The psychic costs of violating corruption laws.

Author:Nichols, Philip M.
 
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ABSTRACT

Understanding corruption is imperative for legal scholarship, both as an intellectual subject and because corruption impedes the operation of law in much of the world and inflicts damage on well-being, governance, and quality of life. Legal scholars have contributed substantial quantitative research on corruption; this paper adopts a qualitative methodology. The similarities and differences between Singapore and Malaysia present opportunities for research. Interviews with discussants in those two countries indicate a real difference in the degree to which corruption laws have been internalized. Differences in the degree of internalization suggest differences in the psychic costs imposed by violation of corruption laws. Discussions also reveal other costs considered by actors contemplating violation of the laws. Discussions also indicate that corruption manifests itself differently in each country, which does not comport with quantitative analyses that treat corruption as a unified, linear phenomenon. Finally, discussions suggest that corruption can be controlled.

TABLE OF CONTENTS I. CORRUPTION PRESENTS SIGNIFICANT ISSUES A. Endemic Corruption B. Corruption Inflicts Substantial Damage 1. Weak Governments that Make Poor Decisions a. Corruption Affects the Composition of Decision Makers b. Corruption Distorts the Decision-Making Process 2. Corruption Causes Economic Fragility 3. Corruption Degrades the Connection Between Governments and People 4. Corruption Degrades the Quality of Life II. CORRUPTION CONTROL IN MALAYSIA AND SINGAPORE A. The Historical Context of Malaysia and Singapore B. Corruption Control in Malaysia and Singapore 1. Malaysia 2. Singapore III. DISCUSSIONS ON CORRUPTION IN SINGAPORE AND MALAYSIA A. Attitudes Toward Corruption 1. Singapore 2. Malaysia B. Manifestation of and Experience with Corruption 1. Singapore 2. Malaysia C. Responses to Corruption Agencies 1. Singapore 2. Malaysia IV. THE IMPLEMENTATION OF CORRUPTION LAWS A. Internalization of Corruption Controls B. Corruption Is Not Monolithic C. Corruption Can Be Controlled V. CONCLUSION Why is Singapore less corrupt than Malaysia? Singapore and Malaysia have implemented similar legal regimes to control corruption, the countries are geographically proximate, and even share much history. Observers perceive substantially less corruption in Singapore and Malaysia than in other countries in the region, but perceive far less in Singapore than in Malaysia. The difference in corrupt activity compels inquiry into one question: why?

The proximity and similarity in legal regimes is fortuitous for legal scholars. The answer to the question "why?" cannot be found in just the words that constitute the laws, because those words are quite similar. (1) The answer probably cannot be found in the structure of the agencies tasked with investigations pursuant to those laws because those, too, have strong similarities. (2) The reasons for the difference in outcomes must lie elsewhere. Seeking those reasons may cast insights into effective implementation or administration of law in general and of corruption regimes in particular.

Inquiry into corruption regimes has both intellectual and practical merit. Corruption strikes at the very heart of an effective legal and administrative system, but often does so from the shadows. (3) It exposes tension at the juncture of law, business, government and civil society. Corruption also constitutes one of the greatest threats to overall improvement in law, economies, and quality of life. (4) Corruption bedevils Southeast Asia as it bedevils many regions of the world, and Singapore's and Malaysia's abilities to ameliorate corruption merit close study to evaluate the exportability of their corruption control programs. (5)

At the global level, scholars have conducted a great deal of quantitative empirical research on corruption. Researchers have surveyed attitudes of local persons toward corruption and corruption regimes in a number of countries and regions (6) and even in discrete business sectors. (7) Financial institutions such as the World Bank attempt to measure the costs of corruption in monetary terms. (8) Legal scholars attempt to quantify the effect of corruption on other relationships, such as settlement of conflicts (9) or human rights, (10) or the effect of base legal systems on corruption. (11) Economists and others attempt to quantify the impact of corruption on other phenomena, such as direct foreign investment (12) or currency exchange rates. (13)

The Asian Development Bank points out, however, that while useful "[n]o one instrument or method can provide a complete picture. Each survey tool has its utility and its limitations." (14) A thorough understanding of the implementation of corruption laws requires more than surveys and quantitative analyses.

The research described in this paper attempts to provide another perspective on corruption regimes. This research undertakes a qualitative rather than quantitative evaluation. The author of this paper discussed corruption with government officials, businesspeople, and members of civic organizations in Singapore and Malaysia. (15) Individual discussions do not produce the amount or type of data needed for quantitative treatment of a subject; qualitative treatment can, however, reveal relationships and attitudes not discerned through quantitative measures. (16)

In this instance, discussions in Singapore and Malaysia reveal a subtle but stark difference. Singaporean discussants exhibit a viscerally negative reaction to corruption, whereas Malaysian discussants exhibit thoughtful negativity. (17) This difference may be attributable to the extent to which members of each group have internalized corruption laws. Internalization of corruption laws, in turn, may increase the psychic costs calculated by an actor contemplating violation of those laws, which would decrease the frequency of violation. (18)

If actors do evaluate the potential benefits and costs of violating corruption laws, then psychic costs are not the only costs taken into consideration. Actors will also take measure of potential social costs and of the likelihood of detection and prosecution in the criminal system. Discussions of corruption in Singapore and Malaysia reveal differences with respect to each of these potential costs as well. (19)

These discussions also challenge fundamental assumptions often made about corruption scholarship and corruption regimes. First, the variety of interactions discussants have with corruption call into question the lack of distinctions among types of or experiences with corruption when corruption is evaluated through quantitative measures--measures used extensively in legal scholarship. (20) Second, these discussions, particularly with Singaporean discussants, disaffirm the notion that corruption cannot be controlled. (21)

Before arriving at that happy conclusion, this paper first examines the extent to which corruption actually constitutes a serious problem. It does so by focusing on Singapore and Malaysia as situated within Southeast Asia.

  1. CORRUPTION PRESENTS SIGNIFICANT ISSUES

    Singapore's and Malaysia's integrity diverge markedly from other countries in the region. Corruption pervades Southeast Asia and imposes critical difficulties on the region. (22) Indeed, Tran Duc Luong, former President of Viet Nam, despaired that "Corruption is taking place every day and every hour, at all places, all the time." (23) No region of the world has escaped the "eruption of corruption" described by Moises Naim to have taken place over the last few decades. (24) The extreme differences in Southeast Asia, however, present interesting possibilities for study.

    1. Endemic Corruption

      Corruption escapes easy measure; most scholars turn to Transparency International's Corruption Perceptions Index for an indication of the amount of corruption in a particular country or region. (25) This paper starts with the Corruption Perceptions Index scores for Southeast Asian countries, but corroborates Transparency International's scores by turning also to the Opacity Index and the Global Competitiveness Index.

      Transparency International's Corruption Perceptions Index uses logarithms developed by Johann Lambsdorff to produce a score based on several disparate sources of information about corruption. (26) A score of ten would indicate a perception that no corruption occurs within the country, a score of zero would indicate absolute corruption, and a score of three or less suggests "rampant" corruption. (27)

      Singapore scores 9.3 on this scale. (28) This score places Singapore third among the countries evaluated, behind only Denmark and New Zealand. (29) Singapore effectively is among those countries with the least amount of perceived corruption in the world. (30) Within Southeast Asia, Malaysia has the second-highest score at 4.4. (31) This score ranks fifty-sixth among the one hundred and seventy-eight countries evaluated. (32) Southeast Asian scores fall precipitously from that point.

      Indexes that do not focus exclusively on corruption corroborate the Corruption Perceptions Index's bleak portrayal of Southeast Asia. The Opacity Index, developed by Joel Kurtzman and Glenn Yago, (34) "draws upon 65 objective variables from 41 sources" in order to compile comparable data on the level of opacity in numerous countries. (35) Kurtzman and Yago define opacity as a "lack of clear, accurate, formal, clear-cut, and widely accepted practices in the broad arena where business, finance, and government meet." (36) The score assigned to each country in the Opacity Index is a simple average of scores on five sub-indices, the first of which is corruption. (37) Thus, the Opacity Index provides a separate score for corruption in each evaluated country. (38) Legal and other scholars use the Opacity Index as a source of quantitative data for the purpose of comparing countries. (39)

      Although not all...

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