Corruption Revisited

Something in our water?

Our other poll has closed and the results are a little surprising, and unfortunately very discouraging. We know of course given the small number of respondents and no way to verify how the voting took place, these results are only indicative, but if these figures were representative, it would suggest that those who responded believe that given the current level of enforcement, they are more than happy to engage in corruption.

Consider our earlier poll where we said that there was no way in which you would get caught accepting a $200,000.00 bribe, and only 57% were willing to participate. Now if you had notice the earlier poll, there was a hint of a question of principles or moral values playing a role in one's answer because the preceding posting highlighted it. In the second poll, this was deliberately left out so that people were more or less free to choose, without the moral issue to 'cloud' their decision. The staggering 97% of individuals who said they are more than happy to accept a bribe given the current level of enforcement in Brunei - higher than the earlier poll suggest one possibility - the mention of Brunei and its enforcement is somehow enough to push more people to engage in corruption.

Why is this, we ask? One possibility is that somehow some pre-existing condition within our economy or society is encouraging people to engage in corruption, i.e. perhaps within our own mindset, too many people engage in corruption and get away with it that we should all engage in it, i.e. in this so called game (as the economist puts it) the losers are those who fail to engage in corruption, while the winners are those who engage in it and get away relatively scot free.

This is only a theory, and as we said, the poll is hardly scientific, but it does allow us to look at corruption from all perspective and start a fruitful debate over the issue. It should be worrying enough that 97% are willing to accept bribes for us to actually discuss and debate on how to tackle this issue.

Economics Glut

Sad fact...

According to today's Brunei Times article, economics isn't likely going to be a popular subject any time soon. Given our earlier call to promote economics amongst our local student populace in order to equip them for our economic diversification efforts, this is very discouraging. Hope people like Rogue Economist will provide a few comments to this issue and how perhaps we can boost interest in Economics.

Time permitting, we'll come up with our own commentary of this issue in the next few days.

Guangxi and Corruption

"If we had complete trust between one another, would the cost of doing business become zero?"

Mohammad left a comment in our previous post about corruption and how guangxi plays a role in it. In his comment, Mohammad wrote:

My uneducated analysis, Mr Red, leads me to believe that in the Brunei context graft is akin to "Guangxi" or "Kongsi" in the Chinese culture of doing business, be it subtly done transparently in the open or discreetly in secret.

So to Chinese business people, under the table deals are the norm rather than the exception and deception is the name of the game.

To Mohammad:

Yes you're right. In the absence of a robust, transparent and independent legal system to protect contracts (such as in Singapore and other developed countries), you fall back on the basic form of reducing risk when doing business with someone, and that is to do business with friends and acquaintances whom you trust rather that strangers who you do not know much about. Guangxi or Kongsi is firmly part of the Chinese culture, be it mainland Chinese or overseas. Guangxi if not managed properly can and will lead to corruption as these form of 'contracts' are never written, implicitly agreed upon and processes such as tenders become nothing more than a facade and an academic exercise to legitimise what other people would consider corruption.

This is however not to say that all Chinese cultures use guangxi in order to do business. If that's the case, a Taiwanese/Malaysian or Bruneian businessman would never even venture overseas with an overseas partner cos the cost of trust would be too high. What Guangxi does instead is to reduce the business risk brought about by doing business with strangers. While Guangxi may reduce risk, it doesn't do it efficiently enough in a globalised market - how many people do you know in the world? And as a businessman, would you unnecessary restrict yourself to do business with only people you know? This is where a good legal system steps in - if we have a good legal system, business deals can be openly discussed between 2 new business ventures, while a relationship is being built up, knowing full well if something goes awry, then the legal system will be able to step in to protect individual rights laid out within these contracts. And Guangxi isn't a Chinese condition too, it's simply explained in Chinese terms what we would call relationship based business.

One way to move away from corruption (in the business environment at least) is to develop a legal system strong enough that will uphold the terms of contracts so that trust based on an existing relationship does not become an over-riding factor when it comes to business deals. In Brunei, we have been privy to tonnes of business dealings that verges on corruption because contracts that are supposedly open to tender are given to people they know because of the trust that exists (don't forget the trust that is greased by behind the door kickbacks to one another too). As Guangxi between 2 parties builds up, it becomes stronger and becomes more likely that one partner will seek the other out in future contracts, thereby propagating the cycle. But in our push to freer markets, such business models can do more harm than good to the economy because when one agency continues to work exclusively with a service provider at the expense of other possibly more viable competitors, a system of monopoly and collusion would have developed.

Let us not forget though, there are other forms of corruption in Brunei that is so institutionalised that removing it might be akin to ripping away a piece of our own culture. And we all know that that would be impossible, but even it if is possible, would be too costly and painful to bear (in the short term, because we know sooner or later, we WILL have to get rid of all forms of corruption for the future of our country).

ACB: More to do....

Oh how corruptible we are....

The poll results are in. While we're not saying that this poll is in any way representative of the population of Brunei in terms of their opinions on the demand/supply of corruption, it seems that those who were kind enough to partake in our little survey have spoken: a total of 57% (rounded up figures) are willing to accept a $200,000.00 bribe, while 43% of those responded are unwilling, seeing corruption as wrong. The figures are similar to the provision of bribes, with 58% willing to pay the bribe, while the other 42% not willing to partake in corruption.

These figures are telling and interesting: in the absence of enforcement (or rather successful enforcement), we see people willing to partake in corruption. While we did not poll people with regards to their propensities towards corruption given the probability of being caught, we go on a limb here to suggest that it might be safe to assume that the figures would be lower. At the end of the day, you have to see this game of corruption as one which revolves heavily around risk. The higher the risk of getting caught, the less likely inherently corrupt people will engage in it - a simple fact of life. It isn't necessarily the severity of the punishment either that can act as a deterrent. China have the death penalty as punishment for corruption in government, but yet corruption remains rampant in China (see here, here and here). Sometimes companies and governments alike simply aren't committed to bring corruption to the forefront by dealing with it through the courts. After all, if we as a country started dragging corrupt people in our country to court, would that not be equivalent to hanging our dirty laundry out for everyone to see?

Here's an excerpt from a news article to drill in this point (from China's perspective):

Ewing (a China analyst) observed that "through talking a tough new game and making examples of a selected group of public officials and businesses, the Chinese leadership hopes to reduce corruption. But it is going to take more than tough talk and selective prosecution to make a real difference. When the odds of getting caught are greater than the odds of not getting caught, then there will be real progress."

And many corruption cases are not brought to the spotlight, only quietly dealt with behind the scenes. A Chinese buyer working for a Western megastore chain in China said that after discovering a kickback scandal the management of the store simply sacked an employee involved instead of pressing charges.

Source: http://www.atimes.com/atimes/China_Business/IJ19Cb01.html

In Brunei, many of us have heard through the grapevine many many cases of people who engage in corrupt activities, either get away with it scot free, or if they are caught, are given a slap on the wrist and, as the above China example, deal with it behind the scenes.

So if you stand to gain $200,000.00 or perhaps $2million, or amounts enough to get you early retirement, and you know that the worst that can happen to you is to get fired cos bringing you to court would embarrass those you stole money from, wouldn't YOU be tempted to become corrupt?

And indulge us in one more poll on the right hand column, to see how many of us would accept bribes given the current level of enforcement for corruption in Brunei. I think the results will give us another eye opener.

Corruption, Windows of Opportunities, and your own principles.

Becoming Corrupt

Have you ever wondered how someone makes that transition from one day being innocent, ethical, and principled to taking that first step towards corruption? What is it that makes someone to make a choice to forego ethics and embrace the practice of corruption? Is it money? Is it power? Is it down to individual values and principles, or are we all inherently corruptible and will engage in such activities as long as a window of opportunity arise and the chances to get caught and punished is minimal? What is it within the human condition that really drives corruption?

There are economic explanations to corruption, explaining it through rents and rent seeking behaviour (see here), and there are humanistic explanations of corruption, arguing that human greed drives corruption - greed for power, greed for status, greed for money. But I'm more interested in the introspective notion of corruption and corrupt behaviour and in what condition do we find ourselves in an opportune situation to engage in corruption - and whether controls for corrupt behaviour comes within or from an external source.

So here's a question, and a poll which I will add in the side bar to try and illustrate our inherent nature when it comes to corruption and I hope we all can participate. As this poll is COMPLETELY anonymous and therefore removes any potential response bias of socially desirable answers (i.e. giving an answer you deem that society will approve even though you may not believe in it because they know your answers), I hope to get everyone to do some soul searching and come up with your own answer - for which ONLY you will know of.

So here it is - the scenario:

There's a project tender worth $5 million and you know that there are alot of interest parties for this project.

As the tenderer, you can ensure your acquisition of this project by paying a bribe (say $200,000.00 - you can come up with any figures of your own) to the official in charge, will you pay this amount?

As the project tender committee, if you were offered a bribe ($200,000.00 or larger amounts), will you accept the bribe?

NOTE: These scenarios assume you WILL NOT get caught. And by the way, this is a hypothetical situation and in no way am I implying this is a true situation.

There are many additional scenarios we can play out, but what I really want to see is what our decision will be. I hope that everyone can have a long think about the issue and click on the poll as truthfully as you can so we can see how the responses come out. I'm sure we will be surprised by the outcome, one way or the other.

Everyone would like to live happily and comfortably: Agree or Disagree?

Response Bias and Pointless surveys

If you are a regular visitor to The Brunei Times website (www.bt.com.bn) for news, you'll notice that they have on the right hand side panel a weekly online poll. Most news agencies have them to engage their readers and also to get act as an informal (but bearing in mind unreliable) thermometer to various issues and agendas.

The tricky thing with surveys and polls is that you need to come up with questions that will elicit an objective unbiased response and according to many research methodologists, the structuring of the question itself is EXTREMELY important to avoid response biases.

Take for example this week's question for The Brunei Times online poll:

Something must be done to prevent the quite often power outages in this rich nation.

If you were to ask any educated/sane/coherent adult to answer this question, then most people would agree that YES it makes sense that something SHOULD be done. After all, who in their right mind would even suggest that getting the problem of power outage fixed is non desirable. So if the survey questions logically points to one answer, and you expect everyone to answer a particular way, then why bother to ask the question in the first place.

To drill this point of response bias home, consider this question DebatingBrunei came up with:

It is in Brunei's best interest and future economic wellbeing to diversify from oil and gas.

Would ANY of you actually click or choose Disagree? Chances are that no one would choose No, because by disagreeing, you're effectively condemning Brunei to a post-oil Brunei with the economy of a third world country. Therefore the question becomes pointless and is simply a wasted exercise in asking people to state the obvious.

Let us look at another question from The Brunei Times online poll:

Do you agree with the Government that fuel subsidies should be reduced step by step?

This one contains what they call a double barreled question, i.e. a question that contains 2 issues that can be answered differently. In this particular example, one part of the issue is whether you agree/disagree that fuel subsidies should be reduced. The other issue is whether it should be reduced step by step. These are 2 entirely different issues. I can just as easily say I agree with reduction but NOT step by step and do it in one go. So the way the question is structured makes my response inaccurate as it assumes I have given the same response to 2 different issues altogether.

Survey and Polling questions should generally be designed with care so that responses are not biased, or are loaded to get a particular response so as to manipulate and redirect a particular response to an agenda or issue. And in the case of The Brunei Times, a media organisation, with good reach into the community with regards to social and economic issues, flawed survey and poll questions can have far reaching consequences.

Not sure who works on The Brunei Times online poll questions, but they need to get someone to design them better.

For more info on Response biases, click here.