Download Comparative studies of corruption: The role of the researcher

COMPARATIVE STUDIES OF
CORRUPTION:
THE ROLE OF THE RESEARCHER
Natasha Chichilnisky-Heal
July 31, 2013
My Background
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Comparativist
Original focus on former USSR region
Work in mining & energy, microfinance, clean tech
Exposure to private sector, public sector, and
academia
Three cases:
 Mongolia
(94 = rank in Transparency International
2012 Corruption Perceptions Index)
 Zambia (88)
 Argentina (102)
Why Comparative Studies?
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Point-by-point and holistic comparison of corruption
cases across time or space
Comparison  generalizability
Theory-building
Theory-testing
Traction on both small-N and large-N analyses
Comparative Studies
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Can be top-down or bottom-up
 Top-down:
public procurement in India vs. China
 Bottom-up: public procurement in India vs. public
procurement in China
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Can be historical or geographical
USA in 19th Century vs. USA in 20th Century
 Geographical: 20th Century New York vs. 20th Century
Chicago
 Historical:
Role of Researcher
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Researcher or Analyst
 Academic,
private sector, or public sector
 Combination (i.e., “PPPs”)
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Purpose: to identify patterns in corruption cases for
use in designing intervention strategies
American federal anti-corruption strategy can
benefit from comparative historical and
geographical analysis of corruption
 Across
states in particular
Role of Researcher
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Comparative analysis of existing studies
or
Construction of new cases
What are the challenges in each type of
analysis?
Challenges: Existing Studies
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Identifying comparable points
Extrapolating patterns within each study
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Microfinance:
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 Fraud
detected in MFIs in Azerbaijan and Nicaragua
 Top-down comparability = high
 Fruit of comparative analysis: patterns in financial
statements that indicate fraud regardless of region or
MFI specifics
Challenges: New Cases
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Time & money
Deep sector-specific knowledge
If new because contemporary, lack of simultaneous
studies for verification
Mining
 Mongolian
mining sector in 1990s vs. late 2000s
 Bottom-up comparability = high
 Fruit of comparative analysis: patterns that transcend
changes from 90s to 00s have great durability
Role of Researcher: Private
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Private sector
 Due
diligence
 Financial,
technical, organizational
 Proprietary
data concerns
 Fiduciary responsibility
 Foreign Corrupt Practices Act
 Compliance
 Profitability
Role of Researcher: Public
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Public sector
 Abuse
of power/privileges
 Nepotism
 Bribery
 Theft of public funds
 Theft of public assets
 False disclosure
Role of Researcher: “PPPs”
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Contract awarding (Zambia lawyer)
License awarding (Zambia copper)
Zoning or construction permits (Mongolia building)
Patent processing (China tech)
Intellectual property (India pharmaceuticals)
Aid distribution (DRC rice)
Cases: Private
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Microfinance:
 Azeri
MFI shows slightly higher rates of NPLs
 Initial queries are answered with allusion to economy
 On-the-ground DD shows falsified documentation 
large-scale fraud
 Nicaraguan
MFI shows rapidly increasing rates of NPLs
 Initial queries answered w allusion to “No Pago”
movement
 On-the-ground DD shows ghost loans  large-scale
fraud
Cases: Private
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Main obstacles:
 DD
requires time and money – private sector in this
case has no other checks in place
 Must check every case of rising NPLs
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Main lessons:
 MFIs
use nation-wide problems as façade to cover
fraud
 Fraud is perpetrated in same way across continents
Cases: Public
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Mining/Regulation:
 World
Bank is main player in guiding evolution of
mining regulation in Mongolia
 WB internal regulations prevent use of WB resources
for private gain
 Senior mining specialist in WB pushes for legislation
favorable to 1 mining company
 Once legislation is passed, stock prices go up, specialist
joins board of mining company
Cases: Public
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Main obstacles:
 No
obstacle to detection – obstacle to prevention
(ability to penalize corruption)
 In case of grand corruption of government officials,
financial disclosure requirements have blunt teeth
 “He-said, She-said” cases
 Former
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Mongolian President Enkhbayar
Main lessons:
 Competition
among public sector elites is positive,
dredges up information on accountability
Cases: PPPs
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Energy:
 Proposal
made to Mongolian government to build coal
liquefaction plant
 Patented technology process presented to government
 Second bidder bribes MRPAM official
 Official shares patented process w second bidder
 First bidder eliminated, second bidder wins contract,
official keeps bribe
Cases: PPPs
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Main obstacles:
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Unlikely to be investigated/penalized unless catastrophe
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ZCCM-IH – public and private shareholders
Who is to blame? Public or Private?
 Unsophisticated banking system
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Main lessons:
Non-disclosure agreements w officials should be more
explicit about tech processes and realistic about jurisdiction
 Bureaucrats in former USSR region desensitized toward
corruption
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Role of Researcher: Conclusions
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Most large cases fall into PPP category
Researchers from either private or public sector may miss
key info from other sector
 Require cooperation from private sector in public cases
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Researcher must choose comparison carefully
Want comparison that will have greatest yield on problem
of interest
 Anti-corruption measure works in Argentina but not Chile;
geographical
 Anti-corruption measure used to work and no longer does;
historical
 New anti-corruption measure; combine geographical and
historical
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Role of Researcher: Conclusions
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Building new cases and conducting comparison with
existing cases is strongest analytical strategy
Combine top-down with bottom-up
Comparative analysis  theory-building in cases
with little previous study, theory-testing in cases with
extensive literature
Open competition can flush out data that would
otherwise remain hidden