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Heads I'm Corrupt, Tails You're Poor

The FCPA matters because public corruption and poverty walk hand-in-hand. The point is illustrated too well by conditions in Bangladesh, a perennial basket case in the world economy. Here are some facts:

• Bangladesh ranked 162nd on Transparency International's 2007 Corruption Perception Index. It was tied with Cambodia, the Central African Republic, Papua New Guinea, Turkmenistan and Venezuela.
  

• This week the country's Anti-Corruption Commission said several of its own members have been taking bribes. "We have decided to take action against 28 of our officials after an internal monitoring and surveillance has found them seeking or taking bribes and breaking service rules such as secretly buying properties," a spokesman said.
  

• With more than 150,000,000 people, Bangladesh is the world's seventh most populous country. Yet its per capita GDP of just $1,374 ranks 148th, with about half the population living below the poverty line.

• A World Bank Country Director in Bangladesh, Frederick T. Temple, described the impact of public corruption this way: The poor suffer from corruption in many ways. Their access to services, such as public health and education, is reduced when drugs and textbooks are stolen from public facilities and sold privately and when doctors and teachers have high rates of absenteeism from their public jobs and sell their services privately. Corruption invariably channels public resources to the rich ? the poor lack the funds to bribe or pay for the private provision of services that are supposed to be provided for free as public services. Almost everybody suffers from corruption, but the poor suffer more.

• Transparency International's 2005 household survey found that in public hospitals, 26.4% of patients had to pay bribes to doctors for receiving medical treatment; 37.5% who had surgery and 57% who had an X-ray had to pay bribes.

• Dealing with the police was worse. More than 90% of households who lodged police reports had to pay bribes and 80% who needed any type of clearance certificate had to pay bribes. Things weren't much better in court, where 71% of the accused and 66% of plaintiffs had to pay bribes.

• Of the households who took a loan from a public bank, the average waiting time was 108 days. For their loans, 61% had to pay bribes.

• A report from Bangladesh cited by the U.N. found that a cattle trader had to pay extortion money at eight different places along the way to the market, both to the police and organized criminals - which added as much as 20% to the selling price.

• Red tape -- public corruption's awful twin -- is legendary. The Bangladesh News recently reported that despite enormous demand, there's gridlock in the development of compressed natural gas delivery. "It often takes several years to launch a CNG refueling station as the government offices concerned miserably lack coordination," the report said. Over 100 applications are tied up. Approval is needed from from at least nine departments and agencies, and aggrieved entrepreneurs said within one agency alone a file has "to pass through 64 tables," providing lots of opportunities for bureaucrats to extract bribes.

Full post as published by The FCPA Blog on July 09, 2008 (boomark / email).