2. Corruption, black money and Money
Laundering
• Black money refers to money removed from the official economy (via
corruption, bribery, tax evasion, etc.) and stored outside of the
country.
• How does the black money get generated?: Corruption, Sale of
property, Sale of goods/services without invoice, Accounting for
fictitious expenses.
• Corruption is the abuse of entrusted power for private gain.
• Converting the black money into white money without any taxes.
3. Major sources of Black economy
1) Real Estate
2) Bullion & Jewellery Market
3) Public Procurement
4) Financial Market Transactions
5) Informal Sector & Cash Economy
6) Tax Havens
7) Profits earned through unorganized markets
8) Donation to political parties
9) Smuggling
10) Control and licensing system
4. Corruption
• Corruption can be called a problem of routine deviation from the
established norms set by the government.
• Corruption is one of the root causes of poverty, conflict and state
fragility.
• Corruption undermines the states’ ability to effectively deliver
services and maintain the rule of law, affects the business climate and
stands in the way of sustainable economic and social development.
• Moreover, international research has repeatedly shown that
marginalised people suffer the most from corruption.
6. Cycle of by-production of
shadow economy in Nepal
Black economy
Corruption
Money laundering
7. Remedies for curbing black economy and
corruption
• Appropriate economic policies
• Reduction of corruption: curative and preventive measures
• Develop strong financial institution
• Implementation of rules and regulation
• Powerful civil society/media
• Value of Integrity and ethics
8. Vicious circle as a result of black money and
corruption
• Corruption is a global problem and no country of the world is totally
free from Corruption.
• It is the level of its prevalence on the one hand and the honest,
committed readiness of the people in eradicating it on the other hand,
that differentiates one country from another in the scale of corruption
perception index.
• Black money & Corruption are two sides of the same coin.
• The black money is created by way of illegal practices
• Therefore the black money is a source of corruption.
9. Causes Of Corruption
• Corruption degrades the quality of the services and also ruins the life of the
common person. Many countries in the world are affected by this problem called
corruption.
• Low Pay scales/ Wages
• Low Job opportunities
• Lack of fear of bad reputation
• Lack of Public Unity
• Lack of transparency in affairs and deals
• The option of many political parties
• Lack of enough powers to the judicial system
• Lack of accountability
• Response of society
• Encouragement of unhealthy competition
10. Types of corruptions
1. Petty corruption usually refers to low-level, small-scale corrupt
practices. This includes grease money for example, paying customs
officials a small bribe to get goods cleared quicker. It also includes
extortion, for example, paying police officers to avoid fines or
imprisonment.
2.Political/policy Corruption: Political corruption includes both
accumulation and extraction and where government officials use and
abuse their hold on power to extract from the private sector, from
government revenues, and from the economy at large.
11. Common causes of corruption and effects
• Among the most common causes of corruption are the political and
economic environment, professional ethics and morality and, of
course, habits, customs, tradition and demography.
• Corruption thus inhibits economic growth and affects business
operations, employment and investments. It also reduces tax revenue
and the effectiveness of various financial assistance programs.
• The wider society is influenced by a high degree of corruption in
terms of lowering of trust in the law and the rule of law, education
and consequently the quality of life
12. Complex issues
• It is not possible to kill or remove the corruption by improving the
Social-economic conditions of the country .
• Because we all know that the most of the people who are corrupted
are not economically or socially backward, surely they will be having a
notable social status.
• several layers of corruption
• Hidden activities
13. Anti-corruption measures
• Anti-corruption measures can include
• TAAPE (transparency, awareness, accountability, prevention, and
enforcement)
• Transparency: absent as the books were not available and only the
CEO knew what happened to the money.
• Accountability: absent as the company did not account to
stakeholders, the government or the donor for their actions and use of
resources entrusted to them.
• Awareness should have determined the nature, extent and
consequences of the corruption at an early stage and taken a position
of terminating or redirecting the project.
14. Anti-corruption interventions
• When corruption is politicised, it becomes embedded in how
politics functions.
• Corrupt acts are used to extract resources from the public
coffers, which are then reinvested in the structures, networks
and tactics that politicians use to maintain and extend their
hold on power.
• Anti-corruption initiatives can also be politicised, meaning
they face being weaponised or hijacked by political
networks.
15. Anti-corruption interventions
• Blanket anti-corruption efforts often fail due to economic
constraints and political resistance.
• In such contexts, development practitioners should target specific
anti-corruption interventions that promise highest impact and
feasibility (such as Albania).
• Cambodia’s anti-corruption reforms have been critical to
consolidating power in the hands of the ruling Cambodian People’s
Party.
• Financial management reforms and decentralization processes
promote to distribute democratic dividends.
16. Cambodia’s anti-corruption regime 2008-2018:
A critical political economy approach
• A number of anti-corruption initiatives have been successfully
implemented in Cambodia in the face of increasingly authoritarian
rule on the part of the Cambodian People’s Party.
• Cambodia’s anti-corruption reforms are fundamentally liberal rather
than democratic in orientation, which implies regime-friendly and
selective implementation.
• Liberal anti-corruption reforms such as public finance management
reform, public expenditure tracking surveys and decentralisation
reform, effectively deepen Cambodia’s market capitalism
17. Overview of corruption and anti-corruption
efforts in India
• The fight against corruption has been declared a high priority by Prime Minister
Man Mohan Singh. However, corruption remains widespread in the country such
as political and bureaucratic corruption, public funds misuse, fraudulent
procurement practices, and judicial corruption.
• The government has put in place a well developed legal and institutional
framework, with institutions including the Central Bureau of Investigation, the
Office of the Comptroller and the Auditor General, and the Central Vigilance
Commission.
• The Supreme Court, in particular, has taken a firm stance against corruption in
recent years and made several important rulings. Another achievement has been
the enactment of the Right to Information (RTI) Act in 2005, which grants
citizens access to government information and a mechanism to control public
spending.
• In spite of progress, however, law enforcement remains weak and reforms have a
long way to go.
18. Corruption Punishment and Prevention
System and the 2008-2012
• China attaches importance to the regulating and safeguarding role of laws
and regulations. Based on the Constitution, China has formulated a series of
anti-corruption laws and regulations.
• China prevents and punishes corruption through system reform and
institutional innovation.
• Major efforts have been made to deal with cases of commercial bribery in
six major areas, namely, engineering construction, grant of the land-use
right and mineral resources exploration and mining right, trade of property
rights, purchasing and marketing of drugs, government procurement, and
development of and deals in resources, as well as those related to bank
credit, securities and futures, commercial insurance, publishing and
distribution, sports, telecommunications, electric power, quality control
and environmental protection.
19. The National Ethics and Anti-Corruption Policy
is anchored on the Political Pillar of Kenya Vision
2030.
• the Task Force established that Kenya continues to have a very
elaborate legal and institutional framework for fighting corruption.
• Various international and regional anti-corruption instruments
require Kenya to recognise the need for a policy framework for
combating corruption.
• The overall objective of this National Ethics and Anti-Corruption
Policy is to reduce levels and prevalence of corruption and unethical
practices in Kenya by providing a comprehensive, coordinated and
integrated framework for the fight against corruption and promotion
of ethics.
21. National Anti-Corruption Strategy
South African Government
• The National Development Plan (NDP) 2030, in Chapter 14, proposed
various measures to fight corruption which include, holding leaders to
account for the use of public funds, putting in place a legislative framework
to fight corruption, and establishment of institutions dedicated to fight
corruption.
• Government has embarked on a process to develop a National Anti-
Corruption Strategy (NACS) that meets international standards, that is
focused on societal behaviour change and that will contribute to achieving
the NDP goal of a resilient anti-corruption system for South Africa.
• The NACS aims to unify all sectors of society to fight the scourge of
corruption, and to align all citizens towards the key values of integrity,
transparency and accountability which should guide the actions and
behaviour of all South Africa’s citizens.
22. South African Government
• Prohibiting public officials in undertaking other remunerative work outside
their employment. Public officials performing other remunerative work
outside their employment should seek permission from senior officials.
Officials who participate in other remunerative work should be issued with
a certificate of approval, which has to be attached to the public service
employee’s Financial Disclosure Form, to facilitate quick verification;
• Prohibiting public officials from conducting business with any organ of
state whether in their own capacity as individuals or through companies in
which they are directors;
• Limiting the public officials from accepting gifts from any employee or
person in return for performing their duties;
• Designated public officials to disclose their financial interests. This is
important in the management conflict of interests;
• Establishment of ethics infrastructure such as ethics committees, ethics
officers and ethics champions in public organisations.
23. Local Government Anti-Corruption Strategy
• Local Government is established
as a sphere of government in
terms of the Constitution of the
Republic of South Africa.
• A number of national and
provincial bodies have been
established to support Local
Government in the
transformation and governance
process.
• Creating a culture within municipalities which is intolerant
to unethical conduct, fraud and corruption;
• Strengthening community participation in the fight against
corruption in municipalities;
• Strengthening relationships with key stakeholders, e.g.
SALGA, employee representative unions and communities,
that are necessary to support the actions required to fight
corruption in municipalities;
• Deterrence of unethical conduct, fraud and corruption;
Preventing unethical conduct, fraud and corruption which
cannot be deterred;
• Detection of unethical conduct, fraud and corruption;
Investigating detected unethical conduct, fraud and
corruption; Taking appropriate action in the event of such
irregularities, e.g. disciplinary action, recovery of losses,
prosecution, etc; and Applying sanctions, which include
redress in respect of financial losses.
24.
25. Remedies for curbing black economy and
corruption
• Context and contextual
• Preventive and curative
• Integrity and Ethics
26. TIPS FOR EVERYDAY WORK
• The public and the private sector
often appear as different sides of the
same problem.
• Your role depends on your position
and job description. Everyone can
contribute to building an organisation
that is free from corruption, so you
should also tell your colleagues about
these tips.
Remedies for curbing black economy and
corruption
28. Remedies for curbing black economy and
corruption: three main dimensions:
• Countering corruption and Building
Integrity (BI) are two sides of the same coin.
While “Counter-corruption” or “Anti-
corruption” concepts tend to be perceived in
a negative light, “Building integrity” suggests
a more positive dimension of what is,
essentially, the same process.
• pro-active enforcement of rules and
regulations. That is: controlling, overseeing,
and investigating suspected corrupt
activities and individuals as well as
prosecuting later via a legal authority.
29. Remedies for curbing black economy and
corruption: How does it work?
•Rule of law
•Effective Legal framework
•Efficient and independent judiciary institutions
•Clear and concise regulations
•Education and training focused on BI
•Codes of Conduct and Ethical Guidelines
Legal and institutional framework
30. Remedies for curbing black economy and
corruption: How does it work?
•Merit and competition-based recruitment and promotion systems
•Transparency (budgets, salaries, procurement, acquisition,
disclosure of assets)
•Planning and budgeting systems in accordance with national needs
and objectives
Personnel management
31. Remedies for curbing black economy and
corruption: How does it work?
•Integrity pacts
•Accountability (effective, proportionate and dissuasive sanctions)
•Oversight mechanisms (internal and external)
Financial management
32. Remedies for curbing black economy and
corruption: How does it work?
•Audit function
•Watchdog
•Monitoring mechanisms
Monitoring
