Corruption: Defining, Measuring and Addressing

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(Disponible en français : La corruption : la définir, la mesurer et y faire échec)

International Anti-Corruption Day occurs on 9 December annually, bringing awareness to the global issue of corruption. Because government spending related to the COVID-19 pandemic may provide opportunities for corruption to occur, the theme for 2020 is “Recover with Integrity.”

The United Nations (UN) believes that no country – including Canada – is completely free of corruption, and that corruption is a significant obstacle to achieving the Sustainable Development Goals.

After defining “corruption” and some of its types, this HillNote examines various ways that corruption is measured and a number of its costs. Finally, it describes several international and domestic measures designed to address corruption.

Defining “Corruption” and Selected Types

A variety of organizations define the term “corruption.” For example, Transparency International has a commonly used definition: “the abuse of entrusted power for private gain.”

A Public Safety Canada research brief identifies types of corruption, including “petty corruption” and “grand corruption,” with “state capture” being one aspect of the latter.

“Petty corruption” occurs when public servants – such as police officers, health care providers or customs officials – are bribed with the goal of receiving preferential treatment or expediting bureaucratic processes. While the amounts of money involved are usually small, petty corruption is thought to be widespread and hard to eradicate.

“Grand corruption” occurs when high-ranking government officials exploit their position of authority to obtain personal benefits. Examples include officials receiving bribes from a firm in exchange for a government contract. With “state capture,” government leaders manipulate a country’s laws to reduce their accountability or to enable the accumulation of state funds for private gain.

Measuring Corruption and its Costs

Transparency International’s Corruption Perceptions Index (CPI) scores and ranks perceptions about public-sector corruption. The CPI’s methodology combines data from up to 13 external surveys of experts and businesspeople concerning corruption within their country.

Canada’s 2019 CPI ranking of 12th was worse than its 2018 ranking of 9th. Three other G7 countries – France, the United Kingdom and the United States – also had their ranking decline from 2018 to 2019. In both years, Transparency International ranked 180 countries.

The World Bank’s Control of Corruption indicator from its Worldwide Governance Indicators measures perceptions of corruption in more than 200 countries. Its methodology uses existing survey data to assess petty corruption and grand corruption, including state capture. With 100 being the best score, Canada scored 93.3 in 2019, a drop from 93.8 in 2018.

A 2018 paper published by the World Bank Group characterized the CPI and the Control of Corruption indicator as among the most valid measures of overall corruption in many countries. However, a guide from the UN Office on Drugs and Crime indicates that, while these measures can provide a sense of overall corruption, they are not reliable when assessing changes within a country from year to year. Perceptions about corruption tend to change slowly, and factors other than corruption can influence people’s survey responses.

According to these two measures of corruption, developing countries and countries with high levels of income inequality tend to have higher levels of perceived corruption than do developed countries and countries with a more equal distribution of income. In all countries, people may be experiencing the economic, social or other costs associated with corruption.

Concerning economic costs, according to the UN, more than 5% of global gross domestic product is lost annually as a result of corruption. Estimates suggest that approximately US$1 trillion is paid in bribes and that US$2.6 trillion in public funds is stolen.

From a social perspective, one sector in which corruption has been found to occur is health care. A 2019 article published in The Lancet observed that vaccines and medicines can be stolen, health-related data can be manipulated and some patients can receive preferential treatment. Overall public health outcomes may be worse than would otherwise be the case.

As well, corruption can erode trust in governments and, thereby, contribute to a country’s instability because of protests. For instance, a 2015 article published by the Brookings Institution notes that corruption was considered to be among the main factors triggering the Arab Spring protests in 2011. In 2020, anti-corruption protestors in such countries as Haiti, Iraq, Libya and Peru have been killed or disappeared.

Addressing Corruption

Corruption – at home and globally – can be addressed through international and domestic measures. For example, all 37 Organisation for Economic Co-operation and Development (OECD) countries – including Canada – and seven non-OECD countries have adopted the 1997 Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

As well, the first legally binding global instrument to address corruption – the United Nations Convention against Corruption – came into force in 2005. Ratified by 186 of the UN’s 193 member states, including Canada, it has provisions on preventing corruption, enforcing laws and recovering assets, among others.

Since 2002, the Global Organization of Parliamentarians Against Corruption has been based in Ottawa, Canada. Representing more than 50 countries, its members have formed the United Nations Convention against Corruption Global Task Force to provide parliamentary oversight of the convention’s ratification, implementation, monitoring and review.

As well, most countries have domestic laws that criminalize corrupt activities. In Canada, relevant statutes include the Criminal Code, which criminalizes bribery, fraud, falsifying documents, breach of trust and the payment of secret commissions.

In 1998, Canada passed the Corruption of Foreign Public Officials Act (CFPOA) to implement certain international obligations. It criminalizes the bribing of foreign officials by Canadian citizens and companies operating abroad. A recent report indicates that eight convictions have occurred since the CFPOA was passed, three of which are under appeal. Austria and New Zealand are undertaking a peer review of Canada’s implementation of the CFPOA, which is expected to be completed in June 2023.

Furthermore, Canada attempts to address corruption through the Freezing Assets of Corrupt Foreign Officials Act, which was passed in 2011. In 2017, it was reviewed by the House of Commons Standing Committee on Foreign Affairs and International Development pursuant to a statutory review provision. Under that law, Canada has frozen the assets of 123 persons from Tunisia and 18 persons from Ukraine.

Moreover, Canada’s Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) came into force in 2017. Under that law, Canada has sanctioned 70 individuals: one from Myanmar, 30 from Russia, 17 from Saudi Arabia, three from South Sudan and 19 from Venezuela.

A 2020 Transparency International report considers Canada to be among the countries with “limited enforcement” of bribery by public officials and companies operating abroad. It proposes the creation of a central agency in Canada that could increase transparency concerning court decisions relating to bribery.

Additional Resources

Matthias Agerberg, “Corrupted Estimates? Response Bias in Citizen Surveys on Corruption,” Political Behavior, 2020.

Sarah Chayes, Thieves of State: Why Corruption Threatens Global Security, New York, Norton, 2015.

Klaus Grundler and Nikolas Potrafke, “Corruption and Economic Growth: New Empirical Evidence,” CESIFO Working Papers, August 2019.

Patricia J. Garcia, “Corruption in global health: the open secret,” The Lancet, Volume 394, Issue 10214, December 2019, pp. 2119–2124.

Global Affairs Canada, Canada’s Fight against Foreign Bribery, Twenty-first Annual Report to Parliament, September 2019 – August 2020.

Government of Canada, Anti-corruption in developing countries.

Michael A. Sartor and Paul W. Beamish, “Private Sector Corruption, Public Sector Corruption and the Organizational Structure of Foreign Subsidiaries,” Journal of Business Ethics, April 2019.

Christian Hauser, “Fighting Against Corruption: Does Anti-corruption Training Make Any Difference?,” Journal of Business Ethics, February 2018.

Author: Marie Dumont, Library of Parliament

Categories: Government, Parliament and politics, Law, justice and rights

Tags: , , ,

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