Corruption

                                                                                 Corruption

Corruption happens when one abuses power entrusted to them for personal gain. This misuse of power erodes the trust between two or more parties and makes a democracy weak. Not only that, but corruption can also hinder the economic growth of a nation and aggravate poverty and inequality. It is essential to understand how corruption works to be exposed and the corrupt can be held responsible for creating a corrupt system.

Corruption refers to misusing public power for personal gain. It can be done by an elected politician, civil servant, journalist, administrator of a school, or anyone in authority. Apart from public corruption, we also have private corruption between individuals and businesses. For instance, education, heritage, marriage, etc. Thus, the corruption definition applies to different forms.

Key Takeways

• Corruption is dishonest behavior by those in positions of power, such as business managers or government officials.
• Corruption can come in the form of bribery, double-dealing, and defrauding investors.
• The consequences of corruption can be social and financial but it has a major impact on those who are financially vulnerable.
• Government intervention in the economy is a root cause of corruption.
  
• Preventing corruption includes the reinforcement of best business practices, education in the form of mandatory anti-money laundering courses, and increased accountability.

Understanding Corruption

Corruption is any behavior that leads to the benefit of an entity in power at the expense of others. As such, it's considered to be an abuse of power. Corruption occurs when someone in a position of power uses their authority to influence decisions or conducts any other dishonest or fraudulent behavior like giving or accepting bribes or inappropriate gifts, double-dealing, under-the-table transactions, manipulating elections, diverting funds, and defrauding investors.

There are many situations in which someone can be considered corrupt. Keep in mind that corruption can involve any entity, whether that's an individual, company, or government. For instance:

• A politician may be deemed corrupt for taking money to sway a vote on a key issue.
• A corporation may be deemed corrupt for trying to influence the market by cooking their books.
• A government may be deemed corrupt by offering a higher degree of resources and incentives, such as tax break and health care, to the wealthy rather than to those who are financially vulnerable.

Causes of Corruption

The International Monetary Fund (IMF) cites several key factors that contribute to corruption. These include government intervention in the economy, the liberalization of policies, and the deregulation and privatization of certain industries. This can pop up in several different areas, including:

• Lowering wages for civil servants compared to those in the private sector. Certain employees may resort to taking bribes in order to compensate for the difference in wages.
• Price control Corruption thrives when governments intervene by putting these in place to keep prices lower for certain goods and services.
• Eliminating foreign competition through trade restrictions, traffic,and trade, thereby opening up the possibility of a semi-monopoly by domestic players. The latter are more likely to resort to corrupt behavior to keep restrictions in place for foreign companies to keep their place in the market.
• Corporations and groups may receive government grants and  subsidies when they aren't the intended recipients

How to Prevent Corruption?
If gone unchecked, corruption will keep rising in the community, which will result in increased criminal activities and organized crimes. Different steps can help in managing corruption and bringing it down. Education is one of the most critical steps. It can help in reinforcing the correct business practices. This way, people will know how to identify corruption.

How can we stop corruption?
We can take different steps to stop corruption. There should be specific codes of conduct that everyone must follow rigorously. Similarly, rewards and incentives must be granted to encourage people to cultivate an ethical culture. Conflicts of interest must be managed efficiently, and a compliance-friendly environment must be fostered.

Real-World Example of Corruption

There are many examples of corruption in the real world. They may include individuals or organizations, whether that entails corporations or governments. Many often go undetected because the behavior is well hidden or because it goes undetected. The following are just two examples of documented corruption. 

Major Banks

The Securities and Exchange Commission (SEC) fined five major global banks in 2015 on various corruption charges.

Citi, JPMorgan Chase, Barclays, and The Royal Bank of Scotland agreed to plead guilty to rigging the foreign exchange market. According to the SEC, the banks "manipulate(d) the price of U.S. dollars and euros exchanged in the foreign currency exchange (FX) spot market." The four institutions paid criminal fines of more than $2.5 billion.

UBS also plead guilty to separate charges of manipulating benchmark interest rates, including the London Interbank Offered Rate (LIBOR). This charge resulted in a fine of $203 million.

PTC

In 2016, the SEC ordered software company PTC to pay a combined $28 million in fines for attempting to bribe Chinese officials by providing approximately $1.5 million in recreational travel through two PTC China-based subsidies.

 PTC struck a delicate public relation effort to restore its reputation as the case became increasingly public. 

                                                                                                    By: Ankit Yadav