IThere's no doubt that corruption, endemic in emerging economies around the world, throws economic development into chaos.

It affects decisions made by bureaucrats, degrades the quality of those in power, and discourages foreign investment. It's also an increasingly hot business topic, with a growing number of influential business and political leaders from around the globe regularly pinpointing corruption as one of the greatest threats to global economic development Corruption and bribery have moved to the forefront in discussions about business," says Wharton legal studies professor Philip M. Nichols. "The list of countries that have been politically or economically crippled by corruption continues to grow, and businesses with long-term interests abroad will ultimately be harmed by any plans that include bribery." Nichols, the author of more than 10 studies and theoretical writings on the implications and mechanics of corruption, has spent the past decade studying corruption in such nations as France, Belize, Russia, Kazakhstan, and Bulgaria. Most recently, he examined perceptions of corruption in Mongolia, where he lived for a year while studying and teaching on a Fulbright Scholarship. In September, Nichols offered anti-corruption strategies to entrepreneurs at a national conference in St. Petersburg, Russia. Last month he led a weeklong seminar on corruption in Tashkent, Uzbekistan run by the Resource Network for Economic and Business Education. "A decade ago, corruption was not a proper subject for polite scholars or policymakers," Nichols and his co-authors wrote in a recent research paper. "Today, the creation of and comment on anti-corruption regimes is a growth industry." Bribery, of course, is the most widespread form of corruption, and corporate strategies for dealing with bribe requests vary. According to Nichols, some companies opt to pay, sometimes damaging their public images and making it more difficult to refuse future requests. Others have the sheer bulk and revenues to successfully and consistently say "no." Oil giant Texaco, for example, has such a formidable reputation for refusing to pay bribes that its jeeps are often waved through even remote African border crossings without paying a penny. A key, Nichols suggests, is wiring this no-bribe ideal into a corporation's culture, starting with a corporate code for managers and employees, affiliates and potential business partners. But coming to grips with what appears to be an international groundswell of corruption is far from a simple matter. Nichols believes that unraveling and explaining the mechanics of corruption is critical to helping the growing body of government and corporate organizations trying to fight it. His research on Mongolia, for instance, compared views of corruption in Mongolia and Bulgaria, two countries at the opposite ends of the former Soviet empire. The study revealed that university students in both countries had nearly identical ideas and perceptions about corruption, something Nichols found surprising. "This does not support the idea that corruption is a completely relative cultural construct," he says. For those in the field trying to study and control corruption, it's interesting to see that there might be "a shared understanding" of it. On a practical level, what does the upswing in international corruption mean to a company? "The fact that a great number of government officials in a great number of countries, including some potentially large markets, seem to demand bribes is critical to any business that has a cross-border presence," says

Nichols. "Then there's the reality that more than 20 nations, including the wealthiest and most-active trading nations, have made bribe paying illegal, and the fact that despite this there are still competitors who will pay bribes. "These facts combined make for some extremely difficult terrain. Officials expect you to pay bribes, some of your competitors will pay them, but you might go to jail if you do." The Corruption Perception Index' Much of the comparative evidence about bribery is anecdotal, though Nichols alone can cite numerous instances. In Kazakhstan, several foreign businesses have told Nichols that the typical bribe amount that must be given to win approval of a large construction project is between 15% and 20% of the contract price which often means that the bribe alone will amount to hundreds of millions of dollars. In Russia, meanwhile, a retail chain manager told Nichols that a bribe of US $4,000 would lower the tariff on a truckload of printer cartridges from U.S. $20,000 to U.S. $4,000. International businessmen and women say the number of countries in which they expect big bribe demands has risen staggeringly. A recent study by Berlin-based Transparency International pegged 70 of 102 countries surveyed as likely places for executives to be hit up for bribes. TI's "Corruption Perception Index" incorporates data from surveys, polls and other ratings on the number of bribe requests perceived by business people who regularly conduct business in a given country. A score of 10 means people perceive that bribe requests are never made in a particular nation, while a zero indicates the perception that bribes are always requested. In the 2002 index, Finland scored a 9.7, the United Kingdom came in at 8.7 and the U.S. earned a 7.7. With 70 of 102 countries scoring 5.0 or lower, however, the index shows that business people believe bribe requests are likely to be made in more than two-thirds of the nations examined. These countries include some of the world's biggest: China, which scored 3.5; India, 2.7; Indonesia, 1.9; and Pakistan, 2.6. Bangladesh had the lowest score of 1.2. Two treaties governing the northern and western hemispheres will soon weave a comprehensive system of laws prohibiting the payment of bribes to foreign government officials. Countries like Austria, Belgium, Canada, Germany, Japan, Korea and the UK are bound by the Organization for Economic Cooperation and Development convention to criminalize transnational bribery. Three years ago the U.S. alone criminalized paying bribes abroad. Today at least 20 countries have such laws and 14 more will soon enact them. The Organization of American States' Inter-American Convention against Corruption, signed by most countries in the Americas in 1996, also requires members to criminalize transnational bribery. Nichols speculates that once the public outcry against paying bribes becomes as loud as it is for environmental issues, the risk for corporations willing to pay bribes will rise significantly. Already the penalties can be severe. In the U.S. they include incarceration, fines and disqualification from doing business with the U.S. government. A French proposal would impose a 15-year prison sentence on

certain types of transnational bribery. Even in Norway, which has the least punitive of the new laws, bribery of foreign government officials is punishable by a year in jail. The risk of prosecution is quite real, Nichols says. Both direct government investigations and reports by competitors can bring a corporation under the spotlight. The U.S., he adds, is believed to already be using intelligence agency reports from Latin America and the Middle East to track bribery. Further, competitors who wish to uphold high ethical standards have every motive to report another company for failing to do so. Strategies for Saying No Corporations, Nichols believes, must create a corporate culture that doggedly refuses bribe requests and establish clear corporate codes that employees unwaveringly adhere to. They must also assure managers that the company will back them when they refuse to pay."A company would be foolish not to develop two general strategies, one for dealing with bribe demands and another for dealing with competitors who offer bribes," he says. "The potential, in terms of criminal liability, skewed relationships, lost contracts, disqualification from government contracts, loss of reputation and so on is simply too great to ignore. "Perhaps the most useful action a business can take is to really understand corruption, and to create and articulate a general response to corruption before it encounters difficult situations," Nichols says. "It's also useful for businesses to work together to create assurances that each will adhere to some agreed level of behavior." Other risks and costs abound for companies that succumb to the bribery game, Nichols says. Because bribery is illegal, it is conducted behind closed doors, with those involved expending time and resources to keep their secret. "For obvious reasons, we have not really been able to study the quality of corrupt relationships," he says. "But those who have endured them often describe them as unhealthy, unstable and unenforceable." He adds that firms' reputations suffer when word ultimately leaks, as happened with those who conducted business with the family of former Indonesian President Suharto. Prior to and just following Suharto's 1998 resignation, the former leader, his children and associates were widely accused of taking advantage of benefits such as monopolies and tariff breaks to amass enormous personal wealth. Companies also face the very real possibility of being pushed to pay more and more bribes as their reputation as a bribe-payer spreads. "One European businessman told me that after his company made its first few payments, bribery became a part of the normal course of business because bureaucrats worldwide expected similar treatment," Nichols says. "This is far from uncommon." Lastly, there are international trade implications surrounding bribery. Bribery degrades markets. Economist Paolo Mauro, in the article "Corruption and Growth," finds a direct link between high levels of corruption and low levels of foreign direct investment. Though Mauro's work does not explain this finding, Nichols offers three likely reasons. "First, corruption actually increases the amount of time a company must spend with a bureaucracy; second, corruption makes it more difficult to obtain

information, which increases transaction costs, and third, corrupt relationships are less predictable and less enforceable. There's probably a fourth reason too, which is that most business people are good people and have a distaste for endemically corrupt environments," he says. "Corruption also drastically affects economic development by causing a misallocation of resources. Yes, Africa is littered with bridges instead of hospitals. But more damaging is the fact that in endemically corrupt systems, regular people are not getting served by the government; they don't trust the government so they don't interact with the government," Nichols says. "But people have to get things done. So they create their own systems to do things, such as resolve disputes or enforce contacts or even police neighborhoods." These systems, however, "are not free," Nichols adds. "They cost money. So money goes to supporting the government system and money goes to supporting the shadow system; twice as much money goes to bureaucracies as it should. That means money is not going to increasing food production, or to health, or to enlarging the economy. And that stinks."

Globalization of markets and the falling trade barriers have opened the floodgates for foreign direct investment and multinational investments. But just as the number of multinational corporations soared in the midst of this socio-economical development and entrepreneurial growth, so has corruption. In today s developing nations, corruption has become an overwhelming predicament. There is no country that has not been hit in some form or fashion, in spite of its political system, development, or its social and economic culture. Enron is proof of this. Lately, more attention has been focused on world-wide corruption due to the immense increase in scandals. The United States and Europe share the spotlight as well as Africa, South America and China. But what really defines corruption? It has been defined in Webster s New World, 2003 as those actions for which there is social consensus that they are a bad thing , impairment of integrity, virtue or moral principle (Merriam-Webster Online Dictionary, 2005) and dishonestly using your position or power to your own advantage, especially for money (Cambridge Dictionary Online, 2005). Corruption comes in various forms and reaches as high as it does low. Minor types of corruption encompass trivial incidences which entail public service personnel who use their jobs to cut through some of the red tape it takes to issue licenses and forms among other minor duties. Even though this is considered an impairment of integrity these minor acts of corruption hardly cause any grave economical injuries. But corruption and bribery go hand in hand. What is bribery? Bribery is defined as the offering of money or other incentives to persuade somebody to do something, especially something dishonest or illegal (Encarta Dictionary Online, 2005). Bribery and corruption in international business has quickly become a key issue in public policy around the globe. Developing nation s government officials have been bribed by multinational businesses in order to win contracts that aide in their market entry. These bribes may range from small inconsequential amounts to billions of dollars. In other words, bribery may be deemed petty or grand based on the dollar amount. Petty bribery appears to be the result of extortion driven by economic factors. The small passages of money are usually seen as nothing more than a little tip or thank you for helping to get things going. Most often the bribes consist of pushing through some of the red tape that businesses go through in order to obtain a permit or a license. But the big guns come out when funds are rerouted from the government and end up lining the pockets of private individuals. This type of corruption can be detrimental to national economies, hurt international trade, and cause serious harm to the economy of developing nations. It is called grand bribery and consists of payments made by high-level officials with no other motive than pure greed. Top public officials have been known to embezzle monies from their governments through multinational assistance. The dollar amounts of these actions have climbed well over a billion dollars. Nigeria is a country that sits smack dab atop approximately 25 billion barrels of high-quality crude oil. Obtaining that oil from its governmental swamps is a muddled job. During an agreement with the Nigerian National Oil Corporation, Addax Petroleum Company was accused of attempting to steal over a billion dollars from the Nigerian government (Nwabuzar, 2005). An alleged attempt of six Nigerian businessmen from the private sector to scam a Brazilian national, Nelson Sakaguchi gives an example of

the continuing level of crime in developing nations. The Brazilian was promised a contract to lift Nigerian crude oil in exchange for $242 million. Mr. Sakuguchi was the Managing Director of the Banco Noereste which collapsed due to the scam (Nwabuzar, 2005). In another botched venture, Nigeria s ugly face of corruption comes into view. Royal Dutch/Shell partnered with Nigerian s Malabu Oil & Gas and ended up in a federal district court in New York City. Shell was sued by Malabu after it was accused of conspiring with Nigerian officials to steal its oil prospecting license. The license, OPL 245, was a humongous block in the deep waters of the Niger Delta and was estimated to possess more than 1 billion barrels of oil. For a measly $1 billion dollars in compensation, Malabu stated the problem would go away. Dauzia Etete, Abacha s petroleum minister awarded himself a license to develop the block in question and made provisions for Malabu to become the license holder. Then Malabu offered Shell s Nigerian subsidiary profits amounting to 40 percent in exchange for production and exploration costs. Now, the clincher; Etete claims to have secretly met and recorded conversations with V.P. Qtiku Abubakar who demanded a cut as a condition of not revoking his license on OPL 245. These conversations supposedly consisted of bribes offered and paid to Abubakar, Shell s managing director Ron van den Berg, and President Obasanjo. After a parliamentary committee hearing, the government revoked Malabu s prospecting license. Shell lost its stake also due to Ron van den Berg s failure to show up for the hearing. A warrant was later issued for his arrest. After some months, the Nigerian government allowed Shell and ExxonMobile to bid on the license. Shell secured it with a $210 million bid. Malabu is now claiming that Shell won the bid based on insider information of the block s reserve. He also is accusing Shell of using oil service contracts to gain the vice president s favor for a stake in Intels. But Etete s credibility is in question. He is wanted by the Nigerian police on charges of money laundering (Sansoni, 2003). Due to these indiscretions, among others, the country has trouble obtaining desperately needed foreign direct investment. As shown previously with Shell, the United States is not without a tarnished image. Enron, the United States, seventh largest corporation declared bankruptcy in November of 2001, the largest one in history. At the root of this bankruptcy brewed charges of illegal practices, criminal charges, plus shareholder and employee lawsuits. Company accounting practices were in question; corporate integrity was questioned; and fraudulent financial reports came into view. Enron was a company that hid its losses very well. The chief financial officer, Andrew Fastow ordered accounts to log projected profits as current revenues to keep the company looking profitable. He also set up a consulting agency, LJM2 to make deals for Enron. This company was used to hide Enron s bottom line losses. Sherron Watkins, vice president of corporate development questioning, Enron s practices and Fastow s monetization policies, wrote a six-page outline detailing her concern. "I am incredibly nervous that we will implode in a wave of accounting scandals," Watkins warned Lay ("Letter to Kenneth Lay"). She asked, "Is there a way our accounting gurus can unwind these deals now?" noting that after the Condor and Raptor deals of 1999 and 2000 respectively the company experienced impressive and high stock prices. Several Enron executives sold stock at this time. "We then try and reverse or fix the deals in 2001 and it's a bit like robbing the bank in one year and trying to pay it back two years later. Nice try, but investors were hurt, they bought at $70 and $80/share looking for $120/share and now they're at $38 or worse," Watkins stated (Enron, 2003). She also voiced her concern for the discontented employees who

possessed enough knowledge of the questionable accounting practices which could possibly return and cause problems. Her concerns were later rejected. When the company s stock began to decline Jeff Skilling resigned as CEO, causing the stock to plummet further. Within weeks of Skilling s resignation, Watkins s fears would come into fruition. Enron filed for Bankruptcy on December 2, 2001 in a New York court. Arthur Andersen s accounting firm was hired to close the books. Unbeknownst to SEC, Enron was Andersen s largest corporate client. When it rains, it pours. All types of document trails were in the jaws of shredders; computer hard drives were being deleted and Enron-related files were being destroyed. Soon his role ended up under a magnifying glass and Anderson was charged with obstruction of justice by the Department of Justice. Charges continued in the scandalous fallout which flowed from Wall Street to the White House. In the aftermath of the Enron scandal, the United States has scrambled to avoid being caught like a deer in a headlight again. The repercussions of this scandal are still evident in the today s news. The tarnishing effect of corruption on a nation has proven to be detrimental to its economic growth. Negative attitudes are learned by the citizens that it no longer pays to be honest, ethical, or possess moral values. Substandard goods and services are produced in efforts to cut costs to prevent making necessary upgrades to equipment and performances. Not only does the effect of corruption linger in the government infrastructure and threaten the legitimacy of a nation s government, it causes the citizens of the affected countries to look at the corrupt nation negatively. Their credibility has been stripped. China is a nation that is on the road to economic growth due to globalization. Just as Nigeria has mud on its face, so does China. It not only possesses the cultural system of guanxi where there lies the question of the whether it is based on unethical norms or encompasses a well hidden system of corruption, it sports a huge wave of crime for the year 2005. We will deal with guanxi first as we venture into China s wave of crime. Guanxi is a system of personal connection that carries long-term social obligations (Millington, 2005). Basically what the system is based on is who you know and the exchange of beneficial favors. It has also been defined as a chief asset of most Chinese firms (Braendle, 2005). These relationships must be spoon fed and nurtured like babies in an effort to establish, develop and continue a strong network worth investing in. Most Chinese are more inclined to deal with individuals they know and trust. The closer the relationships of individuals, the greater the exchange of favors expected. It has been determined that China is so heavily rooted in its gift giving culture that it is more common than not for visiting companies and representatives of banks, organizations, retailers, and the like to visit with gifts in hand. Not only will they visit the businesses, but they will also visit the homes of their associates as well. This is a form of networking for the Chinese. But where is the line drawn that constitutes corruption when the practice ventures from a mere dinner on the town to business favors and getting around laws and social responsibilities? According to the research conducted by Andre Millington et al, there seemed to be quite a few issues concerning guanxi. There were incidences of back-door and under-table activities during business transactions; offers of vehicles and illicit payments for certain amounts of products ordered

from suppliers; and staff dismissals at purchasing companies due to illegal activities of accepting bribes from suppliers. In 1995, it was determined that the practice of guanxi may have been slowing due to legal enforcement (Millington, 2005). But at the time of the previously mentioned survey, it was determined that the guanxi gift-giving practice can be limited through control of the legal system, but it by no means will be eradicated. There are those who feel that, as long as there are the little guys with the small salaries, there will always be the opportunity for someone to accept gifts in return for favors. The small salaries have been known to double or triple because of the gift-giving guanxi. China s history is so deeply rooted in the practice of guanxi that in an informal economic system, it has provided jobs, housing and medical services. But this network may now endanger the economy s integrity. According to Braendle, guanxi is in general a double edged sword . It has been said that business-to-government relationships have been known to impair an already weakened Chinese governing system. Guanxi also impedes continued economic growth and progress (Braendle, 2005). Business-to-government (B2G) corruption in China is based on a guanxi network that has been known to serve as a surrogate market system that includes unclear property rights, economic roles, and a limited flow of information. In many instances a good guanxi network system may take precedence over legitimate decisions based on law or regulations (Braendle, 2005). This type of guanxi is seen as detrimental and unethical and it is here that the line that borders on corruption and guanxi is drawn. But these crimes seem minimal compared to the crimes committed at the beginning of the 2005 year. According to The New York Times, there has been a rash of robberies on China s banks. Bank of China s branch manager ran off with over $100 million dollars of loot while twelve employees from another bank were caught attempting to abscond nearly one billion dollars. Then adding insult to injury, China Construction Bank had some of its midlevel officers to take flight with almost $8 million dollars. All of these episodes of theft were committed by employees, branch managers, loan officials and top bank executives. But these were just some of the crimes committed in China. In April 2004, managers were arrested for the illegal trading of bonds worth $3.6 billion dollars stolen from Delong brokerage firms. Huayin Trust and Dalian Securities had approximately $3.4 billion dollars stolen in December 2004. The thefts involved over two dozen employees accused of embezzlement, forgery, and contractual fraud (New York Times, 2005). China s lists of international crimes goes on and on. Even though Turkey was one of the first 34 countries to sign at OECD s anti- bribery convention in 1997, it has done little to control corruption. Crimes committed in this country have prevented it from taking advantage of many economical opportunities. Former Prime Minister Tansu Ciller was accused of manipulating the sale of state assets for her own benefit. Last year former president Suleyman Demirel nephew Murat Demirel attempted to land his small boat on the banks of Bulgaria s Black Sea. Demirel, who was once an owner of Egebank, was barred from leaving the country pending investigations into the bank s demise. He offered the coastguard $136,000 to let him go, but the guard refused the bribe and he was returned to Turkey to stand trial.

The infamous Uzan family suspected of being the largest thieves of the country has fled abroad. Kemal and one of his sons, Hakan defrauded Motorola and Nokia out of $5 billion dollars. Cem Uzan, who was a media mogul and partner with former president and Prime Minister Turgut Ozal, was smart enough not to sign his name to incriminating documents and still lives in Turkey. The missing Uzans are still sought after by the Turkish government in an attempt to reclaim the $6 billion dollars it claims they owe. This enveloping corruption in Turkey has taken an economic toll on the country. It has caused low levels of foreign direct investments. It has only been able to attract investments from equally or more corrupt countries (Economist, 2005). Asian corruption has had a devastating impact on its economic growth. A senior anticorruption investigator was arrested for taking bribes in Vietnam. A top law enforcement official s son was charged with cheating or obtaining money by deception in Malaysia. In Bangkok, the celebration of the completion of a new $4 million dollar international airport was marred by accusations of trivial corrupt practices to major contracts improprieties. Upon purchase of the company that sold x-ray scanners to the airport, General Electric discovered the company used agents who had bribed officials in the Philippines and in Thailand. Due to this misfortune, General Electric paid almost $2 million dollars in fines for violating the Foreign Corrupt Practices Act. Due to the perceived threat to society, reducing bribery has become a priority for national governments, trade associations, business firms, international government and non-governmental organizations. The elimination of corruption in developing nations and their economies is also on the rise. For quite some time, the United States and Sweden were the only countries that outlawed bribery of foreign officials by their own citizens (Weber, 2004). Transparency International, a non-governmental agency dedicated to fighting corruption is urging the African nations to endorse the UN Convention on Corruption and encourage European Union s newest members to join the anti-corruption efforts (Nwabuzor, 2005). It is the only international non-governmental organization dedicated to fighting corruption in an effort to bring civil society, businesses, and governments together globally. Its mission is to create change toward a world free of corruption (TI, 2004). More than eighty-five independent national chapters around the globe attempt to diminish corruption at the national and international level. Nationally, the chapters strive to increase the levels of accountability advocates. Internationally, TI raises awareness about the damaging effects of corruption, policy reform, works towards the implementation of multilateral conventions and subsequently monitors compliance by governments, corporations and banks (Transparency International, 2004). This agency has been a leading advocate of the OECD s efforts to reduce and ban business bribery. Information access is a necessary tool in fighting corruption. Transparency International publishes newsletters and reports as a tool for getting information out concerning bribery and corruption. The Corruption Perception Index and Bribe Payers Index are two of its most well known reports. In an effort to clean up public contracting, Transparency International has persistently pressured governments, donor agencies and international organizations to tackle corruption by setting higher standards and applying stronger sanctions against businesses caught committing the act of bribery. It has even rallied for companies or business deemed to have committed these crimes to be barred from future bidding on contracts. Political corruption has also been a focus of Transparency International.

Due to the increase in immunity laws to prevent the prosecution of corrupt politicians, in 2004 TI created the Standards on Political Parties and Favours which provides standards for countries wanting to design and enforce political regimes. As TI continued to strive for and build private sector relationships, Social Accountability International and Transparency International launched the Business Principles for Countering Bribery in 2002. The program provides workshops for corporate audiences in more than 25 countries world wide and serves as the foundation for a forum that has more 65 companies have signed a zero tolerance to bribery policy (TI, 2004). Other special entities have been developed in Nigeria since the scam incidences to investigate accusations of corruption by public officials. An independent Corrupt Practices Commission has been established to investigate public officials and corruption allegations and a Money Laundering, Economic and Financial Offences Commission has been developed to do the same in the area of banking, tax evasion, smuggling and other areas of the like. Although the Nigerian government has taken action to eliminate corruption in its nation, it may take a while to see any real progress. National citizens need more than a smack on the hands to keep multinationals from the enticement of corruption and immoral behavior. In an effort to tighten control over corruption, the Chinese government covered over $22.5 billion dollars in bad loans at the China Construction Bank and the Bank of China (New York Times, 2005) In the United States, after the Enron, Tyco and MCI WorldCom scandals, cries for reformation rang out. The result was the Sarbanes-Oxley Act of 2002, "the most important securities legislation since the original federal securities laws of the 1930s," according to Securities and Exchange Commission (SEC) chairman William Donaldson. The act aims to improve the accuracy and reliability of corporate disclosures by, among other things, requiring corporate chief executives to certify, personally, the accuracy of their companies' financial statements(Enron, 2003). No one organization, bill, act of congress or commission can or will deter global corruption. It will take combined efforts of all national governments. Each will have to stand united, firm, and relentless to all facets of criminal behavior in an effort to take a bite out of crime .

Works Cited

Barboza, David. Wave of Corruption Tarnishes China s Extraordinary Growth. New York Times. 22 Mar 2005 pC1 col 02. Braendle, Udo; Gasser, T.; Noll, J. Corporate Governance in China-Is Economic Growth Potential Hindered by Guanxi?. Business and Society Review. Vol. 110:4 (2005): p 389-405. Cambridge Dictionary Online. 2005. Cambridge Dictionary. 06 Nov 2005. . Economist. Den of Thieves. Vol. 374: Issue 8418 (2005).

Encarta Dictionary Online. 2005. Encarta-North American Edition. 28 November 2005. . "Enron: How Did This Happen?." History Behind the Headlines: The Origins of Conflicts Worldwide. Volume 6. Gale Group, (2003). Student Resource Center. Thomson Gale. 29 November 2005 Merriam Webster Online Dictionary. 2005. Merriam-Webster. 06 Nov 2005. Millington, Andrew; Eberhardt, M.; Wilkinson, B. Gift Giving, Guanxi and Illicit Payer in Buyer Supplier Relations in China: Analyzing the Experience of UK Companies. Journal of Business Ethics. Vol. 57 (2005): p 255-268. Nwabuzor, Augustine. Corruption and Development: New Initiatives in Economic Openness and Strengthened Rule of Law. Journal of Business Ethics. Vol. 59: Issue . (2005): p121-138. Sansoni, Silvia. Dirty Oil. Forbes. Vol. 171: Issue 9 (2003): p 92. Weber, James and Getz, Kathleen. Buy Bribes: The Future Status of Bribery in International Commerce. Business Ethics Quarterly. Vol. 14: Issue 4. (2004): p 695-711.

Political corruption, otherwise known as government corruption, has been defined in numerous ways. Aristotle, the third-century Greek philosopher, defined it as the practice of leaders who rule with a view to their private advantage rather than the pursuit of the public interest. More recently, it has also been defined as behavior by government officials that violates publicly sanctioned moral standards. In the early twenty-first century the definition most commonly used among social scientists is that devised by Joseph S. Nyethe abuse of public office for personal enrichment. Such abuse occurs in many forms. The most common include bribery, extortion, embezzlement of government resources, violation of campaign laws, and electoral fraud. Political corruption is often associated with regimes that are described as neo-patrimonial or kleptocratic. In these regimes, the ruler abuses public office by behaving as though all property in the country is his or her personal property. An example of a classic neo-patrimonial regime is that of Joseph Mobutu, known as Mobutu Sese Seko (19301997), in the Democratic Republic of Congo (Zaire). An example of an archetypical kleptocracy is that of Ferdinand Marcos (1917 1989) in the Philippines. Such regimes tend to be autocratic and less economically developed. But political corruption is found in all governments around the world, and it has been present throughout the ages. In his encyclopedic history of bribery, John T. Noonan provides examples of corruption from ancient Egypt to modern America. Contemporary political corruption appears prevalent in countries as diverse as Italy and India. Consequences Although the phenomenon of political corruption is an ancient one, only in the 1960s did social scientists begin to analyze it systematically. One much-debated issue centered on its consequences. The debate began when scholars, most notably Nathaniel H. Leff, questioned the prevailing view that corruption was harmful for economic development. The revisionists, as they came to be known, argued that bribery could be beneficial for less developed countries attempting to industrialize. Such countries require substantial investment, but their unstable governments make investors wary. Bribery, according to the revisionists, would provide investors with the means to ensure policy stability even as government officials changed. Bribery would also provide incentives for government officials to accomplish their tasks more quickly. In 2004 the consensus among social scientists, based on numerous empirical studies, is that political corruption is detrimental to economic development. It lowers investment and leads to the misallocation of scarce government resources. It also increases income inequality within countries. Sources Unlike the issue of the impact of corruption, questions regarding its sources remain unresolved. The main debate exists between scholars who argue that corruption primarily results from the moral values of a society, and those who argue that it is mainly due to a country's economic and political institutions. More specifically, the first group of scholars posits that some societies have moral codes that lead them to deem as acceptable behavior that other societies consider corruption. Unless these societies develop new value systems, they will continue to be plagued by corruption. In contrast, the second group of scholars argues that both a reduction in corruption

and change in values will occur with appropriate transformations of a country's economic and political institutions. Such changes include, but are not limited to, reducing the discretionary powers of government officials over the allocation of economic resources and ensuring free and fair elections for public office. It is likely that both cultural values, on the one hand, and economic and political institutions, on the other, affect the extent of political corruption in any country. More research is needed, however, to determine the relative impact of these sources of corruption, so that reformers can target scarce resources where they will be most effective. Responses The arguments of social scientists notwithstanding, policy makers around the world have long recognized the need to combat political corruption. Some common strategies that policy makers have implemented include increasing transparency in government transactions, requiring top public officials to disclose their financial interests, providing legal protection for individuals who expose corrupt government officials, and creating anticorruption commissions to coordinate the implementation of anticorruption policies. The results in countries that have adopted these strategies have been mixed. Successful cases tend to be distinguished by the degree of their policy makers' commitments to anticorruption reforms. Strong commitments are often sustained only under strong public pressure. In 1997 a novel strategy to combat corruption was adopted by thirty-five countries, including the thirty members of the Organization for Economic Cooperation and Development (OECD) in addition to Argentina, Brazil, Bulgaria, Chile, and Slovenia. These countries signed a Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Before the Convention was signed, these countries had no laws against bribing foreign government officials. Many of their multinational corporations were free to bribe developing country government officials to secure contracts or business licenses. The AntiBribery Convention requires signatories to criminalize the bribery of foreign public officials and to declare that individuals who bribe foreign public officials will be punished as harshly as those who bribe their own national officials. It is still too early to determine whether the Convention has reduced bribery in international business transactions, but it is a welcome addition in the arsenal against corruption. Transparency International. Much credit for heightened awareness of the damage caused by corruption should be given to an organization founded in 1994, Transparency International (TI). TI is a Berlin-based non-governmental organization (NGO) that mobilizes private sector actors in the fight against corruption. It has over ninety national chapters in both developed and developing countries. Since 1995 TI has published annually a Corruption Perceptions Index (CPI). The CPI is based on surveys that typically ask respondents to rank countries according to their level of corruption. CPI scores range from zero to ten, with zero characterizing countries whose governments are perceived to be totally corrupt, and ten for countries whose governments are perceived to be honest. The 2003 CPI reviewed 133 countries. Bangladesh ranked as the most corrupt with a score of 1.3, whereas Finland was least corrupt at 9.7.

Ferdinand Marcos (19171989) Born in Sarrat, Ilocos Norte, Philippines, Ferdinand Marcos was a brilliant student and attended the University of the Philippines on a scholarship. A few months before graduation, he was arrested for the murder of a political rival of his father. He passed the bar exam while on bail and later successfully argued his own appeal before the Supreme Court. Marcos served in World War II, but was not the hero of the anti-Japanese resistance he later claimed to behe was in fact a collaborator. Serving in the House of Representatives from 1949 to 1959 and in the Senate from 1959 to 1965, Marcos used his positions to make himself a millionaire. In 1965 he was elected president and in 1969 reelected. He maintained good relations with the United States and even sent Filipino troops to Vietnam. His main activity as president was self-enrichment (he is estimated to have amassed a personal fortune of $5 billion). While the economy was strong and his public works program created jobs, his support remained high, but during his second term the economy slowed, and his promised land reforms never happened. Insurgent violence and crime increased, and political opposition escalated. Legally barred from running again, Marcos declared martial law in 1972 and had the constitution rewritten to allow him to stay in power. Thereafter Marcos ruled by decree, with much violence toward political opponents. Marcos lifted martial law in 1981, and the opposition began preparations for the next election. In 1983 Marcos had the opposition leader, Senator Benigno Aquino, murdered as he returned from exile in the United States (Marcos had had him sentenced to death for "subversion" in 1977, but allowed him to leave the country). This caused an explosion of protest. A failing economy, plunging living standards, and growing popular insurgencies made the country nearly ungovernable. Marcos called an election for 1986, and Aquino's widow Corazon announced her candidacy for the presidency. Marcos officially won the vote, but the universal belief that he had rigged it brought on continuous demonstrations and strikes that brought the country to a standstill. At that point Marcos lost the support of the military and fled the country. He died in 1989 in Hawaii.