Corruption? Depends on where you are

Forbes ran a thought-provoking editorial from a business professor at Carnegie Mellon University last week. In the editorial, John Hooker writes that nepotism and cronyism – part and parcel of what most people think of as corruption – may be legitimate ways of doing business, if they’re practiced responsibly in certain cultural milieus.

Here’s Hooker on cronyism:

A purchasing agent in Taiwan may award a contract to an old friend rather than the lowest bidder because the friend can be trusted to deliver a good product. That kind of responsible cronyism (known as guanxi) has been a foundation of business in Taiwan for centuries. It becomes corrupt only when the agent favors friends simply because they are friends, rather than because they can be trusted to do the job right.

Many such cultural differences arise from the fact that Western cultures are built on rules and transparency, while most of the world's other cultures are relationship-based. Westerners trust rule-based institutions; others trust their friends and family far more and are therefore especially keen to cultivate strong relationships.


And here’s his take on bribery:

Even bribery in West Africa can be seen as a responsible practice gone awry. In a traditional village context, African leaders earned respect by judiciously bestowing gifts and favors on their subjects. That wasn't simply a patronage system; it was also a form of rational redistribution. The chief channeled wealth where it was most needed, increasing the community's survival advantage. With the coming of colonialism and Western-style institutions, men frequently left villages to take government jobs in the capital. They continued to use gifts to obtain influence, but they left behind the social context that had structured and guided the practice. Responsible generosity became irresponsible influence peddling.

What struck me about his argument – that practices many people would consider corrupt in fact may not be corrupt at all – is that the reverse could be true as well. In that case, practices that many people don’t consider to be corrupt may indeed be corrupt. Take paid lobbyists in the US.

The $2.8 billion spent on lobbying in 2007 and the record number of lobbyists registered in 2008 were noted with concern by a Transparency International report several months ago. “The extensive funds at the disposal of businesses and the close relationship that exists between many companies and lawmakers can lead to undue, unfair influence in a country’s policies and politics,” TI stated.

Agency: Bulgaria should target mob bosses

Bulgaria’s government has been trying to put its best face forward on organized crime since coming to power last year, but another gangland-style shooting in Sofia last week landed the country’s organized crime problem back in the news. The murder victim, Bobi Tsankov, was an author of a recent book on mobsters, had longtime links to at least one alleged major drug dealer and was himself not averse to committing fraud, according to people I talked to for this Index on Censorship article.

While last week’s broad-daylight gunplay may be causing embarrassment for Prime Minister Boyko Borisov’s government, Bulgarian organized crime encompasses much more than the occasional hail of bullets on the streets of Sofia. In that vein, a Sofia News Agency editorial last week gave the Borisov government some advice as to whom they should go after if they want to eradicate organized crime:

But what about cooking the really big fish – the “white collar” gangsters, and the corrupt – former or current – politicians? It is this lethal combination of these two kinds of talented individuals who lean on the lower levels of mafia that are Bulgaria’s very big problem. This is where the two pillars of corruption and organized crime merge into an edifice that the Borisov – or any other – government for that matter is supposed to tackle.

It won’t be simple, continued editorial writer Ivan Dikov. The Interior Ministry is so leaky, Dikov wrote, that Borisov had to hold secret meetings with senior cops and prosecutors at his own house when the authorities were making plans to smash an alleged kidnapping ring last month. And even if people are arrested, there’s no guarantee the courts will hand down any kind of serious sentence. But now might be a promising time to fight such high-powered white-collar organized crime, because unlike the situation in other post-communist countries, many Bulgarians of this persuasion haven’t yet legitimized the wealth they acquired after communism, or in fact stopped using dubious methods to acquire wealth. Dikov said that Bulgaria:

…still doesn’t seem to have reached the point where the illegal “accumulation of capital” throughout the tumultuous and chaotic post-communist transition has stopped, and rules have finally been established and are being obeyed.

Croatia elects new president

Croatian president-elect Ivo Josipovic is a law professor, a composer and a member of parliament. He’s also an anti-corruption crusader, reported Radio Free Europe/Radio Liberty.

Speaking to reporters after his win, Josipovic promised to lead an uncompromising campaign against corruption, one of the main issues bedeviling the Balkan state.

"I strongly believe that we all want to live in a country where work is paid for and crime is punished, in a country of social justice," Josipovic said.


(Jutarnji List columnist Damir)Butkovic wrote that Josipovic's Social Democrats also recognized that corruption is a key issue for Croatians. He said Josipovic's slogan, "Justice for Croatia," held out the promise of better times for the country and a break with its corruption-ridden past.


Sunday’s election saw Josipovic beat his opponent, Zagreb mayor Milan Bandic, with 60.3 percent of the vote to Bandic’s 39.7 percent. Josipovic will become Croatia’s third president when he’s inaugurated on Feb. 18.

Serbia to focus on drugs raids, corruption

Serbian police will be raiding locations known to be used by drug dealers so that they can bring down some kingpins this year, Interior Minister Ivica Dacic told the press last week.

"The main goal, however, will be to strike at organizers, that is, to connect a network of evidence that we find during the raids to the very organizers of the groups," the interior minister was quoted as saying by Belgrade daily Danas.

He also added that this will take place "regardless of whether these people are located in Serbia or abroad".

Drug dealers won’t be the Serbian authorities’ only target in 2010, according to organized crime prosecutor Miljko Radisavljevic. His office will also be scrutinizing elected and appointed officials for corruption, he told Serbian radio last week.

Swiss arrest Kosovo heroin traffickers

Swiss police arrested 14 suspected heroin traffickers last week, saying that the group had brought 42 kilos of heroin into Switzerland from Kosovo in just five months.

Thirteen ethnic Albanians, one Austrian citizen from Kosovo and a Spanish national were arrested in the sting, reported the Swiss state broadcaster. B92 also had the story:

Police said that the heroin came from the town of Peć in western Kosovo and that it was sold in Lausanne, Zurich, and Neuchatel in Switzerland.

During each trip, the report said, the suspects smuggled in more than 12 kilograms of the drug, while one of them was in charge of collecting the money for the bosses of the operation, based in Kosovo.


Czech Republic extradites businessman to Italy

A Czech court ordered a Czech businessman to be extradited to Italy last week so he can face trial there for allegedly helping the Calabrian mafia, or ‘Ndrangheta. Czech Nova television reported that Libor Ruzicka, whose business partner has already been extradited to Italy, was likely to be transferred there soon.

Nova said the Czechs are suspected of having secured through fictitious invoices documents for the mafia trafficking in goods smuggled from Asia through the port of Gioia Tauro in Calabria that 'Ndrangheta controls.

The article wasn’t clear on whether the “goods” involved were drugs or counterfeit merchandise from Asia, both of which are lucrative businesses for Italian crime groups.

In Italy itself, authorities last week said they were sending six more magistrates and 121 more police, Carabinieri and finance officers to the area around the southern Italian town of Reggio Calabria, which was the site of a bomb attack earlier this month. The bombing, which damaged a court building but caused no casualties, was attributed to the ‘Ndrangheta, which is thought to be enraged by the police’s arrests and property seizures last year. (The FT reports that local authorities arrested 49 mob members and seized assets worth more than €800 million in 2009.)

The country’s top officials claim that they are winning the mafia war, reported the Daily Telegraph last week. Because last year police arrested 21 of Italy’s 30 most-wanted gangsters, Prime Minister Silvio Berlusconi and his interior minister have been talking up their “total war” against the clans, and claiming that they are in the process of wiping out the mafias for good. But Telegraph sources said that’s not really the case.

Police, prosecutors and organised crime experts say the government can have delivered only a temporary setback. Arresting a few godfathers is like cutting the head off a Hydra, they say – others will simply take their place.

"Just because you arrest some top people doesn't mean the mafia goes away," said Felia Allum, a mafia expert and political scientist at Bath University. "They still maintain social and political control of territory in places like Naples and Palermo and Calabria."


The financial crisis has also been good to Italy’s four main mob groups, as we’ve noted here before. Banks aren’t lending, but the loan sharks are. Legitimate businesses are failing, and the mob can buy them up cheaply. The Jan. 3 bomb attack would show that the ‘Ndrangheta – which used to keep a much lower profile – has been recently emboldened. Whether that’s been by the financial crisis, or by last year’s arrests, or by something else, that’s for the experts to figure out. At any rate, the Telegraph noted that getting rid of the clans will take a lot more than arrests and court cases:

The reality, for all Mr Berlusconi's boastfulness, is that no government is likely to make headway in the fight against organised crime with mere arrests and court cases unless it first tackles the social conditions which are the mafia's recruiting sergeants across Italy's poorer south – unemployment, poverty and lack of economic growth.

That, at least, is the view of academics like Miss Allum. "There needs to be a concerted effort to improve levels of education and remedy the lack of job opportunities in the South, but that's not happening," she said. "The mafia is a virus in society and in the body politic. The question is, how do you get it out?"