Corruption

In general, corrution is defined as the abuse of authority for improper gain. Public corruption refers to the misuse of governmental authority while private corruption indicates a misuse of purely nongovernmental power. Many analysts focus on public corruption. A very standard definition of public corruption, used by the World Bank, is “the abuse of public power for private benefit.” A more detailed discussion is offered by Bradhan who notes the violation of an implicit or explicit agreement between a principal and their agent:

A more neutral and legalistic formulation, and one that can apply in both public and private settings is offered by Tanzi; he defines corruption as consisting of “intentional non-compliance with arm's length relationship aimed at deriving some advantage from this behaviour for oneself or for related individuals.” There are other types of intentional subversions of processes such as political corruption (e.g., vote-buying in an election) but these meanings will not be considered here.

As to the types of specific actions that may constitute corruption, there are many. A few examples include: bribery and gratuities; influence peddling; offering one's official services for sale; misreporting of financial transactions; fictitious billing and invoicing; fabricating documents, signatures, and approvals; destroying records and evidence; fraud; misrepresentation; and providing special favor to related parties.

However context is critical in judging whether or not any of these actions in a specific instance are, in fact corrupt. For example misreporting may simply be due to negligence and not intentional, therefore not corrupt. Favoring of family members over nonfamily members may be culturally accepted in some cases and therefore not seen as corrupt, especially when the favored party is able to meet a particular obligation, such as a job qualification, even if that party is not the most able available.

Thus two sets of norms help to delimit what might constitute corruption in a given circumstance: morality and legality. Morally, the abuse of authority implies some violation of trust, whether it is the trust of the citizen in their officials or the trust of shareholders in their managers. And abuse that leads to gain is in a general sense doubly immoral, first because it is breaking a commitment (and thus lying to one or more parties, [Page 409]by omission or commission) and second because it implies taking resources that do not belong to the party taking those resources, i.e., stealing. There will be some cultural variation on whether a specific action in a particular context constitutes lying, betrayal, and stealing but these general concepts are in the abstract almost always universally disapproved of.

The law offers a second set of standards by which to judge corruption though these generally will be based on some prior moral precepts, if only loosely. Therefore corruption is not always illegal, nor is illegal behavior always corrupt. For example, gratuities offered by contractors to public agencies are, in most countries, generally legal so long as they are some de minimus (i.e., very small) amount. Conversely, misreporting of transactions to protect shareholders from a venal management might be illegal but might be the morally correct thing to do under the circumstances.

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