Power and corruption in government and business

¶ … power leads to corruption?

In whatever forms of organization - may it be in the government or in the business sectors - there will always be somebody who will be appointed in the top position. This person will then hold the responsibility to the people and to the organization itself. Needless to say, this person will be given with enough "power" to decide whatever he will deem necessary for the organization. With such power comes responsibility, control and authority.

Because of the "perks" attached to being in power, most often than not, the behavior of the person holding the power changes dramatically. Who would not be? With the power to hold things into perspective; with the capacity to be in charge with the people and their works; and with the ability to take control of even all the ins and outs of the money, every person who will be in direct power will really be experiencing a major turn around of his behaviors, perspectives and even priorities in life and in career.

It is in this line why corruption is believed to be always the end result of being in power. Corruption has always been attached to being in command of all things. Governmental history of different counties and the background information of different business establishments can prove the idea that power indeed leads to corruption.

Power and Corruption

Corruption comes in different forms that results a devastating effect in the society or in the organization. There are various forms of corruption. It may come in the smallest and unexpected form from the management in the upper level of management to the smallest department or group within the organization itself.

Corruption is a hidden business deal which involved parties that like to keep it a secret. The most widely condemned practices (e.g. kickbacks on government contracts) are also the most hidden, while more visible practices (e.g. unfair tax exemption) tend to be more tolerated. The fact remains that the further up the system corruption occurs, the harder it is to detect, and to prosecute the perpetrators.

Simply put, corruption is a symptom of deep institutional weaknesses that always leads to inefficient economic, social, and political outcomes. In the government's point-of-view, corruption reduces economic growth, impedes long-term foreign and domestic investments, enhances price increases, depreciates national currency, reduces expenditures for education and health, increases military expenditures, misallocates talent to rent-seeking activities, pushes firms underground, distorts markets and the allocation of resources, increases income inequality and poverty, reduces tax revenue, increases child and infant mortality rates, distorts the fundamental role of the government (on enforcement of contracts and protection of property rights), and undermines the legitimacy of government and of the market economy (Tanzi, 1998). On the business perspective, on the other hand, corruption always leads to bankruptcy, loss of people or the workforce and at most times, incarceration of the perpetrators.

Corruption in the Government

In most developing countries today, corruption in politics is widespread and part of everyday life. Society has learned to live with it, even considering it, fatalistically, as an integral part of their culture. In practice, it is the environment in which public servants and private actors operate that causes corruption. Public administration in developing countries is often bureaucratic and inefficient. And a large number of complexes, restrictive regulations coupled with inadequate controls are characteristic of developing countries that corruption helps to get around (Hors, 2000)

The link between political and economic power can be direct. There is patrimonial, as in Morocco, where access to political power ensures access to economic privileges. The link can be indirect too, as in the Philippines, where political power, such as a privileged position in a patronage-based system, can be bought and sold.

It should be noted that it is in Asia where the most number of corrupt government is positioned. Former President Marcos of the Philippines was believed to be one of the best presidents of this country, because of his wit and idealism. But that intelligence was not put to good use as it was overpowered by the desire to remain in power as long as it takes. Marcos' power over his country was the culprit to his becoming a corrupt politician. He realized that with him in control of the whole country, he could make use of the country's resources and financial assets as his own.

This case is of no difference from Iraq's Saddam Hussein. Hussein was a very wise man. He knew how to take control of the people. He had the best plans of maximizing the use of the resources of his country. He knew how to best train the military system. But his ideas and love for the country is also overpowered by his desire to take all the money - from oil, gold and taxes imposed to the people. He became so corrupt that he did not want anything to prevent him from remaining in power.

In short, the process of allocating political and administrative posts - particularly those with powers of decision over the export of natural resources or import licenses - is influenced by the gains that can be made from them. And the political foundations are cemented as these exchanges of privileges are reciprocated by political support or loyalty (Hors, 2000).

Institutional analysis of corruption indicates where the remedies lie. Greater transparency, accountability and merit-based human resource management in public administration are principles which could possibly curb corruption. Simplification of state intervention in economic activity also helps. A study of the customs administration in Senegal found, using econometric tests that a reduction in import taxes, simplification of their structure, implementation of reforms reducing the discretionary powers of customs officials and computerization of procedures helped to reduce the level of fraud by 85% between 1990 and 1995 (Hors, 2000).

Corruption in the Business Sectors

The downfall of the famous and previously successful companies such as Enron, Barings and Marconi can be summarized as the aftermath of pure greediness of the people who are holding the most significant positions in each of the company - or to in a much lesser word, due to combined power and corruption. It should be noted that there are several reasons why the three companies collapsed or failed to remain on top of its business, but all these reasons have one common denominator - and that is the desire to achieve more money, more fame and more power even at the expense of people's trust.

Enron Corporation was once a multi-billionaire and a leading company in the U.S. It has different branches all over the world. When it collapsed many believed that Enron's failure is the effect of "poor functioning of operations and performance management" (Kurdina, 2005). The company is very big; the income it was generating was enough to support a luxurious style of living among its managers and even low-positioned employees. However, instead of using the said advantages to good use, the top management became exceedingly enjoyed the power they were holding thereby neglecting the ethical values, integrity and management philosophy that they should adhere to.

The same thing happened with the Barings. The company's top management failed to use proper information in controlling the financial losses of the company. This they did in order to keep in control of the money despite the fact that the company's operational system needs more funding. The managers intentionally neglect their responsibilities just to maintain being in power over the finances of the company. This then of course enabled them to continuously enjoy the money despite the fact that the company is really losing.