The Mechanics of Corruption

ARCHIVES 2010

By admin-s On Oct 4, 2010

When we stand by and do nothing, we allow the disease to spread. To do nothing in the face of corruption is to endorse it, allow it and inspire it.

By Fahri Azzat

An illustration of the mechanism of corruption in one situation

An example, of course. W is a Minister in charge of a RM 100 million project that is for the benefit of the public. Say for example the project is a state of the art national learning facility based in Malaysia. If that entire sum were used towards the project, it would be of comparatively high standards.

The first bite would be during the award of the contract. Tender or no tender, it happens. W and his cronies would either go directly with a favoured company, or would create an auction situation and work with the one who shared most generously. We give them the benefit of the doubt, so 15% to them.

Now, company X that is awarded the contract is not going to actually do the project. What for? Their effort was spent entirely on securing the project. Their privilege is in then subcontracting the whole Project out to company Y for a lesser sum. Say they are not very greedy. Company X creams off 10%. That’s the second bite.

Company X now has to provide project specifications worth RM100 million with only RM75 million. But that is assuming they do not flog it off to another company, which often is the case. Say after all the subcontracting is done, ultimately company Z gets it at RM 60. The third bite (or ‘the bite of many’ stage). Company Z is not going to do it for free. It has to be worth its while. Say, company Z only takes a profit margin of a measly RM5 million. So the fourth is more of a nibble than a bite.

Ultimately, a government project that was worth RM100 million was now going to be completed with RM55 million. And that’s just being optimistic and looking at it purely at the contractual ownership level. Then there is the actual construction level – local authorities, government inspectors, government project managers, the contractors, the actual workers, and a host of other approving bodies or levels that want their share too. We can only guess how many more bites are taken into the project budget, so it won’t be considered further.

Needless to say that it being a government project, all that money comes from the country’s taxes, i.e. tax payers statutory contributions, corporate tax, etc. Hard earned money from generally legitimate industry goes towards easy profit towards leeches from no meaningful economic activity.

What is the impact of corruption from this simple example?

The nation’s precious time, energy and money, and so its potential and opportunity cost for economic, financial, knowledge and skill growth are wasted. Worse, national trust is betrayed. Without it the quality of societal civilization deteriorates to a highly refined barbarism. Factions of society become less tolerant of others. The lack of trust in society is symbolized by the continual and widespread breach of trust occurring in public office and the increasingly laudable but hollow public salutations to good governance. Public corruption corrupts public society. It weakens the bonds of trust between them and turns each facet of society against each other. This is the corruption and destruction of the nation’s soul.

Then there is the finished product or project which could never meet the project specifications. No matter how well company Z did it would never ever be able to do so given the actual project sum available. It would be shoddy, at best, or structurally unsound and so dangerous to the public, at worst. More money has to be spent fixing or rebuilding it or if it cannot function, it would be a complete waste of public funds. Similarly if it is not utilized. Corruption is invariably related to poor quality and relentless mediocrity.

A Minister or any government officer holds and administers their office by virtue of public trust. They are trustees for the citizenry, the rakyat. There would be a breach of trust and a fraud committed on W’s and his cronies part. These are crimes of public trust and morality. A corrupt public officer is often a serial offender. After the first time, it’s easier to say yes to the second time. What is often seen is merely an instance in a long history of such transactions. Corruption is fraud, a betrayal of trust and always repeated, and so also a spiritual disease, not merely an economic one.

The money. Each citizen’s money. RM45 million meant for the project, gone. Never saw the light of day or hit the earth. Never to be recovered. Probably banked in some secret overseas account or spent purchasing all sorts of stuff. Corruption is theft. Corruption is cheating and fraudulent. You take ownership of something that is not yours without permission. But in truth most times it is daylight robbery, they system takes place of the guns.

The soul of a nation, the ethical fabric of society, relations between citizens are all wrecked and destroyed so a few greedy humans can accumulate more material wealth than others. Bonds of trust, relationships of value are severed for mere profit. A whole society is sacrificed on the alter of convenience and profit for a few people. Worse, it inspires others to practise such corruption. So corruption is also like a disease. It is insidious, easy and seductive; it therefore spreads easier and faster than values of genuine effort and commitment.