Corruption 101: How The Vice Hurts

[MOON Ki]

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There are those who believe that if the corrupt  are busy building little bars, hotels, sharing their loot with malayas, etc., then all is well---that the money is being "invested", and there is, therefore, an overall benefit to the country.   A friend I had drinks with this evening tried to sell me the same line, and it is one that I have seen on Nipate too:

RV Pundit:

But isn't that corruption feeding into the private sector dynamism we see in Kenya. Aren't our fatcats re -investing corruption proceeds as capital investments in banks,insurance companies, Telcom companies, hotels, industries,real estate and the NSE. Of course some of it probably end up being stashed in foreign swiss accounts...thankfully this is happening less and less. Eng Kamau has reinvested his proceeds from China roads,bridges and railways into upcoming Radisson Blue hotel..and so are the other fat cats like Chirchir chicken is currently building a tea factory...etc etc.

http://www.nipate.org/index.php?topic=1947.0

RV Pundit:

All the money stolen nowadays get somehow invested back....or well like my cousin cop...it ends up in local bar and with sluts..and it oils that economy....so the net effect is nearly the same...economy wise.

http://www.nipate.org/index.php?topic=2307.0

A response:

A short paper---"The Importance Of Leadership In Fighting Corruption In Uganda"---by Augustine Ruzindana, a well-known anti-corruption fighter in that country, ought to be enough by way of an explanation.   (See the section on "Deleterious Effects of Corruption".)

You will find it here:

www.piie.com/publications/chapters_preview/12/7iie2334.pdf

The China argument:

One sometimes hears that China is doing well, a great deal of corruption notwithstanding.  In order to dismiss that argument, it is not necessary to note that China, unlike African countries, takes the matter very, very seriously and routinely sends people to the gallows on that basis.

First: The issue is not merely whether corruption exists or not, and it does exist, to varying degrees all over the world; it is how harmful it is.   Where, as in Africa, it is extremely damaging, it is simple-minded to shrug it off, with pointers to other places.

Second: The leaders of the Chinese government do not take the cavalier attitude that they are doing just fine even with the existence of corruption.   Instead, what focuses their minds is this question: "How much better could we do without all the corruption?".   (And on that basis they act.)  Africans too need to ask themselves that question.

[Kim Jong-Un's Pajama Pants]

Corruption is a fundamental problem in Africa.  The author is spot on when he says it screws up the production structure. 

Where you would have people doing actual work to provide value in a competitive setup, you instead have Things of Desire supplying crappy rice and hot air for an arm and a leg.

On that note, has anything of note been uncovered by CID about these companies in the "ongoing NYS investigation"?  Has any of them perhaps been asked to answer a few questions?

[RV Pundit]

A complex issue like corruption cannot be simplified. That is simplistic thinking. Corruption is a crime [not any special to other crimes]. There is a reason why crime is rampant in poverty stricken areas.

Here were are dealing with egg-chicken situation. Corruption is caused by poverty. Poverty makes the fight against graft hard.

Countries should strive to fight corruption....but we should not deluded ourselves this will be easy fight or will it be an end game.

How do you fight corruption when it corrupts everyone including the judicial system? or even the prison!

Africa countries including kenya should focus on preventing corruption; by using technology and enforcing controls; that to me is surest way to fight graft plus of course growing the economy.

Our most serious corruption remain traffic cops...if we allowed for instant bribes paid via MPESA..we will significantly reduce corruption..in the police force.

If we focus on say ensuring every traffic stop is fitted with video camera...that will stop corruption.

[Georgesoros]

Corruption is not caused by poverty rather by greed and lack of ethics. Imagine if you inherited your fathers estate and your oldest bro grabbed the biggest share of it, and kept taking even what was given to other siblings. How coiuld you feel?

[RV Pundit]

Let say there are just many cause of corruption but for me poverty is the main driver. Everyone by default is greedy. It human instinct. What makes people to engage in crime is risk-reward matrixs. If I am poor and desperate then I'm prepared to take about any risk.Corruption for me is a crime..it very rare to see anyone engaging on it publicly...there is a risk (of losing job or jail term)...and of course huge reward.

Corruption is not any different from stealing. It boils down to taking what doesn't belong you. We condemn robbery with violence (oxymoron) to death sentence or life sentence..but has that in  any reduce robbery?

How do you alter the risk-reward matrix is an INTELLIGENT way. Not just emotional BS that happens in parliament.

Corruption is not caused by poverty rather by greed and lack of ethics. Imagine if you inherited your fathers estate and your oldest bro grabbed the biggest share of it, and kept taking even what was given to other siblings. How coiuld you feel?

[Kim Jong-Un's Pajama Pants]

A complex issue like corruption cannot be simplified. That is simplistic thinking. Corruption is a crime [not any special to other crimes]. There is a reason why crime is rampant in poverty stricken areas.

Here were are dealing with egg-chicken situation. Corruption is caused by poverty. Poverty makes the fight against graft hard.

Countries should strive to fight corruption....but we should not deluded ourselves this will be easy fight or will it be an end game.

How do you fight corruption when it corrupts everyone including the judicial system? or even the prison!

Africa countries including kenya should focus on preventing corruption; by using technology and enforcing controls; that to me is surest way to fight graft plus of course growing the economy.

Our most serious corruption remain traffic cops...if we allowed for instant bribes paid via MPESA..we will significantly reduce corruption..in the police force.

If we focus on say ensuring every traffic stop is fitted with video camera...that will stop corruption.

I could concede that petty corruption could be a result of poverty, if not an automatic one.  I think it thrives in an environment where the link between legitimate work and reward has been destroyed by grand corruption.

We've all by now read about cops being denied allowances because the boss pockets them for himself.  When the system you are supposed to protect is eating you up with impunity, it's not difficult to see why cops take bribes.

While I don't know the numbers that petty corruption drains from a productive economy, I suspect it is less than what the country loses to the Anglo-Leasing types where you'd be hard pressed to find poor or formerly poor beneficiaries.  The big thieves are mostly folks born with a silver spoon in their mouth.  Kamwana's buddies. 

Which is why I dismiss the notion that kamwana is not corrupt because his father stole for him.  Across Africa there are big thieves whose parents have illegally accumulated more wealth than Kenytta ever did.  And they continue to loot.

I can't equate poverty with criminality because most poor people will work for a pittance rather than steal.  As long as there is a reasonable work-reward matrix.   I see petty corruption as a symptom of the big ones.

If the economy grows in-spite of corruption, that tells me it would grow much more in an environment that rewards legitimate production.  I don't think corruption reduces just because the economy has grown.  Reaping where you have not sown will continue as long as one can get away with it.

[Georgesoros]

Kamwana abets corruption. So he is corupt. If you sleep with dogs, youll get fleas. He sleeps with the corrupt, so he has corruption in his system. Eliminating corruption starts with you. But the system itself promotes it. Why should you want to go to jail for speeding while you can part with 2k? How come politicians havent made speeding a misdemeanor purnishable by a fine to eliminate this avenue of corruption? 50yrs and counting...

[RV Pundit]

Interesting take. Big and small corruption. I happen to hold the opposite view. I think small time corruption is the killer. I think there is big time corruption nearly everywhere. In the US they are rich billionaires gaming the system as we speak.

They may use sophisticated tools and techniques like Wall Street but at the end of the day they are folks corrupting and benefiting illegal from it.  Once in a while they get overboard and bring down the economy. US corrupt fat cats corrupts financial systems, policies, congress and foreign affairs but at end of the day they are some few guys benefiting immensely.

But what set the US apart is their systems is not endemic. In Kenya even your own father or mother leave alone siblings are ever ready to steal from you.

I could concede that petty corruption could be a result of poverty, if not an automatic one.  I think it thrives in an environment where the link between legitimate work and reward has been destroyed by grand corruption.

We've all by now read about cops being denied allowances because the boss pockets them for himself.  When the system you are supposed to protect is eating you up with impunity, it's not difficult to see why cops take bribes.

While I don't know the numbers that petty corruption drains from a productive economy, I suspect it is less than what the country loses to the Anglo-Leasing types where you'd be hard pressed to find poor or formerly poor beneficiaries.  The big thieves are mostly folks born with a silver spoon in their mouth.  Kamwana's buddies. 

Which is why I dismiss the notion that kamwana is not corrupt because his father stole for him.  Across Africa there are big thieves whose parents have illegally accumulated more wealth than Kenytta ever did.  And they continue to loot.

I can't equate poverty with criminality because most poor people will work for a pittance rather than steal.  As long as there is a reasonable work-reward matrix.   I see petty corruption as a symptom of the big ones.

If the economy grows in-spite of corruption, that tells me it would grow much more in an environment that rewards legitimate production.  I don't think corruption reduces just because the economy has grown.  Reaping where you have not sown will continue as long as one can get away with it.

[Kim Jong-Un's Pajama Pants]

Interesting take. Big and small corruption. I happen to hold the opposite view. I think small time corruption is the killer. I think there is big time corruption nearly everywhere. In the US they are rich billionaires gaming the system as we speak.

They may use sophisticated tools and techniques like Wall Street but at the end of the day they are folks corrupting and benefiting illegal from it.  Once in a while they get overboard and bring down the economy. US corrupt fat cats corrupts financial systems, policies, congress and foreign affairs but at end of the day they are some few guys benefiting immensely.

But what set the US apart is their systems is not endemic. In Kenya even your own father or mother leave alone siblings are ever ready to steal from you.

I could concede that petty corruption could be a result of poverty, if not an automatic one.  I think it thrives in an environment where the link between legitimate work and reward has been destroyed by grand corruption.

We've all by now read about cops being denied allowances because the boss pockets them for himself.  When the system you are supposed to protect is eating you up with impunity, it's not difficult to see why cops take bribes.

While I don't know the numbers that petty corruption drains from a productive economy, I suspect it is less than what the country loses to the Anglo-Leasing types where you'd be hard pressed to find poor or formerly poor beneficiaries.  The big thieves are mostly folks born with a silver spoon in their mouth.  Kamwana's buddies. 

Which is why I dismiss the notion that kamwana is not corrupt because his father stole for him.  Across Africa there are big thieves whose parents have illegally accumulated more wealth than Kenytta ever did.  And they continue to loot.

I can't equate poverty with criminality because most poor people will work for a pittance rather than steal.  As long as there is a reasonable work-reward matrix.   I see petty corruption as a symptom of the big ones.

If the economy grows in-spite of corruption, that tells me it would grow much more in an environment that rewards legitimate production.  I don't think corruption reduces just because the economy has grown.  Reaping where you have not sown will continue as long as one can get away with it.

Obamacare website cost over $600 million.  You could have done it in your garage.  And for the first few weeks, people still had trouble registering.  The company that did it, I believe has close ties with Obama. But enough hell was raised for them to fix it - someone in India must have been worked to death to get it going.  Stuff like that happens, but it's rare. 

Contracts like that usually have service level agreements that specify the minimum value expected from the supplier.  If it's not met, they should be able to shoulder the liability, usually with insurance.  At the end of the day, you have to be able to produce something or you wont last long.

In Kenya, it seems like you if you are connected, you can sell the government hot-air for years without incurring any costs.  That kills opportunities for genuine producers, maybe a startup that actually does work.  But it also denies value to Wanjiku.  People end up paying for nothing.  And this is just the bit that we know about.

[Georgesoros]

Agreed with you guys. Institutional corruption is the worst cancer. Treatment requires various specialties that are very expensive. If not properly treated this cancer will kill Kenya. Investors will flee to Rwanda, Ethiopia and Tanzania where there's order leaving 50million Kenyans who really need them.

[Kim Jong-Un's Pajama Pants]

Stephen Jennings, the Tatu City bazungu, has his own take on the vice. 

[RV Pundit]

I think corruption is just one of the many factors an investor will consider...kenya has been thriving swamp of corruption..to quite the former US ambassador...who decided to settle in kenya after his tenure.

Agreed with you guys. Institutional corruption is the worst cancer. Treatment requires various specialties that are very expensive. If not properly treated this cancer will kill Kenya. Investors will flee to Rwanda, Ethiopia and Tanzania where there's order leaving 50million Kenyans who really need them.