Robert Klitgaard
The American
March 30, 2010

Can anything be done about corruption? The short answer is yes.

Only a few months after its terrible earthquake, it is hard to break away from cynicism about Haiti. International surveys rate it as one of the world’s most corrupt countries. Big flows of aid could exacerbate matters. “It’s what I’d call a perfect storm for high corruption risk,” says Roslyn Hees, coauthor of Preventing Corruption in Humanitarian Operations. “You have a seriously damaged institutional infrastructure, a country with endemic corruption, a weak or fragile state in the best of circumstances, and sudden influxes of huge amounts of resources to a highly vulnerable population.”

We feel for Haiti, and we want to help. But we fear that aid of the usual kinds may be ineffective. What to do?

One idea is simply not to get involved. Haiti is too far gone. Another extreme is to dismiss worries about corruption and dive in. “Of course Haiti has failed, failed, and failed again,” write Paul Collier, author of an impressive economic strategy for Haiti, and Jean-Louis Warnholz in the Financial Times. “Yet episodes of traumatic failure are ingrained in the histories of even the most advanced economies.” No one’s perfect—so, don’t look back, just man up and move on.

Or we can help the Haitians address corruption, avoiding corrupt systems where possible and subverting them where necessary.

Avoidance strategies will be popular. There will be proposals for enclaves of foreigners to provide high-level services such as planning, auditing, and in some cases implementing reconstruction. There will be calls to “ring-fence” development activities, keeping them safe from government interference. To use foreign companies instead of local ones. To move aid through nonprofits rather than the government.

Avoidance in various guises has been the approach in the past in Haiti. The results have not been encouraging. Nonetheless, on a case-by-case basis, enclave-like mechanisms deserve careful study. Some outside the country have called for a new, independent organization that is Haitian only through participation, not control. Several U.S. senators have talked of putting Haiti “at least temporarily in some sort of receivership.” Not surprisingly, this suggestion affronts Haitians’ sense of sovereignty.

But avoidance is not enough. Most initiatives in Haiti’s economic strategy cannot be carried out in an enclave or receivership fashion, or by nongovernmental organizations and businesses alone. This strategy calls for public-private partnerships for infrastructure, road maintenance, economic free zones, and the garment industry, to name a few. It calls for new government entities, such as a dedicated court for land claims in economic free zones and one or more independent service authorities for social services. The strategy requires much more information about how well these initiatives work—and calls for this information to be linked with rewards and punishments.

The economic strategy’s emphasis  on partnerships, free zones, evaluation, and incentives is important. But note the implication. Haiti’s economic strategy depends on its government doing new things, and doing them capably and honestly.

Haiti and its donors need to face up to bad governance and failed aid. They need to develop a strategy against corruption. This means more than controls and audits, more than training and technical assistance, needed though they are. We must ask how the design and implementation of Haiti’s reconstruction and development strategy might address what public administration experts Derick Brinkerhoff and Carmen Halpern called “the sanctioned plunder that was and remains the core of Haitian politics.”

Cynicism about Corruption

Corruption is one of those issues that seems to short-circuit careful analysis. Around the world, railing against corruption is popular in local newspapers and in international agencies. But if corruption is admitted to be a central problem, what can be done about it? This question quickly changes the complainers’ tune from impassioned outcry to embittered cynicism. “Nothing can be done about corruption,” many of the same citizens and journalists and officials will mutter sadly, if privately. This mismatch between diagnosis and response, between heart and head, means that we do too little about corruption.

“What is the problem about corruption?” was the title of an article by political scientist Colin Leys more than four decades ago. His answer: corruption is not much of a problem. Leys argued that corruption has its functions, sometimes even its benefits. Under awful conditions, bribery may be socially and not just privately beneficial. The political scientist Samuel Huntington noted in 1968: “In terms of economic growth the only thing worse than a society with a rigid, overcentralized, dishonest bureaucracy is one with a rigid, overcentralized, honest bureaucracy.”

These scholars of the 1960s had a point. But today, informed by both careful case studies and econometric estimates, we have abundant evidence of corruption’s many costs. Systemic corruption distorts incentives, undermines institutions, and redistributes wealth and power to the undeserving. Corruption slows economic progress. Axel Dreher and his colleagues estimate that corruption  is responsible for a reduction of 58 percent in per capita income in Latin America and the Caribbean. My research with Johannes Fedderke shows that, other things equal, countries with more corruption  have less investment, and each dollar of investment has less impact on growth. Daniel Kaufmann and colleagues find that measures of poor governance, such as high corruption, lack of rule of law, and lack of citizen voice, have strong, negative effects on long-term outcomes such as infant mortality and educational attainment, even after holding constant many other variables. Corruption undercuts democracy and decentralization. As John T. Noonan, the author of the monumental book Bribes, put it, “Dictatorship and corruption  are the two great sins of government.”

Then the question becomes practical. Can anything be done about corruption? The short answer is yes. Around the world, one finds inspiring examples of cities and towns, ministries and agencies, and countries making progress in the fight against corruption.

Preventing Corruption

Prevention means making government systems, such as procurement, more resistant to dishonest officials and bribe-giving business people. Corruption follows a formula:

C = M + D – A.

Corruption equals monopoly plus discretion minus accountability. Corruption flourishes when someone has monopoly power over a good or service, has the discretion to decide how much you get or whether you get it at all, and has no accountability.

To prevent corruption, monopoly powers have to be reduced and competition increased. Discretion in official actions must be circumscribed. Accountability must be enhanced, through performance indicators and feedback from citizens, businesses, and public officials themselves.

Prevention also recognizes that corruption is a crime of calculation, not a crime of passion. Reforms must change the risk-reward calculations of those who might give bribes and those who might receive them. Salaries should be somewhat competitive with the private sector—perhaps 80 percent is a good norm for senior levels of government. Once salaries for top officials are “reasonable,” reformers should emphasize improving information about performance and the incentives attending good and bad performance.

All these points should be part of Haiti’s reconstruction and development plans. But they won’t be enough in the context of deeply corrupt systems of government. Beyond strengthening the legitimate institutions of government, the task is how to weaken the illegitimate institutions of corruption.

Subverting Corruption

In Haiti, corruption is not the activity of a few rogue officials or politicians. The right metaphor here is not cowboy corruption but organized crime. Take procurement. Corrupt deals have arisen through well-organized arrangements. Some bidders collude, and then working with government officials that award the contracts, approve change orders, and make payments. Political protection is in play.

Once corruption becomes systemic, we have to go beyond prevention to subversion Subverting corruption means understanding corrupt systems, identifying their weak points, and going after them using the tools from fighting organized crime.

First, it is important to understand how organized corruption works. Take procurement, for example. How are corrupt buyers and sellers found and matched? How do they make and enforce their implicit contracts? What footprints do their illicit transactions create, and how do they try to cover them up?

To find the answers, ask the people. Citizens know where corruption  affects them, from getting driver’s licenses to receiving public services. Lawyers understand the workings of corruption in legal systems. Accountants know the illicit games played with audits. Business people understand how corrupt systems of tendering work.

Surprisingly, public servants will explain how corrupt systems work, as long as the questions asked focus on systems and not individuals and as long as they can speak confidentially.

The trick is to get what all these parties know without putting them at risk. In surveys, people can be asked where they perceive corruption to be occurring. In one-on-one, confidential interviews, insiders can be asked how a corrupt system works.

For example, a study of a procurement system would lay out the various steps: prequalification of bidders, technical criteria and their weights, the judging of the various bids, the process for post-award changes, and the payment of the contract. Each step is susceptible to corruption. Interviewees are asked, “Here is how things are supposed to work in prequalification. In your experience, what problems tend to emerge? How prevalent do you guess these problems are? What distortions are created?” The results of many such interviews (perhaps 15 or more) can be the basis for a diagnostic of a corrupted procurement system.

With this information, how can the corrupt system be subverted? First, share the information. Make the diagnostic public. Supplement it with data about the harms of corruption in terms of quality and cost. For example, what is the cost of a kilometer of rural roads, the prices of pharmaceutical supplies, or the cost of school lunch programs? The answers can be compared with previous years, with prices in  the private sector, and with prices in  other places in the Caribbean. The data can provide both a focal point for public outrage and a baseline for monitoring improvement.

Second, go after the corrupt systems. Extortion can be documented by using hidden video cameras, undercover agents, and confidential exit interviews. Induce key insiders to become state witnesses. Misinformation and “dirty tricks” have been used to create distrust among the corrupt—for example, planting false rumors that someone is a turncoat, or catalyzing animosity among various factions.

Third, lifestyle audits can be a valuable tool. Note again the potential importance not just of government but also of civil society. In Colombia, for example, a group of business people, church leaders, journalists, academics, leaders of nonprofits, and activists investigated several corrupt systems and looked into the lifestyles of the leaders of these agencies. They publicized the results through the press, and the result was the toppling of two well-entrenched systems of organized corruption.

Developing a Strategy against Corruption

Experience elsewhere teaches that reforming highly corrupt systems requires a shock to change expectations. “Big fish” must be fried. Then preventive reforms are required. Where corruption has become systemic, the needed measures go beyond prevention to something akin to interventions against organized crime.

A successful strategy against systemic corruption must go inside Haitian politics—and the politics of possible anti-corruption measures. If Haiti is, like other countries, suffering from organized corruption, its corrupt systems are complicated and dangerous. The mysteries of corrupt systems make it easy to accuse people, even innocent people, of corruption. Charges of corruption, never proven but quickly brought to a head, led to the Senate’s rapid dismissal of Prime Minister Michele Pierre-Louis last year. This is an election year in Haiti. Only a few weeks after the earthquake, opposition candidates were already criticizing President René Préval for inaction. The resource flows from reconstruction will heighten political stakes. The supporters and opponents of the current administration will be excited and perhaps threatened by the promise of big changes in the way government works. In this context, corruption fighters need to protect themselves from blowback.

At the same time, this is a propitious moment for change. Haiti is a country in deep crisis, where corruption is already a headline issue and something the government has already promised to tackle. The appropriate strategy may be to put fighting corruption in bold face and to emphasize politically salient steps, such as the prosecution of a few “big fish,” symbolic steps to indicate that impunity is over and the rules have changed, tracking down ill-gotten wealth (even when economically relatively small), and creating an anti-corruption focal point within the Haitian government.

Successfully taking on corruption means thinking as hard and concretely about anti-corruption strategy as one does in any other area of policy and management. An effective anti-corruption initiative must involve local ownership and creativity. It should be championed by the highest level of political leadership. It should also deeply involve the private sector and civil society.

It must be legitimate for international partners to participate. For example, anti-corruption should be linked with the support of reconstruction and with each component of Haiti’s new economic strategy, rather than be seen as an arbitrary attack on Haiti or on a particular political regime.

How can such a strategy be developed? In my experience, high-level workshops can mobilize creativity and create action plans. Ideally, the workshops include leaders from government, business, and civil society. Together, these leaders examine the various kinds of corruption and their costs. They learn together about possible  remedial actions, using case studies of other countries. They analyze these alternatives in the local context. They identify areas where the costs of corruption  seem high and the costs of the remedial actions seem relatively low—promising starting points in an anti-corruption initiative.

Ideally, such a workshop in Haiti would lead to both short-term measures and long-term vision. Participants would consider how the strategy against corruption could become a lever for transforming governance in Haiti.

Improving Leadership and Management

In this vein, Haiti’s greatest lack is ethical leadership and effective management. How to address this gap is a first-order challenge for Haiti and its international friends. One bold possibility is to create a new Haiti Leadership Academy (HLA).

In the near term, HLA would provide urgently needed practical skills through short courses. Because Haiti’s economic strategy emphasizes public-private partnerships, HLA would teach government officials but also people from business, nonprofits, and citizens’ groups.

Some of the needed practical skills include designing and managing public-private partnerships and preventing corruption. Other skills are sector-specific, such as reforming property rights, managing free zones, regulating the private provision of electricity and port services, and customs reform.

Beyond providing crucial skills needed now, HLA will have two long-term goals: to help create a new generation of Haitian leaders and to catalyze a new vision for Haitian governance. Toward these ends, imagine a professional curriculum built on four pillars.

Transformation. Where can Haiti be in the future, say 20 years from now? What lessons can it learn from other countries? What might governance look like in the future, given trends in technology, globalization, community empowerment, and so forth? In order to make this possible, what sorts of leaders will Haiti require?

Integrity. What are the ethical obligations of leaders in government, business, and civil society? What are the dangers of corruption, in Haiti and elsewhere? What does experience around the world teach about the causes and cures of corruption?

Partnerships. Why is the world moving toward public-private partnerships and away from top-down governance? Students will study successful examples of partnerships in sectors crucial to Haiti, such as food security, social services and education, environmental restoration, free zones, electricity, public works and infrastructure, and security.

Accountability. How can the institutions of society be made more accountable to its citizens? How can ordinary people be empowered through such things as rapid rural surveys, client-based scorecards, and using social networking tools for peer-to-peer communication of evaluative information?

HLA would have a third leg: programs at the grassroots level. The people of Haiti have long felt both abused and neglected. One result is a kind of learned helplessness, which leads to ignoring or disdaining possibilities for civic action and self-reliance. HLA would provide training to help citizens unlearn helplessness through examples from Haiti and elsewhere of successful local action. The training would use pedagogical techniques appropriate for target audiences that may lack formal education.

To succeed, HLA will demand the highest level of support from Haitians and the diaspora. It must be Haitian first and foremost. It should also create partnerships with some of the world’s best schools of management and with international aid agencies, to exploit their long experience in reconstruction and development.

Creating such a new institution is daunting. But it also could help galvanize the imagination of the Haitian people. The Haiti Leadership Academy could be crucial for reconstruction and for Haiti’s transformation to a different kind of country. It is an idea that deserves the best support, knowledge, and expertise the world has to offer.

Without putting anti-corruption at the core of Haiti’s reconstruction and development, even a Haitian Marshall Plan could easily become just another “failed beginning.” Haiti and its friends should take a crack at developing a strong, practical strategy against corruption. It won’t be easy. But if successful, this effort would pay off in many ways, including better projects and programs in Haiti’s reconstruction, and a better chance for the medium-term economic strategy. And—shall we dare to wish?—the first step in remaking the way Haiti will be governed in the future.

Robert Klitgaard is the author of a new American Enterprise Institute report, “Addressing Corruption in Haiti.” His eight books include Tropical Gangsters and Controlling Corruption. Formerly a professor at Harvard and Yale universities and dean of the Pardee RAND Graduate School, he is now a professor at Claremont Graduate University.