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Sunday, 6 November 2011

Fighting Corruption

A recent article by South African based Institute of Security Studies touches on the issues we have touched here, particularly the relevant of SMS and hotlines in offering efficient and accessible way for members of the public to report abuse. 

There was a time a few decades ago when some writers argued a case that corruption might actually bring benefits to society and for that reason tolerated, but these voices have since been silenced. What is less certain is which of the 'best practices' are commendable for its control and prevention in the developing world.

Take the use of telephone hotlines to report corrupt practices. The present national anti-corruption hotline in South Africa is intended primarily for reporting misdemeanours in government service. Such a hotline is not always desirable as it must first be tested, since implementing it in a centralised way might amount to a logistical nightmare. We know that the private sector seems often content to encourage a use of multiple hotlines to report mostly incidents of fraud, and which often include promises of a reward for such reporting.

In the South African insurance industry, for example, a toll-free hotline was introduced to report fraud and within the first month of its operation the cost of setting it up had been recovered. Numerous reports were received as large-scale fraud was uncovered by company investigators working in partnership with law enforcement agencies.

The issue of reward for information provided is often raised in the context of whistle-blowing, as without incentives, there seems to be little willingness or motivation for people to come forward and blow the whistle. The terms of the Protected Disclosures Act No. 26 of 2000 assumes one's identity will be revealed in making a disclosure. The risk of occupational detriment, though mitigated by the offer of protection against such an occurrence, weighs heavily upon those wishing to blow the whistle.

The hotline, on the other hand, offers the possibility of reporting corruption anonymously, and may therefore end up being a more convenient and less threatening route for members of the public to follow. Yet hotlines should not be viewed as a substitute for effective whistle-blowing policies, which of themselves should be intrinsic to any organisation's internal integrity, anyway. The question remains therefore whether the creation of a hotline, while facilitating the reporting of corruption, does not serve to undermine the promotion of a whistle-blowing culture. The temptation to remain anonymous on a telephone while reporting corruption would be greater than taking the high road of making a protected disclosure without monetary gain.

Like with so much else about fighting corruption, the lack of quantifiable data to prove the effectiveness of hotlines in curbing corruption is an obstacle when one has to do a cost-benefit analysis. In the case of the Independent Commission against Corruption (ICAC) in Hong Kong many years ago, the hotline was extensively used by the public, particularly to report cases of police corruption. In the United States, the General Accounting Office established a hotline in the fight against fraud, abuse and waste of federal funds in 1979. Over the next nine years, about 90 000 calls were received, 13 992 of which required follow up, with allegations substantiated in only 1 589 cases. These cases most commonly involved private use of state property, abuse of office hours, general mismanagement and fraud by recipients of state benefits. The costs of investigation would obviously have been high, and it's often the case that 'there are no solid figures on actual savings resulting from the hotline operation', and furthermore, 'a strict cost-benefit analysis might very well show no net savings'. Like this American experience of fraudulent claims against state benefits, the (South African) Department of Social Development estimated an annual loss in this regard to run into millions of rands and consequently took the bold step of establishing its own anti-fraud hotline in 2004. This was done despite the then pending launch of the national hotline and at a cost of more millions of rands. The departmental expense was clearly an extravagant one in comparison with the budget for the national effort, but more importantly, it raises again the serious matter of a lack of consultation among the upper echelons of government when plans to fight corruption are being implemented. That brings us back to the old adage of the one hand not knowing what the other is doing, or more pointedly, the lack of strategic co-ordination when it is most needed.

The introduction of the Senior Management Service (SMS) for managers in public service in 2001 was premised on the capacity of the state to attract and retain many of the best and highly skilled managers. Very competitive salaries and conditions of service were offered to, among other factors, help prevent or reduce the temptation to engage in corrupt behaviour. Job evaluation was made mandatory for all posts at senior level to ensure that 'salaries are determined by the responsibilities, the thinking demands, the knowledge and skills required' for a particular job. This dovetailed with the performance management approach in which all managers are required to sign agreements that allow for support to be given to good performers but, also, appropriate action to be taken against managers who default on their performance. The skills and abilities of the managers were also made subject to being nurtured and developed through an array of training programmes. Evidence is therefore not lacking about concrete measures having been taken directly or indirectly by government to root out corruption from among its management echelons. By comparison, the costs of undertaking management reforms such as improved remuneration might be costly to the state, but in view of the multiple benefits they generate, such reforms are often considered an investment in the future. One of the key 'lessons' to be learnt from Singapore's successful efforts to reduce incentives for corruption among civil servants (and political leaders) was to ensure that their salaries and fringe benefits were competitive with the private sector. The above SMS might therefore be viewed in a similar vein, as a step to reducing the incentives for public service managers to engage in corrupt actions. Yet many will still clamour for those enjoying their ride on a 'gravy train' of rewards and benefits, however earned, to be paid less and live more simply so that the public purse can be used for other deserving causes.

To fight corruption and produce a positive benefit for society clearly requires an investment of monetary resources which in any developing country is a rather scarce commodity. It then becomes a matter of contentious debate to establish which approaches are most suited to spending less and achieving a greater impact. Yet without solid research and proper policy analysis it's anyone's guess as to what works and what doesn't and why corruption persists as a blight to society.

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