Combating Corruption

Corruption is one of the world’s largest obstacles to economic development and growth. Research shows that corruption no doubt have serious adverse effects on economic growth, inequality and poverty and on the allocation of public spending on education, health and infrastructure.

Corruption is often defined as the abuse of public power for private benefit. It applies to any transaction between the public and the private sectors where public goods illegally are converted into private benefits.

The United Nations Convention on Corruption entered into force in 2005 and provides a framework for state parties to fight corruption. It helps both to engage in dialogue and to cooperate with other countries on a topic that is usually perceived as difficult to discuss.

Definition of corruption

The Norwegian Penal Code’s main provision against corruption applies to both public and private sectors and states: 

«Any person who a) for himself or other persons, requests or receives an improper advantage or accepts an offer of an improper advantage in connection with a position, office or assignment, or b) gives or offers anyone an improper advantage in connection with a position, office or assignment, shall be liable to a penalty for corruption».

Position, office or assignment includes job duties or assignments abroad. Compliance to corruption is also punishable in the same manner. It should also be emphasized if the act is committed by - or against - a public official, or any other person whom in breach of the special confidence that comes with his position, office or commission, whether it has provided significant economic benefit, whether there was a risk of significant harm economic or another, or if it's false accounting information, prepared false accounting documents or false statements.

It is important to note that trafficking of influence is also included and that one may be punished if for himself or others, receives or accepts an offer of an undue advantage for influencing the conduct of a position, office or assignment, or gives or offers anyone an improper advantage to influence performance of a position, office or assignment. Position, office or assignment includes job duties or assignments abroad.

What does corruption do with society and the population?

Corruption undermines people's confidence in democratic processes and political systems. It hampers resources from being spent on development and poverty reduction.

It is estimated that illicit capital flows from developing countries is ten times greater than the international aid to the same countries. Tax evasion and mispricing is believed to consist of 2/3 of the illicit capital flight, while criminal activity accounts for the remaining third. It is important to support efforts to stop these flows, such as through support for the development of effective tax laws, tax directorates, openness and transparency in public administration.

Norway is also engaged in developing legislation requiring companies to expand their reporting obligations and in strengthening institutions that are responsible for the investigation and prosecution of corruption cases. Supporting a critical and active media, as well as a civil society that can monitor policy decisions by requiring results is also crucial.

Corruption increases the costs of investments and challenges the companies’ competitive conditions. Poor people are required to pay for services which should otherwise be free. While large-scale corruption has significant social consequences, small-scale corruption has significant consequences for individuals and can lead to families becoming unable to afford schooling or to utilize health services. Corruption reduces the trust in the public sector and threatens thus the stability of the democratic institutions.

What are the challenges?

Corruption cross borders and the forces behind criminal activities are strong. Its secrecy makes is difficult to access the information needed to shed light on trends, challenges and solutions to corruption.

A large and debated question is how development cooperation affects corruption, especially in states that are vulnerable and/or in conflict by the corruption risks and the corruption being overlooked because other considerations are stronger. There may be situations where aid workers cannot get through roadblocks with supplies to people in need before they leave parts of the food supplies.

By maintaining sound systems of management of Norwegian development funds, we make our own efforts stronger, but if this happens in a society where corruption is the norm and not the deviation, the sustainability will be reduced. We have to also assess the corruption in the society at large, outside the Norwegian funded project. This is important to understand how corruption can potentially undermine our efforts and whether other measures are needed.

Another challenge is to find good ways of measuring corruption and the results of the initiatives we support. Good risk analysis based on previous studies and evaluation can identify challenges and force measures to reduce risk. Such analysis will also give those who will make decisions a better and more thorough basis for determining whether a partnership is possible.

The globalization of the world in general and the financial sector in particular, the existence of tax havens and the interests of states in using these, makes it necessary to fight corruption across borders. Although we know that the existence of tax havens have very adverse effects on developing countries, the forces supporting their existence is still stronger than those against.

Published 12.02.2013
Last updated 16.02.2015