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The Unexpected LinkJune 17-18
Center for Network Science, CEU, Budapest
Zoltán Szántó – István János Tóth Some typical network configurations
of corruption cases in HungaryPreliminary research results
Topics
Introduction: Our earlier research on business corruption in Hungary
Main results of the earlier research projects (conceptual framework, interview analysis, media content analysis)
The idealtypes of corruption transactions (basic model, bribery, extortion, embezzlement, fraud)
Network configurations of corruption transactions: interpersonal and institutional embeddedness of corruption – some typical corruption cases in Hungary
Conclusion: The evolution of corruption networks – corruption as an institutionalized process?
Topics Introduction Earlier results Idealtypes Networks Conclusions
Introduction
Introduction: Our earlier research on business corruption in Hungary
Financial supporters
Transparency International MagyarországTEXTREND [NKFP_07_A2-TEXTREND, OM-
0002/2008]Corruption Research Center of the Institute of Sociology
and Social Policy at Corvinus University of Budapest
Topics Introduction Earlier results Idealtypes Networks Conclusions
Introduction: Our earlier research on business corruption in Hungary
Conceptual and theoretical framework of corruption research Misuse of public power for private benefit (J.G.Lambsdorff) Principals, agents, and clients
Media representation of suspected corruption cases in Hungary: pilot research (2007)
Background research studies to the Corruption Risks in the Business Sector (National Integrity System Country Study – Part Two) Transparency International, 2008 (http://www.transparency.hu/part_two) and
Business corruption in Hungary: From various angles – Research summary, In: Szántó Zoltán – Tóth István János (szerk): Korrupciós kockázatok az üzleti szektorban – kutatási háttértanulmányok (http://www.wargo/crc/index.html ) Review of the Hungarian research literature on corruption Interviews with business leaders (qualitative analysis) Media content analysis (2006-2007: 737 articles/news, 176 corruption cases)
Topics Introduction Earlier results Idealtypes Networks Conclusions
Introduction: Our earlier research on business corruption in Hungary
Corruption Research Center of the Institute of Sociology and Social Policy at Corvinus University of Budapest (2008)
(Founders: György Lengyel, István János Tóth, Zoltán Szántó)
http://web.uni-corvinus.hu/szoc/intezet_kutatas.php
Suspected corruption cases in the Hungarian media. Content analysis of on-line newspapers. Research report by the CRC, 2009
8 internet news portals and online versions of newspapers between1 January 2001 and 31 December 2007
Keywords: „korrupt” (corrupt), „korrupció” (corruption), „csúszópénz” (slush fund), „kenőpénz” (palm-greasing), „veszteget” (bribe), „pénzmos (money laundering)
Total of 3469 articles/news on 444 corruption cases
Topics Introduction Earlier results Idealtypes Networks Conclusions
Main results of the earlier research projects
Main results of the earlier research projects: conceptual framework Misuse of public power for private benefit (J.G. Lambsdorff: The
Institutional Economics of Corruption abd Reform. CUP, 2007: 16-20)
Private benefit: receiving money or valuable assets, increases in power or status, favors for relatives and friends etc.
Public power is exercised by bureaucrats (appointed to their office) and by politicians (elected to their position)
Public power is exercised in a variety of sectors: judiciary, public procurement, business regulations, granting of permits, privatization, foreign exchange, taxes, police, subsidies, public utility, government services etc.
Misuse: a behavior that deviates from the formal duties of a public role
Topics Introduction Earlier results Idealtypes Networks Conclusions
Interview analysisThe size and scope of business corruption in Hungary Widespread in Hungary Corruption in the business and government sector cannot easily be
separated, often intertwinedBusiness corruption trends in Hungary Corruption on the rise over the past 5-10 years, but not clear about
exact size of increase Increase of corruption between government and business Unclear about reason for increase: Penetration of political influence?Personal experience of interviewees Personal casesPromoters of countering corruption Government and politicians seens as primary promoters Possibly a bottom-up strategy (small institutions and local government
as initiators) Business leaders can have important role
Topics Introduction Earlier results Idealtypes Networks Conclusions
Media content analysis – Number of analysed articles by year
Topics Introduction Earlier results Idealtypes Networks Conclusions
Number of analysed articles by year , 2001-2007, (N=3469)
476
275
602
676629
224
587
0
100
200
300
400
500
600
700
800
2001 2002 2003 2004 2005 2006 2007
Source: BCE Corruption Research Centre, 2009
Media content analysis – Corruption cases by corruption service and bribe types
Topics Introduction Earlier results Idealtypes Networks Conclusions
Suspected corruption cases by advantage and bribe types, 2001-2007(%, N = 444)
9,4
89,2
1,4
93,2
5,11,7
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
100,0
Money Information, permit, positions, etc. Both
Advantage BribeSource: BCE Corruption Research Centre, 2009
Media content analysis – Institutions involved in corruption
Suspected corruption cases by the institutions involved, 2001-2007,(multiple response, %, N = 444)
34,5
3,8
18,7
32,2
5,2
11,0
7,0 6,5
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
Police Courts Localgovernments
Ministries/national
authorities
Tax office Customs andfinancial guard
Localinstitutions
Otherinstitutions
Source: BCE Corruption Research Centre, 2009
Topics Introduction Earlier results Idealtypes Networks Conclusions
Media content analysis – Procedures involved in corruption
Suspected corruption cases by the procedures involved, 2001-2007 (%, N = 444)
19,3
1,4
15,2
20,0
44,0
0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 40,0 45,0 50,0
Other
State subventions
Licences, permits
Public, procurements
Inspections
Source: BCE Corruption Research Centre, 2009
Topics Introduction Earlier results Idealtypes Networks Conclusions
Media content analysis – Share of multiplayer (networked) corruption cases
Share of multiplayer corruption cases, 2001-2007 (%, N=444)
25,028,8
51,6
23,6
55,0
36,6
60,0
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
2001 2002 2003 2004 2005 2006 2007
Source: BCE Corruption Research Centre, 2009
Topics Introduction Earlier results Idealtypes Networks Conclusions
Main results of the earlier research projects: summary Corruption is widespread and increasing in Hungary
Earlier research results only show perception and judgement but not actual mechanisms and motivations
Corruption has been developed to a systemic – regular, predictable, quasi-institutionalised – transaction
The ratio of multi-player, chain-like, networked corruption is increasing year by year
Topics Introduction Earlier results Idealtypes Networks Conclusions
Idealtypes of corruption
The idealtypes of corruption: basic model
Principal-agent-client triad (Lambsdorff 2007: 18-19)
The agent is entrusted with power by her superior (the principal): The principal delegates a task to the subordinate (the agent), sets up the formal rules as to how this task is to be fulfilled, and pays salary to her/him
The agent is supposed to serve the client in accordance to these rules
Different forms of corrupt behavior: the agent defects some ways from her/his rule bound behavior – the principal’s rules are trespassed and his/her interests are hurt
Topics Introduction Earlier results Idealtypes Networks Conclusions
The idealtypes of corruption: basic model
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
The idealtypes of corruption: basic model
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
The idealtypes of corruption: basic model
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
The idealtypes of corruption: basic model
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
The idealtypes of corruption: basic model
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
The idealtypes of corruption: basic model
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
The idealtypes of corruption: basic model
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
The idealtypes of corruption: Bribery
The client acts as a briber, and makes a payment (bribes) to the agent (the bribee)
In return the client obtains an advantage (such as a service or a license) (s)he is not entitled to obtain (for example a tax rebate or a public contract)
Topics Introduction Earlier results Idealtypes Networks Conclusions
The idealtypes of corruption: Bribery
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
The idealtypes of corruption: Bribery
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Briber
Bribe:Advantage:
The idealtypes of corruption: Bribery
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Bribee Briber
Bribe:Advantage:
The idealtypes of corruption: Extortion
The agent (as an extorter) uses her/his power to extract money (or other benefit) from the client (the extortee)
The client (the extortee) may have to pay for a service, although (s)he is legally entitled to obtain it without such payment
The agent (the extortee) uses coercion, violence, or threats to obtain this payment
Topics Introduction Earlier results Idealtypes Networks Conclusions
The idealtypes of corruption: Extortion
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
The idealtypes of corruption: Extortion
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Extorter Client
Money:Extortion:
The idealtypes of corruption: Extortion
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Extorter Extortee
Money:Extortion:
The idealtypes of corruption: Embezzlement
Theft of public resources by the agent (the embezzler)
The disloyal agent (the embezzler) steals from the principal (the embezzlee)
Topics Introduction Earlier results Idealtypes Networks Conclusions
The idealtypes of corruption: Embezzlement
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
The idealtypes of corruption: Embezzlement
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Embezzler Client
Resources:Disloyalty:
The idealtypes of corruption: Embezzlement
Topics Introduction Earlier results Idealtypes Networks Conclusions
Embezzlee
Embezzler
Resources:Disloyalty:
Client
The idealtypes of corruption: Fraud
Information asymmetry: the agent is commomly better informed about details of her/his daily tasks and her/his efforts devoted to their fulfillment
(S)he can benefit from informational advantages (hidden information, hidden action, moral hazard)
The agent can also actively conceal information from the principal (swindle, trickery, manipulation of information, facts etc.) - fraud
Topics Introduction Earlier results Idealtypes Networks Conclusions
The idealtypes of corruption: Fraud
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
The idealtypes of corruption: Fraud
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
Resources:Manipulation:
The idealtypes of corruption: Fraud
Topics Introduction Earlier results Idealtypes Networks Conclusions
Principal
Agent Client
Resources:Manipulation:
Network configurations & cases
Network configurations of corruption transactions: interpersonal and institutional embeddedness of corruption – some typical corruption cases in Hungary
Topics Introduction Earlier results Idealtypes Networks Conclusions
Relations:Personal relationship: actor actorBusiness relations: actor actorOwnership relation: owner ownedBribe: agent clientAdvantage: agent clientFalse service: „seller” „buyer”False price „seller” „buyer”
Actors
P1: (real) principal
P2: (hidden) principalA: agentC: client
B1, B2 : brokers
1.1. Simple model, two actors, non regular corruption
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
1. case:
bribery of police officer in the highway Budapest -Miskolc
Personal: Business:Ownership:Bribe:Advantage:
1.1. Simple model, two actors, non regular corruption
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
1. case:
bribery of police officer in the highway Budapest -Miskolc
Personal: Business:Ownership:Bribe:Advantage:
1.1. Simple model, two actors, non regular corruption
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
1. case:
bribery of police officer in the highway Budapest -Miskolc
Personal: Business:Ownership:Bribe:Advantage:
1.1. Simple model, two actors, non regular corruption
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
1. case:
bribery of police officer in the highway Budapest -Miskolc
Personal: Business:Ownership:Bribe:Advantage:
1.2. Simple model, two actors with personal relationship, regular transaction
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
2. case:
bribery of custom officers at the Hungarian – Rumanian border
Personal: Business:Ownership:Bribe:Advantage:
1.2. Simple model, two actors with personal relationship, regular transaction
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
2. case:
bribery of custom officers at the Hungarian – Rumanian border
Personal: Business:Ownership:Bribe:Advantage:
1.2. Simple model, two actors with personal relationship, regular transaction
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
2. case:
bribery of custom officers at the Hungarian – Rumanian border
Personal: Business:Ownership:Bribe:Advantage:
1.2. Simple model, two actors with personal relationship, regular transaction
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
2. case:
bribery of custom officers at the Hungarian – Rumanian border
Personal: Business:Ownership:Bribe:Advantage:
1.2. Simple model, two actors with personal relationship, regular transaction
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
2. case:
bribery of custom officers at the Hungarian – Rumanian border
Personal: Business:Ownership:Bribe:Advantage:
1.3. Simple model, two actors, resource conversion
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
Personal: Business:Ownership:Bribe:Advantage:
3. case:
the „Hunvald’s model” - real estate selling of local government (Budapest, VII. district)
1.3. Simple model, two actors, resource conversion
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
Personal: Business:Ownership:Bribe:Advantage:
3. case:
the „Hunvald’s model” - real estate selling of local government (Budapest, VII. district)
1.3. Simple model, two actors, resource conversion
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
Personal: Business:Ownership:Bribe:Advantage:
3. case:
the „Hunvald’s model” - real estate selling of local government (Budapest, VII. district)
1.3. Simple model, two actors, resource conversion
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
Personal: Business:Ownership:Bribe:Advantage:
resource
3. case:
the „Hunvald’s model” - real estate selling of local government (Budapest, VII. district)
1.3. Simple model, two actors, resource conversion
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
3. case:
the „Hunvald’s model” - real estate selling of local government (Budapest, VII. district)
Personal: Business:Ownership:Bribe:Advantage:
false price ( < market price)
1.4. Simple model, two actors, two principals
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2]
Personal: Business:Ownership:Bribe:Advantage:
4. case:
political party financing with simple transaction: the Zuschlag-model (HSP)
1.4. Simple model, two actors, two principals
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2]
Personal: Business:Ownership:Bribe:Advantage:
4. case:
political party financing with simple transaction: the Zuschlag-model (HSP)
1.4. Simple model, two actors, two principals
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2]
Personal: Business:Ownership:Bribe:Advantage:
disloyalty
4. case:
political party financing with simple transaction: the Zuschlag-model (HSP)
1.4. Simple model, two actors, two principals
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2]
Personal: Business:Ownership:Bribe:Advantage:
4. case:
political party financing with simple transaction: the Zuschlag-model (HSP)
1.4. Simple model, two actors, two principals
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2]
4. case:
political party financing with simple transaction: the Zuschlag-model (HSP)
Personal: Business:Ownership:Bribe:Advantage:
1.5. Simple model, two actors, two principals, resource conversion
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2]
Personal: Business:Ownership:Bribe:Advantage:
5. case:
political party financing with resource conversion – buying a real estate by local government
(Békés county)
1.5. Simple model, two actors, two principals, resource conversion
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2]
Personal: Business:Ownership:Bribe:Advantage:
5. case:
political party financing with resource conversion – buying a real estate by local government
(Békés county)
1.5. Simple model, two actors, two principals, resource conversion
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2]
Personal: Business:Ownership:Bribe:Advantage:
5. case:
political party financing with resource conversion – buying a real estate by local government
(Békés county)
1.5. Simple model, two actors, two principals, resource conversion
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2]
Personal: Business:Ownership:Bribe:Advantage:
5. case:
political party financing with resource conversion – buying a real estate by local government
(Békés county)
1.5. Simple model, two actors, two principals, resource conversion
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2]
Personal: Business:Ownership:Bribe:Advantage:
resource
5. case:
political party financing with resource conversion – buying a real estate by local government
(Békés county)
1.5. Simple model, two actors, two principals, resource conversion
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2]
5. case:
political party financing with resource conversion – buying a real estate by local government
(Békés county)
Personal: Business:Ownership:Bribe:Advantage:
false price ( > market price)
2.1. Three actors, one broker with A, ownership and business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
B1
Personal: Business:Ownership:Bribe:Advantage:
6. case:
Reconstuction of a building – feasibility study - bribery of local government offical
2.1. Three actors, one broker with A, ownership and business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
B1
Personal: Business:Ownership:Bribe:Advantage:
6. case:
Reconstuction of a building – feasibility study - bribery of local government offical
2.1. Three actors, one broker with A, ownership and business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
B1
Personal: Business:Ownership:Bribe:Advantage:
6. case:
Reconstuction of a building – feasibility study - bribery of local government offical
2.1. Three actors, one broker with A, ownership and business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
B1
Personal: Business:Ownership:Bribe:Advantage:
6. case:
Reconstuction of a building – feasibility study - bribery of local government offical
2.1. Three actors, one broker with A, ownership and business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
B1
Personal: Business:Ownership:Bribe:Advantage:
6. case:
Reconstuction of a building – feasibility study - bribery of local government offical
false service
2.1. Three actors, one broker with A, ownership and business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
B1
Personal: Business:Ownership:Bribe:Advantage:
6. case:
Reconstuction of a building – feasibility study - bribery of local government offical
false service
2.1. Three actors, one broker with A, ownership and business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
B1
Personal: Business:Ownership:Bribe:Advantage:
6. case:
Reconstuction of a building – feasibility study - bribery of local government offical
payoff
false service
2.1. Three actors, one broker with A, ownership and business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
B1
Personal: Business:Ownership:Bribe:Advantage:
6. case:
Reconstuction of a building – feasibility study - bribery of local government offical: „countryside case”
payoff
3.1. Three actors, one broker with C, business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2] B2
Personal: Business:Ownership:Bribe:Advantage:
7. case:
Political party financing – a complex model
C = media agency B2 = TV channel P1 = ministry P2 = political party
3.1. Three actors, one broker with C, business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2] B2
Personal: Business:Ownership:Bribe:Advantage:
7. case:
Political party financing – a complex model
C = media agency B2 = TV channel P1 = ministry P2 = political party
3.1. Three actors, one broker with C, business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2] B2
Personal: Business:Ownership:Bribe:Advantage:
7. case:
Political party financing – a complex model
C = media agency B2 = TV channel P1 = ministry P2 = political party
3.1. Three actors, one broker with C, business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2] B2
Personal: Business:Ownership:Bribe:Advantage:
7. case:
Political party financing – a complex model
C = media agency B2 = TV channel P1 = ministry P2 = political party
3.1. Three actors, one broker with C, business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2] B2
Personal: Business:Ownership:Bribe:Advantage:
bribe = service (advertisement)
7. case:
Political party financing – a complex model
C = media agency B2 = TV channel P1 = ministry P2 = political party
3.1. Three actors, one broker with C, business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2] B2
Personal: Business:Ownership:Bribe:Advantage:
bribe = service (advertisement)
false price < market price
false price > market price
7. case:
Political party financing – a complex model
C = media agency B2 = TV channel P1 = ministry P2 = political party
3.1. Three actors, one broker with C, business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2] B2
Personal: Business:Ownership:Bribe:Advantage:
bribe = service (advertisement)
false price < market price
false price > market price
7. case:
Political party financing – a complex model
C = media agency B2 = TV channel P1 = ministry P2 = political party
3.1. Three actors, one broker with C, business relations
Topics Introduction Earlier results Idealtypes Networks Conclusions
P1
A C
[P2] B2
Personal: Business:Ownership:Bribe:Advantage:
bribe = service (advertisement)
false price ( > market price)
false price < market price
false price > market price
7. case:
Political party financing – a complex model
C = media agency B2 = TV channel P1 = ministry P2 = political party
Conclusions
Conclusion: The evolution of corruption networks – corruption as an institutionalized process?
The evolution of corruption networks in terms ofthe number of actorsthe comlexity of network configurationsthe level of interpersonal and institutional embeddednessthe multiplicity of relationships
Corruption as an institutionalized process in terms ofstabilitymixing the reciprocity, redistribution and market forms of
economic integration
Topics Introduction Earlier results Idealtypes Networks Conclusions
Thank you for your attention!