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Oil, capture and corruption illustrated?: Alaska’s hotel Baranoff, suite 604…
By Kaufmann | March 9, 2008 2 Comments »
Alaska: hardly a tropical developing state. This vivid illustration of alleged corruption, in the video below, exemplifies the general point in the Governance Myth #1: there is a way to go in improving governance in industrialized countries as well.
Rather than pointing a finger at a particular state, firm, or individual, posting a video link excerpted from a program aired by PBS is meant to illustrate a number of more general points, beyond the simple fact that misgovernance and corruption can be found in far flung corners of our globe. In fact, it is also misleading to think about corruption only in terms of a petty bribery transaction between a low level bureaucrat and a small entrepreneur; more focus is required on more costly forms of higher level corruption, such as ‘capture’ of state laws and policies by potentate private financial interests. In our studies in economies in transition, we have named this phenomena as ’state capture’. And high level corruption and capture by vested interests is also common around extractive industries, such as oil, due to the concentrated nature of such rich asset.
While corruption may exist in some form or another in so many corners of the world, its degree and consequences vary. Countries also vary enormously in terms of whether rule of law institutions function or not, and in whether there is transparency and free press. Like in others, in the U.S., or in my own country, Chile, from time to time some corruption scandals do surface. Yet in both of these countries thanks to transparency and freedom of expression, there is broad-based exposure of these cases, rule of law exists, and institutions react. Further, in many countries nowadays the new IT tools, such blogs and video posting, assist in exposing and raising awareness about corruption.
This particular video clip, based on taped evidence gathered during an undercover FBI investigation, happens to deal with a recent scandal in Alaska. A trial is ongoing alleging that oil executives and lobbyists bribed a network of state lawmakers to bend laws in their favor. The video below is from a short excerpt on You Tube, based of a longer investigative documentary aired by the PBS Now program. For the fuller PBS documentary and more information on this particular case, click here.
Topics: Corruption, Public-Private Linkages, Rule of Law, Transparency, capture, financial crisis | | 2 Comments
March 13th, 2008 at 8:06 am
I just found out about this new blog by Kaufmann from a nice note in the IMF Public Financial Management or PFM blog. Because he is a world expert and says it clearly, it is good that Kaufmann is joining the blog world on governance and corruption. This could also help the credibility of the World Bank, especially now when we see in the press allegations of corruption in countries like India and also in Kenya.
Kaufmann is reminding us that there is corruption in rich countries, which is important for us in developing countries because rich countries need to set a better example and their multinationals need to behave cleanly.
This video on corruption in Alaska is a good example of detection techniques that I wished could be put to use in our countries. And we should also learn from the financial tracking methods used to catch Eliot Spitzer who had to resign from being the Governor of New York. So, agreed, there may be corruption in the United States, but there the corrupt often gets caught and punished. Doesn’t this mean that we shouldn’t only look at corruption, but also pay much more attention to rule of law?
March 14th, 2008 at 1:11 am
The constructive comment by Vinay is noted, and his ending query leads to the next posting, Myth # 2, related to the Economist’s article on the ‘Order in the Jungle’, all accessible here.
[Further, some days later, saw that the Bayesian Heresy had picked this Alaska corruption story up, and gone further with it, link here]