Kenya Will Still Pip UK In Corruption

On a day last week, the same issue of a newspaper reported 1. Britain’s Barclays Bank had been fined half a billion dollars due to corrupt practices and its CEO and the chairman had resigned; 2. GlaxoSmithKline, the British medicines maker had pleaded guilty to healthcare fraud and been fined $3 billion; and 3. Oxford University Press had bribed government officials in Kenya and Tanzania and been fined half a billion dollars too by the World Bank. Barclays had been rigging the inter-bank interest rate.

GlaxoSmithKline had been violating laws involving medicines taken by millions of sick persons, had been promoting their medicines for unapproved purposes and had failed to report safety problems. They were also overcharging the US Government and paying kickbacks to doctors. Oxford University Press had been making improper payments to Government officials on contracts to supply text books. (The Standard, 4 July 2012).

These are terrible developments. If this goes on any more, Britain will overtake Kenya in global corruption, and Kenya will lose its pre-eminent place there. It was not easy achieving our high standing. It took decades of venal leaders, bent accounting officers and dedicated greedy families. Now it seems as if all their hard work will go to naught. In this Olympic year Britain may well move to the top of Transparency International’s Corruption Index.

We should however not lose heart. We have many practiced advantages: 1. Our fines are non-existent. 2. We accuse persons of corruption, we never convict them. This gives us a real edge. 3. We accept all denials and legal objections, reflecting our unswerving commitment to the Rule of Law. 4. Great Britain has reached only three scandals a day. On any given day we in Kenya can muster at least ten. 5. We play from a position of real strength. We draw upon a pool of 42 Cabinet Ministers, 50 Permanent Secretaries and 210 elected MPs. We have as many extras waiting on the bench as substitutes – all our aspiring candidates. Then if Britain moves any stronger in the field, we are able to fall back on 210 CDFs, numerous tenders and single-sourced procurement. We have depth.

We should not let this make us complacent, nor to overlook the strengths of our competitors. Losing its former monopolies and captive markets to competition, CorruptionGB has become an aggressive player, hungry for that Transparency International top spot. Its culprits are better at showing remorse. Barclays said they wished it had never happened. Now none of our suspects ever says that. Ours wish it would keep happening. Barclays’ Chairman declared, “The buck stops with me.” Our Chairmen always pass that buck. Glaxo expressed regret - after seven years of breaking the law. They said, Glaxo “has learned from the mistakes that were made.” This is really admirable. They are making corruption a corporate educational process. Our own perpetrators learn nothing from being caught, and thus have not yet applied to be appointed adjunct professors at our business schools.

Are these large fines deterrents to all this corruption? The researched answer is No. Social science research has long ago established that increased punishments are not a deterrent to crime or corruption. It found that the true deterrence is increasing the likelihood of being found out: the greater the likelihood of being caught, the greater the deterrence. This is reflected in the thinking of these very smart CEOs. Well aware of the wrongdoing, they continue it as long as they can get away with it. Their ‘remorse’ further demonstrates this. Barclays’ CEO resigned not because the bank broke the law or made criminal profits, but, by his own statement, because, “The external pressure placed on Barclays has reached a level that risks damaging the franchise – I cannot let that happen.” (Ibid) But he could let the criminal activity happen.

The conditions imposed on Glaxo in addition to the fines are more to the point. Glaxo will be “monitored by the government for five years to ensure the company complies with marketing and other rules.” (Ibid) We in Kenya have moved from no regulation to regulation, but there is little monitoring or sanctions. Last year, the Central Bank of Kenya stated publicly that five banks had been manipulating the shilling-dollar rate for their own profit. But he declined to name them. No prosecution or public punishment ever followed. No preventive monitoring was imposed. As long as our regulators are also in our pool of players we will remain the tops.