Corruption, Not Revolutions or Coups, Topples Governments These Days

In Brazil, 700,000 people rallied in heavy rain calling for the resignation of a president accused of taking kickbacks. In South Korea, protesters banging gongs and drums took over a 10-lane avenue demanding an end to corruption. In Italy, demonstrators at candlelight vigils begged the nation’s top anti-corruption prosecutor not to resign.

Once it was socialism versus capitalism, East versus West that inflamed political passions. But in the post-Cold War world, it is increasingly corruption that incites public outrage, inspires protests and topples governments.

Corruption has brought down long-governing parties such as India’s Congress-I Party and Italy’s Christian Democrat and Socialist parties. Two former South Korean presidents are in jail.

Presidents of Brazil and Venezuela were forced to resign and a former Peruvian president is a fugitive. Corruption scandals contributed to the downfall of Prime Ministers Khaleda Zia of Bangladesh and Felipe Gonzalez of Spain, discredited Turkey’s former prime minister, Tansu Ciller, and forced Willy Claes of Belgium to resign as NATO’s chief.

Whether corruption is actually on the rise is unknown. Bribes are as furtive as secret romances and neither the giver nor the taker wants the relationship exposed. For every payoff splashed in a headline, countless more stay secret forever.

What is clear is that as the world has changed, so has corruption--and how corruption is perceived. There are new opportunities to pay bribes, but also new freedoms to expose crooked politicians and demand the downfall of corrupt governments.

“Democracy and free markets are the enemies of corruption in the long run, but in the short run they can open up some opportunities that weren’t there before,” said Robert Klitgaard, a professor of economics at the University of Natal in South Africa.

The rapid dismantling of state-controlled economies in much of the world is drawing investment cash to countries where there are few safeguards against bribing government officials.

“With every new market, every new emerging opportunity, you have another set of public officials that have to be paid off,” said Christopher Whalen, chief financial officer of Legal Research Inc., a Washington-based trade advisory firm.

Bribery, kickbacks and other forms of corruption were rampant in closed societies like those of the former Soviet bloc. And they are rampant in the successor states today. But it’s not the same.

When the state controlled much of the economy--especially in the Soviet bloc--bribes were paid to government officials for favors.

“Before, you had a system that was too controlled, that was too rigid,” said economist Susan Rose-Ackerman, a Yale University professor and visiting research fellow at the World Bank. “People would pay to get to the head of the queue.”

Now, Rose-Ackerman said, there is an “institutional vacuum”--it’s not clear who is in control or what the rules are. So businesses pay bribes to officials who can guide them through the system.

The move toward privatization also means the bribes have gotten bigger. Where a business owner may have once paid a bribe to get hooked up to a water line, now some businesses deliver piles of cash to rig the sale of a water company. Such was the case of Alain Carignon, mayor of Grenoble, France, who was convicted of receiving $4 million in bribes, including $1.8 million from the sale of the city water system in 1989.

Billions of dollars in business may be at stake. That makes it more tempting for an official to demand a hefty payoff--and for a company to pay it.

A German businessman, Wolfgang Greiner, paid $3.75 million in bribes to the head of an agency overseeing the privatization of former East German state enterprises so he could buy companies and real estate at bargain rates. He was sentenced to five years in prison. The head of the agency, Wilfried Glock, was sentenced to 5 1/2 years.

“Now it’s sort of a Wild West, winner-takes-all system,” said Kimberly Elliott, a research fellow at the Institute for International Economics in Washington. “[Bribery] may not be more endemic, but it may be at a higher level.”

But high-priced bribes have also created a backlash. Businesses that have been willing to pay off officials can find they are being priced out of the competition.

“It’s like there’s a certain honor of thieves. People who bribe are being fed up about being extorted,” said Maria Ionata, a special assistant at the U.S. State Department’s bureau of economic and business affairs.

And a public that tolerated officials who pocketed a little cash are shocked when they find out how much money is changing hands.

Former South Korean presidents Chun Doo Hwan and Roh Tae Woo were convicted Aug. 26 of amassing slush funds of up to $900 million while in office in the 1980s and early 1990s. They also were convicted of treason and mutiny for their roles in a 1979 military coup. Chun received a death sentence, but that is expected to be commuted to a prison term. Roh was sentenced to 22 1/2 years in prison. They were fined a total of $620 million.

Italy’s “Clean Hands” investigation is believed to involve between $3 billion and $4.3 billion in bribes and kickbacks paid to businessmen and politicians. More than 3,000 people, including two former premiers, have been implicated.

In Mexico, authorities are investigating how Raul Salinas de Gortari, the brother of former President Carlos Salinas de Gortari, managed to accumulate more than $80 million in foreign bank accounts during a time he was mostly working for the government.

The public outrage is further fed by the tough economic times in many countries as they shift from state-supported welfare states to free markets. Politicians getting rich on bribes are sometimes the same ones who implored the public to endure hardships today for the promise of better times ahead.

And they are getting rich as roads and schools crumble because contracts were awarded on the basis of payoffs instead of workmanship. The consequences can be deadly. An investigation of a shopping mall collapse that killed 501 people in South Korea last year revealed that city officials had been bribed to allow illegal design changes.

Years ago, dictators were able to cover up cases of corruption. Now it’s not so easy. Journalists in the former Soviet bloc, Latin America, Africa and Asia are freer not only to report on corruption but expose it.

Brazilian President Fernando Collor de Mello was implicated in a corruption scandal after the newsweekly Veja published a tell-all interview with his brother. Brazil’s news media eagerly reported details about Collor’s luxurious lifestyle--his garden landscaping alone was worth $2 million--and reporters even sifted through the garbage of Collor’s press secretary in search of credit card receipts.

Nationwide protests led to Collor’s resignation in 1992. The Supreme Court in 1994 acquitted him of charges that he was involved in a $100-billion kickback scheme for awarding public works projects.

Collor isn’t alone among Latin American leaders. Venezuelan President Carlos Andres Perez was impeached in 1993 and convicted last May 30 of misusing funds. Former Peruvian President Alan Garcia faces charges of accepting a $1-million bribe; he is in exile in Colombia. Colombian President Ernesto Samper has withstood allegations that his election campaign was financed by drug-traffickers.

The accusations against contemporary Latin American leaders often pale in comparison with the thievery of Nicaraguan dictator Anastasio Somoza a generation earlier. After an earthquake devastated Managua, the capital, in 1972, Somoza stole much of the money donated to rebuild the city.

The theft was no secret, yet he stayed in power for six more years, until toppled by the Sandinista revolution. Somoza could count on something that Collor and his Latin American contemporaries couldn’t--the backing of the U.S. government.

It was the Cold War, and both the United States and the Soviet Union supported brutal dictators--as long as they were loyal allies.

That has changed.

“After the end of the Cold War, it is not that easy anymore to bribe a foreign official and say that this was necessary to block communism,” said Johan Graf Lambsdorff, a lecturer of economics at the University of Goettingen in Germany.