1. Corruption takes many forms, and all of them
distort the workings of a political system…
Wirtschaftuniversitaet - Wien Elizabeth Pyle
Doing business in C.E.E. Henry Sichel

2. Elizabeth Pyle
Doing business in C.E.E. Henry Sichel

3.  “the currency of the corrupt act, be it a bribe,
profiteering, nepotism, or something else, is
less important than how it distorts the
workings of the political system”
Elizabeth Pyle
Doing business in C.E.E. Henry Sichel

4. Low Level Self Serving “State Capture”
administrative asset stripping by corrupt
corruption by officials networks
Elizabeth Pyle
Doing business in C.E.E. Henry Sichel

5. • Bribes to break rules and regulation
Bribery to
Bend Rules • The whole political regime can change
Over-regulation, • “corruption thrives on disorganization”
Obfuscation and
• More rules, regulations and burdens to
Disorganization induce the public to offer more
Misuse of Licensing • Ukraine 1999 –26 agencies but no
and Inspection Powers published rules!
“payments to police and the health services
account for about half of all bribe expenses.”

6. Diverting Public Funds • Hidden „second‟ budgets
• Exploitative use of natural resources;
Mismanagement and
• Not useful leasing of pubic spaces;
Profiteering from • Quasi privatization of state owned
Public Assets enterprises
• Privatization‟s officials concentrated on
their own enrichment;
Profiteering from • Decisions without open market competition,
Privatization public scrutiny or accountability procedures
“ “Russian generals are believed to have
embezzled $65 Mll from sales of military
property intended to pay for military housing”

7. • The prices the state pays in procurement
Procurement Schemes
are typically too high
• Shady hiring practices;
Nepotism,
• Corruption occurs by commission as well
Clientelism and
as omission, „old comrades network‟;
“selling” of
Positions • Threat of firing
Elizabeth Pyle
Doing business in C.E.E. Henry Sichel

8. • Corrupt or criminal networks penetrate
De facto Takeover of
executive institutions at critical points.
Institutions
• Especially difficult to prove and fight
• Democracies cannot function properly if
Forming Collusive collusive power blocs capture the political
Networks market
• Nomenklatura elites
• Illicit financing of parties electoral slush
funds linked to power oligarchies
Undermining Elections
• Pay for hidden political advertising in
supposedly objective media
Elizabeth Pyle
Doing business in C.E.E. Henry Sichel

9. • Laws purchased by business or criminal
interests that illegally pay legislators to pass
Misuse of Legislative
specific bills.
Power
• Confusing and contradictory legislation
promotes corruption.
• Executives often bribe prosecutors and
Corruption of Judicial
judges
Justice
• Judicial complicity – lack of evidence
• Misuse of auditing, investigative and
Misuse Oversight oversight powers to hide and promote
corruption
Elizabeth Pyle
Doing business in C.E.E. Henry Sichel

10. • Intimidate citizens and political rivals
Kompromat • Concrete legacy of soviet system
• Mutual blackmail
• The most crucial player in promoting or
hindering efforts to stamp out corruption
• News stories are sometimes skewed
Media Corruption
• Innuendos and false accusations are spread
against political or economic rivals
Elizabeth Pyle
Doing business in C.E.E. Henry Sichel

11.  Corruption is the chief obstacle to democratic
and economic progress in the post-communist
region.
 The misuse of public power for private gain has
political consequences that need to be spelled
out and assessed.
 Officials charged with securing the public good
focus instead on securing their own private good
 The people at large pay a cost
Elizabeth Pyle
Doing business in C.E.E. Henry Sichel

12. Corruption has 3 dimensions that affect
the quality of its politics:
3. And its
consequences
2. Its for the polity
institutional
aspects
1. Currency of
the corrupt act
Elizabeth Pyle
Doing business in C.E.E. Henry Sichel

13.  Corruption undermines the principles on
which democratic regimes are built, such as
the rule of law, free and fair electoral
competition, and representation and
responsive government. If corruption
becomes so persuasive that it seriously
undermines these principles, then the entire
system of government has changed and a
new vocabulary will be needed to explain the
outcome
Elizabeth Pyle
Doing business in C.E.E. Henry Sichel