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.     

Roh regrets: Leadership, culture and politics in South Korea

South Korea has, in recent years, suffered a number of serious corruption scandals reaching to the very top of the political and economic worlds. This article attempts to explain why corruption scandals are so frequent in Korea. It suggests that practices that in the West are regarded as corrupt are seen as acceptable in Korea, but that nevertheless Koreans do take corruption very seriously. Korean culture is if anything less willing than western culture to see corrupt behaviour as normal; at the same time it is particularly susceptible to behaviour that is, within its own terms, corrupt. Corruption scandals are therefore frequent, both because there are pressures encouraging corruption, and because corruption, when exposed, is indeed seen as scandalous. This revised version was published online in July 2006 with corrections to the Cover Date.     

Conflict of interest,corruption or (simply) scandals?

The unprecedented municipal corruption scandals that occurred in Oslo in 1989–91 illustrate the contrasts and interrelationships between publicly-perceived scandal and actual corruption. What was depicted at the time as massive corruption has resulted in no convictions of politicians; on close examination the corrupt behavior appears to have been limited in both significance and scope, though official reports do suggest the possibility that more serious wrongdoing may have occurred. The case illustrates not only the mechanisms by which scandal is propagated, but also the contrasts between legalistic and other definitions of corruption. Analysis of four possible categories of corrupt behavior shows the difficulties of applying legalistic definitions to actual practice, and offers a clearer understanding of how corruption and scandal can diverge so sharply.     

Toward a methodology for the comparative study of political corruption

Robust explanations of political corruption demand that research progresses beyond purely theoretical analyses and single case studies. In this article, we highlight problems of definition, operationalization and measurement of corruption that have restricted the number of truly comparative, empirical studies of the phenomenon. We suggest a few steps that might help researchers overcome methodological obstacles in their study of corruption. We introduce and evaluate one example of how the phenomenon might be comparatively operationalized and measured. While not beyond criticism, the corruption index we present will undoubtedly help light new avenues toward more comprehensive explanations of comparative political corruption. This revised version was published online in July 2006 with corrections to the Cover Date.     

Fraud by Certified Public Accountants in Japan and the United States

In recent years, Japanese and American societies have been beset by massive corporate scandals involving accounting firms and their certified public accountants (CPAs). These scandals included major accounting frauds by CPAs and have led to deep distrust of corporate accounting in both societies. This paper provides a detailed probe into three major financial scandals in Japan and United States: Enron, Kanebo, and Livedoor. Case histories are used to highlight both the characteristics of frauds perpetrated by CPAs as well as the social reactions to these economic crimes in Japan and the US. Finally, the paper outlines similarities and differences in CPA frauds perpetrated in both countries and considers how cultural variations play a major role in producing these outcomes.     

Political structure,legislative process,and corruption: comparing Taiwan and South Korea

Taiwan and South Korea have the same constitutional system, approximate economic scale, and similar cultural backgrounds, yet they differ in degree of corruption. What political structures and legislative processes cause this outcome is the major question posed in this paper. The political structure in South Korea is a centralization-of-power model, while that in Taiwan is a separation-of-powers model. This paper proposes that Taiwan and South Korea have different types of corruption and different political structures, and the legislative process in South Korea is more compromising than that in Taiwan. These factors contribute to greater corruption in South Korea than in Taiwan. This study clarifies how particular institutional dynamics reduce or enhance the prospects for democratic governance and help to better understand how political structure and legislative process channel different types of corruption into different degrees of corruption. Studies on the relationship between constitutional structure and corruption have concluded that parliamentarism can help reduce corruption more than presidentialism. This thesis argues that a country with centralized power tends to be less corrupt than a country with separation of powers. If this argument and the rationale behind it hold true for countries with both parliamentary and presidential systems, we can expect that semi-presidential countries with a centralized system are less corrupt than those with a decentralized system, all else being equal. However, by comparing these two semi-presidential countries, we find that South Korea, with its centralized model, was more corrupt than Taiwan, with its decentralized model. This comparative case study provides a counterargument to the conventional wisdom of constitutional structure and governance.     

CEO qualities and codes of ethics

Ethical issues have received growing attention recently, after corporate scandals and during the current economic crisis. Several initiatives have been adopted to restore confidence and trust in businesses, such as ethics codes. In addition, as a result of those scandals and financial frauds, several rules have focused on the role played by Boards of Directors in the planning and monitoring of codes of ethics. However, the empirical evidence is still scarce and needs some degree of extension. The purpose of this study is to determine the influence of several corporate governance features—particularly, the Chief Executive Officer (CEO)—on the decision of developing an ethics code, among Spanish companies. Our main findings point out the lack of influence of the CEO’s characteristics (except for CEO reputation) on the likelihood of having a corporate code, indicating that this decision has to do with a choice made by the company overall, perhaps because of regulatory reasons or stakeholders’ expectations. Also, we have checked how other variables, such as the extent of a firm’s participation in defence or other government contracts or multiple listings of the company in different financial markets, can influence the decision of developing an ethics code.     

Sugar coated bullets: Corruption and the new economic order in China

The recent political debate concerning the influence of corruption on the new economic order in the People's Republic of China is unique not only for its detailed and public manifestations, but also because it works around the acceptance of some degree of corporate private ownership of the means of production within China. The concern for corruption in Chinese government and commerce is not, of itself, novel.We prefer in this paper briefly to focus on the economic and political environment from within which this concern has been generated, to comment on the significance for the Government of the PRC in associating the pall of corruption with the undermining of more capitalist economic reform, and then to examine how the legal definitions and controls on corruption have been transformed to complement a new political agenda. Associated with this, it has been necessary to advance some rather tentative predictions concerning the development of new anti-corruption initiatives in the PRC, their justifications, and pressures on the economic transition which is said to be corruption generative.Speculation about the future face of economic corruption in China is of limited value when one is interested in questions of regulation and control. As the definition, indication and interpretation of corruption is a political process which may pay little regard to realistic indicators, so too the creation of control initiatives may not be dependent on predictions of actual developments in graft. We have endeavoured to show that recent regulatory programmes in the PRC themselves indicate much about the commercial contradictions that underly the new economic order, as well as evidencing the socio-legal dilemmas inherent in anti-corruption official discourse.     

Protecting integrity at the local level: the role of anticorruption and public management networks

This article argues that anti-corruption agencies at the local-level have been successful in a way that can be evaluated and emulated. A related contention is that corruption control is most effective when the central public integrity agency is part of both a local anticorruption network and a local public management network. Quite reasonably, the international anti-corruption project has focused most time and energy on advocating and assessing efforts made to ensure public integrity at the national level. Baseline studies by scholars and supra-national integrity nongovernmental organizations (NGOs) identify the form of corruption control (if any) adopted by the central government. Key considerations in assessing the status of national anti-corruption agencies (ACAs) are the ones mentioned in the introduction to this special issue: political independence, scope of authority, investigatory powers, position in the national legal/political network, durability, and use of effectiveness measures. Similar taxonomies are deployed by OLAF, Transparency International, Organization for Economic Co-operation and Development, and United Nations Development Programme (UNDP) and by scholars on corruption control.     

THE OBJECTIVE OF THE COMPANY

The important role that corporate governance has played in a wide range of public companies is self-evident. Recent major corporate failures are more or less related to bad corporate governance and the increasing corporate scandals call for good corporate governance not only in China but all around the world. Corporate governance is principally about how companies are structured and directed, which is indeed a quite broad field. It is a good direction to discuss how to improve the overall corporate governance level in China through the perspective of perfecting shareholder protection. However, while running companies for shareholder interests is getting increasingly more criticisms, the so-called stakeholder model and entity model are raised as alternative approaches. Accordingly, it is the purpose of this paper to find the most appropriate corporate objective which could be applied as the starting point for future corporate governance discussion by providing a right direction for assessing and evaluating corporate performance and accountability of management. Through the comparative studies of the three models, this paper concludes that shareholder primacy is a more effective and efficient approach with regard to advancing social welfare and controlling director’s accountability among others; the other two models cannot justify substituting the shareholder model as the corporate objective.     

On the dark side of the code: organizational challenges to an effective anti-corruption strategy

Corporations have been fighting for decades to eliminate corruption. However, despite the proliferation of compliance programs and a recurrent surge of interest in business ethics, commercial bribery prevails as a “rational choice strategy” for economic success and thus is widely regarded as the result of immoral choices of greedy individuals. This article reports on a modus operandi study concerning corruption within a large industrial corporation (Siemens AG). Results highlight the fact that neither consistent anti-corruption norms nor severe formal sanctions were able to deter certain employees from deviant behavior in this landmark case of structural corruption. Sociologists and business economists have both pointed to the organizational culture that provides an explanation for this paradox. The author compares three diverging hypotheses: (1) private gain, (2) cognitive normalization, and (3) organizational cultures, and concludes that the structural causes of corrupt practices fit the definition of ‘useful illegality’ (Luhmann). To a large extent, this old sociological concept resembles the criminological idea of corporate crime, but it emphasizes the cultural factors that undermine management’s preventive strategies, and thus holds the promise of theoretical progress. Implications that emerge from the case analysis for the social control of corporate bribe payers are discussed. The discussion reveals why challenges to successful anti-corruption efforts persist at the organizational level.     

Japan,Korea, the Philippines,China: four syndromes of corruption

Both generalizations about “Asian corruption”, and claims about greater or lesser amounts of corruption, tend to overlook the many variations existing among and within Asian societies, and among the corruption problems they experience. I suggest that deeper influences in social, political and economic development, and contrasting institutional settings, create four distinctive syndromes of corruption, each with its own set of implications for relationships between wealth and power. Japan is an example of “influence markets” in which private interests buy or rent influence over relatively specific policy outcomes within a strong state. Korea is a case of “elite cartels”, in which collusion and corrupt incentives enable several kinds of elites to cooperate in governing, enriching themselves, and resisting rising political competition. The Philippines is marked by “oligarchs and clans”, with powerful families and their entourages plundering a weak state in a climate of uncertainty and insecurity. China experiences “official mogul” corruption, in which officials abuse state power with impunity, although that process is becoming increasingly fragmented. The four syndromes may help us understand why corruption and rapid growth have coexisted in some, but not all, Asian states for long periods of time, and may also help us understand why some of those states will adapt to new global realities only with some difficulty. They also show how “consensus”-driven reforms emanating from the west may not only be ineffective, but may actually make matters worse.     

The politics of conceptualizing corruption in reform China

It is significant to examine Chinese debates over corruption for several reasons. These debates confirm certain universal aspects of corruption that have been emphasized in the Western social science literature. They also suggest unique features of corruption that are useful for understanding the issue in the Chinese context. They further reveal how the conceptualization of corruption is politicized in the Chinese discourse,giving insight to the alignment of political and intellectual forces on the issue. Finally, Chinese analyses have heuristic values for general discussions of political corruption. This paper surveys Chinese debates over the definitions, sources, and consequences of corruption from the late 1980's to the late 1990's.     

The electoral consequences of corruption scandals in Spain

Previous studies of the electoral consequences of corruption in Spanish local elections (Jiménez Revista de Investigaciones Políticas y Sociológicas, 6(2):43–76, 2007; Fernández-Vázquez and Rivero 2011, Consecuencias electorales de la corrupción, 2003–2007. Estudios de Progreso, Fundación Alternativas; Costas et al. European Journal of Political Economy: 28(4):469-484, 2012) have found that voters do not necessarily punish corrupt mayors. As has been pointed out in the comparative literature, the average loss of electoral support by corrupt incumbents is small and does not prevent their reelection most of the times (Jiménez and Caínzos 2006, How far and why do corruption scandals cost votes? In Garrard, J. and Newell, J. (eds.) Scandals in past and contemporary politics. Manchester: Manchester University Press). What remains unsolved, however, is the remarkable variability in this pattern. This article explores some of the micro-level variables that may mediate the effect of corruption scandal on the votes. We focus on three factors: ideological closeness to the incumbent party, political sophistication, and employment status. Our results provide only partial support for our hypotheses, suggesting that the effects of corruption are much more complex than what may seem at first sight.     

New avenues in the study of political corruption

This article argues that the 1990s have witnessed a sea change in the study of political corruption, especially in political science. It explores the reasons for the relative neglect of corruption by political science in the past, and suggests that a process is underway whereby the study of corruption is becoming more integrated into the mainstream of the discipline. It explores the paradox of the co-existence of unresolved disputes about the definition of corruption with a consensus on the severity of the problem, suggesting that corruption remains a worthwhile object of investigation. Finally, it summarises how the contributions to this special issue light possible new avenues in the study of the phenomenon. This revised version was published online in July 2006 with corrections to the Cover Date.     

The foundations of electoral corruption in Japan

This article describes the sources of electoral corruption in postwar Japan, in particular the relationship between demand for political funds by politicians and its supply by corporate donors. The weakness of legal and political sanctions, it is argued, allows this relationship to continue. The article concludes by examining the possibilities and limitations of recent efforts to curb electoral corruption.     

Institutional change in the European Parliament: balancing legislative ethics and parliamentary independence

Research on legislative ethics has shown how scandals often trigger ethics reform; yet, the content of the reform often differs from that of the scandal. Why is this the case? And if scandals don't explain legislative ethics reform outcomes, then what does? If not this kind of external shock, then what factor(s) shape legislative reform outcomes? These questions provide the point of departure for a case study of the European Parliament's 2011 ethics reform. Drawing from the legislative ethics literature and from recent theories of institutional change, the article examines the impact of the scandal that initiated the reform, the interests and strategies of reform agents who wanted a quick reform process that would not undermine the EP's independence; and the institutional order in which those actors were embedded. It argues that an institutional logics perspective offers a convincing and comprehensive account of EP ethics reform, and suggests a new analytical framework that might be used by researchers in future research on legislative ethics.     

Dictatorship,democracy and corruption in Chile

The study of corruption in Chile suffers from the lack of a pre-existing body of academic research on which to draw for historical or contemporary analysis. This situation may be partially explained by several factors. Firstly, academic research tends to be reactive rather than proactive, in the sense that issues rarely become researched until they are either topical, or perceived to be problematic and significant. The configuration of historical circumstances in Chile has meant that corruption has been perceived to be considerably less widespread and less overt than in other parts of Latin America. For reasons which will be examined below, Chile is quite clearly not in the same league as Brazil, México or Venezuela in terms of corruption in the political system, and therefore the body of existing research has tended to focus on those cases where corruption is evident and more easily observable. Secondly, the lack of research material may also be partially explained by the nature of corruption in Chile. It undoubtably exists, but it has been characteristically low-key, assuming its own particular characteristics which have become known as corrupción a la chilena. Low-intensity corruption is undoubtedly more difficult to categorise, define and measure in comparison with flagrant abuses by individuals, sectors of society or ruling parties, and this may also be a contributory factor. A third factor may be that such low-intensity activities may become such an integral part of the political culture that they become accepted ways of the business of politics and therefore fail to even raise objections from public opinion. Only when the political environment changes do these issues become perceived as unacceptable. However, what is beyond dispute is that corruption has and does exist in Chile but it is influenced by the political culture of a particular period and by the political and social context.     

Should we trust the gatekeepers?: Auditors’ and lawyers’ liability for clients’ misconduct

Many corporate scandals of the past years (Enron, Worldcom) have made apparent the essential role of professional service providers, such as auditors, corporate lawyers, and securities analysts, in detecting and revealing corporate misconduct on the part of their clients [Coffee, J., Jr. (2006). Gatekeepers. The role of the professions in corporate governance. Oxford University Press]. Political and legal responses in the aftermath of those scandals have increased the level of regulatory intervention upon auditors and lawyers. For instance, several measures were introduced in the Sarbanes–Oxley Act of 2002, and were recommended by the European Commission.The imposition of duties of care and reporting on gatekeepers, conditional on their having observed an underlying wrongdoing or misconduct of their clients, is, however, more complicated at a theoretical level than believed by policymakers and commentators. Using framework similar to the one we have recently employed to analyze heterogeneous victims in terms of their costs of care [Ganuza, J., & Gomez, F. (2005). Caution, children crossing! Heterogeneity of victim's cost of care and the negligence rule [article 3], Review of Law and Economics, 1], we model the interaction as one in which the gatekeeper observes the state of the world affecting misconduct with a given probability, and Courts or regulators imposing duties or liabilities are unable to verify whether, in fact, misconduct had or not been observed by the lawyer or auditor. The wrongdoing by the client, however, is ex post costlessly verifiable by the Courts or regulators. Information on wrongdoing is thus verifiable but hideable. In this setting, we show that general (albeit maybe increased) standards of professional behavior by auditors or lawyers may well be sufficient as incentives. If those standards can be adequately set by Courts or regulators, in anticipation of the opportunities for strategic behavior derived from the imperfect observation and the unverifiability of actual observation, legal rules do not need to rely on more complex policies of trust or distrust towards the statements, or on the proofs, provided by the gatekeepers, concerning the actual observation of clients’ misbehavior. The implications of the model tend to imply that the distinction between voluntary violation (scienter) of duties, and mere negligence, contrary to existing Law, is not very useful in this context.