3.3. “Big” corruption
Although the transition from “petty” to “big” corruption is fluid in the individual case, the latter presents a distinct problem area. (20) In the worst case a parasitic political and economic upper stratum ruthlessly exploits its privileges and the clout that goes with them to funnel huge sums into its own pockets. In order to bag loot on that scale corrupted and corrupters shop for ways to buy goods and services with the highest possible price tag.
Everyone involved has an interest. The supplier sells pricey, perhaps overpriced, goods and services, while the “customer” takes his cut in the form of illicit “commissions”. (21) Development ruins in many a poor country testify to the deplorable results of such wheeling and dealing. Most of them are relatively useless, ill-adapted and lavishly expensive installations, colossal prestige projects and outsized construction schemes, or armaments that far exceed a country's legitimate defense interests. In most cases the purchase transaction as such is perfectly legal.
The illicit nature of such dealings consists in this: by dint of loyalty to their charge, and in view of the scarcity of resources, the officeholders or those empowered to make decisions would be duty-bound to serve the public interest, fending off whatever is harmful to it. For selfish reasons they fail to do so, however. Instead of seeking the most cost-effective solution to a problem-for example, by publicly inviting tenders and straightforwardly appraising the offers that come in-they give preference to the most expensive variant. The overblown dimensions, technical complexity, lack of a flanking infrastructure before and after, or simply a non-existent need-all these factors often make it highly unlikely that such investments will ever be efficiently used.
Since the “commissions” are normally high and, being underhanded, do not show up on any tax declaration, the direct effect on the beneficiary's income is substantial – and the harm done to the public welfare usually great. The devious practice is considered to have added massively to the foreign indebtedness of many developing countries while seldom contributing to bettering the lot of their people. The upshot is the notorious “privatization of profits and socialization of losses”, with the public costs of corruption outweighing whatever private benefit it may bring many times over. (22)
The privatization/socialization caper takes on especially opprobrious dimensions when large-scale corruption is carried on-that is, when payments are made in order to transgress the law. Again, an example will show what is meant:
A company in an industrial country wants to spare itself the high investment costs of building a special wastes incineration plant on its own turf and mounts a search for an alternative, cheaper way to dispose of the waste. In this situation a highly placed ministry official of a developing country approaches the company with a proposal: for a consideration of three million dollars he would arrange for the trouble-free importation of all of the waste into his country for a five-year period. He would also see to it that the special waste was buried in a remote and, in his perception, secure site. In his native village he owns enough land that would be well-suited to the purpose. True, the import (and since the “Basle Convention” of 1989, the export as well) of such toxic substances is officially prohibited. However, he, the Deputy Minister for Economic Promotion, sees no cause for worry since, first, the waste can be mixed with other materials such as gravel or sawdust and, second, the waste dump would bring jobs and so benefit the people of his village.
After briefly considering the economic advantages of the proposal the company assents to it. The sequel: a few years later the people living in the vicinity of the disposal site fall victim to a mysterious ailment – later diagnosed as severe poisoning. The deputy minister swears that he knew nothing of the special wastes' toxicity and that he was misled by the multinational corporation. The company is indited in the “host” country and becomes a focus of public protests at home as well as in numerous industrial countries.
At the beginning of this discussion we pointed out that, far from being confined to developing countries, corruption is a world-wide phenomenon. Nevertheless, it does constitute a special problem in the developing world.