Finding the Real Cost of Corruption: How to use the Concept of “Social Damage” for the Anti-Corruption Struggle.

An introduction to the concept

Corruption has been wrongfully dubbed as a “victimless” crime. This ignores the damage suffered by citizens due to public services or necessary infrastructure not delivered or of bad quality; ignores the opportunity cost for society of public money gone to waste and the cost for companies who lost business because they were playing clean. The possibility of repairing damage originated in corruption makes fighting corruption more purposeful, strengthens the role of law enforcement in preventing and controlling it, and addresses directly the impact of reforms seeking to strengthen law enforcement mechanisms.

The recent settlements involving international companies like Alcatel, BAE, Siemens and others provide an interesting opportunity to explore this issue. Of particular interest is the case of Alcatel, who on January 2010 stroke a deal with the “Procuraduría de la Ética Pública” in Costa Rica by which Alcatel paid to the Costa Rican State US$ 10 million to repair the social damage caused on a US$ 2.5 million bribery case involving a cell-phone contract. The case is the result of the effort of Costa Rican prosecutors with the support of public media and civil society. Of interest is the mechanism of “social damage” under which the settlement was grounded and the fact that this provides an opportunity for compensating the Costa Rican citizens.

The concept of “social damage” implies that a financial retribution should be made by those found guilty of affecting a society at large to repair the damage caused, in this case by corruption crimes. It is a quite innovative concept for the anti-corruption struggle but used already by other social agendas such as the environmental protection. Therefore, at this point it is important to further understand the concept, the mechanisms for its application and their implications for corruption fighting.

The Bangkok workshop explored how the “social damage” concept could serve to repair the consequences caused by corruption in a society and through this mean compensate the most vulnerable populations. It was an opportunity to identify how the concept could strengthen law-enforcement and prosecution efforts as well as civil society advocacy action for an accountable corporate world. The workshop aimed to address “social damage” as an incentive for corporate firms to refrain from committing corrupted practices and strengthen their responsibility towards societies at large.

Moderator: Delia Ferreira Rubio, Chair, Poder Ciudadano – TI National Chapter in Argentina, and Member of the TI International Board of Directors.

Rapporteur: Anja Roth, Researcher, Basel Institute on Governance.

Panellists:

Gilberth Calderón Alvarado, Director, Procuraduría de la Ética Pública, Costa Rica.
Joachim Eckert, Presiding judge Penal Court Munich, Germany (TBC).
Juanita Olaya, Director, Public and Corporate Governance Basel Institute on Governance, Switzerland.
Andrew Feinstein, Former ANC Member of Parliament and activist in the field of corruption and arms trade, South Africa.

Coordinator: Manfredo Marroquin, Regional Coordinator for Central America, Transparency International, & Andres Hernandez, Senior Programme Coordinator, Americas Department, Transparency International.

Resources

For a more comprehensive understanding, see the paper on Repairing social damage out of corruption cases: opportunities and challenges as illustrated in the Alcatel Case in Costa Rica

You can listen to the Bangkok Social Damage session by clicking on the play arrow below. Please note that panellists often speak in Spanish.

If you are having trouble hearing the sound, use the cursor to jump forward until the sound increases

Workshop Outputs

Download Short Report

Download Long Report

Taking the Issue to Scale

The work presented at the workshop is a first step in the direction of learning more about the idea of repairing damage emerging from corruption cases and facilitating the development and spread of best practices in this regard, and in fact a few organizations and individuals have signalled their interest in knowing more about this topic. This interest indicates that the idea resonated to the public present at the workshop and has translated in continuous outreach and follow up activities after the Conference.

The main workshop document has been circulated to people at their own request. The paper is also being translated into Spanish to facilitate its further circulation among Spanish speaking audiences. The workshop was also featured in the World Bank’s blog http://blogs.worldbank.org/publicsphere/it-s-our-money-0.

This workshop coincided with other workshops at the IACC related to the theme of legal instruments to fight corruption. As a result, many of their organisers and panel members who met in Bangkok realised a common interest, and have formed a network of experts and specialists to facilitate and multiply knowledge sharing in this field that has already been activated.

In addition, Juanita Olaya and the Transparency International-Americas Department are now working on more follows up activities around this topic initially in Central America.

For more information please contact Juanita Olaya (JuanitaOlaya@gmail.com) or Andrés Hernández (ahernandez@transparency.org)

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