Sectoral Corruption

Corruption: A governance problem

Governance

Corruption

Sectors: Health Education Environment Public Works

Public Perceptions of the Most Corrupt Sectors

Globally: Most Corrupt Sectors

(TI, GCR, 2005)

Most Corrupt

Least Corrupt

Political parties (4) Military (2.9) Parliaments (3.8) NGOs (2.7) Police (3.6) Religious Bodies (2.6) Judiciary (3.5) Tax Revenue (3.4) Business (3.4) Customs (3.3) Medical Services (3.3) Education (3.2)

Most Corrupt Entities in Africa

Police (4.4) Political Parties (4.2) Customs (4) Parliament/Legislature (3.8) Judiciary (3.7)
TI GCB, 2005 (Average of 8 African Countries)

Some Sectors are Especially Vulnerable

Health
Education

Public Works
Natural Resources

Electricity
Taxation

Judiciary

What makes some sectors particularly vulnerable?

A lot of money involved Very complex and diverse sector activities Subject to significant government regulation High level of Discretionary Decision Making Information Asymmetries Prices by end users are significantly greater than local costs of production (particularly for extractive industries)

How to Assess the Problem?

Financial Management
Budget Accounting Transfers/Leakages Off budget

Service Delivery
Professional services (doctors, teachers) Facilities (schools, hospitals) Suppliers

Goods and Services

Procurement Distribution/Transportation Storage Final delivery

Analyzing Sector Vulnerabilities

Financial Axis Goods/Services Axis

Budget Process

Procurement

Accounting Process

Central Receiving

Transfers/Leakages

Transfer/Transport

Off Budget Projects Service Delivery Axis Service Providers Facilities

Local Delivery/Storage

Facilities

Clients

Clients

Suppliers

Manifestation of Corruption in Some of the Most Corrupt Sectors

Health
Bribes/Informal Payments for Services
Unnecessary Referrals to Private Practice

Theft/Diversion of Supplies/Equipment
Overcharging for Drugs Funding Leakage Procurement Practices Absenteeism

Education
Bribes (Admission/Grades) Hiring Influenced by Politics Ghost Schools/Teachers Procurement Kickbacks Funding Leakage No Inventory of Books/Supplies Poor-Quality Construction

Public Works
Commissions/Kickbacks

Licenses/Permits
Poor Quality Construction

Influence Peddling
Contractor Collusion Public Works vs. Public Good

Natural Resources
Bribes Solicited/Payments Offered to:
Influence Allocation of Prime Resources (Water/Land/Forests/Minerals) Permit Illegal Logging Obtain Permits and Certifications

Buy Favorable Environmental Assessments

Avoid Inspections or Enforcement of Environmental Regulations

Private Sector
Partners in Crime Or Victims?

Private Sector
Payments to Block Code Enforcement Policies Designed to Block Firms, Investors from Entering Markets Selective Enforcement of Regulations/ Taxation Discretionary Issuance of Licenses, Permits, Customs Clearance, BorderCrossing Documents Bribing Legislators to Pass Favorable Legislation Illegal Contributions to Political Parties

Cross Cutting Functions

Budgeting Procurement Administration Service delivery Registration for Services/Permits Receipt of Transfers/Payments

Thank you!