Getting to the dollar cost of corruption
THE ALLEGATIONS of cronyism and other governance failures at Petrojam have caused public attention to be focused on what is a perennial matter of concern for Jamaicans – corruption, or the perception thereof. Eight of 10 Jamaicans believe that their public officials are chronically corrupt.
There is a strong sense, too, that corruption costs the country dearly. It encourages inefficiencies in the public and private sectors, supports crime, leads to underinvestment and undermines economic growth. Indeed, at the start of the parliamentary debate on legislation to establish the recently launched Integrity Commission, Prime Minister Andrew Holness argued that corruption has held Jamaica back for more than half a century since it jettisoned colonial rule.
He said: “There is no denying that while we have made significant strides as a politically independent country, we could have achieved much more were it not for corruption in many forms: revenue leakage due to corrupt practices, misuse of public funds, and the overall perception of pervasive corruption, all of which have served to compromise the flow of investment into our country.”
While there is much anecdotal evidence of the effect of this corruption, there is little hard, research-driven data on the financial or broader economic cost of corruption in Jamaica.
For instance, more than two years ago, the European Union (EU) estimated that corruption annually costs its 28 member states nearly €180 billion, or about the same as what Brussels spends on the institution, its programmes and projects.
The commission has, to mounting criticism, not kept its promise for the biennial publication of such reports. However, an analysis released by the European Parliament last year estimated the loss to EU economies, depending on the method of calculation – including assumptions made about the extent to which corruption levels could be lowered – was as high as €990 billion. That is around six per cent of the value of the EU output of goods and services.
Corruption in public procurement alone, the study found, costs EU around €5 billion a year.
No country, or region, is immune. Globally, according to the World Economic Forum, corruption wastes around US$2 trillion a year, money that could be spent on fixing many of the world’s most pressing problems. Or, as the European Parliament’s report observed: “All member states are affected by the problem.”
TELLING IMPACT
However, in poor, slow-growth countries like Jamaica, with little fiscal cushion, the effect of corruption, as Mr Holness implied, is likely to be more telling. That is why the people who run institutions like the Integrity Commission have an obligation to make them work by aggressively pursuing their mandate.
In the case of the Integrity Commission, that mandate includes not only investigating, and where there is evidence on which it can proceed, prosecuting cases of public corruption, but help to put a dollar figure on corruption.
Indeed, among the responsibilities established for the commission at Section 6 (1) (N) of the act is for it to “determine the extent of financial and such other losses to public bodies, private individuals and organisation, including losses sustained by the private sector as a result of acts of corruption”.
Implicit in that pronouncement, in our view, is an obligation on the part of the Integrity Commission to engage in research to determine the cost and effect of corruption, or to have it done.
In other words, it is also the agency’s responsibility to lift the impact of corruption beyond nebulous constructs by allowing people to see its costs in dollars and cents and the value of goods and services they are deprived of.
It is not our sense that this side of the equation has as yet animated the people putting in the structures of the institution. But then, in the absence of effective communication on the part of the agency, we are not certain that anything has happened beyond naming some people to some acting positions. We hope not.