History Shows Every Nation Has Been Affected by Corruption, Torsello Says at Book Launch

At the June 26 book launch of "Debates of Corruption," CEU Business School Professor Davide Torsello reminded the audience that history shows that there is no country in the world that hasn't been affected by corruption. Torsello was joined by his colleague and co-editor Professor Peter Hardi, director of the Center for Integrity in Business and Government as well as Yale Law School Professor Susan Rose-Ackerman to discuss the volume.

Hardi began the discussion by pointing out the multidisciplinary approach of his Center and noting that Torsello is an anthropologist, not a business scholar, and how valuable that perspective is. Torsello said there is a huge amount of academic production on corruption but anthropology was likely the last field to attack it.

"We see we can't deal with corruption in a monolithic kind of way. Sometimes it moves from country to country. When I came here, I was a bit hesitant because I was mostly studying corruption from a political perspective, but it's blind to think that political corruption doesn't exist without business corruption," Torsello said. "How can you really understand corruption if you don't investigate illegitimate 'shell companies' where people are investing money?"

Torsello underscored the importance of the volume as it brings together both European and U.S. perspectives and cases. His own chapter focuses on petty corruption and the social exchange mechanisms that maintain it. He gave the example of border guards in underdeveloped countries whose jobs might put them in danger and do not pay well.

"There are some countries where people are dependent on this kind of petty corruption. It's a social exchange mechanism, like 'I'm giving this extra money to you because I know that you need my help; you don't get paid enough or well enough for your job/duties.'"

Rose-Ackerman, who has worked on issues of corporate ethics for years, contributed a chapter in the book that focuses on the U.S. Chamber of Commerce taking on the Foreign Corrupt Practices Act (FCPA) which, in 1977, made it a federal offense to accept bribes to get business abroad. Corporations could now be held criminally liable as well as the managers who took part in bribes. An international treaty followed that most members of OECD have adopted, but she noted that it's a relatively weak treaty with no international court that can deal with cases but that it has, at least, helped change the discussion and laws in some countries.

"The Chamber of Commerce is trying to build up opposition to this statute, saying it's not in the U.S.'s interest, but they are over-exaggerating," she said. "If we're talking about the U.S., it's sending an extremely bad signal to the rest of the world if the country pulls back on this statute. If you can get other countries to lower corruption as a result of the OECD convention, all the better. Corruption is extremely costly to the host countries. The U.S. and EU should care about developing a global political/economical system that is fairer and provides fairer distribution."

During the question-and-answer session, an audience member queried the panel about what methods they think would be the most effective to eliminate corruption. Hardi emphasized the importance of education while Torsello noted that in some countries, there is very poor knowledge about what corruption is. There are countries, he said, where it is ok to give "gifts" and some where it is not legal. He gave the example of Switzerland – a relatively corruption-free country – where there is no cap to the "gifts" you can receive while doing business. He countered this with Italy, his home country, where there is rampant corruption despite a €100 cap on allowed "gifts."

In Rose-Ackerman's view, education is fine but not sufficient. She said the problem with the proposal to train people to be ethical is "that the rest of the world is corrupt and those trained are taken for fools." She recommends trying to streamline businesses and large projects. The World Bank is doing this, she noted, through a program where they conduct diagnostic studies in individual countries to determine which sectors are the most corrupt. "My own emphasis has always been: What is it between the structure of human beings and institutions that allow for payoffs and which are causing the most harm?"

In closing, Torsello gave the example of India where, to fight the huge bureaucracy, people learn to work the system to get things done. "It's something we will never get rid of. It might sound pessimistic, but my feeling is that it's not realistic to say we'll have zero tolerance for corruption. To get rid of corruption, you need much more than a revolution because it's much harder to get rid of."

CEU Business School Dean Mel Horwitch introduced the panel and hosted the reception that followed the book launch. More information on the book is available here: http://www.palgrave.com/page/detail/debates-of-corruption-and-integrity-...