News accounts of Ukraine’s longstanding problems with corruption put a spotlight on a wider problem: the staggering cost of corruption worldwide. Bribes, money laundering and other shady dealings each year siphon off at least $2.6 trillion, or 5% of global economic output, the World Economic Forum reports.
Such diverted funds could have gone toward important needs. “Corruption robs schools, hospitals and others of vitally needed funds,” notes António Guterres, the United Nations secretary‑general. Low-income individuals are especially hard hit. “The poor pay the highest percentage of their income in bribes,” the World Bank reports — 12.6% for impoverished residents in Paraguay, for example, and 13% in Sierra Leone.
Governments, foundations, nonprofits and international institutions are taking greater action to monitor how their funds are used and to respond if irregularities are spotted. The World Bank severed ties with 83 firms and individuals during fiscal 2018 over corruption concerns. The U.S. Agency for International Development, which allocates foreign aid, has canceled contracts in response to corrupt practices in countries such as Pakistan and Afghanistan.
Nigeria provides a particular example. The FBI in 2017 began efforts to recover $144 million in funds illegally laundered in the U.S. as part of Nigerian corruption schemes. Nigeria’s government last year agreed to pay back $500 million to the U.S., France and Britain in connection with public funds looted by Nigeria’s former military head.
The level of corruption varies widely among nations, but the problem can be severe in many countries. Some examples:
» In Peru, corruption probes have pointed to illegal actions by the country’s past four presidents plus scores of businessmen, judges, prosecutors and lawmakers. One former president is fighting extradition from the U.S., and another killed himself to avoid arrest this year. A third is awaiting trial in Peru, and the fourth resigned as president last year to avoid impeachment over alleged corruption. The leader of Peru’s opposition party is in jail ahead of trial on corruption charges.
» In El Salvador, the government has charged three former presidents with money laundering or embezzlement.
» In South Korea, a former president is serving time in prison after a corruption conviction.
» In the Republic of the Congo, a daughter of the current president has been widely criticized for allegedly using embezzled funds to purchase a $7 million apartment in New York City.
Promoting government transparency, press freedom and robust democratic activity are important in fighting corruption. So is forceful reform by elected officials. The current president of Angola fired more than 60 government officials as part of an anti-corruption drive, for example. The Dominican Republic has taken major steps to address corruption in government contracting and the health care sector. The actions led to a significant reduction in contracting costs and lowered drug prices.
Corruption exacts a terrible toll on countries and individuals in many parts of the world. Addressing it requires constant vigilance by governments, including ours.