Why does corruption matter?

Anyone who regularly follows anti-corruption enforcement actions can easily become desensitized to the headlines…multi-billion dollar multi-national corporations paying hundred million dollar settlements for bad acts in some faraway land. Many commentators bemoan the fact that such settlements have become the cost of doing business in many developing countries. In 2016, there have already been two settlements of more than $390 million each and more are likely on the way.

But what often gets lost in the sanitized recitation of facts in the settlement documents are the consequences for the people affected by corrupt officials who have perverted the decision making process and caused the inefficient distribution of scarce resources. Case in point: the Sabah State Water Department (Malaysia).

According to The Straits Times, the Malaysian Anti-Corruption Commission (MACC) recently discovered that two senior officials in the Sabah State Water Department had allegedly pocketed 60% of more than $1.1 billion that had been earmarked to improve water distribution in the largely rural area since 2010. Authorities reported seizing:

  • More than $12 million in cash
  • More than 41 pounds of jewelry worth more than $4.5 million
  • More than 90 handbags worth more than $119 thousand
  • Nearly $14.3 million in various bank accounts
  • Nine luxury cars
  • Another $7.1 million stashed in foreign banks

The report indicates that the scheme was perpetrated by water department officials breaking projects into small pieces that did not have to go through a public tender process, and then awarding them to a network of collusive vendors. For a country that ranks #54 (out of 167) on Transparency International’s Corruption Perceptions Index, this quote from a MACC deputy chief commissioner is noteworthy: “In the 49 years since the commission was set up, we have never seen this amount of money. The thought that this involves government servants is very bad.” 

Some interesting facts about the state of Sabah:

  • Malaysia’s eastern-most state located on the island of Borneo
  • Home to 3.72 million people in 2015
  • The population of Sabah is approximately 54% urban / 46% rural (or 1.7 million people)
  • According to the Sabah State Water Department’s website, it only provides clean drinking water to 69% of Sabah’s rural population (or 1.2 million of Sabah’s rural residents)

How much difference would $500 million in graft payments have made in the lives of the half-million Sabah residents who still don’t have running water today?

This is why corruption matters.

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