Corruption

eLesson 3

What is corruption?

Which of the following describes corruption?

A secret arrangement to gain an unfair advantage. When two or more people reach a secret agreement to influence something or to deceive others. Examples include trying to influence a tender or showing favoritism to a particular bidder or company for a contract. It also covers conflicts of interest. This is when, for example, family or personal connections result in an unfair and uncompetitive tender process.

Stealing money or products and lying about it. It is often financial or accounting wrongdoing which is intended either for personal gain or to give a false impression. Examples include stealing or diverting funds, misrepresenting or changing accounting records, transactions, invoices, financial statements…

The misuse or abuse of power for private gain. Examples include giving or receiving a bribe or a kickback, paying an official to win or asking for money to award a contract, offering or accepting excessive gifts or hospitality to influence a decision.

eLesson on corruption

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Why should you care about corruption?

Corruption adds significant costs to the price of doing business

Corruption steals resources that could be used to build the capacity of countries and harms their abilities to serve citizens

Corruption prevents a “fair playing field” in competitions to provide goods and services

Corruption thrives where there is a lack of transparency, which can damage a nation’s social and economic fabric

eLesson on corruption

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What is the cost of corruption?

$1 trillion in bribes paid each year

Total cost of corruption worldwide equals 5% of global GDP ($2.6 trillion)

Corruption adds up to 10% to the total cost of doing business globally, and up to 25% to the cost of procurement contracts in developing countries

eLesson on corruption

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How do you spot corruption?

Corruption has the following red flags:

A significant improvement in lifestyle in the absence of changes in financial circumstances

Owning property or high-value items that do not seem to match the salary of the person and without other explanation (such as inheritance or family contribution)

A procurement official exerts pressure or otherwise tries to influence a contractor to use a certain sub-contractor

Procurement officials fail to complete conflict of interest forms

Procurement officials who act above or below their normal duties during the course of a contract award

Facilitation payments: a government official is given money to perform his or her duties

Gifts and gratuities: accepting excessive presents from suppliers for example paid vacations, luxury goods, expensive liquor etc.

eLesson on corruption

5 mins left

Case study on corruption

Real case studies of corruption from our archives