Corruption is a form of dishonest or unethical conduct by a person entrusted with a position of authority, often to acquire personal benefit. Corruption may include many activities including bribery and embezzlement, though it may also involve practices that are legal in many countries. Government, or ‘political‘, corruption occurs when an office-holder or other governmental employee acts in an official capacity for personal gain.
Corruption offences may also involve breaches of tax and accounting laws and stock market regulations. For example, a bribe wrongly shown in the accounts as an agency commission for legitimate services would constitute a false accounting entry which may be in breach of accounting laws and stock market regulations and may also constitute other types of criminal offence. Deduction of a bribe against tax may also constitute a breach of tax law. Prosecutors may find it easier to prosecute under accounting or tax laws rather than bribery laws as proof may be easier. Thus, a wide range of people may be caught in both the initial offence (such as bribery or submission of fraudulent claims), which may involve site and commercial staff, and in subsequent offences, which may involve accounting and legal staff.
TYPES OF CORRUPT GAINS
Abuse of discretion
Abuse of discretion refers to the misuse of one’s powers and decision-making facilities. Examples include a judge improperly dismissing a criminal case or a customs official using their discretion to allow a banned substance through a port.
Favoritism, nepotism and clientelism
Favoritism, nepotism and clientelism involve the favouring of not the perpetrator of corruption but someone related to them, such as a friend, family member or member of an association. Examples would include hiring or promoting a family member or staff member to a role they are not qualified for, who belongs to the same political party as you, regardless of merit.
R. Klitgard postulates that corruption will occur if the corrupt gain is greater than the penalty multiplied by the likelihood of being caught and prosecuted:
Corrupt gain > Penalty × Likelihood of being caught and prosecuted
The degree of corruption will then be a function of the degree of monopoly and discretion in deciding who should get how much on the one hand and the degree to which this activity is accountable and transparent on the other hand. Still, these equations (which should be understood in a qualitative rather than a quantitative manner) seem to be lacking one aspect: a high degree of monopoly and discretion accompanied by a low degree of transparency does not automatically lead to corruption without any moral weakness or insufficient integrity. Also, low penalties in combination with a low probability of being caught will only lead to corruption if
people tend to neglect ethics and moral commitment. The original Klitgaard equation has therefore been amended by C. Stephan into:
Degree of corruption = Monopoly + Discretion – Transparency – Morality
According to Stephan, the moral dimension has an intrinsic and an extrinsic component. The intrinsic component refers to a mentality problem, the extrinsic component to external circumstances like poverty, inadequate remuneration, inappropriate work conditions and inoperable or overcomplicated procedures which demoralize people and let them search for “alternative” solutions. According to the amended Klitgaard equation, limitation of monopoly and regulator discretion of individuals and a high degree of transparency through independent oversight by nongovernmental organizations (NGOs) and the media plus public access to reliable information
could reduce the problem. Any extrinsic aspects that might reduce morality should be eliminated. Additionally, a country should establish a culture of ethical conduct in society with the government setting the good example in order to enhance the intrinsic morality