THE BLOG
05/26/2010 05:41 pm ET Updated May 25, 2011

Corruption in 2010

Will 2010 see a surge forward, or an easing back of corruption? There is unease about how much of the stimulus money might be corruptly misappropriated. 2009 was a vintage year in the east with a NY ex-police commissioner pleading guilty on corruption charges, a dysfunctional view of ethics in the NY state legislature, but New York has by no means had a monopoly on corrupt behavior by those in public office.

In January 2009 two judges in Pennsylvania, were indicted for sentencing kids for cash. It was alleged that they took $2.6 million over nearly seven years in kickbacks for sentencing juveniles to a private prison facility. In July 2009 the FBI arrested 44 people in New Jersey on a variety of corruption charges. There were three current mayors, and one deputy mayor, a number of state legislators, public officials, and curiously a bunch of rabbis. The mayors and politicians were accused of taking bribes, and the rabbis of money laundering. A day after these arrests, former State Senator Wayne Bryant was sentenced to four years in prison after he was convicted of a range of corruption charges that exhibited extensive manipulation of the institutions of the state of New Jersey which enriched him personally.

While the State of Illinois was still in after-shock following the impeachment earlier in 2009 of Governor Rod Blagojevich for allegedly trying to sell a Senate seat, local media documented corrupt admissions processes at the University of Illinois. The Chicago Tribune reported that applicants with sub-par academic records were gaining admission to the University based on support from state lawmakers, university trustees, and others. This was not a case of corrupt payments or underhand kickbacks to individuals but rather a breach of procedures in which certain well connected individuals benefitted at the expense of lesser connected students. A corrupt process operated to override the decisions of admissions professionals and resulted in the enrollment of students who did not meet the University's admissions standards.

Corruption comes in many flavors and shapes. In the simplest of terms, corruption is the abuse of a position of trust for personal gain. The World Bank has estimated that about $1 trillion is paid globally in bribes each year, and that the kleptocrats (that robust cross of a kleptomaniac with an autocrat) skim about $40 billion annually. The World Economic Forum suggests that corruption costs about 5% of global GDP, that is about $2.6 trillion per year all up.

Yet many believe that this is what happens only in developing countries, where corruption, when unchecked, deters investment, distorts markets, hinders economic growth and deprives the poor of essential services. Corruption exists in poor countries and rich countries alike, and the US does not rank well, compared to most European countries.

Corruption follows opportunity. A huge opportunity arises from complexity -- complexity of regulations and complexity of systems, both of which abound in the US. Many businesses cannot fully comprehend what is required to avoid code violations. Wherever demand for something exceeds supply, and a public official can regulate or enhance that supply, then a corruption opportunity may arise.

Past opportunities for corrupt officials arose from poor rule making and the occasional cultural belief that a public office was one's own for personal enrichment. This has been a historical situation, yet it need not necessarily be so in the future. Three types of strategies can combat corruption and turn around unacceptable situations. First, our legal system has processes whereby corruption is criminalized, the laws enforced, activities investigated, offenders prosecuted, and sanctions applied. Yet people still get through the net.

Second is a capacity building exercise, where the focus is on ethical leadership, the development of a culture of integrity and the strengthening of a governance framework and adherence to sensible, yet effective procedures. Third, we can learn from crime prevention, and break corrupt activities down into their smallest components and then work to make the activity harder to commit, riskier, less rewarding, and importantly remove excuses and supposed justifications. Clear thinking combined with ethical leadership and strategic communication can pave the way, and lift the standing of the US in the global anti-corruption league tables, and perhaps, protect some of that stimulus money.