Measuring Corrupt Rent Extraction by Tracking the Misuse of Corporate Vehicles

Mihály Fazekas, Bence Tóth

In recent years, the abuse of diverse corporate networks for extracting corrupt rents and channelling them to opaque destinations have come to the forefront of international anticorruption efforts. This was marked by the UK anti-corruption summit’s focus on beneficial ownership which built on initiatives against opaque companies by OECD or FATF to name a few. However, results remain to be seen. This is partially due to the difficulty of measuring success on the ground rather than in law books.
In order to adequately measure the corrupt misuse of corporate vehicles we have to focus on the exchanges they conduct with public bodies rather than simply looking at legal loopholes or the mere existence of suspicious companies. Corrupt exchanges involving companies typically require the participation of public and business elites who can manage high value public decisions, and can move large sums among business entities. Public decisions can concern, among others, public contracts, concessions (e.g. mining rights), specific regulations (e.g. protection from competition), or the sale of public property. Such high-level corruption requires the violation of the underlying universalistic or impartial principles of public resource allocation in order to benefit a select few to the detriment of others.

This paper was submitted by our DIGIWHIST researchers Mihály Fazekas and Bence Tóth for the Proxy Challenge II “Finding new ways to assess anti-corruption efforts” organised by U4 Anti-Corruption Resource Center at the 17th IACC in Panama (2016).  It was nominated bext proxy indicator submission and won the competition.

The comments are closed.