Corruption can take many forms
Corruption is the misuse of authority for personal benefit. Corruption is generally associated with bribery, which is when money, a service or another benefit is given to a person or people who can influence decision-makers in the hope of receiving a favour in return, or, conversely, asking for an unlawful benefit in exchange for a favour. Bribes are, however, only one form of corruption.
Corruption is a wide-ranging phenomenon, and actions are categorised as corruption based on whether they meet the criteria for malfeasance, bribery, fraud, embezzlement, money laundering or insider trading. Crimes related to misuse of a position of trust and inappropriate use of business secrets may also show features of corruption. Identifying and preventing corruption is made difficult in part by the fact that, although corruption has damaging effects, it is difficult to define unambiguously.
Corruption is an international phenomenon that occurs everywhere in the world, including in Finland. However, the prevalent forms of corruption vary from one country to another.
Corruption exists at all levels of Finnish society
Corruption occurs in the form of unethical giving and accepting of benefits, conflicts related to benefits and favouritism as well as as unethical decision-making outside of the formal decision-making structures. A common feature of corruption in Finland is that the perpetrator operates in compliance with the law, but still unethically. According to a study (PDF 2,86 Mt) corruption risks are less often connected to petty corruption than they are to large-scale corruption, and they often occur at the interface between the public and private sectors.
The most significant risk areas for corruption are the construction sector, public procurement and competitive bidding, city planning, political decision-making and financing. Other areas susceptible to corruption include international trade and sports.
Corruption is difficult to identify
Corrupt operations occur in numerous different forms, which makes it more difficult to identify them. Corruption usually takes place away from the public eye, meaning that only a fraction of corruption cases come to the attention of the authorities or citizens.
Corruption can occur, for example, in operations between public authorities and businesses in the form of considerably large representation expenses paid regularly by a business to certain officials. Exceptionally large material procurements may also be a sign of corruption, indicating that a portion of materials procured with public funds are being used by the official in charge of the procurement or their inner circle. In Finland, exchanges of favours with officials in particular have come to light as a result of Eurobarometer interviews. The concept of corruption also includes the favouring of family members or friends in connection with recruitment, procurement or other decision-making. Such instances have come to light as a result of court cases.
Corruption related to business can occur, for example, in the form of a subcontractor having to pay so-called “kickback” money to a company planning a major construction project. Exceptionally large representation costs paid by subcontracting companies can also be a sign of inappropriate influencing when bidding for contracts.
When it comes to international trade, high sales commissions or exceptionally large payments for raw material procurements can also be indications of corruption.
Corruption is usually connected to economic crimes
Authorities usually become aware of corruption in connection with other suspected criminal activity. Suspected cases of bribery that come to the attention of the police seem to be closely related to other economic crimes, particularly the grey economy. Corruption and money laundering are also closely related to one another. The risk of corruption and other inappropriate forms of influencing is pronounced in construction and public procurement. Bribing people in charge of decision-making concerning contracts, for example, fosters further criminal activities related to the grey economy by creating a favourable operating environment for seeking benefits through other criminal activity and for the emergence or continuation of operations by groups engaging in organised crime.
Activities in violation of the Competition Act can also show features of corruption. Such situations can have a direct impact on the competitive situation and on the ability of new companies to enter the market. If an employee of a public procurer playing a double role is able to influence the content of bidding competitions and the selection criteria, that person has the possibility to place one company in the most-favoured position in the procurements, thereby skewing the competition. Such phenomena can also be connected to cartels, or unlawful restrictions on competition between companies.
Changes in the operating environment lead to changes in corruption
The different forms of corruption have not changed significantly over the years, but changes in the operating environment have had an impact on the situations and contexts in which corruption occurs.
The incorporation of the public sector has brought significant changes to operations financed by public funds and the environment in which such operations are carried out. From the perspective of preventing corruption, the risks posed by incorporation are primarily related to transparency in decision-making. Reports on financial operations and the grounds for decision-making as required by the Act on the Openness of Government Activities are no longer available to residents of municipalities, municipal council representatives or representatives of the media.
Corruption has a negative impact on well-being and economic growth
Corruption has been compared to a disease that infiltrates the structures of society and destroys its central functions. Corruption has serious consequences for society as well as at the individual level because it slows down economic development, increases economic inequality and environmental destruction and weakens democracy. It makes it more difficult for people to access services and live an equal, good and safe life.
According to the Anti-Corruption Report (PDF 437 kt) published by the European Commission in 2014, corruption is estimated to cost the economy of the EU around EUR 120 billion each year. According to a study (PDF 4,62 Mt) commissioned by the European Parliament, the cost of corruption may be up to EUR 990 billion per year, if the calculations also account for the indirect effects of corruption.
Corruption can be prevented through increased transparency, awareness and cooperation
The cooperative network against corruption established by the Ministry of Justice of Finland has approved a preliminary anti-corruption strategy as its programme (publication in Finnish). The goal of the cooperative network against corruption (webpage in Finnish) is to ensure that corruption in Finland occurs as little as possible. Corruption can be prevented by increasing awareness of its occurrence and by making it easier to reveal instances of corruption through new reporting channels and whistleblower protections, among other measures.
The preliminary strategy recognises that more effective anti-corruption work is necessary at the national level, for example through more effective cooperation and increased resources for entities coordinating and engaging in anti-corruption work. The preliminary strategy and action programme still require political approval.
In Finland, various different ministries and public authorities participate in anti-corruption work on a broad front. In addition, civic participation and journalism play an important role in preventing corruption related to decision-making.
An integral part of comprehensive prevention of corruption is clear legislation that gives the authorities sufficient possibilities to address infractions and that has the power to influence proactively.