An Objective Corruption Risk Index Using Public Procurement Data

In order to address the lack of reliable indicators of corruption, this article develops a composite indicator of high-level institutionalised corruption through a novel ‘Big Data’ approach. Using publicly available electronic public procurement records in Hungary, we identify “red flags” in the public procurement process and link them to restricted competition and recurrent contract award to the same company. We use this method to create a corruption indicator at contract level that can be aggregated to the level of individual organisations, sectors, regions and countries. Because electronic public procurement data is available in virtually all developed countries from about the mid-2000s, this method can generate a corruption index based on objective data that is consistent over time and across countries. We demonstrate the validity of the corruption risk index by showing that firms with higher corruption risk score had relatively higher profitability, higher ratio of contract value to initial estimated price, greater likelihood of politicians managing or owning them and greater likelihood of registration in tax havens, than firms with lower scores on the index. In the conclusion we discuss the uses of this data for academic research, investigative journalists, civil society groups and small and medium business.     

Measuring Government Favouritism Objectively: The Case of Romanian Public Construction Sector

Government favouritism in the allocation of public funds raises costs for any society in which corruption prevails. Particularistic transactions can be identified in three different situations: uncompetitive awards of public contracts when there is only one “competitive” tender, when public money is spent on contracts supplied by politically connected firms, and a situation of capture in which one private contractor obtains a disproportionate share of contracts issued by some public agency. This present research has tested for the relevance of those three types of particularistic transactions that signal government favouritism as they apply to the Romanian construction sector for the period from 2007-2013, and to do so has made use of original public procurement databases. Furthermore, it will be proposed here that the “kickback”—a percentage of particularistic awarded values—can be used as a measurement of corruption. Even conservatively estimated, kickbacks account for much of the cost borne by any society that fails to eradicate corruption. For our purposes here, amounts of kickbacks at county level have been controlled against criminal convictions for corruption at county level. As a result, data analysis provides strong evidence that kickbacks based on particularistic allocation of public funds are indeed relevant in the measurement of corruption, and the steps used to evaluate kickbacks can be used just as well for other countries.     

Access, accountability and authority: Corruption and the democratic process

Democratic systems face the challenge of sustainingtheir political authority while simultaneouslyproviding access to the political system for theircitizens, and ensuring existence of mechanisms for theformal and political accountability of those inoffice. The connections between these threecomponents, and between them and corruption, arecomplex. The paper suggests ways in whichaccountability may undermine authority through theblurring of distinctions between formal and politicalaccountability, by ham-stringing politicalinstitutions, by creating incentives for corruptpractices, and by politicising accusations ofcorruption. Access can be similarly destabilising andcorrupting, where trust is low and compliance withrules weak; and a basic problem with securing highlevels of trust is that the materials from which suchtrust is manufactured are often the very things whichaccountability mechanisms regard as corrupt – localnetworks, clientelism, and personal loyalties andfriendships. In democratising states, attackingthese elements can eradicate rather than enhance thebasis for well-regulated access.Different democratic systems have evolved differentways of balancing these three components. Theparticular institutional form the balance takes willhave a major impact on the types of corruption thesystem will face, and on the solutions which areappropriate. However, the tendency in internationalcircles is for one highly idiosyncratic understandingof this balance to hold sway, with potentiallydestabilising consequences when applied to theanalysis of corruption, especially in democratisingstates. The paper concludes that attempts to reduce corruptionand increase accountability by increasingparticipation and access are flawed. Access mayincrease the risk of corruption, while accountabilityremains a classic public good on which free-ridingwill be widespread. Corruption control in democracieswill not be solved by more democracy – indeed, itmight need less.     

Can corruption constrain the size of governments?

This paper analyzes the relationship between government size and the level of corruption. We propose a theoretical model where production decisions and corrupt behavior are endogenously determined. We model corruption assuming production in the formal sector is regulated by public officials who can use their public power for private gain. In this context, the underground economy emerges as an outside option that allows entrepreneurs to avoid dealing with bureaucrats. The fact that investments in the informal sector may influence public finances, introduces the possibility of multiple equilibria with different levels of corruption. Consistent with previous theoretical works and recent empirical evidence, we find out that corruption and the shadow economy are complements as they positively correlate across equilibria, which implies that corruption may limit the size of the public sector.     

The rise of the Red Mafia in China: a case study of organised crime and corruption in Chongqing

‘Red Mafia’ is the collective term for corrupt public officials in mainland China, mainly from the criminal justice system, who attempt to monopolise the protection business in the criminal underworld by abusing power. In contemporary mainland China, the Red Mafia has developed into an alternative system of governance that can control organised crime groups, enable them to flourish, and protect them where strong government and effective self-protection associations are absent. The author examines organised crime and corruption by analysing the Wen Qiang case, one of the most famous and widely publicised cases in Chongqing’s latest crime crackdown campaign. Drawing on interview data and extensive published materials, this paper offers a tentative definition of ‘Red Mafia’, develops a typology of organised crime, describes the emergence of the Red Mafia in China, explores how gangsters developed relationships with public officials, suggests why organised crime groups chose the Red Mafia as their preferred protection and enforcement mechanism, examines patterns of services provided, and explores the differences between the Red Mafia and other Mafia groups.     

BEHIND MORE LITIGATION: POSITIVE AND NEGATIVE IMPACTS

Since the reform and the opening up to the world of China, there has been increasingly more litigation in China, which has stimulated further development of the legal profession and greater public and private expenditure on the legal practice. Accordingly, legal reform has become an important component of the national scheme of social transformation. On the other hand, the rapid increase in litigation has unexpectedly eroded the traditional means to resolve disputes of both mediation and judicial mediation. More alarming is that judicial credibility is seriously challenged by judicial corruption and poor enforcement of judicial decisions. The increasing number of litigation-related complaints by the public, and the large number of vetoes against the working reports of the Supreme People’s Court and the Supreme People’s Procuratorate by the National People’s Congress, are two indicators of the crisis of judicial credibility. This paper is to analyze the data of litigation, legal profession, mediation, and the phenomena of judicial corruption. Based on this analysis, it suggests that, to overcome the current quandary of judicial development, further reform should not only focus on courts, but also on all functional departments that could collaborate one way or another with the judiciary, should not depend only on governmental organizations but also on NGOs in resolving disputes and social issues, and should explore and develop innovative ways of social management.     

Who pays more “tributes” to the government? sectoral corruption of China’s private enterprises

Which industry sectors bribe the government and, in turn, are exploited by the government the most in China? Or, as commonly satirized by the people, which sectors pay the most “tributes” (shanggong) to government officials? This article attempts to answer these questions by proposing a meso-level approach, which examines corruption in China at the sectoral level. We use a firm-level survey from 1997 to 2006 in China and treat two types of payments by private enterprises—public relations–building fees (yingchou) and forced apportionment of funds (tanpai)—as indicators of potential corruption in a sector. We find that the most corrupt sectors are those that rely on scarce and less mobile resources controlled by the government. Thus, further reform in the factor markets is necessary to reduce corruption caused by government intervention in the allocation of important resources.     

Corruption,Party Leaders,and Candidate Selection: Evidence from Italy

Research indicates that voters are not particularly effective at removing corrupt politicians from office, in part because voters make decisions on the basis of many competing factors. Party leaders are much more single-minded than voters and will choose to deselect implicated legislators if it means maintaining a positive party reputation and improving the odds of winning a legislative majority. We examine renominations to Italy’s legislature in two periods marked by corruption. We compare these renomination patterns with those from the prior legislature, when corruption lacked political salience. Our analysis shows that incumbent renominations are negatively associated with the number of press mentions that link the incumbent to corruption—but only when corruption is salient to the public. Our study highlights the importance of party leaders in forcing malfeasant legislators out of office—and reducing corruption—and redirects attention from voters to political elites as a critical channel in enforcing democratic accountability.     

Public corruption and fraud in the Netherlands: Research and results

Empirical research by social scientists on public corruption and fraud in the Netherlands has been scarce. Exceptions are research on criminal cases of corruption and, recently, a survey among local government functionaries to establish the extent of public corruption and fraud in the country. The article presents the conceptual framework and the results of this survey research on local corruption and fraud. A discussion of the findings concludes the article: How serious is the problem of Dutch public corruption and fraud? To stimulate comparative research, the questionnaire is added in an Appendix.     

贪污贿赂犯罪案件诉讼程序的反思与重构

贪污贿赂犯罪作为权力型职务犯罪，越来越具有高智能性、高隐秘性的特点。现行刑诉法所规定的诉讼程序是在特定历史条件下仅为普通刑事犯罪所设计，并没有考虑到贪污贿赂犯罪案件的特殊性而赋予相应的特殊诉讼程序，已不能满足当前贪污贿赂犯罪侦查与审判工作的需要。规定贪污贿赂犯罪案件特殊诉讼程序，是检察机关职务犯罪侦查权合理配置与运行的重要内容。随着社会发展和科技进步，国家应权衡利弊得失，有必要对贪污贿赂犯罪案件的诉讼程序在立法上进行修改完善和在制度上进行科学构建。     

Bureaucrats’ corruption and competition in public administration

Competition in public administration is often advocated as a solution to bureaucrats’ corruption. However, there are no well developed analyses of how competition could succeed and the issue of its detailed design has not been carefully addressed so far. In this paper, we put forward a series of models that help understand what competition in public administration can actually accomplish. We distinguish two different shapes that corruption may take: bribery and extortion, and we demonstrate, under the usual assumption of asymmetric information as to the honesty of the bureaucrats, that while competition is effective in fighting extortion it exacerbates bribery. Given that corruption normally manifests itself simultaneously under the two different shapes, an anti-corruption policy based upon competition is bound to face a serious trade-off: trying to curb one of them through competition implies making the other worse. This result holds, with some differences, under exogenous and endogenous bureaucrats’ “honesty”. The dual aspect of corruption is probably one of the most serious—and so far largely neglected—obstacles to any effective anti-corruption policy.     

How damages recovery actions can improve the fight against corruption: the crisis of criminal law policies and the role of private enforcement in an Italian case of judicial corruption

In many countries corruption is rife, despite the fact that there is a criminal-law legislative framework for corruption. Italy is one of these countries. The commitment of judges and prosecutors to combating instances of corruption is often frustrated by the consequences of the excessive length of the proceedings. The fight against corruption has been carried out mainly in the field of criminal law. The criminalisation of corruption both in domestic and in international contexts is not enough to reduce corrupt practices. In the last decade another front in the fight against corruption has been explored: the private law approach as a complement to criminal law policies. Indeed, the same corrupt practise may be subject both to criminal proceedings by public authority and to civil proceedings by the victims of corruption. The argument that private law instruments may be used in order to achieve a public policy goal is not new and goes beyond the definition of "private enforcement" in the context of competition law. The idea of creating a favourable social and legal background to encourage the victims of anti-competitive practices can also be transposed to the fight against corruption. In fact, in many cases of corruption the low percentage of successful criminal persecution and the class of punishment associated with corruption offences do not represent a deterrent, considering the benefits deriving from bribe. This paper aims to address the question as to whether private law remedies under national legal systems could constitute an effective disincentive against corrupt practices, alongside criminal prosecutions. The case CIR vs. Fininvest, Lodo Mondadori is one of the first cases involving damages actions resulting from corrupt practices, and addresses two of the main obstacles to civil actions in this field: evidence and the quantification of damages.     

论公私协作执法

公私协作执法是公共执法和私人执法基于各自特点进行协作的法律执行模式,可以有效弥补公共执法动力不足、腐败和信息劣势的缺陷,也可以有效弥补单纯私人执法过程中的执法过度、缺乏强制力等缺陷.长期以来,我国法律执行活动被公共执法机构垄断,公私协作执法的制度空间不大.为此,应当通过扩张诉讼当事人资格、建立罚金分享制度、增加惩罚性赔偿规定以及放宽风险代理诉讼限制等方式为公私协作执法开辟空间,使公私协作执法能够成为我国法律执行机制改革的重要方向.     

政府采购对中小企业优先规定之评析

我国的《政府采购法》与《中小企业促进法》同时有政府采购应当对中小企业优先的规定。政府采购与一般的民事采购不同,在追求采购经济效益的同时,还应负载社会和谐发展的政策目标。政府采购对中小企业优先的规定有相当的合理性,已经为许多国家所运用,称为“合同的治理”或“合同顺从”;但同时必须看到的是,该优先规定也会带来许多新的弊病。通过政府采购来扶持中小企业发展未必是最合理的选择,我国政府采购在对中小企业优先时只能作有限性优先的安排。     

Political parties and corruption: Ten hypotheses on five vicious circles

Strong political parties and genuine competition among them feature in many anti-corruption strategies, but in practice the relationships between corruption and political parties are much more complex than is generally recognized. This article explores and illustrates ten hypotheses about those connections, drawing in detail upon Italian, Japanese, and other cases for evidence. These connections extend well beyond amounts and trends of corruption to include the motivations of party members and supporters, internal problems of party organizations, and links between parties and state institutions. Major concerns included party bureaucratization, membership, and resources; electoral volatility; party fragmentation; collusion among parties; and party influence in public administration. These hypotheses will be best understood, and tested, comparatively, but in so doing we need to look not only at basic causes of corruption but also at ways in which parties and other institutions reproduce the conditions that sustain it.     

Internal strategies against corruption: Guidelines for preventing and combating corruption in police authorities

While corruption is not an entirely new phenomenon in Germany, the number of cases suggests that proactive measures should be taken to strengthen prevention and detection. This article proposes a number of measures which, used separately and in combination, aid prevention and detection. It then proposes a wider management approach to dealing with corruption which ranges from general to specific strategies and actions that are intended to prevent corruption, to design out the circumstances in which it may occur and to provide means of detecting areas of risk and vulnerability. The article particularly focuses on police organisations but has applied relevance to all public sector organisations. This revised version was published online in July 2006 with corrections to the Cover Date.     

Petty corruption in Central and Eastern Europe: the client’s perspective

This qualitative study examines the role of clients in petty corruption by analyzing actual corrupt exchanges between ordinary citizens and low level public and private employees in post-communist Hungary. Using a grounded theory approach, interviews reveal how clients from different social strata deal with low-level agents in corrupt situations. Findings suggest two contrasting forms of low-level corruption: transactions where the client and the agent do not have a prior relationship and where external factors dominate the relationship; and cases with stronger social ties between the actors, where the client has more freedom to structure the transaction. However, a client's social background frequently determines the form of corrupt transaction and the form of resources illegally exchanged in the deal.     

Risk Aversion, Liability Rules, and Safety

This paper investigates the performance of liability rules in two-party stochastic externality problems where negotiations are feasible and side payments are based on the realized level of externalities. Results show that an increase in polluter liability does not necessarily increase safety or efficiency in cases where the polluter is risk neutral. Complete polluter liability is found to yield Pareto optimality. When either party is risk averse, an increase in polluter liability may sometimes reduce safety and efficiency. If the polluter is risk neutral and the victim is risk averse, Pareto optimality is only achieved by assigning full liability on the polluter, i.e. giving the victim complete property rights to a clean environment. If the polluter is risk averse and the victim is risk neutral, no level of polluter liability is optimal. In this case, optimality can only be achieved through a contract on abatement activities, such that the risk-averse polluter receives a guaranteed payment regardless of the stochastic outcome.     

Throwing the rascals out? The electoral effects of corruption allegations and corruption scandals in Europe 1981–2011

Corrupt politicians have to a surprisingly great extent been found to go unpunished by the electorate. These findings are, however, drawn from case studies on a limited number of countries. This study, on the contrary, is based on a unique dataset from 215 parliamentary election campaigns in 32 European countries between 1981 and 2011, from which the electoral effects of corruption allegations and corruption scandals are analyzed. Information about the extent to which corruption allegations and scandals have occurred is gathered from election reports in several political science journals, and the electoral effects are measured in terms of the electoral performances—the difference in the share of votes between two elections—of all parties in government, as well as the main incumbent party, and the extent to which the governments survive the election. The control variables are GDP growth and unemployment rate the year preceding the election, the effective number of parliamentary and electoral parties, and the level of corruption. The results show that both corruption allegation and corruption scandals are significantly correlated with governmental performances on a bivariate basis; however, not with governmental change. When controlling for other factors, only corruption allegation has an independent effect on government performances. The study thus concludes—in line with previous research—that voters actually punish corrupt politicians, but to a quite limited extent.     

Measuring Meritocracy in the Public Sector in Europe: a New National and Sub-National Indicator

Since the late nineteenth century, the presence of an independent and meritocratic bureaucracy has been posited as an advantage for effective bureaucratic behaviour and a means of limiting patrimonial networks and corruption, among other benefits. There is little consensus on how the features of an independent and meritocratic bureaucracy should be measured across countries, however, and broad empirical studies are therefore rare. What is more, the few such studies that exist have advanced measures which are constructed exclusively on expert surveys. Although these have indeed contributed to the knowledge in the field, the data on which they are built come with problems. This paper proposes a set of novel measures that complement existing measures and thus fill important gaps in this burgeoning literature. The measures we present are not based on expert assessments but on perceptions of public sector employees’ and citizens’. We create two measures—that can be combined into one—from a recent survey (2013) of over 85,000 citizens in 24 European countries. One is purely based on the assessments from public sector employees’ and the other is based on perceptions of citizens working outside the public sector. The paper also discusses the survey and explores the external validity of the measures provided here, showing correlations with alternative measures based on expert opinions, as well as variables from the literature that we would expect to correlate highly with a meritocratic bureaucracy.