Philippine Business Magazine: Volume 8 No.1 - Issues & Industries
The Price Of Corruption
Corruption has become a local buzzword and the reason for the ouster of the country's highest public official
By Edward Marcel C. Gacusana

Ousted through People Power II, deposed President Joseph Estrada remains insistent that he is innocent of the charges hurled against him. It took a rather vigilant, if not militant, civil society (NGOs, people's organizations, business and religious sector) - who first filed complaints against him - to topple the graft-ridden administration.

Everybody gave the impeachment trial a chance despite of acquittal predictions. But when the public saw how the system they have trusted failed and some legislators unfurled their partisan bias, the president's trial shifted to EDSA, and as history would record it, to the bloodless second People Power Revolution.

Now that the nation is rebuilding again, it is rather timely to ask whether lessons have been learned. Are the institutions built ready to detect and prosecute the transgressors that care no less for integrity and transparency?

Corruption was cracked to its core in a recent public lecture by Dr. Robert Klitgaard, co-author of the book Corrupt Cities: A Practical Guide to Cure and Prevention and dean of the RAND graduate school in Santa Monica, California.

Dr. Klitgaard defines corruption simply as the misuse of one's office for private gain. What is important, though, is to understand the types of corruption that breed in the system. It is also important to know the economic costs, social costs, and political costs of corruption in order to confront it well.

C= M + D - A
Dr. Klitgaard presents a formula to understand how corruption works. He says, "It takes monopoly plus a lot of discretion without any accountability to have corruption."

Monopoly. It is synonymous to a cartel, a consortium, or having exclusive possession. For illustration purposes, observe how an alliance of suppliers clinches textbook contracts from the Department of Education, Culture, and Sports. With the collusion of suppliers, the consortia created could very well control prices to the government's detriment. Or it could be in another form, a department head eliciting either a new car or cash for a single signature in a contract. In other instances, it could be both.

Discretion. A clear instance would be in a licensing agency. The agency has the option of approving, denying, or delaying the transaction. In fact, the persons in charge of processing documents have the option to decide whether to grant the license or not. The reasons for denying or delaying the application can be endless unless the requesting party gives a bribe.

Accountability. Who is responsible? Without this, in any field of work, if one does not get punished or get incentives, the level of tolerance for corruption would have a natural tendency to permeate in the culture. If no one answers for his own actions whether right or wrong, then there is a danger of depleting accountability.

Every organization or local or city government should begin to understand these key factors. Local and city governments are susceptible to systematic corruption, other than vulnerable sites of petty tyrannies. That is why Dr. Klitgaard suggests simplification of procedures in government agencies, especially in areas that are payment- or approval-intensive.

Attitude Matters
"We must first overcome the feelings of shame, apathy, and futility," says Dr. Klitgaard. One tip that Dr. Klitgaard gives in handling corruption is to get the big fish. It will convince others that it is possible to win over corruption. It will show the soon blooming grafter that he will regret the day he took or gave a bribe. And it will encourage honest employees to speak up for any sign or smell of corruption.

Systematic change can happen if there is attitude change. Fighting graft should go beyond the works of policy. It is all about advocacy. It is all about attitude. Only a callous mind would refuse to fight corruption.

Solutions
Dr. Klitgaard identifies three key steps to solve corruption. The first is by participatory diagnosis. Involve employees in the process of identifying problem areas. In many cases, employees are willing to share information on the conduct of corruption. Consequently, it will be the employees themselves who will implement any anti-corruption scheme. Likewise important is to know "where, how much, who's helped, and who's hurt in the process," says Klitgaard.

Second, develop a strategy. How does one now reduce monopoly, limit discretion, and enhance accountability? Aside from punishments and incentives, the strategist should ensure that the program would be highly effective. He must ensure that the program has enough support from employees known for their integrity.

And finally, implementation. Dr. Klitgaard suggests some basic tips in implementing the strategy: use information and incentives; help your employees before attacking them; recover institutional memory - meaning, if there were any programs or procedures used in the past that were proven effective, then use them again; and ally with favorable institutional forces that abhor corruption.

Dr. Klitgaard relates how the town of La Paz in Bolivia solved corruption in the areas of public works, tax revenue collection, permits, and procurement during its worst year. The case proved how the town mayor managed to solve graft.

He used the key steps. He simplified procedures, diagnosed with employees, spotted areas prone to corruption, set proper regulations, and even analyzed the workplace.

The corruption expert provides some practical tips for analyzing the workplace. Observe if there are unnecessary drawers. Who are the employees who need to be alone or seen by many? Are there walls to separate employees? How are the desks and the rooms positioned? Those fighting corruption must understand how and where corruption breeds and who keeps it alive.