because it represents a denial of the value of universalism, that is, ‘the principle that all persons should be evaluated in the same way, regardless of who they might be’ (Sharrock, 1977: 507). And because clientelism denies the significance of impersonally applied rules, those whose power depends on it face lower moral costs in resorting to illegality to defend their positions whenever these are threatened. If they do decide to resort to illegality, then the corrupt exchange presents itself as a (more or less feasible) possibility that has much in common with the patron–client relationship. It too is based on an individualistic exchange. It too denies the value of universalism. The positions that allow their incumbents to patronize clients frequently provide access to the resources that can provide the basis for corrupt exchanges. While the centrality of clientelism in Italian political culture has traditionally provided fertile terrain for corruption, since the latter is an exchange relationship, explaining its actual incidence in recent years also requires mention of the specific demand and supply factors that have been at work in this time period. For, while cultural factors may create a certain predisposition, or vulnerability, to corruption, in the final analysis its actual incidence will be a function of its costs and benefits for each of the parties involved. On the supply side, a major role in the Italian case appears to have been played by the decline of Cold War–ideological conflict, and the growing costs of politics. Since Italy’s main party of opposition was a Communist party, Italy was contested terrain between the two world power-blocs (della Porta and Vannucci, 1999b: 14) and under these circumstances, the DC and its governing partners on the one hand and the PCI on the other, received generous funding from the United States and the Soviet Union respectively. However, with the declining intensity of the conflict and the emergence of détente in the 1970s, funding from the super powers began to dry up. Meanwhile, the costs of politics, already relatively high in Italy, were increasing. On the one hand, Italy’s list system of proportional representation, allowing the voter to express preferences among his chosen party’s slate of candidates, raised the cost of campaigning beyond what it would otherwise have been by ensuring that candidates from the same party were just as close, if not closer rivals for the coveted parliamentary or local council seats as candidates from other parties (Newell, 2000: 49). On the other hand, the media and office revolutions were pushing up information and propaganda costs and making necessary large investments in order to provide party

42 ‘Quite Corrupt’ Countries

offices with the necessary equipment (Rhodes, 1997: 65–6). Of course, funding from abroad was only one source of finance for the parties, but for a variety of reasons it was difficult to compensate for this loss and meet the increased costs by raising the flow of income from other sources. For example, the 1974 party finance law, introduced in the wake of the oil scandal of that year, outlawed donations from public-sector companies and thus banned a source of funding that had previously been legal (Rhodes, 1997). So there was a corresponding increase in the propensity of parties and individual politicians to seek funding by offering to sell their services and decisions. On the demand side, the most important stimulants to the purchase of favours seem to have been bureaucracy (Rhodes, 1997: 65); entrepreneurs’ lack of trust in the efficiency and impartiality of public action (della Porta and Vannucci, 1999a: 16); a situation of legislative uncertainty and administrative inefficiency. In such circumstances, a system of corrupt exchanges offered entrepreneurs a means of re-establishing the degree of certainty and predictability in their dealings with their environment that they needed in order to be able to make rational business decisions (Magatti, 1996: 69). But if all this is true, then it raises a question of timing. After all, a lack of confidence in the impartiality and efficiency of the public authorities was long standing. Therefore, if the demand for illegitimate decisions and illicit services really was stimulated by this, why was corruption pervasive only from the mid-1970s and not before? Part of the answer to this question has to do with the fact that when corrupt exchanges are marginal phenomena, the search for reliable partners will be difficult, while as networks become established, corruption will then spread in a self-generating way (della Porta and Vannucci, 1999b).

Dynamics of corruption Corrupt exchanges violate contracts that agents have made with principals. Therefore, they are inevitably deemed to be illegitimate. Therefore, they inevitably involve a risk of punishment, and this risk will be inversely related to the number of individuals already involved in corrupt exchanges. One of the reasons for this is that in a society where bribery is rare, it will be widely assumed that the behaviour of at least most other people is honest. Consequently, attempting to bribe in a society where bribery is rare carries with it a relatively high risk of being reported to the authorities – this as the result of the moral outrage provoked by an overture that threatens the security of everyone. Conversely, in a society in which bribery is widespread, expectations concerning the honesty of others will be correspondingly lower with the result that the moral barriers to bribery will also be lower. Consequently, attempting to bribe in a society where bribery is widespread is unlikely to provoke moral outrage and therefore, all other things being equal, to carry a relatively low risk of being reported to the authorities.

Political Corruption in Italy 43

It is the inverse relationship between the extent of corruption and the risks associated with it that in turn allows it to feed on itself. It was essentially because of this logic that, given the initial conditions described above, ‘the system of bribes’ (della Porta and Vannucci, 1999b: 15) then expanded so dramatically from the mid-1970s onwards, spreading until, by the time the Mani Pulite investigations began, it had ‘thoroughly infected every sector of the state, local, and central administrations, public agencies and enterprises, the military apparatus and the bureaucracy, including the judicial power’ (della Porta and Vannucci, 1999b: 15). The analyses of della Porta (1993, 1996a, 1998) and della Porta and Vannucci (1997, 1999a,b) suggest that the processes involved were typified by the gradual transformation that overtook the party most heavily implicated in the early 1990s scandals – the Socialist Party (PSI) – in the period after it first joined the government in 1963. This event led to a major split in the party as a result of which it lost contact with its working class and trade union base. And because of the significance of political affiliation for appointment to so many positions in the public sector, the PSI began gradually to attract less ideologically motivated ‘business politicians’ for whom the party became a source of upward mobility. Since public positions were distributed as rewards for loyalty to a particular political leader, it was necessary for the business politician to develop ad personam electoral and party followings. For these served as resources to be placed at the disposition of political patrons when decisions about the distribution or renewal of positions were being made. And since business politicians had a tendency to view public resources as personal property, their followings would often be constructed in ways that were themselves corrupt. For example, in exchange for public works contracts, licences to trade and so forth, firms could be induced to offer employment to individuals indicated by the politicians. Persons taken on in this way could be relied upon to be faithful to the politician ‘because of their fear of losing their jobs if they [ratted]’ (Allum, 1973: 162). Even more importantly, they could be relied upon to influence others of their group. Once public-sector positions had been acquired, the acceptance of bribes and other abuses of responsibility offered the means of acquiring even larger clientele followings and thus opportunities to accede to positions of ever-increasing importance. For example, part of the proceeds of corruption could be invested in improving the effectiveness of the politician’s political machine. Or, as revealed by Mario Chiesa, the first politician to be caught up in the Tangentopoli scandal, proceeds could even be used to pay the subscription fees of party members (della Porta and Vannucci, 1999b: 79). If processes such as these meant that clientelism and corruption were mutually reinforcing, then the spread of the latter was further reinforced by the corrupt politician’s need to ensure that the persons for whom he acted respected their side of agreements reached, and by the need to ensure the silence of those who might otherwise report him to the authorities. The first need

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arose from the impossibility of using the authorities to force clients to pay if they decided to cheat, for as della Porta and Vannucci (1999b: 45–6) explain, ‘there can be no legal recourse for settling disputes within the corruption market’. In southern Italy, transactions were often underpinned by making use of the services of organized crime from which the corrupt politician would receive the services of the threat of physical violence in exchange for using relationships of connivance with the judicial authorities to provide protection from threats of prosecution. The second need was often met by implicating potential ‘squealers’ themselves in the process of corruption by offering a share of the bribe money – in effect, exchanging silence for part of the proceeds. At other times it could be met by fear, the business politician using an ability to influence things to create a reputation for being powerful.

Anti-corruption laws and campaigns, remedies and solutions On 17 February 1992 Mario Chiesa, then the Socialist head of a Milanese old people’s home, the Pio Albergo Trivulzio, was arrested ‘in the act of taking a 7 m lire ($4,000) bribe from the owner of a cleaning company’ (Gilbert, 1995: 126). As a business politician, Chiesa had built his career through the skilful combination of corruption and the clientele practices described in the previous section. Despite having ingratiated himself with Bettino Craxi, the PSI leader, the latter refused to help him, publicly dismissing Chiesa as a mariuolo (‘little rascal’). Chiesa decided, therefore, to empty the sack (Newell, 2000: 54). Chiesa’s confession set off a domino effect as his naming of names led others to confess and they in their turn to do likewise. In this way, the investigation quickly brought to light the massive networks of ‘mutually beneficial linkages’ (Waters, 1994: 170) that existed between the political parties and groups of entrepreneurs in the city – before spreading out to catch in its nets politicians, officials and entrepreneurs in an increasing number of towns and cities in other parts of Italy as well. By the end of 1993, it had reached the highest levels of the state, and by 1995, the annual number of accusations of corruption and extortion had reached 1,065 cases involving 2,731 persons – as compared to an average of 252 cases involving 365 persons per year between 1984 and 1991 (della Porta and Vannucci, 1999b: 3). Tangentopoli precipitated the most serious political crisis in the history of the post-war Republic, leading to the complete disintegration of all the parties of government; a restructuring of the party-system itself, and attempts at institutional and constitutional reform that led observers to view Italian politics as having begun an (hitherto incomplete) process of transition from a ‘First’ to a ‘Second Republic’. Tangentopoli owed much to an influx into the profession of a new generation of younger magistrates from the early 1970s. As a consequence, a

Political Corruption in Italy 45

novel interpretation of the judge’s role had gained ground within the judiciary: from being a passive bouche de la loi (Guarnieri, 1997: 158) the judge was to adopt a far more active stance and – through penal initiatives in the areas of workplace safety, environmental pollution, tax evasion, fraud, corruption and so forth – to act as a ‘problem-solver’, attempting to tackle the great social issues of the day (Di Federico, 1989: 33). In the past, politicians had usually been able to defend themselves from the threat of judicial investigation by using informal relations of connivance with individual members of the judiciary whereby the activities of excessively zealous junior magistrates could be curbed – via marginalization, transferral or pressure – by superiors more sensitive to ‘political needs’ (della Porta, 1998: 11). In 1992 such possibilities were considerably diminished by the great popularity of the investigations – which also curtailed the capacity of political leaders to sanction those breaking the previously all-prevailing conspiracy of silence. This then induced ever increasing numbers of individuals to collaborate (della Porta and Vannucci, 1999b: 267), something that was assisted by the judicial investigators’ own strategy of offering suspects the prospect of being held in custody if they refused to co-operate or immediate release if they did, while also using custody to keep them ignorant of whether, and how much, fellow suspects might have confessed. This made it impossible for suspects to agree to keep silent and created a rush to confess that could be likened to a series of falling dominoes. A second factor helping to explain why Tangentopoli unfolded when it did is the end of the Cold War and the crisis of the PCI which, in the immediate aftermath of the collapse of the Berlin Wall had transformed itself into a non-communist party with a new name – the Democratic Party of the Left – and undergone a major split leaving it considerably weakened in electoral terms. This made it clear to investigating magistrates that they could now attack the governing class without running the risk that, in so doing, they would thereby enhance the likelihood of the Communists coming to power. It also made it clear to entrepreneurs that, for the first time in 45 years they ‘could foster a crisis of the political system without risking [their] own survival’ (Calise, 1993: 556). Finally, the economic effects of corruption also played a part in the timing of the scandal. On the one hand, by perpetuating the maladministration on which it fed, corruption led to a growing fear on the part of entrepreneurs that they would be unable to compete effectively in the increasingly integrated European markets. On the other hand, by bringing ever-increasing levels of public indebtedness (since politicians had to spend if they were to have the contracts on which to collect bribes) corruption raised the prospect of Italy being excluded from the single currency envisaged by the Maastricht Treaty. In a situation, then, in which public spending had drastically to be curtailed, the rising costs of corruption eventually became unsustainable.

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Impact of political corruption and exposure of political corruption Tangentopoli brought about a complete disintegration of the traditional parties of government and a complete restructuring of the party system through four related impacts: financial, organizational, electoral and institutional. The financial impact was straightforward. Given the sheer scale of the parties’ dependence on corrupt forms of funding, by reducing the amounts available from illegal sources of financing to just a trickle, the investigations pushed all the traditional parties fairly quickly towards bankruptcy. The organizational impact led to the parties’ virtual disintegration. That is, the spread of corruption had considerably weakened the parties’ organizations by favouring the recruitment of individuals whose motives were venal, while penalizing policy and ideological commitments. The process was selfreinforcing – a gradual decline in the numbers of ideologically committed members tending to reduce the attractiveness of membership for those with similar ideological beliefs; a growth in the numbers of members whose motives were instrumental tending to make membership more attractive for those of like mind – and weakened the parties organizationally by virtue of the concomitant decline in reserves of members’ loyalty and commitment. Hence, when Tangentopoli destroyed the basis for instrumental relationships by effectively cutting off the flow of resources that sustained them, it left the parties vulnerable to complete collapse. The sudden collapse of the parties is reflected in the dramatic decline in the figures for party membership which, according to one estimate, went down from 3,804,000 in 1991 to 1,330,000 in 1993 when Tangentopoli was at its height (Follini, 1997: 250). The electoral impact was a haemorrhage of support in the voting booths for all the traditional parties of government. Having already in 1992 polled its lowest share of the vote at any general election in the post-war period, in November 1993 the DC saw its support, at 11 per cent, fall to less than a third of its post-war average. The PSI’s collapse was such as to reduce it to the small change of electoral politics, but none of the traditional governing parties was spared. Facing breakaways of local federations and the desertion of members en masse, after June 1993, the five parties from which governments had continuously been drawn since 1945 had largely ceased to exist as credible political forces. The institutional impact was on the electoral law, which, in April 1993, was changed by referendum (promoted by a referendum movement led by dissident Christian Democrat, Mario Segni), the new law providing for three quarters of the seats of both chambers to be distributed according to the single-member, simple plurality system, one quarter to be distributed proportionally. Largely as a consequence of the new law (which forces parties to seek electoral alliances if they are to maximize their parliamentary representation), elections since 1993 have seen the emergence of an essentially

Political Corruption in Italy 47

bi-polar party system. This, it was hoped, would contribute to a reduction in levels of corruption through giving voters the power to determine the political composition of governments directly, and through governments’ corresponding awareness that rectitude was the price of retaining voters’ confidence. Yet, if the financial, organizational, electoral and institutional effects of Tangentopoli are clear, the policy impact (in terms of preventing or controlling corruption in the future) is more open to question. There have been various reforms. Most of them (such as measures concerned with the privatization of large public enterprises and the reform of public administration) have had implications for the phenomenon as a by-product of other ends (della Porta and Vannucci, 1999a) and, it is true, have in many instances had a significant impact on those conditions known to favour corruption. Lengthy administrative procedures; an absence of checks on the possibilities of collusion between politicians and public employees; a lack of accessibility of the public administration: these are examples of some of the conditions that have been tackled. On the other hand, measures passed with the explicit intention of combating corruption have been few and of an ambiguous character. For example, one of the two proposals of the anti-corruption Commission (established in 1996 by the Chamber of Deputies) that had been passed by the end of 1998 actually narrowed the circumstances in which a defendant could be found guilty of abuse of office (della Porta and Vannucci, 1999a: 41). In a country where the exposure of corruption had been so dramatic as to lead the traditional governing parties to be displaced by completely new parties in a new, bi-polar system, such legislative inactivity may at first sight seem strange. It is to be explained by three factors. First there is the incomplete consolidation of bi-polarity in Italy’s multi-party system – something that has allowed the lack of inter-party consensus, and the system of interlocking vetoes to which this gives rise, to continue to act as a considerable obstacle in the path of would-be reformers. Secondly, though reform and political renewal were, when Tangentopoli was at its height, central battle cries of many of the parties that now dominate the political stage in Italy, these cries no longer have the political usefulness they once had now that the old parties have been displaced. On the contrary, since a number of the politicians that have stepped into the places of the old ones have not themselves been free of suspicion in matters of corruption, it has in some quarters been asserted (and in others with equal vociferousness denied), that continuing judicial activity against corruption has developed into a kind of witch-hunt against individual members of the political class. And this lack of consensus at elite level on the value and significance to be attached to continuing anticorruption investigations in part accounts for the third factor, namely, that with the passage of time, popular interest and enthusiasm arising from periodic revelations of corruption has gradually given way to a lack of interest, and in some instances even hostility towards judicial investigators.

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The political success of Silvio Berlusconi is perhaps the best example of this shift. Despite being under recent and ongoing investigations on several charges relating to money-laundering, links with the Mafia, tax evasion, bribrery, and even complicity in murder, Berlusconi nevertheless actually built his campaign for the 2001 national election around the notion that the election amounted to a referendum on himself – and went on to win handsomely (Newell and Bull, 2001).

Conclusion The prospects, then, for Italy to move from the category of ‘quite corrupt’ countries to one or other of the less corrupt categories are, for the moment uncertain. On the one hand, recent years have seen the appearance of several signs that would augur well for the future. Prior to the early nineties, the spread of corruption had been encouraged by a political system whose features also fed the popular discontent that would ultimately play a significant role in bringing about corruption’s exposure. With the exclusion of left and right extremes and the inability of the governing parties to compete on policy, clientelismo partitocratico developed as a significant alternative basis of party competition. This in turn sustained administrative inefficiency and a situation of policy paralysis as the governing parties, in their perpetual squabbles over the distribution of posts to be exploited for patronage purposes, were unable to achieve any kind of governmental stability. It therefore spoke positively to likely future developments when, in the early 1990s, the judicial investigations that brought down a by-then largely corrupt political class were sustained by a wave of popular indignation which also fuelled pressure for a significant change in the electoral system. In a situation in which the traditional parties were disintegrating, the new law facilitated the emergence of a restructured party system with strong bi-polar tendencies as a result of which it was reasonable to anticipate significant measures of reform. Some significant changes have been made, particularly in the area of public administration. On the other hand, hostility towards the political class and its actions is not the same as widespread support for reform of the conditions which facilitate corruption, and in this context it is worth noting Ginsborg’s (1996) remark that while bringing down an entire political class, the Tangentopoli investigations failed, beyond intellectual circles, to induce any widespread reflection on those cultural traits of clientelism, nepotism and tax evasion in which the activities of the Tangentopoli defendants were ultimately rooted. Since, in a democracy, parties and their leaders are by definition responsive to the wishes and moods of voters, the failure of Parliament to tackle corruption more energetically than it has done in recent years is necessarily tied, to a degree, to these popular attitudes. And what is especially worrying is the possibility that popular attitudes and elite-level inactivity come to reinforce each other.

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At the elite level the largest governing party, Forza Italia, is essentially a vehicle for the political ambitions of its rich leader. Consequently, effective action against corruption could well continue to elude Italian reformers despite the profundity of the changes in the country’s party system. For in continuing to insist that the judicial investigation of the accusations of corruption that have been levelled against him would amount to a political witch-hunt, Forza Italia’s leader, Berlusconi, reinforces that deeply rooted particularistic strain in Italian culture according to which law and its enforcement is ultimately assumed to be negotiable (LaPalombara, 1987). This can only perpetuate corruption and other acts of impropriety for, while it is in the interest of citizens collectively that an overall state of legality prevails, if politicians and parties tolerate illegality, then individual citizens will begin to find that their own interests are best served by acting illegally themselves. Italian democracy, therefore, still has a long way to go to rid itself of corrupt practices.

Notes 1. http://www.transparency.org/documents/cpi/2001/cpi2001.html. See also Luca Fazzo, ‘Corruzione, L’Italia sempre tra i peggiori’, La Repubblica, 29 June 2001. The 2001 result was an improvement on the previous year’s score of 4.6 and thirtyninth position, but still leaves Italy in a poor position relative to its First World counterparts. 2. See, for example, what the Socialist deputy, Sergio Moroni had to say in his 1992 suicide note to the President of the Chamber of Deputies (Colaprico, 1996: 31–2).

Part II ‘Somewhat Corrupt’ Countries

5 Political Corruption in Germany Joanna McKay

The Federal Republic of Germany is one of the great success stories of the post-war period. It is the first liberal democracy on German soil – a Rechtsstaat in which the rule of law is paramount. In sharp contrast to previous German regimes, the Federal Republic is characterized by stable governments, a strong economy, a commitment to European integration, and a preference for multi-national solutions to crises in foreign policy. Faced with lingering memories of the ill-fated Weimar Republic and the Nazi regime that followed, for several decades, leading politicians in the new Federal Republic, were determined to prove that democracy was safe in German hands. However, fears persisted that the (West) Germans were merely ‘fairweather democrats’ who supported the system for pragmatic reasons rather than through conviction. This concern was revived during the early 1990s in the wake of German reunification, encouraged by an increase in rightwing extremism, and by a reunited Germany’s increased size and influence on the international stage. Even the transfer of the German government from Bonn to Berlin in 1999 caused a revival of the old questions about the nature of the German state and the foreign policy ambitions of the Germans because Berlin had been the capital during the less palatable phases of recent German history. However, as the twentieth century drew to a close, a different issue revived the debate about the state of German democracy, namely a political scandal of unprecedented proportions. During the 1990s the Federal Republic was categorized as merely ‘somewhat corrupt’ compared with other countries (Heidenheimer, 1996: 338). However, the scale of the party funding scandal (exposed at the end of 1999) involving the party which had governed Western Germany for the bulk of the post-war period, the Christian Democratic Union (CDU), prompted a reappraisal of the Federal Republic’s ‘corruption rating’. It also prompted a reassessment of the record of the longest serving chancellor in post-war German history, Helmut Kohl. The dynamics and consequences of this extraordinary corruption scandal are examined below. 53

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Newness, scale and variety of corruption Corruption (Filz) in the Federal Republic is almost entirely the preserve of politicians as opposed to bureaucrats. Compared with the political class, the bureaucracy has remained relatively immune to corruption, partly as a result of the inheritance of ‘Prussian bureaucratic integrity’ (Girling, 1997: 172). Even today the civil service has an air of authority and respectability, and confers social status and concrete privileges on its members. However, as is the case elsewhere, political appointments have increased, especially in the case of senior positions in both Land and federal bureaucracies. While this is also the case in most Western democracies, it is more marked in Germany because the civil service encompasses so many areas of the public sector. In addition, under the German federal system, the Land governments have a whole host of responsibilities which offer opportunities for party patronage, for example, in regional courts, banks and broadcasting corporations. Corruption in German politics is a relatively recent phenomenon. Until the early 1980s, ‘there seemed to be a tradition of Prussian correctness and belief in legality that kept the national political arena above influence based only on money and favouritism’ (Blankenburg et al., 1989: 913). Furthermore, most West German politicians seemed committed to the creation of a good impression of German democracy and determined to prove that the Federal Republic was unlike previous incarnations of the German state. The dominant parties ditched the constraints of ideology in favour of consensus, and a new generation of politicians evolved, schooled in the arts of compromise and diplomacy. The average post-war politician was moderate, provincial, and in many cases, rather colourless. Only the ‘Spiegel Affair’ of 1962, a scandal involving revelations in the weekly newsmagazine Der Spiegel about federal defence policy, raised doubts about the integrity of the new breed of German politician. The scandal that was to tarnish the clean image of postwar German politics was the Flick affair of the 1980s.1 This damaged the reputations of all the main parties, and was followed by a series of corruption cases in the early 1990s involving senior politicians. A distinctive feature of political corruption in Germany is that it is not widespread, low-level corruption, but high-level corruption involving a small number of senior figures. Indeed, it is the seniority of the perpetrators that substantially raises Germany’s ‘corruption rating’. The most notorious cases of the 1980s and 1990s involved ministers at federal and Land level and several federal party chairs. And the key figure at the heart of the CDU party funding scandal that came to light in 1999 was the former chancellor and architect of German reunification, Helmut Kohl. In terms of variety, political scandals in post-war German politics show marked similarities. In fact the most serious cases, including the Flick affair and the recent CDU scandal, all involved violations of party finance laws. Furthermore, apart from some relatively trivial cases, the beneficiaries have

Political Corruption in Germany 55

usually been party coffers and not individual politicians. Indeed, former Chancellor Kohl, whose dedication to his party took precedence over his commitment to the law of the land, is the antithesis of the ‘gain politician’ identified by Rogow and Lasswell.2 A second common form of corruption in German politics has centred on the construction industry, the most notorious case being the Neue Heimat scandal of 1985–86, in which a housing construction consortium controlled by trade unions collapsed amid bankruptcy and charges of corruption involving top trade unionists. In the past there was a third variant of corruption in German politics: corruption within city administrations with long-term dominance by one party. This situation is increasingly rare, and the opportunities for corruption within city governments have likewise declined (Helm, 1999: 210). Finally, it should be noted that the occurrence of scandals of a personal or sexual nature involving politicians is rare in the Federal Republic.

Causes of corruption Some of the root causes of corruption in German politics, and of its increase since the 1990s, are similar to those identifiable in other Western democracies. In particular, the extraordinary rise in the cost of election campaigns in the high tech age has encouraged German political parties to seek new ways to generate income. However, due to national variations in political culture there are also specific national causes of political corruption. For some time commentators have blamed the German party financing system itself for the prevalence of corrupt practices (Blankenburg et al., 1989: 915). Compared with their counterparts elsewhere, German political parties are generously funded by the state. This is justified by the fact that Article 21 of the Basic Law gives them a constitutional duty to ‘help form the political will of the people’, an obligation that cannot be fulfilled for nothing. Under current German party law, all parties that receive at least 0.5 per cent of the total vote in federal and European elections, and 1 per cent in Land elections3 receive DM 1.30 (€0.66) per vote for the first 5 million votes, and DM1 (€0.51) per vote above this number per annum. While this level of state funding may sound generous, and does indeed amount to a huge sum in a country with 60 million voters, it is a substantial reduction compared with the level of state support the parties used to receive prior to the new party law of 1994. Before then, the parties received DM5 per vote. In addition to this funding based on electoral strength, for every deutschmark a party receives in the form of donations from citizens, the state contributes an additional DM0.5 (€0.26).4 Since the foundation of the Federal Republic, state funding has helped the parties to fulfil their constitutional duties, and has enabled new parties to enter the party system. It has been estimated that the cost of state support for the German polity has risen tenfold over the past 30 years. This is a result

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of steep rises in direct party funding, in funding for political foundations, and in MPs’ salaries and pensions, instigated by the parties themselves.5 However, several conditions place limits on the amount of state funding the parties receive. First, the funding a party receives from the state may not exceed its self-generated income. Secondly, the Party law of 1994 limited the total annual state expenditure on parties to DM230 million.6 Finally, since allocations are based on the most recent elections, they are set for four or five years. Other sources of income include membership subscriptions, contributions from the parties’ own MPs, and of course, donations from supporters, including individuals and companies. Ever since changes in the law occurred in the 1960s, donations from supporters have been the most variable component of party income (Blankenburg et al., 1989: 920). However, bearing in mind that donations from leading industrialists had helped Hitler and the Nazis to gain power in the 1930s, certain rules and restrictions apply. Under current law, donations from individuals qualify for a 50 per cent tax credit,7 but there are no longer tax benefits for donations from legal persons such as commercial companies. This was stopped in the wake of the Flick affair of the 1980s. German party law forbids donations from certain sources, in particular, religious institutions, professional bodies that serve a specific interest, and donations given in expectation of political or economic favours. Anonymous donations and those from foreigners may not exceed DM1,000 (€511.29). In the case of donations over DM20,000 (€10,225.84), the donor’s name and address must be entered in the annual statement of accounts of the party concerned.8 Both the parliamentary parties and political foundations are exceptionally well funded in Germany (Gunlicks, 1995: 116–17), but direct donations from such organizations to the party with which they are associated are forbidden.9 Even so, the dividing line between their responsibilities and those of the parties can become blurred, hence they do provide support for the parties, if not directly, then in kind. As mentioned earlier, all parties demand contributions from their MPs at federal and Land level from their salaries. The amount and the pressure to comply vary, and Green MPs contribute the most in real terms.10 This is partly because the party’s ecological message is unlikely to attract the support of industry and business. Also, the Greens’ egalitarian ethos demands that MPs share their generous remuneration with the whole party. In addition the Greens originally aimed to break the mould in German politics and did not seek to play by the rules laid down by the existing parties. As a consequence, they were the only party to emerge untainted from the Flick affair, and are the only party to have maintained a ‘clean’ image ever since. In many minds, corruption in German politics is a consequence of the ‘closely interwoven links between economic and political élites’ (Girling, 1997: 172), and the ‘complicity between party and business interests’ (Blankenburg et al., 1989: 921). Such links have been encouraged by the fact that the commercial and business sectors are highly regulated in the Federal

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Republic. The construction industry, a prime example of commercial overregulation, has proved to be particularly vulnerable to corruption (Seibel, 1997: 85), as companies seek political allies who may help them circumvent regulations or win public contracts. The aforementioned Neue Heimat scandal is the best known example of complicity between the construction industry and leading politicians, and the explosion of construction in Eastern Germany since reunification in 1990 has brought new opportunities for corruption in this sector. An additional, though controversial, explanation of corruption in German politics, put forward by Seibel (1997: 92), is that the root causes lie in German political culture. He suggests that the Germans do not value democracy for its own sake due to their lack of ‘the historical experience of acquiring democratic institutions by their own efforts’. However East Germans who took part in the mass demonstrations that hastened the demise of the communist regime of the German Democratic Republic (GDR) in 1989 might challenge such an assertion. The outline of the main causes of corruption in German politics poses the question of why there has been a dramatic increase in cases during the 1980s and 1990s. First, as mentioned earlier, during the early years of the Federal Republic, the need to prove that (West) Germans could govern themselves responsibly was paramount, along with the need for political stability, in view of the communist threat on the state’s doorstep. However, it appears that by the 1980s, this constraint was wearing off. Evidently politicians believed that the Federal Republic had proved itself both politically and economically, and that it was now a ‘normal’ Western democracy like any other, and sufficiently robust to withstand minor breaches of the law without threatening the foundations of democracy. Secondly, the increase in party funding scandals can be attributed to changes in the party political landscape in Germany during the 1980s and 1990s. The German party system was for decades essentially a ‘two-and-ahalf party system’, comprising two parties with mass appeal, the Social Democratic Party (SPD) and Christian Democratic Union/Christian Social Union (CDU/CSU), and the small Free Democratic Party (FDP). But party competition has increased dramatically, first with the entry of the Greens into Land and federal politics in the 1980s, then with the consolidation of the post-communist Party of Democratic Socialism (PDS) in Eastern Germany since reunification, plus sporadic success for parties of the far right. Consequently, the main parties now face competition from all sides of the political spectrum and a reduction in their overall share of state funding. In Eastern Germany in particular, party loyalty is relatively weak and the social groupings on which the main parties can rely for support in the west of the country are far less marked. As a result elections are more competitive, party activists more thinly spread, and all the parties need to spend more to retain support.

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Finally, until 1998, one particular party, the CDU, and one man, Helmut Kohl, had dominated the political scene for 16 years. It appears that this exceptionally long spell in power led to a blurring of the boundaries between the leader and his party, and between the party and the state, which encouraged gross violations of the Federal Republic’s party law.

Dynamics of corruption The Flick affair of the 1980s had all the classic traits of political corruption in the Federal Republic. It emerged that the managing director of the powerful Flick industrial corporation had been granted a lucrative tax exemption by ministers from the FDP, following generous donations to that party. In fact, the Flick consortium made secret donations to all the main political parties, apart from the Greens, in order to encourage a ‘political environment conducive to business interests’, and nurtured individual politicians who would support this objective (Girling, 1997: 17). The leaders of both of the main parties, one of whom was the future Chancellor Kohl, were found to have lied in connection with donations from the Flick consortium. Further allegations continued to make the headlines for several years, culminating in the conviction of the FDP leader for tax fraud. He did not however resign. Far from marking the end of political corruption in the Federal Republic, the Flick affair was followed by a whole host of individual cases. During the 1990s numerous senior politicians at federal and Land level were found guilty of a range of corrupt activities, including nepotism, the awarding of contracts to supporters, and accepting gifts and perks from private firms (Seibel, 1997: 87–90). However, what is rather surprising, in view of the corruption epidemic in other post-communist societies, is the fact that almost every case of political corruption uncovered in post-unification Germany has involved politicians and economic actors from the old West Germany.11 This could be interpreted as an indication that West Germans now take democracy for granted, whereas East Germans, who only gained democracy in 1990, do not. Scandals involving politicians from Eastern Germany since reunification have been of a completely different nature. Allegations of collaboration with the oppressive security service of the former GDR, the Stasi, have ended several high profile political careers and cast doubts on the integrity of others who have survived. The dynamics of the most serious corruption scandal in the history of the Federal Republic, dubbed ‘Kohlgate’, warrant particular attention. At the end of 1999, it emerged that former Chancellor Kohl had personally accepted undeclared donations for his party, the CDU, and had overseen secret bank accounts (‘schwarze Konten’) abroad. This was a clear violation of German party law, which his own party had reformed in the early 1990s. In addition, there was evidence to suggest that money had been channelled into CDU organizations, including Kohl’s local party, from the CDU/CSU parliamentary

Political Corruption in Germany 59

party, a practice which is illegal. There was no suggestion of personal gain however. In addition to the illegal donations, there followed allegations of corruption surrounding the award of contracts. The most serious charge was that a substantial donation to the CDU from an arms dealer, Karl-Heinz Schreiber, was linked to the sale of tanks to Saudi Arabia. A parliamentary committee was convened to investigate this case and other dubious contracts, in particular, the sale of the decrepit Leuna oil refinery in Eastern Germany to the French oil company Elf Acquitane; the sale of aircraft and helicopters to Canada and Thailand in the early 1990s, and the sale of railway workers’ housing at a bargain price to a company whose owners had given DM2.5 million to the CDU.12 Evidence suggested that middlemen with connections to the CDU had received generous ‘kickbacks’ in these cases. Once the scandal broke in December 1999 Kohl admitted accepting undeclared donations amounting to DM2.1 million. However, he denied that political decisions had been for sale, stating that his primary aim had been to serve his party.13 A key aspect of the case was Kohl’s violation of party law by refusing to name the secret donors. This led to intense media speculation as to their identity. The logical assumption was that Kohl had something to hide; after all, if the donations had not bought influence, why not name them? One allegation that Kohl did deny was that his 1994 federal election campaign had benefited from a donation from his close friend and partner in Europe, President Mitterrand of France.14 According to allegations, an election victory for the CDU was threatened by diminishing electoral support in Eastern Germany. Defeat for Kohl could have ruined plans for a single European currency, to which Mitterrand and Kohl were both committed. Consequently money was allegedly channelled into CDU coffers via the sale of the Leuna oil refinery to Elf-Acquitane. However, investigators discovered that many files relating to this transaction were missing. Another interesting aspect of the CDU funding scandal was the question of who else within the party was involved, or at least knew what was going on. Although Kohl had a firm grip on the party, it seemed inconceivable that other senior figures knew nothing of the secret accounts as they claimed. Kohl’s (chosen) successor as chair of the CDU, Wolfgang Schäuble, initially denied all knowledge of the donation from the arms dealer, but his version of events was contradicted by the party treasurer and Schäuble eventually admitted receiving the donation. At the time of writing, the CDU finance scandal remains under investigation by federal prosecutors and a committee of the Federal Parliament. Until the names of the donors are revealed, it is impossible to know precisely what the exchanges between the parties concerned were based on and whether decisions were influenced. In a bizarre twist, it transpired that the security services of the former GDR were aware of illegal donations to the CDU via phone tapping prior to German reunification. However it was decided that

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this evidence had been acquired illegally and was therefore inadmissible in court.15 In the light of the CDU funding scandal a total re-evaluation of the level of corruption present in the German political system is necessary, along with a reappraisal of the record of former Chancellor Kohl. While all the mainstream parties have been implicated in corruption at some point in the history of the Federal Republic, other cases pale into insignificance compared with ‘Kohlgate’. During Kohl’s unprecedented 16 year term as chancellor and 25 years as chair of the CDU, he built up ‘the Kohl system’, which was essentially ‘a party political form of feudalism’.16 This incorporated ‘a network of relations based on party protection, lucrative posts, help with campaigns and other favours. In return, beneficiaries were required to serve the great party patriarch with loyalty and obedience’.17 Over time Kohl became synonymous with the CDU, and in his mind the interests of his party became synonymous with those of the state. To him his word of honour to the donors clearly took precedence over the law. While ‘Kohlgate’ was a scandal of sensational proportions, it was not the only case of political corruption in the Federal Republic exposed at the turn of the century. A Social Democrat Land premier was found to have enjoyed subsidized flights and holidays at public expense; the CDU leadership in the Land of Hessen admitted illegally transferring funds to finance an election campaign in 1999 that they rather surprisingly won; and even the Federal President, Johannes Rau (SPD) was accused of having used state funds to finance birthday parties while he was premier of North-Rhine West-Phalia. The resulting impression was that not only the CDU, but the entire political establishment in Germany, was corrupt. They treated the state like their own treasure chest, according to the highly respected former Federal President, Richard von Weizsäcker.18

Anti-corruption measures In spite of changes to the law on party financing following the Flick affair, the series of cases of political corruption during the 1990s, culminating in the recent CDU finance scandal, suggests there are serious weaknesses in the country’s anti-corruption measures. The task of policing politics has largely been left to investigative journalism, most notably by the weekly newsmagazine Der Spiegel. However, the press clearly failed to uncover irregularities in the CDU’s finances, which date back to the early 1990s, if not earlier. Furthermore, while the media are in the business of uncovering corruption, they are not in the business of eradicating it, since corruption sells papers. The law regarding party funding has already been outlined, but the law is worthless if it can be evaded without fear of serious repercussions. Two key factors in particular appear to have encouraged a number of German politicians to flout the law: first, the fact that corrupting members of Parliament

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is not a punishable offence in the Federal Republic (Seibel, 1997: 80); and secondly, insufficient public pressure on politicians to act responsibly. This has been attributed to the German public’s inherent deference to authority and their attitude of detachment towards politics, beyond the act of voting.19 In short, neither the judicial system nor public opinion places sufficient pressure on immoral politicians to persuade them that corruption does not pay. As has been noted elsewhere, the responses of German politicians convicted of corruption have been highly inconsistent, and it has often been those implicated in the most serious cases who have resisted pressure to resign (Seibel, 1997: 88–90). Even the Flick affair did not end the careers of the ministers found guilty of tax evasion (Seibel, 1997: 88; Blankenburg et al., 1989: 926). However, the key figures in the CDU funding scandal have paid the price for their misdemeanours. Kohl himself could be indicted for an ‘abuse of trust’ and could even receive a prison sentence of up to five years. He has already suffered a spectacular fall from grace and his image as a great German and European statesman has been shattered. Ironically, only a few weeks before the scandal broke, he had been honoured during celebrations of the tenth anniversary of the fall of the Berlin Wall along with the other contributors to German reunification, the former Soviet president, Gorbachev, and former US president Bush. Many of Kohl’s party colleagues disowned him, in some cases in an attempt to distance themselves from the scandal. Kohl lost his position as honorary president of the CDU but refused to surrender his parliamentary mandate. Finally, all official celebrations of his seventieth birthday in April 2000 were cancelled. Kohl’s successor as party chair, Schäuble, became a truly tragic figure. His initial dishonesty regarding his role in the party funding scandal finally ended the potentially great political career that an assassin’s bullet had failed to end in 1990. This produced an unexpected development: the election of the first woman and first East German to head a major political party in the Federal Republic, Angela Merkel. These very characteristics ensured that she had not been part of ‘the Kohl system’. Her election was an attempt by the CDU to demonstrate a clear break with the recent past. Thus it could be argued that the exposure of corruption had a positive effect, accelerating the rejuvenation of the CDU, which in many eyes was long overdue. Finally, the financial consequences for the CDU as a result of the funding scandal were potentially devastating. The president of the Federal Parliament, Thierse, decided that, as punishment for submitting falsified accounts, the CDU should repay the DM41 million of state subsidies received in 1998. The money was to be distributed among the other parties represented in the Federal Parliament, according to their strength, and to other smaller parties.20 In addition, the CDU was fined DM6.3 million for the DM2.1 million illegally received by Kohl. The former chancellor personally appealed to friends and supporters for donations to help pay the fine imposed on the party he claimed he only wanted to serve. He mortgaged his home and collected

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DM6 million (circa €3 million) in just a few weeks, provoking speculation that these new donors were also the original donors with guilty consciences.21 In short, it may have taken a political scandal of the magnitude of ‘Kohlgate’, with serious financial consequences for the party concerned, and total disgrace for the key actors involved, to put an end to political corruption in Germany. It is noticeable that in cases of corruption at Land level that came to light around the same time, the perpetrators resigned immediately, unlike the former chair of the CDU, Schäuble. However, the consequences of this extraordinary episode go far beyond the immediate price paid by the perpetrators, and they are discussed below when we consider the overall impact of corruption on the German political system.

Impact of political corruption and exposure of political corruption Political corruption, be it in Germany or in any other democratic country, essentially amounts to breaking the rules or cheating in the game of politics, which in turn undermines the very principles on which democracy is founded. But the variations in political culture in modern democracies mean that the nature and impact of political corruption also varies nationally. The CDU funding scandal had highly damaging consequences for the party involved. However, parties do not operate in isolation but within a party system in which one party’s misfortune may be highly beneficial to other parties. Indeed, if traditional CDU voters were to desert the party en masse, and for good, this would have serious consequences for the balance of power within the German party system. Initial opinion polls showed that the party’s popularity had plummeted in the light of the corruption scandal. This was a gift to the governing Social Democrats who had suffered a run of defeats in Land elections in 1999. But the Chancellor, Gerhard Schröder (SPD), did not want to see the CDU face financial ruin and stated, ‘For the state of its stability, this country needs a strong party of the democratic right’.22 The implication was clear: German history had shown what the alternative to this was. There was already widespread concern regarding the strength of two parties of the extreme right, the Republikaner and the German People’s Union, in certain regions, and the Austrian Freedom Party had recently proved that it was possible for a far right party to enter government, even in a stable democracy. The CDU funding scandal and other, less dramatic, incidents have affected the German parties in other ways. In particular, the finances of all the parties are likely to undergo greater scrutiny in the future, and the whole issue of how to implement the party law will need to be reopened. Although the current party law was only revised in 1994 there can be no doubt that it was devised by the parties for their own benefit. The issue of MPs’ immunity from prosecution for corruption may be reconsidered, and in the light of ‘Kohlgate’ the possibility of limiting a chancellor’s term in office has been raised.

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But the impact of recent cases of corruption in German politics goes much further than the short-term consequences for the parties. They have seriously damaged the image of the prevailing political system and of the German political class in general. One prominent political commentator held Kohl responsible for the degeneration of political culture in the Federal Republic.23 Far from encouraging the public to scrutinize the activities of their elected representatives more closely, political scandals may serve to alienate voters further from the main parties. Indeed the term Parteiverdrossenheit, roughly meaning disillusionment with the parties, was coined at the end of the 1980s, when popular dissatisfaction with the mainstream parties reached an all time low (Smith, 1989: 27–8; Dalton, 1989: 116), something that was illustrated by a substantial drop in their overall vote share.24 Recent cases of political corruption may also encourage disillusioned voters to consider the smaller parties, or alternatively it may accelerate the drop in active political participation and electoral turnout that is already in evidence.25 In addition, the cases of corruption that have come to light since German reunification in 1990 are likely to exacerbate the East–West divide, something which remains highly evident. Many Eastern Germans have good reason to feel disappointed with German democracy, primarily due to the economic hardship they have faced over the last decade. Eleven years on, the unemployment rate in the east of the country is still double the western rate. Furthermore, Eastern Germans have had to adapt to the western way of doing things and have faced a lack of sympathy, even prejudice, from their fellow countrymen and women from Western Germany. These factors have undoubtedly helped the post-communist PDS to transform itself from a fringe party for devout communists into the only authentic Eastern German voice in a political system numerically dominated by Western Germans. The fact that almost every case of corruption in post-unification Germany has involved politicians from the west of the country can only serve to reinforce Eastern Germans’ disillusionment with the whole political system of the Federal Republic. Some may even conclude that politicians are all the same, whether the system is totalitarian or democratic. Another East–West dimension to corruption in contemporary German politics is the fact that today’s model ‘clean’ politicians, such as the new CDU chair, Merkel, and the president of the federal parliament, Thierse, are East Germans. Both are the antithesis of the average western politician in terms of their behaviour and appearance. Potentially even more damaging is the impact of political corruption on the image of Germany abroad. In spite of the fact that the Federal Republic has proved itself to be a stable democracy with a strong economy and peaceful intentions in foreign policy for half a century, some outside observers, especially in the UK, continue to look for evidence that Germany may return to its old undemocratic ways. The recent increase in the quantity and seriousness of corruption in German politics has provided fuel for those

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keen to prove that the Germans cannot be trusted. The allegations regarding money paid to Kohl by the former French president have provided further evidence for Eurosceptics who regard the European Union as a Franco-German conspiracy which aims to impose a federal Europe on their neighbours.

Conclusion The recent exposure of corruption in the Federal Republic has raised worrying questions about the way German politics works, and has tarnished the image of the only truly democratic political system in German history. The Federal Republic’s image as a model of consensus politics has turned out to have less to do with the common good than with mutual back scratching and the avoidance of true competition on the part of political and economic actors. In the light of recent revelations, the controversial move of the German seat of government from Bonn to Berlin in 1999 may turn out to be welcome after all. The advent of the ‘Berlin Republic’ is likely to mark the end of the ‘tightknit political system – marked by cosy arrangements among banks, industry and political parties’26 that characterized the ‘Bonn Republic’. Political and economic elites will no longer rub shoulders on a day-to-day basis and institutions will gradually become infiltrated by Eastern Germans who have not been schooled in the ‘Bonn system’. In spite of the enormity of the recent CDU funding scandal, the evidence suggests that corruption remains a minority activity in the Federal Republic and not a way of life, however shocking the level of that corruption may be. While the reputations of the mainstream political parties, especially the CDU, have been damaged, the more recent additions to the German party system have not been implicated in cases of corruption, although the appeal of parties such as the Greens and the post-communists remains limited. Even so, unless the law is changed to make the prosecution of corrupt politicians easier, the only factor that may deter future perpetrators of political corruption will be increased psychological pressure as a result of recent events. Whereas to be compared with former chancellor Kohl would once have been regarded as an honour, such a comparison is now one that most politicians would wish to avoid. The study of corruption in German politics makes an interesting contribution to our overall understanding of corruption in contemporary democracies. One question that arises concerns the apparent susceptibility of centre-right parties to corruption. This could be linked to their ideological proximity to wealthy economic interests. Alternatively, it could be a result of the fact that in many western democracies, centre-right parties have simply spent a much greater proportion of time in power than their socialist and social democratic rivals. What is undeniable is that the German example

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certainly supports the widely held view that there is a strong correlation between corrupt political behaviour and longevity in power, and it confirms Lord Acton’s famous view that ‘power tends to corrupt, and absolute power corrupts absolutely’.

Notes 1. For a detailed account see Glees (1987). 2. Cited in della Porta and Mény (1997b: 167–8). 3. Based on the ‘second vote’ which uses the proportional representation system with voters choosing party lists as opposed to named candidates. Small parties who only put up constituency candidates for direct election via the ‘first vote’ qualify for funding if their candidate receives a minimum of 10 per cent of the ‘first vote’. For a more detailed explanation of the German electoral system see Paterson and Southern (1991: 182–4). 4. This applies up to DM 6,000 (€3,067.75) per person or DM 12,000 (€6,135.50) per couple. See Gesetz über die politischen Parteien, Article 18 (1–3). Details in English can be found in Gunlicks (1995: 113–14). 5. According to Hans Herbert von Armin, Spiegel-Online, 1 December 1999. 6. Gesetz über die politischen Parteien, Article 18(2), (5). 7. This applies up to DM6,000 (€3,067.75) (DM12,000 (€6,135.50) for couples). See Gunlicks (1995: 114). 8. Gesetz über die politischen Parteien, Article 25(2). 9. Gesetz über die politischen Parteien, Article 25(1). 10. Spiegel-Online, 5 January 2000; Süddeutsche Zeitung, 5 January 2000. 11. With one exception, namely the former East German minister, Günther Krause, who had awarded contracts illegally. See Seibel (1997: 91). 12. Spiegel-Online, 16 December 1999. 13. Spiegel-Online, 30 November 1999. 14. Spiegel-Online, 23, 24 January 2000; The Economist, 29 January 2000, p. 50; The Times, 7 February 2000. 15. Spiegel-Online, 9 May 2000. 16. Süddeutsche Zeitung, 23 December 1999. 17. Economist, 8 January 2000, pp. 39–40. 18. Spiegel-Online, 1 December 1999. 19. Seibel (1997: 96–9) is highly critical of the German public’s attitude towards political scandals, accusing them of detached voyeurism ‘as if the phenomenon had no connection with them’, and of ‘leaden placidness’. 20. Der Tagesspiegel, 15 February 2000. 21. Süddeutsche Zeitung, 10 March 2000. The largest donor was media magnate, Leo Kirch. 22. Spiegel-Online, 21 February 2000. 23. Hans Herbert von Armin, Spiegel-Online, 1 December 1999. 24. Between 1980 and 1990 the vote share of the two mass parties, the CDU/CSU and SPD, in federal elections fell from 87 per cent to 77 per cent. 25. Following the Flick affair, turnout fell by 5 per cent to 84 per cent at the 1987 federal election. Source: Forschungsgruppe Wahlen. Since then it has continued to drop due to consistently lower turnout rates in Eastern Germany compared to the west. 26. New York Times, cited in Spiegel-Online, 19 January 2000.

6 Political Corruption in the United States Robert Williams

Corruption and scandal have long been regular and conspicuous features of American politics and government. From the land, oil and railroad scandals of the nineteenth and early twentieth centuries to the presidential, congressional and electoral scandals of the late twentieth century, the United States has rarely enjoyed a reputation for political probity or institutional integrity. Some American states are less corrupt than others and the federal judiciary experiences fewer scandals than do the executive and legislative branches but, overall, corruption is not confined geographically or institutionally. The way in which corruption is understood in the United States is a product of legal, social, economic and political cultures and contexts. Rules regulating political conduct were conspicuous by their absence in the nineteenth century and, what may appear as conspicuously corrupt by modern standards, was then perceived as ‘politics as usual’. While corruption has long been a notable part of American political life, attempts to regulate and control it effectively began in the 1970s in response to the Watergate scandal (Williams, 1998). The use of public agencies to pursue private vendettas against ‘the enemies of the state’, most notably the creation of an in-house team of burglars based in the White House itself, was sufficiently scandalous to elevate the issue of corruption up the political agenda. Corruption and misconduct now play an important role in contemporary American political debate. Politicians are more sensitive to the issue, the media display a keener interest in exposing misconduct and the rules governing official conduct have become more restrictive.

Newness, scale and varieties of corruption There seems to be a new ‘iron law’ of American politics; the more you look for corruption and scandal, the more you are likely to find it. This makes it very difficult to assess whether there is more corruption now than there was in the past because it is difficult to separate issues of awareness and investigation from actual incidence. Corruption receives much greater attention 66

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now than it did before. This is linked to the growth of a culture of mistrust which encourages the press and the public to question the motives of all politicians and to assume that, in varying degrees, they are all crooks. There is no reliable ‘hard’ data about levels of corruption in the United States and no way of being certain whether there is more now than there was in 1950 or even 1850. We do have opinion poll evidence which suggests that public trust in the integrity of politicians fell sharply in the last third of the twentieth century. We also know that at different points in American history, there have been upsurges of political and public discontent about standards of public ethics and conduct. These periodic ‘moral panics’ have provoked a variety of reform efforts and, as a result, there are good grounds for the claim that the United States has the most comprehensive and stringent anti-corruption laws and rules of any modern democracy. Thus, while we cannot prove that corruption has increased in frequency or importance, we can say that public cynicism has reached new heights and, as part of a hitherto unsuccessful effort to calm the public’s fears, an unprecedented range of reform measures have been implemented.

Causes and dynamics of corruption Any assessment of the causes of corruption has to take note of the political culture and institutional framework of government. The key principles of the American constitutional design are federalism and the separation of powers. Both principles encourage the dispersal and fragmentation of political authority and, in so doing, they multiply the number of potential decision and access points. Critics claim that the American system of government is designed not to work and, if this is an exaggeration, it remains the case that the system is not conducive to swift, decisive action. American politics and policy-making are complex and the system lacks cohesion and purpose. It is, for example, quite common for the executive and legislative branches to be controlled by different political parties. To British observers, the idea of having a Labour government but a Conservative majority in the House of Commons seems absurd and unworkable. But, in his second term, President Clinton had to come to terms with the political fact that his Republican opponents controlled both the House of Representatives and the Senate. This phenomenon of ‘divided government’ further complicates an already complex system and makes coherent policy-making extremely difficult. Divided government exacerbates the already formidable problems of governing in such a fragmented and porous political system. It is only possible because American politics normally lacks the hard edge of ideological conflict which makes co-operation with political opponents so difficult in other political cultures. American politics depends on the skills of politicians to broker compromises. It is a system of incremental change in which principle and consistency are singular disadvantages. It is, almost by definition,

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a system in which it is easier to prevent change, to protect the status quo, than it is to promote comprehensive reform. Political activity in the United States is not driven by political principle or ideological conviction but by pragmatism and reciprocity which means that politics is a market place in which deals are struck and favours exchanged. Where party loyalty and ideological purity are not effective guides to political action, they tend to be replaced by individual self interest. Despite the continuity of the two-party system, legislative politics in the United States is inherently individualistic where each representative and senator seeks to gain allies on particular pieces of legislation by a process of ‘horse-trading’ or ‘logrolling’ whereby individuals who offer their support for a cause expect, even require, something in return. Nothing is sacred and everything is negotiable. Presidents seek congressional support by offering favours or by directing public funds to key constituencies. Within Congress, individual legislators will trade support for particular favourite pieces of legislation so that an urban Democrat might vote in favour of higher farm subsidies on the understanding that a rural Republican will reciprocate by voting for new housing projects in urban ghettos. In a fragmented political system so evidently lacking in cohesion and discipline, the opportunities for intervention by external actors such as business corporations are plentiful. American politics and government are characterized by openness and an ease of access to politicians and officials. In terms of state theory, the United States falls into the ‘weak state, strong society’ category, and the possibility of making political decisions without reference to those who are affected by them would seem heretical. Interest groups have multiple points of access at both the federal and state levels and, when their efforts are unsuccessful at one level or with one institution, they quickly move to another. The point is that such activity is not only legitimate but is considered by many to be commendable, as evidence of the health of American democracy and the means by which politicians are required to respond to those who put them in office. The individualistic character of politics and, in particular, the lack of strong party or ideological loyalties, means, on one interpretation, that American politicians enjoy a status and independence which is rare in Europe. Viewed differently, it could be argued that, stripped of party protection, politicians are isolated and vulnerable to both legitimate and illegitimate pressures from individuals, groups and organizations. In particular, the fact that every American elected politician from county to state to national level is expected to raise their own election funds means they are dependent on donations from wealthy contributors. No doubt some contributors are motivated by altruism and a concern for the public good but usually the norm of reciprocity applies. Most contributors expect office holders to grant them privileged access and timely information. Many commentators suspect that contributors’ expectations go well beyond access and information and place

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obligations on officeholders to intervene in administrative or legislative policies and processes for the particular benefit of major campaign contributors. This could, for example, involve inserting an amendment in a bill, obstructing a bill in whole or part, or exercising pressure on regulators. The case of the ‘Keating Five’ offers a striking example of the potential for corruption and for a negative impact on public policy-making (Thompson, 1993). To many observers, ‘The Keating Five scandal became symbolic of the collapse of congressional ethics’ (Roberts and Doss Jr, 1997: 140). The collapse of the savings and loan industry in the 1980s eventually cost the American taxpayers hundreds of billions of dollars (Adams, 1990). If the proximate cause of the scandal was the wave of financial deregulation promoted by the Reagan Administration, it also received support from many members of Congress. The Lincoln Savings and Loan was acquired by a property speculator from Arizona, Charles Keating, whose reckless investment strategy attracted the attention of the federal regulators. Keating declined to co-operate with the regulators and sought political protection from his friends in the United States Senate. It emerged that, in 1987, five senators had intervened on Keating’s behalf with the federal regulators, accusing them of harassing a respectable businessman. All five senators had received substantial campaign contributions from Keating. In 1989, Lincoln Savings and Loan collapsed at a cost to the taxpayer of two billion dollars. The causes of corruption in any political system are broadly similar and depend on the structure of incentives, the range and number of opportunities and the risk and consequences of detection.1 Where there are frequent opportunities, the prospect of large gains and a minimal risk of detection, it is likely that corruption will flourish. Where opportunities are limited, gains are modest, the risk of detection high and the penalties draconian, corruption will be lower. Some areas of government activity in the United States, as elsewhere, are peculiarly susceptible to corruption. The usual ‘hotspots’ include public procurement and contracting, capital projects, customs and excise, taxation, licensing and all forms of regulatory activity. When the scope and size of government grows, as the federal government did in the 1930s, so do the opportunities for corruption. Given the current scale of American government, the opportunities for corruption are numerous but, because of the federal system, the opportunities are disproportionately large at the state and local level. The federal government in Washington is less a direct supplier of goods and services than a source of funding to state, city and local governments to enable them to deliver services to citizens. The major exception is defence procurement where the federal government still contracts directly with suppliers. Federalism multiplies the points of access and influence and thus disperses opportunities for corruption. Attempting to control corruption in American government is therefore a complex task because there are so many layers of government to tackle. The political culture is receptive to interest group

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activity and elected representatives are expected to respond to the needs and claims of their constituents. This combination of structural and environmental factors contributes to the problem of controlling corruption because it increases the opportunities for corruption and complicates efforts to reduce it. One consequence is that levels of corruption vary from state to state depending on local circumstances and traditions.2 Corruption flourished in the era of the urban political machine which controlled many American cities in the late nineteenth and early twentieth centuries because ‘bosses’ needed state resources for patronage purposes. The risks of detection and punishment were minimized by the politicization and corruption of police departments and judges and the intimidation of political opponents. Perhaps the most distinctive feature of corruption in the United States is its links to the funding of electoral campaigns (McSweeney, 2000). Where some European states rely heavily on state funding and others channel funding through strong central party organizations, the United States places unusual responsibility on individual candidates to fund their own election campaigns. The consequences for corruption in the United States are considerable. Political parties have long experienced a bad press, and distrust of parties (or factions) has been a major theme in American political history from the founding of the republic. The corruption of party machines gave rise to a reform movement in the early twentieth century whose aim was to weaken parties. The introduction of primary elections helped erode the party bosses’ control over candidate selection and encouraged the separation of candidates from parties which has become such a striking and distinctive feature of American electoral politics. Party machines had funded election campaigns through corruption but their decay and destruction did not offer any obvious solution to the problem of how to fund election campaigns in the future. American political parties lack any concept of membership let alone any aspiration to mass membership. Political affiliation is measured by party identity expressed through voting intentions rather than by ideology or the possession of a party membership card. Deprived of internal sources, it has been necessary to seek external sources of campaign funding.

Anti-corruption laws and campaigns, remedies and solutions Fund raising by political parties in the United States has operated within a political culture and legal context which is driven by a fear of corruption. In 1907, 1921, 1940 and 1947, laws were passed which sought to eliminate or at least control donations to parties from business corporations and, more recently, trade unions. But expectations that legal restrictions would reduce the influence of vested interests over political candidates were soon disappointed. The 1907 Tillman Act which banned contributions by businesses and banks merely served to encourage more indirect forms of contribution. Thus, senior executives in corporations would make it known that they

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expected or even required employees to make individual contributions to nominated candidates for which they would later be reimbursed. Not only did contributors find ingenious and innovative ways around legal restrictions but the commitment to enact legislation was not matched by a determination or ability to enforce it. The Corrupt Practices Act 1921 limited the size of campaign contributions and required candidates to submit reports of expenditures, presumably in the expectation that this would reduce corruption and promote transparency. The Corrupt Practices Act was superseded by the 1971 Federal Election Campaign Act (FECA) but, in its fifty year life, not a single candidate or contributor was convicted for offences under it. By the 1960s, a leading commentator could observe that ‘American politics is atomized and each candidate must in some way or other cover his own personal campaign expenses’ (Key Jr, 1964: 494). When that candidate was Richard Nixon, it ultimately produced the notorious Watergate scandal which was at root a campaign funding scandal. It was a scandal involving illegal contributions from some of America’s best known companies including Goodyear and American Airlines, the exchange of contributions for favourable government decisions in the case of the Associated Milk Producers Inc, the solicitation of donations backed by the threat of sanctions against those who initially declined and the apparent sale of ambassadorships to major contributors. The illegal donations were matched by a series of illegal expenditures including the formation of the notorious burglary squad, ‘the Plumbers’, established inside the White House. Watergate generated a series of anti-corruption measures and, with regard to campaign funding, FECA was amended in 1974 with the aim of eliminating large donations and reducing the costs of elections. The impact of the reforms was to accelerate the already clear trend toward the separation of candidates from parties. In terms of campaign funding, American election law affords political parties no special status but rather treats them like any other private source of money, a potential threat to the public interest. Other democracies do things differently and it is more usual to find that ‘Campaign finance law has been aimed at protecting parties from special interests rather than treating parties as special interests’ (McSweeney, 2000: 44). Despite the FECA and its subsequent amendments in 1974, 1979, and 1991, what characterizes American campaign finance reform is the consistent ingenuity of candidates and contributors in finding ways around the legal restrictions. The Federal Election Commission has a reputation for ineffectiveness which is matched by few federal agencies. It investigates only a small proportion of alleged violations and, on the rare occasions it comes to a judgement, the penalties are usually light. It is underfunded, overworked and politically deadlocked. Campaign finance reform is a regular feature of political debate and a wide range of reforms have been canvassed. Sometimes it is even possible to pass a new law but they generally do little to allay concerns about levels of

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corruption in the system. Laws can be circumvented or inadequately enforced. In the case of the ‘Keating Five’, the campaign contributions were legal and the senators defended themselves on the grounds that they did not do anything illegal or improper. The legal counsel to the Senate Ethics Committee argued that what was important was the appearance of impropriety and he claimed that a senator ‘should not engage in conduct which would appear to be improper to a reasonable, non-partisan, fully informed person’ (Roberts and Doss Jr, 1997: 141). It is not clear how many politically conscious individuals in Washington can meet this person specification. If there is a broad consensus that the present system of campaign finance generates corruption or the appearance of corruption, reform has proved elusive and illusory. Finding a combination of measures which satisfies politicians and citizens, Democrats and Republicans, liberals and conservatives, incumbents and challengers, and representatives and senators as well as meeting constitutional and legal objections has so far proved beyond the reformers. It seems that the pernicious influence of private money in public elections is highly resistant, if not completely immune, to attempts to clean up the electoral process. The substantial and ever increasing costs of election campaigning which require aspiring candidates to raise larger and larger sums of money to compete for their party’s nomination, let alone fight a general election, point to more of the same. Piecemeal reforms will be the norm because the political system is temperamentally and institutionally resistant to root and branch reform. It is therefore not simply a question of ironing out a few creases in the campaign finance legislation but rather understanding how the American political cloth is woven and recognizing that pulling at one thread might unravel the entire political fabric. In any comparative study of contemporary political corruption, the distinctiveness of the United States consists in three features of American political life. The first, as we have seen, is the idiosyncratic system of campaign finance which makes it difficult for politicians to avoid giving the appearance of corruption. The problem has been exacerbated by the steep rise in campaign costs associated with the need to buy expensive television and radio time. The second distinctive feature is the tendency to overreact to corruption scandals by introducing ever more onerous and rigorous anti-corruption measures (Garment, 1991). This has the consequence of setting the threshold of corrupt conduct at a lower level and this makes it more difficult for politicians and officials to establish and sustain a reputation for integrity. The attempts to tackle the abuses of campaign finance have resulted in making the system extremely complex, thus making it ever more difficult for candidates to stay within the rules. Thus, the appearance of corruption is more striking in the United States because the low threshold and complex arrangements make it easier to point to unethical and illegal behaviour by politicians.

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This is linked to the third distinctive feature of American political corruption: the use of corruption allegations as a political weapon. Such allegations are a feature of many democratic systems but, in the United States, they are easier to make both because of the constitutional protections of freedom of speech and hence the lax libel laws and because, if you operate with a low threshold of unethical conduct, it is easier to identify violations of laws and rules. The problem is that corruption allegations are a double edged sword and those who live by it sometimes also die by it as former Speaker of the House of Representatives, Newt Gingrich, found to his cost. The outbreak and intensification of the ‘corruption wars’ has been a notable feature of American politics since Watergate. The resignation of President Nixon in 1974 in anticipation of his impeachment made it difficult even for optimists to sustain their belief in the integrity of American government. From landslide re-election to total disgrace in two years is as precipitous a fall in political fortunes as can be found anywhere on the globe. The revelations of his abuses of office and the subsequent revelations of those of his predecessors in office helped develop and reinforce a growing public distrust of politicians. If the President turns out to be a crook, what price a senator or representative? Watergate ushered in an era of reform, a drive for stronger limits to political conduct, more transparency, and greater accountability. Not only was the FECA amended in 1974, but, after the Lockheed scandal the Foreign Corrupt Practices Act was passed. In 1978 the Ethics in Government Act became law and, among other provisions, it established the Office of Independent Counsel. This single reform was to have profound consequences for Nixon’s successors. The presidencies of both Reagan and Clinton were seriously tainted by the efforts of independent counsels, Lawrence Walsh and Kenneth Starr (Williams, 1999). Watergate persuaded many that there was a crisis in public ethics and the Ethics in Government Act was the major legislative response. Apart from the Independent Counsel provision which was intended to protect the integrity of investigations of executive branch misconduct, the law provided new restrictions on ‘revolving door’ appointments by imposing a one year cooling-off period for officials; it established the Office of Government Ethics to provide ‘overall direction of executive branch policies related to preventing conflicts of interest’ (Roberts and Doss Jr, 1997: 95), and added to financial disclosure requirements and rules governing blind trusts. But it is important not to see the Ethics in Government Act in isolation. In the Justice Department a new Public Integrity section was established which developed close working relations with US attorneys across the country. Most states created boards or agencies to oversee public ethics, conduct investigations, issue advisory opinions and collect and consider financial disclosure statements. Following Watergate, the Federal Bureau of Investigation (FBI) made the investigation of corruption one of its most important priorities.

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It embarked on a pro-active strategy of setting up what became known as ‘sting’ operations designed to test the integrity of federal and state politicians and officials. In 1980, the ABSCAM3 investigations exposed one senator and a number of representatives taking bribes (Wilson, 1990). In the early 1990s, US attorneys and the FBI embarked on a number of corruption investigations at state level and there were corruption scandals in Arizona, California, New York, Rhode Island, Tennessee, Texas and West Virginia. An FBI sting operation in South Carolina trapped five state legislators into agreeing to sell their votes to support a proposed bill. In the same year in Kentucky, 15 legislators, lobbyists and officials were convicted on corruption charges as part of another FBI sting, ‘Operation Boptrot’ relating to the horse-racing business. Between 1980 and 1992, the number of corruption charges filed in the federal courts rose by 70 per cent. The rise of corruption up the government agenda had triggered a substantial political and law enforcement response. Public integrity was now a ‘hot’ issue and a public integrity bureaucracy grew up to combat corruption at all levels. Determining whether corruption has increased is a difficult task but there are certainly many more people, both inside and outside of government, looking for it, and many more allegations are made about it than was the case thirty years ago. The use of corruption charges as a political weapon has been particularly striking and damaging in the United States Congress. Few institutions can thrive when there is a breakdown of trust between colleagues but, when the institution relies on shared understandings and a norm of reciprocity, the problems become particularly acute. Congressional politics have become increasingly partisan and accusatory and this has created more difficulties for an institution which already lacks discipline and coherence (Thompson, 1995). One source of this tension was the affront to partisan sensitivities caused by the circumstances of Nixon’s resignation. Republicans in the House of Representatives had long been resentful of the way they were treated by the seemingly permanent Democrat majority and with the way in which the Democrats were able to contain their own scandals. One young ambitious Republican, Newt Gingrich, anxious to make a name for himself, determined to bring down the most powerful figure in the House, Speaker Jim Wright, and his chosen weapon was to accuse him of corruption. Congress had approved its first code of ethics in 1968 and this was tightened in 1977. The tightening of the code involved members of Congress agreeing to restrictions on their freedom to earn money outside of Congress through, for example, giving speeches. The loss of income inherent in accepting the new code was made more palatable to members by the decision of Congress to vote for a significant increase in congressional salaries. Although the ethics committees in both houses were formally bipartisan, Gingrich’s attacks on the Speaker increased inter-party tensions. Although there were calls from other sources for an investigation of Speaker Jim Wright, it was

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the ultra conservative and ultra ambitious Gingrich who launched a personal crusade with the direct aim of destroying Wright and, indirectly, of smearing the Democratic majority with a reputation for corruption. In the short term, Gingrich’s strategy was successful in that Wright was forced to resign in 1989 and, when the Republicans captured control of the House in 1994, it was Newt Gingrich who became the first Republican Speaker for almost 50 years. Ironically, Gingrich’s allegations against Wright were never sustained but he did succeed in focusing public, media and congressional attention on Wright’s misconduct. Gingrich is also responsible for helping to turn corruption from a matter of individual disgrace into a major battleground between the political parties. In his resignation speech, Wright portrayed himself as a ‘victim of a partisan vendetta and denounced the mindless cannibalism of attacks on politicians’ personal ethics’ (Roberts and Doss Jr, 1997: 137). Just before Wright’s resignation, the House Majority Whip, Tony Coelho, also resigned because of financial indiscretions and, four years later, the Chairman of the Ways and Means committee, Dan Rostenkowski, was convicted on corruption charges. It might be thought that with leading Democrats resigning or being convicted on corruption charges and with his own election as Speaker, Gingrich’s triumph was complete. But making corruption charges is much easier than defending your reputation against them. House Democrats were angry at their loss of power in general and Gingrich’s role in particular and they wanted revenge. Gingrich soon found himself the subject of concerted attack and after prolonged investigations from the House Ethics Committee, he was censured and fined for ethics violations. Gingrich’s position was correspondingly weakened and his position declined further when he was out manoeuvred by President Clinton in the 1996 government shutdown (Jubb and Williams, 1996). In 1998, Gingrich resigned as Speaker. The public integrity war had escalated and Gingrich’s successor was bound to come under close scrutiny. The favoured Republican candidate for the post, Bob Livingstone, abruptly resigned from Congress after allegations about his extramarital sex life. The double edged character of corruption and ethics allegations was now fully apparent and election campaigning became increasingly negative and ‘dirty’.

Impact of political corruption and exposure of political corruption The impact of corruption can be assessed in a variety of ways. Most importantly, there is the impact on public perceptions of government and politics and the consequences it has for both public trust in politicians and for electoral outcomes. Clearly, the way in which the public receives information about corruption is important and, in particular, this focuses attention on the role of the mass media. Since Woodward and Bernstein allegedly ‘uncovered’ Watergate, a mythology has developed about idealistic and crusading

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journalists supported by fearless editors and proprietors (Bernstein and Woodward, 1974; Ben-Veniste and Frampton, 1977). The reality is that serious investigative journalism is expensive, difficult and time consuming and both print and electronic media prefer to rely on the efforts of, and leaks from, law enforcement agencies. What has changed in the last five years is the growth of the internet and the interaction between mainstream and fringe publications. Internet sites are favoured by conspiracy theorists whose claims are then reported in reputable journals and given greater weight. The media’s attitude to politics and politicians has changed significantly over the past 25 years. From being respectful, even deferential, it has become more inquiring and sceptical, more aggressive and intrusive. Its role has changed from lapdog to watchdog to attack dog. At the same time, levels of public trust and confidence in politicians and political institutions have declined. The perceived integrity of politicians in contemporary America is on a par with car salesmen and estate agents. According to one survey in the 1990s, ‘over half the public believe that half or more of the members of Congress are financially corrupt’ (McSweeney, 2000: 47). The decline in public trust is matched by a decline in voter turnout and while the explanation for this decline extends well beyond the impact of corruption, it clearly plays a part. Voters do not generally approve of corrupt legislators and one recent study concluded that ‘charges of corruption against an incumbent produce a negative effect on the incumbent’s share of the vote’ (Welch and Hibbing, 1997: 234). This effect varies according to circumstances but is estimated to be about 10 per cent. As a consequence, ‘twenty five percent of incumbents charged with corruption lose their general election bids’ (Welch and Hibbing, 1997: 237). In assessing why 75 per cent win anyway, it is important not to assume that these voters are necessarily indifferent to corruption. The possible explanations are many and varied, for example, the belief that all politicians are corrupt and therefore corruption is not a ground for discriminating in voting. Some voters may lack sufficient information or be sceptical about the validity of particular charges. Ultimately, the weight attached to corruption charges will depend on a variety of factors including the voter’s closeness to the candidate in terms of partisan and policy preferences. The impact of corruption on the American economy is hard to gauge but clearly the size and dynamism of the economy is such that the United States is better able to carry the economic costs of corruption than any other country in the world. Since the passage of the Foreign Corrupt Practices Act in 1977, there has been growing concern in the United States about the lack of a level playing field in international trade. Where American companies risked prosecution for offering bribes to secure contracts overseas, rival companies from other nations were not similarly constrained and could even claim them as tax deductible expenses. Thus, the United States has been the driving force behind the OECD Convention on bribery in international trade.

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Corruption was ‘discovered’ as a global issue in the 1990s and the ‘discovery’ was disproportionately an American one. Multilateral agencies like the World Bank had studiously avoided the issue of corruption for forty years but, after the end of the Cold War and the growth of American concerns at the loss of competitive advantage in international trade, it made corruption a top priority. If American companies are constrained by domestic legislation, their desire is to see their competition constrained by their national governments or by international agreements. Part of the awareness raising exercise about corruption was the development of the Corruption Perceptions Index (CPI) by TI. This regularly judges the United States to be more corrupt than Scandinavian, Australasian and North European states but also more corrupt than Canada, Hong Kong and Singapore. The only major European states thought to be more corrupt than the United States are France and Italy. The compilation of the CPI presents a number of methodological problems but most commentators would agree that the ranking of the United States is about right. Despite the vigorous anti-corruption efforts of the last 25 years, and the lead it has taken in reducing corruption in international trade, the United States is still viewed as more corrupt than many other developed countries.

Conclusion The post-Watergate years have not seen an era of corruption-free politics but rather an intensification of the ‘public integrity war’. Corruption has become a high profile issue although this does not necessarily mean that corruption is more prevalent or important. Some blame the media for elevating minor indiscretions into national headlines. In this view the media are like piranha and when they scent even a little political blood they engage in a ‘feeding frenzy’. Sabato (1991) argues that the media needs to discriminate between serious and trivial corruption. One problem with this approach is that, as a corruption scandal unfolds, it is not always, or even often, possible to tell how important a scandal it is going to be. Some conservative writers blame the liberal media and political analysts for the attacks on the Reagan Administration in the 1980s. In this view the problem was not that many of Reagan’s senior officials were corrupt but rather that their critics lacked proper respect for office holders and established institutions. But it was the conservative media and ultra conservative commentators who sustained the assault on the alleged corruption of the Clinton presidency. In determining what is to be done about corruption in the United States, it is important to start with an appreciation of how large and how serious a problem it is. Clearly some groups, such as Common Cause, take a pessimistic view and believe there is the need for the introduction and rigorous enforcement of comprehensive anti-corruption measures. As already noted,

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numerous anti-corruption measures have been implemented at federal and state levels in the late twentieth century but, as we have also seen, they do not seem to have had much success in restoring public confidence and trust in politicians or the political process. Corruption has become a political tool, even a weapon of first choice. Ginsberg and Shefter have argued that the decline of parties and the increasing frustrations of political deadlock have forced both Republicans and Democrats into a strategy of revelation, investigation and prosecution (Ginsberg and Shefter, 1990). While mobilizing the electorate and swaying public opinion are extremely difficult and politically dangerous, there are short-term gains for men like Newt Gingrich in using corruption to drive their opponents from office. The combined failures of ideologies and institutions have encouraged politicians to find alternative means of achieving their aims. Ginsberg and Shefter (1990: 433) posed the question, ‘How did our politics reach the point where public officials now regularly seek to secure the imprisonment of their political opponents?’ The answer lies in the salience of corruption as a political issue in a polity which lacks policy coherence and institutional accountability. Where ideology and institutions fail to provide adequate guides, it is likely that the characters of those who seek to lead will be seen as more and more important. Where public trust in political integrity breaks down, the rational response is to ensure that politicians and officials are weighed down with codes of conduct, disclosure requirements and a whole range of monitoring and supervisory procedures. There are two dangers here; the vigorous pursuit of corruption can become a primary goal in itself to the detriment of the conduct of government,4 and the prospects of restoring public trust are reduced when the public integrity debate is infused with bitter partisanship. If present trends continue or intensify, the main casualties in the war against corruption will be American politicians, and they will only have themselves to blame.

Notes 1. The literature on the causes of corruption is large but a number of important contributions are contained in Williams (2000). 2. Some northern states such as Minnesota seem to enjoy low levels of corruption while others like Louisiana, New York and Rhode Island have had higher levels. In 1904, Lincoln Steffens called Rhode Island ‘A State for Sale’. In April, 2001 a new wave of scandal broke (Sappenfield, 2001). 3. This stands for ‘Abdul Scam’. An FBI agent dressed up and pretended to be an Arab sheikh called Abdul, while ‘scam’ is the American word for a deception/fraud/ confidence trick. 4. The desire to purify government can easily render government ineffective. See Anechiarico and Jacobs (1996).

7 Political Corruption in France Jocelyn A.J. Evans

An outside observer might be forgiven for being somewhat confused by France’s position in the TI Index’s ‘somewhat corrupt’ category. Well into its second decade of regular revelations about politicians’ misdeeds, France betrays a level of political corruption that is startling in its longevity if not its intensity. In addition, looking at the TI corruption ranking trends between 1980 and 1997, France shows a greater ‘acceleration’ in corruption than most of its European neighbours, including Italy: only Belgium shows greater disparity (della Porta and Vannucci, 1999b: 7). In the search for explanations, evidence is not hard to find. The bright backdrop of François Mitterrand’s promised political and social revolution in 1981 made the subsequent shadows of economic decline, party finance scandals, misappropriation of public funds and kickbacks all the darker. As prosecutions of ever more senior politicians increased, and the means by which they attempted to hamper the investigations became more and more blatant, so the problems with France’s institutional structure and political culture became increasingly apparent. Of course, we should not lose sight of the fact that there are undoubtedly instances of corruption which have not come to light, and indeed by the same logic other potentially more corrupt countries may have seen fewer actual scandals. Yet, French exceptionalism lies in the frequency and longevity of perceived corruption. The triumphant return of a renewed Socialist-led government in 1997, its insalubrious elements apparently extirpated, provided only a brief respite before corruption once more appeared and, in many ways, more insidiously than before. Much of the corruption of the 1980s and 1990s had been rationalized as partly attributable to two specific aspects of the French institutional framework: the system of notables at the local level; and the lack of structured party financing laws. These problems have been addressed, starting with the party financing law of 1988, but apparently not solved. This chapter will look at why the scandals and corruption appear not to have gone away. It will argue that, while much of the current fiasco is in part a vestige of the past, the French elite have often done themselves no favours 79

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in the manner in which they have dealt with the original scandals and their underlying causes. Moreover, it will be argued that a number of elements of the current institutional framework still provide a fertile setting for practices that threaten to sustain the longevity of French corruption ever further.

Political corruption: the historical context The seeds of contemporary problems within the system can be traced back to the post-revolutionary period and the establishment of the Jacobin ideal, namely a highly centralized culturally, socially and to some extent politically homogeneous state. With the construction of an efficient transport infrastructure and the spread of national media, this led to the increasing domination of Paris and the central administration.1 Centralization has served to engender a political and administrative situation conducive to high levels of impropriety. This does not mean that corruption did not exist at the local level, simply that effects in the periphery usually had no national importance and thus gained little or no broad coverage. The first period to receive the greatest publicity for scandals was the 1930s, due to the coincidence of the press’ interests and wider interests (Weber, 1994: 129). The Stavisky affair, which had started with the issue of fake bonds in the town of Bayonne and subsequent losses by purchasing insurance companies, gained prominence because of the involvement of the town’s mayor, a Radical deputy, and a Radical minister. The death of Stavisky, a con man involved in the scandal, led the right-wing press to announce a cover-up as part of the ubiquitous Jewish, Masonic and Communist conspiracy. The left-wing press joined in to denounce the self-serving centrist Radical bourgeois politicians. But as Weber (1994: 132) notes, ‘[p]oliticking cost … [e]lections also cost’. Unlike the Communists with their party dues or the Right with their wealthy industrialist and aristocratic backers, the governing moderate centre had to find funds from elsewhere. As we shall see, the problems of moderate fund-raising remained a commonplace of the Fifth Republic system, and a key cause of many of the party finance scandals of the 1980s and 1990s. A second effect of the Jacobin centralization was paradoxically to reinforce a level of local autonomy where notables haggled over state resources and local influence. The increase in mayoral powers beginning in the 1870s under the Third Republic produced a role complementary to and competing with the prefect, particularly in terms of resource allocation and relations with local interests. By the 1980s, the power-balance had swung, in some cases to mayoral hegemony reinforced by the infamous cumul des mandats – the accumulation of political positions of power. The influence of these notables and their close circle of delegates provided fertile soil for the growth of illicit practices. In the following sections, we will separate out three institutional domains which have encouraged corrupt practices, together with three developments

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which have ensured that corruption becomes perceived as such within the public domain and hence results in political scandal. The domains are: unregulated party financing; strong executive autonomy and elite interpenetration, and the sub-national politico-administrative framework,2 both before and after the Socialist decentralization reforms. The three developments have been: increased media coverage and investigation of corrupt politicians; increased judicial autonomy to investigate suspected corruption, and an increase in public dissatisfaction with politicians in the face of economic recession.

Causes and dynamics of corruption Party and campaign financing France is not alone in the problems party financing and its regulation have caused for political systems in recent years. The cost of running political parties has increased dramatically in all consolidated democracies, principally due (a) to the rising costs of campaigning in an age when media access is both more prevalent and more expensive, and (b) to the need for parties aspiring to a role in government to apply themselves to an ever-widening policy burden to appear credible in the eyes of the electorate. Unfortunately for parties, sources of income which were in the past sufficient – membership dues, supporters’ contributions, local fund-raising events, and the production of political goods, such as newspapers – are no longer sufficient to meet rising costs, and worse, are themselves in decline (Gunlicks, 1993: 5). The French case, however, has specifics that exacerbate the common trend. The Fifth Republic constitution, under Charles De Gaulle’s influence, gave almost no status to political parties beyond their right to ‘contribute to the exercise of suffrage’ (Article 4). In an attempt to reduce their legitimacy further, even less attention was given to them in civil law. Consequently, the legal status of parties defaulted to the 1901 law on associations, which stated that political parties were not entitled to receive donations or gifts, and that membership dues could not surpass 100 francs (Drysch, 1993: 158). Given that political parties had traditionally been weak organizations with little internal control and small memberships, the legal financial means at their disposal were paltry to say the least. Perhaps only the Communist party had sufficient membership and internal control to be able to collect a significant sum of money by these means, but even this party had to resort to other methods to support its running costs, and particularly campaign costs. Campaign costs were partially refunded but only to a very low ceiling. Presidential candidates who managed to win more than 5 per cent of the vote were allocated 250,000 francs under the decree law of 1964. For legislative elections, the decree laws of 1945 and 1946 allowed a miserly reimbursement for a specified number of posters, campaign letters and flyers if the candidate surpassed the 5 per cent threshold (Drysch, 1993: 160). Such laws, combined

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with the increasingly large number of elections which were introduced into the French system – three levels in 1959, six by 1986 (Elgie and Griggs, 2000: 120) – necessitated resorting to other, not always legal, means to fund campaigns as well as the running costs of the parties. First, although illegal, many donations to parties were tolerated by public officials simply turning a blind eye (Pujas and Rhodes, 1999a: 53). The interpenetration of administrative and political elites made the desire as well as capacity of many officials to follow up such cases negligible. Any attempt to prosecute a case would come up against potentially insurmountable political barriers, for instance control of investigations and prosecutions by the Ministry of Justice. Secondly, many campaign costs were met indirectly by individuals and firms happy to provide services such as printing, transport or catering ostensibly gratis. Thirdly, political parties all took greater or lesser tranches of their elected officials’ public salaries. Fourthly, at the local level, funds and services provided for official use by a mayor, such as a car, support staff and office space, could quite easily be surreptitiously diverted for party use. Fifthly, those parties acceding to government found themselves endowed with slush funds which, due to their official non-existence, could be used for whatever purpose without fear of scrutiny. However, such sources of support could not fully account for parties’ ability to campaign for six levels of election and fund internal organizations and functions. Hence the existence of pseudo-consultancies and service-sector companies whose real purpose was to provide funding for parties and candidates. Perhaps the most notorious of these was the Urba group of companies set up by the Socialist Party in 1972. The company’s shareholders contributed to the party’s funding, as well as providing ‘consultancy’ services which amounted to little more than illegal influencing of public works contracts and other economic incentives for clients whose payments were also diverted in part to the party. Reaction to these and other scandals was to introduce campaign and party financing laws to provide a level of state funding, limits to private contributions and a cap on campaign expenses. However, as we shall see, many of these laws were knee-jerk in their conceptualization and perhaps unsurprisingly needed a series of amendments that were themselves often reactive in nature. Strong executive autonomy and elite inter-penetration By at least initially weakening political parties and the legislature, De Gaulle instigated a system which not only granted primacy to the dual executive of president and government, but which also removed the efficacy of many checks and balances that would normally ensure scrutiny of the executive. In the case of De Gaulle himself, this focus of power, together with his charismatic status, allowed overt bending if not outright breaking of the constitutional and institutional rules, for instance in his use of a referendum

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to amend the presidential electoral system. In the case of many of his successors, the same framework has allowed covert abuse of powers in areas irrelevant to constitutional law, but of considerable relevance to civil and criminal law. The otherwise untarnished Georges Pompidou managed to deploy patronage extensively if not corruptly, and his successor Valéry Giscard d’Estaing was no different. Not beyond accepting gifts of jewels from Emperor Bokassa, the Central African Republic leader with an unhappy human rights record, he was also involved in one of the more darkly comic episodes in the history of French political scandals, the so-called ‘sniffer-aircraft’ affair. Effectively, presidential approval was granted to an oil exploration project which claimed to employ new technology to seek out oil deposits, despite it being singularly unable to detect anything whatsoever in the laboratory demonstration. One of the alleged reasons for this was so that the company investing in this ‘technology’ would provide money for Giscard’s Republican Party campaign funds. Whether nepotism or something more crooked, the affair demonstrated the ability of the executive to follow apparently irrational lines without excessive scrutiny. The Mitterrand dual septennat demonstrated the true extent to which the president could march through scandal apparently unhindered. The resignation of the Defence Minister, Charles Hernu, over the sinking of the Greenpeace ship Rainbow Warrior in New Zealand, was linked to the presidential cabinet (private office of advisors) although never directly to the President himself. Similarly, the Pechiney scandal in the late 1980s and early 1990s, where insider trading implicated a number of left-wing politicians and friends of the President, brought doubts upon the entire executive, much to the delight of a right-wing opposition anxious to exploit the revelations about left-wing corruption. Such affairs were indicative of a feature of corruption scandals more generally in France, namely, the continuous role of les proches, the senior politician’s inner circle of friends and, more importantly, his cabinet. Evidently, to engage in corrupt acts successfully, a politician needs trustworthy associates complicit in the process. One check on such practices is thus the independence – that is, the non-complicity – of those responsible for implementing the politician’s plans, namely the bureaucracy. In France, however, the vital role of the favoured advisors, selected due to their very lack of independence, ensures that the bureaucratic check can be effectively bypassed. All manner of material and non-material rewards can and have been granted to such minions. Surrounded by their willing yes-men, the politician feels safely cocooned from outside checks and scrutiny. This cabinet can be drawn from party supporters, the civil service or even members of a politician’s family, such as former Mayor of Paris, Jean Tibéri’s wife, who earned around 200,000 francs for a very flimsy 36-page consultancy report on la francophonie for the Essone department.

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At the national level, this phenomenon is accompanied by two corollary dynamics. First, the shifting of civil servants to political posts is characteristic of the inter-penetration of French elites both at the political level and more broadly in the economic and social spheres. Among politicians, party lines may define government and opposition, but at least amongst the mainstream parties, the practical divides are somewhat less entrenched. Many successful politicians and most successful civil servants have attended one of the grandes écoles (elite training schools for top civil servants), and in particular the National School of Administration or the Ecole Polytechnique. There is thus familiarity between politicians and across the politico-administrative divide, and individuals frequently move between one and the other.3 The former makes the frequent cases of Left and Right being implicated in the same scandals more understandable than in a country characterized by greater social separation of its party elites. The latter demonstrates that, even beyond the microcosm of the cabinet, even the apparently apolitical civil servant may have future plans in the political sphere that might influence his activities. The inter-penetration spreads to the economic sphere as well. As in many European nations, pantouflage or the transfer of civil servants to well-paid private-sector positions ensures that companies can protect their interests while civil servants can enjoy the material benefits of the top floor. Thus, two-thirds of the top 100 firms in France are headed by grande école alumni (Elgie and Griggs, 2000: 54). Such practices were reinforced by the privatization programmes beginning in 1986. The positioning of political insiders on boards of directors ensured covert linkage between the state and newly privatized companies, and public-sector officials parachuted into private sector board-rooms found their drop-zones broadened. Finally, the two spheres most responsible for the revelation and pursuit of corruption scandals in France have also been closely linked with the politicoadministrative elite. The French media have not traditionally engaged in the investigative journalism characteristic of other countries. The press has always enjoyed a close relationship with political parties, most of the newspapers that emerged with the growth of the press having overtly political stances or at the very least employing political writers in their columns. In the post-war period, the national press encountered major circulation crises, with even Le Monde coming close to bankruptcy in the 1980s (Harrison, 1994: 239). The only papers to have maintained circulations high enough to ensure prominence to their stories are the regional dailies, papers with few investigative credentials. Similarly, until the privatizations of the 1980s, state television broadcasting stations had little or no incentive or indeed remit to embark upon political corruption investigations. Consequently, the only true investigative journalism came from Le Canard Enchaîné, a smallcirculation satirical weekly, and occasionally from the glossy hébdomadaires, such as L’Express and Le Point.

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The judiciary in France, as in any democracy, has been seen as separated from the other branches of government, but their de facto politicization has equally been held up as a cause for concern, particularly in investigating party corruption. In particular, the public prosecutor’s office is under the direct control of the justice ministry. Should investigations stray too close to senior figures, pressure can be brought to bear on the prosecutor not to pursue the case. Indeed, this relationship has become so problematic that in 1997 the President, Jacques Chirac, announced the creation of an independent commission to consider the link. Yet it is noticeable that many public prosecutors and other legal and judicial appointees defend the politicization of the office because of the moral element to their role and the fear that depoliticization would be replaced by ‘occult’ linkages (Revue Politique et Parlementaire, 1997: 10). It has essentially been left to the investigating magistrates to pursue cases of corruption, in the process making famous/notorious names for themselves. Judges such as van de Rumbeke and Thierry Jean-Pierre gained huge public prominence during the initial investigations into corrupt party financing, and their successors, such as Philippe Courroye and Isabelle Prévost-Desprez, who are currently investigating the ‘arms to Angola’ affair, are gaining equal prominence. Their intervention has not always been popular. For instance, the prosecution and imprisonment of Bernard Tapie, the charismatic entrepreneur and football-club owner, for tax fraud and misuse of corporate funds to fix football matches, evoked more sympathy than condemnation. Indeed, Eva Joly, one of the principal investigators into the Elf-Aquitaine scandal, feels that still too often, judges are condemned by the media with too little attention being given to the cases they are investigating.4 This inter-penetration of elites is not just restricted to the Paris-based, horizontal axis, however: amongst national and sub-national actors, there is similar linkage due to the institutional and economic frameworks. Furthermore, the presidentialization of French politics is not restricted to the occupant of the Elysée. The notable epitomizes a presidential logic at the local level, a phenomenon in many ways enhanced by the Defferre decentralization laws between 1982 and 1986. Politico-administrative incentives at the sub-national level With three principal levels of sub-national administration – communes, departments and regions – France has the largest network of local authorities in Europe. Each level has a specific remit in terms of policy areas and functions, its own representative councils as well as the departmental statedelegated prefect, and its own framework and culture of political influence and management. The prefect traditionally co-ordinated ministerial field services and the implementation of policy as the governmental representative at departmental level, as well as scrutinizing local authorities’ financial and administrative probity in his role as appointee of the Minister of the

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Interior (Wright, 1989: 304). The functions invested in this dual identity removed the ability to perform either effectively. Field services were thus often notoriously a law unto themselves so that local authorities’ illegalities often went undetected. Given the ‘outsider’ status of the prefect in his third, most symbolic identity – the state representative – the functions of the local notables at the other levels of the politico-administrative framework were strengthened both formally and informally. The autonomous local sub-systems that developed allowed effective functioning despite the complex procedures that enveloped the centralized bureaucracy. Whilst the prefect shuttled back and forth between ministerial field services to negotiate the distribution of financial resources, the easier solution for local businesses and investors was to lobby the source of the money in more direct fashion, via the mayor who would either hold a position in Paris, or know someone who did. The route to power for a politician in Paris almost inevitably involved the securing of a local power-base first, adding to this a seat in the National Assembly, and relinquishing this only for a Ministry (but retaining a suppléant to ensure continuity on the loss of ministerial office).5 This cumul des mandats could only promote the value of local lobbying. With the reins of power in so few hands, those with direct access to the notables could ensure speedy and effective service via this route, rather than relying upon the oppressed and politically enfeebled prefect to provide help via the approved channels. Unfortunately, its effects were also pernicious. In particular, while a certain functionality is apparently achieved in terms of the notable acting as broker, time constraints dictate that the individual cannot fulfil all roles adequately. Hence use of delegated powers and the organization of the personal cabinet as a miniature executive – something which results in an oligopoly run more along the lines of a business than a democratic organization (Mény, 1992: 94). Yet the system was self-sustaining, principally because of the monopolization of resources by a handful of individuals. As Mény (1992: 81) notes, the cumul was limited to two in 1986 because the Socialist deputies who voted the amendment realized that, with impending electoral defeat, they could safely relinquish positions they would be unlikely to hold within a short space of time in any event. Furthermore, the decentralization reforms under the Socialists, designed to counter some of the excesses of centralization, in fact exacerbated many of the elements contributing to corruption. The prefect’s control of the budget was officially handed to the conseil général, now headed by the council president rather than the prefect. Yet with this and similar reforms at the regional level went a reallocation of policy responsibilities among the different sub-national strata. Arguments over jurisdiction often added to Jean Lecanuet’s stereotypical complaint of France requiring 13 years to approve the rebuilding of a town square in Rennes (Wright, 1989: 330). Thus, where autonomy was possible, it gave rise to practices which, whilst not necessarily illicit in themselves, led easily to corruption – especially as they took place in

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combination with the clientelistic cumulants and concerns about party funding. Inevitably, the personal misuse of public funds are the cases which stand out and local scandals can also reach the centre, again due to the cumul. Again, the issue of functionality appears. Means such as false invoicing, although illicit, were seen as oiling the cogs of the system. By recouping false costs from the state, money could be used to react to economic circumstances more rapidly than was possible by waiting on the tortoise-like ministerial procedures. Additionally, such practices introduced into local economies and administrations a level of flexibility that was entirely absent from centralized provision. Yet they also undermined the legitimacy of the system. A system may be dysfunctional, but if those who are meant to abide by it bypass it, then its value is jeopardized and the ethical dimension of the administrative framework disappears. In terms of responses to these processes, evidence of an ethical renaissance is scant.

Anti-corruption laws and campaigns, remedies and solutions The changes in party finance laws have been piecemeal and reactive, and in the first instance attempted to introduce a blanket of legality to existing practices rather than to address the root causes of these practices. The first law of February 1988 introduced transparency to political financing, and at least gave political parties legal status in these matters. However, such transparency might be described as opaque at best (Riglet, 1988: 3). First, Presidential candidates and deputies had to submit two counter-signed statements of their personal wealth – one on taking office (or running for the presidency) and one at the end of their mandate. This clearly gives no indication of campaign spending, or of party finances in general, but is simply a basic rundown on an individual’s possessions and financial status. Secondly, the provision for state funding of political parties – a fundamental step which has been expanded in subsequent laws – was only extended to those parties securing parliamentary representation. Thirdly, it only applied to legislative and presidential elections. Finally, in only applying to candidates, the law made no provision for limiting funding of campaigns by private individuals. The laws of 1990, 1993 and 1995, amended and expanded certain areas of campaign and party financing, often as a reaction to scandals that had surfaced in the meantime. For example, the 1990 law clarified the limits to campaign expenses for all elections and the extent of financing activities (Pujas and Rhodes, 1999a: 54). In addition, it extended state financing to cover parties not represented in Parliament by taking into account vote share as well as number of seats. Beyond this, however, the amendments again seem reactive and conceived out of excessive pragmatism rather than a clear policy of cleaning up party financing. One feature of the earlier laws was the inclusion of amnesties. Given the number of investigations under way, such moves resembled more a desire to stem the tide of prosecutions

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than extirpate corrupt practices. Overall, since 1988, parties have been made progressively more reliant upon the state for their funding and limited in their autonomous fund-raising possibilities. However, individuals are still allowed to contribute anonymously to a certain ceiling, and then as registered contributors to a further ceiling, and these ceilings are widely perceived as ineffective against the corrupt machinations of party officials in dealing with larger financial operations.

Impact and exposure of political corruption It would not be overly cynical to say that the impact of the corruption scandals of the 1980s and 1990s has had surprisingly little effect at the elite level. Despite the imprisonment of a number of prominent local politicians, the Who’s Who of French politics at the beginning of the twenty-first century still looks remarkably similar to the one at the beginning of the 1980s. As with elite effects, the electoral effects have not been as prominent as one might have expected either. Since the 1980s, abstention in elections has risen. While it is extremely difficult to link this to the rise in corruption, it seems likely that it is due, at least in part, to growing exasperation with the political class.6 Similarly, there appears to have been an overall decline in interest in politics since 1981 (Figure 7.1). Again, we should be very careful 100

Interested in politics? (%)

80

Not at all Not very Quite Very

60

40

20

0 1981

1988

1990

1995

1997

Year Figure 7.1 Levels of political interest among the French electorate Source: World Values Surveys, 1981/1990; Sofres post-presidential electoral surveys, 1988/1995; Centre for the Study of French Politics–Centre for Research into Administration, Politics and Society (CEVIPOF–CRAPS) post-legislative electoral survey, 1997.

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in linking this exclusively to corruption, but the plunge between 1981 and 1988 corresponds to the failure of the Socialist ‘Experiment’ – perceived by many as the new beginning – and the failure of the right to offer an alternative between 1986 and 1988. Similarly, the slight recovery in 1995 corresponds to the return of the revamped Socialists. It remains to be seen what effect the more recent revelations will have. The second broad electoral effect, again not always easy to demonstrate, is the success of the extreme right party, the National Front (Front National, FN), on account of the corruption amongst mainstream parties. It has been more common to perceive the FN as campaigning and winning votes on anti-immigrant issues, but such an interpretation is certainly simplistic (Evans, 2000). Leaving aside for a moment the debate over necessary and sufficient conditions for a vote for the FN, what is certain is that the party has campaigned on the perceived rottenness of the mainstream parties (‘Ils sont tous pourris’ – ‘they’re all rotten’). It has supported this with variations on the theme that ‘of course mainstream politicians could address the masses’ problems, if only they weren’t so busy lining their own pockets’. Elsewhere, the effects of corruption scandals are even less easily discernible. Certainly the party finance laws have partially addressed the problems of electoral campaign funding. However, it is important that such laws be kept up-to-date and not be driven by political self-interest. It is clear that, with the deregulation of media broadcasting, parties will be increasingly faced with the paradoxical challenge of paying for space on more and more terrestrial, cable and satellite channels that are decreasingly interested in covering politics. Unlike state-run television, privatized airtime can only be assured via money. Equally, from the media side, deregulation and the decline of direct political influence (aside from government approval of those nominated to head the two public channels) provides greater opportunity for investigative journalism – though whether commercial channels find such activity viable profit-wise is a moot point. The media more generally have proved able to uncover political corruption and bring their coverage of investigations into the public domain. Newspapers are taking a harder line on corruption in their disgust with Jean-Christophe Mitterrand and his backers’ claims that they are the targets of a witch-hunt. Many of the hébdomadaires are also pursuing their investigations with renewed vigour, for instance Paris-Match in its revelation of Alfred Sirven’s hiding place in the Philippines. But this coverage has contrasted with other institutions’ continued failure to address the problems of corruption head on. In the Sirven case, the revelation by Paris-Match seems to have forced the French judiciary’s hand in securing his extradition to stand trial. The other defendants seem happy to see Sirven, either because his presence may deflect many of the accusations, or more worryingly because his introduction into the judicial equation may resurrect the corrupt politician’s greatest friends, namely delay, obfuscation and subsequent legal confusion. Elsewhere, the

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Constitutional Council’s ruling that Jacques Chirac could not, while he was President of the Republic, be indicted for crimes committed as Mayor of Paris, is perhaps constitutional and perhaps only delays possible prosecutions; the Court of Cassation’s ruling in 1997, that bribery is not a crime as long as the briber secures something in return, is not (Wright, 1999: 112).7 Finally, the relations between the local and national levels, and between the various sub-national units, could clearly benefit from a number of clarifications and from restructuring. In the Socialist government’s declaration on decentralization in the National Assembly on 17 January 2001, Lionel Jospin emphasized six priorities concerning the continuation of the decentralization process. Three are of particular interest here, notably greater co-operation between communes and between these units and the departments and regions; democratization of the local politico-administrative units, making access to elective office feasible for individual citizens; and a clearer division of responsibilities amongst sub-national units to address, in the Prime Minister’s words, the problem of ‘many citizens having trouble identifying exactly who is responsible for what’.8 All clearly address many of the areas which in the past have encouraged corrupt practices, namely, administrative log-jams, confusion and lack of transparency. In this area, the pluralist left government is attempting to clear murky waters.

Conclusion In terms of the current slate of corruption scandals, it should be noted that many of the contemporary scandals are ‘old news’ in that they relate to practices and events that took place in the 1990s and in some cases even earlier. For instance, the posthumous revelations by Jean-Claude Méry about illegal fund-raising activities by the Rally for the Republic (RPR), implicating Jacques Chirac as well as other Gaullist politicians, refers principally to the 1980s.9 However, many of the old guard – for instance Jacques Attali, Mitterrand’s former advisor, accused of misappropriation of funds in 1998 in the ‘arms to Angola’ affair10 – are being indicted for fresh activities. Nor are politicians backing down in the face of the investigations: Charles Pasqua has threatened to begin legal proceedings for defamation of character against those accusing him of involvement in the same affair.11 The sheer scope of the current scandals is also noticeable. In the same way that networks of local notables of all political colours emerged in the 1980s, so international networks have emerged in the 1990s from Angolan and Taiwanese arms sales to the German Christian Democrats and Helmut Kohl. Grey arms sales have always been an issue for major arms-producing nations, but the linkage with domestic politics and particularly party funding is unprecedented. Similarly, the ubiquity of Elf-Aquitaine as a shadowy corporate negotiator for the French state grows more web-like as each revelation emerges. The work of international organizations such as the OECD

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aside, this branch of globalized corruption is less controllable by institutional and legal reforms at the national level. Commissions and reforms by the Government and judiciary are evidently valid and potentially positive steps to eradicate the type of corrupt practice that characterized the 1980s in France, this by closing the sometimes extensive loopholes and ensuring transparency. However, at the executive level regulations are less easy to implement vis-à-vis international connivance. Perhaps here, if nowhere else, it is more difficult to eliminate individual traits from the corruption equation, and in that sense continuity with the 1980s is discernible. Christine Devier-Joncour’s lawyer’s assertion that the ‘top people’ behind the Elf scandal have not been implicated is not rare as a defence. As Mény (1992: 340–1) shows, similar phenomena can be seen in other cases over the past 20 years of French corruption. As in these cases, culpable responsibility in the contaminated blood scandal was restricted to junior ministers, Laurent Fabius being acquitted by his peers for his involvement during his premiership in the mid-1980s. More recently, French mayors have bitterly contested the legal responsibility which decentralization laws have placed on their shoulders. In the Elf affair, the marchés des lycées investigation, the Juppé housing scandal, and the many other facets of corrupt activity, the salient feature is a continuous passing of the buck, a refusal by the notables whether national or local, to accept responsibility. Mény’s concluding citation from Max Weber’s Le savant et le politique is as trenchant in condemning ethical inadequacy today as it was a decade ago: The honour of a political leader, a state executive, consists precisely in exclusive personal responsibility for everything that he does, a responsibility which he cannot and should not disclaim or pass on to another. (1992: 341, author’s translation)

Acknowledgements The author would like to thank the Banque de Données Socio-Politiques, Centre for Electronic Archiving (CIDSP)-Grenoble, for making available the data-sets used for Figure 7.1.

Notes 1. Some authors claim the reign of the roi-soleil, Louis XIV, as marking the origins of French state intervention (Elgie and Griggs, 2000: 2). In terms of a secular administration, the post-revolutionary period provides a more solid foundation, we believe. 2. This label is taken from Négrier (1999) to distinguish between centralized government and a sub-national level largely defined by its negotiations with the centre. For a more detailed analysis of the traditional role of sub-national elites and bureaucracy, see Grémion (1976).

92 ‘Somewhat Corrupt’ Countries 3. Prior to 1981, 55 per cent of Fifth Republic Ministers began as civil servants (Cole, 1998: 107). 4. Guardian, 3 February 2001. 5. Although some post-war politicians have taken the ‘top–down’ approach, securing a position at the national level, and then parachuting into a convenient local space (Knapp, 1991: 28). 6. As Appleton (2000: 216) notes, however, this interpretation of abstention must be set against contextual institutional effects and in particular voter fatigue, given the large number of elections in which French voters participate. 7. Coincidentally, France seems to have been one of the more severe EU negotiators in the OECD Agreement to Criminalize Bribery negotiations of the same year (Metcalfe, 2000: 141). This decision, which included the criminalization of bribery of foreign officials, has itself now been transposed into French law (Le Monde, 7 August 2000). 8. This declaration was based upon the findings of the Mauroy Commission on Decentralization, convened in October 1999. The full text of the declaration can be found at http://www.assembleenationale.fr/2/dossiers/decentralisation/ 2decentralisation.html. 9. The video of Méry’s confession was handed over by Dominique Strauss-Kahn, the former Socialist Finance Minister who resigned in November 1999 subsequent to investigations into his having received fraudulent consultancy fees from a student union, the National Association of French Students (MNEF). 10. The Rally for France’s (RPF’s) funding by African states would seem to require some explanation, something the investigating magistrate Philippe Courroye clearly wants to elicit from Pasqua. 11. Le Monde, 9 March 2001.

8 Political Corruption in Belgium Lieven De Winter

The 1990s in Belgium will be remembered as the decade of political corruption, scandals and crises. It led to a decline in Belgian citizens’ trust in their political institutions, while the country’s external image was also tarnished. For instance, after being criticized, in January 2000, by Belgian Foreign Minister, Michel, Austria’s Jörg Haider responded by saying that he would take no lessons in democracy from a corrupt government that would do better to occupy itself with its paedophilia scandals. The political scandals that shook the country in the 1990s were based on a series of episodes of corruption involving top politicians, the judiciary and civil servants. In addition, other themes surfaced simultaneously: fraud concerning industry and banking; the Dutroux paedophile murders and other child disappearances; blunders made by the judiciary and the police in these affairs; and several food crises (BSE, chicken dioxin poisoning, the use of illegal growth hormones). These themes were heavily exploited by a steadily growing extreme right-wing tendency, and they culminated in a rise in their vote. In this chapter, we will focus on political corruption scandals. However, the scientific study of political corruption poses several methodological problems in relation to measurement of the scale and type of corruption and its determinants. This is particularly true in the Belgian case, as until now, hardly any empirical scientific research has been carried out on political corruption. In spite of the publication of several books about corruption scandals, the number of cases for which solid data exist are few, for only a small number of the alleged cases of corruption have been brought to trial. TI’s Corruption Perceptions indices for 1998, 1999 and 2000 indicate that, after Italy and Greece, Belgium is perceived to be the most corrupt country in the European Union. In 1997 it was surpassed only by Italy, whereas in 1995 and 1996 it had also been surpassed by Portugal and Spain. It should, however, be kept in mind that this index is only a perception index based on assessments of corruption levels by business people, risk analysts and the general public. Obviously, the wave of corruption cases that has rocked 93

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Belgium since 1994 has had an effect on perceptions of the degree of corruption of Belgian politicians. This is true independently of the fact that most of the cases that emerged were related to events that occurred in the 1980s. However, despite the lack of hard data, there are several sources of ‘soft’ or ‘indirect’ evidence suggesting that political corruption is widespread, or at least was in the 1970s and 1980s. Secondly, many of the factors that have been identified as facilitators of political corruption are, or were until the beginning of the 1990s, observable in the Belgian case. The Belgian penal code makes it quite difficult to prove that corruption has actually occurred. It has to be demonstrated that the promise of a gift actually influenced the decision of the public official, or that a corruption deal was struck before the decision was formally taken. Having received money or gifts after a decision was taken is not sufficient proof. Consequently, the courts frequently transform corruption charges into more easily provable cases of fraud, embezzlement, and the falsification of documents. In this chapter, we will only focus on cases where corruption has been alleged. Such cases involve allegations made by the media or the judiciary, against public officials.

Newness, scale and varieties of corruption Our inventory based on corruption allegations mentioned in the national print media suggests that since the first big political corruption scandal (the 1973 Régie de Téléphone et Télégraphe affair) there have been around a hundred cases of alleged corruption (not all of which have been brought to court).1 In about one in five of these cases, one or more politicians have been charged with corruption. In only half of these cases have politicians actually been found guilty of corruption, while only a few trials are pending. There are hardly any allegations that refer to the ‘new’ corrupt practices that could only have occurred after the second law on the public financing of political parties was passed in 1993 (see below). Hence, in comparison with the number of allegations and trials in Italy, Japan and the US, we can argue that Belgium is a relatively less visible case. Still, some soft indicators suggest that corruption was much more widespread than the ‘tip of the iceberg’ presented above might suggest. Some analysts point to regular, stable, organized and to some extent formalized forms of hidden exchange. First, there is evidence that at certain decisionmaking levels, the sizes of bribes were sometimes expressed in terms of fixed percentages of tenders (Sauviller and Ilegems, 1997: 108). In addition, privileged access to decision-makers in exchange for party donations was a widespread practice.2 Most leaders of the traditional governing parties have admitted that the 1980s were a period of ‘crazy money’ (l’argent fou), of ‘grey’ party financing, of a culture where many decisions could be ‘fixed’. Finally, most of the classic structural factors facilitating corruption were

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present on a large scale in Belgium in the 1970s and 1980s, including mechanisms for cover-up. The most frequent types of political corruption relate to services offered by both public actors and the private sector. The main forms of exchange mentioned in the corruption allegations refer to the various ways in which public tenders were manipulated. In order to give an advantage to a firm, tender rules can be violated, or interpreted in too lenient a way, for instance by manipulating deadlines and other formal requirements. Favouring protégés is most common when decision-makers are allowed to take into account, besides the cost–benefit ratio, a multitude of factors that are difficult to define objectively. These can include perceptions of economic advantages for the national, regional or local economy. Another way of bending the rules is by transforming tenders from the types that require public calls to potentially interested companies into those that can be concluded under the table. One technique consists of splitting contracts into smaller parts that do not require public calls to tender. Another involves leaking information about the prices offered by competitors, to the firm a decision-maker wants to favour. The latter then offers the cheapest price and wins the contract. The winner knows that the decision-maker will subsequently allow the firm to increase the price to more realistic levels by presenting unforeseen supplementary costs, or by making claims for reimbursement for services they did not render. Another means of corruption is by organizing fictitious competitions. Phantom companies linked to the protected company make bids that are higher, thus leading the protected company to win the competition. Protégés can also benefit from the selling of public enterprises and other public property (offices, land, etc.) at below their market values. A more encompassing service is that of changing legislation and issuing decrees in order to serve a company or interested group. This has been common in the area of planning legislation whereby agricultural land and fauna are turned into industrial and residential areas. A further service involves intervening in the resolution of conflicts, in and outside the courts. First there are the interventions of politicians in judicial procedures concerning conflicts between contractors and the state, and between private enterprises. Second, politicians can also intervene in arbitration outside the courts, in the bargaining that takes place between enterprises and the state regarding assessment of the damages due to one of the parties as a result of violation of the terms of a tender. Another main service is that of offering impunity and penalty reductions to corrupters. Politicians can be protected, at least temporarily, by their parliamentary immunity. This prevents many shady dealings being investigated in depth as the main protagonists cannot be interrogated.3 Through politicization of the judiciary (see below) political parties can discourage judicial activism in corruption cases; incite judicial investigators to make procedural errors that will torpedo a case; cause the closure of a case; or in the rare

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instances that a corruption case is brought to court – help to downplay the charges or reduce the penalties. Apart from direct ‘under-the-counter’ monetary gifts to individual decision-makers, the private sector has been accused of rewarding politicians and civil servants in a variety of ways. First, there are the donations to party funds that are often not traceable in the accounts. There are rewards in kind that support the work of a party or politician, such as personnel and housing paid for by companies. There are the direct donations to party periodicals, or the more frequent indirect support through the purchase of overpriced advertising space. Likewise, sponsors may make direct donations to party research centres, but also indirect gifts (for instance by commissioning overpriced or entirely fictitious research projects). Election campaigns may be sponsored indirectly through the financial support of advertising, opinion surveys, printing or the broadcasting expenses of a party or politician. When the corrupting firm is active in the communications sector, they can offer the free use of campaign resources in exchange for tenders in the past or future. Finally there are the private, non-monetary rewards in kind, such as leisure trips disguised as research trips for politicians, civil servants and their relatives; free luxury vacations using the private property of an entrepreneur; wining and dining in top restaurants; tickets for VIP seating in sports stadiums; cars and furniture for private use; and even help in forming and/or maintaining extramarital relations (Sauviller and Ilegems, 1997: 104).

Causes of corruption Political corruption in Belgium is facilitated by both cultural and structural factors. Cultural factors Comparative surveys suggest the existence of a rather ‘un-civic’ political culture in Belgium, evidenced in indications of a widespread permissiveness towards breaking the law in general (Gibson and Caldeira, 1996). To a greater extent than elsewhere in Europe, Belgians appear not to believe that the law is on their side; to believe that laws are too restrictive, and that ‘if you don’t particularly agree with a law, it is all right to break it provided you are careful enough not to get caught’. This culture is most visible in attitudes concerning tax evasion (European Values Study, 1981 and 1990 analysed by Voyé et al., 1992) which has been estimated to amount to 20 per cent of the gross tax revenue (Frank, 1994). The European Values Surveys also indicate that permissiveness towards taking bribes during the course of one’s work is considerably higher than the European average. There is also ample evidence of clientelism in the relationship between voters and their elected representatives. Serving individual constituents, as well as the constituency as a collective entity, is considered by voters as well as MPs as one of the main duties of elected representatives (De Winter, 1992).4

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Extrapolations on the basis of surveys amongst MPs and mayors (De Winter, 1992; Ackaert, 1998) allow us to estimate the size of the ‘services-for-votes’ exchange network. About one in four voters appeals to the clientelistic services of elected officials. About half of these clients vote for the politicians they contact. As voters make many demands on their representatives to bend the rules in their interests, they tend not to be outraged when politicians engage in large-scale corrupt behaviour favouring companies. Thus, it comes as no surprise that the widely publicized corruption cases of the 1990s have hardly influenced voting behaviour (Billiet et al., 1996). In addition, Belgians tend to have few of the characteristics that make citizens inclined to demand the accountability of elected officials. Thus, their level of interest in politics is among the lowest in the EU (De Winter, 2000). Their knowledge of basic political facts is generally limited (Maddens and Dewachter, 1993) and their sense of political efficacy is among the lowest in Europe. Among the populations of the EU, they display very high (if not, as in 1999, the highest) levels of distrust of political institutions, politicians and their fellow citizens (De Winter, 2000). Aside from responding to individual constituents’ demands for services, Belgian politicians also engage massively in collective goods allocation activities, such as those aimed at attracting government subsidies for roads, ports and rail connections, and government and private investment aimed at stimulating economic development in their constituencies. Politicians perceive activities concerning this collective allocation as important extraparliamentary duties (De Winter, 1992). Given the strong impact of Belgian parties on executive decision-making (see below), MPs can, through contacts with ministers, their cabinets and party nominated civil servants, play a very influential role in the executive decision-making process. Due to the ample opportunities this gives them for satisfying constituency demands, Belgian political elites are correspondingly vulnerable to corruption offers regarding government contracts. In fact, in some corruption cases, part of the pay-off was made by means of large investments by the contracting enterprises in the politicians’ constituencies. The entrepreneurial culture also promotes secret exchanges. Belgian enterprise culture is strongly based on informal contacts, flexibility and a willingness to bend business rules. This particular business culture is one of the causes of the size of the hidden economy and the tax fraud mentioned above (Schneider, 1997). Several analyses (Lambsdorff, 1998; TI Bribe Payers Survey, 2000a) indicate that Belgian companies abroad show a high propensity to pay bribes for contract acquisition at the international level. Structural factors Structural factors relate to changing financial needs, electoral and party system features, party domination of the public sector and civil society, and, finally, the weak performance of anti-corruption bodies.

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In relation to finance, one of the main reasons for the expansion of the secret financing of parties and politicians in the 1970s and 1980s was the growing financial needs deriving from a growing professionalization of party organization and communications. These years were characterized by the creation of party-policy think tanks; the growing use of commercial advertising agencies, central data-management systems, membership periodicals and mass leisure activities; the increasing employment, by party leaders, of personal secretariats, chauffeurs, housing in the capital and personal expense accounts. Expenditures rose most uncontrollably in the area of campaign costs, which rose from €5.5 million in 1974 to nearly €40 million in 1987.5 The expenses of individual candidates, and hence their need to mobilize money, also grew exponentially, this due to the growing focus of campaigns on them, rather than on the parties and their programmes. The traditional sources of party income – membership dues and contributions from elected officials and the parliamentary parties (De Winter and Dumont, 1999) – were not sufficient to meet these rising costs. Hence, before a comprehensive system of public financing of the non-parliamentary party structures was established in 1989, the gap between expenditures on the one hand, and legal party incomes on the other, grew inexorably and was filled mostly by soft money. Low salaries (a factor commonly cited to explain corruption) cannot account for the apparent willingness of the public-sector elites in Belgium to accept bribes and grey forms of political finance. Belgian MPs, higher civil servants and judges have salaries similar to their European colleagues (Brans, 1994). However, they are clearly paid less than those in senior privatesector positions and this gap has remained stable over time. The second factor relates to electoral and party-system features. The electoral system, based on proportional representation, does not in and of itself contribute significantly to political corruption. The proportional system has, however, contributed to an increasing fragmentation of the party system as more and more cleavages have become politicized. The Belgian party system has become one of the most fragmented in Europe. The effective number of parties reached an EU record in 1999 (9.1) with the largest party in Parliament obtaining only 14.3 per cent of the national vote (De Winter and Dumont, 1999). Party-system fragmentation produced high levels of fragmentation of governing coalitions. Since 1973, governments have included four to six parties. This extreme fragmentation of executive power, and the highly collective nature of cabinet decision-making (Frognier, 1997), should in principle have reduced corruption given that the number of decisionmakers – and therefore the likelihood of mutual control and whistle-blowing – has increased dramatically in comparison to the 1950s and 1960s when single-party or two-party government was the norm. However, the entire period seems to have been characterized by an implicit non-aggression pact between the parties prohibiting the reporting of acts of political corruption.

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If a party were to expose the corruption of a competitor, the latter could retaliate by reporting the corrupt activities of the former. As all have the skeletons of illicit party finance hidden away in their cupboards, such a spiral of escalation would lead to mutually-assured destruction. Therefore, in spite of convincing evidence of the widespread and well-organized illicit financing of some parties, the other parties have been reluctant to exploit these disclosures. In addition, there is the justified fear that an escalation of disclosures of corruption will only benefit the extreme right, the Vlaams Blok and the Front National. These parties, which at the 1995 and 1999 general elections obtained more than 10 per cent of the vote between them, are the only ones that explicitly and successfully campaign on the corruption issue. For this reason, the green parties – which have not hitherto been involved in corruption – have refrained from politicizing the issue. The third factor relates to the parties’ grip on the civil service and society. Until the end of the 1980s, the promotion of civil servants was strongly controlled by the parties of the majority. During the negotiations for the formation of coalitions, parties usually agreed upon the promotion quotas allocated to each party, usually in proportion to their parliamentary strength. Promotion of the personnel of public radio and television companies was subject to similar party influence. In most other sectors in which the parties were influential – such as education, public, semi-public and quasi-autonomous enterprises and services, and in local government – the parties interfered with the recruitment and promotion of personnel at all levels, from janitors in public kindergartens to the chair of the board of Sabena. Civil servants were thus rather heavily dependent on party support for their careers. It therefore comes as no surprise that 70 per cent of higher civil servants held a party membership card (Dierickx and Majersdorf, 1993). This dependence allowed the parties, until recently, to downgrade the role of the civil service in decision-making and to rely more heavily on the cabinets ministériels (that is, ministers’ large personal staffs). When top civil servants belonged to a party different from the one to which their minister belonged, ministers feared that they could not rely on the unconditional loyalty of their civil servants. Hence, until the beginning of the 1990s, policy development, the verification of the implementation of policy, mediation with interest groups and the award of tenders was mainly carried out by ministerial cabinets (Hondeghem, 1996: 51–8). The role of the civil service was basically reduced to providing these cabinets with the information necessary for policy planning, implementing government decisions and managing the department. Hence, civil servants generally did not serve as a source of external control and vigilance over the correct application of decisionmaking procedures. Meanwhile, as they are central to departmental decision-making and are staffed by party loyalists, ministerial cabinets are evidently useful sites for organizing illicit exchanges.

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Della Porta and Vannucci (1999b) argue that the invasion of civil society by parties lowers defences against corruption and mismanagement. A particular form of societal invasion is that provided by consociational democracy, whereby parties act as the representatives of well-organized ideological sub-cultures. These sub-cultures are well-entrenched in civil society through a network of pillar organizations active in most sectors of society. Not only has Lijphart (1981) considered Belgium to be the case that best fits his consociational ideal-type, but unlike other cases, the basic premises of the model still hold for Belgium (Luther and Deschouwer, 1999). Frognier (1986) argues that consociationalism facilitates corruption, as it implies frequent informal dealings between elites. It allows elites to operate better as a cartel and to exercise greater control over civil society and potential whistle blowers. It allows them more easily to share the pay-offs of corruption, and to minimize the harmful effects of scandals. In addition, the Belgian press used to be well linked to the pillars, both ideologically and organizationally (De Winter, 1981), and this made it reluctant to publish stories that might cause problems for pillar parties. The final factor relates to the weakness of detection agents, one of the main reasons for which is the politicization of the public sector which has meant that the controllers have often been controlled by, or dependent on, the controlled. First, as in the civil service, the recruitment and promotion of judges has been almost completely determined by party patronage. In the 1970s the exercise of patronage was centralized through the creation of intra-party selection committees to which interested candidates were required to apply. The governing parties then bargained over appointments, in inter-party committees chaired by a representative of the Minister of Justice. Secondly, the Superior Committee of Control, the official state anticorruption service, has not been able to perform its role adequately. It was traditionally under-staffed with a dozen civil servants having to scrutinize about 3000 public tenders per year. Its resources were even systematically reduced once it became pro-actively involved in investigations into the wave of corruption cases of the early 1990s. Its staff was highly politicized, and this produced many leaks of information to the media – but also to parties and politicians under investigation. Thirdly, the inspectors of the Ministry of Finance are compromised. To every ministerial department one or more inspectors of finance are attached. These act as the financial and budgetary watchdogs of the Minister of Finance. They verify the legality as well as the substantive merits of the conditions applied to tenders. However, these inspectors belong to the same party as the minister whose department they control and a part of the monthly supplements to their income is dependent on the receipt of positive reports from their ministers. Inspectors that create too much trouble for their ministers are usually transferred elsewhere.

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Fourthly, the Parliamentary Audit Office plays a largely insignificant role. Every year, the office has to produce a report that is introduced as a bill to Parliament in October of the following fiscal year. While the vote on this bill was originally intended as a means to assess government policy, in practice approval is usually discussed several years later, rendering the vote a mere formality, as the government or minister responsible is usually not in office anymore. MPs usually display little interest in these reports in spite of the fact that the media often manage to reveal some of their more shocking parts. Fifthly, parliamentary committees of inquiry could potentially play an important role in unearthing scandals, as they have the same powers as investigating magistrates, including the use of coercion and the questioning of witnesses under oath. However, until the 1980s, such committees were very uncommon in Belgian parliamentary life. This was because majority MPs – in solidarity with the Government – were reluctant to allow investigations which could embarrass a specific minister or the entire Government. In addition, even when committees suggested that they were politically responsible for given failures, ministers could often rely on the support of their parties to avoid being forced to resign. Finally, no whistle-blowers act yet exists. On the contrary, if we consider the fate of those who have reported the most important cases of corruption, we can only conclude that they were the first victims of their activism, especially if they were civil servants. Very often they became pariahs within their own departments, and were transferred to less sensitive, even meaningless, positions. Furthermore, they sometimes faced large financial claims for defamation of the politicians involved, forcing them to seek expensive legal council.

Anti-corruption laws and campaigns, remedies and solutions Since the breakthrough of the Vlaams Blok at the 1991 ‘Black Sunday’ elections, there have been a large number of proposals and measures that might make Belgian parties and the wider public sector less vulnerable to political corruption. Undoubtedly, the most influential measure concerns the introduction of a comprehensive system of public financing of parties together with restrictions on campaign expenditures. The 1989 legislation on the public financing of parties stipulated that parties represented in Parliament were to receive a lump sum plus an additional amount for each vote they received at the most recent parliamentary elections. A number of new regulations were introduced in order to reduce the overall costs to both parties and candidates of campaigning. Some campaign techniques were prohibited. The second main party finance law (1993) prohibited tax deductible gifts as well as filling some other gaps; but most importantly it almost quadrupled subsidies. Responsibility for ensuring that these campaign restrictions are respected rests with a parliamentary committee and, so far, very few complaints have

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been made to it. Still, the legislation on public party finance has probably reduced the number of corrupt exchanges to a substantial degree. There are indeed very few corruption allegations that do not date back to the period before the introduction of public party finance. This indicates that supplying sufficient resources to allow parties to function, together with restrictions on their campaign efforts and expenditures, is a powerful anti-corruption blend. The 1990s also witnessed a general move towards the de-politicization of the civil service and the wider public sector. Civil servants are increasingly recruited and promoted on the basis of skills and performance rather than party patronage. Higher civil servants have been given greater responsibilities in the management of their departments, while the role and size of ministerial cabinets has been gradually reduced. The current government has launched a plan to scrap ministerial cabinets altogether within the next few years. In addition, the 2000 reforms have increased senior civil servants’ pay levels in order to make their salaries more competitive with those offered in the private sector. In the 1990s, several important public enterprises were given more autonomy, and public stockholding has in most cases been reduced to 51 per cent or less. This has put a break on the interference of ministers and their party headquarters in policy making and personnel recruitment in these sectors. There have also been changes in the judiciary. In 1991, recruitment to the judiciary was made conditional upon success in entrance examinations, although the Minister of Justice could still freely choose between the candidates that passed the tests. Only in 1998 was it decided to de-politicize the promotion of judges by transferring the minister’s powers of nomination to a more neutral and pluralist Council of the Judiciary. A less positive development has been the fate of the Superior Committee of Control. After a series of modifications of its powers and status, in 1998 most of its functions were transferred to a new Central Office for the Repression of Corruption, within the Justice ministry. The rest were transferred to the new section on state tenders and subsidies within the federal Civil Service department. These modifications are generally considered to have seriously weakened the fight against corruption. More than ever, the new Central Office suffers from under-resourcing, party interference, and de-motivation of its personnel. Finally, there has been an increase in parliamentary activity. While Parliament created only nine committees of investigation in the entire 1880–1988 period, since then it has established roughly one each year. These have developed into an alternative instrument of parliamentary control. They also cover sectors particularly vulnerable to political corruption such as military tenders, the arms trade, and the trade in industrial and nuclear waste. However, in spite of the large volume of publicity these committees attract, not a single minister whose activities have been exposed by them has yet had to resign.

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The clientelistic practices of elected officials have been restricted by codes of conduct that curtail their scope for intervention in the affairs of the public administration.6 Parliamentary immunity rules for MPs and ministers have become less stringent, and the investigative capacities of ordinary courts and judges examining cases of alleged corruption of elected officials have been enhanced.

Impact of corruption and exposure of corruption The main factors underlying the gigantic public debt in Belgium are the allocation of public expenditures on the basis of political rather than cost– benefit criteria, subsidization of declining industries, and the rise in public employment in the 1970s (Lammens, 1993). Public debt in December 2000 ran at 111 per cent of GNP, with a peak of 141 per cent in 1993. The size of this debt is slowly crippling the federal government: about 40 per cent of the annual federal budget is taken up by interest on this debt – meaning that it cannot be used for substantive measures such as public employment or tax reductions. Hence, citizens are becoming increasingly dissatisfied with the material outputs of their political system. Corruption and favouritism may be tolerated at times of expansion of public expenditures from which most citizens benefit in one way or another. But in a state that is bankrupt, public opinion, interest groups and competing parties are much more concerned to ensure that slices of the smaller public cake are efficiently allocated to the recipients that need them most or that produce the highest cost/benefit ratios. Consequently, non-instrumental support for Belgian democracy has declined. As mentioned above, trust in political institutions has dropped to a level lower than for any other country in the EU. In the second half of the 1990s, satisfaction with the way democracy worked fell drastically, to a level even lower than the pathological level of Italy (1997). Among EU publics, Belgians became the least supportive of political rights and freedoms (Eurobarometer, 1997). The heaviest blow, however, seems to have been dealt, not by the explosion of corruption scandals in the early 1990s, but rather by the Dutroux affair and the blunders made by the judiciary and the police. This also fully exposed the politicization, inefficiency and under resourcing of the judiciary, the disputes between police forces, and the immoral behaviour of leading politicians. This case also triggered the largest demonstration in the post-war period, the so-called White March, which expressed the widespread and deep dissatisfaction of citizens with their political system (Rihoux and Walgrave, 1997). The corollary of this dissatisfaction has been the growing success of the extreme right, especially in Flanders, where the Vlaams Blok now has the support of 15 per cent of voters (1999), and 34 per cent in the main Flemish

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town of Antwerp (2000). Political dissatisfaction with the state of Belgian democracy is one of the main reasons given for voting for this party (Swyngedouw et al., 1996). Finally, on the positive side, one can discern in public opinion a growing tendency to reject clientelism and to take political corruption more seriously.7 The press has started playing a more independent role in reporting and unearthing corruption. Therefore, corruption is much more severely sanctioned, and the risks of disclosure much higher, than before. These new attitudes may further destabilize the main governing parties. Not only have a large number of senior political figures (including party leaders, prime ministers, and even the secretary-general of NATO) had to resign as a result of being named in corruption affairs. But in most parties, people involved in the grey fundraising and spending of the 1980s are still in, or aspire to be in, the highest public offices – thus making them vulnerable to the old corruption skeletons that have been falling out of their parties’ cupboards in recent years.

Conclusion Belgium still ranks high on TI’s corruption index. The findings of the various surveys on which the national averages are based are, however, very divergent. The public in particular perceives the country as corrupt, this perception having obviously been influenced by the disclosures of political corruption in the 1990s. However, most disclosures refer to cases dating back to the 1980s, before a comprehensive system of public party financing eliminated the main cause of politicians’ acceptance of bribes and soft money. It is therefore possible that the high TI score reflects the past, rather than the present. In addition, the impact of several structural factors facilitating corruption in the 1970s and 1980s has been weakened due to measures taken in the 1990s. The current government in particular has made a considerable effort to prove, through symbolic as well as substantive measures, that ‘Belgium is back’ (De Winter and Türsan, 2001). Internally, this strategy of restoring Belgium as a ‘model state’ seems to have been rather successful, for recent Eurobarometers indicate a spectacular recovery of popular satisfaction with the way democracy works in the country. Furthermore, trust in institutions has increased, while the number of citizens that consider corruption to be a salient problem has dropped by half in the last three years (VRIND, 2000: 24–5). On the other hand, the state’s capacity to detect corruption may have deteriorated. Many of the formerly disgraced politicians are currently making a come-back, or at least have to some extent been rehabilitated. Therefore, a number of observers hold that in the 1990s we only saw the tip of the iceberg, and that currently, the iceberg is even less visible. Optimists, however, believe that the traumatic experiences of the 1990s have triggered

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sufficient reforms and changes of attitude to transform Belgium into a corruption-free, or at least ‘normal’, country.

Notes 1. Judicial statistics which would allow us to construct a full inventory of the number of trials in which corruption was one of the accusations, or of the number of cases of persons found guilty of these crimes, do not exist. In constructing our less complete inventory, we have updated Barrez’ inventory (1997) using the main weeklies (Knack, Le Vif-Expres, Trends and Tendances) and the electronic archives of the main quality papers (Le Soir and De Standaard). 2. Scheyven – who for 40 years was treasurer of the Christian Democrat Party (which held office uninterruptedly between 1958 and 1999) – declared that in order to collect campaign resources for his party, he ‘taxed’ enterprises that had obtained public contracts, in proportion to the total value of the contracts they had received. Cools, the leader of the Socialist Party, used to call post-electoral contact meetings between his ministers and the main sponsors of the party. 3. In order for a minister or MP to be interrogated, Parliament had, until 1997, to give its permission. Only in clear-cut and flagrant cases of corruption would MPs agree to lift the parliamentary immunity of their colleagues. Therefore, in several cases, party treasurers and members of ministerial cabinets whose names were mentioned in corruption cases were swiftly made MPs, making it much harder to prosecute them (Ghijs, 1997: 69). 4. Requests for assistance vary enormously in content, ranging from requests for support of recruitment and promotion applications in the civil service to requests concerning taxes, education, culture, leisure and family problems (De Winter, 1992). 5. These are estimates made on the basis of information about campaign activities (Informatiebundel KUL), as expenditure and income data provided by the parties themselves in that period are either unreliable or non-existent (Deschouwer, 1992). 6. The Flemish regional parliament has recently voted to approve such a code, drafted by the author of this chapter (De Winter, 1997) and which is gradually becoming the standard for similar codes being drafted by other legislative assemblies at national, provincial and local levels. 7. The Flemish Regional Indicators (VRIND) placed political corruption as the second most salient issue for voters in 1997 and 1998, although it dropped to fourteenth place in 2000 (VRIND, 1998, 2000).

9 Political Corruption in Japan Albrecht Rothacher

In international comparisons Japan is not a particularly corrupt country. According to TI’s 2001 Corruption Perceptions Index (where the higher a country’s placement the lower its perceived levels of corruption) among 91 countries Japan was ranked twenty-first, just behind Germany, ahead of France and Belgium, and ahead of the EU’s four southern Member States.1 There is virtually no petty corruption; and apart from among segments of the political and managerial class, moral condemnation of corruption is near universal. Yet at the same time corruption is a structural component of Japan’s power structure. Political contributions – mostly of the illicit sort – are an essential lubricant of co-operative interactions in Japan’s fractious power triangle. Political corruption is endemic in a system run by an oligarchy operating in a gift culture.

Corruption as an endemic feature of Japanese politics Legitimate donations are made by the mainstream economic associations and the business conglomerates to the major governing party, the Liberal Democrats (LDP), and to a lesser extent to its various coalition partners and the non-communist opposition. They are made in order to secure a generally positive, pro-business, attitude. Yet the bulk of contributions given to LDP faction leaders and to individual conservative MPs are made by specific corporations – with or without flimsy legal camouflage – beyond the narrow, legally stipulated, limitations. They are given in recognition of past favours and/or to secure new ones. They are related to the abilities of government MPs to intervene successfully, on behalf of their clients, in ministerial decisions concerning the award of licences, public procurement and public works contracts. Otherwise, they are given in order to assure protection from tax audits, anti-monopoly investigations or other controls. Actual contributions are an essential element in the smooth operation of Japan’s power triad. In simplified terms, this involves organized big business sponsoring the LDP (and its equally conservative split-offs, the Liberal Party (LP) 106

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and the Democratic Party (DPJ)). The power holders within the LDP then control the ministries of this centralized country, and the ministries in turn supervise and guide the business sector. Without political contributions (often considered as quasi taxes by the mainstream business conglomerates) the LDP’s hold on power, as well as the prosperity and survival of quite a few corporations benefiting from extra rents due to their ‘affinity’ with certain power holders and ministries, would be in jeopardy. This applies in particular to the heavily regulated, protected and un-competitive sectors like the building, transportation, securities, oil-processing and food industries. Efforts to achieve political reform have mainly been directed at reducing the dependence of conservative MPs on large sums of money to maintain their power (that is, to secure re-election). All have been aimed at eliminating political corruption, whose exposure has led to the downfall of half a dozen prime ministers, to political instability and to a significant and enduring erosion of political legitimacy in the last decade. Reform would have threatened the LDP’s continued rule or its return to power. Predictably, therefore, the attempted reforms failed to achieve the required change in Japan’s political culture. A 1994 reform provided for the replacement of Japan’s previous electoral system based on multi-member constituencies, by a system based on 300 single-member constituencies and on the proportional distribution, in 11 electoral districts, of a further 200 seats.2 In the old three-to-five member constituencies, the excessive financial needs of conservative MPs had been due to the electoral system itself. For, though belonging to the same party, LDP candidates were in effect forced to compete for votes among the same conservative clientele and thus to maintain expensive personal local support organizations (see Curtis, 1971). The single-seat constituency was supposed to change this by ensuring that there would be only one official LDP candidate. Yet since the party’s split in 1993, competing conservatives have emerged again – this time from the LDP, the LP and the DPJ, plus ‘independent’ upstarts and challengers. And all employ the time-honoured and expected instruments of ‘pork barrel’ politics and constituency financing.

Causes and dynamics of political corruption Japanese politicians are quick to point to greedy voters and the need to finance an expensive personal constituency support-organization (Koenkai). Conservative voters – especially in the countryside and in small town Japan – have come to expect gifts from their native son whenever they successfully elect him to the pork barrels of Tokyo. Local politicians and power brokers expect even larger gifts (mostly to be redistributed amongst their own supporters) in return for the delivery of their own support network of local voters. An MP needs to maintain at least two offices – one in Tokyo and one or more in his constituency. Hence an MP has large fixed costs which are essential

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for his political survival, but which are far in excess of anything that can be paid for from his parliamentary allowances or the meagre stipend he gets from party headquarters. Hence he must look for his own sources of finance and to his faction leader to defray the larger part of his expenses. A 1994 reform of party finances introduced public financing of parties where (in a system similar to that of Germany) the sums involved depended on parties’ voting support. Designed to reduce parties’ dependence on ‘voluntary’ contributions, the reform has meant that public money now accounts for some 50 per cent of parties’ officially declared revenues. Yet, depending on their constituency situations, the financial requirements of struggling MPs remain heavy, as do those of their faction bosses in the LDP who need to retain their followers in the parliamentary party. Whether a corrupt electorate has corrupted the politicians (as LDP spokesmen claim) or vice versa (as the general public claims) remains a question for debate. For traditional supporters of the governing party (supporters of the small socialist or communist opposition have no such expectations) gifts from their MPs represent a fair deal in a clientelistic relationship that has re-distributive aspects. Traditional supporters living in the disadvantaged peripheries of a centralized state in which most affluence, power and opportunities are concentrated in Tokyo, feel it only just that they should receive some compensation in cash or in kind from their personal representatives in the distant capital. These representatives, often for a fee, will also intervene, on behalf of concrete business interests, in employment matters, to achieve the admission of constituents’ relatives to private universities and hospitals, and so forth. In short, MPs are available in order to facilitate the provision of opportunities that would otherwise be unavailable. The exchange of gifts is a regular pattern in public and private life – with two regular ‘gift seasons’ in Spring and in Autumn. Department stores, for example, organize the distribution of millions of elaborate and expensive gift packs as personalized parcels. For a politician, election time is the most expensive gift season. As mentioned, conservative MPs have traditionally had to compete mainly against fellow conservatives occupying roughly the same social and ideological spaces. Apart from campaign literature, candidates or their staff will, during house calls in their districts, usually hand over cash-filled envelopes to their supporters (‘for their troubles’ – such as displaying the candidates’ campaign posters on the walls of their houses). Another ‘must’ is the regularly organized all-expenses-paid trip to Tokyo, or the wining and dining at regional spas of members of the thousands-strong local support organizations (Koenkai), as well as any number of charitable and individual donations.3 All LDP MPs are organized in intra-party factions, similar to the correnti of the old Italian Christian Democratic Party. They are essentially based on ‘pre-modern’ leader–follower ties, with only minor programmatic differences between them. The faction leader will nominate his senior followers,

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depending on seniority and merit, to ministerial positions, and will supply finance and parliamentary and party posts to his junior faction members. The standing of a faction leader varies with the number of his followers among LDP MPs (and this in turn is affected by his ability to raise funds to avoid defections and his followers’ electoral defeats). The largest faction leader within the LDP is typically regarded as ‘king-maker’ in so far as it is he who determines who becomes the next Prime Minister of Japan. In the 1970s this was Kakuei Tanaka, in the1980s Shin Kanemaru, and in the 1990s Noburu Takeshita. These men controlled the LDP’s largest faction as ‘shadow shoguns’ from unofficial background positions. All were self-made rural businessmen with very strong links with the construction industry. The Tanaka/Kanemaru faction broke up in 1993 when a bitter struggle for succession and power between the two opposing Takeshita/Obuchi and Ozawa/Hata camps erupted within the faction following Kanemaru’s arrest and the confiscation of his integrating ‘war chest’. Ozawa and Hata and their followers then left the LDP and set up their own ‘reformist’ party, initially named Shinto (Japan’s New Party). This party, together with four opposition parties, managed, for the first time since 1948, to exclude the LDP from power for an eight-month period in 1993. The four opposition parties involved were the Socialists (JSP), the Democratic Socialists, the (religious) Buddhist Clean Party (Komeito), and another LDP split-off organized by ex-governor Hosokawa. The odd five-party coalition essentially succeeded only in achieving the above-mentioned electoral reform. When Hosokawa had to resign over a relatively minor illegal campaign contribution, Tsutomu Hata was able to rule for only two months further in 1994. Then the LDP recovered and lured the JSP into a coalition, which was to last for three years. This experience almost eliminated the previously dogmatic ‘Socialists-turnedopportunists’ from the political map, and re-established the LDP’s ‘halfeternal’ rule in Japan. Takeshita’s faction, which supplied Hashimoto (1996–98) and the late Obuchi (1998–2000) as Prime Ministers, remains by far the strongest. For about 40 years, each funding scandal has been regularly followed by a solemn announcement that the LDP’s faction system is to be dissolved, only for the factions to be reconstituted along familiar lines and with predictable memberships informally a few months later. The factions’ multiple functions in the taking of high-level personnel decisions and in securing their loyal members’ finances and ultimate ministerial careers have simply made them irreplaceable and thus they have easily survived all the numerous half-hearted attempts at reform. Even in the new ‘reformist’ camp a factional structure was quickly reproduced. In the Shinto, two factions, led by Ozawa and by Hata and Hosakawa respectively, emerged. Disagreements over personalities, style and tactics (including Ozawa’s continued ‘machine politics’ approach) became so intense that they led to a new schism with Hata, Hosokawa and their followers leaving the party (which has since been renamed the Liberal Party) and joining the DPJ.

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The Democrats themselves are an uneasy amalgam of conservative defectors from the LDP – like their current chairman Yukio Hatoyama – and the remnants of right wing Democratic Socialists and Socialists, like Hokkaido’s former governor Yokomichi, and their trade union followers. The rank and standing of MPs increases with the frequency of their re-election and with their recognized policy expertise. As such, they normally specialize in a given area – say, public construction, agriculture, or transportation – and closely supervise the relevant ministry. Due to regular cabinet reshuffles, ministers seldom stay in office for more than ten months. Hence, those MPs who are senior policy specialists (Zoku) within the LDP form a sort of collective leadership together with the incumbent minister. As these MPs influence key personnel decisions at senior levels (promotions, early retirements, etc.) in ‘their’ ministries, senior bureaucrats are well advised to listen to the wishes of core Zoku members. In the past, overt political influence had been evident in relatively weak sectoral ministries (such as the Ministry of Transport or the Ministry of Construction) with correspondingly low prestige. In recent years, however, the top-ranking Ministry of Finance (MOF) and the Ministry of International Trade and Industry (MITI) – erstwhile bastions of bureaucratic elitism and independence – have also fallen victim to politicization, with administrative vice-ministers and directors general having been dismissed by more assertive ministers. Attempts at deregulation did not result in a reduction in political intervention – but rather indicated reduced influence on the part of the ministerial bureaucracies. Frequently, of course, all this is paralleled by the efforts of business to cultivate direct relations with the ministries. Such relations give rise to a range of favours from working lunches to conventional regular lobbying. They may involve wining and dining with evening entertainment (including at bars where, through standing arrangements, all the expenditures of certain senior officials are taken care of), exclusive golf-club memberships, travel invitations, non-repayable loans and post-retirement career offers. Nevertheless, in the central administration, straightforwardly corrupt practices still appear as the exception. As a rule, ministry officials have a strong sympathy for Japanese business interests. Hence, they often accept junkets and favours for goodwill and for pro-business decisions which they would have maintained and taken anyway.

Impact: anti-corruption measures, exposure and scandal The exposure of corrupt practices is a subject worthy of research in its own right. There is plenty of material known to the national media (which retain vast armies of reporters to follow individual politicians at close quarters). Yet only a few instances of corruption give rise to full blown ‘scandals’, with the culprits – who initially appear genuinely unaware of any moral wrongdoing – being publicly humiliated and prosecuted with their political careers

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subsequently put on hold or terminated. The media (never the parliamentary opposition, which has its own share of relatively minor skeletons in various cupboards) choose cases one at a time. However, they only pick cases in which a major national figure, usually already on the downward slope in terms of his political influence, is implicated and in which there is irrefutable overt evidence of wrongdoing. This also forces the public prosecutor to act and hence supplies a stream of investigations, raids and testimonials for subsequent stories. Politicians have found means to protect themselves. These include front organizations of supporters, which rake in the money but which are officially unrelated, and designated fall-guys – like the hapless financial assistants of MPs – who will take any blame (and be ready to commit suicide if required) and declare their political masters’ implausible ignorance of the various transactions. Finally, there are gangland ties whose strong-arm tactics may deter fainthearted middle-class reporters from doing unwelcome research (Kaplan and Dubro, 1987; Rothacher, 1993b: 114). The scandals that shook the legitimacy of the Japanese power triad of LDP politicians, the ministerial bureaucracy and big business were of essentially three types: ●

●

●

those arising from the corruption and misbehaviour of the political class due to its insatiable funding needs; those concerning the corruption of the underpaid bureaucracy many of whose members still aspire to the upper-class life styles of their corporate peers and clients in terms of night entertainment, leisure and postretirement careers; those based on the links between organized crime (Yakuza gangs) and big business (and sometimes between LDP politicians, certain ministries and the police as well).

None of these normative transgressions had any novelty value in the 1990s. They probably did not even increase in intensity or scope. They took place in pre-war Japan and have continued to do so throughout the post-war period as well. However, after 1992/93, the ‘bubble’ of speculative asset inflation burst and the country began to slide into a prolonged banking crisis and recession. Consequently, the general public and the media felt no longer able to tolerate the excesses of an ossified power cartel that was so obviously failing to deliver the economic goods it had supplied so reliably until 1992. Famous political scandals include ‘Lockheed’ (1973/76), which brought down Prime Minister Kakuei Tanaka, who took cash to instruct All Nippon Airways to buy Lockheed Tristars. Another was ‘Recruit’ (1988/90), in which most of the LDP’s establishment, the administrative vice-ministers of the Ministry of Education and the Ministry of Labour, and the president of the Nippon Telegraph and Telephone Corporation (NTT), took bargain-priced shares which they later effortlessly sold for fantastically high profits.

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Politicians also sold vast numbers of phoney party cards at inflated prices to the management of Recruit in return for a range of political and administrative favours (see Reddies, 1989; Rothacher, 1993a: 102–18). The ‘Sagawa Kyobin’ scandal, following on the heels of ‘Recruit’, was the catalyst for the LDP’s split, in which, in 1993, one-quarter of the party’s MPs (mostly belonging to the Takeshita/Kanemaru faction) formed the ‘reformist’ Shinto. Sagawa Kyobin was a delivery company that sponsored prominent Zoku MPs in return for the award of exclusive transport licences by the Ministry of Transport, which the MPs in question controlled. Sagawa Kyobin finally and famously led to the downfall of Shin Kanemaru, then the undisputed head of the construction Zoku, and (in the 1980s until 1992), Godfather of LDP (and later New Party) politics (in succession to Kakuei Tanaka). The prosecutors hauled in a treasure-trove of 6.7 billion yen in cash and gold bars, hidden in his house, in a raid that was transmitted on live television. Only after Kanemaru had resigned from power, following his admission of the receipt of 500 million yen (a relatively small amount) from Sagawa Kyobin as an oversized (and hence untaxed) contribution, did the public prosecutor feel strong enough to arrest the retiree and his secretary on suspicion of further tax evasion. A house search revealed that he had, as mentioned, 6.7 billion yen in cash, debentures and gold bars partly hidden under a carpet in his bedroom. The presence of this treasure pointed to undeclared contributions from various construction companies. Kanemaru was subsequently charged with tax evasion of over 1,038 billion yen, and released on bail after having spent only three weeks behind bars. Eighteen construction businesses were subsequently raided to substantiate what had been common knowledge for decades. That is, in order for their bids to be considered for public construction projects, companies had to donate at least one manju (filled bean cake), meaning one million yen for each individual project, to Kanemaru alone. Of all public projects 90 per cent would go anyway to the four major political contributors, the Obayashi, Kajima, Taisei and Shimizu corporations. Kanemaru himself would then get, as a premium, 1–3 per cent of the value of each successfully awarded public works contract. Subsequently, 21 executives from the major construction industries were arrested, including the head of the industry association, plus the governors of the Ibaraki and Miyagi prefectures, the mayor of Sendai, and Kishiro Nakamura, a construction minister in the Miyazawa cabinet. The minister had received 10 million yen from the Kajima Corporation to ensure that an inquiry by the Fair Trade Commission into bid rigging in the construction industry came to nothing.4 Later Nakamura was found guilty and sentenced to 18 months in prison without suspension of the sentence, and was made to repay the bribe.5 Successful LDP faction leaders accumulate the donations. Faction leaders must satisfy the ever-increasing financial appetites of their MPs (or else face defections to competing factions and the loss of power and political standing).

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They also need funds in order to buy votes in internal LDP contests involving either themselves or their choice of candidate for Prime Minister. Hence Kanemaru’s treasure, accumulated through decades of contributions almost extorted from public works contractors, was astounding only for its size and for its romantically old fashioned composition. Given their origins in the LDP’s predominantly ‘money politics’-oriented Tanaka/Takeshita/Kanemaru faction, the reformist New Party men, unsurprisingly, were involved in further scandals. Tokyo Kyowa, a now bankrupt credit co-operative, financed a leading New Party politician, ex-Labour Minister Toshio Yamaguchi, to protect himself against MOF investigations.6 Yamaguchi, who was subsequently arrested on charges of breach of trust, had received 7.2 billion yen (£17 million) in unsecured loans for his family from the ‘Resort King of the Pacific’, Harunori Takahashi. Takahashi was a large-scale golf-course developer and real estate speculator. Once the ‘bubble’ had burst in 1992, with real estate prices and the demand for golf courses collapsing, bank credit lines were no longer extended. Then he used his own bank, Tokyo Kyowa and a sister institution, Anzen Credit, to raise funds for continued expansion plans. Takahashi freed himself from the MOF’s banking supervision through the efforts of influential friends – including Yamaguchi – in high places, whom he cultivated with the usual mixture of expensive wining and dining, preferential loans and free golf-course vacations. By December 1994, however, the party was over, with both of his financial vehicles going bust and the public prosecutors moving in. In spite of certain ‘scandalous’ irregularities, however, most dubious political contributions, of which only the proverbial tip of the iceberg comes to public attention, remain without consequences. One example of this is when Prime Minister Hashimoto received (and accepted) a (trifling) donation of 2 million yen from a hospital linen leasing group after it had received an official warning concerning its violation of anti-monopoly laws.7 Another example is when Prime Minister Keizo Obuchi purchased NTT DoCoMo shares that were worth 2 million yen in 1993 at the time they were acquired by his financial secretary. His financial secretary had then, in obscure circumstances, bought into a regional paging company later taken over by NTT. Then, once Japan’s leading mobile telecom operator had gone public, the shares were revalued at 2 billion yen ($18 million).8 In 1998, Yujiro Nakajima, an LDP MP, was arrested. He became the first victim of the new law providing for the public funding of political parties. He had put public funds to a value of 2 million yen ($100,000) into his personal account.9 His was a clear case of traditional constituency work in which personal and political interests are indistinguishably mingled. To differentiate between legitimate costs acceptable to participants in a highminded politics seminar, and the less legitimate costs of the lunch packs and sake designed to provide a more enjoyable outing for the faithful, is already difficult. Even more difficult is it to distinguish between the public and

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private accounts of the local chieftain, whose traditional family business happens to be politics in the region. As in continental Europe, so too in Japan, personal misconduct terminates fewer political careers than in the puritanical world of Anglo-American politics. The fact that Sosuke Uno, briefly prime minister in 1979, was forced to resign after having lied and publicly denigrated a part-time geisha, whom he had contracted for regular sexual services, while a certain US President survived a similar misalliance and public lies with impunity, is only an apparent contradiction. Prime Minister Hashimoto, for instance, had a well-publicized long-term affair with a likely Chinese Secret Service Agent, Miss Li Weiping. And this may have influenced his decision as a Minister of Finance to grant large-scale aid to Chinese hospitals and to resume aid programmes to China immediately after the Tiananmen Square massacre.10 Political marriages in Japan (as in many other conservative traditional trades, such as academia, the arts and among corporate owners) are largely arranged dynastic affairs. More than half the MPs currently belonging to the LDP and the other conservative parties are second generation politicians who inherited their fathers’ or father-in-laws’ constituencies. The Hatoyama clan is the most prominent political dynasty, often termed the Kennedys of Japan. Yukio Hatoyama, who is the current president of the Democrats, is now a fourth generation politician. His father was a former foreign minister, his grandfather a prime minister (1954–56), and his great grandfather a president of Parliament. The lineage of ex-Prime Minister Hosokawa goes back to the sixteenth century daimyo of Kagoshima, his home prefecture (of which he was a governor) in western Japan. In dynastic matters, marital fidelity is certainly not a requirement. In Japan middle-class voters and the media are cognisant of this reality. Among Japan’s powerful central ministries some (like those for construction, transportation, agriculture, health and welfare, all with large spending budgets) have traditionally had the reputation of having been ‘colonized’ and dominated by their Zoku of pork barrel-hungry LDP MPs. Yet the toprated MOF and the MITI were long proud of their immunity from political interference, let alone outright corruption. The big MOF scandal of 1998 revealed that links between senior ministry officials and the banking community had become so close as to allow Yamaichi Securities illegally to hide secret losses before it ultimately collapsed.11 Not only that, but the links also enabled the top banks, including Dai-ichi Kangyo Bank, Sanwa, Asahi, and Daiwa Securities, to obtain their own and their competitors’ confidential inspection reports.12 The officials implicated in the scandal had received the normal fare of extensive wining and dining in Tokyo’s most expensive and discrete traditional ryotei night-clubs and the prospect of lucrative postretirement careers in Japan’s well-paid securities and banking world. Japanese officials typically retire at 55 at the latest and begin to receive a meagre pension only at 65. Hence from a certain age they begin to become

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obsessed with their post-retirement careers with their ministries’ clientele industries (Miyamoto, 1995: 163). Expensive entertainment, an essential lubricant to reduce transaction costs in the Japanese power triangle, also loomed large in the MITI scandal of 1996. In this, six senior officials in the oil regulatory department were punished for having regularly accepted the hospitality of a shady Osaka oil broker, Junichi Izui. He, in the pay of Mitsubishi Oil and Mitsui Mining, spent 6 billion yen cultivating oil related political and administrative circles in order to obtain business-friendly decisions. Typically, one meal in a ryotei (with geishas) for senior bureaucrats would cost Izui 70,000 yen (£370) per head.13 After each of these almost daily revelations the police would publicly raid the ministries and suspected corporate headquarters in question, arrest the humiliated culprits live on television; and their seniors, including the ministers, would go through the ritual of public apologies and resignations. Confessions, and all too often the suicides, of minor and not so minor suspects would follow. Accusations of unaccounted-for entertainment and travel expenditures also hit scores of prefectural administrations, ranging from rural Akira in the North to metropolitan Tokyo.14 In all cases the transgressions stemmed from Japanese men’s predilection for hard work and hard play, their total identification with the job and their innate inability hence to distinguish between public duties and private pleasures. Where this weakness is skilfully exploited (and it frequently and obviously is) corruption sets in. Formal rules prohibiting officials from accepting travel, golf or dining invitations by related private sector contacts have recently been enacted.15 Whether these will be enforced and how they will be circumvented remains to be seen. Although some features of political corruption in Japan are definitely unique, its impact is felt further afield. Most significant is probably the influence buying practised by Japanese multinationals in Southeast and East Asia. This is often organized by its general trading companies (sogo shosha) operating through the discreet networks of overseas Chinese active in the region. Such companies actively used and encouraged the corruption that is endemic in Indonesia, Thailand, the Philippines and, more recently, in China itself. More interesting from an academic point of view is perhaps the purchase of favourable research results at US (and to a lesser extent European) universities. Of a similar stamp was Yoshiaki Tsutsumi’s success in ensuring that the 1998 Winter Olympics would be held, courtesy of the International Olympic Committee, in a largely unsuitable location in Nagano in central Japan. Here the real estate tycoon owns most of the mountains and the city, which he then saw developed with public money.16 Equally interesting is the case of the late Ryoichi Sasagawa, a former war criminal and underworld figure, who had made a fortune in controlling speed boat racing and later bought himself untold numbers of honours (including UK honorary doctorates) on the politically correct global charity circuit.17

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The role of organized crime The links between mainstream big business and organized crime (Yakuza) are manifold. Originally the Yakuza had been used to break up unwanted strikes, to intimidate dissident employees, to motivate unwilling property owners to sell and to vacate their land for development, or to engage in quick and effective debt collection. A specialist yakuza occupation (sokaiya) was to ensure – for a hefty fee – that no embarrassing questions were asked at a corporation’s annual shareholders’ meeting. The sokaiya’s business proved so lucrative and senior corporate management’s desire for harmony and meaningless ceremonies so strong, that the 7000-strong sokaiya began to carry out research into corporate transgressions and management misbehaviour ranging from tax fraud and false accounting to bid rigging and the supply of defective products. As a result they developed large-scale blackmail and racketeering schemes. Securities firms (Yamaichi, Nomura, Nikko and Daiwa) routinely compensated sokaiya for their stock-market losses.18 Others paid inflated consultancy fees and for excessively priced ‘research’ reports, or else paid sokaiyaaffiliated companies for fictitious or grossly overpriced services. Since 1982 such payments have been strictly illegal. Once the police began unravelling the securities–sokaiya nexus, discoveries quickly spread to bastions of the corporate establishment which had all paid the mobsters: Mitsubishi, Toshiba, Hitachi, Dai-ichi Kangyo Bank, Ajinomoto, Takashimaya, Ito Yokado, Kubota, JAL, Kobe Steel, Daiwa, Nomura Securities and Kirin Brewery.19 In 1997 alone some 65 corporate chieftains had to resign, 20 were arrested, and one, the president of DIK Bank, committed suicide. There are also links between organized crime (which with 80,000 formal yakuza gang members can control an interesting pool of voters in those urban constituencies with large night-life areas) and right-wing politics and the administration (Rothacher, 1993b: 111–21). Revealing case studies are the ‘Nagoya Connection’ and the Japan Harbour Transport Association. The ‘Nagoya Connection’ stood for large-scale illegal imports, mostly through the port of Nagoya, of Taiwanese pork which did not respect the official minimum import price (and could hence be sold with a high mark-up on the higher-priced Japanese market) (Rothacher, 1992). Customs had been intimidated by the gangland and political connections of the illicit importers, who all belonged to the militant burakumin (Dowa) group as descendants, from Japan’s Buddhist past, of the outcasts who had handled ‘impure’ tasks like leather tanning, butchery or executions.20 For a decade the practice damaged the interests of Japan’s pork farmers and those of legitimate importers (such as those from Denmark, Ireland and the Netherlands). It was also a practice well known to insiders in the meat trade. However, given the sensitive background of the burakumin (which, as a discriminated minority, uses militant tactics to defend its residual sectoral privileges) the case never became a national scandal, with the main operators and profiteers, and their political protectors, never being fully exposed.

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The case of the Japan Harbour Transport Association is relatively more clear-cut. Until 1997, it used to be the monopoly agency for handling all stevedoring operations in Japan’s harbours. Its chairman was a certain Shiro Takashima who, until his death in May 1997, aged 83, was the undisputed godfather of Japan’s waterfront. With the help of the Yamaguchi crime syndicate, Takashima also acquired control of the organized crime-infiltrated port-workers’ unions. Takashima was hence sovereign in setting stevedoring and port handling charges in this island nation, all of which were summarily approved by a compliant Ministry of Transport. The result was that, according to the US Federal Maritime Commission, Japanese harbour fees were 25–100 per cent higher than elsewhere in this part of the world. No shipping company, domestic or international, could circumvent Takashima’s expensive, monopolistic ‘prior consultation procedure’. Any that tried to do so – by, for example, setting up their own dock terminal operations or by going through fearless independent stevedores – were immediately singled out for violent labour problems or other prolonged troubles, something which, in the competitive environment of global shipping, they could ill afford. It was only in October 1997, when the US Federal Maritime Commission had threatened the closure of US ports to Japanese ships and the EU had lodged a World Trade Organization (WTO) complaint against Japan’s harbour practices, that the Japanese government – well after the death of Takashima – agreed to liberalize its harbour services.21

Conclusion: a decade of purges, but business as usual As demonstrated, political corruption in Japan is an essential glue and lubricant in the country’s power triad consisting of big business, the central ministries and the governing party. With the downsizing of the previously asset-inflated bubble economy since 1992, the transfers involved may have become less spectacular, but the structural phenomenon remains. Although pre-modern in many ways, corruption in Japan (a ‘gift culture’ based on the cultivation of personal connections and paternalist leader-follower ties) is not the result of family/clan solidarity taking precedence over loyalty to the state (as appears to be the case in many less developed countries). Neither is it the result of the decline in public service morale, of social disintegration or the lack of social control evident in much of the developed West. Rather, corruption derives from the use and abuse of personal connections driven to endemic proportions in the context of an over-affluent ossified power elite ruling a largely pre-modern centralized political system. Japan did not become more corrupt during the 1990s. Rather, the LDP’s more embarrassing links with gangland and with extreme right-wing figures, which had enjoyed a certain prominence during the 1970s and 1980s, were quietly suppressed. Yet, the Japanese people did not fail to notice that during 1992–99, eight reflation packages totalling a mind-blowing 93,000 billion yen (£570 billion) were mostly spent on bailing out the

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mistakes of banks’ incompetent managers and on infrastructural projects in the LDP’s rural constituencies. These included building unnecessary roads, bridges and tunnels from nowhere to nowhere, building fishing harbours in abandoned fishing villages, and so forth, to service the party’s struggling construction interests. At the same time the burden of adjustment (in terms of unemployment and economic insecurity) was placed on the country’s middle classes and taxpayers. Meanwhile, the political elite’s self-serving economic programmes obviously and conspicuously failed to reflate the economy, which continues to suffer from a structural (not cyclical) crisis. Given the LDP’s and the ministries’ vested interest in rent profiteers in the regulated sectors of the economy, the much heralded deregulation programmes predictably resulted in very few tangible results (except in areas in which the US had a clearly prioritized import interest and pushed for it with insistence). The straw which finally broke the camel’s back was the public authorities’ failure to mount an effective rescue operation in the wake of the Kobe earthquake in 1995 in which 6,000 people died and which also revealed the inadequacy of building safety standards. Then, in the Tokaimura nuclear accident, criminal negligence on the part of the operators, joint cover-up attempts, and incompetent alert and rescue operations on the part of the authorities, all created an avoidable but deadly crisis. The corruption-induced purges of 1992–2000 hit roughly 10 per cent of the Japanese power elite consisting of some 3,000 individuals in national politics, big business and the top layers of the central ministries. For some this meant imprisonment or death by suicide (and the end of their careers and honoured earthly existence). However, for most, especially if they were young and resourceful enough, it meant only a temporary setback and a shameful episode that could be overcome within a few years. The purges hit the corrupt core of Japan’s power elite (such as Shin Kanemaru – like Kakuei Tanaka in the 1970s) no more harshly than it did many of the minor actors. Many of these just happened to have been in the wrong place at the wrong moment while others, much more deeply involved, but remaining unexposed, can now deliver high-minded lectures on ethics in politics, business and the public administration.

Author’s note The views expressed here are exclusively those of the author. They do not engage his institution.

Notes 1. http://www.transparency.org/documents/cpi/2001/cpi2001.html. 2. Since the June 2000 elections, the proportionally distributed seats have been reduced from 200 to 180.

Political Corruption in Japan 119 3. For details on MPs’ finances see Rothacher (1993a: 52–60). 4. See Financial Times, 12 October 1993, 12 March 1994, 1 July 1993; Frankfurter Allgemeine, 13 March 1993; Newsweek, 5 April 1993 and Shin Kanemaru’s obituary (Financial Times, 29 March 1996). 5. Neue Zürcher Zeitung, 2 October 1997. 6. Financial Times, 7 December 1995. 7. Financial Times, 12 December 1996. 8. Financial Times, 22 September 1998, 15 February 2000, 31 March 2000. 9. Nikkei Weekly, 2 November 1998. 10. Financial Times, 30 May 1998. 11. Financial Times, 31 January 1998 12. Neue Zürcher Zeitung, 4 February 1998; Financial Times, 28 January 1998. 13. Financial Times, 30 November 1996, 12 December 1996 and 28 December 1996. 14. Financial Times, 26 November 1996. 15. Financial Times, 31 March 2000. 16. Asali Evening News, 6 July 1991 and Downer (1994, ch. 19). 17. For Sasagawa’s obituary, see Financial Times, 20 July 1995. 18. International Herald Tribune, 18 September 1997. For interesting background reading, see Alletzhouser (1980: 281–90). 19. Financial Times, 13 March 1997, 1 November 1997, 14 July 1998 and 17 June 2000. 20. For background details see Sabouret (1983). 21. Neue Zürcher Zeitung and Handelsblatt, 20 October 1997; Financial Times, 5 September 1997.

10 Political Corruption in Portugal José M. Magone

As events in Sierra Leone clearly show, when corruption becomes so widespread as to become systemic, it can lead to the collapse of state authority and a situation of permanent, latent warfare between individuals and groups (Thompson and Potter, 1997: 150–1). Many countries in Africa, Latin America and South-East Asia have at one time or another approached such a situation. At the other end of the scale lie the Scandinavian countries where accountability, transparency, solid institutions of law-enforcement and a critical public opinion give rise to very low levels of tolerance of corrupt behaviour. The Portuguese case belongs neither to the first nor to the second of these categories, but has to be located in-between them. A first, very crude, characterization taken from Arnold Heidenheimer, places Portugal in the category of ‘somewhat corrupt’ countries, that is, countries that fall between the ‘quite corrupt’ and the ‘least corrupt’ categories (Heidenheimer, 1996: 338; Mény and Rhodes, 1997: 103). This is confirmed by the regular surveys of TI which place Portugal regularly in the lower-middle ranks of the ‘somewhat corrupt’ countries, even Greece, Spain and Italy being perceived as more corrupt by the respondents to these surveys (TI, 1998, 1999, 2000). We argue that corruption in Portugal has never become systemic, as it gradually did in Italy from the 1970s, or as widespread as in Sierra Leone, but rather has been sporadic, based mainly on patrimonial behaviour and the lack of a culture of democratic accountability, transparency and law-enforcement. The country’s historical legacy is an important element in understanding corruption in Portugal. A society that was characterized until very recently by profound imbalances in terms of literacy, naturally gave power to anyone who had acquired a minimal level of education. Such imbalances only began actively to be corrected a short time before the Portuguese Revolution of April 1974, and they naturally allowed the literate, well-educated minority to profit from the political system through trading of the influence needed to gain control of the most important positions at local, regional and national levels. This special access of the elites (to the detriment of the vast 120

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majority of the population), due to their advantageous positions in terms of social, cultural or symbolic capital,1 established a regime of patrimonial rule, that is, a form of political organization, underpinned by patron–client relations, in which loyalty is vested in the person and not the office. Since 1974 Portugal has had to confront the task of overcoming this and has tried to do so by implementing a package of reforms designed to ensure accountability, transparency, strong mechanisms of law enforcement, and above all, equal access to public offices and public goods for the entire population. This is essential to the setting of good examples to the economic sector, something that is in turn essential if a culture of the contract is to become a reality (Sapelli, 1995: 170–4).

The difficult establishment of democratic governance in Portugal In the nineteenth century, rotativismo, based on the peaceful alternation in power of the elites of the two main political parties led to a system of electoral corruption agreed upon by the two parties and designed to ensure that most MPs would be re-elected election after election. The system was based on informal exchanges of favours with local caciques, influential persons who normally had above-average levels of social, cultural or symbolic capital or a combination of all three. As the incumbents of important local positions, they were able to use clientelism to ensure that the local population voted for the candidates pointed out to them by the central administration in Lisbon. This system was in crisis by the end of the century. Several new parties such as the Socialist Party and the Republican Party began to challenge the system of rotativismo. Candidates from these and other parties began to be elected to Parliament, making it more difficult for the two dominant parties to control the electoral machinery. However, after the collapse of the First Republic in 1926, corruption in the sense of influence-peddling, the patrimonial selection of people for public office, and co-option of the business elite into the structures of power became a normal aspect of Salazar’s and, later on, Caetano’s dictatorships. The Revolution of April 1974 carried out by middle-ranking military officers was to some extent influenced by the fact that officers felt that the Government was corrupting the senior levels of the armed forces by including more fast-track officers, recruited from institutions of higher education, to fight against the liberation movements in Angola, Mosambique and Guinea-Bissau. It was only after normalization had produced a democratic constitutional settlement and the election of the first civilian president, Mário Soares, in 1985, that legacies of patrimonialism could be overcome. Consequently, it was only after the mid-1980s that corruption became an important political issue. With the consolidation and institutionalization of democracy and integration into the EU it became more difficult to keep the

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unregulated system of patrimonial politics. Instead, new institutions and rules began to create boundaries between what was legitimate and illegitimate in the transactions between public office-holders and the private sector.

Causes of corruption: the persistence of patrimonialism in a context of democratic consolidation Administrative and judicial reform were crucial if democracy was to be made resistant to old practices. Although the revolution brought moderate purges of civil servants, judges and magistrates who had been too close to the former authoritarian regime, after 1976 most of the purged office-holders were reinstated and most of the institutional infrastructure of the former authoritarian regime was preserved. It took over a decade to mould the judiciary according to the ethos of democratic regime-building, the whole process of reform being long delayed by the political instability of the first decade of the new democratic regime. In addition, the judiciary was (and still is) underresourced in human and financial terms. The result was a very bureaucratic, slow-moving piece of institutional machinery that is still facing many obstacles in overcoming the patrimonial legacy and still fails to ensure equal access to justice for everyone (Santos et al., 1995: 387–482). Although legal aid is available to the poorer parts of the population, it represents a rudimentary beginning and there is little awareness of its existence.2 The creation of an ombudsman was certainly innovative, but a decade after the office was established in June 1976, it was still quite unknown amongst the population. The importance of the ombudsman’s office lies in the fact that it receives complaints from the whole country and is therefore a kind of barometer of administrative irregularities in Portugal. During the first decade a disporportionate number of complaints came from the two larger cities, Lisbon and Oporto, as compared to the more distant cities of Braganca, Beja, Guarda and Portalegre. In more recent times new technologies such as the Internet and e-mail have been introduced to inform citizens and to receive their complaints about irregularities on the part of state authorities (Provedor da Justica, 2000). The judicial system is not a single system but a plurality of systems each with a different rationale. This feature has added further complexity, but it may lend dynamism to the judicial system. Apart from the system of ordinary justice, there is a constitutional judicial system centred on the Constitutional Court, a system centred on the Court of Accounts and several other judicial systems centred on the administrative and fiscal courts, on the military courts and on the Maritime Courts (Lúcio, 1989: 743–4). Each of these judicial systems deals with a different aspect of the Portuguese legal system and may or may not touch aspects of political corruption.

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The entire system is supported by a Centre for Judicial Studies attached to the Ministry of Justice which provides judicial officers with training in democratic norms of behaviour. In spite of all this, the accumulation of legal traditions which are disconnected and sometimes incompatible has resulted in a lack of consistency and a persisting impression amongst the population that it is not only the political class which is corrupt, but also the judiciary (Santos et al., 1995: 35–40). The second sector that had to undergo major reform was the civil service. Highly centralized, this was deconcentrated and decentralized in the 1980s and 1990s. A so-called Secretariat for the Modernization of Administration was set up in the mid-1980s. Its main tasks are to make administrative processes more efficient and citizen-friendly and to create more formal procedures to govern relationships between the public and private sectors. In the 1990s, one could see a growing rationalization and efficiency of administrative structures, mostly induced by the impact of European public policies. This naturally improved the quality of services for Portuguese citizens (Magone, 1997: 53–7). Public efforts to establish structures to combat corruption go back to the plan to establish a Special Office for the Fight Against Fraud and Corruption in the Public Administration and Business Sector, by Prime Minister Mota Pinto in February 1979. In this period of political instability, the plan remained just that. It was only during the coalition government formed by the Socialists and Social Democrats under Prime Minister Mario Soares that in October 1983 a High Authority Against Corruption (Alta Autoridade Contra Corrupcao, AACC) was established. This was responsible to the Council of Ministers and was directed by High Commissioner Costa Brás. The work of the AACC was restricted to the collection of evidence. Attempts to increase the powers of the AACC in 1986 and 1992 were not successful. Indeed, in July 1992 the AACC was abolished by Parliament, despite the fact that it had collected over 1.5 million pages of evidence relating to corruption over a ten-year period. Most of the files were trasferred to the Portuguese National Archive, the Torre do Tombo. The most sensitive files were burnt. The bulk of acts of corruption had been found to have taken place at local level. In the town of Faro in Algarve corruption had been found to be quite widespread. The same applies to the island of Madeira under the presidency of Alberto Joao Jardim, whose administration was considered to be a case of systemic corruption. The main reason for the failure of the AACC to increase its powers was the fact that the people involved in corruption charges were protected by their own party’s MPs in the Portuguese Parliament. The documentation collected by the AACC will only be made available to the public twenty years after the body’s abolition, in 2013, to prevent acts of blackmail against eventual culprits. A new law against corruption transferred all the AACC’s powers and responsibilities to a branch of the judicial police, the so-called Directorate for the Fight Against

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Corruption, Fraud, and Economic and Financial Infringements (Direccao Central de Combate contra Corrupcao Fraudes e Infraccoes Economico e Financeiras, DCCCFIEF), attached to the Ministry of Justice. The DCCCFIEF was granted special powers to gather information, particularly in cases that may have significant effects on the civil service (Magone, 1994: 759–61) and is now the main body investigating corruption allegations. It consists of four sections of which the most relevant for our purposes is the Section for Investigations Concerning Corrupt Activities. The latter consists of three branches dealing with crimes related to corruption, namely: embezzlement; involvement in activities damaging to administration in a branch of the public sector; the laundering of monies arising from the aforementioned activities. Since 1993, instances of corruption involving ministers, members of Parliament, or local councillors have surfaced periodically. The most significant cases have involved embezzlement, influence-peddling and irregularities in the provision of political parties’ balance sheets. Portuguese parties have to be characterized as cartel parties in Katz and Mair’s terms (Katz and Mair, 1995). This means that they rely heavily on public subventions and strong representation in public office. Public office-seeking therefore becomes an important aspect of party strategies. Loss of elections has strong repercussions upon parties in terms of reductions in public subventions and in the control of public offices (De Sousa, 2001: 158–64).

The dynamics of corruption: the patrimonial labyrinth revisited Portuguese parties receive public subventions for their organizational expenses, according to the results they have achieved at the most recent elections.3 Parliamentary groups receive public subventions too, and they also have at their disposal the human and material resources belonging to the Portuguese Parliament. MPs and Ministers receive a monthly salary. Last but not least, in election years parties receive extra contributions to support their election campaigns. Naturally, this does not tell us much about the amounts individuals actually receive in Portugal. According to data made available by the Portuguese Parliament, MPs receive only £2,000 per month before tax. This is no more than £24,000 annually, a very low salary in comparison to the UK, France or Germany (Borchert, 1999: 29; Magone, 1999: 408). Obviously, this can lead to the pursuit of other interests. Until 1993 party finance was governed by a law passed in 1974 and updated in 1979. This stipulated that parties were required to publish financial reports and accounts annually. In reality, this requirement was never enforced. Private donations went unscrutinized. In spite of a new law concerning party finance, passed in November 1993, which places an obligation on parliamentary parties to submit financial reports to the Constitutional

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Court annually, the situation continues to be unsatisfactory. The first two reports of the Constitutional Court on party expenditure for the years 1994/95 and 1995/96 stated that none of the parliamentary parties had provided complete accounts of their revenue or expenditures and that they had neglected to provide any details concerning the finances of their local organizations (Magone, 1999: 404; Tribunal Constitucional, 2000a,b: 611–42). This was particularly observable in the period after 1995, when the Social Democrats lost the absolute majority they had enjoyed since 1987. After losing over 15 per cent of the vote, the new leader Marcelo Rebelo de Sousa had to introduce very stringent organizational changes within the party in order to pay all the debts the Social Democrats had accummulated while in government. According to an excellent study by Frain (1998: 233), the party lost 201.47 million escudos4 as a result of the elections. While it had received 55 million escudos monthly before October 1995, it began to receive only 39 million escudos after this date. Marcelo Rebelo de Sousa’s changes involved checking more thoroughly that party members actually paid their dues. This had been neglected during the years the party had been in government thus showing how highly dependent Portuguese parties had become on public subventions.5 During Cavaco Silva’s governments between 1985 and 1995 the media and opposition parties coined the expression ‘the Orange state’ (estado laranja) – recalling the colour of the Social Democrats’ emblem – to refer to the situation described above. During this period there were several political scandals relating to abuse of power and influence peddling. This says much about one of the main causes of corruption: longevity in power.6 An absence of clear criteria for public appointments led to the emergence of widespread clientelistic practices in the distribution of senior-level jobs in the health, public television and public telecommunications sectors. Such practices were, later on, extended to the devolved administrative structures in the regions where 70 to 95 per cent of posts were filled by people with ties to the Social Democrats (Lopes, 1997: 38–49). Several politicians such as Leonor Beleza, the former Minister of Health, Miguel Cadilhe and Jorge Braga de Macedo, former ministers of finance, all took advantage of their positions to gain access to private benefits. Most of them reacted indignantly to the charges laid before them by the media and the judiciary. They were not aware that they had been indulging in corruption, mainly because they were immersed in a patrimonial culture in which private and public interests are mixed to support friendships or personal enrichment, the so-called culture of amiguismo (Magone, 1994: 757).7 Such patrimonial behaviour has not been restricted to members of the former Social Democratic government, but it has led to the resignation of members of the present Socialist government as well. The most prominent recent case has been that of the present European Commissioner, Antonio Vitorino, a former judge of the Constitutional Court and a close friend of

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Antonio Guterres. He became Deputy Prime Minister with responsibility for the Ministry of Defence in 1995. In 1997, he was charged with having evaded taxes when he bought a ruined farm house in 1989 and failed to pay 300,000 escudos. He resigned from office on 23 November 1997 (Magone and Stock, 1998: 509). After he had paid his taxes, Guterres invited him back as minister, but he decided not to take the opportunity. Instead he became a European Commissioner under the leadership of Romano Prodi in 1999. Already in 1995, Francisco Murteira Nabo, the Minister of Public Works and Social Equipment, had had to resign even before taking office following allegations that he had evaded tax on a property he purchased in 1992. The press claimed that he had paid 42 million escudos for a house, but had failed to declare its full value in order to achieve a lower tax bill. A case involving former President Mário Soares became public in 1998. Soares was at that time the President of the European Movement. The European Commission had to withdraw over 30 million escudos worth of funds because of suspicions of fraudulent activities. The suspicions were based on investigations undertaken by the EU’s Court of Auditors into fraudulent activities that allegedly took place in 1997 when Mário Soares took over the presidency.8 The flow of European structural funds since 1986 has opened up new opportunities for fraud and political corruption. Even before reform of the funds in 1988, several cases of non-existent courses related to vocational training programmes had emerged. Mismanagement and abuse of European structural funds took place largely because the Portuguese Government was ill-equipped to absorb them. This led to a lack of control of recipients, the absence of effective auditing being particularly evident in 1986 and 1987. The situation became even more notorious because the main trade union confederation, the General Workers’ Union (Uniao Geral dos Trabalhadores, UGT) which is closely linked to both the Socialist Party and the Social Democratic Party, was also involved in fraudulent behaviour in the provision of courses using money from the European Social Fund (Eisfeld, 1989: 163). Only after 1989 did control mechanisms begin to be more strict. Even so, clientelistic–patrimonial modes of behaviour reappeared again when, despite the confederation’s allegedly fraudulent behaviour in relation to the provision of phantom courses, the Socialist Government helped the UGT to obtain a loan it needed to overcome the threat of bankruptcy. The Agreement on Strategic Concertation 1996/99 proposed by the Socialist Government included a package of measures to reform the state, the economy and the labour market. For this purpose the trade-union confederations were asked to support voluntary limits on pay increases. While the UGT was supportive of this important strategic agreement, the rival General Confederation of Portuguese Workers (Confederacao Geral de Trabalhadores Portugueses, CGTP-In) regarded it as too ambitious and insufficiently concrete in some of its aspects. During 1997, the Government agreed to act as

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a guarantor to the UGT in its pursuit of a loan of 600 million escudos from the Caixa Geral de Depositos. This was regarded as a quid pro quo for the UGT’s willingness to sign the strategic agreement in December 1996. Even though the UGT and the Government denied it, it was still true that the process leading to the guarantee of payment was informal and lacking in transparency. Had the Government refused to act as guarantor, the UGT would have had to declare bankruptcy. This situation led to further alienation of the CGTP-In from the Government and the UGT. It was felt that the ideological closeness of the Socialist Government to the UGT had been a major factor in inducing it to agree to underwrite the confederation’s loan. After protests by the CGTP-In, it was discovered that the latter had received a loan of 90.5 million escudos from the Institute for Employment and Vocational Training in 1992 and that, despite promising to repay it in 1994, the debt was still outstanding. The financial problems of the two main trade union confederations threw a spotlight on their vulnerability to a recourse to patrimonial–clientelistic sources of finance (Magone, 2001). For, in contrast to Spain, Portuguese trade union confederations’ main sources of revenue are membership fees, and trade unions are not entitled to receive any public subsidies. A less easily detected form of corruption based on clientela relationships, to use Joseph LaPalombara’s (1964) expression, is influence peddling. Some ministers may become dependent on a single major interest group for the development of policies or the distribution of funds. An instance of this came to light during the Cavaco Silva government in relation to the Agriculture Minister. The Financial Institute for Support of the Development of Agriculture and Fisheries was responsible for allocating structural funds from the European Community’s programme for the financial support of agricultural associations and cooperatives. In some cases, the influence of the main agricultural associations on the decision-making boards raised doubts about the transparency and the correct application of the procedures for awarding grants. However, most of the investigations arising from the allegations had to be dropped by the judicial police (Magone, 1994: 757). A more recent case says much about the transition from patrimonial to democratic and accountable approaches to corruption. In October 1998, Joao Cravinho, Minister for Planning and Public Works, submitted evidence requiring the Assistant Attorney General, Francisco Pinto dos Santos, to open an enquiry into suspicions of corruption and illicit party financing by the public-sector Autonomous Road Office. A second enquiry was also launched by the General Inspectorate of Public Works. In February 1999, it was discovered that about ten prominent politicians and civil servants close to the Social Democratic Party, and to some extent to the Socialist Party, had been involved in acts of corruption. The scandal thus involved politicians from both of the parties that had been in office since 1983. Although the inquiry is still in progress, the Autonomous Road Office case suggests that

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such webs of corruption could be discovered in the activities of other parastate agencies. The response of the opposition party was one of indignation, and accusations were made that the Socialist Government wanted to damage the Social Democrats’ chances in the 1999 European elections.9 This episode suggests that some instances of corruption are to be explained in terms of the small size of the political class. Notwithstanding the complexities of democratic political systems, there was, for many years, a tendency among politicians belonging to the two main parties to accumulate jobs, something which, at some stage, was bound to create a conflict of interest. This situation has recently been targeted by the Constitutional Court. Nevertheless, the small size of the political class, as well as an absence of effective control procedures, often lead to such webs of corruption remaining unnoticed for long periods of time (Gladdish, 1990: 121). A more recent case concerned Portuguese free masons. Their heavy infiltration of the education sector and (probably) the judiciary was regarded as a threat to the democratic character of the Portuguese political system. Demands that the names of all the members of masonic lodges be made public, as happened in the UK in March 1998, were opposed by most politicians. Indeed, the mayor of Lisbon announced that he was a member of the Grande Oriente Lusitano masonic lodge and said that he was opposed to attempts by the state to obtain the names of persons involved in masonic lodges.10 This is quite problematic in democratic terms, because free masonry was always connected with the Republican movement in Portugal and it was a relevant factor in the overthrow of the monarchy in the Revolution of 1910. Strong links between free masons, republicans and the Socialist Party persisted throughout the authoritarian dictatorship and thereby established a network of persons that may use its power to influence decisions in the judiciary, administration and government. The discussion over the approval of the budget for 2000/01 showed that aspects of clientelism and patronage are still quite crucial in Portuguese politics. The poor state of Portuguese finances11 after a decade of high levels of public expenditure is beginning to create problems in view of the restrictions on government spending policies that come with membership of the European Single Currency. The opposition parties all opposed approval of the budget, each one for different reasons. Only one dissident MP, Daniel Campelo from the anti-Maastricht People’s Party, decided to vote in favour of the budget, so giving the Government the crucial vote needed for its approval. Campelo is also mayor of the small northern town of Ponte de Lima. He voted in favour of the budget on condition that money would be allocated to a cheese-processing factory in his town. This led to indignation among the opposition parties, which called the agreement a return to clientelism and patronage in Portuguese politics. This was also a blow for the leader of the People’s Party, Paulo Portas, who was seen as not being able to enforce discipline on his own MPs.12

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Anti-corruption laws and campaigns, remedies and solutions: new laws, but weak control Two of the most crucial prerequisites for success in the fight against corruption are willingness on the one hand and a low tolerance threshold on the other. Institutional reforms designed to eleminate corrupt behaviour in the administration, the political system, the judiciary and the economy will fail to work unless sustained by a democratic cultural ethos. Such an ethos will, in its turn, require reform of all the political structures inherited from authoritarianism. In 1995, the Cavaco Silva government introduced a major transparency package, one that updated most of the legislation that had been approved in the 1980s and early 1990s. In the Portuguese Parliament regulations concerning incompatibilities of office have been made stricter and both the administration and the judiciary are undertaking long term reforms designed to increase their efficiency in the struggle against corruption. The Constitutional Court has a wide range of powers and responsibilities concerning the scrutiny of individual politicians and party organizations. It is too early to assess the degree to which these new structures and responsibilities have been successful in replacing patrimonial cultural attitudes with democratic ones. The present government has been very keen to prevent clientelistic practices becoming widespread in the Portuguese Government and administration. The famous statement of Antonio Guterres on becoming Prime Minister, ‘No jobs for the boys’, was probably premature, since certain individuals with close ties to his party subsequently obtained jobs in the administration.

Impact of political corruption and exposure of political corruption There are now more mechanisms available to expose corruption in Portugal. Among the most important of these is the informal ‘fourth power’ of the Portuguese political system, namely, the media. During the authoritarian regime, the lack of an independent uncensored press was the major factor preventing the exposure of corruption. Since 1974, the Portuguese press has completely transformed the climate. The weekly newspaper Expresso in particular has published a number of substantiated allegations about corruption and other forms of wrong-doing. Other publications, such as Independente, Diario Economico and O Publico, and the independent television station SIC are at the forefront of the critical scrutiny of governing and opposition parties. The rapid exposure and prosecution of those involved in corruption has an automatic pedagogic effect because it makes the costs of corruption high. Not all corrupt activities can be detected, but the greater the likelihood of

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detection, the greater the chances of establishing democratic norms of behaviour and the public-service ethic necessary if transparency and the accountability of politicians are to be assured. Such principles are probably already hegemonic in Portugal, but they need even further consolidation in order to make it even more difficult for corruption to roll back what has been achieved. Last but not least, the EU has had a significant impact on the transformation of the political system in Portugal and this is so in spite of the criticisms of clientelism, patronage and corruption in the EU’s own structures (Macmullen, 1999; Spence, 2000). For example, exposure of the deficiencies of the Jacques Santer Commission certainly had a pedagogic effect in the Portuguese case. The recent transformation of the European Commission’s Coordination of Fraud Prevention Unit (UCLAF) into the European AntiFraud Office (OLAF) will probably also have a pedagogic effect, though it is to early to assess the impact of this new structure (Quirke, 1999). The European Commission has challenged previous patrimonial practices of Portuguese governments. European integration has in this way democratized Portuguese policy-making structures, and this in turn has had a spillover effect on the economy and the judicial and other sectors.

Conclusion This chapter has sought to highlight the distinctiveness of the Portuguese case as compared to the established European democracies. After decades of authoritarian rule, the new Portuguese political class had to overcome patrimonial forms of behaviour and move slowly towards democratic patterns of behaviour. Before that could be achieved, the Portuguese state had to set up properly democratic institutional frameworks to lower the threshold of tolerance of corrupt activities, and to make a huge effort to overcome a legacy of illiteracy which in 1974 still stood at 30 per cent. Since the constitutional settlement of 1976, both the Portuguese population and the political class have become more democratic. Slowly, after years of effort, new institutional frameworks have been consolidated. Since 1974, illiteracy has been reduced to 10–12 per cent. Neverthless, lack of education is still a major hurdle to be overcome in promoting a culture of democracy – which is becoming more complex every day owing to its legalistic nature. Consequently, although the democratic culture is now hegemonic, earlier patrimonial forms of behaviour that are conducive to corrupt activities still exist. One factor that has helped Portugal to break out of the vicious circle of patrimonial behaviour has been the European integration process. It not only placed the public administration under pressure to modernize itself, but it has had a spill-over effect upon cultural frameworks. A new younger generation born after the Portuguese revolution is already well infused with democratic patterns of behaviour and is now finding it as easy to encounter

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similar cultural attitudes among the population at home as it is to find them elsewhere in the EU.

Notes 1. A thorough discussion of Pierre Bourdieu’s definition of cultural, social and symbolic capital can be found in Magone (1996: 162–7). 2. Legal aid is used by only a very small proportion of people involved in court cases. Citizens appear to mistrust any lawyers or legal assistance provided by the courts themselves, preferring to pay their own lawyers even if this means considerable sacrifices (Santos et al., 1995: 497). 3. The law provides that every party receives 1/225 of the national minimum wage per vote received in the elections. A decline in turnout naturally means a reduction in levels of public subvention. 4. The exchange rate was approximately 300 escudos to the pound (sterling). 5. When Manuel Durao Barroso replaced Marcelo Rebelo de Sousa shortly before the 1999 elections he was forced to admit that the Social Democrats had no funds to run a campaign for elections to the European Parliament. 6. Much the same can be said of most European countries, particularly Italy, Germany, France, Spain and the UK. For a critical reappraisal of stereotypes such as ‘the corrupt South’ and ‘the clean North’ see Pujas and Rhodes (1999b). 7. The culture of amiguismo can no longer be regarded as solely a southern European phenomenon. The recent investigations into the activities of Max Strauß, son of the former President of Bavaria, have revealed similar tendencies to blur public and private spheres for personal gain (Die Zeit, 15 June 2000, pp. 17–21). The illicit financing of the German Christian Democratic Union, which has given rise to a political scandal centred on Helmut Kohl, was actually suspected in 1984, but it was not pursued at that time (Noack, 1987: 177–8). Similar tendencies were revealed in the case of Jonathan Aitken, former cabinet member in the UK government of John Major, who went to prison for mixing private and public spheres and lying about it. 8. Expresso, 10 April 1998. 9. Expresso, 20 February 1999, 13 March 1999. 10. Expresso, 7 March 1998. 11. The ratio of public debt to Gross Domestic Product stands at 50 per cent. 12. O Publico, 4 November 2000, p. 3; O Publico, 7 November 2000, p. 11; Expresso, 4 November 2000, pp. 4–5; O Publico, 8 November 2000, p. 8.

Part III ‘Least Corrupt’ Countries

11 Political Corruption in Sweden Staffan Andersson

Sweden is easily classified as one of the ‘least corrupt’ countries of the world. In such countries, because the number of obvious corruption cases are not that many, some of the most interesting questions are which areas of society are most likely to be affected by corruption and what are the types of corruption that do cause concern. In this chapter the concepts of ‘danger zones’ and ‘types’ of corruption are used. This makes possible a discussion not only of clear-cut examples of corruption but also of those lying on the fringes of corrupt activity. To be able to analyse danger zones and types of corruption a typology based on the following factors is used: (a) location of corruption; (b) types of actor, whether politicians or public officials; (c) type of norm, whether legal or non-legal; (d) type of transaction, whether direct or indirect; (e) public reactions and perceptions. This is developed below. Danger zones are those areas of society most susceptible to corruption. They need not be characterized by high levels of actual corruption, but instead are characterized by the large number of opportunities for corruption, by a high frequency of corrupt offers, or by the widespread suspicion that they are corrupt. In this chapter, danger zones are identified by examining legal cases and media reports and by conducting interviews in order to study the frequency of corruption cases in government organizations.1 One distinction that can be used concerning types of corruption is whether an act that is legally corrupt is regarded as morally corrupt by the public and vice versa. The two do not necessarily coincide (see Table 11.1). To develop this further, it is fruitful to distinguish between direct and indirect gains from corruption, not least because we can expect corruption in a modern society such as Sweden to be indirect in many cases. Indirect forms of corruption are vague, involving unspecified exchange deals, and they tend to take on a collective character, with personal aspects receding into the background (Kjellberg, 1995: 342–3). Combining the distinction between direct and indirect gains from corruption with the distinction between corruption 135

136 ‘Least Corrupt’ Countries Table 11.1 Legally and normatively defined corruption Immoral

Yes Illegal No

Yes

No

Obvious cases of corruption Public outrage

Some patron–client relations Not corrupt

Table 11.2 Types of corruption Transaction type

Legal Breach of norms Illegal

Direct

Indirect

1

3

2

4

Source: Kjellberg (1995: 343).

as a violation of legal norms or ethical standards, gives four types of corruption (Table 11.2). The first type is the simplest form, both illegal and direct. It is straightforward (as in most cases of bribery) and when exposed easy to identify. Type four is the opposite, where gains from the exchange may be contingent, secondary or collateral, coming into balance for both sides over a long period of time. It also represents a breach of social norms not reflected in the legal code. This type is often perceived by the public to be on the fringes of what can be regarded as corruption. Actions falling within the remaining two categories are also difficult to identify as corruption – either because the norms breached are not legal ones (type two) or because the transactions are indirect (type three).2

Newness, scale and varieties of corruption Internationally, the Scandinavian countries have long been regarded as among the least corrupt in the world. In the period 1980–85, Sweden was ranked as the fourteenth cleanest of the 54 countries included in TI corruption ranking. Among the countries of Western Europe, Sweden was ranked as number nine. Between 1995 and 2000 Sweden was ranked higher among the least corrupt countries than it was in 1985. So in cross-national terms Sweden’s position remains strong and is even stronger than it was in the 1980s according to the rankings (TI, 1996b, 1997, 1998, 1999, 2000b). The traditional and official Swedish view has been that the country does not have to pay much attention to corruption because it does not have any.3

Political Corruption in Sweden 137

But in the 1990s political scandals contributed to a debate about political ethics, corruption and political affairs. Political affairs are not a new phenomenon in Sweden, but in the 1990s there was an increase in the number of reported affairs, and these were debated in newspapers, on news programmes, at conferences and in Parliament. One explanation for the growth in the number of political affairs could be closer scrutiny by the media. A case that received much attention concerned a prime-ministerial candidate who had to stand down after using a state credit card in a way that caused criticism. The initial hearings uncovered no grounds for criminal proceedings. However, as a result of the affair, the media began to conduct similar investigations concerning other politicians and as a consequence there have been several disclosures involving politicians especially at the municipal level or public servants in government offices and municipal public companies. These scandals concern the use of public credit cards for private matters; using public funds for private travel, and entertainment expenses regarded as unreasonably extravagant. There have also been clear-cut cases of bribery. The picture revealed by studying media reports suggests that there have been many improprieties reported.4 In the Swedish daily Dagens Nyheter 90 reports of suspected improprieties and corruption appeared between September 1995 and May 1997. These cases concerned not only bribes but also cases in the grey zones of corruption.5 But whether this increase in publicity points to a real increase in corruption and improprieties is difficult to tell. There was a slight increase in known cases of bribe-taking and bribe-giving up to the mid-1990s following which the trend turned down again (Table 11.3). But the true figures for bribery are not known, so far-reaching conclusions about whether or not Table 11.3 Numbers of persons found guilty of criminal offences by principal offence 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Embezzlement 1291 1201 1323 1443 1492 1578 1604 1575 1544 1479 1385 1205 1296 and breach of trust of which: Breach of trust 22 25 23 26 23 28 30 22 35 29 35 16 30 Crime against public 2825 3083 3009 2970 3059 3166 3193 3565 3438 3419 3031 3095 3423 activities of which: Bribe-giving 6 5 3 10 16 16 17 12 9 79 14 10 12 Misfeasance, etc. 26 14 18 16 29 38 36 54 29 30 40 24 15 of which: Bribe-taking 12 6 9 3 11 12 12 29 8 8 12 7 3 Bribe-giving and 18 11 12 13 27 28 29 41 17 87 26 17 15 taking Note: The figures represent the sum of judgments, summary impositions of fines, and prosecution remissions. Data from BRÅ (BRÅ, 1996–98, 2001).

138 ‘Least Corrupt’ Countries

corruption has increased cannot be drawn. Cases concerning embezzlement, crimes against the public service and breach of duty are also of interest. Actions having to do with corruption could be hidden among them, but the most clear-cut category is of course bribe-giving and bribe-taking. Breach of trust has increased over time. Concerning embezzlement and crimes against public activities the trend grew until the mid-1990s but after that fell back to previous levels. From business there are signals that economic improprieties are increasing.6 Furthermore, when students were asked whether they thought corruption had increased in Sweden over the past ten years, the majority thought that this was the case.7 Purchasing is often seen as a sensitive area, where different actions to influence the purchaser, such as bonuses, favours and kickbacks can be used. A survey in 1996 showed that 53 per cent of the purchasing agents in Swedish municipalities had been offered bribes during the 1990s.8 The offers consisted most often of trips, tickets to sporting and cultural events and different kinds of gifts that could be questioned from a legal point of view. About 20 per cent of the respondents answered that they received offers frequently, as often as several times a year or even each month. Many also thought that bribes were even more common during the 1980s (Rydell, 1996). Thus, there are some indications that corruption has either increased or is regarded as an increasing problem.

Dynamics of corruption: the danger zones and types of corruption9 Using the typology developed earlier provides an empirical picture of corruption in Sweden. Data from three different sources are used. Thus, while the legal picture is based on investigations into 130 alleged cases of bribery, the media picture is based on 90 cases reported in the daily Dagens Nyheter between September 1995 and May 1997, and the interview picture comes from interviews with 41 politicians and public officials.10 Corruption and other improprieties reported in the press There were 52 cases at state level, and 38 cases in local government.11 Around 25 cases concerned indirect transactions, many of them involving conflict-of-interest situations, funding of political parties, and public procurement of goods and services. These media cases cover a broad spectrum from clear-cut examples of corruption to borderline cases.12 Public sector relations with business, side occupations, contributions to political parties and candidates, public procurement and purchasing, are some of the illustrated danger zones. Some cases concern offices involved in making decisions about contracts for housing and construction. In several cases concerning misuse of public resources, there were friendship ties between the persons involved, where group loyalty weakened oversight and control.

Political Corruption in Sweden 139

Other cases concerned privileges and the use of benefits by high officials. The extent to which such uses were proper or not has been the subject of debate and a number of cases have been tried in court. Other areas of uncertainty are the contributions to political parties and candidates from companies and organizations, such contributions being examples of the indirect transaction type. The contributions of the Swedish Trade Union Confederation to the SPD, and whether the contributions have been conditional, has been the focal point for this debate. Opinions are divided as to whether this is an example of corruption or not, but the law has not so far regarded it as improper. Of the state-level cases, many concerned the misuse of public resources for private gain, illegitimate use of favours and conflict-of-interest situations in public procurement. In housing and construction, tender and procurement contracts gave rise to many cases. There were also instances of people trying to bribe policemen, and some cases of bribes offered to border staff. Bonuses from companies to public officials were another common type. In local government, several of the bribes offered concerned housing and construction contracts. Many of the cases involving politicians concerned their use of favours, while others concerned fraud, embezzlement or breach of trust, such as private travel using public funds. There were a number of cases of bribes being offered in relation to the procurement activities of local government-owned companies. Slightly less than half of the cases (43) concerned politicians. Of the 48 cases involving public employees, 38 of them involved high public officials. Of the cases involving politicians, about half of them concerned the local government level as did about the same proportion of the cases involving public officials. Prosecutions Out of 130 alleged cases of bribery giving rise to legal proceedings between 1979 and the first half of 1996,13 44 concerned the state and 82 local government.14 Many of the cases concerned relations between business and the public sector in housing and construction, public procurement, purchasing, permissions, and licences and duties where the official had direct contact with the client. The largest proportion of the 130 cases was found in the housing and construction sector. Most cases where the police had been a party, concerned drivers who had offered bribes to try to get police officers to ignore traffic offences. Only one of the cases involving police officers concerned a criminal investigation, where the police officer investigating an insider theft received a bribe from bank officials. A number of the cases also involved local government public transport. The state-level cases concerned activities involving traffic violations, licenses and permits, border controls, private travel at public expense, housing and construction, purchasing and contract by tender. At the

140 ‘Least Corrupt’ Countries

local-government level, most of the cases concerned housing and construction followed by transport, contract by tender on machines, and company establishments. Nine cases concerned local government owned companies. Politicians were involved in 16 cases, where 13 concerned local government politicians and 3 concerned central government politicians. Several cases concerned the establishment of new companies. At the national level, the offer of a member of Parliament to give economic information to companies in return for money, received much attention. The view of politicians and public officials Political actors themselves point to many different areas involving relations between the public sector and business as danger zones of corruption. They include procurement and purchasing, contract by tender, defence and decisions about infrastructure. In local government, those with responsibility for purchasing, economic management, industry and trade were regarded as occupying exposed positions. Among national-level politicians, local government was seen as more vulnerable than central government (Andersson, 1999). Many of the instances of corruption involving politicians and officials concerned direct gains and involved breaches of legal norms. Several of the individuals involved had received corrupt offers, either themselves or through colleagues. But many instances concerned indirect gains and breaches of nonlegal norms. Some regarded the Trade Union Confederation’s contribution to the Social Democratic Party as an instance of corruption (Andersson, 1999).

Anti-corruption laws and campaigns, remedies and solutions Swedish anti-corruption legislation concerns bribery. Bribe-taking is the crime committed by the taker when making a promise or accepting an undertaking in order to receive a bribe or other undue reward in the execution of his or her duty.15 These rules apply to all employees, holders of political positions of trust, and holders of official positions regulated by the Constitution. Bribegiving is the crime committed by the giver when offering a bribe to employees or officials – who by accepting make themselves guilty of bribe-taking. Even if an undertaking entered into is not in fact fulfilled, bribe-taking is still an offence. Even if the potential bribe-taker declines the offer, this does not imply that the bribe-giver is not guilty of an offence (Cars, 1990: 9–10). Other relevant laws concern embezzlement, breaches of the trust placed in an agent by his or her principal, fraud, and conflicts of interest. There are detailed provisions on conflicts of interest in order to safeguard the impartiality of central and local government administrative agencies.16 The regulations concerning conflicts of interest are not as strict for elected politicians as they are for public officials.17 Members of Parliament are expected to be active outside Parliament and to be sensitive to public opinion, and there

Political Corruption in Sweden 141

are no regulations concerning the outside occupations in which they may or may not engage, as exist for public officials. Legislative changes A cross-national comparison of anti-corruption regulations shows that domestic areas have been more regulated by law than has the bribery of foreign officials, and this is also true for Sweden. In recent years, the Swedish Government has produced legislation in response to proposals from the international organizations of which Sweden is a member. Sweden has ratified EU and OECD protocols concerning bribery, and these have necessitated several legislative changes. As a consequence, bribery includes favours offered to persons other than the one whose actions the favour is intended to influence and now also includes favours to European Commissioners, to members of the European Parliament and to judges of the Court of Justice of the European Communities and the European Court of Auditors. It has been made a criminal offence to bribe foreign parliamentarians and ministers as well as other persons carrying out duties for a foreign state (Ds, 1998: 29, 89). Thus, the tax deductibility of bribes to foreign civil servants has been abolished. With these legislative changes in force, Sweden can be said to have strong legislation against both domestic and foreign bribery. Another important legal change was the introduction in the mid-1990s of the Public Procurement Act (SFS, 1992: 1528). By this means, EU directives substantially strengthening public procurement rules, were integrated into Swedish law. Swedish policy and other measures to combat corruption The meeting between the Prime Minister, the national police commissioner and the prosecutor-general following revelations of suspected corruption in the Swedish police and the public prosecution authority in August 1996 testifies to the increased seriousness with which scandals and cases of alleged corruption are being taken in Sweden (Haag, 1996: 33–6). The Chancellor of Justice was given the task of coming up with measures to prevent the spread of systemic corruption.18 Regarding danger zones, public policy suggests that there is no official awareness about which areas are most vulnerable to corruption (Government Offices, 1997). But, in the late 1990s, reports pointed to public procurement as such an area (Government working paper, 1999) and in official government publications there are signs of an increased general awareness of corruption. There is an aspiration to work as far as possible for an ethic of service in the public administration and an increased emphasis on information and education about corruption. Measures suggested in official government publications often concern control systems and transparency, particularly in public companies and local government where the need for improved audit has been especially emphasized. This is partly a result of the fact that many

142 ‘Least Corrupt’ Countries

scandals in local government were discovered by the media rather than through internal control procedures. In order to increase citizens’ trust in the local government audit, consensual measures have been taken to increase the efficiency, competence and independence of the local government auditors and improve the controls exercised over local government-owned companies. Local-government activities are subject to the scrutiny of (lay) auditors elected from the political parties in the assembly itself. The changes stipulate that professional auditors should assist the elected auditors. But there are different opinions about what role elected auditors should have vis-à-vis the assisting professional auditors. Whether the current position is to be preferred, or else one that makes auditing more independent of the politicians can thereby be expected to continue to be debated.19 At the national level, politicians are very sceptical towards legislation regulating the funding of political parties and candidates by private organizations and companies. In this area self-regulation and voluntary agreements between parties are preferred. While party funding has been regarded as a matter for the parties themselves, a voluntary record of the economic interests of Members of Parliament has been established (SFS, 1996: 810). In the late 1990s it seemed that attitudes towards legislation regulating the funding of political parties were becoming more positive (Gidlund and Möller, 1999: 72–4).

Impact of political corruption and exposure of political corruption The effects that corruption and affairs can have on legitimacy is one of the most obvious reasons for studying corruption and its danger zones in Sweden. In the industrialized countries of the world there is a general debate about the lack of confidence in politicians. This lack of confidence may be explained by various factors such as economic problems, the inability of democratic political systems to live up to their promises and so on. From Italy we know that scandals can also be an important factor in explaining low levels of confidence in the political system as such. An international long-term trend towards declining trust in politicians applies also to Sweden.20 Politics in Sweden have been significantly affected by scandals. Those that have had the greatest direct effects have occurred in local government where, in some municipalities, entire political leadership-groups have had to resign. Local-government scandals have also received considerable publicity in the national media. Table 11.4 shows the low levels of confidence in local government politicians and civil servants, as well as a decline in confidence levels. There is no doubt that scandals have played a part in these results, for the data are drawn from a survey carried out in 1996 when scandals were a salient topic

Political Corruption in Sweden 143 Table 11.4 Confidence in local government politicians and public servants in 1996 (balance measures)

Politicians Public servants

Confidence

Change

⫺50 ⫺23

⫺67 ⫺45

Note: N ⫽ 1,022. Balance measures are calculated as the percentage difference between a ‘great deal’/‘quite a lot’ of confidence and ‘rather little’/‘little’ confidence. Questions: ‘In general, how much confidence do you have in local politicians in Sweden?’ ‘Has your confidence in local politicians increased or decreased in the last year, or has it remained unchanged?’. Source: Wrede et al. (1996).

of public discussion. Public servants do not seem to have been as negatively associated with scandals as elected representatives have.21 Is this reduced confidence in politicians reflected in levels of confidence in local government as such? Judged by citizens’ perceptions of democracy in 1997, municipalities have the best scores, while the higher the level of government asked about, the more negative are people’s perceptions (Petersson et al., 1997: 121–3). Municipalities also have the best scores in terms of citizens’ perceptions of legal security and corruption. This suggests that condemnation of the politicians involved in local-government scandals does not necessarily lead to any corresponding erosion of confidence in local government as an institution.

Causes of corruption There are several factors that help to explain the relatively low levels of corruption typical of Sweden. Compared to many other countries, public administration is open; the bureaucracy is relatively efficient; protection for whistle-blowers handing over information to the media is good; the efficiency and independence of the legal system is high; civil society is developed, and people generally trust each other. Another important factor is that, since levels of corruption have been low for a long time, people have acquired the expectation that public administration will be honest. But as noted above, there are also signs of an increased danger of corruption in Sweden. Several changes have occurred in politics and administration that may have implications for understanding corruption in a Swedish context. The efforts being made in the public sector to increase efficiency create new demands on controlling bodies. Internationalization, not least

144 ‘Least Corrupt’ Countries

membership of the EU, demands new routines and working practices on the part of government and the authorities. An important change in the style of administration by central government has involved the passage of legislation establishing only general frameworks, thus giving more discretion to local authorities to design their own implementation rules. However, growing decentralization and increased discretion have not been accompanied by any corresponding adaptation of internal and external control systems (JK, 1997). Controlling bodies in Sweden are not as independent as in some other comparable countries. At national level, the National Audit Office is subject to government supervision. But the political parties have agreed to merge the Parliamentary Auditors22 with the National Audit Office and to make the new body independent of government. The two organizations will be merged in January 2003. The new body will be answerable to Parliament and will be responsible for efficiency audits and for security screening (KU, 2000/01:8). The principle of public access to official records, and guarantees concerning the disclosure of information, increase the likelihood that improprieties are made public and can be dealt with. However, lack of awareness of the principle of public access to official records and a tendency towards more closed administration might decrease the flow of information. In Sweden, protection for public officials disclosing information carries more weight than the duty of loyalty even in a number of cases concerning secret information. There is sometimes a lack of awareness of this on the part of the authorities.23 Concerning the funding of political parties and candidates, Sweden is a country with few laws and regulations. The introduction of preference voting in 1998 increased the pressure on individual politicians to seek election through personalized election campaigns. This could suggest an increased risk of corruption in Sweden, not least because this area is still regulated only by voluntarily agreements among the parties.24 These institutional changes in turn affect actors. There are signs that democratic values, legal guarantees and public ethics have been overshadowed by the stress on economic values that was characteristic of the 1990s.25 Employees are more afraid to criticize their employers and are becoming more silent. With declining job security and a growing tendency for wages to be set on an individual basis, civil servants have become more dependent on their superiors (SOU, 1997b: 28). They seem to be more afraid than before to expose improprieties,26 which is alarming since whistle-blowing and criticisms of mismanagement are an important mechanism for keeping corruption at bay. Political actors themselves seem to stress institutional factors rather than individual moral failings as explanations for corruption. In general politicians see local government as more exposed to corruption than central government. They regard this as being due to the existence of weaker control mechanisms, a lack of alternation in power, an absence of real powers of scrutiny for opposition parties, weaker controls in local government-owned

Political Corruption in Sweden 145 Table 11.5 Acceptability of bribe-taking Country Average for West Germany,27 Spain, Norway, Sweden and Finland

Sweden

Year

Mean

Std dev.

No.

Mean

Std dev.

No.

1981 1990 1996

1.60 1.63 1.80

1.27 1.35 1.59

1475 1487 1497

1.57 1.60 1.55

1.31 1.33 1.46

7383 7379 7433

Note: Data calculated from Inglehart et al. (2000). Question: ‘Do you think that accepting a bribe in the course of one’s duties can always be justified, never be justified, or something in between?’ Scale from 1 (never) to 10 (always). N is weighted.

companies, less efficient audit systems and less scrutiny by the press. Weaker political control was thought to be partly connected to the way in which the public funding of parties is organized (since it could be regarded as making the smaller parties dependent upon the larger parties for the allocation of public funding) and to the way the system of politically elected auditors operates (Andersson, 1999). People’s attitudes to corruption in Sweden are strict and this can be regarded as an important factor in keeping corruption at low levels. Table 11.5 shows that Swedes have a low tolerance of bribe-taking. But over time there have been changes. In 1981 and 1990 the mean value for Sweden was only slightly higher than the average, but in 1996 the mean was noticeably higher suggesting an increased acceptance of bribe-taking in Sweden. The standard deviation shows that the spread of answers in Sweden is increasing over time and that while it was lower than the average in 1981, in 1996 it was higher. There are many possible interpretations of this development. One could be that attitudes towards bribery in Sweden are becoming more diverse with some people able to imagine situations in which bribery would in their view be justified. Another is that there is a growing tendency towards increased acceptance. If this is so then it is a matter of concern since strong attitudes against corruption are important in keeping it at a low level.28

Conclusion The existence of a corruption problem should be judged against the overall picture of corruption in Sweden. Traditionally corruption has not been high on the political agenda but the relatively large number of scandals that took place in the 1990s have served to focus public attention on it.

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Concerning danger zones, there seems to be no explicit official view about what areas are most susceptible to corrupt or questionable activities but public procurement is an area often pointed to. Measures suggested in government reports and investigations in many cases concern control systems and oversight, particularly in public companies and local government, where the need for improved audit systems has been given special emphasis. An analysis of media reports, interviews and legal investigations into allegations of bribery, showed a broad spectrum of areas and relationships vulnerable to corruption. Such areas are those involving the exercise of considerable discretion or the taking of decisions about permissions, licenses and the procurement of projects. In the interviews undertaken by the author and in the media reports, corruption was discussed as a concept covering a broader range of phenomena than legal cases of bribery. One important difference between the interviewees and the government reports is that when talking about control systems, the interviewees highlighted the weakness of opposition parties at municipal level, as well as the financial dependence of small parties. A comparison of the legal investigations into allegations of bribery with the cases reported in the press shows that public officials are involved in the vast majority of the former while the latter concern politicians about as often as officials. Similarly, while an overwhelming proportion of the legal investigations concerned local government, cases in the press concerned the local and national levels to the same extent. Cases of corruption and improprieties in the media to a large extent concern instances where non-legal norms have been broken and, as with the legal investigations, most often concern direct transactions. But cases concerning indirect and less specific transactions not directed to an individual person are at least as interesting. Contributions by the Trade Union Confederation to the SPD and whether they have had conditions attached to them have been the focus for this debate. Though such contributions have not been made illegally, legal changes, regulating contributions to parties more strictly, did intensify this debate. Sweden is taking an active part in international efforts to combat corruption and has as a result strengthened its legislation, particularly in relation to the bribery of foreign officials and the tax deductibility of bribes in international business dealings. The domestic implications of changes in legal interpretations of bribery have been debated, not least in relation to contributions from organizations to political parties. On the question of whether or not to have more legal rules regulating party financing, Sweden has chosen to maintain its traditional stance in this area with very little legislation. In sum, there is corruption in Sweden and it may have increased, but in international comparisons Sweden is still a good example of a ‘least corrupt’ country. Yet the 1990s have shown that there are many danger zones for corruption and that a low level of corruption cannot be taken for granted. This points to the need for increased attention to corruption in the ‘least corrupt’ countries too. The number of public officials that can be assumed to be

Political Corruption in Sweden 147

corrupt, as well as having a reputation for corruption, can affect the willingness of others to engage in corrupt deals. Therefore it is important to keep corruption at low levels in order to avoid the risk of it becoming established at higher levels. But many Swedes seem to believe that corruption has increased in the 1990s. The public in general has been very strict in its attitudes towards impropriety and questionable actions. But there are some indications of a change in attitudes over time. It is therefore very important that the government and its agencies take note of what is regarded as corrupt by the public.

Notes 1. The danger zone concept and the theoretical framework is further elaborated in Andersson (2002). 2. Perceptions can be used to analyse corruption further by distinguishing between black, grey and white corruption, depending on whether the actions in question are condemned by elite and/or mass opinion in society (Heidenheimer, 1989: 161). 3. Corruption in Sweden has hardly been studied empirically by academics. In the field of law, Thorsten Cars has written the most extensive work with empirical ambitions (Cars, 1996). 4. There has also been an intense debate about whether media coverage of suspected improprieties has been fair or whether it has involved pre-judging the persons concerned. 5. Of all cases 20 concerned bribes, 12 fraud, 13 embezzlement, 10 challenge, 11 breach of duty, 5 breach of trust against one’s principal and 5 breach of an obligation to observe silence. 6. A survey conducted among representatives of 600 companies in 1995 showed that about half the respondents thought that the problems were increasing. Only 8 per cent of the respondents thought they were decreasing (Jörle, 1995). 7. The author conducted this survey in May and December 2000; 160 students in the author’s introductory-level class in political science took part. 8. The weekly journal KommunAktuellt, published by the Swedish Association of Local Authorities, carried out the survey. Purchasing agents in 187 municipalities out of 287 answered the questionnaire. 9. Cases are included if at least one party involved has the public as principal. We should note that this means that the empirical examples cannot tell us how corrupt the public party involved is: the case could be included here simply because the public official involved was exposed to corruption, for example through a bribery attempt, even though they did nothing wrong. 10. The interviews were conducted with local-level politicians and officials in Motala and Skellefteå municipalities in 1997, and with national-level politicians and officials in 1998. 11. The different classifications do not always provide a total of 90 cases due to overlapping categories. 12. In relation to the data concerning prosecutions (below), the media material also includes cases where the prosecutors involved did not think there were sufficient grounds for a trial. 13. Figures given below do not always add up to 130 because of overlap between the categories used. 14. Thorsten Cars presents about 150 legal cases of bribery in Sweden. Most cases are from the district courts and the courts of appeal (Cars, 1996: 168–9). Among them

148 ‘Least Corrupt’ Countries

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27. 28.

I have singled out the cases where at least one party involved was working in the public sector. In total, this makes about 130 cases. If an illegitimate favour is associated with certain actions by the taker, generally the favour is to be regarded as a bribe whether such actions violate the taker’s duty or not. However, the nature of the taker’s duty is crucial in judging whether the favour was a bribe or not (Cars, 1990: 20–1). Anyone with a particular interest in a matter, which might be reasonably supposed to influence the way the matter is dealt with, may not be involved in its administration. This is not to say that conflict of interest is a sufficient condition for corruption or a necessary prerequisite. But in the long run incompatibility might create the basis for a culture of indifference (Kjellberg, 1995: 357). This report concerning improprieties at all levels of government was presented in February 1997, where recommendations mainly aimed at strengthening control functions in certain key areas (JK, 1997). According to several of the interviewees, the position of the professional auditors needs to be strengthened owing to the risks involved if party friends and followers are elected as auditors. Internationally the decline in confidence in the political system was halted in the 1980s. In Sweden, however, the trend continued downwards (Gilljam and Holmberg, 1990: 113–14) and political scandals can partly explain this. This might be explained by the position of trust occupied by the elected representative. But it might also be partly explained by the fact that a large proportion of the cases that receive attention in the media concern politicians. Compared to the National Audit Office with about 300 employees, the Parliamentary Auditors, who investigate and examine all kinds of state activities mainly in the form of performance auditing, are a very small organization with about 30 employees and 12 politicians and 12 substitutes (Riksdagens revisorer, 2000). During the 1990s the number of complaints to the parliamentary ombudsman concerning violations of the right to freedom of speech increased. Between 1977 and 1987 the ombudsman received 24 reports from public employees and between 1987 and 1997 about 90 complaints (Svensson, 1998b). New regulations have been demanded in parliamentary motions but government commissions have regarded voluntary agreements between the parties as sufficient (SOU, 1993: 21; KU, 1996/97:16). The chief justice has noted a tendency for legal guarantees to be overshadowed in the police service by overriding pressures to achieve efficiency (SOU, 1997a: 57, 146). One survey showed that one in three public servants thought that their colleagues had become more afraid of criticizing their employers in recent years. About 20 per cent stated that they avoided making criticisms (Svensson, 1998a). The survey in West Germany was conducted in 1997. Another factor that has changed over time is the trust between persons, which was highest in Sweden in 1990 and then went down in 1996 to about the same levels as in 1981 (Inglehart et al., 2000). The average for West Germany, Spain, Norway, Sweden and Finland was subject to a similar trajectory. This is interesting in view of the fact that low corruption levels and high interpersonal trust have been shown to be related (Andersson, 1999).

12 Political Corruption in The Netherlands Petrus C. van Duyne, Leo W.J.C. Huberts and J. Hans J. van den Heuvel

The Netherlands is rated as one of the ‘Least Corrupt Countries’. For ‘corruption watchers’ this may look like a dull landscape indeed: for want of ‘big’ cases, international attention has been limited to the 30-year-old corruption scandal involving the Prince-consort, the Lockheed affair. Nevertheless, the seeming dullness may be just an appearance, hiding the same human weakness that leads to abuse of public property and subversion of the fair application of decision-making powers. This chapter will first evaluate the extent of corruption and correlated transgressions like fraud and embezzlement. Even in a ‘least corrupt country’ the problem may well be disguised or redefined under other less disturbing labels. The possible causes of political corruption will then be analysed. Various causes of corruption will be reviewed and we will summarize what Dutch experts consider the most important causes. These causes will be illustrated in an elaboration of the dynamics of corruption: the paradox of the successful leader. This may clarify how public decision-making processes lose transparency and integrity. Government policies will then be discussed. Here we will ask what is being done in The Netherlands to curb political and administrative corruption and to ensure integrity. In the final section we will assess the significance of political corruption and draw some conclusions about the causes of corruption and the vigorousness of anti-corruption policies.

Newness, scale and varieties of corruption Empirical research by social scientists on corruption and fraud in The Netherlands is scarce. For the purposes of summarizing the available evidence we shall use Huberts’ (1992) data as a starting point. A survey among local town clerks was the basis of an estimation of the total number of cases of local corruption and fraud (Huberts, 1994/95). In this research an official was considered corrupt if they harmed the public interest because of rewards or promises offered or made by outside actors. The finding of the review was 149

150 ‘Least Corrupt’ Countries Table 12.1 Public corruption and fraud in The Netherlands Public corruption and fraud in The Netherlands (Huberts, 1996) Estimate of the number of public corruption and fraud investigations (Vrije Universiteit research 1992, projected results)* Estimate of no. of actual cases of corruption and fraud Police notified Public fraud Public corruption Total Public corruption (Hoetjes, 1991) Criminal cases: corruption Convictions for corruption

No. of cases (annually) 370

247

71 59 130 No. of cases (annually) 19 6

Note: *The results of the research on local corruption and fraud were projected onto the entire public service in The Netherlands, based on the number of civil servants employed.

that 102 new cases of alleged and substantiated local corruption and fraud are discovered every year. When these figures are related to Hoetjes’ research results on criminal cases (1991), it is clear there is a gap between the number of cases reported to the Public Prosecution service, and the number of cases that are actually prosecuted (Table 12.1). A few years later, research carried out by criminologists confirmed the previous findings. In addition they concluded that corruption and fraud constituted only a few of the cases of serious violations of public integrity (Niemeijer et al., 1996: 20). Research among Dutch politicians and civil servants in 1997 provided information concerning opinions about the extent of public corruption and fraud. A clear majority disagreed with the statement that corruption is widespread in the public sector.1 About 15 per cent agreed with a contrasting view. At the same time, the problem is considered important enough to merit serious attention in order to safeguard public integrity. The cases of corruption that do occur seriously undermine the credibility and legitimacy of the political and administrative system. Therefore, most respondents also expect that integrity will continue to be an important issue.

Causes of corruption Corruption can have a multitude of interconnected causes, not least because there are never fewer than two parties involved, each having their own agenda. Quantitative research is fraught with methodological difficulties. Not only does the nature of the problem defy any representative sampling, but the huge diversity of types of corruption means that, even if the total

Political Corruption in The Netherlands 151

number of cases appears to be sufficient statistically, required sub-divisions soon result in half-empty tables. Trying to solve this problem by turning to ‘experts’ is not a solution but a substitute, one that involves replacing the single cases as the units of observation by opinions. In addition, the researcher has to determine who will be considered an ‘expert’, realizing that his selection may not be representative (Vahlenkamp and Knauß, 1995). Table 12.2 Expert panel views on the causes of public corruption and fraud (% of Dutch respondents who consider the causes important or very important) Factors

Importance of cause: important and very important %

Social factors increasing strength of organized crime social inequality rapid social change strong family ties and obligations social norms and values concerning private and public rights and duties values and norms concerning government and state officials and organizations

important %

94 62 49 49 71

56 27 6 15 35

79

33

Economic factors economic problems: inflation/recession rapid economic growth

69 42

11 6

Political factors growth and size of government organizations strong interrelationships politics and administration strong interrelationships business, politics, state penetration by market ideology of the state increasing significance of lobbying

56 65 85 46 85

12 9 27 12 27

82 88

18 62

80 97 32

51 54 9

88

44

51

17

Organizational factors: culture public-sector culture (values/norms) lack of commitment of leadership (giving a bad example) Organizational factors: structure disorganization and mismanagement lack of control, supervision, auditing computerization of administrative procedures Individual factors norms and values of individual politicians and public servants low salaries in the public sector Source: Huberts (1998).

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In 1994, Huberts (1998) carried out an extensive world-wide opinion survey among 257 experts, 35 of whom were Dutch. The answers of the Dutch2 experts to the questions concerning the causes of corruption and fraud are summarized in Table 12.2. More than half of the respondents consider the following circumstances very important: lack of commitment of leadership; increasing strength of organized crime; lack of control, supervision and auditing; disorganization and mismanagement. Of these, ‘the increasing strength of organized crime’ is particularly interesting. At the time the research was being carried out, there was a widespread, possibly orchestrated, fear about ‘organized crime on the march’ (van Duyne, 2000). While organized crime is still believed to be ‘on the march’ (no law enforcement agency would dare to deny this), no increased penetration of the ‘upper world’ has been observed in terms of an increase in the number of organized crime-connected corruption cases. Aside from organized crime, it is important to observe that lack of leadership, insufficient supervision and mismanagement, followed by individual values and norms, are consistently singled out as the most important causes. Those factors seem to be more important in explaining corruption in The Netherlands than more general social and economic changes. In the next section we will breath some life into these concepts by studying the dynamics of corruption.

Dynamics of corruption: the leadership disease As corruption scandals involving highly placed people are sensational and ‘spicy’, they attract much attention. The gradual budding of corruption from seemingly innocuous human relationships in organizational contexts has received less attention. Just as fish start to rot from the head downwards, the spread of corruption can best be described from the perspective of decaying leadership, as indicated by respondents to the expert panel survey. Corruption is in many cases a leadership disease which is more often than not diagnosed only in its final stages. Looking at the often tragic downfall of many honoured political leaders, there is a paradox. Corruption does not need to be alien to (technically) successful leadership, but it can sprout alongside successful management, remaining unseen (at first) or veiled and denied (in later stages) by the halo effect of the praised leader’s successes. If the road to hell is paved with good intentions, the road to corruption may be rationalized under the heading ‘the good leader deserves the best’ and ‘he knows best, give him full rein’. There is a built-in corruptive trap in this rationale. Let us follow this road to corruption. The phase of extravagance We shall first briefly sketch the conduct of a Dutch mayor (later secretary of state), who worked hard for his decaying naval port, though he had his own

Political Corruption in The Netherlands 153

opinion about how to spend public funds. As soon as he was installed, his expenses for representation started to rise and soon soared to ten times the costs of his predecessors. Despite quiet grumbling, no one on the town council requested him to give an account of his expenses. After all, he was successful. Thus he became secretary of state, showing the same pleasure in increasing his expenses, for example, by ordering an expensive executive jet for his many trips, against all the advice of his technical experts. Though there was some journalistic grumbling about his extravagant conduct, the political watchdog, Parliament, kept quiet. Nevertheless, though there was not the slightest evidence that this political figure might have been corrupt, at a time when ‘integrity’ had become a politically sensitive issue, after the elections the other party leaders began looking for a new secretary. A wise decision indeed. The erosion of accountability An important aspect of the paradox of the successful leader is that the more success he has the more people will, understandably, trust him and the more they will make allowances for his whims in other matters. The paradox is that the increase in trust is inversely related to degrees of accountability and to the leader’s openness to critical evaluation. Gradually, precisely because of his successes, the successful leader will be deprived of negative feedback arising from requirements to account for his deeds. Critical evaluation (even that made with a positive intention) will be treated with impatience, and if there is no obligatory system of external auditing, compliance with the principles of accountability and transparency will gradually be circumvented or diluted. Professional leadership deformation can be checked by strong secondline management. However, a successful leader – even when his feats are declining – can maintain an aura of success because of his hold over people. Staunch, principled members of staff may be beyond his grasp and will soon experience the dilemma of whether to fight back – perhaps having recourse to the desperate option of whistle-blowing – or leave the organization. However, the histories of most whistle-blowers are sad, as once again proven by the European Commission at the end of the last decade (van Buitenen, 1999). Leaving office means being replaced by characters most favoured by the leader: ‘safe’ figures from whom no negative feedback will be feared and who fit the ‘profile’ of the organization. The ownership phase The organization, meanwhile, slips into an important new phase in which the leader starts behaving as if he were its owner. Though he may still pay lip service to conventional standards and principles of management, he determines what is responsible management; he appoints the staff; he built the organization ‘from nothing’; all is his doing. There is the feeling that he has a ‘natural right’ to decide what to do with the organization’s assets and people.

154 ‘Least Corrupt’ Countries

There is an important difference between this and the extravagance phase. While the squandering may be no less, we now face a blurring of the boundaries separating the private and the organizational domains, understandable if one ‘owns’ the place. With expenditure for ‘representative purposes’ already high, it is increasingly unclear whether expenses are being incurred to promote the organization or to meet the leader’s ‘need’ to live in the lap of luxury. Case studies repeatedly reveal exorbitance in the declared expenses of managers who view ‘their’ department, company or town as their own ‘households’, whose assets they can dissipate at will, confusing business and private expenses ‘all for the good of the firm’.3 Court building and Caligula-appointments So far the word ‘corruption’ has not been mentioned. Nevertheless, two social processes consolidate and eventually further the growth towards corruption: court building and arbitrary procedures for the recruitment and promotion of staff. The leader who has become accustomed to personal rule, shies away from employees who might display an independent mind. He needs an inner circle of ‘yes men’ for his daily monologues, like the feudal lords needed their chancellors and retainers to sit around and listen subserviently while enjoying the favours bestowed on them. For middle management, usually the mainstay of organizations, this sets a negative example. Their loyalty to the organization is likely to wane, to be replaced by a desire to get a share of the spoils and privileges. To ‘earn’ such privileges it is not enough to be technically competent: one has to be ‘like the boss’ in beliefs, tastes and values in order to be considered eligible for upward mobility to the panelled board rooms of the inner circle. This court building implies more than getting rid of critical staff displaying concern over less-than-transparent policies. It leads to suppression of one of the most important decision-making criteria, namely, the recruitment criterion of the right person for the right post, something that is supposed to ensure that the quality of human capital stays above a certain minimum. How does this relate to corruption? Given the phenomenon of court building, recruitment takes place more according to who is liked by the leader and his underlings than according to skills-oriented selection criteria. This does not imply that no one pays attention to quality, but it does imply that, though displaying the required skills, applicants who also display an independent mind will have a lower probability of being appointed or promoted. Decisions about persons will increasingly reflect the form of favouritism that recently brought down the European Commission. Consequently one may witness what van Duyne (1996, 2002) calls ‘Caligula-appointments’: like emperor Caligula, the ‘owner’ of the Roman empire who, according to legend, could appoint his horse a consul, the ‘owner-boss’ may feel free to appoint whom he pleases, irrespective of quality. This quality is usually mediocre at

Political Corruption in The Netherlands 155

best, as talented people tend to become troublesome eventually, unless they match their talents with an even greater cynicism and lack of ‘spine’. From favouritism to clientelism We are passing the very threshold of corruption, of which clientelism is its unambiguous manifestation. Bestowing a favour is itself a one-sided generous action. However, this is soon turned into a two-sided exchange relationship. Having once ‘received’ a position in the organization, the favourite is the boss’s pet, realizing that he must not bite the hand that feeds him, which means that he will always lend his support in exchange. Meanwhile, such ‘caligula-appointees’, appearing to be the omnipresent ‘right hand’ of the leader, try to strengthen their positions by attracting little ‘caligulaappointees’ of their own. Gradually clientelism permeates the entire social fabric of the organization. We are of the opinion that at this point the organization has passed the threshold of corruption. The proper decision-making standards have been eroded and replaced by complicated social exchange mechanisms such as: ‘I vote for the suggestions of my benefactor lest his protection or the flow of his favours dries up’. This is a person-bound decision mechanism in which organizational aims have been replaced by an internal competition for the spoils of favour. All this can take place without such ‘vulgar’ acts as paying bribes. That conduct is observed in such murky episodes as the affair involving Dumas, the President of the French Constitutional Court, and his mistress. In higher, ‘gentlemanly’ circles, it is considered degrading and common to get so blatantly involved (and caught). As long as gentlemen stay away from such scandals there is hardly any sense that corruption has taken place, as ‘nothing has happened but the helping of friends’. Who will call such behaviour ‘corrupt’, when it is exactly ‘what friends are for’?4

Anti-corruption laws and campaigns, remedies and solutions If the growth model elaborated in the previous section has descriptive validity, it implies that tackling corruption should not begin with weeding the evil seedlings, let alone the corruption infested governmental orchards to be found in some countries. Rather, tackling corruption starts with the breeding ground of unethical behaviour, namely, a lack of integrity. In The Netherlands, integrity came onto the political agenda some ten years ago. The debate was strongly stimulated by the Minister of Internal Affairs, the late Mrs Ien Dales, who, in a famously uncompromising address to mayors and administrators in 1992, said of government and integrity: The government either has integrity or it does not. There is no such thing as ‘a little bit of integrity’. And the administration relies upon the integrity of the government. When the integrity of the government is

156 ‘Least Corrupt’ Countries

affected, the government loses the trust of the people. Without the trust of the people there is no democracy. It ceases to exist. A gloomy picture.5 The address was the result of a number of developments. The political corruption scandals in Italy made it clear that large-scale corruption could take place in modern centres of trade and industry like Milan, far away from the Mafia. Concern was further reinforced by revelations of corruption and fraud in places like Maastricht, and by the ‘organized crime scare’. Organized crime was supposed to be ‘on the march’ and to have generated so much money for those involved that it could not but corrupt. A final factor was the increasing strength of a global anti-corruption movement, for example in the Fifth International Anti-Corruption Conference held in Amsterdam in 1992 (Punch et al., 1993). The Minister’s words gave much food for thought and led to suggestions for an ‘integrity policy’ to include: vulnerability studies; the promotion of training and education; the spelling out of the risks of conflicts of interest; the necessity of compliance and the requirement of transparency in the finances of political parties.6 Vulnerability Maintaining integrity within government starts with the realization that a number of fields of the administration are potentially at risk. This induced many public bodies to initiate vulnerability investigations. Vulnerable areas are those involving tendering and contracting-out, public works and the granting of subsidies. Also vulnerable are sectors charged with issuing permits and granting licenses such as the judiciary and the police. Norms and values Another aspect of the vulnerability of the public service concerns the norms and values of civil servants. A decay of norms and values within the public service forms a threat to its integrity. In the Dutch administration a number of policy initiatives have been taken. The requirement of openness, transparency and accountability has been stressed and many public bodies have ordered its management and staff to participate in ethics (dilemma) training. This attention to values and norms has often resulted in the drawing up of codes of conduct, which provide an agreed upon ‘yardstick’ for proper conduct. Personnel New integrity policies have had consequences for personnel management. Attention has been paid to the separation and circulation of functions; ethics courses have been added to training and education programmes. Appointments to public bodies are increasingly being accompanied by a revival of the requirement (which had fallen into abeyance) to ‘take

Political Corruption in The Netherlands 157

the oath’, which explicitly refers to norms and values required in the public service. Conflicts of interest Many integrity discussions have focused on possible conflicts of interest arising from gifts and second jobs. Many codes of conduct offer clarity on this subject. In 1999 the Minister of Internal Affairs concluded that a more general rule would be appropriate. Civil servants in the ministries are not allowed to accept gifts of more than €50. Civil servants and politicians are not allowed to have additional functions that may entail conflicts of interest. All functions of Members of Parliament and of top civil servants are registered to guarantee transparency. Compliance Systematic supervision is a prerequisite for the prevention of the erosion of rules and principles. Supervision is primarily carried out by the internal auditors of public bodies themselves. On a higher level, the Auditor General has paid attention to the implementation of integrity policies by public bodies in order to obtain insight into compliance with such policies. Tightening of the criminal code The effects of this policy in terms of detected transgressions of codes of conduct are difficult to assess. Most cases of integrity violation result in disciplinary investigations and sanctions. The number of criminal investigations and prosecutions has remained limited (see Table 12.1). To date, the corruption cases the Public Prosecution Office has been able to bring to court have all concerned the small fry of village mayors and councilors who have succumbed to the lure of local private interests. If in most of these cases the officials under suspicion have been dismissed, where there have been legal proceedings, these have mostly ended in dismal acquittals. One of the legal stumbling blocks in the way of successful prosecutions has been the wording of anti-corruption laws. Often, although it could be proven in court that suspects had received favours, it could not be proved that this had caused them to act in the desired way or that they knew that the favours were related to the desired acts. Most favours were delivered sometime after the required services and it was frequently not possible to establish that they had been preceded by promises. This induced Parliament to tighten the wording of the applicable articles and to widen their range of application. Being paid off after one has left the service has become as punishable as being paid while in service. Very important is the introduction of the ‘should know’ principle (culpa). This means that, in order to secure a conviction, it is sufficient to show that the civil servant should have known that a reward or promise of a reward was related to the carrying out of his official role. Thus there is no longer room for pretended or real naïveté.

158 ‘Least Corrupt’ Countries

Adaptation to international standards The anti-corruption laws have also been extended to Dutch civil servants abroad and to the officials of institutions operating under international law, residing in The Netherlands. International obligations following from the EU anti-fraud treaty, the first corruption protocol and the OECD-corruption treaty have, or will be, incorporated (Pieth and Eigen, 1999). Nevertheless, The Netherlands has been wavering in the implementation of international agreements to combat corruption, something that might be explained by the interests of Dutch multinational companies. Until recently, bribes given to foreign government officials were tax deductible. Political parties Party finance has been discussed because of the financial problems of political parties and because of the implications for integrity of the sponsoring of parties by business. This has led to a new law governing political party funding, and to state subsidies for certain activities. The law does not forbid private funding of parties, although many parties have stated that they do not accept gifts from business. The liberal-conservative party (VVD) is an exception in that it accepts gifts if they are given in accordance with its code of conduct for sponsoring. All gifts of more than €5000 have to be made public. Evaluation of anti-corruption policies It is difficult if not impossible to evaluate the anti-corruption policies of the Dutch authorities. Nevertheless, something can be said in general terms on the basis of the elements and aspects identified by Transparency International as relevant parts of a ‘National Integrity System’ (Pope, 1996; see also Lawton, 1998; Sampford and Preston (with C.-A. Bois), 1998; Pieth and Eigen, 1999). Table 12.3 provides details of the anti-corruption mechanisms and institutions making up a ‘National Integrity System’. Many of them are present in democratic and developed countries such as The Netherlands. There is a multi-party parliamentary democracy; government is held responsible for its administration, and a modern civil service makes the occurrence of corruption a rare phenomenon. Administrative law provides a number of guarantees to ensure that decision-making is carried on in the public interest. There is also an ombudsman as well as other procedures to report alleged misconduct. The judiciary is independent and the penal code provides clearly stated deterrents. There is an open, competitive and transparent system of public procurement, and, last but not least, an alert and free press is keen on exposing public corruption. On the other hand, a comparison of the Dutch anti-corruption infrastructure with the elements of the National Integrity System also reveals some problems and flaws. First, there appears to be a broad reluctance to manage potential conflict-of-interest situations by monitoring the assets, income, liabilities and business interests of politicians, civil servants and

Political Corruption in The Netherlands 159 Table 12.3 The ‘National Integrity System’ and The Netherlands National Integrity System 1. political democracy, election process relationship between ministers and civil servants managing conflict-of-interest situations monitoring assets, income, liabilities and business interests of politicians, monitoring assets and liabilities of political parties 2. partnership between government and organizations of civil society 3. administrative reform/organization countering conflict of interest in the civil service (monitoring assets, income, liabilities) protecting whistle-blowers 4. administrative law aimed at probity and accountability of decision-makers 5. channels for reporting alleged corruption mechanisms that ensure independent monitoring procedures and systems (ombudsman) 6. independence of the judiciary legal procedures and remedies auditor-general (watchdog over financial integrity) 7. open, competitive and transparent system of public procurement 8. private sector self-regulation rules and legal deterrence against corruption 9. an alert and free press 10. independent anti-corruption agencies 11. cooperation with other countries to combat (international) corruption

The Netherlands ⫹ ⫹ ⫹/⫺ ⫺ ⫹/⫺ ⫹/⫺ ⫹ ⫺ ⫺ ⫹ ⫹ ⫹ ⫹ ⫹ ⫺ ⫹ ⫹/⫺ ⫺ ⫹ ⫺ ⫺

Source: Huberts (2001).

political parties. Hence, there is no system of financial disclosure that would reveal the degree to which improper interests play a role in decision-making processes. Protection of the privacy of public officials includes acceptance of the confidentiality of information about their income and assets. This lack of transparency limits the possibilities of obtaining insights into the extent of conflicts of interest. Secondly, there is no real protection for whistleblowers, and little has been done to encourage the revelation, by potential whistle-blowers, of corruption and malpractice. Thirdly, the system lacks an independent institution with responsibility for the investigation and prevention of corruption. Investigation rests with the police, while prevention is the task of government institutions themselves. Fourth, public involvement to secure integrity in the private sector is limited, even though many experts suspect that corruption is more deeply rooted in the business sector than in the public sector.

160 ‘Least Corrupt’ Countries

Impact of political corruption scandals Lapses from correct official behaviour and faux pas – even if minor compared with foreign scandals – can create media waves and have as disastrous effects on politicians’ careers as they do in other countries. Interestingly, scandals concerning the sexual tastes or conduct of public figures, whether homosexual or heterosexual, are practically non-existent: ‘who does it with whom’ is not an issue in The Netherlands and thus far there have been no memoirs published by neglected or resentful mistresses.7 However, spending public money for private purposes, and even the slightest abuse of power for one’s own advantage, is quickly presented as a mortal sin. This does not mean that every ‘mortal sin’ will lead to the downfall of a politician. It depends very much on the shrewdness of their crisis management and the flanking support they receive, apart from sheer luck. When ‘political friends’ have daggers hidden under their cloaks, the chances of survival will be slim indeed. Compare what happened in the following cases: ●

●

●

At the beginning of the 1980s, the Slavenburg bank was investigated by the Rotterdam fraud squad and by the fiscal police. The bank and its management were suspected of money-laundering. The general manager happened to be one of the favoured regular clients of the Minister of Justice when the latter was still a barrister. Suddenly there were allegations that the investigation would be halted on the orders of the Minister of Justice (van de Roer, 1988). Subsequently there were rumours that the chief prosecutor had offered his resignation. After a public statement from the Ministry of Justice that there would be no interference with the work of the police or the prosecution, the investigation was resumed, but in a ‘slightly slimmed-down’ form. The subsequent justification in Parliament was accepted rather than believed. The minister was too adroit, and politically too useful, to be sacrificed. Hence, the scandal died quietly. A few years later, another dignitary, a secretary of state for education, though involved in lesser sins, proved to be less lucky. In a previous job as a professor he had used the letter heading of his university for his own consultancy business. Though the university had not been short-changed in any way and the conduct was better classified as ‘clumsy’ than as willful abuse, the suspicion of having abused property belonging to the university was enough for there to be big headlines and inflated ‘revelations’. Two weeks after his appointment the new secretary had to resign. The unlucky secretary had attracted too much ‘media heat’ and had probably had too few political friends to be able to weather the storm. The final example concerns the experience of Bram Peper, the erstwhile Minister of the Interior, when mayor of Rotterdam before becoming member of the cabinet. The mayor, who held office continuously for 16 years, had developed a pattern of conduct which mirrored the developmental

Political Corruption in The Netherlands 161

phases towards corruption discussed above (extravagance, erosion of accountability, feelings of ownership and court building) even if it did not cross the threshold of corruption. Not without reason he was nicknamed the ‘Rotterdam Sun King’. He worked hard and was ‘in harness’ 24 hours a day. ‘How can I abuse public funds for private purposes’, he complained, ‘when my private and public lives coincide so completely?’. Though it was clear that his conduct fell far short of the standards of integrity developed by his own ministry and might have led to the dismissal of the mayor of a smaller town, the minister fought back tenaciously. This, however, led to his undoing. The councillors who had endured the reign of the ‘Sun King’ with endless adulation and bent backs suddenly found their spines again. With so many daggers drawn, the minister finally decided to resign ‘to fight back as a private person’. These scattered examples are too few to enable us to draw general lessons from them. Scandals are whimsical phenomena. Their outcomes are not always predictable and depend on many surrounding social forces. An important force is the public’s sensitivity to scandals, of which the media are a very important element. Sometimes the media provides too little weight for a scandal to unfold. For example, the dubious conduct of a high-ranking police officer was reported in only one newspaper. No further questions were asked and other papers showed no interest, because it was not their ‘scoop’. An extensive description in van Duyne (1995b) did not stir officials into action either. Too sensitive to allow any further ‘digging’, the case died. But if misconduct is sufficiently fanned by the media, a scandal is likely to bring officials down, even if allegations of bribery cannot be proven. If, subsequently, the ranks of the high and mighty are closed again, a scandal’s impact will be no larger than the sacrifice of erstwhile political ‘friends’. But though these may soon be replaced and forgotten, the personal costs of scandals are heavy. This forces policy-makers to draw lessons from them. One of the lessons is that if there is even the semblance of a conflict of interests, then the officials concerned are no longer eligible for office. This is a stringent integrity criterion but it has a preventative, and very wholesome, effect on public life.

Conclusion How much political corruption is recognized in a society or an organization depends on how the phenomenon is interpreted. If the concept is defined in a broad sense, then corruption is rather widespread in virtually all western industrialized societies. It can be seen as a psychologically comprehensible, though reprehensible, developmental process. We explored this thesis by sketching the dynamics of corruption in an organization. Successful leadership often coincides with a neglect of the mechanisms of accountability

162 ‘Least Corrupt’ Countries

and transparency, or, worse, leads to a situation in which the leader more or less ‘owns’ the organization. This blurs the distinction between the personal and organizational domains and can easily lead to clientelism, favouritism and corruption. Most Dutch scandals involving politicians and civil servants reveal characteristics of this process. Without outright corruption or bribery, improper relationships and interests infect the decision-making process. This corresponds to the causes of corruption mentioned by Dutch experts. Most important are failures at the organizational level including: moral distortion of leadership, inappropriate mechanisms of control and supervision, and a dubious organizational culture in which norms and values begin to decay. The number of criminal corruption and fraud cases is limited. Whether the amount of corruption has increased or decreased is unknown. Nevertheless, cases of corruption and other violations of the standards of integrity have stimulated the government to develop an integrity policy. Since 1992 the penal code has been amended with more efforts being made to identify weaknesses which might lead to improper behaviour; civil servants have been trained; codes of conduct have been discussed and implemented. However, an evaluation of integrity policies also shows that the Dutch ethical infrastructure reveals a number of important blind spots. Financial disclosure of the interests of politicians and top civil servants is lacking. The protection of whistle blowers is inadequate and there is no independent institution with responsibility for investigation and prevention. In brief, the low levels of corruption in The Netherlands are no justification for complacency.

Notes 1. Survey carried out in 1997–98 by Van den Heuvel, Huberts and Verberk, Vrije Universiteit Amsterdam (results to be published in 2002). 2. The panel was asked to indicate the importance of 20 social, economic, political, organizational and individual factors which are mentioned in the literature (in Wertheim and Brasz, 1961; Hoetjes, 1982; Caiden, 1988; Klitgaard, 1988; Heidenheimer et al., 1989; Alatas, 1990; Huberts, 1992; Benaissa, 1993; van Duyne, 1995a). 3. The way office holders use public money as if it belonged to them personally is revealed not only by large expense claims. Like greedy petty thieves, office holders also meet small expenses, like hair brushes, gel, handkerchiefs or sweets, out of public funds, as was revealed by the case involving the mayor of the Spanish town of Leon (The Volkskrant, 17 December 1998). 4. This appears to be the defence of the previous French European Commissioner Cresson, who ‘helped friends’ with meaningless jobs. Her reference to ‘normal French practice’ is revealing of the deeply rooted corrupting clientelism that exists in France. 5. The text of the speech was later published in Dales (1994). 6. See also Maas, Johan (1995), which is a case study reflecting the situation in December 1995.

Political Corruption in The Netherlands 163 7. There is also no tabloid tradition in The Netherlands. The few tabloid papers that exist are published only on Sundays. They have their ‘spying eyes’, but these are only interested in royalty and TV stars and their private, family lives, including sex of course. Compared with Britain, the Dutch tabloids are hardly taken seriously and, unlike the papers owned by Murdoch – with whom Blair established an uneasy relationship hiding the seeds of corruption – they could certainly not ‘make or break’ prime ministers.

13 Political Corruption in Ireland Neil Collins and Mary O’Shea

Corruption in political and business life has become a prominent issue in Ireland in recent years as measured by the number and duration of parliamentary and quasi-judicial inquiries. Media interest in the topic has been intense. There has been a widespread perception that corruption is rife. This view is reflected in a decline in the standing of politicians. In an October 1999 opinion poll, for example, only 20 per cent of the Irish public expressed trust in government ministers.1 Definitions of corruption are broad ranging. Some authors opt for definitions based on laws and other formal rules because these allow relative precision and stability. Others stress cultural standards to accommodate more realistic and subtle definitions. A third school seeks to put the wider political implications of corruption and the moral issues centre stage (Johnston, 1994). An accepted core element, which is taken here as a working definition, is ‘the abuse of public office for private gain’. Such gain is not necessarily financial but is of personal value to those involved.

Newness, scale and varieties of corruption In Ireland, the received wisdom is that the misuse of office and a marked want of probity have increased in the past decade. Politicians of previous generations are assumed to have been less corruptible. This was certainly the image of the founders of the state who took relatively drastic measures to stamp out elements of corruption that had emerged during the war of independence from 1919–21. In comparative terms, Ireland is still perceived by outside observers to be relatively low in the ‘corruption league table’: Ireland is internationally regarded as a country in which corruption in business and politics is slight … [In surveys conducted by the anticorruption group Transparency International] this State has fallen, in the space of three years, from 11th to 15th place … Ireland is eighth of the 15 countries of the European Union (EU).2 164

Political Corruption in Ireland 165

Suggestions that standards of political behaviour were under threat were made as far back as the late 1960s. In 1967, George Colley, a leading Fianna Fáil deputy, warned of low standards in high places (Dwyer, 1997: 153). Again, in the early 1980s, a series of scandals enveloped the Fianna Fáil government led by Charles Haughey. Nevertheless, they seemed confined to a small group within the Fianna Fáil party. In general, parliamentarians, the civil service, public enterprises and local government were regarded as assuredly honest. Corruption has become a prominent issue only in more recent years. Several incidents in the early 1990s suggested the existence of a ‘golden circle’ of business people that influenced the dispersal of large amounts of public money for private interest. The scandals centring on the McCracken, Moriarty and Flood Tribunals (Figure 13.1) focus on the issue of politicians,

The Flood Tribunal is investigating the planning process in North County Dublin. The Tribunal also has the power to investigate any improper payments to politicians in connection with the planning process. The Tribunal was established by the Oireachtas (Irish Parliament) in October 1997 under the chairmanship of Mr Justice Flood. A key witness, Mr Gogarty, alleged that the former minister for foreign affairs, Mr Ray Burke, received payments amounting to IR£80,000. Mr Burke says he received IR£30,000. The terms of reference of the Tribunal were widened in June 1998 following the disclosure of a further payment of IR£30,000 to Mr Burke in 1989, this time by Rennicks Manufacturing Ltd. The Tribunal is also empowered to investigate all improper payments made to politicians in connection with the planning process. Under this provision, it is investigating allegations made by the UK-based Irish property developer, Mr Tom Gilmartin, about payments, including a claim that he gave Mr Pádraig Flynn, a former minister and EU Commissioner, a IR£50,000 cheque in 1989. The Moriarty Tribunal was established in September 1997, and is a follow-on tribunal arising from a report by the McCracken (Dunnes Payments) Tribunal. It is investigating payments to former Taoiseach Charles J. Haughey and former Fine Gael Minister Michael Lowry. In particular, it is investigating whether any political decision might have been made by either Mr Haughey or Mr Lowry when in office to the benefit of a person or company which made a payment. The Tribunal is conducting inquiries into the Ansbacher deposits, but only to ascertain whether any politicians received money from the deposits, and if so where that money came from. It is already known that Mr Haughey had accounts in the deposits. Additionally, the Tribunal uncovered Denis Foley, a back-bench Teachta Dála (TD, Deputy to the Dáil), as an Ansbacher account holder. The Tribunal is also inquiring into the performance of the Revenue Commissioners in the raising of taxes from both Mr Haughey and Mr Lowry and into the effect of offshore accounts on the tax base. Figure 13.1 The Tribunals Source: Irish Times http://www.ireland.com/special/tribunals/.

166 ‘Least Corrupt’ Countries

money and relationships. Each incident would have been a source of public disquiet on its own, but coming together they seriously undermined the general assumption in Ireland that corruption was not a significant political problem. In Ireland, there is an expectation that politicians will act on behalf of constituents looking for favourable treatment by public servants, especially when some ambiguity or grounds for discretion can be identified. Various studies have described politicians as specialists helping the ‘bureaucratically illiterate’. The working class uses the clientelist system most (Gallagher and Komito, 1999). Social welfare, housing and medical entitlement cases dominate politicians’ constituency work. What in Ireland would be accepted as normal and legitimate, may elsewhere be considered corrupt. It is important to note that the evidence from case studies offers a picture of clientelism or, more accurately, brokerage that is low key and routine. Major allocative decisions are not involved. The elector may or may not be accommodated but the politician will feel that some electoral advantage has been gained from the exchange. No money or other inducement is involved. Still, some political cultures would focus on the ‘apparent’ privileging of the citizen using a politician as opposed to the equally entitled direct applicant. The covert nature of corruption makes it impossible to gauge accurately whether the current spate of incidents in Ireland marks a rise in actual levels; or, simply readier exposure. There is reason to believe that both are on the increase. The nature and variety of corruption in Ireland is quite narrow. In particular, political corruption has been found in those areas where: ●

●

●

politicians have a direct role in deciding specific, individual policy decisions of high value to wealthy business interests; these conditions have been fulfilled in relation to planning at local government level;3 civil servants routinely exercise discretion over commercially valuable decisions in the context of lax systems of accountability and ambiguous policy objectives; ministerial decisions are both commercially charged and the criteria are insufficiently explicit.

Causes of corruption Corruption in Ireland shares many of the same roots as elsewhere. Those that deserve particular attention are: the financing of political parties; institutional change; ethical leadership. The financing of political parties In Ireland, the frequency of elections and the level of intra-party competition for preference votes exacerbate the problems of financing politics. The system of proportional representation used in Ireland pitches candidates of

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the same party against each other, especially in the larger parties. Election contenders build up ‘war chests’ independently of their own parties. Though the electoral logic of individual campaigns has always been evident, a former Taoiseach (Prime Minister), Garret Fitzgerald, claims that: The problem we now face is, of course, a very different one. It is the impact of a growing culture of individualism upon the multi-seat electoral system. As a result of this new factor, personal campaigns by candidates – always forbidden in the past although not always completely prevented – seem to have become accepted, or at least tolerated, by the parties. … This relaxation of the discipline required in a multi-seat electoral system seems to have led to the emergence of individual funding of candidates on a significant scale.4 In the absence of adequate state funding, many critics maintain, the pressures of party competition create the conditions that encourage a dependency on business and wealthy individuals. Furthermore, in Ireland the political spectrum is narrow so politicians cannot rely on ideological differences to mobilise broad sections of the electorate. Though the restrictions on election expenditure are now stricter than in the 1980s and 1990s, the temptation to exceed the legal level is always there. The Beef Tribunal, an enquiry into irregularities in the food sector in the 1980s, brought to prominence the financial links between businesses and political organizations. Private companies in Ireland are free to give money to politicians and political parties. It was suggested that a major meat company had been given special treatment because of contributions it had made to Fianna Fáil. Private companies, it emerged, make donations to all of the major parties without expecting particular benefits. There is, however, an easy assumption shared by the political and business elite that what is good for Irish companies generally, especially those in the export field, is beneficial to the Republic as a whole. This outlook is thought to be particularly prevalent in Fianna Fáil, the party which has dominated government since the 1930s, and which pioneered Ireland’s development strategy in the late 1950s and in the 1960s. Despite all the efforts of the Beef Tribunal, however, the link between business contributions to parties, and ‘favourable treatment’, remains far from clear. All the political parties continue to solicit and accept support from business by, for example, holding fund-raising dinners. The relationship between governments and business is so complex, however, that it is hard to pinpoint specific benefits to either companies or individual politicians. More likely is the explanation that, given the corporatist element in Irish policy making and the relative size of government as a purchaser of goods and services, political contributions are seen as a useful form of public relations.5

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Institutional change The major institutions of the Republic of Ireland are based on those inherited from the United Kingdom at Independence in 1922. Institutional change has been gradual and has not been a cause of such sustained opposition that it could be seen as a cause of corruption. The independence of the judiciary, civilian control of the military and the rule of law are all firmly established. Changes of government are orderly and present no challenge to the constitutional order. One institution that has been the subject of particular criticism is Dáil Eireann, the Republic’s parliament. It has been a feature of several incidents that Dáil deputies were unable to elicit crucial information that was subsequently central to tribunal and other inquiries. Frequently the rules established to ease the Government-scheduled business of the Dáil have militated against the investigative role of its members. The function of parliaments is to legitimise, scrutinise and supervise the executive. If the legislature is working effectively, both through its elected members and their political staff, the political system should be so transparent and accountable that political corruption is minimal. Proponents of the view that parliaments have declined as a check on government may have as a reference point former periods, often in the nineteenth century, when legislators were dominant (Norton, 1993). Such proponents highlight the rise of more disciplined parties; the increased pace of the legislative process, and the scale, scope and size of government, as factors militating against incisive parliamentary scrutiny. These factors are particularly acute in political systems in which the cabinet and other government offices are filled by members of the legislature. Ireland has just such a system and the political fortunes of parliamentarians are closely linked to the popularity of the senior members of their party in the executive. Ethical leadership Some explanations of corruption single out the lack of exemplary ethical leadership. These suggest that corruption at elite level gives a signal to others that such behaviour is more generally acceptable. In the Republic, this factor is being given greater credence by the realization that many members of the political elite must have been aware of corruption in the 1980s and 1990s but did not take any action: The plain people of Ireland were told time beyond number that Haughey was a political thug and still they elected him. And the movers and shakers within the greatest political party this State has known also backed him time and again, despite all they were told and knew themselves … Haughey had made himself rich by accepting payments from businessmen and pilfering Fianna Fáil State-funded coffers. Although this was not generally known initially, as the decade progressed it became known to a widening circle of people. (Murtagh, 1999)

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At a more general level, between 1979 and 1992, when Charles Haughey was leader of Fianna Fáil, populist, short-term measures were often adopted in an ad hoc fashion with little reference to proper procedure or broader policy considerations. In these circumstances, individual ministers, civil servants and business people may have been influenced by the perceived lax ethical standards in high places. Low tax morality was suspected for many years. In April 1998, however, the Sunday Independent reported that some 53,000 bogus non-resident accounts containing over IR£600 million were held in the Allied Irish Bank (AIB) in the late 1980s and early 1990s. The Dáil Public Accounts Committee’s (PAC) subsequent investigations into AIB were extended to other financial institutions. The PAC report finds that the opening of bogus non-resident accounts to evade DIRT (Deposit Interest Retention Tax), a tax on earnings from bank deposits, was an ‘industry-wide’ problem across the banks and building societies in the late 1980s and early 1990s. Clearly, a great many small business people, local bank staff, accountants and others were all conspiring to evade tax. In 1998, Revenue Commissioners reported that some extremely high earners were paying less tax than the average compliant PAYE (Pay-as-YouEarn) worker. The Revenue survey of 400 individuals with incomes of more than IR£250,000 in the 1993/94 and 1994/95 tax years showed that the average effective tax rate for nearly one-fifth of them was less than 20 per cent.6 For taxpayers in general, the rate was 24 per cent. Again, the evidence points to low levels of tax morality among business people and their advisors. This is further confirmed by the so-called Ansbacher accounts. This was money held by wealthy Irish people in a Cayman Islands bank, which first came to light during the McCracken inquiry but the full facts about which are still coming to light. After one revelation, the Irish Times suggested: The compliant taxpayers, those ‘little people’ of US tax dodger and socialite Leona Helmsley’s memorable phrase, who pay their taxes and obey the laws of the land, can be forgiven if, over these extraordinary days, they veer between fury and despair.7 All these events point to the influence of both political systems and ethical example. The likelihood of decisive moral leadership may have been further inhibited in some crucial cases because politicians in receipt of large sums from business people occupied Cabinet positions with responsibility ranging from heading the Government to justice and local government.

Dynamics of corruption As outlined above, the range of Irish corruption is comparatively narrow, involving wealthy business interests, planning and near-commercial ministerial discretion. The dynamics of corruption are similarly restricted. For example, in contrast to other jurisdictions, foreign companies are seldom

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involved. The dynamics isolated here are: popular judgements; elite cohesion; and business morality. These are examined in the context of revelations at the recent and current tribunals (see Figure 13.1). Popular judgements Although the amounts of money that have been given by business people to a small group of the Republic’s politicians have surprised public opinion, the judgement of the electorate, measured by its propensity to remove from national office those involved, has been mild. Observers have suggested that Irish people’s judgement may lack severity because more petty transgressions are widespread. Unethical behaviour, be it in tax-evasion, welfare fraud or false claims for compensation, is defended because ‘everybody else does it’, ‘the victims are usually faceless’ or the tax system is or has been too onerous (O’Higgins, 1999). The public’s judgement may also be mitigated, it is suggested, if the victim is not just faceless but an agency of the EU. Despite this track record at a national level there is some evidence that the electorate did punish councillors who were associated with controversial re-zoning in County Dublin in the late 1980s and early 1990s.8 It may also prove to be the case that the scale of corruption revealed by the recent Tribunals will significantly diminish the tolerance of the electorate. Elite cohesion A quick check on the current status of the miscreants unmasked over 10 years of tribunals and tribulations would disabuse anyone of the naive belief that wrongdoing carries any serious punishment … An unwritten code of class solidarity and diplomatic immunity guarantees at worst impunity and at best an actual reward for actions that any real democracy would punish severely. (O’Toole, 2000) Social mobility is not high in Ireland but politics and business are potential paths to higher status and other rewards. For many, the Sheedy affair9 and the subsequent nomination of O’Flaherty to the European Investment Bank are symptomatic of the coherence of the powerful in the Republic. This sense of mutual interest between senior politicians, business people and holders of important administrative and judicial posts can facilitate corruption. The Fianna Fáil party had been in power during most of the period examined by the Beef Tribunal. The Tribunal, however, found no evidence of any wrongdoing, describing a friendship between a Cabinet member and a businessman under investigation as ‘business-like’ (Collins and O’Shea, 2001: 24). While the businessman’s ready access to politicians was regularly used by the company, no identified political links or personal friendships were relevant to this business advantage. Rather, the ‘insider’ status of the business reflected ministers’ assessments of the commercial potential of its operations and the

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contribution that these could make to the national economy. Ministers took huge risks with public money but they did so ‘in the national interest’. It is hard to distinguish between the close relationships that may develop between successful business leaders and senior politicians, and personal friendships. For Charles Haughey, his own lifestyle probably made it inevitable that his friends would be drawn from the business elite. The optimistic tone of the Beef Tribunal’s conclusions are, however, hard to sustain in view of the amounts of money subsequently shown to be involved. Haughey was given more than IR£8.5 million by business people between 1979 – when he became leader of Fianna Fáil and Taoiseach – and 1996, four years after his resignation: [F]or 17 years, during which he held the most powerful office in the State, he was in hock to people whose loyalty was to their own commercial interests. … Of course, Haughey’s apologists say that his donors didn’t ask for anything … Haughey didn’t dole out favours. So no strings were attached; no harm was done. This is nonsense. Re-read Mr Justice Brian McCracken’s report on payments to politicians, a model of straight thinking and plain language. McCracken makes no bones of it: politicians who depend on payments from businessmen leave themselves open to bribery and corruption. (Walsh, 2000)

Business morality Ethical leadership by politicians was discussed above but standards of corporate governance are also a contributory factor in the dynamics of corruption in the Republic. The Report of the Beef Tribunal did not allocate blame to anyone for the staggering irregularities it uncovered in the way employees of a major company conducted their business. Nor did it seek to pin responsibility for the inadequate control exercised by government departments. The proceedings of the inquiry, however, were characterized by seemingly daily revelations of malpractice and systematic fraud in the handling of beef exports. The final report detailed a massive, systematic taxevasion scheme in exhaustive detail. The construction business has also been shown to have given money to politicians. A retired building company executive, James Gogarty, was central to the setting up of the Flood Tribunal. In addition to the allegations against former Minister, Ray Burke (see Figure 13.1), Gogarty also gave evidence alleging that the former assistant Dublin City and Council Manager, George Redmond, received a payment of IR£15,000 from the Murphy Group in 1989, in relation to the impending expiration of planning permission on land in north Dublin. In April 2000, a public affairs lobbyist, Frank Dunlop made his first appearances at the Flood Tribunal. He was paid over IR£275,000 in fees and

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expenses by property developer Owen O’Callaghan for lobbying members of Dublin County Council to re-zone land for a shopping centre development at Quarryvale. In his evidence, Dunlop went on to name councillors to whom he had paid money, though the politicians themselves styled the payments as contributions to election expenses. The recipient of some unusually large sums described them as consultancy payments. Many of the instances above demonstrate a propensity by Irish business to engage in illegality or, at least, morally questionable actions. In other jurisdictions, corruption is also associated with organized crime. In the Republic there are, according to a recent survey, 13 organized-crime gangs, nine of which have direct links to drugs suppliers in other EU countries.10 These criminal groups are involved in drug trafficking, armed robbery and, to a lesser extent, the theft of computer components. The problem of organized crime in Ireland is tiny compared to other EU states, but of relevance here is that the gangs often use legitimate businesses in the construction and leisure industries as avenues for laundering money.

Anti-corruption laws and campaigns, remedies and solutions In Ireland, the legislation used to govern corruption had until recently changed little for almost 80 years. Under the Public Bodies Corrupt Practices Act 1889 and the Prevention of Corruption Acts 1906 and 1916, bribery of a public official leaves both giver and receiver open to a seven-year prison sentence. The Ethics in Public Office Act 1995 updated the law and shifted the burden of proof in some cases. Thus, where senior government or parliamentary office holders are involved, money is deemed to be given corruptly unless proven otherwise. The 1995 Act has made conviction much easier. On the other hand, exposure of corruption through the media is inhibited by relatively high burdens of proof in the law on defamation. Despite measures such as the Committees of the Houses of the Oireachtas [Irish Parliament] (Privileges and Immunities of Witnesses) Act, 1997, critics suspect that the odds against the detection of corruption using parliamentary means are lengthening. In recognition of similar misgivings, many parliamentary systems augment the role of the legislature with other watchdog agencies such as ombudsmen, special prosecutors and other quasi-judicial bodies. In Ireland, it is a feature of several incidents cited above that Dáil deputies were unable to elicit crucial information, which was subsequently central to tribunal and other inquiries. The appointment of tribunals and inquiries in the wake of media revelations of corruption amounts to recognition that the established means of public accountability have been deficient. It is difficult to assess whether this has been as a consequence of corruption, though the revelations about Deputy Foley, who was forced to resign as vice chairman and member of the PAC, indicate the potential dangers. It is unlikely that the corrupt parliamentarian

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would ask the difficult question which might expose another and/or endanger him or herself. The Irish parliamentary system, like cognate ones elsewhere, is very much dominated by the Government. This is not a consequence of corruption. It is, however, in the interests of the corrupt to resist more effective methods of parliamentary scrutiny. Further, those who have sought to use parliamentary methods to highlight corruption have been harried and characterized as unpatriotic. The safeguard of collective responsibility has been undermined by corruption. The doctrine is supposed to make Cabinet colleagues sensitive to each other’s decisions because any one member is obliged publicly to defend every policy. It is now clear that there were grounds to doubt the probity of a recent Taoiseach and other senior ministers, but their colleagues failed to act. The flaw may be the dominance of the Taoiseach in a cabinet of career politicians. Alternatively, it may be that the pressure of individual departmental responsibilities did not allow time for a truly collective approach. It is hardly in the interests of back-bench parliamentarians from parties in government to question ministers so resolutely that they undermine their collective electoral credibility. Private party meetings, therefore, assume a significant role in the system of parliamentary accountability. During Haughey’s tenure as Prime Minister, party forums were important but not sufficient checks. Local government corruption has been detailed in the Flood tribunal and recent legislation establishes a new code of conduct for elected members and the staff of local authorities. Under the Local Government Act 2000, such staff are required to maintain ‘proper standards of integrity, conduct and concern for the public interest’. And the member of staff is not allowed to ‘seek, exact or accept from any person any fee, reward or other favour for anything done by virtue of his or her employment of office’. Thirteen areas of declarable interests are identified in the legislation including an interest in development land, directorships, gifts and foreign travel valued above IR£500 (€635.87). Employment as a political lobbyist or adviser has to be declared.

Impact of political corruption and exposure of political corruption Following Hope (2000), three (overlapping) types of negative impact of corruption can be identified: economic, political and administrative. Economic The most direct economic consequence of corruption is to make business more costly. The allocation of local monopolies to suppliers of services with high initial costs, such as cable television, is fraught with economic dangers. Corruption may lead to the award of licences on the basis of criteria other

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than intrinsic economic considerations. Customers and/or taxpayers eventually carry the cost. The international perception of Ireland’s level of corruption does not seem to have altered despite recent revelations. The impact on actual inward investment is impossible to assess in the absence of direct evidence from foreign companies. Domestically, corruption may well have unfairly provided opportunities for some businesses, and frustrated others. The major areas of concern are in development planning, broadcasting and tax designation for urban development. Similarly, the furtive nature of various tax evasion schemes lead to capital flight and lower levels of domestic investment, even though the yields from foreign financial investment may have been repatriated. It is ironic that the fear of capital flight is offered as a major reason for the authorities’ failure to act against bogus non-resident accounts. Political The political systems of liberal democracies depend in part on a relatively low level of actual participation but a high belief in its potential efficacy. This arrangement in turn rests on significant levels of trust in politicians, public servants and other authority figures. As Heywood (1997: 3) notes, ‘without trust, democracy itself is threatened’. In Ireland, trust in political institutions is relatively high. In the 1999 Spring Standard Eurobarometer 51, respondents were asked to state their trust or distrust in their national and international institutions. On average 35 per cent of Europeans trust the civil service, the parliament, the government and the political parties of their country. The country results show that average trust levels range from 25 per cent in Italy to 56 per cent in the Netherlands. The Irish score was 39 per cent. When disaggregated, however, it is clear that trust in the civil service (61 per cent) is much greater than in political parties (21 per cent). Perhaps a more telling indication of trust is the finding in April 2000 that 46 per cent of the respondents to an Irish Marketing Surveys opinion poll indicated they did not believe the Taoiseach’s denial that he had received IR£50,000 from a Cork businessman in 1989. The poll showed 36 per cent accepted Bertie Ahern’s word while 18 per cent expressed no opinion. Interestingly, 67 per cent of those polled approved of the Taoiseach’s leadership.11 The Irish electorate has been relatively lenient. Notwithstanding the voters’ ambiguity, periodic elections are too broad an instrument to be an effective tool of public accountability. As McAllister puts it: the principle of ‘throwing the rascals out’ … assumes that electors are sufficiently well informed … [and] will be able to overcome their partisan loyalties, by perhaps voting against their favoured party in order to remove an unsatisfactory elected representative. (McAllister, 2000: 25)

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In the simple model of parliamentary accountability, the focus for an assessment of corruption is properly the Dáil and its committees. In recognition of this, members have a level of immunity from prosecution and they cannot be sued for remarks made there (Doolan, 1984: 34). Although parliamentarians elsewhere have more general protection, Dáil deputies still protect their privilege. Thus, for example, in the recent case involving Deputy Foley, a Dáil committee suspended him on full pay from Parliament for several weeks after adjudicating on his conduct. Similarly, Minister Burke made his initial response to accusations of corruption in a statement on the floor of the Dáil. The weakness of parliamentary control was, however, pinpointed by Deputy Jim Mitchell, chairman of the PAC and of the DIRT inquiry: all the scandals have a common strand. All of them represent a failure of political and parliamentary accountability.12 When even a small minority of politicians conspicuously betray their trust, abusing their role in society for their own personal financial advantage, public attitudes to the whole corpus of them can become very negative indeed. This has obscured the fact that in Ireland, all but a handful of politicians are in fact free of any taint of financial corruption. But it has to Ethics in Public Office Act, 1995: The Act established a Public Offices Commission comprising the Ombudsman, the Ceann Cornhairle (Speaker of the Dáil), the Comptroller and Auditor General, the Clerk of the Dáil and the Clerk of the Seanad (Senate). The Act provides for the disclosure of interests by holders of certain public offices, such as Ministers and members of the Oireachtas (Irish Parliament), and other persons holding designated positions or directorships in the public service. It also deals with gifts to Ministers and personal appointments by them. The Commission also has a role under the Electoral Act 1997 in relation to disclosure of political donations. Freedom of Information Act 1997: This gives the public access to official records, files and reports of government departments and public bodies. The legislation effectively overturns the presumption that all official information is secret. Some data, especially commercially sensitive or legally privileged material, are excluded from the scope of the Act. Compellability, Privileges and Immunities of Witnesses Act 1997: This Act confers on parliamentary committees, whose terms of reference include provision for the calling of persons and papers, statutory power to compel the attendance and co-operation of witnesses and the furnishing of documents. It also confers High Court privilege on all persons directed to give evidence or present documents to such committees. Virtually every citizen is compellable. Figure 13.2 Recent anti-corruption legislation

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be said that the honest majority of politicians in Ireland have shown a lack of alertness to the temptations posed to a small minority of their colleagues by the interaction of business and politics under the conditions of modern capitalism (Fitzgerald, 2000). Administrative The challenge of administrative accountability is not new as evidenced by the various measures introduced since the early 1980s when the Office of the Ombudsman was established. This was followed by increased powers of audit for the Comptroller and Auditor General to enable that office to undertake value-for-money audits and to examine the effectiveness of management systems, thus throwing them open to greater scrutiny. In addition, significant steps have been taken to enhance the internal audit function throughout the civil service. The Ethics in Public Office Act, Freedom of Information Act, the Public Service Management Act, and the Compellability, Privileges and Immunities of Witnesses Act were all enacted in recent years. They each add to and reinforce the others in strengthening the overall system of administrative accountability (see Figure 13.2). Legislation was introduced in 2000 augmenting the safeguards at local government level.

Conclusion The process of consolidating democratic institutions and society is a difficult and lengthy one, and a corrupt regime, or even perception that the government is corrupt, can hinder or even derail this process. (National Democratic Institute for International Affairs, 1999: 1) Corruption is an elusive phenomenon. Its measurement is at best indirect and tentative. In reaching a conclusion about it there is also a temptation towards the cultural conceit that it is a characteristic of other cultures. According to della Porta (1996b): Political corruption has long been considered a disease typical of the pathological but temporary phases that precede the advent of democracy. … In the industrialised countries, political corruption should only be a limited, marginal phenomenon. In Ireland, however, it is difficult to remain sanguine in the face of the steady stream of revelations and accusations about the abuse of public office for private gain. There may need to be a major cultural change to deal with corruption involving more ethical corporate governance, higher tax morality in society at large and less tolerance of politicians’ indiscretions. Even popular deputies and ministers associated with policies and actions that enjoy electoral support may in future have to be excluded from office even

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for relatively minor corruption. Similarly high standards will have to be applied to judicial and high administrative officeholders.

Notes 1. Sunday Independent, 24 October 1999. 2. The Irish Times, 20 April 2000. 3. For example, of particular concern in Dublin County, the local authority critical to the growth of the capital city, have been changes in the designation of zones from agricultural or amenity to residential or industrial uses. Recent years have seen land values with a change of zoning increase dramatically – from circa IR£6,000 (circa €7,600) per acre for agricultural land to circa IR£80,000 (circa €100,000) for residential land. 4. The Irish Times, 29 April 2000. 5. The public capital programme in 1998 was IR£4.25 billion, about 40 per cent of the total fixed capital investment in the Republic. 6. The Irish Times, 27 February 1998. 7. The Irish Times, 20 September 1999. 8. See note 3. 9 This occurred in November 1998 and concerned the unorthodox early release of two prisoners. An inquiry by the Chief Justice led to the resignation of two judges and a court official. One of these was Judge Hugh O’Flaherty of the Supreme Court. 10. The Irish Times, 30 May 2000. 11. Sunday Independent, 30 April, 2000. 12. The Irish Times, 17 December, 1999.

14 Political Corruption in the United Kingdom Alan Doig

Britain invariably scores highly in indices on integrity in public life despite evidence of underlying and persistent corruption (see Doig, 1984, 1995, 1996). Evidence of bribery and the misuse of public office for partisan or personal benefit has invariably been treated as episodic and personalized. When identified, cases have been subject to investigations that have dealt with the offenders while confirming the general integrity of institutions and the robustness of the procedures involved in dealing with the offences. At the same time, British political and administrative life has pragmatically so ordered its affairs that the need for corruption has been widely minimized. Thus members of the executive and senior civil servants are unlikely even to be offered, let alone accept, bribes from government contractors while in office – while many will be offered, and accept, financially-rewarding appointments on resignation or retirement from public life. Similarly, the apparent outlawing, by legislation in 1925, of the payment of large sums of money to political parties for an honour in fact simply regularized the practice. Concerns about MPs speaking or voting on matters in which they had financial interests, directly or as spokespersons for commercial interests, appear to have been resolved by allowing the practice of both subject to internal regulations on the disclosure and registration of those interests. Yet these have been so lightly or weakly applied that MPs have been able to appear to follow the formality of the rules while continuing to pursue those practices the rules were intended to restrain. Thus, the reliance on piecemeal rules and regulations, the failure to update or adapt them following high profile cases, and the impact of wider publicsector and societal changes, has resulted in a rise in corruption. While there may have once been a suspicion of the existence of corruption – one Labour government minister said in the 1970s of the increasing numbers of civil servants moving into lucrative private sector appointments that ‘it is not so much specific corruption as atmospheric pollution’ (quoted in Kellner and CrowtherHunt, 1980: 199) – current concerns would suggest that the failure to address the pollution has allowed the corruption to become increasingly overt. 178

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Historical roots of political corruption in Britain Much of the basis for the British approach to standards of conduct in public life, is to be found in a series of reforms from the Victorian era onward. The process of political reform and the expansion of the electorate were very much bound up with the growing influence of middle-class mores. These were underpinned by an emphasis on personal respectability and rectitude, both of which had a substantial impact on what was described as responsible and representative government. The political elite could no longer presume to govern as of right, but could only do so through the electoral consent of those grudgingly allowed access to the political arena. Consequently, those ‘who wanted effective political power had to behave, at least in public, in a middleclass way’ (Lloyd, 1986: 24). This ensured that, by the latter half of the nineteenth century, discovery of misconduct was increasingly a political liability and that reformers were meeting less and less resistance to change. Thus, from the latter half of the nineteenth, into the early twentieth century, political and administrative leaderships were able to introduce measures that precluded membership of Parliament as a means of personal profit in return for government support; required verbal disclosure of financial interests; curbed payments for honours; disengaged MPs and ministers from the spoils and patronage systems that dominated traditional politics; introduced constraints on civil servants moving to the private sector; outlawed voter bribery, and introduced anticorruption legislation for both public and private sectors. While it should be remembered that corruption and misconduct did not necessarily disappear during this period, allegations invariably provoked some form of official inquiry that was often used as a vehicle for some general statement of the principles of conduct. At the same time, the tendency to rely on personal honour (MPs were and are exempt from the criminal law in pursuit of their official duties) was tempered with greater regulation. In local government, for example, conflict of interest was proscribed by legislation that forbade councillors holding contracts with their councils. Police forces were run on almost-military lines and subject to public inquiries that included reviews of levels of misconduct. By the end of the Second World War, most of the laws and rules governing corruption and standards of conduct in public life up to the late twentieth century were already in place, and the few cases that did come to public attention were not seen as financially significant or politically relevant. Indeed, the major immediate post-war inquiry – the 1948 Lynskey Tribunal inquiry into influence-peddling and bribery involving government ministers and civil servants – has been referred to as a ‘reaffirmation of the integrity of the British Civil Service and of the political morality of the members of Parliament’ (Robinton, 1970: 258). The existing sense of public service and duty, supported by rules and regulations on conduct, were assumed

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to provide an ethical environment in which attitudes of probity and honesty were the norm. Where there was evidence to the contrary, such misconduct could be assumed to be the sporadic consequence of the behaviour of unscrupulous individuals opportunistically seeking to exploit those in public life, or to exploit their public position, but who were invariably caught out and arraigned by an effective means of inquiry. Such inquiries tended to be firefighting exercises or political responses to specific circumstances, seeking to deal with the specific issues or individuals. Their conclusions, implicitly or otherwise, tended to reaffirm the general integrity of those in public life, without attempting either to quantify the actual incidence of misconduct or to look at the wider organizational or cultural circumstances that gave rise to it.

The 1970s – corruption interlude or corruption evolution? The 1970s Poulson scandal thus came as an unwelcome revelation, exposing entrenched and extensive networks of local-government corruption and influence peddling that also encompassed Parliament and several public sector organizations. The scandal led to two official inquiries – the Prime Minister’s Committee on Local Government Rules of Conduct (the 1974 Redcliffe–Maud inquiry) and the Royal Commission on Standards of Conduct in Public Life (the 1976 Salmon inquiry) – and two parliamentary inquiries: a Select Committee on Members’ Interests and a Select Committee on the Conduct of Members. John Poulson was an architect who exploited contacts from every area in public life to obtain contracts. The success of his firm followed his recruitment of T. Dan Smith, an energetic, ambitious and politically well-connected former Labour leader of Newcastle-upon-Tyne council, to win contracts at a time when local government had access to substantial capital and revenue funds for expansion and urban redevelopment during the 1960–72 period. The 1974 Commons inquiry into MPs’ financial interests resulted in a hasty and ill-thought-out reordering of the shelved deliberations of an earlier 1969 committee (triggered by allegations of MPs acting as paid lobbyists) to introduce requirements for the declaration and registration of financial interests. The House managed not to act on the findings of the inquiry into the conduct of those MPs with undeclared interests in Poulson’s activities. One MP was forced to resign by internal party pressure prior to the parliamentary debate on the inquiry’s report, while the debate itself simply noted the report’s comments on the other two. The two more general official inquiries – Redcliffe–Maud in 1974 and Salmon in 1976 – produced a long list of eminently sensible, if mundane, recommendations intended to tighten up the ethical environment that had permitted the corruption perpetrated by people like Poulson. These included proposals relating to: the declaration and registration of interests in public bodies; MPs’ financial interests; public relations consultants; codes of

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conduct; gifts and hospitality; post-retirement employment of public officials; external scrutiny and means of investigation, and legal changes to bring MPs within the criminal law. Few of the recommendations from either were implemented and those that were, were not implemented systematically or monitored later for effectiveness and review. The Redcliffe–Maud and Salmon reports lacked any research capability (or interest), failed to dissect the underlying trends behind the corruption, and were published too soon to be able to take account of other cases elsewhere in local government, Parliament and the public sector. Indeed, two significant sets of investigations – into the Crown Agents (which provided a range of financial and other services to colonies and former colonies) and into the Property Services Agency (the government building works and maintenance department) – led a number of police and official inquiries to provide a wealth of detail of the cultural, organizational and monitoring inadequacies which could (and did) lead to mismanagement, waste, fraud and corruption. Of particular contemporary relevance, they drew attention to the risks of overlong or prolonged contact with private-sector values, personnel and practices that could lead to public officials initiating or agreeing to participate in fraud and corruption. Of equal note is the fact that they were greeted with the same indifference by governments and the Commons that was accorded to the earlier reports on standards of conduct in public life. Neither the Redcliffe–Maud nor the Salmon report was debated by the House of Commons, and regular attempts by a handful of leftwing MPs to persuade the Government to implement the recommendations of the reports were ignored. The election of a radical Conservative government in 1979 under Margaret Thatcher then swept any interest in the reform of standards in public life off the agenda (and under the carpet) for more than a decade.

Old habits, new contexts: the significance of Thatcherism and new public management It was with a sense of déjà vu, therefore, that the PAC issued a damning report in January 1994, drawing attention to the negative consequences of many of the concerns raised in the 1970s and warning of ‘a departure from the standards of conduct which have mainly been established during the past 140 years’ (Committee of Public Accounts, 1994: v). Changes first proposed in the 1979 election manifesto of the Conservative party allied to an ideological commitment to the inherent superiority of the values and practices of the private sector, led successive Conservative governments to undertake a three-handed approach to reform after winning the 1979 election. These concerned a rolling programme of privatizations; efficiency drives in the civil service; and, after the 1987 General Election, extensive legislative and structural reforms across the public sector. The latter were designed to ensure the introduction of internal markets, the transfer of large parts of the civil service from the Whitehall framework into semi-independent

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‘Next Steps’ agencies, and the devolution of substantial amounts of financial responsibility to deliverers of services. At the same time, market testing, expenditure reviews, citizens’ charters and performance indicators combined to ensure that those services that were still to be delivered by the public sector would be delivered by managers working in accordance with private-sector methods, attitudes and measures of performance. The continuous and comprehensive nature of the changes created a significant amount of turbulence in the existing ethical environment, which may have led to ‘misunderstanding among public servants about the quasi-private sector environment … (and) … inaccurate perceptions of private sector values and practices’ (Harrow and Gillett, 1994: 4–5). Of the effects of change in the public sector under successive Conservative governments after 1979, the 1994 PAC report warned: ‘it is … essential to maintain honesty in the spending of public money and to ensure that traditional public-sector values are not neglected in the effort to maximise economy and efficiency’. Such concern was echoed elsewhere. Some months before the PAC report, and some months after, the Audit Commission – the public body that appoints external auditors for local government and the National Health Service – published two reports on probity, arguing that ‘numerous recent changes to the nature and operation of local government services … such as the delegation of financial and management responsibilities, while contributing to improved quality of service, have increased the risks of fraud and corruption occurring’ (Audit Commission, 1993). The concern expressed by the National Audit Office, the Audit Commission and the PAC, did not simply address mismanagement, misguided expenditure, the neglect of due process or corner-cutting procedures to achieve outcomes more easily, but also clear cases of corruption, misappropriation and fraud (few of which ended up in the courts). Nevertheless, the concern did not attract widespread public attention, for there were no significant organizational or individual examples of corruption, nor any sense of sector-wide problems, which could focus public or media concern. Furthermore, successive Conservative governments and senior civil servants continued to support the general tenor and thrust of the reforms, insisting that the core publicservice values remained intact and that cases of possible misconduct were isolated examples or the results of the teething troubles of change. Neither of these, it was claimed, would be likely to reoccur once the reforms had become established – until the revelations of the ‘cash-for-questions’ scandal in the House of Commons in the early 1990s focused public concern and forced another general review of standards of conduct across public life.

Members of Parliament: the self-regulation of corruption The 1948 Lynskey Tribunal had been established after allegations were made that, in the restriction-bound world of post-war economic shortages and

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government controls, certain businessmen could pay for access to ministers and officials through intermediaries (prototype professional lobbyists). The inquiry concluded that in at least two cases, including that of a junior government minister, this was done with the intention of corrupting them. What was interesting about the circumstances surrounding the inquiry was that, unlike official inquiries both before and after the Lynskey Tribunal, a parliamentary committee was subsequently set up to consider the context in which the corruption had taken place and to ascertain how far lobbying generally was shading into influence-peddling and bribery. The committee’s report did not see any future for the intermediary or the private middleman: if an individual desires to set up as a professional intermediary, he must be able to attract a clientele, and in order to do so he must be able to offer some services of value to his prospective clients. The only services he can render are a knowledge of the workings of the system, with or without the addition of personal acquaintance with individual officers. It is difficult to see how a private intermediary can acquire this knowledge. (Report of the Committee on Intermediaries, 1950: 67) While the report noted that large firms and trade associations had both the staff and the contacts to lobby, quite legitimately, government and the civil service, it did not foresee the possibility of those within the ‘system’ setting themselves up as intermediaries and selling their knowledge, access and contacts on behalf of companies, trade associations, and professional lobbyists. Although political PR was in its infancy at the time the committee was reporting, there was a growing number of clients seeking access to the decision-making processes in an area where the increasingly active role of PR men seemed ‘another testimony to the age-old weakness of democracies run by amateur politicians in the face of well-informed and determined professionals … ’ (Turner and Pearson, 1966: 159). Further, those seeking access and influence were also able to exploit ‘the new post-war Tory MPs (who) were “young men on the make”, eager to obtain financial rewards and the hallmarks of status’ (Wilson, 1961: 65). The cause for concern was the enthusiasm of the latter for what MP Francis Noel-Baker described as the ‘grey zone’, the jobs that paid fees and retainers but required no special qualifications or fixed hours of work and where the roles of advisor and consultant ‘need not become generally known’ (Noel-Baker, 1961: 91). By the end of the 1960s concern was crystallized by allegations that a Labour MP was being paid by a PR firm working for the Greek military government as its lobbyist behind the scenes in Westminster. Keen to avoid possible self-inflicted damage from an inquiry into the conduct of its own MPs (others of whom were also paid by overseas governments), the Government encouraged Parliament to establish a select

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committee in 1969 to look at ways of improving existing procedures generally rather than investigate this and other cases. While seeking to ban ‘advocacy’ (that is, lobbying on behalf of outside interests, within Westminster or Whitehall, solely for payment), the committee believed in maintaining the tradition of allowing MPs to receive payments as advisers from outside interests with whom they had an involvement prior to election, so long as they adhered to a code on disclosure to avoid possible conflicts of interest. It rejected the need for a register of interests – or mechanisms to police disclosure or advocacy – because of ‘the prevailing traditional ethos and practices of the House, which informed individual decisions and continued to encourage trust in the honour and self-restraint of individual MPs, along with the belief in their right to privacy’ (Williams, 1985: 61). The report was never debated in Parliament and was shelved by the incoming Conservative Government in 1970 but, as noted above, was revisited as a consequence of the Poulson affair. This time a new Select Committee on Members’ Interests ignored the fine distinction between advocacy and interestrepresentation, allowing MPs to do both, but seeking to police any abuse by introducing a code on verbal declaration of relevant financial interests, a register of those interests and a supervisory committee. Subsequent failure by this committee to require MPs to complete an entry in the register lost it its credibility, a loss that was to be compounded by weak reports, a reluctance to act as the Commons’ policeman, and a growing tendency among MPs to exploit the Commons’ 1974 decision that it was up to the individual MP to determine what was a relevant interest for declaration or registration. The failure of self-regulation was both compounded and highlighted by the speed, and by the radical and comprehensive nature, of successive Conservative governments’ legislative reform programmes during the 1980s. These demanded almost constant access by companies to government ministers as well as through the more traditional lobbying of Whitehall. This demand was satisfied by a growing number of lobby firms, many of whom either employed or were run by Conservative MPs (who also employed lobbyists as ‘research assistants’ to give them privileged access to the House and its facilities). A number of MPs became involved with lobbying because they were unlikely to be considered for political advancement. They were also aware that the intertwining of ideological and personal financial interests was effectively unregulated by the Select Committee on Members’ Interests, leading ‘to a progressive legitimization of behaviour that is more and more removed from the original boundaries of probity …’ (Mancuso, 1993: 186–7). The number of scandals involving MPs, the increasingly overt activities of lobby firms, the unusual presence of ministers accused of conflicts of interest, and the general indifference to the self-regulating requirements on disclosure and registration led the Committee to produce three general reports in 1991 and 1992 relating to declaration of interests and Select Committee membership, parliamentary lobbying, and the registration and declaration

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of Members’ financial interests. These were intended to make internal procedures clearer and more explicit so that ‘Members’ perceptions of these issues’, especially the fine line between an advocacy payment and a bribe, would be sharpened to remove the threat that they would need to be codified by statute and involve outside agencies in the business of the House. Said the Committee: ‘the intervention of the criminal law, the police, the law and the courts of law in matters so intimately related to the proceedings of the House would be a serious and in our view regrettable development, and would have profound constitutional implications’ (quoted in Doig, 1994). This last-ditch attempt to persuade MPs to abide by House rules came at an awkward time for the Conservative government, with growing public discontent and dissatisfaction over the effects of the long drawn-out economic recession, perceived cuts in public services, the threat of middle-class unemployment, and the continued absence of economic recovery. There were a number of political scandals and ministerial resignations over what might be termed injudicious sexual and financial relationships, concern over the rise in partisan appointments to non-department public bodies (NDPBs), and a general hostility to what were termed the ‘fat cat’ salary increases and share options made available to the directors of privatized utilities. It was probably an unwise decision by Prime Minister John Major then to try to seize the moral high ground from a reviving Labour Opposition by calling for a ‘Back to Basics’ campaign in October 1993. While the campaign sought to promote the core values of the party, it proved disastrous as a number of Tory MPs and junior Ministers were revealed to be involved in a variety of sexual escapades apparently at variance with those family values and private morality which the Government espoused publicly. The impact was heightened by use of the term ‘sleaze’, which not only gave a focus for public attention but provided a word formula that allowed disparate areas of concern to be connected by the media and the public in an innovative but easily understandable way (Doig and Wilson, 1995). Of the ministers who were to resign over their financial interests, or over allegations that they had used their parliamentary office for private gain, four were significant. Graham Riddick and David Tredinnick were suspended as Parliamentary Private Secretaries in July 1994 pending an inquiry into newspaper allegations that they had been prepared to accept £1000 each to table parliamentary questions. Neil Hamilton and Tim Smith, respectively Corporate Affairs and Northern Ireland Ministers, were accused in October 1994 of having received payments and other benefits in connection with Mohamed Al-Fayed, the owner of Harrods, directly and through a lobby firm, Ian Greer Associates (IGA). The allegations, published by The Guardian newspaper, that Smith and Hamilton ‘were paid to plant questions’ were already known to the Prime Minister through a report from Al-Fayed taken to him by another newspaper editor. An internal inquiry was undertaken by the Cabinet Secretary as Greer and Hamilton issued writs. While Hamilton

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denied the allegations, Smith agreed that he had accepted money and resigned. Hamilton was forced to resign later the same day by the Prime Minister who announced within days the establishment of a committee on standards in public life chaired by a judge, Lord Nolan.

Nolan: sleaze and standards The terms of reference of the Committee on Standards in Public Life were ‘to examine current concerns about standards of conduct of all holders of public office, including arrangements relating to financial and commercial activities, and to make any recommendations as to any changes in present arrangements which might be required to ensure the highest standards of propriety in public life’. It was established as a standing committee for three years with a membership of ten. Given a remit to report in six months, it advertised for written evidence and held public hearings before issuing its first Report in May 1995. Arguing that there was public anxiety about standards of conduct in public life, that cases of sexual misconduct were increasingly being reported by the media, that changes to the public sector had had an impact on conduct, and that there appeared to be uncertainty over what was right and wrong in public life, the committee appeared to tread the well-worn path of championing personal standards of conduct as the key to a return to the high standards it believed once existed. In calling for ‘a degree of austerity’ and a ‘respect for the traditions of upright behaviour’ it proposed seven principles of public life – selflessness, integrity, objectivity, accountability, openness, honesty and leadership – to be underpinned by codes of conduct, internal systems supported by ‘independent scrutiny and monitoring’, and ‘guidance and education’ in three areas: Parliament; Ministers and Civil Servants, and NDPBs. The Committee accepted the tradition of paid employment for MPs, but recommended that there should be clearer information in their register of financial interests, as well as a ban on working for lobby firms. Integrity would be assured through a code of conduct and an independent commissioner for standards. A similar figure would be responsible for appointments to NDPBs. Such appointments should be made on merit, with political affiliations declared, and each NDPB should draw up a code of conduct. Codes were also called for, for ministers and civil servants, while the former would be subject to rules on moving to the private sector that were similar to those applied to the latter. Parliament agreed in October 1995 to the creation of a new Committee on Standards and Privileges to replace the existing Committees on Members’ Interests and on Privileges. It also agreed to appoint a Commissioner, to ban advocacy, and to record MPs’ outside earnings (within given bands) in the register. The first test of the new Committee and Commissioner came during the allegations concerning Neil Hamilton. With a reputation as an

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uncompromising Thatcherite, enhanced by a successful libel case against the BBC, Hamilton had developed a number of outside interests, some of which emerged from his relationship with Ian Greer whose firm, IGA, was one of the most successful of the political lobby firms during the 1980s. One of IGA’s major clients was Mohammed Al-Fayed. His purchase of Harrods had been the subject of a bitter take-over battle with Lonhro and his background had been later heavily criticized in a Department of Trade and Industry (DTI) report. The possibility of a Monopolies and Mergers Commission intervention over the sale, and the belief that the DTI inquiry was politically motivated, led to Greer proposing, and Al-Fayed funding, what was later described as a lobbying operation of Members ‘who would be willing to champion his (Al-Fayed’s) cause in the House and within relevant government departments, principally the Department of Trade and Industry’ (Committee on Standards and Privileges, 1997, para. 111). Two of the lobbying operation were Neil Hamilton and Tim Smith. They were among over 20 MPs against whom Al-Fayed made allegations of payment that fell to the new Commissioner and the new Committee on Standards and Privileges to investigate. The allegations required Downey to gather and assess evidence from 25 Members, over 60 witnesses, 13 oral hearings and 14,000 pages of written material. The impending 1997 General Election forced the Committee to endorse a short report from the Commissioner clearing 15 MPs of any impropriety over receipt of Al-Fayed money through alleged donations by Ian Greer to their campaign funds. After the election (in which Hamilton lost his seat to an ‘anti-sleaze’ candidate), the Committee stated that both he and Smith had received money directly from Al-Fayed in return for lobbying services. Four other Conservative MPs were criticized for a failure to register or declare interests. In December 1999 Neil Hamilton lost his civil libel action against Mohammed Al Fayed over claims the latter had made in a Channel 4 Dispatches programme in January 1997 about Hamilton’s demands for, and payments of, money, gift vouchers and a holiday in return for asking parliamentary questions. The whole affair meant that there was no criminal investigation and no prosecution of either donor or recipient in what Hamilton himself was to claim was a charge of corruption. The realization that the tradition of gentleman’s honour was not working, led the Committee on Standards in Public Life to propose that bribery be criminalized (a proposal first made by the 1976 Royal Commission). The Committee revisited its first report in 1999 under its new chairman, Lord Neill of Bladon. Its review, Reinforcing Standards, published in early 2000 (Committee on Standards in Public Life, 2000), continued to support the case for the criminalization of bribery in relation to MPs. The recommendation was accepted by the Joint Committee on Parliamentary Privilege and the 1997 Government (Home Office, 2000), but is unlikely to be implemented in the near future now that the other area requiring legislative reform – implementation of the OECD Convention on

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the bribery of overseas officials – has been incorporated into the 2001 Antiterrorism, Crime and Security Act.

Standards in perspective – controlling corruption The need to be more prescriptive about standard-setting has been a feature of the work of the Committee on Standards in Public Life in its reviews of other areas, such as local government, National Health Service Trusts, NDPBs, higher education, and party funding. Its focus on more formal and structured approaches to areas of vulnerability and risks, however, only parallel recognition elsewhere of the need for a more proactive control environment. In its Third Report (Committee on Standards in Public Life, 1997) the Committee addressed the development of an explicit ethical framework for local government. Its proposals included: a statement of General Principles of Conduct for Local Councillors to be approved by Parliament; a Model Code of Conduct for local councillors; a standards committee of senior councillors to deal with allegations of breaches of the Code and to exercise disciplinary powers; and the creation of Local Government Tribunals to act as independent arbiters on matters relating to councils’ Codes and appeals from councillors arising from decisions of standards committees. Its faith in local ownership and self-regulation, however, was not favoured by the new Labour Government. Aware that it was vulnerable to partisan attacks over its failure to address corruption in Labour-controlled local councils, of which the cases of Labourcontrolled London Borough of Lambeth and Doncaster have been wellpublicized, the Labour Government’s subsequent recommendations differed from those of the Committee in two main respects: the legally guaranteed presence of independent members on standards committees, and an independent Standards Board to take responsibility for the investigations of all ‘substantive’ allegations against councillors through the employment of ‘Ethical Standards Officers’. In relation to the police – a major area of the public sector not considered by the Committee – the approach has been even more hard-edged. Police corruption, particularly in the largest service, the London Metropolitan police service, has regularly surfaced into the public domain although the organizational response has tended to be reactive. Internal suspicions of continuing police corruption in the early 1990s prompted a secret intelligence gathering operation. This resulted in the creation of a carefully-selected squad of 150 officers to undertake a range of anti-corruption measures as part of a ‘robust, proactive investigation into suspected corruption and the proactive maintaining of integrity … ’ (HM Inspectorate of Constabulary, 1999: 6). Such reforms reflect the emphasis on a control environment, ranging from the criminalization of bribery involving MPs and the payment of bribes overseas, to the funding of political parties and greater regulation and

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supervision of other areas or activities in the public sector. These will not only bring police investigations and external agencies into areas where discretion and self-regulation have prevailed, but will also expose current practices to the more instrumental analysis of external examination and judgement. In some areas, however, the control environment is only seen as a stage. The staffing of the Metropolitan police anti-corruption squad has risen while its remit now includes, again, the promotion of ethical awareness and professional standards. The Standards Board also has the authority to pursue the creation and implementation of an ethical and preventative environment. The approaches being pursued in local government and the police are based on the recognition of something that the Committee mentioned in its first report but has failed to develop as an approach. There are now codes of conduct, and internal systems supported by ‘independent scrutiny and monitoring’, but there is also a need to pursue the issues of ‘guidance and education’. If the current types and levels of corruption have less to do with the ad hoc and sporadic conduct of certain individuals than with the changes in the public sector, then tackling corruption is as much about the culture of public service, as it is about the control environment.

Conclusion: corruption, control and complacency The changes to the public sector have been influenced by wider societal changes where the promotion of entrepreneurial activity, the removal of controls from commercial sectors, and the encouragement of financial gain as an indicator of worth, has placed a premium on self-centred secularism and materialism. More generally, societal attitudes to right and wrong, to honesty and dishonesty, have always been fluid and varied (Doig, 2000) and, in the context of changing organizational cultures, staffing and performance, this has significant implications for the potential for corruption. The predominant focus on the controllable components within the context of a compliance or accountability environment may not, as Jim Jacobs and Frank Anechiarico argue, be either the only or even the right answer in the longer-term: in searching for solutions to the corruption problem, we must look beyond the traditional strategies of monitoring, control and punishment … Laws, rules, and threats will never result in a public administration to be proud of; to the contrary, the danger is that such an approach will create a selffulfilling prophecy: having been placed continuously under suspicion, treated like quasi-criminals or probationers, public employees will behave accordingly. (Anechiarico and Jacobs, 1996: 207) This argument has been pursued by Gregory and Hicks (1999: 14) who see that effective control is achieved through prevention and in turn requires personal responsibility: ‘strategies to maintain and enhance high standards

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of conduct in public service will need to be based on a conceptual understanding of responsible accountability, as distinct from a narrow preoccupation with accountability itself’. Both themes reflect a perspective that the National Institute of Law Enforcement and Criminal Justice noted as long ago as 1978: corruption has three main components that are controllable and one that is not. The three controllable ones are opportunity, incentive, and risk: the uncontrollable one is personal honesty. Many public servants over a long period of time have had the freely available opportunity to be corrupt, a large incentive to do so, and little risk of being found out if they did, but have refused because ‘it wouldn’t be honest’. (quoted in Zimmerman, 1982: 98) The answer to the prevention of corruption may well lie in a focus on the individual, and personal awareness and responsibility, but that in itself raises two issues. First, how would that approach address newer, more sophisticated types of corruption? Should the focus continue to be on contract corruption or selling influence? But if so, what about politicians willing to use their office to facilitate the activities of organized crime? What if political influence is being used to promote money-laundering and tax avoidance or evasion? What if those now entering public life espouse the views of a former local government figure, T. Dan Smith, who was jailed as a consequence of his involvement in the Poulson affair, in wishing to combine public service ‘with what they call a piece of the action’? Such questions must inform the second issue, namely, what are the ethical and cultural themes to be emphasized? The Committee on Standards in Public Life stated that ‘a degree of austerity, of respect for the traditions of upright behaviour in British public life, is not only desirable, but essential’ (1995: para. 7, p. 16). But if the organizational, social and cultural reference points are changing, then it may be naive to try to return to a golden age of public service standards (if it ever existed to the extent that its proponents believe). The control environment is the beginning, rather than the end, of the reform process; the danger is not only about complacency over levels of corruption or over the current response. Controlling corruption is as much about prevention as it is about detection and investigation. It is also about blowing away the atmospheric pollution to see more clearly the causes, and addressing them accordingly. Achieving the ‘it wouldn’t be honest’ response does suggest that reform must seek a balance between a control and prescriptive environment and the promotion of cultural changes to attitudes and conduct, thus recognizing the influence of the developing cultural and social issues: ‘the challenge for the new era is to discover the moral and political principles which are appropriate to the public domain facing the transformations of our time’ (Ranson and Stewart, 1994: 23).

Part IV Comparative, Supra-National and International Perspectives

15 Political Corruption in Central and Eastern Europe Leslie Holmes

In 1999, the World Bank published a comparative analysis of corruption in all the major regions of the world for the period 1996–99 (see Kaufmann et al., 1999a,b). According to that, and contrary to many people’s expectations, the worst region on earth for corruption was perceived to be neither Africa, nor South or East Asia, nor Latin America, but the Commonwealth of Independent States. Not quite as bad, but still among the more corrupt parts of the world, was what used to be known as Eastern Europe. This chapter will explore both regions – hereafter referred to as Central and Eastern Europe (CEE). To some extent, the term ‘corruption’ is culturally specific. But there are many acts that are considered corrupt in most societies and by most people. Moreover, there is less difference across cultures as to what actually constitutes corruption than there is in public and official attitudes towards it. Some cultures and groups appear to be more tolerant of corruption than others – although recent survey-based research suggests that levels of public condemnation are less varied than was once thought. What does vary is the level of public despair. Hence, it should never be too readily assumed that the citizens of country X are more tolerant of corruption than are the citizens of country Y; the former might simply have less faith that the authorities can or will do anything about the problem. For our purposes, we can say that an action or non-action (an example of the latter is ‘turning a blind eye’) should in principle meet the following four criteria to constitute corruption: 1. it is carried out by an individual or group of individuals occupying a public office; 2. the public office must be one of responsibility and authority; 3. the official must commit the act at least in part because of personal interest; 4. the official must be aware that their actions or non-actions either are or might be considered illegal or improper. Accepting this definition, it becomes clear that corruption might involve business people if they interact with public officials. But improper behaviour solely between business people is excluded from this analysis. 193

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Newness, scale and varieties of corruption Contrary to what some believed at the time, there was a considerable amount of corruption in the USSR and Eastern Europe during the communist era (see, for example, Simis, 1982; Gurov, 1990; Clark, 1993; Holmes, 1993). However, its reporting was usually selective. The media were in most countries strictly censored, and reports of corruption typically appeared only when senior leaders wanted these to be published. Now, the mass media are generally much freer to investigate and report than they were 15 years ago. One topic on which many of them focus – partly because it ‘sells’ – is corruption. Hence, while corruption in this region is far from new, there is a much greater awareness of it nowadays. It is impossible to know for certain whether or not the scale of corruption really has increased in CEE since the collapse of communist power in the period 1989–91. A major reason is that we cannot rely on official statistics on corruption from either the communist or the post-communist periods. During the communist era, the authorities rarely published detailed crime statistics of any sort. In the post-communist era, most countries have become much more open in publishing data on criminal activity. However, few publish detailed statistics specifically on corruption. Whatever the ‘reality’ of the situation, there is a widespread perception that corruption has increased substantially in the region over the past decade. Thus there is by now a considerable amount of survey data available to show that citizens in almost all CEE states are very concerned about both corruption and organized crime within their individual countries (see, for example, Centrum Badania Opinii Spolecznej, 1994; Holmes, 1997b: 151–2; Miller et al., 1997, 1998, 2001; Vitosha Research, 1998; Centrum Badania Opinii Spolecznej, 2000; Coalition, 2000: 22–3). For reasons elaborated below, it is likely that perceptions of a dramatic increase in corruption under post-communist conditions are accurate. However, the perception may exaggerate the scale of the increase. One major reason is that the past few years have witnessed the emergence of political scandals at least partly generated by the mass media. In some countries – Russia is a prime example – particular media are linked to specific political parties and personalities, and newspapers often compete for market share through sensationalization. It is not unusual for the findings of subsequent formal investigations to imply media ‘beat-ups’. That said, the sheer number and range of cases reported in the media over the past decade indicate that there is a serious problem. One sign of this is how many very senior political actors, including prime ministers, have been accused, and in some cases found guilty, of corruption.1 This situation is very different from the communist era. One of the most interesting dimensions of post-communist corruption is that some of its forms are either new or else have become far more salient

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in recent years. For example, there have been a number of major corruption scandals connected with the privatization process. Another apparently new form of corruption relates to the financing of political parties. Even in communist states in which there was formally a multi-party system (such as the German Democratic Republic or Bulgaria), the parties were in no meaningful sense in competition and were not required to look to the market for funding. Now parties do genuinely compete – for funding as well as political offices – and such competition is highly conducive to corruption. Related to the last point is the fact that in the communist era legislatures were, for the most part, little more than rubber-stamping agencies. In contrast, there is now genuine debate in most of the region’s parliaments, and in this context, a new form of corruption allegation is that some parliamentarians have been prepared to ‘sell’ their votes. For example, it is widely believed that Russia’s ironically named Liberal Democratic Party, led by the controversial Vladimir Zhirinovskii, is susceptible to this. During the communist era, a frequent complaint from ordinary citizens was of too little freedom of movement. With only one or two exceptions, notably in communist Yugoslavia, it was almost impossible for most citizens in Eastern Europe and the USSR to travel outside the communist bloc. This situation changed dramatically in the 1990s. While not a completely new form of malfeasance, the salience of corruption relating to the more porous boundaries of post-communist CEE has increased significantly in recent years. So great did this problem become in Bulgaria in the late-1990s that drastic measures were taken by the new government, including replacing the directors of all 16 regional customs houses (Todorov et al., 2000, esp. p. 16). The reference to boundary-related corruption leads us to a particularly disturbing aspect of corruption that has emerged in the post-communist era. There are now sometimes clear linkages between corruption and organized crime, much of it relating to smuggling. While organized crime and corruption are conceptually separate phenomena, there is no question that the former has been able to expand as much as it has largely because of the latter. In this sense, one of the new and most unsavoury features of CEE corruption in recent years is the indirect relationship it has to violence. While such a linkage could occasionally be found in the communist era too, it has become more overt since the early 1990s. Just as some forms of corruption have either emerged or else become more salient in the post-communist era, so other types that were common in the communist era have now either completely or virtually disappeared. An obvious example is corruption relating to fulfilment of the economic plans; the disappearance of these in most CEE states has meant the concomitant demise of corruption relating to them. Equally, the nature and role of political patronage – which many see as a form of corruption – has changed under post-communism, albeit to varying levels depending on the country. In the communist era, appointments were

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made according to the so-called nomenklatura system, under which ‘hiring and firing’ to and from all significant posts in society, not merely those within the communist party, could occur only with the approval of the party. Depending on the period and the country, this sometimes meant that political considerations and personal connections overrode merit-based criteria. In the post-communist era, the monopoly on appointments has virtually disappeared; now, if an individual falls foul of one agency or company, s/he can apply to another. This is not to say that patronage and personal connections have disappeared; to suggest this would be naïve, since such questionable arrangements exist in all countries.2 But there is an important difference between a situation in which one organization has a monopoly over appointments throughout the state and society, and one in which patronage still operates, but within a plurality of organizations.

Causes of corruption Four factors in particular help to explain the rise in corruption in the region over the past decade or so. The first is the combined effect of the legacy of communism and path-dependency. In terms of the communist legacy, six dimensions can be highlighted. One is that the strictly hierarchical nature of the communist system meant that personal responsibility was not encouraged to anything like the extent it typically is in Western systems; this underdevelopment applied also to moral responsibility. Secondly, there was considerable institutional blurring in the communist era. The most obvious example of this was between the communist party and the state. One implication of this in the post-communist era is that there is often confusion between the state and the private sector. Many postcommunist politicians have difficulty in understanding the concept of ‘conflict of interests’, which in turn renders it more difficult to reduce high-level political corruption. Thirdly, several post-communist states have been slow in ‘off-loading’ functions that are not typically fulfilled by developed states; indeed, the size of the state apparatus has substantially increased in some states, such as Russia, since the collapse of communism. Other things being equal, there is greater scope for corruption where state officials have a wider range of discretionary powers. Fourthly, a ‘them’ (meaning those working for the state in a broad sense) and ‘us’ (the citizenry, or simply society) mentality was widespread in the communist world. One ramification of this was the fairly sharp distinction many drew between private and state property; whereas most citizens respected the former, many saw nothing wrong in helping themselves – if they believed they could get away with it – to the latter. This form of alienation was common among many officers of the state themselves, and has continued into the post-communist era.

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A fifth dimension of the legacy relates to the point made above concerning high levels of patronage in the communist era (see, for example, Rigby and Harasymiw, 1983); this practice, which in many situations becomes a form of corruption, has continued into the new era. While the levels of patronage vary from country to country, and also from ruling party/coalition to ruling party/coalition, the phenomenon remains a feature of many CEE states. Finally, communist states tended to legitimise themselves in terms of goal achievement (goal rationality), as distinct from the rule of law broadly understood (legal rationality). Typically, the ends of plan fulfilment were more important than the means. This encouraged a lack of respect for formal, rule-based procedures and the law more generally. Whereas cultural determinist arguments focus on the effects of values that are transmitted from generation to generation (albeit often subject to mutation), path dependent approaches pay more attention to structural constraints and possibilities, including institutional capacities. In rejecting many of the basic tenets of communism, certain options have been considered politically unavailable to many CEE politicians in the transition period. A good example is that many politicians and state officials have been reluctant to use what they consider to be excessively draconian measures for combating corruption, on the grounds that this would be too reminiscent of the authoritarian past. Our second factor relates to the unique situation of the post-communist countries in terms of the multiple and simultaneous transitions. Following the collapse of communist power, the so-called new democracies of CEE attempted far more radical change than the transition countries of Latin America, Southern Europe or elsewhere. Like the latter, they sought fundamental and comprehensive restructuring of the political system. But in addition, they were attempting economic restructuring of a type and on a scale unknown before. They were also redefining boundaries and identities; forging new international allegiances; creating new legal and educational systems; and seeking new ideological and ethical orientations. The sheer scale of the attempt, and the absence of relevant role-models, meant there was almost bound to be confusion over the way forward. Old laws were often disregarded and treated as irrelevant even before new laws could be adopted. Demands on the CEE transitional states greatly exceeded the latters’ capacity; to a greater or lesser extent, each was a weak state. The situation was ripe for exploitation by corrupt-minded officials. It should in fairness be noted that some of what was subsequently branded corruption was a function less of deliberate malfeasance than of genuine ignorance as to what did and did not constitute acceptable behaviour. While some countries, such as Poland, had reasonably clear alternative sources of ‘new’ morality and values in the form of a re-energized church, religion was not a feasible or attractive alternative for many citizens in most countries.

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Crucial to an understanding of many of the problems of post-communism, including corruption, is the fact that during the communist era, most property, including the means of production, was owned and controlled by the state. This near-absence of a bourgeoisie represents another aspect of path dependency, and constitutes our third factor. The West had limited funds to invest in the post-communist countries. This suggested that privatization would have to take place through the sale of assets to domestic investors. But in the absence of a wealthy capital-owning class, it was unclear how this would happen. This is not the place to examine the numerous methods – some of them ingenious – used by post-communist states to privatize their assets and attract investment. It is sufficient to note that many members of the former nomenklatura (i.e. of the various elites from the communist era) were particularly well-placed to take advantage of some of the unusual privatization processes, albeit to differing extents in different countries. Many were directly involved in the sell-off of state assets, and benefited both in terms of bribes and kickbacks from those to whom they sold assets at knock-down prices, and by becoming shareholders themselves. Most post-communist states had little, if any, conflict of interest legislation; in the few cases where this existed, it was ambiguous and poorly implemented. Thus was created a situation ripe for corruption. The final factor is the international situation, and, in particular, the fact that the post-communist states were born at a time when neo-liberalism was becoming the dominant ideology within Western governance. Neo-liberalism undermines ‘traditional’ (Weberian) notions of the role of the state and of public servants, and advocates outsourcing and privatising functions that were once considered the (Western) state’s responsibilities. While its advocates claim greater economic efficiency for this arrangement, it often reduces accountability. In many countries, a resort to ‘commercial-in-confidence’ laws is made by governments that prefer not to provide information to the public on contracts they have concluded with the private sector. Such contracts often relate to tasks once performed directly by the state; when they were, citizens were usually able to discover details of costings etc. under freedom of information acts or their equivalent. This meant that citizens had some control over the way the state was spending funds largely generated from those citizens by way of taxes. The decline of public accountability represents a reduction in state transparency, which in turn is conducive to corruption. If to this structural reason for a likely increase in corruption is added the important point that outsourcing, public sector ‘downsizing’, etc. typically leads to a higher sense of insecurity among officials, and hence lower levels of loyalty to their employer (i.e. the state), the connection between neo-liberalism and corruption becomes clear. How does this relate to the transition states of CEE? Neo-liberalism is not the only form of capitalism. Another is the so-called Rhineland or Scandinavian/Nordic model, in which the state is more

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interventionist and provides much more to the citizenry. Had the postcommunist states moved in the direction of this model rather than the more neo-liberal one that several did, the gap between the old system and the new would have been smaller. This in turn should have meant that both officials and ordinary citizens would have felt less traumatized and insecure than many clearly did, and there might have been less anomic behaviour. Unfortunately, the Scandinavian model was not feasible, for two reasons. First, it was already in decline in the West by the end of the 1980s. A decaying model is not an attractive one. Secondly, the model is very expensive. None of the post-communist states had the resources to create and offer it, even had they wanted to. In sum, it is argued here that the neo-liberal model is conducive to corruption,3 and that it had become dominant in Western ideology by the time the post-communist CEE states were establishing themselves. Some CEE politicians and countries openly embraced the model – possibly unaware of its implications for corruption – early on; Balcerowicz in Poland and Gaidar in Russia are two prime examples, with former Czech prime minister Klaus being a somewhat more hesitant member of this group. Other countries were much slower, but have begun to adopt this ideology and model recently; Bulgaria is a good example. However, the relationship between neo-liberalism and corruption in post-communist states is complex, and not the same as in Western developed states. This issue is addressed at the end of this chapter.

Dynamics of corruption For various reasons, including continuing political squabbling at the top in various countries about basic institutional arrangements and the optimal economic structures, it is possible that corruption levels will increase in some CEE countries for the foreseeable future. It is also possible that corruption will continue to be found at all levels and in all branches of the state. The longer corruption continues and the more widespread it becomes, the more a culture of corruption can become ingrained in a society. This is of particular concern if corruption becomes the norm at the highest levels since, ultimately, the most effective tool in the anti-corruption arsenal is the political will of the senior leadership. Hong Kong and Singapore are two societies that have in recent years demonstrated that rampant corruption can be reduced to manageable levels if the senior leadership is sufficiently committed. Although the current situation vis-à-vis corruption in CEE is discouraging, certain dynamic aspects of it suggest the possibility of improvement in the future. For example, the privatization process will eventually draw to a close, which will remove various existing opportunities for corruption. Then there is the related fact that many of those who have benefited improperly from

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the confusion of early economic transformation will want to legitimize their questionably acquired wealth. This will happen as they seek to pass on their wealth to relatives; as tighter and more transparent banking practices in the West render it more difficult to hide large sums of money; and for the simple psychological reason that most people would prefer to know that their property is secure, rather than likely to be sequestered by the state at some future date.4 Most CEE states are now also slowly catching up on the ‘legislative lag’ implied earlier. As new laws are introduced, and loopholes in existing ones closed, so the scope for corruption relating to ambiguous or non-existent legislation is reduced. One significant area of improvement in this regard is the recent adoption of clearer and more effective conflict of interest laws in several CEE states. The improvement in legislation also represents a consolidation of the new state institutions; inasmuch as the growth of corruption in post-communism has been linked to the weakness of new states, this consolidation bodes well for the fight against official malfeasance. Not only the state, but also civil society should become markedly stronger in CEE countries, though the prospects for this happening in the near future vary considerably across the region. It is possible, though far from certain, that the mass media will become more responsible in reporting corruption, and will make fewer unsubstantiated allegations. One reason would be growing appreciation of the ‘boomerang effect’, whereby those who continue to make sensational allegations as a form of political point-scoring become increasingly aware that this can turn back on them, undermining both their own and the system’s popular legitimacy. The fact that some real progress is now being made towards the eventual admission of ten CEE states to the EU bodes well on balance, since the applicant states are aware that they must be seen to be bringing corruption under control. Moreover, as CEE countries are admitted to the EU and form part of the latter’s external frontiers, Brussels will have a direct vested interest in ensuring a marked decline in corruption among border guards and customs officers in CEE states. Finally, if concepts such as Blair’s ‘Third Way’ or Schroeder’s ‘New Centre’ ever become substantive, it is possible that the implications of neo-liberal ideology for the CEE states will be lessened. It would be premature to emphasize this point at present, however. One reason is that there are as yet only a few indications that the faith of the 1980s and 1990s in privatization and outsourcing is beginning to wane (though once it does, it will probably snowball). Even if such a change does occur in much of Western Europe, its impact on CEE states could be slow and limited, since they could not realistically afford much more state intervention in the economy anyway. Additionally, if the US continues to be the most successful Western economy and the EU something of a laggard economically, the attraction of the West European model to many CEE governments, if not populations, will be limited.

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Anti-corruption laws and campaigns, remedies and solutions Numerous approaches have been and are being used in the post-communist world to combat corruption. These can be classified under five headings. The first is institutional development. In their fight against corruption, most CEE countries have focused on improving legislation as a means of both delineating more clearly what constitutes corruption and expanding the arsenal against it. However, the laws, once they define clearly what constitutes corruption, will have to be more effectively implemented. All too often, allegations of corruption are not properly investigated; when they are, prosecutions are few, and convictions even fewer. Occasionally, a corrupt official will receive a tough sentence, but it is far more common for those found guilty to receive such light sentences that it is often worthwhile for an official to engage in corruption even if s/he gets caught. A second general approach to the reduction of corruption is information sharing. Several CEE states have been willing to learn from the experience of other countries in fighting crime, including corruption. For example, several CEE states – including Estonia, Poland, Russia and Ukraine – permitted the establishment of FBI offices in their capitals during the 1990s; these assist local law enforcement agencies. At the same time, CEE states have begun to share information, including data-bases, among themselves. The third approach is through education. In the longer term, there is a need to socialize people, especially the young, into what it means to be a good citizen and why it matters. In the short term, anti-corruption campaigns can be an effective means for raising awareness of corruption, and of what the state is doing to combat it. Several CEE states – including Bulgaria, Czechia, Poland, Russia and Slovakia – launched so-called ‘Clean Hands’ campaigns during the mid-to-late-1990s, in emulation of the Mani Pulite campaign of the early-1990s in Italy. However, anti-corruption campaigns need to be short and effective. If they are too prolonged and/or appear to be more rhetoric than action, citizens become cynical about them, and the campaigns dysfunctional. The fourth approach concerns the role that two components of civil society are playing in exposing corruption and making the public aware of its unacceptability. One is the mass media. Investigative journalism has developed at a considerable pace since the collapse of communism (see Fuszara, 1999). Both the police corruption scandal in Poznan (Poland) in 1994–95 (see Holmes, 1997a: 140–1) and the major scandal surrounding the Hungarian privatization board in late 1996 (see Szilagyi, 1996: 46–7 and 64) broke because particular newspapers had investigated rumours of corruption.5 The second is the local branches of the leading international non-governmental organization targeting corruption, established in 1993. One of TI’s principal methods for combating corruption globally is to establish local chapters to devise anticorruption strategies. By January 2002, local chapters had been established

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in 16 CEE countries (Armenia, Azerbaijan, Bulgaria, Czechia, Estonia, Georgia, Hungary, Kazakhstan, Latvia, Lithuania, Poland, Romania, Russia, Slovakia, Ukraine and Yugoslavia); this represented a doubling of the number of such chapters in just eighteen months. A further five countries (Bosnia and Hercegovina, Croatia, Kyrgyzstan, Republic of Macedonia and Moldova) were in the process of establishing them, while a third category, comprising just one country (Slovenia) had a national contact.6 The final approach concerns the role played by the international community. Surprisingly, it was not until May 1994 that the first guidelines on combating corruption were issued by an international organization (the OECD). Since that time, most international bodies (including the UN, the International Monetary Fund (IMF), the World Bank and the EU) have issued similar guidelines, and the problem is finally being recognized as serious. Most of the guidelines are generic, and do not target the CEE states specifically. But the Council of Europe, together with the EU, has taken steps to target corruption and organized crime in the post-communist countries via two ‘Octopus’ projects. The first was established in June 1996, and 16 CEE states agreed to participate. The project ran for 18 months, and involved measures such as the exchange of information and harmonization of legislation. Octopus II ran from February 1999 until the end of 2000. One of its principal objectives was to assist participating states that were also applicants for EU membership to meet those accession criteria that relate to corruption and organized crime. Despite the vast number of methods that can be and are being used to combat corruption in the region, the available evidence suggests that they are in general having little impact. There are numerous reasons for this, but the lack of sufficient political will is ultimately the single most important factor. Unfortunately, the West often sets a poor example. Not only has there been a string of corruption scandals in Western Europe in recent years, but Western governments often reveal themselves to be less than unambiguous in their attitudes towards corruption. For example, following the Lockheed corruption scandal of the 1970s, the US made it illegal for American companies to offer bribes to foreign governments and agencies. Not only did many other Western countries not pass similar legislation, but they even allowed companies tax write-offs for bribes paid in connection with tendering processes; this was true of Australia, France, Germany and the Netherlands, for example. The US has become increasingly irritated by this unequal competition, and has therefore brought pressure to bear on various international agencies. But many believe that globalization, from which the US often appears to be making disproportionately more profit than other Western countries, forces competitors to ‘fight dirty’ – which helps to explain the ambiguities in Western attitudes towards corruption. In such an atmosphere, and in addition to factors such as nomenklatura privatization, it becomes easier to understand why some

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CEE governments appear to have less genuine commitment to fighting corruption than might be expected. If the world’s most stable and affluent countries are in practice less concerned to combat corruption than they claim to be, they may inadvertently act as poor role models for new democracies.

Impact of political corruption and exposure of political corruption The economic and social impact of corruption and its reporting can be profound. If a given country is seen to be particularly corrupt, it is likely to attract less investment – respectable foreign investors will usually be more reluctant to invest in corrupt countries – and this has various negative knock-on effects. One is that it affects that country’s ability and commitment to implement economic reform and so improve economic performance. A vicious circle is created. The impact of political corruption on the functioning of the political system is multifarious. The ability to buy votes surreptitiously, whether at election time or in the legislature, has obvious disadvantages for the democratic process. This problem is related to the fact that parties remain fluid in many CEE countries – which in turn is as much related to the presidential, or semi-presidential, nature of the systems concerned as to corruption per se. However, it is argued here that the ‘naughty schoolchild’ syndrome could pertain, and relates to the fight against corruption. Most of us know of children who have been disruptive at school until laterally-thinking teachers have taken a risk and made them form captains or prefects. The naughty child suddenly becomes highly responsible; s/he can continue to attract attention, but now in a more constructive way. If the presidential systems were to grant parliaments, and hence political parties, more real powers in countries such as Russia, parliamentarians might take their responsibilities more seriously. At the same time, a more parliamentary system renders it less likely that a new and fragile democracy will become a dictatorship. Anyone believing that corruption is less likely under a dictatorship need only consider the Indonesian case under Soeharto, the Philippines under Marcos, or various African and Latin American countries. Corruption may well be less reported in a dictatorship than in a democracy; but it can also be even more pervasive where there is a lack of control from civil society, and genuine pluralism, including some form of separation of powers, within the political system. Interestingly, those CEE states that are considered the most corrupt (see Conclusion) are also those that, in general, are the least democratic – while those in which the system is genuinely parliamentary and the media freest are generally perceived to be the least corrupt. Arguably the most serious effect of corruption in many CEE new democracies is that it undermines the legitimacy of systems that have yet to

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consolidate themselves. If citizens continually read and hear reports of corruption, they begin to lose faith in the democratization and marketization projects; the ‘honeymoon’ period of post-communism has long since passed. Much of the explanation for the low levels of popular trust in political institutions in CEE countries (see Rose et al., 1998: esp. pp. 152–7) can be found in the perceived high levels of corruption. As Bulgarian President Petar Stoyanov expressed it in a 1998 address, ‘While corruption is not a product of democracy, it may well turn into one of the chief obstacles to the establishment of democratic values’.7 Given the point made in the last paragraph that the corruption situation is often worse in dictatorships, it becomes clear why CEE governments and the West must do far more to rectify it.

Conclusion Despite the numerous methodological problems involved in measuring corruption in CEE (as elsewhere!), there is no question that the phenomenon is a significant concern throughout the region. Transparency International, Freedom House and other agencies involved in assessing relative corruption levels are probably correct that the problem is much worse in Albania, Azerbaijan and most of the Central Asian states than in other post-communist states (see below). But corruption is a concern even in what are perceived to be the ‘cleanest’ countries of the region, such as Estonia and Slovenia. The reasons for its significance in the transitional states of CEE are many, and reference has been made to some of them. They include the fact that corruption is potentially more destabilizing in transitional states because they are more fragile. Such countries have still to establish a rule-of-law tradition on which to fall back in times of crisis. A second major reason is that organized crime has become a salient feature of some post-communist states precisely because of corruption (see Williams, 1997; Sterling, 1995 provides a more sensationalist analysis). Were it not for so many corrupt police and customs officers, for instance, criminal gangs would not have become as influential as they have in Russia, Bulgaria and elsewhere. The presence of such gangs is a threat not only to the populations of CEE states, however. They are becoming a serious problem in several Western countries, being involved in drug dealing, prostitution, illegal migration, and even arms dealing; the potential dangers of smuggled weapons-grade nuclear materials falling into the hands of terrorists are obvious (see Lee, 1997; Nelson, 2000). It was argued above that both the communist legacy and the effects of neo-liberalism can impact negatively on the scale and nature of corruption, and it is now appropriate to consider which factor – the communist legacy or neo-liberalism – appears to have the greater effect on corruption rates. In the 1999 CPI produced by TI (see http://www.transparency.de/documents/cpi/ index.html), and based largely (though not exclusively) on surveys of businesspeople, 24 of the 27 post-communist states of CEE are classified according

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to the perceived level of corruption in them.8 According to this classification, the higher the country’s score on a 0–10 rating, the less corrupt it is perceived to be. While none of the CEE states performs particularly well on this index, there are significant differences between them. For our purposes, we can classify the CEE countries into four clusterings; within each, the first mentioned is considered the least corrupt, while the last is considered the most: ● ● ●

●

Group A – countries with a CPI Score ⬎ 5.0: Slovenia; Estonia; Hungary Group B – countries with a CPI Score ⬎ 4.0 but ⬍ 5.0: Czechia; Poland Group C – countries with a CPI Score ⬎ 3.0 but ⬍ 4.0: Lithuania; Slovakia; Belarus; Latvia; Bulgaria; Macedonia; Romania Group D – countries with a CPI Score ⬎ 1.5 but ⬍ 3.0: Croatia; Moldova; Ukraine; Armenia; Russia; Albania; Georgia; Kazakhstan; Kyrgyzstan; Yugoslavia; Uzbekistan; Azerbaijan

An entire article could be devoted to an interpretation of this clustering. For our – polemical! – purposes, it is argued that those countries that have introduced the most radical economic and political changes are in general the ones to score best in the CPI, while those that have in practice been more hesitant to move too far from their old communist model perform the worst. Russia did move towards a radical model influenced by neo-liberalism when Gaidar was acting Prime Minister in the early 1990s, but then backtracked. Conversely, Poland under Balcerowicz and Suchocka, Czechia under Klaus, Estonia under both Vahi and Laar, and Slovenia under Drnovsek all adopted radical reform packages influenced by neo-liberalism. While Hungary did so less obviously, and adopted a more piecemeal approach to reform, it nevertheless maintained a steady momentum, and proved over time to be among the more radical reformers. All this suggests an interesting conclusion. While neo-liberalism may have increased corruption levels in Western countries, as della Porta and Mény (1997b) among others have suggested, the situation is more complicated in CEE. In that region, neo-liberalism raises corruption rates less than does the communist legacy. Moreover, if neo-liberalism accelerates economic recovery and then positive growth, many of the factors tending to increase corruption become less salient. Indeed, if neo-liberalism helps to break the hold on the new systems that former members of the nomenklatura still exercise in many post-communist states, it will have served a very useful function in reducing corruption.

Acknowledgements I wish to acknowledge the considerable financial assistance received from the Australian Research Council in 1999 and 2000 (Award No. A79930728) for researching corruption in Central and Eastern Europe since 1989. Much of the information in this chapter was discovered by my Research Assistant,

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Dr Yuri Tsyganov, to whom I am particularly grateful. The chapter was actually written in Sweden and Germany, at, respectively, the Institute for East European Studies at Uppsala University and the East Europe Institute at the Free University of Berlin; I wish to thank Profs. Anders Fogelklou and Kristian Gerner in Uppsala and Prof. Klaus Segbers in Berlin for permission to work in their fine institutes, and to Ms. Lena Wallin in Uppsala for dealing so efficiently with the administrative side of my stay in Sweden.

Notes 1. For example, among prime ministers who have been directly accused of corruption, or else have in some way been implicated and have had their careers negatively affected because of it are: Fatos Nano of Albania; Andrey Lukanov of Bulgaria; Vaclav Klaus of Czechia; Andris Skele of Latvia; Adolfas Slezevicius of Lithuania; Yegor Gaidar and Viktor Chernomyrdin of Russia; and Pavlo Lazarenko of Ukraine. 2. One need only think of the ‘old boys’ network’ syndrome in the UK, for example. 3. More precisely, it is the transition to neo-liberalism in countries that have been more used to the other model of capitalism that is particularly conducive to corruption. By the 1980s, the public and officials in the US, for instance, were more accustomed to ‘flexibility’, job-mobility, and limited state provision of collective goods and services than were most West Europeans. This caveat only strengthens our argument about the impact of neo-liberalism on CEE countries. 4. It is interesting to note in this context that when the so-called ‘oligarchs’ sought a meeting with Russian President Putin in July 2000, they requested a moratorium on investigations into questionable privatization processes; in return, they offered to pay their taxes in full and on time in future. 5. It should be noted that censorship has made a strong comeback in some CEE states, in which the media have been much less free than elsewhere to conduct independent investigations. This is true of Belarus under Lukashenka (president since 1994), and applied to Slovakia when Meciar was prime minister (1994–98). 6. Although the role of indigenous social movements in fighting corruption in CEE is generally discouraging, one bright spot is Coalition 2000 in Bulgaria. Its success is being recognized by groups in other CEE countries, which have been sending delegations to Bulgaria to learn more about the organization and its methods. The World Bank has described it as a ‘groundbreaking’ initiative. 7. CSD Monitor, Issue 3, 1998, p. 1. 8. At the time of writing, the most recently published CPI is that for 2001. However, this ranks only 16 of the CEE states – so that, for the sake of a fuller analysis, the 1999 CPI is used here.

16 International Corruption Jens Christopher Andvig

The public’s interest in the problem of corruption in general and international corruption in particular has increased significantly since the early 1990s. In May 1993 the first internationally organized Non-Governmental Organization dealing with international corruption, TI, was launched. By the middle of the decade several initiatives in different international organizations had been taken to contain cross border corruption and they were surprisingly well received. Private business has formed special organizations to fight international corruption. Interest in corruption issues has not faded since then. It is tempting to relate this upsurge of interest to the ending of the Cold War in 1990. Though precise mechanisms are difficult to pinpoint, one such is clear even if somewhat trivial, namely, the loss of bureaucratic rationale for a large number of espionage activities that suddenly occurred as a consequence of the end of the Cold War. One way to save at least some of the espionage bureaucracies was to transfer resources within each country’s secret services from traditional espionage to the monitoring of different forms of international economic crime. Another possible mechanism might be found in the increased emphasis on market forces as the basic instrument of economic and social co-ordination. But in this case, it is not clear whether interest has been aroused mainly by a desire to legitimate market forces by cleaning them up, or rather as a reaction against market forces based on the claim that they have gone too far. Yet a third possible mechanism might derive from the United States’ 1977 Foreign Corrupt Practices Act. According to this line of thought, the Act set an agenda for the fight against international corruption (see below). Consequently, as the only superpower left after the end of the Cold War, the US deliberately sought a new international and political order in conditions in which it was now able to push other powers into line. Finally, it could be that the interest in international corruption can be explained as a consequence of international aid policies – either as a consequence of ‘aid fatigue’, or as part of an attempt to clean up aid and thereby rescue it. 207

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International corruption is the set of all corrupt acts where the corrupter is located in one country and the corrupted is located in another country or is a member of an international organization. There are basically two forms of international corruption: that which takes place when private agents bribe employees of international public or private organizations such as the United Nations, the European Union or Shell; and that which takes place when multinational firms with headquarters in one country bribe public officials in other countries. The focus of this chapter is on the second form. Global corruption is simply the total of corrupt acts taking place in all countries regardless of whether the exchanges are national or international.

Anti-corruption: the Foreign Corrupt Practices Act (FCPA) As mentioned, the 1977 US Foreign Corrupt Practices Act (FCPA) set an agenda for efforts to curb international corruption. It contained three provisions: 1. Firms were obliged to disclose the payment of bribes made in foreign countries. 2. It made it illegal for American business to ‘make, authorize, or promise payments or gift of money or anything of value corruptly’ (Greanias and Windsor, 1982: 14) that is, to bribe public servants abroad. 3. American firms were held responsible for establishing proper accounting methods making it possible for their managers to be held accountable for expenses paid to local consultants or agents. The main event that triggered the FCPA was the Watergate scandal in 1972. The public upheaval that followed it led to legislation that was in many ways considered impractical, but which passed through Congress without any opposition. Since then there have been several attempts to modify the Act, but its basic features remain. For long the Act was discussed from the perspective of rolling it back. The accounting requirements were considered impractical. It harmed American firms by making them lose contracts in competition with foreign firms that had no such constraints on their behaviour. Its disclosure requirements harmed American foreign policy interests since it could easily threaten the stability of friendly regimes. The combination of a disclosure demand and criminalization was considered contradictory. The most extreme argument against the FCPA was that it was an example of moral imperialism. Why penalise firms that bribe if they operate in countries where bribing is an accepted social practice? According to Gillespie (1987) this view was voiced by many businessmen, and had support from social scientists who believed in cultural relativism as well as from some who were involved in the economic aid business at the time. The outcome of these deliberations was that the law was relaxed in two stages. In 1982 the tax penalty for ‘grease’ payments was removed, something

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which was estimated to reduce the tax yield by $30 million a year. While not so important from a practical point of view, the modification represented an important change of principle since such grease payments were illegal inside the US. Now the US was as guilty of the double standards practised by the other economic powers. In 1988 it was made easier for US firms to use foreign agents to offer bribes (Hines, 1995: 5). By the mid-1990s, the context of the discussion had become completely different. The issue was not whether the US was going to repeal the FCPA, but rather what the other industrialized countries should do by way of introducing similar legislation and criminalizing the bribery of foreign public servants. In the following section we examine the economic and political consequences of the FCPA, which are still relevant to policy discussions today. The FCPA is one of the few known attempts to influence international corruption. If the impact was uneven across countries and industrial sectors, that may tell us something about the countries and industries for which corruption may be the more serious problem. If it had no impact, that may tell us that international corruption is not such a serious problem after all, or it may assist us in locating the ways in which such laws can be circumvented by business firms.

The economic and political consequences of FCPA When it was passed by the Carter administration, the FCPA was seen as an attempt to make American firms instruments of US foreign policy, giving the latter a kind of moral boost after Watergate and Vietnam. However, the FCPA soon came to be perceived as a high-risk option, since the disclosure of corrupt payments often exposed US-friendly governments to dangerous political scandals, some of which apparently ended in changes of government, including the overthrow of the Shah of Iran (Gillespie, 1987). Looking at the more mundane economic consequences, in 1981 the General Accounting Office published the results of a questionnaire administered to a random sample of Fortune’s list of the 1000 largest US industrial firms asking about the consequences of the FCPA (Comptroller General of the United States, 1981). 30 per cent of the firms claimed they had lost some business as a result of the Act. More than 60 per cent believed that ‘American companies could not successfully compete abroad against foreign competitors that were bribing’ (ibid.: 15). A special survey was carried out among firms in the construction and aircraft industries. 54 per cent in these industries believed they had lost business.1 No attempt was made to assess these claims by means of any econometric study. Indeed the report claimed: ‘The perception that the act’s anti-bribery provisions have caused American firms to lose overseas business is difficult, if not impossible to quantify or support because many factors influence overseas sales …’ (ibid.: 18).

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Since then, econometric studies have been carried out, however. One concludes that the FCPA ‘served to weaken the competitive positions of American firms without significantly reducing the importance of bribery to foreign business transactions’ (Hines, 1995). A closer look at Hines’ statistical analysis does not really support this strong conclusion, however. For example, he has four variables that he claims have been influenced by the FCPA: foreign direct investment; the capital–labour ratios of American firms that operate in foreign countries; joint venture activity, and aircraft export. In each case he compared these values for more corrupt and less corrupt countries classified using the index constructed by Business International. Only the aircraft industry variable seems to be obviously significant. Meanwhile, the theoretical link established between corruption and capital–labour ratios appears so tenuous, and the proxy used for joint venture activities so arbitrary, that it is difficult to rely much on them. This author agrees with Hines’ conclusion that the FCPA had a significant impact on the propensity of American firms to offer foreign bribes – while disagreeing that this caused firms in aggregate to lose business. The clearest indication is Aburish’s (1985: 59) description of the Middle East situation. Aburish was an economic agent who bribed when necessary and who also wrote a book about his experience. He hints at an explanation as to why the aggregate effect may have been close to zero. He writes: Amazingly, Arabs have a secret admiration for American anti-corruption laws. Though they keep many American companies from participating in tenders, they reflect positively on what Arabs consider American honesty. Hence, by reducing the American firms’ propensity to offer bribes they may have resulted in the loss of some contracts while bringing the gain of others. Nevertheless, the fact that many American politicians and academics believed for good or bad reasons that the FCPA harmed their competitive position, was an important reason for the Americans to raise the issue of multilateral regulation of international corruption. They could also for good reasons argue that it would be only fair if other countries introduced similar pieces of legislation. They had, of course, argued this from the beginning, but had made no diplomatic progress. Looking at the FCPA in 1988 when it was again weakened, one would have expected it soon to have become a dead letter. The question that was asked at that time was how it could have survived for so long when the other OECD countries had refused to follow its lead. Then suddenly, in 1989, the question changed. No longer was it asked how the US could keep such an unrealistic and moralistic piece of legislation on its statute books, or how the legislation could be made more realistic, but rather how other countries could be induced to adopt similar measures. With the FCPA legislation as a given, the Americans were again able to make a moralistic push in their foreign policy,

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and to raise the issue both at the Organization of American States (OAS) and the OECD. What had happened?

Why the regulation of international corruption has become ‘fashionable’ As referred to in the introduction, most observers attribute the US’ raising of the issue to the end of the Cold War. In one sense this is obvious. As the only superpower left in the global arena, it was easier for it to push whatever issue it wanted. However, American economic losses due to the law are likely to have been fewer after the latter’s modification in 1988, so the need to push for a general convention should have been less great after that date. While, therefore, the end of the Cold War undoubtedly played an important role, a satisfactory explanation of the shift in attitude requires deeper analysis. When the first attempt to regulate international corruption was made in the mid-1970s,2 it reflected the critical attitude to business that ruled at the time. The American authorities were quite explicit in saying that the FCPA was a piece of legislation designed to make business more socially responsible. The ideological climate changed, however, and it came to be felt that the frontiers of the state should be rolled back, market forces allowed a freer reign, public enterprises privatized, international financial markets deregulated, and currencies made convertible. At the same time, the urge to acquire material goods became a socially accepted motivating force, even among political and academic elites. All these tendencies were reinforced when the break-up of the former socialist systems took place. The market economy looked like an invincible force. However, many then began to realise that things had gone too far. If you set stronger market forces loose, you also need stronger fences to contain them. A kind of counter trend against deregulation has recently set in. The attempt to contain international corruption should be considered as part of this. The break-up of the former socialist countries had the more specific effect that suddenly the industrial world experienced economic changes that were quite uncontrolled and where actors were genuinely confused about where to draw the line between market and non-market forces. Hence, one could see how the problem of corruption acquired dramatic proportions in these countries. Moreover, there was growing concern that extensive corruption in one country might help to build up far-reaching networks of internationally organized crime. The unfettered release of market forces, it was felt, might raise the spectre of an uncontrolled semi-criminal economy at the international level that might in the end undermine the new democracies.3 Finally, the aid agencies have played a role. For long they had a tendency to hide from their home publics the corruption that was taking place in the field of international aid out of fear that the information might jeopardize the aid itself. When concealment proved difficult, an obvious strategy was

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to show that one was taking serious measures to deal with the problem. In 1996, the OECD’s Development Assistance Committee recommended the inclusion of anticorruption provisions in bilateral aid projects. Whatever the deeper reasons might be, it is an historical fact that it was the Americans who raised the issue of international corruption at the OECD, and for the first time with a surprising degree of diplomatic success.

Recent efforts to contain international corruption by the OECD The most important attempt to establish some rules to contain international corruption has recently been made by the OECD on the initiative of the US members. In 1990 the Council of the OECD asked its Committee on International Investment and Multinational Enterprises (CIME) to study the feasibility of international co-operation through the OECD to fight illicit payments of public officials abroad. This finally resulted in the adoption of a recommendation of the Council, ‘Bribery in International Business Transactions’, on 27 May 1994. Transparency International later said that it was ‘the first multilateral agreement among governments to combat the bribery of foreign officials and as such clearly represents a breakthrough’ (TI, 1996a: 15). The recommendation urged member countries to reconsider their existing legislation so that they could criminalize bribery, and pressed them to change their tax laws in order to end the tax deductibility of bribes payments. It further recommended that they revise their regulations concerning business accounting systems in order to make it more difficult to create ‘slush funds’, and that they reconsider their public procurement rules so that they could be used as sanctions against bribery. The regulation of financial institutions to deal with money laundering was also seen as important. The Council instructed CIME to formulate detailed rules and to monitor the member countries’ implementation of the recommendations. An assessment of the effects of these changes would require detailed scrutiny of the actual rules adopted by the major countries, something that could only be done after the rules had been in place for some time. However, an evaluation of the forces driving international economic corruption provides some insight into what might be achieved by diplomatic, legal efforts. Various possibilities can be outlined. For example, international corruption may have a prisoner’s dilemma structure at the firm level while it may have an assurance game structure at the national level. That is, even if other firms are not bribing, it will be profitable for a single firm to break the convention and bribe. If this is detrimental to the national interest, as the FCPA assumes, and we have an assurance game at the diplomatic level, it will be in the interest of each country to contain its own firms’ bribing if the other countries do so. On the other hand, if they are not following the convention, it pays for each individual country not to follow it either. If we have

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an assurance game, then monitoring of the agreement can be left to national organizations after an initial effort has moved international corruption to a low level. If the game has a prisoner’s dilemma structure also at the diplomatic level, monitoring should in principle be continuously performed by the OECD or some other international organization. Without such monitoring, the convention is likely to remain a paper exercise. If present levels of international corruption are high, it does not matter much in the short run whether the diplomatic game is of an assurance or prisoner’s dilemma type. In neither case does it pay for the single country unilaterally to bring down its levels of international bribing. A co-ordinated effort and a centralized monitoring and punishment system is necessary. The most widely-held view is that present international corruption levels are high, thus increasing efforts by a number of international organizations to fight corruption, each claiming a will to co-ordinate. However, so far no central policing system has been developed. Only a few national secret services have sufficient resources seriously to monitor international corruption, and their activities are biased in a predictable way. For example, a classified annex to US Department of State (2000: vii), reports that ‘a large number of competitor firms from other [!] countries have been engaged in bribery of foreign officials’. It claims that American firms lost 92 contracts worth $26 billion due to other countries’ bribery. The lack of plans to develop a central, well-resourced monitoring system makes the prospects that the OECD convention will have a significant longterm impact fairly slim, if our conception of the basic structure of the coordination problem is realistic. Enthusiastic talk will be insufficient to turn the situation round if corruption levels are in fact high.

Global trends in international and global corruption If international corruption levels were not that high, an assurance game structure would give more reason for optimism. The national monitoring systems may then be assumed to work and the OECD convention followed without major resource transfers to monitoring. Alas, the common view among experts is that international corruption is extensive and, despite all the international efforts to contain the problem, still rising. A few serious observers (MoodyStuart, 1996: 134–5; Glynn et al., 1997; Wesberry, 1998) have even claimed that in the early 1990s an ‘explosion’ in international corruption took place. Interpol reported a 30 per cent increase in the corruption cases reported in 1995 compared to 1994. Perhaps not surprisingly, a questionnaire sent to participants in international conferences on corruption and related issues revealed that 77.8 per cent of the European delegates believed the problem had become more serious in recent years (Huberts, 1995: 15). Hearsay among businessmen, and the biased opinions of the police and other interested experts, is of course rather flimsy evidence. It could be

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argued that the claim that there was a steep rise in international corruption in the early 1990s is implausible, for there are so many organizations involved that it is difficult to imagine why strong shifts in their corruption propensities would all occur at the same time. Moreover, there are reasons to believe that corruption propensities are subject to a high degree of inertia; for if a certain corrupt act is profitable today, then under normal circumstances it was also profitable yesterday. A large change in propensities requires the impact of some significant external shock. It is unlikely that a shock of sufficient size occurred, although two possibilities exist: the end of the Cold War, and the increase in the speed of international liberalization that both took place at the turn of the decade. Looking at global corruption, the increased levels of corruption that came about in the former Soviet dominated area after the breakdown of the Soviet Union were significant. However, their effects on international corruption were probably minor for, although highly corrupt, the international economic interaction between this area and the rest of the world was not very extensive at the time. Hence we are left with the speed-up in international liberalization as the only plausible possibility. However, economists are not yet in a position to pinpoint plausible mechanisms. On the contrary, most theoretical discussions assume that the various dimensions of economic openness will reduce at least global, and maybe even international, corruption. Instead of focusing directly on the question of whether a sudden upsurge in corruption took place in the early 1990s or not, it may be more useful to look at the kind of factors that might explain larger changes in its frequency and severity at the global level. What structural economic changes have taken place in recent decades that are likely to have influenced international corruption? One change is the shift of economic activity towards Asia. That is, a larger share of international trade is taking place in areas with higher corruption propensities. If we stretch the 1996 TI Corruption Perceptions Index (TI, 1996c) a little we may confirm this picture. Let us assume that the index rankings were valid for the whole period 1966 to 1995. Let us take the simple average of these rankings for the countries within each trading group – the industrial countries; Africa; Europe; the Middle East, and the Western Hemisphere – defined by the IMF. Let us weight these rankings by the relevant group’s share of global imports for 1966 and 1995. On this basis, according to our calculations, the average cleanliness indicator falls from 6.45 to 5.64 in 1995. That is, international corruption can be expected to have increased by about 12 per cent due to the change in the global pattern of imports. Another factor that may lead us to expect international corruption to have increased, almost by definition, is the increased levels of foreign direct investment (FDI) that have taken place in the last decade or so. There has been a striking tendency among industrial enterprises to expand output and employment in foreign countries while often reducing employment at home.

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For the developed countries the outflow of investment for the period 1981 to 1985 was US$168 billion while for the period 1986 to 1990 it was US$800 billion. The inward flow was 134 and 618 billion respectively (Graham and Krugman, 1993: 18). If FDI becomes skewed towards countries that are more corrupt than the home country, this development will not only increase international corruption, but also corruption at the global level. The presentday expansion in East Asia makes this outcome likely. A third reason why we might expect international corruption to have increased is the simple fact that economies have become more open with imports and exports as proportions of GDP having increased for most countries. World merchandise exports as percentages of GDP increased from 11.7 per cent in 1973 to 17.1 per cent in 1993 (Krugman, 1995: 331). To sell goods abroad, bribes will have to be offered in at least some cases. For a given sector composition and a given frequency with which bribes have to be paid for each good and service, a larger share of global corruption should be international corruption. So, global structural changes should be expected to generate more international corruption and make corruption a more serious economic and political problem. The analysis so far might give cause for pessimism. However, there are factors working in the opposite direction which should also be explored.

International openness, corruption and trade It is a well-documented fact that one of the factors that stimulates corruption in general and cross-border corruption in particular, is the prevalence of non-convertible currencies, particularly when the official exchange rate is far away from the exchange rate that would clear the currency market. Even though many developing countries still have some restrictions, the dominant tendency has been towards increased convertibility (IMF, 1995: 5–6). There have also been fewer direct, quantitative import controls, so less of the world’s trade is passing through this bribery-inducing system. Hence, there are important aspects of the increased openness of the world economy that should make for less corruption. We have just argued that almost by definition, increasing openness will give rise to growing international corruption in the short run. In the longer run, cross-section evidence, and some theoretical arguments, point in the opposite direction. After having argued that restrictions on product-market competition are the most important factor promoting corruption, Ades and Di Tella (1995: 22–3) concluded strongly that rather than investing in mechanism design and auditing procedures, governments interested in curbing corruption should first consider opening up their economies to foreign trade and making their domestic markets more competitive.

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So while openness may increase international corruption, it may decrease the global level of corruption, when the increased intensity of competition has started to have an impact. The possible impacts of corruption on international trade have been explored in several studies (see, for example, Lambsdorff, 1998; Gatti, 1999; Wei, 2000). Considering the results of the studies of the impact of international trade on corruption with the results of the studies of corruption’s possible impact on trade, the empirical relationship between trade barriers and corruption appears weak. This is surprising given the fact that much anecdotal evidence indicates that customs officers in highly corrupt countries receive a large share of aggregate bribes, supporting the presumption that tariff barriers go together with corruption. How can we then explain the absence of an empirical relationship (leaving aside the possibility of faulty data or ineffectual statistical techniques)? The simplest explanation may be that even if tariff rates are low, in most cases legal imports have to pass customs houses for inspection and clearance. Clearing the goods, however, is a cumbersome and time-consuming affair in many developing countries. Thus, by refusing or delaying clearance, customs officers may receive a larger share of the import price than they receive in situations in which importers have to pay high tariffs. Second, the transaction costs involved in collecting bribes may be low when controlling borders. Thus, when the sum of exports and imports constitutes a large share of gross domestic product (GDP) this may imply that it is easy for the bureaucracy to skim a large share of GDP. On the other hand, an increase in tariffs means that the degree of openness is reduced which makes a smaller share potentially available for grabbing. A third, more ‘roundabout’ explanation is that higher tariffs in a country with a weak customs administration may imply more smuggling which leads to less aggregate corruption. However, in this situation the bribes lost to customs officers may partly be collected by, for instance, the police chasing smugglers. This is obviously an area that requires further research.

Corruption at the political level Different economic sectors have different needs for the supply of corrupt public services. It is well known that international construction, and the engineering and arms industries are among the most exposed sectors. Moody-Stuart (1996) ranks the four most attractive types of supply contract from the point of view of the politician who wants to obtain bribes: aircraft and defence supply; major industrial supply units; major civil works; consultancy. The large projects that often characterize these industries mean that the suppliers of corrupt acts necessarily operate at high levels within public hierarchies, and will demand ‘big money’. With the exception of consultancy, projects to interest a head of state should reach $200 million; for

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a minister $20 million should suffice. Projects of less than $2 million would only rarely catch the eye of a person in a political position. A five per cent commission (bribe) would be a fairly standard rate. In the more corrupt parts of the world, politicians or their representatives will actively search for projects that may be skimmed. Rose-Ackerman (1978) shows that politicians need to calculate the effect that their acceptance of bribes will have on their chances of political survival. In most countries one would expect a negative effect, but some political systems demand so much in terms of the distribution of favours and largesse that the receiving of bribes may actually increase the likelihood of political survival. The role of the media is clearly important, because they influence considerably the likelihood of there being any serious political costs involved. An independent judiciary will also restrain political corruption. Interestingly, Rose-Ackerman’s analysis suggests that while corruption overall reduces the chances of political survival, politicians who are either certain to stay or certain to leave in the short term are the ones who will demand most in bribes.

Conclusion The theoretical premise of this chapter is an economic one. Corruption may be said to have both a supply and a demand side. The agents who pay the bribes we will consider as ‘buyers’, the agents who provide the corrupt services, who receive the bribes, we will consider as ‘sellers’. Andvig and Moene (1990) have argued that the profitability of corrupt acts hinges upon their relative frequency. There are likely to be strong feedback mechanisms that give rise to wide variations in the frequency of corrupt exchanges even when agents have similar preferences, operate in similar economic environments, and belong to the same economic and political culture. One of these feedback mechanisms, the positive spill-over across the ‘market’ for corrupt transactions, is of particular relevance for the recent OECD initiative. One of the major reasons why the frequency of corrupt exchanges may remain low in a situation in which it is already low, has to do with the transaction costs involved if one tries to bribe in a society in which bribery is rare. Think of a situation in which the developer knows that only one in a hundred officials are likely to ask for a bribe. If he then wants to offer a bribe, he will expect to have to undertake a long search in order to find someone to bribe. Given the expected search costs he will probably conclude that it does not pay to offer a bribe. Looking at the other side of the market, if only one in a hundred developers are willing to bribe you, why then ask for a bribe? In such a situation only one in 10,000 meetings between officials and businessmen is likely to give rise to a bribe. But as soon as the behaviour on one side of the market changes, the outcome of the economic calculation on the other side changes, too. If, let us say, one in five developers offer you

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a bribe, then why not go for it? Suddenly, not only are one in a hundred officials asking for bribes, but almost everyone. Corrupt transactions are generally so difficult to prove as such, that legal sanctions are often only a minor deterrent, but the knowledge that corruption is, indeed, illegal, may often have some effect on the moral deliberation that takes place prior to the act. Moreover, if corruption is illegal, the business has to invest in costly organizational safeguards in order to keep the transactions secret. Hence, given that there have not hitherto been any legal measures taken against ‘buyers’ in cases of international, as against domestic, corruption, businesses can be expected to resort more easily to bribery abroad than at home. Hence, officials can be expected to ask for bribes more frequently from foreign-based than from home-based firms. How strong this effect is, may be impossible to determine, but the likelihood of some kind of cumulative effect of the kind described in the previous paragraph, makes the work of the OECD to criminalize the bribing of officials abroad more important than it may appear at first sight. As mentioned, this way of thinking about corruption leads one to expect to find wide variations in its incidence even among otherwise rather similar countries. This expectation is confirmed by businessmen’s and travellers’ informal accounts, and by recent empirical work, such as that by Mauro (1995) and by Ades and Di Tella (1995), that indicates wide variation in corruption frequencies across countries. However, the increased international openness of most economies today means that given firms are more often operating in countries showing substantial variation in corruption frequencies. The question that then naturally arises is whether this situation will lead to a levelling out of these frequencies, and if so, whether it will be a levelling out at high or low levels? Larger multinational firms have, of course, been exposed to countries with high corruption levels. They will therefore normally have learned how to bribe and to develop the organizational and financial techniques necessary for keeping these transactions secret, because it is illegal to bribe in almost every country, however common such acts might be. Many of the same techniques can be applied in low corruption settings. If officials in such settings are quick to learn that these firms know how to bribe, and might pay for valuable information or decisions, the change in their behaviour might be rather sudden. That officials will more often than not perceive clear economic advantages in accepting bribes is of course rather trivial, since normally the chances of being caught are fairly small. Hence, after passing a certain threshold level, corruption should be expected to become a rather dominant behaviour pattern. At the international level, the most realistic way to model the trend is probably through some kind of epidemic model of the international learning process, whereby multinational enterprises will often be the carriers that transmit learning from the high corruption to the low corruption areas.

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If this suggestion is correct, then the positive effects of increased openness and more convertible currencies are more than lost by these processes of learning which hasten the spread of international corruption, and then, by adding the effects of each country’s own spill-over mechanisms, also increase global corruption. Is it possible to give any specific reasons why international corruption should show an increasing trend? In cases of grand corruption, the learning process is almost certainly at work, since here the receivers of bribes are likely to be well informed about developments elsewhere. The ideological hostility towards the public sector present in most countries over the last two decades may also reduce the political costs of engaging in bribery. This should also support an increasing trend. The major difference between a bribe paid by a home-based rather than a foreign-based company is of course that the former can be more directly threatened by its own legal system, so that the likelihood of detection and conviction is greater for the corruption of home-based than foreign-based companies. But there are limits to the growth of international (as, indeed, of global) corruption. If the demand for bribes becomes too high compared to what the company can expect to earn, bribes will simply not be forthcoming. It is perhaps no coincidence that the two entrepôts, Hong Kong and Singapore, have made great efforts to get rid of corruption. It has been an effective way to attract international business.

Notes 1. The results were undoubtedly strongly influenced by firms’ perceptions that their answers might influence the future of the Act. Hence they were likely to exaggerate the negative impact of the Act on their business. 2. A brief discussion of this early history can be found in Sacerdoti (1995). 3. It should be obvious, but is not often made clear, that a healthy democracy requires clear demarcation of its political and economic spheres. If it becomes too easy for entrepreneurs to accumulate power in one sphere and apply it in the other for further accumulation, democracy in any meaningful sense of the term has gone. Corruption means that economic resources are spent in order to gain power in the political sphere.

17 Political Corruption in the European Union David Nelken

In its tenth annual report on ‘The fight against Fraud’ (EU Commission, 2000) the European Commission once again offered its proposals for defending, as it put it, ‘the Community’s interests against the actions of wellorganized delinquency or even crime, which not only target Europe’s finances but also affect the very legitimacy of certain fundamental Community policies, endanger the national economies and erode the credibility of European integration.’ As this suggested, much of the report did its best to show that it was business as usual in the long-running battle against the criminals threatening the community budget. There was the traditional up-dating of the range of actions which had been taken by the Commission and others since the last report, the figures summarizing the reports of so-called, ‘irregularities’ for the financial year 1998, and ambitious proposals for legal and technological improvements in the future. Somewhat incongruously, however, the report also explained that the publication of this issue of ‘The fight … ’ had been delayed by the resignation of the entire Commission which followed the European Parliament’s refusal to ‘discharge’ the budget on 31 March 1998. This had led to the appointment of an ad hoc Committee of independent ‘experts’ to investigate claims of corruption and mismanagement levelled at particular commissioners, as well as more general criticisms concerning the apparatus for the control of fraud within and beyond the Brussels bureaucracy. In its first report the Committee confirmed the allegations of favouritism levelled at French Commissioner Madam Cresson and found that some of the other commissioners had also failed to follow correct procedures in the way they ran their programmes. In its second and later report it put forward reform proposals concerning the instruments available to deal with fraud and corruption in the Union. A new Commission guided by the former Italian Prime Minister Romano Prodi then received a mandate to take these proposals further. These events provide an appropriate starting point for the issues to be discussed in this chapter. Most writing about EU fraud relies on official publications. Where empirical investigations are carried out, these tend to be 220

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limited to questions concerning the shape and size of fraud (and the reliability of official and academic estimates of this). But, as these latest developments suggest, such questions have now become increasingly interconnected with questions that concern the ability or willingness of the institutions concerned effectively to reduce such misbehaviour. Hence the phenomenon of EU fraud and its control will be examined here as a case-study for the student of corruption. In order to tackle this issue we will need to face an obvious but usually neglected difficulty, namely, How far can official publications be trusted given their need to show that the problem of fraud is ‘under control’? I shall first say something, by way of background, about the nature of EU fraud and those responsible for its control. I shall go on to analyse the potential links between EU fraud and corruption and then illustrate what we can discover about such links by gathering information from both official and unofficial sources.

EU fraud and its control Fraud against the EU over the years, has cost thousands of millions of pounds. Less noted, people also regularly die or are injured as a result of fraudulent schemes, whether in inter-gang warfare, through the elimination of law enforcers or witnesses, or as a result of health threats when frauds involving adulteration of foodstuffs get taken too far. But although the beneficiaries know who they are, these frauds against the ‘community’ rarely bring forward identifiable, influential and self-conscious victims. As significant, many of those who collude in such frauds do so as much out of a sense of obligation and loyalty to lesser groups as they do for personal gain. Most fraud, at least until very recently, exploited the complicated system of corrections and subsidies made available in pursuit of the Common Agricultural Policy (CAP). Widespread frauds involve exaggerating the amount of land or produce cultivated, exceeding quotas or failing to meet prescribed conditions. At a more sophisticated level, hundreds of thousands of pounds can be earned by misclassifying the type or quality of product for which subsidy is being claimed. Export, re-export or (more broadly) transit frauds, set out to manipulate the provisions of the CAP intended to protect the internal agricultural market from cheaper foreign imports and subsidise the export of surpluses to less well-off countries. Well known ‘carrousel’ frauds, for example, involve repeatedly exporting and then re-exporting falsely labelled products which attract high subsidies on export and low tariffs on import (for an extended discussion see Perduca, 1995). Another sizeable set of frauds, likely to increase further with the enlargement eastwards of the Union, concerns the exploitation of structural funds. These funds, now running at around a third of the EU budget, are made available for the modernization of infrastructure and the creation of new employment opportunities. Because of the way the money is managed and

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directed and because effective development would often threaten local power élites, such grants can end up merely creating over-capacity, unused and unusable industrial installations (so called ‘cathedrals in the desert’) or roads going nowhere. A third major area of EU fraud is that against so called ‘own resources’, that is, revenues collected by customs and indirect tax payments by the Union and the nation states. Evidence of reported cases is taken to suggest that, as a result of tightening up in control over the outflows of grants and other funds, fraud against inflows is now overtaking the others (Savona, 1998a). All three types of fraud can in any case often be profitably combined. Thus, structural funds can be plundered for building useless grain silos to use in agricultural fraud. And the amount obtained by any fraud can be multiplied through the associated evasion of customs duties, tax and value added tax (VAT) payments and by improperly obtaining refunds. All provide opportunities for laundering money earned from a variety of illegal activities. A large number of national and EU agencies are responsible for preventing, reporting or sanctioning these frauds. These include national parliaments and the European Parliament, national courts of auditors and the European Court of Auditors, various police forces, prosecutors and judges, customs officers, health inspectors, vets, and other functionaries, regional and other producers’ associations, national paying-out agencies, and last but not least, UCLAF, the European Commission’s own agency for co-ordinating the fight against fraud. Recently renamed OLAF, it is now set to increase its staff to 300 and perhaps serve as the embryo of a new European-wide prosecution service, responsible eventually even for cross-national crimes which do not involve EU funds.

The link with corruption: defining the problem Despite the large number of primary and secondary discussions of EU fraud it is hard to find any academic studies which systematically address the question of the link between EU fraud and corruption, and this is obviously a difficult topic to research. Fraud and corruption may overlap but do not have to do so. EU fraud, however, is certainly often a convenient way of paying bribes, just as corruption is an essential means of obtaining the collusion which makes some frauds possible. Corruption can come in at the level of ensuring who gets selected to benefit (or who gets to select the beneficiaries), in controlling or not controlling fraud, in appointing who is supposed to carry out such controls, in delaying or nullifying the application of sanctions or demands for repayment. As this suggests, a wide variety of social actors may be involved. Sometimes the connections go all the way to the top. Greek ministers were implicated in the famous Greek Maize case (a carrousel export fraud which they attempted to cover up), and in 1999, of course, the whole Santer Commission

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resigned. More routinely, however, what is entailed is corruption by higher or lower level civil servants and administrators, professionals or any of a range of others involved in the approval, authentication or transport of goods subject to EU subsidies or grants. In establishing the nexus between the two phenomena much can be learned by studying the methods used in successful frauds. Corruption comes in as part of a wide variety of techniques such as supplying false information, forgery, exploitation of legal loopholes, lobbying, bribery and, ultimately, the use of violence, which are used to obtain monies unlawfully (Sieber, 1998: 9). Fundamentally, however, EU and national paying out schemes, as well as their procedures for collecting tax and duties, are obliged to rely on millions of certificates. Organizing the forging or acceptance of false documentation is, from a criminal point of view, a ‘clean job’, suited to new forms of organized crime, where, generally speaking, little violence but a lot of corruption is needed (Savona, 1998b: 237). So far we have established that fraud against the EU does not necessarily require that all those who pay out the funds actually be hoodwinked. They may, to a higher or lower degree, be in collusion. But at what point should we talk of corruption? Must our definition of corruption depend on breaches of laws against corrupt practices? But the EU countries vary in the type and extent of laws on these matters (and most have not signed up to Union-wide protocols on this subject matter). Should corruption be seen, irrespective of its legal status, as using (abusing) public office for private gain? But in many cases the misappropriation or maladministration of EU funds may involve preferring the claims of a more local but still public interest. More broadly still, should we treat as corruption all cases of distributing resources not according to impersonal criteria? But how can we then divide corruption from (deliberate) waste? In practice, the line between what does and does not count as corruption is not fixed. It is drawn and re-drawn (both routinely and unexpectedly) by those engaged in anti-corruption activities, for example, politicians, bureaucrats, prosecutors, the media, whistle-blowers, or other moral entrepreneurs, whose (changing) possibilities of initiative, and own special interests, must be included within the frame of any comprehensive research into corruption (Nelken and Levi, 1996). We need to ask then which are the groups engaged in material or ideological struggle over this issue, which ones are pushing, and in which direction, and which are resisting? Some examples are obvious. The European Parliament has used the fraud issue in its attempt to gain more control over the Commission (though members have not escaped criticism over their own expense accounts). The Court of Auditors criticizes the Commission for its failure to keep the problem of fraud ‘under control’ even whilst insisting that auditing should not be confused with policing. The Commission, for its part, criticizes the Council of Ministers for last minute political compromises which make it impossible to fraud-proof the resulting legislation.

224 Comparative, Supra-National and International Perspectives

Official, unofficial and anti-official accounts To which sources should we turn in order to learn more about such struggles over definition? As noted, most discussions of EU fraud rely heavily on official publications. The claim being made here is that official publications must be seen as part of the phenomenon under investigation. Hence the way they draw the (changing) line between fraud and corruption is itself an example of a struggle over definitions rather than simply a source of data we can use in assessing this process. It is essential to go beyond such official accounts if we want to obtain deeper insight into what is going on. Official discourse about EU fraud: reading between the lines In the past, official reports were extremely cagey about corruption, and if they did discuss it, they focused on the criminal corrupters rather than the officials being corrupted. Slowly the existence of official collusion in the overlap between the problems of fraud and corruption is being conceded and the Commission is increasingly promoting relevant conventions and legislation within the European Union. Generally speaking, however, those responsible for reporting on the way they are regulating EU fraud have basically to satisfy two organizational requirements. To justify their role, and plead for greater resources, they are likely to acknowledge that the problem cannot be entirely controlled, and may even be getting worse (in fact the number of people employed on anti-fraud duties at Brussels has increased exponentially over the last decade). Their main message, however, must be that EU fraud is broadly ‘under control’ in the sense that they are doing all that they can be expected to do about the problem. Insofar as there is periodic concern over fraud getting ‘out of control’ this must as far as possible be attributed to a lack of control or ‘under-control’ which can be attributed to other countries, other authorities or other agencies. The Member states, the European Court of Auditors and the European Parliament regularly blame the Commission, whilst the Commission blames both the Council and the member states, political oppositions blame their governments, and everyone blames everyone else’s lack of collaboration. One thing certainly never discussed is the contribution to the problem of this bureaucratic practice of shifting and fragmenting responsibility. Official accounts of EU fraud, therefore, mobilise self-serving presentations of the nature of the problem, its scale, its causes, and possible solutions, which are conditioned by the bureaucratic contexts of their production, the purposes for which they are written, and for whom they are written. Deliberately or otherwise, official accounts will obscure as much as they reveal. Perhaps the clearest example of the difficulty of relying on official publications can be seen in the way annual reports for the last ten years always include the figures for ‘irregularities’ as reported by the nation states to the Commission. The figures available for 1998 are set out in Table 17.1.

Political Corruption in the European Union 225 Table 17.1 European Agricultural Guidance and Guarantee Fund (EAGG) irregularities in 1998 (selected countries) No. of cases Germany Greece Spain France Italy The Netherlands UK Total (all EU)

Amount in ECU

501 163 294 141 443 78 328

39,623,402 8,784,048 10,588,940 37,402,327 150,391,570 9,220,515 16,241,275

2,412

284,841,275

Source: EU Commission, 2000.

There is a strong temptation, in the absence of anything better, to read a lot into these figures. It seems logical that Italy with its organized crime problems should report so many cases. But how far can we really use these figures to tell us about which country commits more fraud, which types of EU funds are more vulnerable to fraud, or whether rates are going up or down? The objection is not simply that these statistics register the activity of the institutions of law enforcement rather than fraud behaviour as such (White, 1998). For the Commission is not even able to record the facts about police and customs enforcement in each country (such figures would be far higher), but only receives the figures for the cases each country knows about and chooses to report. In addition, because the Commission is as keen to encourage reporting as it is to proceed for recovery against countries for not having done enough to prevent fraud, it prefers to know about ‘irregularities’ generally rather than just fraud. After the reports of the Committee of experts the Commission is now frankly admitting the limits of its figures – though of course it blames the nation states as usual.1 In its 1998 annual report, for the first time the Commission attempted to clarify what the figures meant – saying that no more than 20 per cent of all reported cases involved ‘a suspicion of fraud against the EU budget’.2 But then why are so few fraud cases reported? Missing information can also become misinformation, as when the Italian paying out agency, needing to rebut attacks by the ex-communist opposition, used the number of cases it itself chose to report to the Commission as objective evidence of what a low percentage of cases in Italy involve any irregularity! What of solutions? For some time now an important theme of much official discussion has been the claim that the main obstacles to ‘the fight against fraud’ arise from the difficulties in legal collaboration resulting from the survival within the EU of separate nation-state systems of criminal law. The creation of the single market in 1992 and the consequent dismantling of customs controls, in particular, has allegedly given transnational criminals the great advantage that they can cross borders without restraint whereas

226 Comparative, Supra-National and International Perspectives

the forces of law enforcement have to negotiate lengthy and complicated agreements before they can bring them to justice. Once again, while there is some truth in this line of argument there is at the same time much that can be misleading. Many of the factors which allow fraud and corruption to flourish might be quite unaffected even by complete harmonization of criminal law. Why do auditing techniques fail to prevent fraud despite their not being tied to national jurisdictions? It is implausible to think that legal harmonization (even if desirable) could compensate for social and cultural differences. This argument does not deal with the potential for fraud between the outer borders of Europe and third countries (one of the major sources of fraud). What is undeniable, however, is the usefulness of discussing this type of solution from a political and bureaucratic point of view: it is oriented to the future rather than the present, and requires yet more employment of experts, more consultation with a series of official and semi-official bodies, with the ultimate goal of drafting more laws and regulations – anything rather than a frontal attack on deep lying political and economic interests. Off the record: Italian corruption as a case study To get beyond official publications (and to learn how to use them by reading between the lines) we need to tap into accounts of EU fraud which are given ‘off the record’. Such accounts will often be furnished by those critical of the bureaucracy being described. But the line between official and unofficial accounts depends more on the setting and function of the communication than the identity of the author. What is important is that, for whatever reason, we get access to descriptions and judgements which are not subject to the normal bureaucratic constraints of satisfying the requirements of showing that the problem is ‘under control’. The sign of a successful research interview, in this context, will lie in its ability to reveal rather than respect normal bureaucratic constraints. UK customs officials who were interviewed for this project emphasized that there was a lack of resources for tackling EU fraud, and that it was considered a boring, low prestige task. They noted that the chosen level of staffing did not reflect the public profile of more needing to be done even during the period when Margaret Thatcher was most vocal. More recently, a senior auditor gave it as his insider’s opinion that even the ‘experts’ report’ on the Commission’s failure to control fraud left out many ‘lurid’ details. He described cases where the French government had applied high level pressure to avoid the confiscation of bank guarantees deposited by a large national company accused of fraud, and where the UK had refused to extradite known criminals. In the many years I have been conducting this enquiry I have also had numerous occasions to gather confidences under more informal circumstances. At the beginning of the 1990s, at a workshop on controlling EU Fraud, a middle ranking official of the Italian financial police explained to me that in his judgement Italian politics involved respecting an implicit

Political Corruption in the European Union 227

compact between the Government and members of the business class. Provided the latter were not prevented from evading tax on a large scale they would not protest at inefficient and clientelistic methods of government. Some of these confidences border on the conspiratorial. Early in my research, for example, I was handed a lengthy closed prosecution file by a senior prosecutor who was frustrated that the case had been taken out of his hands (the case is described at length in Passas and Nelken, 1993). The events surrounding this case give us a rare glimpse of what can lie behind even the most routine cases of prosecution (or non-prosecution). One of the organized crime ring who had began co-operating with the judges was swiftly murdered – the case was then shifted to a court in the Campania region where one of the new judges was allegedly related to one of the accused – and nothing more was heard of it. My informant, moreover, also alleged that in order to secure the immunity of those involved, the Government had passed a new law against EU fraud whose provisions were less strict than in the equivalent cases of national fraud, and that accused persons in Italy always benefited from the most favourable provisions even if they arrived after the offence. As a result the accused in this case would not need to stand trial. While this story then seemed hard to credit, the prosecutor also told me about a close colleague who was about to be moved by the Government from his sensitive judicial post as someone with special responsibility for cases having to do with political corruption – and this did indeed take place. Whatever the truth of the more dramatic claims made by informants, this episode clearly suggests that only long familiarity with social and cultural patterns of behaviour in a given country can provide the basis for reasonably sound guesses about the likely connections between fraud and corruption. Official EU publications, for obvious reasons of political caution, say little about differences between countries in the way they handle fraud, treating as equal even those countries which academics distinguish as being host to ‘systemic’ as opposed to only ‘occasional’ corruption (Savona, 1998c). In fact it is best to assume that every country is different. My evidence comes mainly from Italy where I now live and work and where I have the possibility of learning about the society in the role of an ‘observing participant’ (Nelken, 2000). Hence what I have to say is by no means applicable generally; others must seek to unravel the links as they present and conceal themselves elsewhere. For our purposes, Italy may also be of interest for other reasons. The difficulties it has in controlling fraud represent in microcosm many of those that afflict the EU itself. It has a central administration with weak legitimacy, has enormous variety amongst its regions, with problems in policing outlying areas, and it employs subsidy and benefit systems more from political calculations than for their economic rationale. It also has a plethora of overlapping and competing control bodies. On the other hand, Italy also has many dedicated and courageous judges, policemen, anti-fraud inspectors, and administrators who are in the front line in seeking to spread what they call the

228 Comparative, Supra-National and International Perspectives

‘culture of legality’ – even in the teeth of an ungrateful State. The EU’s ungenerous treatment of the whistleblower whose actions led to the resignation of the Commission is regrettably similar. Is EU fraud perpetrated against the Italian State or by the State? Does this question even make sense? All roads lead to Rome. In particular the key to the question of how far EU funds were (and are) distributed corruptly lies in the behaviour which takes place in the administrative offices of the payingout agency, AIMA (now, with formal legal autonomy, renamed EIMA) – as well as in its recently established inspectorate. Giovanni Goria (late Italian Prime Minister) described the workings of AIMA as ‘one of the many wretched things one can meet in one’s life’. Year after year the annual reports of the Italian Court of Auditors (Corte dei Conti) lamented the confusion and lack of rigour of the organization’s finances, and the mismanagement of its tasks. Above all, it strongly criticized the lack of any inspectorate attached to the organization, and the reliance instead on beneficiaries, such as regional councils or producers’ associations, for the distribution and checking of subsidies even in cases where they had already shown themselves to be inefficient and dishonest. Given the way the resources are channelled it might be expected that cases of outright fraud would be the exception rather than the rule. But they occur regularly enough. A close friend and ally of former Christian Democrat power brokers Antonio Gava (then Minister of the Interior) and Cirino Pomicino (then Treasury Minister) built up a grain business (Italgrani) which went in the 1980s from a turnover of 500 million lire (circa €258,000) to 2,000 billion (circa €1 billion) and became the biggest group in southern Italy. A document called ‘In the shadow of AIMA’ (PDS, 1992), produced at the height of the Tangentopoli (‘Bribe City’) investigations by the former communist party reported allegations that the business had been involved in export frauds, such as the time 3,200 tons of worm-ridden flour were sent to Peru subsidised by funds for humanitarian co-operation and other grants provided by AIMA. The State is not just in the hands of these figures. Throughout the 1980s and 1990s prosecutors tried to deal with the most obvious cases of corruption, sending Ministers of Agriculture and those responsible for AIMA to court on charges of abusing their positions. But they had limited success. One head of AIMA who tried to repay the State 530 billion lire (€274 million) was told to hold onto it. Another accused Minister ended up in the Strasbourg Parliament. And for much of this period the Government’s chief accountant insisted that there ‘had been sacred rigour’ in ensuring that the AIMA accounts were kept correctly. Fraud among friends: the banality of organized crime The official literature discussing EU fraud tries, for self-serving reasons, to maximize the apparent distance between the controllers and those attempting to outwit them. At the other extreme, those who are actively engaged in

Political Corruption in the European Union 229

EU fraud do their best to argue that everyone (or almost everyone) is corrupt – or at least corruptible. In seeking to ‘condemn the condemners’ (Sykes and Matza, 1957) they adopt an all embracing concept of corruption even describing the EU itself as a gigantic fraud (see Nelken, 1997). But the main impression these informants seek to give is that of each playing a role in a well-oiled machine (the analogy they themselves use) where all that matters is achieving the appropriate level of personal and technical skills in accomplishing the complicated arrangements required for succeeding in fraud as an ongoing project. The oil of course is corruption. The following extracts are taken from a series of interviews conducted with members of Camorra-led fraud rings in Naples.3 A leading Camorrista on the run from the authorities agreed to be interviewed in a safe house at a time of his choosing. He was asked: Q. ‘Why do you (plural) get involved in EU fraud?’ A. ‘The ‘friends’ get involved in anything which involves enterprise. Where we can make or help others make a profit that’s where we will be. Otherwise there would be considerable anarchy, as you would say. We create order. In this way we keep everyone happy.’ Q. ‘What exactly do you do? How do you operate?’ A. ‘Our task is to make sure of the necessary supports where they are needed. We ‘grease’ (⫽corrupt) those that it is possible and essential to ‘grease’, and we ‘convince’ (⫽force) those who are a little more resistant (i.e. those who don’t want to be corrupted).’ In later interviews members of two Camorra families were asked about the division of tasks within ‘a family’ when it comes to organizing a fraud. The first of these answered: ‘Certainly everyone has his exact role: there is the person who has to organize the contacts with the lawyers and the accountant, the person who is asked to take charge of the contacts with politicians, the person for the Ministry (of Agriculture) and the person who deals with Brussels’. In the course of a collective interview with a member of staff of the European Bank in Brussels (⫽B), a regional politician (⫽pol.), a functionary (⫽F) and an inspector (⫽insp) from the paying-out agency, AIMA, and an accountant who had been compromised into helping the Camorra (⫽acc.), the bank official explained: (B) ‘When there is a goose which lays golden eggs anyone who can help themselves does so … The Ministers for Agriculture, the Ministers for ‘the South’ (Mezzogiorno), Under-secretaries, regional presidents,

230 Comparative, Supra-National and International Perspectives

everyone, some to a greater some to a lesser extent, have taken eggs from this goose … not just organized crime.’ The interviewer then asked: ‘But hereabouts organized crime is anyway tied in with the politicians?’ (Pol.) ‘You try to find me a politician who isn’t. The whole system here is impregnated with organized crime.’ Some idea of the mix of motives used to justify collaboration with organized crime comes out in the following exchanges: Q. (B.) (Pol.)

(F.) Q. (Acc.) (B.) (F.)

(Pol.) (Acc.)

(B.)

‘Were you given help to get the posts that you now occupy?’ ‘Well, ‘one hand washes the other’ … these are positions that are always given to people who may one day be able to be useful.’ ‘The politician must always make his choices very carefully. If he doesn’t help one of his friends, it will be difficult for him to remain in the saddle … ’. ‘That’s exactly right.’ ‘And why do you respond to the request for help?’ ‘Favours must be returned.’ ‘It is not good to refuse to help friends.’ ‘We are just the small cogs in the machine … and each one helps the other turn … Otherwise the whole machine would block and come to a halt. It is not so much a question of money but above all to find yourself with a role, with the possibility of giving orders, of ‘willing’ something … ’. ‘Money serves to give you more weight, prestige in this society … ’. ‘Without money you’re a nobody and you have always to submit to the will of others, to those who do have money. But in any case there is no way we could survive on the (small) State pension … whereas, like this, we can also guarantee a better future for our children, thus they will be able to have the instruments needed for really changing things.’ ‘And then who is really ‘honest’ in this system? And what does honesty even mean nowadays? Nothing more than a pretty word … ’.

The accountant was asked to give more details of the official ‘connections’ needed to put together EU frauds. He answered, ‘The connections are within AIMA itself. It is the functionaries of AIMA who ‘cover up’ and push along the necessary application documents (through the appropriate channels). Even more it is often these very functionaries who propose the fraud to the manufacturer. The same applies to the Ministry of Agriculture. And at the European Bank.’

Political Corruption in the European Union 231

The interviewer continued by asking, ‘And (is the same true) for the fiscal police force (Guardia di Finanza) and in the Carabinieri?’ (Acc). ‘It applies also to the fiscal police, but it is absolutely not true for the Carabinieri. However, the only reason to pay off a member of the fiscal police is when it is necessary to avoid them carrying out particularly thorough checks of the documentation.’ Q. ‘But are some checks carried out? Of what kind?’ (Acc). ‘Routine (face consistency) checks are made.’ Q. ‘So when is a fraud ever discovered?’ (Acc.) The only way a fraud is ever discovered is if someone gives information to the police. In that case the police will indeed be obliged to carry out cross-checking of the financial documents to test the credibility of the invoices which have been presented. But bear in mind that the matter (fraud) is so well put together technically that it is virtually impossible to uncover. And so in the 30 years I have been exercising this profession I have never seen anyone go to jail for this type of crime.’ The interviewer then put the crucial question concerning the price of collusion. Q. ‘How much does a functionary ask for in order to overlook or participate in a fraud?’ (Acc.) ‘From seven to ten per cent of the total.’ Of particular interest is the story told by the inspector responsible for fraud control in AIMA. Q. ‘What are your responsibilities? (Insp.) ‘In theory I should be controlling whether a given manufacturer is producing as much of the agricultural product (for which subsidies are being claimed) as is declared in the request for subventions. I should be checking that his request falls within all the parameters of the regulations set out by AIMA. I should then investigate who meets these requirements and who does not.’ Q. ‘Well, that’s as far as the theory is concerned. And what about in practice, on the other hand. What actually goes on?’ (Insp.) ‘What happens is that you have to authorise as approved those applications which you are guided towards.’ Q. ‘But you do know that you are doing something illegal?’ (Insp.) ‘I have no choice about it. Whether it was this or some other job it would always be the same story. … We are not living in the North here. Here you have to bend to those in command if you want to eat.’ Q. ‘What do you do with the money (you receive for these services)?’ (Insp.) ‘Actually we only get presents. I do what I do to please ‘the friends’ who have helped me get a secure job for life.’

232 Comparative, Supra-National and International Perspectives

The future of EU fraud The interviews go back to the early to middle 1990s, and much has happened since. Can we now say that EU fraud and corruption is ‘under control’? Have levels of misbehaviour declined? Perhaps more important, is there less societal tolerance of this behaviour? It would be unwise to give too confident an answer to these questions. For example, in 2000, pig farmers in England admitted that they were moving pigs out of areas about to be declared contaminated with swine fever (with the real risk of spreading the disease round the country) because government schemes of compensation for slaughtering such pigs did not pay them enough (this even after the BSE scandal had cost hundreds of millions of pounds in compensation for slaughtered cows – including a share of quietly tolerated EU frauds). Certainly, changing circumstances do have an important influence. As the Committee of Independent Experts (1999) noted: The Commission in the 1990s was transformed from proposer of policy to policy implementer but its administrative and financial culture, the sense of individual responsibility among its staff and awareness of the need to comply with the rules of sound financial management have not developed at the same speed. The senior hierarchy in particular remains more concerned with the political aspects of the Commission’s work than with management … in the light of its new management tasks, the commission had a duty to set priorities, something which it failed to do, preferring to use Community funds (sometimes illegally) to ensure a match between the objectives to be achieved and the resources to be employed. Opportunities for those in receipt of EU largesse also change, or can be made to change. Fraudsters deliberately try to stay one step ahead of changes in the organization of agricultural and other subsidy programmes, shifting their attentions to exploiting new vulnerabilities (such as in VAT regimes). Both corruption and anti-corruption campaigns go through cycles. If the 1980s was a growth period, the 1990s saw a reaction – and the next decade? EU fraud is a symptom of the lack of strong loyalty to a supranational ideal of Europe. Subsidy programmes may have helped hold the ‘community’ together in the period between the bestiality of the Second World War and the new ties being created by the single market and the collective self interest of ‘fortress Europe’. But they are an ambiguous legacy. What Penelope weaves by day, she undoes by night.

Notes 1. ‘When collecting evidence, Community investigators are very much at the mercy of external factors such as political or commercial interest, the effectiveness of the

Political Corruption in the European Union 233 local legal system and the effectiveness and goodwill of the local administration’ (EU Commission, 2000). 2. Amongst other problems, the figures for any one year may cover several years, while practices of classification vary between states and change over the years (in the 1980s Germany decided to report many lesser cases because it was out of line with the other member states). 3. The interviews were carried out by a research assistant as part of a project into the relationship between forms of trust, crime and criminal justice (see Nelken, 1994, 1997).

18 Conclusion: Political Corruption in Contemporary Democracies Martin J. Bull and James L. Newell

In this concluding chapter, we draw on the findings of the 16 preceding chapters to formulate a series of comparative observations and conclusions.

Newness, scale and varieties of corruption One cannot easily study a phenomenon, which, by its nature, is clandestine. One is therefore dependent upon assessing the newness, scale and varieties of corruption either from the cases that happen to have been exposed, or from perceptions – something which is the focus of the corruption index (Lancaster and Montinola, 1997). However, there are, inevitably, dangers in this approach. The Spanish case in this book, for example, shows that an improvement in a TI rating can be due to the decline in salience of the issue in the country, and this might, in fact, have little or nothing to do with a decline in corrupt practices. It might have more to do with a change in party opposition strategies. Conversely, something like an intensification of anti-corruption investigations might alter perceptions so as to produce a worsening TI rating. Newness Notwithstanding such difficulties, most of the chapters in this volume suggest that political corruption has increased in the past two decades to the point that one can speak of it as a new issue. Many of the authors are explicit on this point. The 1990s were marked by the exposure of a considerable number of high-profile corrupt practices in Italy, Germany, Britain, Belgium, France, Spain and Greece. In CEE, despite the unreliability of official statistics and media reports, the sheer number of cases and convictions suggest that corruption has increased. The EU saw the resignation of the entire Commission after allegations of corruption levelled at particular commissioners, and there has been a big rise in international corruption. Other authors in this volume are more cautious. They argue that it is impossible to tell whether or not there has been a rise in corruption in their countries, or whether one is talking about a rise in anti-corruption activities, 234

Conclusion 235

media interest and exposure, with a concomitant decline in levels of public trust (Ireland, The Netherlands, Japan, Sweden, US, Portugal). Nevertheless, there is agreement on the fact that, as an issue, political corruption has become much more prominent in the past two decades. Scale If political corruption is a relatively new issue, establishing the exact scale of the phenomenon is much more complex, especially comparatively. The comparative scale of corruption produced by TI’s Index, for example, can be relied on for consistency only with considerable difficulty. In addition to the factors already mentioned, perceptions may be influenced by scandals generated by the exposure of corruption – but the degree of scandal is determined by various factors, including expectations amongst the national public. The comment (quoted by Koutsoukis) of the former Greek Prime Minister, Papandreou, on the Greek Electric Power Authority scandal summarizes the problem well: ‘It might be expected that an official would offer himself a present but not one as big as 500 million drachmas.’ In other words, while the taking of a ‘smaller present’ might have proved acceptable in Greece, it might have proved to be as scandalous in some other countries as was the taking of the larger sum in Greece. There is also the problem of the impact of the level at which corruption occurs on the overall perceived scale of corruption. Put bluntly, the bigger the names exposed the more likely it is that the perceived scale of corruption in the country will be higher (Germany, where there is little routine sub-national corruption but big names at the top have been exposed, might be cited as an example here). What is clear about the scale of corruption is that it can, on the one hand, become all encompassing, stretching from the periphery to the centre and involving a large number of politicians, bureaucrats, entrepreneurs and others. In other words, it becomes pervasive at both the lower and higher levels (Italy, CEE). On the other hand, it might involve politicians mainly at the highest level (Germany, Japan) or mainly at the lower levels. The latter is most likely to be the case where one party has been dominant for long periods of time (US, Sweden, Portugal). Varieties The types of political corruption are rich and diverse. The main varieties that have been brought to light in this volume concern corruption arising from: ●

the power of politicians to take decisions concerning the allocation of public money, or to take other commercially charged decisions (a tendency reinforced where the decision-making criteria are insufficiently explicit). Such corruption may arise where politicians have a role in making decisions with a direct impact on certain business or other interests (Ireland, Japan, US, Sweden, Portugal, Greece). Otherwise, it may take

236 Conclusion

●

●

● ●

●

●

●

●

place through the use of kickbacks and other illegal devices for the award of public contracts, the proceeds of which can be channelled into party coffers or individuals’ pockets (Italy, Ireland, Germany, Japan, Belgium); the exercise of discretion by civil servants over commercial decisions, especially in a context of lax systems of accountability and ambiguous policy objectives (Ireland, Greece); the violation of party finance laws, by undisclosed and therefore illegal donations, usually to influence policies. Beneficiaries can be individuals, parties and election campaigns (Italy, Germany, Japan, Britain, Belgium, France, US, Portugal, CEE, Spain, Greece); the power to supply public services, permits and resources (Italy, Greece); the power of public officials to investigate private conduct and impose penalties (e.g. tax inspectors in Italy and Greece; the police in Britain); the power of elected representatives to influence legislation in favour of selected groups or individuals in return for financial or other gain (Italy, Ireland, Japan, Britain, US, CEE); the power to bestow patronage or honours, and to determine the postretirement employment of public officials (Japan, Britain); the power to influence the allocation of EU grants, structural funds and subsidies (Italy, Portugal, Greece); the implementation of customs and immigration controls at national borders (CEE, Greece).

Causes of corruption The causes of corruption are multifarious and it is, of course, important to distinguish between factors that facilitate the growth of corruption (that is historical, structural and cultural factors) from those that are more direct causes. The development of corruption is dependent not just on the presence of certain structural/historical variables but also, as Williams points out in his chapter, on the number and nature of opportunities and the risk and consequences of detection. However, some factors fall into both categories. Political culture The development of corrupt practices is more likely where cultural attitudes are not strongly supportive of a country’s democratic institutions (Italy, Belgium, Portugal, Greece) or of democracy more generally.1 The latter point is especially pertinent in countries with an authoritarian or dictatorial historical legacy, and of note is that in CEE those countries which are considered to be the most corrupt are those which are currently least democratic in their institutional arrangements. Corrupt practices are also more likely to develop where societal culture is particularistic, where the prevailing view is that law and its enforcement is ultimately negotiable, and where ‘pork barrel’ politics is common (Italy,

Conclusion 237

Ireland, Japan, Belgium, Portugal, Spain, Greece, US). In these countries there may be insufficient public pressures on politicians to act responsibly. Yet, even in countries which do not belong in this category, attitudes to honesty and dishonesty may be fluid and varied, with the organizational culture (that is, the norms and values of politicians and civil servants) becoming an issue (Britain, The Netherlands, Germany). In some countries cultural attitudes towards the moral probity of public servants may give rise to complacency and the assumption that such officials can be trusted (Britain), or else to the view that corrupt practices can be justified if they help to oil the cogs of an inefficient state machine (France). In addition, a society characterized by the presence of patron–client relationships and where personal connections are important can facilitate the development of corrupt exchanges (Italy, Ireland, Japan, Belgium, France, Portugal, Greece, Spain). Strong traditions of freemasonry and secrecy (Italy, Portugal), the presence of organized crime (Italy, Ireland, Japan), and countries where there is an absence of clear criteria or transparency relating to public appointments (Portugal, Spain) are often symptomatic of the presence of clientelistic practices. Political structures and institutions The political cultural factors outlined above are more likely to have an impact in the context of a highly centralized political system, a long-standing power elite (see below), and in countries where the state has been insufficiently modernized (Italy, Ireland, Japan, Belgium, France, Portugal, Greece). Where there is strong executive autonomy and elite inter-penetration, with the presence of loyal inner circles, advisers and cabinets (sometimes reinforced by transfers of civil servants to political posts and the private sector), a cohesion can be fostered, with a tendency towards protection from outside scrutiny and bureaucratic checks (France, Belgium, Italy, Ireland, Japan, Britain, Portugal). A wide dispersal of power, however, is not necessarily an answer to these problems. Federalism in the US, for example, ‘multiplies the points of access and influence and thus disperses opportunities for corruption’ (Williams). In Spain too, the decentralization of power that accompanied economic structural changes (in the relationship between the public and private sectors) multiplied decision-making centres and thus opportunities for corrupt practices. The political cultural factors outlined above will also have a greater impact depending on the effectiveness of mechanisms of prevention and exposure. One should note in particular the difficulties in exercising, and therefore the declining efficacy of, the scrutiny role performed by legislatures (Italy, Ireland, Britain). Prevention and exposure may relate to the judiciary’s effectiveness, its activism (which may be shaped by how far culture and society tolerate it) and its degree of politicization or autonomy (which has an impact on its investigative capacities) (Italy, Belgium, France, Portugal,

238 Conclusion

Spain). They may also relate to the protection of whistleblowers (for which few countries have provision). Finally, prevention and detection may relate to the role played by less formal institutions such as the media and the degree to which media personnel engage in investigative journalism and exposure (Belgium and France are good examples of countries with traditionally weak media). Since the exposure of Watergate the US has been held up as an example of an idealistic and crusading media, but, as Williams points out, serious investigative journalism is very costly.2 Moreover, despite the prominence of corruption scandals in recent years, it has in the past often been difficult to generate a focus on public concern and give corruption prominence. Nevertheless, in general, the attitudes of the media have certainly changed: there is no longer the respect of those in authority, and the media tend to be more aggressive, inquisitive and willing to scrutinise and expose corrupt practices, even in countries (Portugal, France) where previously this hardly existed. Party system, party government, political parties and politicians Where the party system facilitates the domination in government of a single party or parties (e.g. Italy, Japan), it can provide a fertile bed for corruption because there would appear to be a correlation between corruption and longevity in power. Party dominance also has a bearing on the role of political parties in relation to the state and civil society. The penetration by parties of areas of the state and civil society, and the development and perpetuation of a clientelistic mode of managing power, can reduce drastically the societal and bureaucratic protections and controls against the growth of corruption (Italy, Japan, Belgium). These countries are more extreme examples, but it is important to note that the decline of traditional bureaucratic controls and supervision was, from the 1980s onwards, a generalized phenomenon that accompanied the shift towards private-sector techniques of management (Britain). Irrespective of the more indirect facilitators of corruption, it is political parties’ need for funding in order to be electorally successful that constitutes one of the main direct causes of corruption. In situations where the cost of successful election campaigns has risen, where funding (and notably state funding) is inadequate, and where party finance laws are insufficiently robust, parties and politicians will be susceptible to entering into corrupt exchanges (Italy, Ireland, Japan, Belgium, France, Portugal, Spain, and even Germany where parties, compared with elsewhere, are generously funded by the state). This tendency has arguably been reinforced by the decline in the intensity of ideological conflict that occurred in the 1990s. This, by narrowing the political spectrum, makes it more difficult for politicians to rely on ideological differences to mobilize the electorate. This tendency is reinforced at the level of the single politician where the system of election may encourage individual campaigns and dependence on individually built-up resources (notably but not only in PR systems with preference votes). The role of politicians, moreover, is significant, because

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where, at the highest level, they fail to provide visible ethical leadership, this can have a filter down effect on the population leading to a fall over time in ethical standards (Italy, Ireland, Japan, Britain, The Netherlands, Belgium, France, Portugal). The rising levels of corruption in Italy, for example, can be partly explained by the gradual replacement (in the context of continuity of a political class) of existing politicians and administrators by people with lower moral calibre. Political economy: the public and private sectors From a political economy perspective, the direct cause of corruption lies in the relationship established between entrepreneurs on the one hand, and politicians and bureaucrats on the other.3 The willingness of the two sides to enter into such a relationship will depend, most obviously, on the ethical climate in the country in question. But more profoundly, it will depend on the degree of legislative certainty, and on the degree to which public action is efficient and impartial – qualities that entrepreneurs need in order to compete and thrive. Where these conditions are not present, or where they are in decline, or where there is simply disorganization and mismanagement, a system of corrupt exchanges offers entrepreneurs the possibility of re-establishing those conditions that are critical to rational business decision-making. Where business and commercial sectors are highly or over-regulated, they are prone to corruption because companies seek political allies to help them circumvent regulations or win public contracts (e.g. Germany). This is not to suggest that public regulation is always and everywhere associated with corruption. Indeed, a growth in corruption can also be identified where there has been privatization and a drive towards deregulation of commercial activity. There is, of course, an international dimension here. International liberalization and the increasing openness of economies (resulting in greater import and export flows) have increased the propensities towards international corruption (although, as Andvig suggests, greater openness may, in the long-term, result in a reduction). This broader context has, at the same time, reinforced national trends and the magnitude of problems deriving from these trends. As mentioned above, private-sector management techniques increasingly prevail in the public sector. This has caused turbulence in the existing ethical environment and confusion amongst public servants about the standards of conduct to which they should be adhering. This applies not only to advanced democracies (e.g. Britain, France) and countries which have undergone ‘democratization’ in the recent past (Spain, Greece), but also those countries undergoing ‘democratization’ (or ‘democratic consolidation’). In CEE, the transformation is comprehensive and radical, the degree of confusion considerable, and the opportunities for corruption high. The factors outlined above summarize the indirect and more direct causes of corruption in contemporary politics. Their significance and impact will, of course, vary from one country to another and we would also emphasize

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that as long as it lies undetected, corruption is bound to increase simply because once the phenomenon is established it becomes self-generating. This throws a spotlight on the dynamics of corruption.

Dynamics of corruption The reason why corruption, once established, becomes self-generating, is because of the inverse relationship between the amount of corruption that exists and the risk of indulging in it oneself. When corruption is a marginal phenomenon, there are few reliable partners, the risk of being caught is therefore higher, it is less easily defended or justified and the likelihood of severe admonishment or punishment greater. However, once corruption begins to spread, the potential partners are manifold, the risk of being caught diminishes, the likelihood of being able to defend one’s actions and escape conviction is greater, as a decline in ethical standards sets in across society and the political system. As noted in the Italian case, as entrepreneurs and politicians became socialized in the practices of corruption, the networks grew and gained in solidity. Corruption feeds on itself and can be defended on the grounds that ‘everybody does it’ (Italy, Ireland, Japan, Britain). In this way corruption can become systemic, or a culture of corruption ingrained (Japan, Italy, CEE) because it is not rational for an individual (especially an entrepreneur) to stay outside of the ‘circle of corruption’. At the heart of the process is the so-called ‘business politician’. This is someone who tends to view public resources as personal property; who therefore distributes rewards on the basis of loyalty; who develops electoral and party followings often using corrupt methods, and who may also use corrupt methods to ensure that the corrupted partner respects the exchange and does not squeal. Here the role of organized crime (and thus, if nothing else, the threat of violence) is sometimes important to ensuring that officials act corruptly and that the corruption process runs smoothly, as shown in Nelken’s account of the misuse of EU structural funds. In general, the idea is to create an image of being ‘powerful’ (Italy). A key aspect of the dynamic of corruption, then, is not just the corrupt exchange itself but the development, by the participants (and notably politicians), of various protection mechanisms which can prevent discovery or hinder or sabotage investigations (Italy, Japan, Belgium, EU). These may include efforts to exploit inadequate legislation based on trust, or the insistence that any revelations are isolated examples and that core moral values remain intact (Britain before the 1980s and 1990s). Using whatever method, however, the general objective is the same: to attempt to divert responsibility to avoid prosecution. For example, in France, in Evans’ words, ‘the salient feature is a continuous passing of the buck, a refusal by the notables whether national or local, to accept responsibility.’

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Anti-corruption laws and campaigns, remedies and solutions Anti-corruption campaigns on the part of magistrates and others have increased in the past two decades, and as a consequence revelations about corruption have become more widespread. This has not just been at national level (e.g. Italy, Ireland, Japan, CEE, Spain), but at the supra-national and international levels (e.g. the EU’s launch of explicit anti-corruption strategies in post-communist countries).4 The reasons for this increase in activity are not easy to identify. Part of the explanation, of course, is that there has been an increase in corruption and varieties of corruption, as argued above. There has also been a degree of international diffusion, with institutional and political learning by some countries as a result of intense media coverage of corruption in those countries where its exposure has had a dramatic impact on the political class. The exposure of corruption in Italy has had a noticeable effect, especially in northern Europe, because it was first uncovered in the ‘moral capital’, Milan, which had always had the image of being a ‘northern European city’ in contrast with Rome. This rang alarm bells in other European cities. However, it is also true that the rapid spread of corruption and organized crime in the newly ‘democratizing’ countries of CEE has also generated considerable concern. Other factors causing the increase in anti-corruption activity relate to the increase in the autonomy, capacity and willingness of magistrates to investigate corruption (e.g. Italy and France). This is not to suggest that prior to the recent period there was no judicial anti-corruption activity. However, it would appear that in many countries this activity has been more successful than in the past in exposing corruption and that the explanation for this, in turn, lies in the reduced ability of the corrupt (politicians and others) to withstand or undermine judicial investigations (e.g. Italy and France). It is undoubtedly because of this that in a number of countries politicians have launched, against the judicial branch, accusations of a witch-hunt, while trying to save themselves through general amnesties and other abuses of power. The case of Silvio Berlusconi, with a number of charges (including corruption and illegal financing of political parties) outstanding against him, is exemplary of this. Having been elected Prime Minister in the 2001 elections, he then managed to use his position to secure legislation considerably tightening the conditions under which certain kinds of evidence are admissible in court. The expected result of this is that the increased amount of time that the cases against him and his associates will require will be such that the charges will in the end have to be dropped under the statute of limitations. Meanwhile, anti-corruption efforts can be undermined because of a lack of conviction behind clean-up campaigns, and their consequent failure to make an impact. In Britain, for example, complacency led to the view that

242 Conclusion

the scale of the problem had been exaggerated by public perception. The focus, therefore, was on improving standards of behaviour rather than on tighter regulation, and this was accompanied by poor investigation of alleged cases of corruption and a constant failure to implement anticorruption recommendations or to monitor the implementation of certain measures once approved. In several countries there have been many acquittals and the survival or return of some of the old elites, suggesting that old practices may be continuing (e.g. France, Italy). Anti-corruption efforts need not necessarily take the form of a campaign by magistrates and others to eliminate existing corruption. They can also take the form of measures aimed at preventing its appearance in the future. The most important examples include: ●

● ●

●

● ●

● ●

●

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legislation (or codes of conduct) on ethics in public office and incompatibilities of office (Ireland, Britain, The Netherlands, Belgium, France, Sweden, US, Portugal, CEE, Spain, Greece); ‘vulnerability’ investigations (Netherlands); amendment of laws providing immunity from investigation by magistrates for members of parliament (Italy, Belgium); amendment of laws on party financing, contributions to parties, campaign funding (Italy, Japan, Germany, Britain, The Netherlands, Belgium, France, US, Sweden, Greece);5 electoral reform (Italy, Japan); privatization of enterprises, deregulation, amendment of laws on public procurement (Italy, Japan, Greece); depoliticization of the civil service and public enterprises (Belgium); depoliticization of the judiciary and an increase in judicial independence (Belgium, Portugal); establishment of local chapters of TI in order to devise anti-corruption strategies (CEE); tighter regulation of firms in their business dealings with foreign companies and states (US).

Impact of corruption and exposure of corruption The impact of corruption, and the impact of the exposure of specific instances of corruption, may, or may not, coincide. Therefore, if only from an analytical perspective, it is useful to separate the two sets of impacts. Impact of corruption There are several effects deriving from the presence of corruption in a country’s political system: ●

a financial drain on the state, contributing in some countries to a rise in public debt (Italy, Belgium) and/or a growing tax burden (Italy, Ireland);

Conclusion 243 ●

●

●

capital flight and lower levels of domestic and foreign investment, a direct potential consequence of the presence of tax evasion schemes (Ireland, CEE). In the countries of CEE a decline in foreign investment can make it more difficult to carry through social and economic reform, thus creating a vicious circle; an undermining of the safeguard of collective responsibility, a consequence of the failure of cabinet members to act over doubts about the probity of senior colleagues (Italy, Ireland); a decline in trust, either in the political system as a whole, or in specific institutions, and notably parties and parliament (and, of course, the politicians staffing them). This can lead to growing voter apathy (registered in higher abstention rates) (Italy, Ireland, Japan, Belgium, Germany, France, US, Sweden, CEE). It can also produce support for parties of the extreme right (Italy, Belgium, France), even if these parties are not necessarily free from corrupt practices themselves once in office (France).

Impact of exposure of corruption The impact of the exposure of corruption will depend on a series of factors that emanate from the particular country’s mores and traditions as well as the prominence of other important issues at the time. The seriousness of the offence will be only one of these factors and not necessarily the main determinant. The impact can be registered at different levels of society and the system: ●

●

●

Political parties. First, there can be a financial impact, if the parties have become increasingly dependent upon corruption as a source of funds (Italy, Germany – where the parties were ordered to repay corrupt receipts). Second, there can be an organizational impact, where exposure can undermine the membership base and leave parties close to collapse, especially where they have increasingly attracted members for instrumental reasons (or illicit gains) rather than because of ideological or policy commitment (Italy). Party system. Where the effects on individual political parties are cumulative, widespread and involve the principal parties in the party system, this can cause changes in the nature of competition between parties (Italy, Germany) and even a transformation of the party system (Italy). Electorate. At one extreme, the exposure of corruption can cause outrage amongst the electorate, voting those politicians and parties responsible out of office in a form of popular revolt against the establishment (Italy). At the other extreme, the impact can be relatively insignificant with little effect on voting behaviour. In between the extremes, corruption can be an issue in elections (e.g. Belgium, Spain) whose overall impact, however, is difficult to evaluate.

244 Conclusion ●

●

●

Political system. Exposure of corruption can lead to high levels of political instability as prime ministers, governments and personnel are brought down (Italy, Japan). Nation-state. The exposure of corruption can increase existing territorial divisions. For example, in Italy it increased the hostility of the north of the country towards the south by helping to fuel support for an autonomist Northern League that saw in Tangentopoli further evidence of the way in which northern prosperity was being undermined by a Romebased ‘partitocracy’. In Germany, it caused disillusionment of the east towards western Germany, since corruption was uncovered almost entirely in the west. Political culture. The impact in terms of declining levels of public trust, disaffection with politics and voter apathy has been noted in the section on the impact of corruption. What is more questionable is the extent to which the exposure of corruption has caused a genuine debate on the cultural roots which facilitate the emergence of corruption (examples of this absence are Italy and Ireland).

Conclusion There seems to be little doubt that there has been a rise in corruption in recent decades and, in the last decade or so, a rise in the exposure of corruption. There have been an increasing number of anti-corruption actions and measures, and in some countries (e.g. Italy, Japan, Belgium) this has led to a number of high profile arrests and convictions. Yet, the extent to which this anti-corruption drive has been successful remains very much an open question. Italy, for example, witnessed the removal of a large part of the political class, yet many elites have survived or returned and many of the problems that bedevilled the political system remain. In France, there is little visible impact at the elite level of the corruption scandals of the 1980s and 1990s, beyond failed prosecutions, amnesties, and political comebacks. In Portugal, the special anti-corruption agency established as early as 1979 was wound up in 1992 despite (or rather because of) having a large amount of evidence of corruption which included links to politicians, and there is a continuing impression amongst the population that both politicians and magistrates are corrupt. In Greece only a very small number of those who have been taken to court have ended up being punished. This is not to suggest that anti-corruption campaigns are completely ineffective. They can serve an important purpose in raising public awareness, and creating a climate in which anti-corruption laws and solutions can be carried through. However, it also evident that there are limits to the longterm impact of exposure of corruption, after which populations can become cynical, and support for these campaigns and solutions can wane (Italy,

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Japan, CEE). Although corruption may be considered serious, other (socioeconomic) objectives may be more important to publics than governments fighting corruption, and the danger is that with the loss of salience of the issue it results in a downgrading of the fight against it (as suggested by Jiminéz in relation to Spain). Evidently, one can dwell on the ineffectiveness of some anti-corruption measures and the need for stronger laws to make it easier to prosecute corrupt politicians and officials. Nevertheless, because corruption is so difficult to detect (due to its clandestine nature) and then to prove, legal sanctions are unlikely ever to be a significant deterrent. For that reason, the US Senate Ethics Committee argued (in the late 1980s) that what was important was the appearance of impropriety and that the benchmark was less what was legally possible than what a reasonable, non-partisan, fully-informed person would do. This suggests a possible response to the fundamental dilemma pointed out by Britain’s National Institute of Law Enforcement and Criminal Justice (referred to by Doig): that while there are three controllable elements to corruption (opportunity, incentive and risk), there always remains one uncontrollable element, namely, personal honesty. This is not to suggest that there is no room for legislative improvement. In the Netherlands, for example, the phrasing of anti-corruption articles in the penal code has been tightened by moving away from a dogmatic requirement to prove that a public official knew that a gift received was in relation to a favour bestowed. To secure a conviction now it is sufficient to show that the civil servant should have known this. In Belgium too (where the penal code makes a distinction between passive and active corruption, and where it is difficult to prove that corruption actually occurred) revision of the code has made corruption allegations easier to prove. This, however, points to a deeper problem. That is, it is not just a matter of honesty and what a ‘reasonable’ person would be expected to do, but of culture, because some societies may have distinctive cultural traits that make certain practices more acceptable than they would be in other societies. In Japan, for example, many voters (especially conservative voters in rural and small-town areas) expect the delivery of gifts from their elected members. Meanwhile, local politicians or power brokers expect even larger gifts from those above for delivering their own support, something that shows how popular and elite attitudes can reinforce each other. In Portugal, former ministers accused of corruption reacted indignantly to the charges, seemingly unaware that what they had done was wrong because of their immersion in a patrimonial culture of amiguismo. This issue may be even more problematic in relation to the EU because, as Nelken notes, the tendency towards corrupt practices is influenced by the lack of real association or belief in a supranational state: the extortion, therefore, is from something which the perpetrators do not see as their own. What is noticeable is that, despite the spread of corruption and its exposure, there has been an absence of any serious

246 Conclusion

reflection or debate in the various countries on the cultural traits that facilitate the emergence of corruption and how they might be tackled. There would appear to be two interrelated levels that need to be tackled: the individual and the system (or broader society). It is possible to portray ideals for both these levels. With respect to the individual, for example, the Nolan Committee in Britain called for the respect of seven principles of public life: selflessness, integrity, objectivity, accountability, openness, honesty and leadership. These principles should, the committee argued, be underpinned by codes of conduct, internal systems and guidance and education in specific areas. With respect to the system, Transparency International has defined the fundamental parts of a ‘National Integrity System’ (as outlined by van Duyne et al.). These include: political democracy; partnership between government and organizations; modern administration with a tradition of reform; administrative law aimed at the probity and accountability of decision-makers; channels for reporting corruption, and monitoring procedures; an independent judiciary; an open, competitive and transparent system of public procurement; private sector self-regulation with rules and legal deterrence against corruption; an alert and free media; independent anticorruption agencies, and co-operation with other countries to combat international corruption. These are obviously ideals. While they provide countries with a benchmark by which to evaluate their current situation relative to the state of other nations, they provide only general guidelines as to how a state can regulate institutions, personnel and activities in such a way as to minimize corruption. Yet, they do underline certain important points. First, addressing individual behaviour and responsibility is paramount, difficult as this may be. Second, laws and regulations should not be merely restrictive, but should attempt to reinforce the importance of moral and ethical behaviour. Doig, using the research of authors such as Anechiarico and Jacobs (1996) and Gregory and Hicks (1999), emphasises the limitations of an exclusive reliance on anti-corruption laws and regulations, in view of the assumption on which they are formulated – that public officials are not to be trusted – and the effect this is likely to have on the behaviour of politicians and the attitudes of the public. Third, the broader emphasis of any anti-corruption campaign should be on trying to promote and improve a common ethical culture, something that requires education and cultural change. This does not mean hoping to return to a golden age when corruption did not exist. Proceeding on that false assumption (as has happened in the British case) makes achievement of the objective more difficult, for if corruption can be considered a profession, then it probably has greater claim than does spying to be the second oldest. In that case, the task of overcoming it is a long-term one based on education, integrity policies and cultural change, and thus far this approach is most noticeable in countries with good corruption records, such as Sweden and The Netherlands. This suggests that processes such as

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European integration have an important role to play in gradually modernizing some states and cultures and undermining their patrimonial and clientelistic practices. This, however, will require the institutions of the EU themselves to develop a better image in relation to corruption.

Notes 1. In the German case, for example, it is argued that the public does not value democracy for its own sake because it did not acquire democracy by itself. 2. He also notes that the most interesting recent development is the growth of unofficial Internet sites dedicated to corruption exposure. 3. It should be noted that it is difficult to establish with any certainty the likely impact of the state of the economy. On the one hand, a long period of economic growth can provide opportunities for quick enrichment which are less than legal. On the other hand, a decline in economic growth can result in rising demands on the state to take corrective measures, and this can provide fresh opportunities for politicians and state officials to indulge in corrupt practices. 4. In the US it happened somewhat earlier, triggered by Watergate, something which marked the beginning of an explicit FBI strategy to uncover corruption of politicians at both the federal and state levels, and legislative attempts to prevent and control corruption. 5. Paradoxically, while amendments to party-funding legislation involve clearer provision of state funding (to reduce the need for parties to seek funds elsewhere), this provision was, in the Italian case, removed by popular referendum in 1993 almost as a punishment for the parties’ involvement in corrupt practices (a measure of state funding was later re-introduced by a back-door method).

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Index ABSCAM (Abdul Scam) (US) 74, 78n Aburish, S. 210 Ackaert, J. 97 Acton, Lord 65 Adams, J.R. 69 Ades, A. 215, 218 administrative impact 175, 176 Ahern, Bertie 174 aid agencies 211–2 AIMA 228, 229, 230, 231 Aitken, Jonathan 131n Alatas, S.H. 162n Albania 204, 205 Albero, Vicente 11 Al-Fayed, Mohamed 185, 187 Alletzhouser, A. 119n Allied Irish Bank (AIB) 169 Allum, P.A. 40, 43 Alta Autoridade Contra Corrupao (AACC) (Portugal) 123–4 amiguismo 125, 131n, 245 Andersson, S. 140, 147n, 148n Andreas Papandreou Institute 34 Andréu Abela, J. 10, 10 Andvig, J.C. 217 Anechiarico, F. 78n, 189, 246 Ansbacher accounts 165, 169 anti-corruption measures 3, 4, 24, 234, 241–2, 244–5 Belgium 100, 101–3 Central and Eastern Europe 201–3, 206n France 87–8, 90–1, 92n Germany 60–2 Greece 24, 30–3 international corruption 76, 207, 208–13 Ireland 172–3, 175, 176 Italy 44–5, 47 Japan 107 Netherlands 155–9, 159 Portugal 121, 122–4, 129 Spain 19–20 Sweden 140–2

UK 188–9 US 70–5, 76, 78, 247n Appleton, A. 92n Armenia 202, 205 Armin, Hans Herbert von 65n arms sales France 85, 90 Germany 59 Athens Daily 34 Attali, Jacques 90 Audit Commission (UK) 182 Australia 34–5 Autonomous Communities (Spain) 18 AYET-Heracles scandal (Greece) 30 Azerbaijan 202, 204, 205 Balcerowicz, Leszek 199, 205 banking 28 Barreiro, B. 20 Barrez, D. 105n Barroso, Manuel Durao 131n Beef Tribunal (Ireland) 167, 170–1 Belarus 205, 206n Beleza, Leonor 125 Belgium 93–4, 104–5, 244 anti-corruption measures 101–3, 242, 245 causes 96–101, 236, 237, 238, 239 Corruption Perceptions Index 9, 79 impact and exposure 103–4, 242, 243 newness, scale and varieties 94–6, 234, 236 Benaissa, H. 162n Ben-Veniste, R. 76 Berlinsky, U. 25 Berlusconi, Silvio 48, 49, 241 Bernstein, C. 75–6 Billiet, J. 97 black economy 35 Blair, Tony 163n Blankenburg, E. 54, 55, 56, 61 Bois, C.-A. 158 Bokassa, Emperor 83

263

264 Index Borchert, J. 124 Bosnia and Hercegovina 202 Botsis Foundation Archives 29 Bourdieu, Pierre 131n Brasz, H.J. 162n Bribe City (Italy) 6n, 37–8, 43, 44–5, 46–7, 48, 228, 244 bribery 42, 136 Belgium 94, 97 France 90 Greece 25, 27–8 international corruption 208–9, 212, 217–19 Sweden 137–41, 145, 145, 146 UK 178, 187–8 US 76, 202 Britain see United Kingdom Buddhist Clean Party (Japan) 109 Buitenen, P. van 153 Bulgaria 195, 199, 201, 202, 205, 206n Bull, M.J. 3, 4, 48 burakumin 116 bureaucracy see civil service Burke, Ray 165, 171, 175 business morality 171–2 business politicians 240 cabinet (France) 83, 86, 237 caciques (Portugal) 121 Cadilhe, Miguel 125 Caiden, G.E. 162n Caínzos, M. 20–1 Caldeira, G.L. 96 Caligula-appointments 154–5 Calise, M. 45 Campelo, Daniel 128 Canada, Corruption Perception Index 34–5 Canard Enchaîné, Le 84 Cars, Thorsten 140, 147n, 148n cash-for-questions scandal (UK) 178, 182 Cazzola, F. 38, 39 CECS 10, 10 Central and Eastern Europe (CEE) 35, 193, 204–5, 214 anti-corruption measures 201–3, 241, 242, 245 causes 196–9, 236, 239 dynamics 199–200, 240 impact and exposure 203–4, 243

newness, scale and varieties 194–6, 235, 236 centralization 80 Centrum Badania Opinii Spol/eznej 194 Chernomyrdin, Viktor 206n Chiesa, Mario 43, 44 Chirac, Jacques 85, 90 Christian Democratic Party (DC) (Italy) 38, 40, 41, 46 Christian Democratic Union (CDU) (Germany) 57, 90 funding scandal 53, 54, 58–60, 61–2, 64, 131n Christian Social Union (CSU) (Germany) 57 CIRES 12, 12, 16, 20, 22n, 23n CIS 11, 13, 13, 16, 17, 20, 22n, 23n civil service 242 Belgium 99, 102 France 84 Greece 26–7, 26, 30–1 Portugal 123 Spain 16–19 UK 178, 179 civil society 35, 203 Belgium 100 Central and Eastern Europe 200, 201–2 Clark, W. 194 Clean Hands campaign 201 see also Mani Pulite clientelism 155, 237 Belgium 96–7, 103, 104 France 162n Greece 27, 28–9 Ireland 166 Italy 41, 43, 48 Portugal 121, 126–8 Coalition 2000 194, 206n Coelho, Tony 75 Cole, A. 92n Colley, George 165 Collins, N. 170 Committee of Independent Experts (EU) 220, 232 Committee on International Investment and Multinational Enterprises (CIME) (OECD) 212 Committee of Public Accounts (PAC) (UK) 181, 182

Index 265 Committee on Standards and Privileges (UK) 186–7 Committee on Standards in Public Life (UK) 186, 187, 188, 190 Common Agricultural Policy (CAP) 221, 232 Common Cause (US) 77 common good 2 Commonwealth of Independent States 193 communist legacy 196–7, 202 Communist Party (France) 81 Compellability, Privileges and Immunities of Witnesses Act 1997 (Ireland) 175, 176 Comptroller General of the United States 209 Confederacao Geral de Trabalhadores Portugueses (CGTP-In) 126–7 Consejo General del Poder Judicial (CGPJ) (Spain) 19 Conservative Party (UK) 181–2, 184, 185 Consiglio Superiore della Magistratura (Italy) 19 consociationalism 100 construction industry Germany 55, 57 Ireland 171–2 contaminated blood scandal (France) 91 Cools, André 105n corruption see political corruption Corruption Perceptions Index (CPI) 4, 34–5, 77, 214, 234, 235 Belgium 93, 104 Central and Eastern Europe 202–3, 206n France 79 Ireland 164 Italy 37 Japan 106 Portugal 120 Spain 9, 9, 13, 15, 21 Sweden 136 Corrupt Practices Act 1921 (US) 71 Council of Europe 24, 202 Council of Ministers 223, 224 Courroye, Philippe 85, 92n court building 154 Cravinho, Joao 127

Craxi, Bettino 1, 44 Cresson, Edith 1, 162n, 220 Croatia 202, 205 Crowther-Hunt, Lord 178 cultural factors 236–7, 245–6 Belgium 96–7 Netherlands 151 cultural impact 244 cumul des mandats 80, 86, 87 Curtis, G.L. 107 customs officers 28, 36n, 195, 216, 236 cynical corruption 27 Czechia 199, 201, 202, 205 Dagens Nyheter 137, 138–9 Dáil Eireann 168, 172–3, 175 Daiwa Securities 116 Dales, Ien 155–6, 162n Dalton, R.J. 63 danger zones 135, 146 decentralization 237 France 86–7, 90, 91 Spain 16–18 Dechamps, G. 36n De Gaulle, Charles 81, 82–3 della Porta, D. 2, 6n, 37, 41, 42, 43, 44, 45, 47, 65n, 79, 100, 176, 205 democracy 25, 219n, 236, 247n Central and Eastern Europe 203–4 Portugal 121–2, 130 Democratic Party (DPJ) (Japan) 106–7, 110 Democratic Party of the Left (Italy) 45 Democratic Socialists (Japan) 109 Demoscopia 12 Deschouwer, K. 100, 105n De Sousa, L. 124 developing countries 1, 35 Devier-Joncour, Christine 91 Dewachter, W. 97 De Winter, L. 96, 97, 98, 100, 104, 105n Diario Economico 129 Dierickx, G. 99 Di Federico, G. 45 direct corruption 135–6, 136, 140 see also bribery Directorate for the Fight Against Corruption, Fraud, and Economic and Financial Infringements (DCCCFIEF) (Portugal) 123–4

266 Index Di Tella, R. 215, 218 Dobel, J.P. 35 Doig, A. 178, 185, 189 Doolan, B. 175 Doss Jr, M.T. 69, 72, 73, 75 Drnovsek, Janez 205 Drysch, T. 81 Dubro, A. 111 due process norms 1 Dumas, Roland 155 Dumont, P. 98 Dunlop, Frank 171–2 Durkheim, E. 2 Dutroux affair (Belgium) 93, 103 Duyne, P.C. van 152, 154, 161, 162n, 246 Dwyer, T.R. 165 Eastern Europe see Central and Eastern Europe Eastern Germany 57, 58, 63, 244 see also German Democratic Republic (GDR) economic factors 35, 151 economic growth 247n Italy 38 Spain 15–16, 21 economic impact 173–4, 242–3 education 28, 201 Portugal 130 Eigen, P. 158 Eisfeld, R. 126 Electric Power Authority Scandal (Greece) 36n, 235 Elevtherotypia 32 Elf-Aquitaine 59, 85, 90, 91 Elgie, R. 82, 84, 91n equality 5 Estonia 201, 202, 204, 205 ethical factors 35 Spain 15, 16, 17 ethical leadership 168–9 Ethics in Government Act 1978 (US) 73 Ethics in Public Office Act 1995 (Ireland) 172, 175, 176 Eurobarometer 103, 104, 174 European Agricultural Guidance and Guarantee Fund 225 European Anti-Fraud Office 130, 222 European Commission 1, 232, 232–3n

anti-corruption measures 24, 220 corruption allegations 154, 220, 222–3, 234 official accounts of fraud 224–5, 225 whistleblowers 153 European Court of Auditors 222, 223, 224 European Parliament 220, 222, 223, 224 European Union 220–1 allegations of corruption 247 anti-corruption measures 141, 158, 202, 241 Central and Eastern Europe 200 fraud 126, 127, 221–3, 232, 236, 240, 245 Italy 45 Kohlgate 59, 64 official accounts of fraud 224–6, 225 Portugal 130 unofficial accounts of fraud 226–31 European Values Study 96 euthenoi 24 Evans, J. 89 Express, L’ 84 Expresso 129 extravangance phase 152–3 Fabius, Laurent 91 fakellitis 28 favouritism 154–5 Fazzo, Luca 49n Featherstone, K. 29 Federal Bureau of Investigation (FBI) 73–4, 201, 247n Federal Election Campaign Act 1971 (FECA) (US) 71, 73 Federal Republic of Germany see Germany Fianna Fáil 165, 167, 170 Fitzgerald, Garret 167, 176 Flick affair (Germany) 54, 56, 58, 61, 65n Flood Tribunal (Ireland) 165–6, 165, 171–2, 173 Flynn, Pádraig 165 Foley, Denis 165, 172, 175 Follini, M. 46 Foreign Corrupt Practices Act 1977 (FCPA) (US) 73, 76, 207, 208–11, 212, 219n

Index 267 foreign direct investment 210, 214–15, 243 Forza Italia 49 Fraile, M. 23 Frain, M. 125 Frampton, G. 76 France 79–80, 90–1, 244 anti-corruption measures 87–8, 241, 242 causes and dynamics 81–7, 237, 238, 239, 240 clientelism 162n Corruption Perceptions Index 9, 77 EU fraud 225, 226 historical context 80–1 impact and exposure 88–90, 88, 243 newness, scale and varieties 234, 236 Frank, M. 96 Free Democratic Party (FDP) (Germany) 57, 58 Freedom of Information Act 1997 (Ireland) 175, 176 freemasonry 128, 237 Friedrich, Carl 24 Frognier, A.-P. 98, 100 Front National (Belgium) 99 Front National (FN) (France) 89 Fuszara, M. 201 Gaidar, Yegor 199, 205, 206n Gallagher, M. 166 Garment, S. 72 Garzón, Baltasar 11 Gatti, R. 216 Gava, Antonio 228 General Confederation of Portuguese Workers (CGIP-In) 126–7 General Workers’ Union (UGT) (Portugal) 126–7 Georgia 202, 205 German Democratic Republic (GDR) 57, 195 see also Eastern Germany German People’s Union 62 Germany 1, 53, 64–5 anti-corruption measures 60–2, 242 causes 55–8, 237, 238, 239, 247n EAGG irregularities 225, 233n impact and exposure 62–4, 243, 244 newness, scale and varieties 54–5, 234, 235, 236

Ghijs, I. 105n Gibson, J.L. 96 Gidlund, G. 142 gift culture 108, 117, 245 Gilbert, M. 44 Gillespie, K. 208, 209 Gillett, R. 182 Gilljam, M. 148n Gingrich, Newt 73, 74–5, 78 Ginsberg, B. 78 Ginsborg, P. 37, 48 Girling, J. 54, 56, 58 Giscard d’Estaing, Valéry 83 Gladdish, K. 128 Glees, A. 65n global corruption 208, 214, 215 Glynn, P. 213 Gogarty, James 165, 171 González, Felipe 1, 11 Goria, Giovanni 228 Graham, E.M. 215 grandes écoles 84 Greanias, G.C. 208 Greece 24–5, 34–5, 244 anti-corruption measures 30–3, 242 causes and dynamics 27–30, 29, 236, 237, 239 EU fraud 222, 225 impact and exposure 33–4 newness, scale and varieties 25–7, 26, 234, 235, 236 Greens (Germany) 56, 57 Greer, Ian 185, 187 Gregory, R. 189–90, 246 Grémion, P. 91n Griggs, S. 82, 84, 91n Guardian 185 Guarnieri, C. 45 Gunlicks, A. 56, 65n, 81 Gurov, A. 194 Guterres, Antonio 125–6, 129 Haag, M. 141 Haider, Jörg 93 Hamilton, Neil 1, 185–7 Harasymiw, B. 197 Harrison, M. 84 Harrow, J. 182 Hashimoto, Ryutaro 113, 114 Hata, Tsutomu 109 Hatoyama, Yukio 110, 114

268 Index Haughey, Charles 165, 168–9, 171, 173 Heidenheimer, A.J. 2, 25, 53, 120, 147n, 162n Helm, J.A. 55 Hernu, Charles 83 Heywood, P. 22n, 174 Hibbing, J.R. 76 Hicks, C. 189–90, 246 Hines, J.R., Jr 209, 210 Hoetjes, B.J.S. 150, 162n Holmberg, S. 148n Holmes, L. 25, 194, 201 Hondeghem, A. 99 Hong Kong 199, 219 Hope, K.R. 173 Hosokawa, Morihiro 109, 114 hospitals 28 Huberts, L.W.J.C. 24, 149, 150, 151, 152, 162n, 213 Hungary 201, 202, 205 Huntingdon, S. 26 idioteles society 35 Ilegems, D. 94, 96 illegality 2, 3–4, 49, 135–6, 136 immigration 28, 36n immorality 135–6, 136 Independente 129 Index, Greece 30 indirect corruption 135–6, 136, 140 Indonesia 203 information sharing 201 Inglehart, R. 145, 148n institutional development 201 institutional factors 237–8 Ireland 168 Spain 15, 16–19 integrity 155–6, 246 international corruption 207–8, 217–19, 234 Foreign Corrupt Practices Act (US) 208–11 global trends 213–15 OECD convention 212–13 and openness 215–16 political level 216–17 regulation 211–12, 242 International Monetary Fund (IMF) 202, 215 Ireland 164, 176–7

anti-corruption measures 172–3, 241, 242 causes 166–9, 237, 238, 239 Corruption Perceptions Index 9 dynamics 169–72, 240 impact and exposure 173–6, 242, 243, 244 newness, scale and varieties 164–6, 165, 235, 236 Irish Times 169 Italgrani 228 Italian Communist Party (PCI) 38, 40, 41, 45 see also Democratic Party of the Left Italy 1, 37, 48–9, 120, 156, 244 anti-corruption measures 19, 44–5, 241, 242, 247n causes 39–42, 236, 237, 238, 239 Corruption Perceptions Index 35, 77, 79, 93 dynamics 42–4, 240 EU fraud 225, 226–31 impact and exposure 46–8, 142, 242, 243, 244 newness, scale and varieties 37–9, 234, 235, 236 Tangentopoli 6n trust 174 Izui, Junichi 115 Jacobs, J.B. 78n, 189, 246 Japan 106, 117–18, 244 causes and dynamics 107–10, 237, 238, 239, 240, 245 corruption as endemic feature 106–7 Corruption Perceptions Index 9 impact, anti-corruption measures, exposure 110–15, 241, 242, 243, 244, 245 newness, scale and varieties 235, 236 organized crime 116–17 Japan Harbour Transport Association 116, 117 Japan’s New Party 109, 112 Jean-Pierre, Thiery 85 Jiménez, F. 10, 20–1 Johnston, M. 164 Joly, Eva 85 Jörle, A. 147n Jospin, Lionel 90

Index 269 Jubb, E. 75 judiciary 237–8, 242 Belgium 95–6, 100, 102, 103 France 85 Greece 28 Portugal 122–3 Spain 19 Juppé housing scandal (France) 91 Kanemaru, Shin 109, 112–13, 118 Kaplan, D.E. 111 Katsoudas, D. 29 Katz, R. 124 Kaufmann, D. 193 Kazakhstan 202, 205 Keating, Charles 69 Keating Five 69, 72 Kellner, P. 178 Key Jr, V.O. 71 Kjellberg, F. 135, 148n Klaus, Vaclav 199, 205, 206n Klitgaard, R. 162n Knapp, A. 92n Knauß, I. 151 Kobe earthquake 118 Koenkai 107, 108 Kohlgate (Germany) 53, 54, 58–60, 61–2, 64, 131n Kohl, Helmut 1, 55, 63, 90 Komeito (Japan) 109 Komito, L. 166 Koskotas scandal (Greece) 29, 30 Koutsoukis, Kl. S. 26, 30, 36n Krause, Günther 65n Krugman, P.R. 215 Kyrgyzstan 202, 205 Laar, Mart 205 Labour Party (UK) 188 Lambsdorff, J.G. 97, 216 Lammens, A. 103 Lamo, E. 16 Lancaster, T.D. 4, 6n, 234 LaPalombara, J. 49, 127 Lasswell, H.D. 55 Latvia 202, 205 Lawsell, H.D. 2 Lawton, A. 158 Lazarenko, Pavlo 206n leadership 161–2

leadership disease 152–5 Lecanuet, Jean 86 Lee, R. 202 Leuna oil refinery 59 Levi, M. 223 liberal democracy 5, 37 Liberal Democratic Party (Russia) 195 Liberal Democrats (LDP) (Japan) 106–7, 108–9, 110, 111–13, 114, 117–18 Liberal Party (LP) (Japan) 106–7, 109 Lijphart, A. 100 Lincoln Savings and Loan 69 Lithuania 202, 205 Livanios, A. 32 Livingstone, Bob 75 Lloyd, T.O. 179 lobbying 183–5 local government France 85–7 Spain 17–18 UK 188, 189 Local Government Act 2000 (Ireland) 173 Lockheed scandal 102, 111, 149 Lopes, F.F. 125 lottizzazione 40–1 Lowry, Michael 165 Lúcio, À.L. 122 Lukanov, Andrey 206n Luther, R. 100 Lynskey Tribunal (UK) 179, 182–3 Lytras, T.L. 32 Maas, Johan 162n Macedo, Jorge Braga de 125 Macedonia, Republic of 202, 205 Macmullen, A. 130 Maddens, B. 97 Magatti, M. 38, 39, 42 Magone, J.M. 123, 124, 125, 126, 127, 131n Mair, P. 124 Maize case (Greece) 222 Majersdorf, P. 99 Major, John 185 Mancuso, M. 184 Mani Pulite 39, 43, 201 marchés des lycées investigation (France) 91

270 Index market exchanges 4–5, 15, 207, 211 masons 128, 237 Matza, D. 229 Mauro, P. 218 McAllister, I. 174 McCracken Tribunal (Ireland) 165–6, 165, 169, 171 McSweeney, D. 70, 71, 76 media 235, 238 Belgium 100 Central and Eastern Europe 194, 201, 206n France 84, 89 Greece 29–30, 29 and international corruption 217 Japan 110–11 Netherlands 161, 163n Portugal 129 Spain 10–11, 10 Sweden 137, 146, 147n US 75–6, 77 Members of Parliament (UK) 178, 182–7 Mény, Y. 65n, 86, 91, 120, 205 Merkel, Angela 61, 63 Méry, Jean-Claude 90, 92n Metcalfe, D. 92n Milan 241 Miller, W. 194 Mitchell, Jim 175 Mitsotakis, K. 29, 29, 30 Mitterand, François 59, 64, 79, 83 Mitterand, Jean-Christophe 89 Miyamoto, M. 115 Moene, K. Ove 217 Moldova 202, 205 Möller, T. 142 Montinola, G.R. 4, 6n, 234 Moody-Stuart, G. 213, 216 Moriarty Tribunal (Ireland) 165–6, 165 Moroni, Sergio 49n Mórón, Sánchez 18 Morris, S.D. 2 Mundo, El 10, 10 Murdoch, Rupert 163n Murtagh, P. 168 Myrdal, G. 26 Nabo, Francisco Murteira 126 Nagoya Connection 116 Nakajima, Yujiro 109, 113

Nakamura, Kishiro 112 Nano, Fatos 206n National Audit Office (UK) 182 National Democratic Institute for International Affairs 176 National Front (FN) (France) 89 National Institute of Law Enforcement and Criminal Justice 190, 245 National Integrity System 158–9, 159, 246 National Statistical Service of Greece 26 Négrier, E. 91n Neill, Lord 187 Nelken, D. 223, 227, 229, 233n Nelson, T. 202 neo-liberalism 198, 199, 200, 202, 205, 206n Netherlands 149, 161–2, 246 anti-corruption measures 155–9, 159, 242, 245 causes 150–2, 151, 237, 239 dynamics 152–5 EAGG irregularities 225 impact 160–1 newness, scale and varieties 149–50, 150, 235 trust 174 Neue Heimat scandal (Germany) 55, 57 New Democracy (Greece) 1, 29, 30 Newell, J.L. 3, 4, 41, 44, 48 newspapers see media New Zealand 34–5 Niemeijer, E. 150 Nikko Securities 116 Nixon, Richard 71, 73 Noack, P. 131n Noel-Baker, Francis 183 Nolan Committee (UK) 186, 246 nomenklatura 195–6, 198, 205 Nomura Securities 116 norms 156 Northern League (Italy) 244 Norton, P. 168 notables 79, 80, 85, 86, 90, 91, 240 Obuchi, Keizo 109, 113 Octopus projects 202 Office of Government Ethics (US) 73 Office of Independent Counsel (US) 73 O’Flaherty, Hugh 170, 177n

Index 271 O’Higgins, E. 170 OLAF 130, 222 ombudsman 122 organizational culture 237 Organization for Economic Co-operation and Development (OECD) 24, 90–1, 202 Anti-Bribery Convention 76, 92n, 158, 187–8, 212–13, 217, 218 Spain 18 organized crime 24, 237 Central and Eastern Europe 194, 195, 202 EU fraud 228–31 Ireland 172 Japan 111, 116–17 Netherlands 152, 156 O’Shea, M. 170 O’Toole, F. 170 ownership phase 153–4 Ozawa, Ichiro 109 paedophilia scandals (Belgium) 93, 103 pantouflage 84 Papandreou, An. 29–30, 29, 36n, 235 Paris-Match 89 Parteiverdrossenheit 63 Partido Popular (PP) (Spain) 10, 11–12, 20, 21 partitocrazia 39–41, 48, 244 Partridge, H. 40 Party of Democratic Socialism (PDS) (Germany) 57, 63 PASOK (Greece) 29–31 Pasqua, Charles 90, 92n Passas, N. 227 Paterson, W. 65n patrimonialism 121–2, 124–8, 130 patronage 195–6, 197 Pearson, G. 183 Pechiney scandal (France) 83 Peper, Bram 160–1 Perduca, A. 221 personnel management 156–7 Petersson, O. 143 Petropoulos, J.A. 25 Philippines 203 Pieth, M. 158 Pinto, Mota 123 Pizzorno, A. 37 Point, Le 84

Poland 197, 199, 201, 202, 205 police corruption 188, 189, 201 political corruption 1–5, 24–5 causes and dynamics 236–40 impact and exposure 242–4 newness, scale and varieties 234–6, 244 see also anti-corruption measures political factors 35, 151, 236–7, 239–40 political impact 174–6, 244 political parties 1, 236, 238–9, 242, 243 Belgium 96, 98–100, 101–2 Central and Eastern Europe 195 France 79, 81–2, 87–8, 89 Germany 54–6, 57, 62, 63, 64 Greece 31–3 Ireland 166–7 Italy 39–42, 46–7, 48, 247n Japan 108, 109–10 Netherlands 158 Portugal 121, 124–5 Spain 20, 21 Sweden 144 UK 178 US 70, 71 see also individual political parties political pathology 24 Political Scandals and Causes Célèbres since 1945 35 politicians 238–9 Pomicino, Cirino 228 Pompidou, Georges 83 Pope, J. 158 Portas, Paolo 128 Portugal 120–1, 130–1, 244 anti-corruption measures 122–4, 129, 242 causes 236, 237, 238, 239, 245 Corruption Perceptions Index 9, 35, 93 democratic governance 121–2 dynamics 124–8 impact and exposure 129–30 newness, scale and varieties 235, 236 Potter, G. 120 Poulson scandal (UK) 180, 184, 190 press see media Preston, N. 158 Prevention of Corruption Acts 1906 and 1916 (Ireland) 172

272 Index Prévost-Desprez, Isabelle 85 principal–agent models 2–3 prisons 28 privatization 198, 199, 200, 201 Prodi, Romano 220 Provedor da Justica (Portugal) 122 Public Bodies Corrupt Practices Act 1889 (Ireland) 172 public debt 103, 242 Publico, O 129 Pujas, V. 82, 87, 131n Punch, M. 24, 156 Quirke, B.

130

Rainbow Warrior 83 Rally for France (RPF) 92n Rally for the Republic (RPR) (France) 90 Ranson, S. 190 Rau, Johannes 60 Recruit scandal (Japan) 111–12 Redcliffe-Maud inquiry (UK) 180–1 Reddies, B. 112 Redmond, George 171 Régie de Téléphone et Télégraphe affair (Belgium) 94 Report of the Committee on Intermediaries 183 Repubblica, la 38 Republican Party (Portugal) 121 Republikaner (Germany) 62 Revue Politique et Parlementaire 85 Rhodes, M. 42, 82, 87, 120, 131n Riddick, Graham 185 Rigby, T.H. 197 Riglet, M. 87 Rihoux, B. 103 Roberts, R.N. 69, 72, 73, 75 Robinton, M.R. 179 Roer, R. van de 160 Rogow, A. 2, 55 Roldàn, Luis 11 Romania 202, 205 Rose, R. 204 Rose-Ackerman, S. 38, 217 Rostenkowski, Dan 75 Roszkowski, W. 25 rotativismo (Portugal) 121 Rothacher, A. 111, 112, 116, 119n rousfeti 25

Rubio, Mariano 11 Russia 195, 199, 205 anti-corruption measures media 194 state apparatus 196 Rydell, S. 138

201, 202

Sabato, Larry 77 Sabouret, J-F. 119n Sacerdoti, G. 219n Sagawa Kyobin scandal (Japan) 112–13 Salmon inquiry (UK) 180–1 Sampford, C. 158 Sa-nchez-Cuenca, I. 20 Santos, B. de Sousa 122, 123, 131n Santos, Francisco Pinto dos 127 Sapelli, G. 121 Sappenfield, M. 78n Sasagawa, Ryoichi 115 Sauviller, R. 94, 96 Savona, E. 222, 223, 227 Scandinavia 34–5, 120, 198–9 see also Sweden Schäuble, Wolfgang 59, 61, 62 Scheyren, Raymond 105n Schneider, F. 97 Schreiber, Karl-Heinz 59 Schröder, Gerhard 62 Scott, J. 33 Segni, Mario 46 Seibel, W. 57, 58, 61, 65n Select Committee on Members’ Interests (UK) 184–5 Service of Public Administration Comptrollers (Greece) 30, 31 sexual misconduct 114, 185, 186 Sharrock, W.W. 41 Sheedy affair (Ireland) 170 Shefter, M. 78 Shinto (Japan) 109, 112 SIC 129 Sieber, U. 223 Sierra Leone 120 Simis, D. 194 Simitris, K. 29, 30 Singapore 199, 219 Sirven, Alfred 89 Skele, Andris 206n Slavenburg bank 160 sleaze 185 Slezevicius, Adolfas 206n

Index 273 Slovak ia 201, 202, 205, 206n Slovenia 202, 204, 205 Smith, G. 63 Smith, T. Dan 180, 190 Smith, Tim 185–6, 187 sniffer-aircraft affair (France) 83 Soares, Mário 126 Social Democratic Party (Portugal) 125, 127–8, 131n Social Democratic Party (SPD) (Germany) 57, 62 Social Democratic Party (SPD) (Sweden) 139, 140, 146 social factors 35, 151 Socialist Party (France) 82, 86, 89 Socialist Party (PSI) (Italy) 43, 46 Socialist Party (Portugal) 121, 126–8 Socialist Party (Spain) 10, 11–12, 17, 20, 21, 22n Socialists (JSP) (Japan) 109 sogo shosha 115 sokaiya 116 Sousa, Marcelo Rebelo de 125, 131n Southern, D. 65n Spain 1, 21 anti-corruption measures 19–20, 241, 242, 245 causes and peculiarities 15–19, 237, 238, 239 Corruption Perceptions Index 9–10, 9, 35, 93, 234 EAGG irregularities 225 impact and exposure 20–1, 243 newness, scale and varieties 10–13, 10, 11, 12, 13, 14, 15, 234, 236 Spence, D. 130 Spiegel, Der 60 Spiegel Affair (Germany) 54 Standards Board (UK) 188, 189 Starr, Kenneth 73 state administration see civil service Stavisky affair (France) 80 Steffens, Lincoln 78n Sterling, C. 202 Stewart, J. 190 Stock, M.J. 126 Stoyanov, Peter 204 Strauß, Max 131n Strauss-Kahn, Dominique 92n structural factors 151, 237–8 Belgium 97–101, 104

Greece 27 Spain 15–16, 16 structural funds 126, 127, 221–2 Suchocka, Hanna 205 Sunday Independent 169 Svensson, G. 148n Sweden 135–6, 136, 145–7, 246 anti-corruption measures 140–2, 242 causes 143–5 dynamics 138–40 impact and exposure 142–3, 143, 243 newness, scale and varieties 136–8, 137, 235 Swedish Trade Union Confederation 139, 140, 146 Swyngedouw, M. 104 Sykes, G.M. 229 Szilagyi, Z. 201 Takahashi, Harunori 113 Takashima, Shiro 117 Takeshita, Noburu 109 Tanaka, Kakuei 109, 111, 118 Tangentopoli 6n, 37–8, 43, 44–5, 46–7, 48, 228, 244 Tapie, Bernard 85 tax evasion 243 Ireland 169, 170 Italy 39 Thatcher, Margaret 181 Theobald, R. 26 Thierse, Wolfgang 61, 63 Thompson, B. 120 Thompson, D.F. 69, 74 Tillman Act 1907 (US) 70–1 Todorov, B. 195 Tokaimura nuclear accident 118 Tokyo Kyowa 113 trade 216 Transparency International (TI) 4, 6n, 24, 207 Bribe Payers Survey 97 Central and Eastern Europe 204 international corruption 212 local chapters 201–2, 242 National Integrity System 158–9, 159, 246 see also Corruption Perceptions Index Tredinnick, David 185 Tribunal de Cuentas (Spain) 18–19

274 Index trust 5, 235, 240, 243, 244 Belgium 93, 97, 103, 104 Central and Eastern Europe Ireland 164, 174 Italy 42 Sweden 143, 148n US 67, 70, 73, 75, 76, 78 Tsutsumi, Yoshiaki 115 Turner, J. 183 Türsan, H. 104

204

UCLAF 222 Ukraine 201, 202, 205 Uniao Geral dos Trabalhadores (UGT) (Portugal) 126–7 United Kingdom 1, 35, 178, 189–90 1970s 180–1 anti-corruption measures 188–9, 241–2, 245, 246 causes 237, 238, 239 dynamics 240 EU fraud 225, 232 historical roots 179–80 newness, scale and varieties 234, 236 old boys network 206n sleaze and standards 186–8 Thatcherism and new public management 181–2 United Nations 24, 202 United States 35, 66, 77–8 anti-corruption measures 70–5, 242, 245, 247n causes and dynamics 67–70, 237 impact and exposure 75–7, 243 international corruption 202, 207, 208–11, 213 and Japan 117, 118 media 238 newness, scale and varieties 66–7, 235, 236 universalism 40 Uno, Sosuke 114 Urba (France) 82 Uzbekistan 205 Vahi, Tiit 205 Vahlenkamp, W. 151 values 156

Vannucci, A. 2, 6n, 37, 41, 42, 43, 44, 45, 47, 79, 100 Vitorino, Antonio 125–6 Vitosha Research 194 Vlaams Blok (Belgium) 99, 101, 103–4 Voyé, L. 96 VRIND 104, 105n vulnerability 156, 242 VVD (Netherlands) 158 Walgrave, S. 103 Walsh, D. 171 Walsh, Lawrence 73 Watergate scandal (US) 66, 71, 73, 75–6 Waters, S. 44 Weber, E. 80 Weber, Max 91 Wei, S-J. 216 Weizsäcker, Richard von 60 Welch, S. 76 Wertheim, W.F. 162n Wesberry, J.P. 213 whistleblowers 153, 227–8, 238 Belgium 98, 100, 101 Netherlands 159, 162 Sweden 143, 144 White March (Belgium) 103 White, S. 225 Williams, P. 202 Williams, R. 2, 66, 73, 75, 78n Williams, S. 184 Wilson, H.H. 183 Wilson, J. 185 Wilson, J.Q. 74 Windsor, D. 208 Woodward, B. 75–6 World Bank 77, 193, 202, 206n Wrede, M. 143 Wright, Jim 74–5 Wright, V. 86, 90 Yakuza 111, 116–17 Yamaguchi, Toshio 113 Yamaichi Securities 114, 116 Yugoslav corn scandal (Greece) Yugoslavia 202, 205

36n