Now war on corruption

The Dirty Money is a reality.  All of us know the primary function of money is to serve as a medium of exchange. As such it is accepted in the form of currency and coins in final discharge of debts or payment of goods or services. Even as the money in itself is not an evil, it’s the wrong use which has made the money dirty.

Money is considered as the root of all problems. It’s the money which is responsible for many mischief and evils. Corruption, black marketing, smuggling, drug trafficking, tax evasion or name any form of evil existing in our society, the root cause is the misuse of money. The money-crazy people want more money to cater to their needs and during the course they don’t hesitate to have money from any source and it’s here the money laundering is prosperously triggered.

Today, the reason for discussing dirty money is the International Anti-Corruption Day which was observed last week (Wednesday, December 9). Traditionally, the day is marked by governments, businesses and the whole of society to renew their commitment to working together to end the devastating impact of corruption on people’s lives around the world.

However, this year it has assumed significance and the Day is tagged with a theme – “Recover with Integrity” as COVID vaccines are being distributed by some countries.

Basically, it is the COVID-induced crisis which has unveiled the grand system of corruption existing in the global financial system by picking wide range of weaknesses in the ways countries all over the world spend public resources and make decisions during crises. The crisis, as noted by the United Nations, has unearthed global stories exposing the powerful nations stealing public wealth from under developed and developing nations and spending it in developed countries. According to the reports, in the virtual International Anti-Corruption Conference (IACC), 19th in series, participants showed a resolute determination among all parts of societies to achieve a strong recovery which, in the words of United Nations Secretary-General António Guterres, “must include measures to prevent and combat corruption and bribery.”

It was noted in the conference that in far too many parts of the world, high-level public officials are robbing entire populations of the chance of a sustainable future. The uncomfortable truth, as noted in the conference, is that advanced economies are enabling or even fuelling this kind of corruption.

Notably, one key opportunity to tackle major corruption challenges head-on is the first-ever United Nations General Assembly Special Session against Corruption, also known as UNGASS 2021. The level of grand corruption practices exposed during the ongoing COVID crisis has led to fears about the unequal distribution of the COVID vaccines among the poor populations across nations.

Here it makes a sense to reproduce a message of Wipro chairman Azim Premji showcased during Ficci’s 93rd Annual General Meeting on December 14. Premji said the COVID-19 pandemic has wreaked staggering human misery and tragedy. He noted that agenda for the nation in present crisis must include food, shelter, safety and basic social security; equitable and high quality public education and public health systems; care for the planet and all life on it; elimination of any kind of prejudice and discrimination; and jobs and livelihoods that are just and fair.

Here, a report by corruption watchdog Transparency International is also worth reproducing. The report says: “Bribery in public services continues to plague India. Slow and complicated bureaucratic process, unnecessary red tape and unclear regulatory frameworks force citizens to seek out alternate solutions to access basic services through networks of familiarity and petty corruption. With the highest bribery rate (39%) in Asia, India also has the highest rate of people using personal connections to access public services (46%).”

Notably, the Global Corruption Barometer (GCB) – Asia, found that nearly 50% of those who paid bribes were asked to, while 32% of those who used personal connections said they would not receive the service otherwise.

Meanwhile, when world bodies are gearing up to declare a war on corruption, let’s have a look on the corrupt practices which over a period have become a norm.

We all know that corruption is a game of two players: one who gives, and one who takes it. Wittingly or unwittingly, we have integrated this menace in every aspect of our life, making it extremely difficult for us to stay in business without resorting to unethical or illegal practices. In succinct, corruption is blatant and exists in different forms. There is also a situation where a person is selling his influence over the decision process involving a third party- be it a person or an institution. So this influence peddling is also a type of corruption.

Then there is practice of graft in which the official gains something of value, not part of his official pay, when doing his work.

Corruption is through patronage mode also. This may be legitimate, but most of the time it can be seen as corruption if this means that incompetent persons, as a payment for supporting the regime, are selected before more able and deserving ones. We cannot overlook nepotism and cronyism as safe ways of corruption.

Favouring relatives or personal friends of an official is by all means a form of illegitimate private gain. Seeking to harm enemies becomes corruption when official powers are illegitimately used as means to this end. And, of course, embezzlement and kickbacks are some more means of corruption.

Let me give you some simple examples of generating dirty money. We have a common practice of hiding the cost of any property. A person purchases a property or residential house. But only a part amount of actual price is recorded in the documents registered with the authorities. The stamp duty is paid only for the recorded amount, and not for the entire transaction amount. A company shows a reduced income in its accounts by showing some un-incurred expenses and hence pays lesser tax. Here it is the undeclared amount of property transaction and the amount held by fictitious expenses and the evasion of tax amount which is dirty money and interestingly generated through normal legal transactions. Huge black money is generated by illegal, immoral, and anti-social transactions like drug trafficking, unauthorised parallel foreign exchange transactions etc.

If estimates are to be believed the illegal money of those involved in practices of corruption parked in foreign countries is over 20% of our economy. It’s this illegal money which has furthered our economic misfortunes. Today our mainstream economy is designed in a way where richer are going richer and poor are going poor every day. And this is really threatening, as the illegal money existing in our economic system is by all means a parallel economy.

Parallel economy is basically functioning of an unsanctioned sector in the economy whose objectives run parallel, rather in contradiction with the aroused social objectives. In other words, parallel economy is nothing but bottomless economy or we can simply call it hidden economy.

The impact of this dirty money has direct bearing on our economy in several ways. In the first instance it leads to the misdirection of our precious resources. The income distribution gets worsened. It is interesting to note that there are income tax advisers, chartered accountants and other financial advisers who are in the part of establishment of dirty money operators. One of the big disadvantages is that the dirty money has viciously corrupted every system. Succinctly, the politics of dirty money has decomposed our moral fibre. The existence of this huge hidden segment of the economy has handicapped our planners in making a correct analysis and formulation of right developmental policies for various sectors of economy. So, if the dirty picture of the money is not cleaned, it’s sure to lead us to ruin.

Lastly, the crux of the matter is that COVID-19 crisis has taken lid from the grand corrupt practices prevailing across globe. It’s quite clear now that a strong recovery from the pandemic will directly depend on how effectively the powerful leaders and advanced economies are prevented from indulging in corruption.

(The views are of the author & not the institution he works for)