The Integrity Initiative: What is corruption?

Mon, Jun 21, 2021 5:00 AM

This post originally appeared in Business Mirror. Click here to read the original post.

The Integrity Initiative: What is corruption?
By Henry J. Schumacher

While the Integrity Initiative  Inc. focuses on a variety of behaviors, like long-term sustainability over short-term gain, the main target of our mission is anticorruption, both in the government and in the private sector.
  • I respect the environment
  • I respect the labor laws
  • I pay the right taxes
  • I don’t smuggle
  • I don’t bribe

To understand corruption, we must first recognize what form corruption takes, what allows it to thrive, what consequences it can have on the society and what measures have been successful in controlling corruption.

So what is corruption? Like the heads of Hydra’s dragon, corruption presents itself in many shapes, though all originate from the same: temptation. Forms of corruption differ from one another in terms of both the sources of power that is exploited and the impact they have on the economy, business and on society at large. Let us look at two forms of corruption, each occupying extreme positions on a scale of corrupt activities. At one end is a somewhat benign example, such as the doorman asking for a small tip to let you into the office. At the other end, we find a more malignant example of a leader treating society’s assets as personal property.

Most people are exposed to corruption in its benign form when they have to pay a bribe to receive a service from a government office. Quite often, the service would have been a right of the citizen; the bureaucrat may merely have discretion over imposing some costs (in the form of delays and opportunity costs of permit denials) on the citizen before granting the service. A bribe is demanded to reduce that cost. This form of bureaucratic corruption usually occurs once a regulatory regime has been determined and the resource allocation decisions have been made—the bureaucrat is, in fact, interfering with the implementation of decisions.

At the other extreme, ‘political’ or ‘grand’ corruption arises from a leader or leadership team that has control over the country’s resource allocation and expenditure decisions. These people will maximize their personal wealth rather than the welfare of the population.

A portion of the wealth amassed through corruption is used to purchase the loyalty of those who will help these corrupt people to remain in power and to undermine the civic society and public institutions that may rise in opposition. This form of corruption leads to a misallocation of resources and an extreme degree of concentration of wealth in the hands of a few.

And there are many ways to view corruption other than in between the two extremes discussed above.

But corruption is also well entrenched in the private sector. Where does it happen?

In the top management,  in human resources, in sales and marketing,  in finance and accounting and especially in procurement and logistics.

That is the reason the Integrity Initiative’s endeavours are directed to both government and the private sector. While good progress is made in parts of the government (I will provide examples in future), the majority of the private sector is still reluctant to make the important step to sign the Integrity Pledge and live up to the commitments detailed in the pledge.

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