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  • Published: 19 February 2020

Corruption and complexity: a scientific framework for the analysis of corruption networks

  • Issa Luna-Pla 1 &
  • José R. Nicolás-Carlock   ORCID: orcid.org/0000-0003-4065-372X 1  

Applied Network Science volume  5 , Article number:  13 ( 2020 ) Cite this article

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According to United Nations, corruption is a systemic and adaptive phenomenon that requires comprehensive and multidisciplinary approaches for its effective prevention and combat. However, traditional approaches lack the analytical tools to handle the structural and dynamical aspects that characterize modern social, political and technological systems where corruption takes place. On this matter, complex systems science has emerged as a comprehensive framework to study highly adaptive phenomena from natural to socio-technical settings. Thus, in this article we present an empirical approach to model corruption using the concepts and tools of complexity science, mainly, complex networks science. Under this framework, we describe a major corruption scandal that took place in Mexico involving a network of hundreds of shell companies used to embezzle billions of dollars. We describe the structure and dynamics of this corporate network using available information related to their personnel and the date of the companies’ creation. We measured some global parameters, such as density, diameter, average path length, and average degree in order to provide systematic evidence on which corporate characteristics are likely to signal corruption. Moreover, this analysis also provides an objective perspective of the systemic nature of events where companies are abused for corrupt purposes, and the shortcomings of reductionistic analyses. Major corruption scandals comprise both legal and illegal deeds, in addition to several parties acting simultaneously over extended time periods. As a whole, such scandals pose enormous challenges for the study of law and put the legal design of administrative and criminal controls to the test.

Introduction

“Injustice anywhere is a threat to justice everywhere. We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly.” - Martin Luther King Jr.
“The 21st century will be the century of complexity." - Stephen Hawking

The purpose of modern governments is to establish and enforce the rules that guarantee social cohesion, personal freedom, and collective well-being. In contrast, corruption comprises everything that deviates from that purpose by distorting the goal for which all socio-political structures are created, sacrificing the well-being of the collective for the benefit of the few.

According to the UN Convention Against Corruption (UN General Assembly, 2003 ), corruption is no longer acknowledged as a local problem of the nations, but as a transnational phenomenon that affects societies in deep and several ways (Transparency International, 2018 ): on the political front, corruption is an obstacle to the development of democracies and the rule of law, affecting the political leadership and institutional legitimacy; in economy, corruption hinders growth and distorts healthy competition within the markets, deterring national and foreign investments; at the ecological level, corruption degrades the environment, destroying vital ecosystems through the reckless, unchecked exploitation of natural resources, with clear local and global consequences; moreover, corruption corrodes the fabric of society by generating environments that foster the violation of human rights. In summary, corruption produces a complex, ubiquitous and many-faceted threat to the common interests of all societies that allows for enormous systemic risks in different sectors, form local to global levels (Helbing, 2013 ).

It is well acknowledged that the theoretical and technical frameworks of traditional corruption studies are not sufficient in order to handle the highly systemic nature of this phenomenon, and that new empirical, inter-disciplinary, and scientific approaches are necessary if we are to face the complexity of corruption effectively (Mungiu-Pippidi, 2017 ). At this juncture, issues relating to legal matters find common ground with problems of a scientific nature considering that the purpose of science, technology and innovation is to study our natural, social and technological environments, aiming at a deeper understanding of such environments and the application of the obtained knowledge in order to improve our living standards (Pentland, 2015 ; Altshuler & Pentland, 2018 ). In particular, through the transformation and advancement of legal practices relevant to that goal (Livemore & Rockmore, 2019 ). In this regard, complexity science has emerged as a comprehensive framework that allows for the multidisciplinary study of natural and social adaptive systems that are found everywhere in our everyday lives (Ball, 2003 ; Mitchell, 2009 ; Vespignani, 2012 ; Thurner, Hanel & Klimek, 2018 ).

In this article we present an empirical approach to describe and model corruption using the concepts and tools of complex systems science, mainly, network science (Barabási, 2016 ; Newman, 2018 ; Thurner et al., 2018 ). Under this framework, we describe a major corruption scandal that took place in Veracruz, Mexico, between 2010 and 2016, involving a complex network of hundreds of shell companies used to embezzle billions of dollars, originally destined to diverse social programs (Animal Político, 2016 ). First, we survey the progress of traditional studies on this topic by briefly reviewing attempts at describing and fighting corruption from different academic perspectives. Second, we present a short introduction to the characteristics of complex systems. Finally, we apply the complexity and network approaches to the analysis of the Veracruz case. Here focus on the structural and dynamical features of this corporate network in order to identify the network characteristics that are more likely to signal corruption. Also, we show that corruption networks go beyond the rhetorical elements of public discourse and practice, materializing into well-defined and complex structures across different layers of information (for example, through legal representatives or administrators) and time periods (date of creation of the companies), providing an objective view of the systemic nature of this event, and the shortcomings of reductionistic investigations.

Define, measure, predict and control

From a scientific perspective (Barabási, 2010 ; Vespignani, 2012 ), modern studies on corruption should aim at defining, measuring, and predicting the phenomenon, in a way that the mechanisms and methods for its control (regulation) and elimination (combat) may be set and executed satisfactorily. In science, these objectives set the conceptual and methodological frameworks that allow results to be efficiently and effectively implemented, otherwise, the effectiveness of the methods is wanting and in a best-case scenario the results are temporarily adequate, and in the worst-case, they may be counterproductive (Milinski, 2017 ; Muthukrishna, Francois, Pourahmadi & Henrich, 2017 ). Considering this, the complexity of anti-corruption efforts lies first and foremost in the adequate development of the following: (i) definition, (ii) measurement, (iii) prediction, and (iv) control. These goals not only organize the strategies that must be implemented for the study of the phenomenon, but also, they provide a guideline for the appraisal of previous anti-corruption approaches, their limitations and their potential for future improvement.

Defining corruption

A quick check to the literature allows us to see, there is a large amount of studies addressing the conceptualization or definition of corruption (Andvig et al., 2001 ; Riccardi & Sarno, 2014 ). Several definitions for corruption have been proposed in proportion to the number of social, economic and political areas were corruption has taken place (definitions according to sector), as well as from the prism of the multi-discipline (definitions according to discipline). For example, a large portion of the literature discusses the definition of corruption from economic, legal and governmental perspectives, aiming to create a definition drawn from the “umbrella idea”, that contains concepts such as clientelism, abuse of power, state capture, and patrimonialism (Varraich, 2014 ). One may also find definitions of corruption in government and bureaucracy (Rose-Ackerman & Palifka, 1999 ), political corruption (Heidenheimer & Johnston, 2011 ; Reno, 1995 ), and the definition of corruption as moral decadence and lack of ethics (Huntington, 1970 ; Mulgan, 2012 ). Similarly, social research has focused on classifying the types and sub-types of corruption in order to be operational. For example, several categories classify corruption based on its economic magnitude with concepts such as grand corruption, structural corruption, systemic or endemic corruption, petty corruption (Andvig et al., 2001 ), and rentism (Khan & Jomo, 2000 ). It is noteworthy that the most popular definition is the one promoted by Transparency International and the World Bank that states that corruption is “the abuse of entrusted power for private benefits or gains” (Transparency International, 2018 ). This definition is influenced by non-moralistic classic concepts (Nye, 1967 ), as well as by the historical endeavor of philosophy to search for the causes and origins of corruption (Hill, 2012 ).

Even though the efforts to define corruption from general to specific settings are diverse, one may argue that those definitions have little to do in current anti-corruption efforts since at the end of the day, the legal definitions of corruption, such as bribery, embezzlement or obstruction of justice (UN General Assembly, 2003 ) are the ones against whom prosecutors and investigators can do something about it, in other words, where there’s no crime there’s no punishment. Nonetheless, the task of defining corruption is important because it bounds the subject matter, however, this task must go beyond the mere delimitation of the phenomenon in different contexts, but also strive to generate an operational and quantifiable definition, so that its causes and possible effects may the described with greater precision (Olken & Pande, 2012 ; Riccardi & Sarno, 2014 ).

Measuring corruption

Over the past 20 years, empirical sources of information have been used to have a better and objective approximation to the reality of the corruption phenomenon by establishing proxies, risk indicators, correlations among relevant indexes and socio-economic parameters (Lambsdorff, 2007 ; Olken & Pande, 2012 ). Within this academic current one may find several indexes that try to measure corruption in a standardized manner by quantifying risk levels based on experience and perceptions (Svensson, 2005 ). One may also find the economic behavior and anthropological research that studies honesty, cooperation, and reciprocity (Drugov, Hamman & Serra, 2014 ; Sah & Loewenstein, 2014 ; Arney, 2010 ). In addition, economic theories strive to explain the way in which corruption occurs by using game theory, conceptual models of transactions or trade, and moral dilemmas (Platteau, 1994 ; Yoo, 2008 ).

Even though these studies represent progress in the modern description and quantification of corruption, they still suffer from important shortcomings. For example, the interpretation of perception indexes is highly dependent on the professional expertise of the group sample (Morris, 2018 ), and suffer from conceptual limitations that tend to over-simplify the phenomenon while showing inconsistencies among results when compared to each other over different periods of time (Méndez & Sepúlveda, 2009 ). It is also well-known that these approaches are based on statistical models and socio-economic parameters that do not allow to establish causality in a precise manner, nor are they able to describe corruption acts from their micro- to their macro-properties (Mungiu-Pippidi, 2017 ). Nevertheless, important efforts have been conducted in order to establish objective risk indicators, for example, in public procurement (Fazekas, Tóth & King, 2016 ; Fazekas & Kocsis, 2017 ).

Predicting corruption

The possibility of establishing models that can be used to quantify corruption provides an opportunity not only to describe the phenomenon more precisely, but also to predict it. However, the problem of prediction is not rigorously addressed within the vast academic literature about corruption, and we know little of the aspects that may help predict these acts in a precise manner (Colonnelli, Gallego & Prem, 2019 ). For example, the statistical models used in diverse studies (Olken & Pande, 2012 ) lack the capacity of prediction due to the scope of the data used, the spatial and temporal scales of analysis, the fields of operation, and the high dependency on correlations, making nearly impossible to establish causalities for different events (Riccardi & Sarno, 2014 ). As it is, conclusions and proposals derived from such models should be considered reservedly within their respective contexts. Nevertheless, with current computing capabilities and trends towards the digitalization of information in many public sectors, the ideal and promising approaches to predict corruption risk seem to be those supported by live-monitoring systems powered by artificial intelligence (Fazekas & Kocsis, 2017 ; López-Iturriaga & Sanz, 2018 ; Colonnelli et al., 2019 ). Such systems may provide a wide range of real-time preventive capabilities (Byers, 2017 ; Altshuler & Pentland, 2018 ).

Controlling corruption

The study of corruption has helped to delve deeper into practical cases and to have a better understanding of the workings of sophisticated operational schemes by identifying the common traits of corrupt acts, types of corrupt human behavior, normative spaces and grey areas in law that might allow for corruption (Andvig et al., 2001 ). Solutions for fighting and controlling corruption proposed by these studies consist of legal reforms, novel institutional and burocratic designs, mechanisms for accountability and control, codes of ethics, awareness campaigns, among other strategies for legal combat, prevention and sanction (Riccardi & Sarno, 2014 ; David-Barrett, Fazekas, Hellmann, Mark & McCorley, 2018 ). Great efforts have been made to improve the measurement of corruption, however, these suffer from limitations in their design (Méndez & Sepúlveda, 2009 ); studies recommending solutions for corruption that consist of more rules and legal reforms are under debate due to the fact that ineffectiveness and negative impacts from overregulation may arise (Mungiu-Pippidi, 2017 ; Mungiu-Pippidi & Dadašov, 2017 ; Smilov, 2010 ). With current scandals of corruption worldwide, the results obtained thus far remain highly questionable and the criticism concerning the scientific progress in corruption studies is ever more present.

In summary, appropriate definitions of corruption would make objective measurements not only possible, but also more accurate. In turn, the correct measurement would make way for the possibility of prediction, and prediction would give rise to the intelligence needed for control. Though great progress has been made in the fight against corruption, all of these efforts suffer from the inherent limitations pertaining to the methodologies that support them. Having exact models of the causes, circumstances, mechanisms, effects and consequences of a corruption event remains as a great scientific challenge. Without a doubt, we know much more about corruption than we did 20 years ago, yet, this issue remains unsolved: we do not know how to measure it in a systematic and standardized manner, and we still have not been able to control it within existent models. It is clear that this problem demands of new conceptual, methodological and analytical frameworks that allow for the integration of all the elements that in one way or another determine the complexity of the phenomenon.

Applied complexity science

Corruption is a phenomenon that occurs within the intricate structure of social, political and technological systems, therefore, a better understanding of it requires of integral and inter-disciplinary perspectives. As with contemporary medicine or biology advances, which stand upon the progress made by disciplines such as physics, applied mathematics and computing science, social sciences have begun to use such disciplines to describe, model, explain, and even predict certain phenomena (Conte et al., 2012 ; Holme & Liljeros, 2015 ; Lagi, Bar-Yam, Bertrand & Bar-Yam, 2015 ; Wiesner et al., 2018 ; Capraro & Perc, 2018 ). This integration of disciplines previously considered totally apart from each other (natural and social sciences, and even the humanities) has been possible due to important advances in computing capabilities, knowledge-transfer and cross-disciplinary problem solving (Ball, 2003 ; Miller & Page, 2009 ; Caldarelli, Wolf & Moreno, 2018 ).

Moreover, in the scientific exploration of physical to social systems, it has been found that the hardest adaptive systems to model and control are those involving individuals whose willing decisions may give rise to collective phenomena that are not easily defined, explained or predicted by means of the analysis of isolated individuals (Ball, 2003 ; Miller & Page, 2009 ; Caldarelli et al., 2018 ; Capraro & Perc, 2018 ). In this context, corruption could be regarded as a phenomenon that occurs within systems whose structure and dynamics can evolve as a response to changes in its corresponding socio-political and regulation context, with a strong dependence on the interrelation of different factors and actors acting as a whole. In general, systems with the previous characteristics are the subject matter of complexity or complex systems science, which represents a new scientific paradigm and a new way of doing science in the twenty-first century (Mitchell, 2009 ; Thurner et al., 2018 ; De Domenico et al., 2019 ; Helbing et al., 2015 ).

Complex phenomena

In complex systems theory, a system is considered complex not only because it has an intricate structure, but also because its temporal evolution cannot be easily explained as a function of the behavior of its isolated components (Bar-Yam, 1997 ; De Domenico et al., 2019 ). In particular, there are two important concepts that help to explain the ‘complexity’ of a system, those are ‘emergence’ and ‘self-organization’ (Sayama, 2015 ). On the one hand, ‘emergence’ is a concept associated to the effects of non-trivial interrelations among the components of a system across different scales of observation or analysis. Specifically, the properties of the parts acting as a whole are called ‘emergent’ when they cannot be explained based on the properties of the parts looked in isolation, thus, global properties are different from local ones (Bar-Yam, 1997 ; Sayama, 2015 ). On the other hand, ‘self-organization’ is a dynamic or temporal process through which the solely interactions among the multiple parts of the system create collective structures and behaviors, with no intervention from a central or external organizing agent (Sayama, 2015 ). From these concepts, it becomes clear that there are two important aspects to be considered within the analysis of complex systems: the structure (statics) and temporal evolution (dynamics) of the system. In complexity science, network theory is one of the most important tools for the analysis of these structural and dynamical elements (Sayama, 2015 ; Thurner et al., 2018 ).

  • Complex networks

Network theory has been applied to have a better understanding of many natural, socio-technical, and legal systems (Barabási, 2016 ; Rutherford, Lupu, Cebrian, Rahwan, LeVeck & Garcia-Herranz, 2018 ). The importance of the application of multidisciplinary and scientific approaches such as complex systems, network theory, and even physics, to the study of criminal activities was presented by the end of last century (Sparrow, 1991 ). However, it was until the last decades that these types of studies have begun to gain momentum given the great progress in computing and data science (Caldarelli et al., 2018 ) and their enormous relevance in modern social, economic, and political contexts (D’Orsogna & Perc, 2015 ; Helbing et al., 2015 ; Espinal-Enríquez & Larralde, 2015 ; Marshak, Rombach, Bertozzi & D’Orsogna, 2016 ; DellaPosta, 2017 ; Fazekas, Skuhrovec & Wachs, 2017 ; Morselli & Boivin, 2017 ; Altshuler & Pentland, 2018 ; Magliocca et al., 2019 ; Ouellet, Bouchard & Charette, 2019 ; Niu, Elsisy, Derzsy, & Szymanski, 2019 ).

Notably, although corruption studies go back a long way and have been conducted from different perspectives, corruption studies conducted from a complex systems or network theory approaches are quite recent and scarce. For instance, a recent study covering 30 years of corruption in Brazil shows that the co-occurrence of politicians in corruption scandals create networks with large connected components that might spans decades (Ribeiro, Alves, Martins, Lenzi & Perc, 2018 ). Other study proposes diverse methods for the strategic dismantling of corruption or crime networks considering their structure and the cost of removing key nodes (Ren, Gleinig, Helbing & Antulov-Fantulin, 2019 ). Another study looks into the social fabric of Hungary in order to establish the social factors associated to corruption risk in public procurement, finding that fragmented social networks are more prone to corruption risk whilst more diversity hinders it (Wachs, Yasseri, Lengyel & Kertész, 2019 ). An additional study that explores 28 years of bill-voting in Brazil shows that the dynamics of co-occurrence networks of similar-voting congressmen reveal patterns that allow for the identification of convicted corrupt politicians and also, for the possibility of predicting or identifying other possible corrupt individuals within the network (Colliri & Zhao, 2019 ). Noteworthy, the identification of latent criminal groups (Campedelli, Cruickshank & Carley, 2019 ) and the effective dismantling of their organizational structure (Wandelt, Sun, Feng, Zanin & Havlin, 2018 ) are relevant and non-trivial subjects in criminal investigations and law enforcement, since empirical evidence has shown that the dismantling process might potentially make these criminal organizations stronger (Duijn, Kashirin & Sloot, 2014 ). In addition, when it comes to fighting corruption the goal is clear: one not only is looking to describe it post factum, but to predict it (Rumi, Deng & Salim, 2018 ; Alves, Ribeiro & Rodrigues, 2018 ; López-Iturriaga & Sanz, 2018 ; Colonnelli et al., 2019 ; Wachs et al., 2019 ; Wachs & Kertész, 2019 ; Colliri & Zhao, 2019 ).

In summary, though corruption studies are diverse and tackle different aspects of the phenomenon, complex systems and network science approaches allow us to establish practical aspects for its investigation (Sayama, 2015 ; De Domenico et al., 2019 ), mainly:

Components and interactions. Complex systems are usually comprised of large sets of interacting elements or components. Both the components and their interactions may be of different types.

Network structure. The structure of a complex system may be described as a network of interactions and interrelations in which all nodes and edges evolve as a whole over time.

Self-organization. There are many interactions among components. These occur independently, with no need of intervention by central organizing agents, producing collective non-trivial phenomena.

Emergence. The collective behavior and properties of these systems can neither be predicted nor understood from the individual behavior or properties of each component in isolation.

Predictability and control. The dynamics, or temporal evolution, of a complex system are collective and often non-linear which, under certain conditions, makes the system highly unpredictable and difficult to control.

To show the usefulness of approaching the study of corruption through the complexity perspective, we will now analyze one of the most important corruption scandals in Mexico of the past decade.

  • Corruption networks

In the Mexican case, recent corruption scandals tell of the complexity of the phenomenon. From governors accused of embezzlement at local levels (Ángel, 2017 ), through federal agencies and public universities awarding contracts to shell companies at a national scale (Roldán et al., 2018 ), to transnational bribery scandals (Olmos, 2018 ), corruption is ever present across all public and private sectors of Mexico. As a concrete example, here we analyze a recent and paradigmatic corruption scandal: the case of the “phantom” companies of former governor of Veracruz, Javier Duarte de Ochoa (Ángel, 2017 ; Animal Político, 2016 ).

Case, data and methodology

In one of the biggest embezzlement scandals in Mexico of recent times, the former governor of the state of Veracruz, Javier Duarte de Ochoa was sentenced by federal authorities to 9 years of prison for criminal conspiracy and money laundering, after an initial charge for organized crime and operations with illicit proceeds, and an unexpected escape and extradition from Guatemala (Animal Político, 2016 ). According to the Mexican Superior Audit of the Federation, the amount of diverted money could reach 60 billion pesos (about 3 billion dollars), originally destined to diverse social programs, security and education, but that never reached their end. As the leading investigative journalists of the case documented (Ángel, 2017 ; Animal Político, 2016 ), the embezzlement mechanism consisted of hundreds of “phantom” or shell companies, created under fake ownership, that were awarded with contracts from the local government for diverse projects but that never delivered neither the goods nor services promised. This is a case in which much of the analysis and debate centers on the legal fulfillment of the public procurement process, the failing of the control mechanisms, and the government responsibility on these matters. However, the analysis of the abuse of companies for corrupt practices is a relevant aspect at the forefront of international anti-corruption efforts (Fazekas & Tóth, 2017 ). This matter has not been formally treated for the Duarte case and it is especially important for two reasons: first, the lack of systematic evidence on which corporate characteristics are likely to signal corruption has the potential to bias our understanding of corruption, making it overly focused on the public sector (Fazekas & Tóth, 2017 ); second, the Duarte case is eminently characterized by a huge group of private companies that seem to be structured to operate as a network. Recent studies have shown that the characterization of the structural and operational features of corporate or trade networks are not simple, with different layers of information adding to the complexity of the problem (Alves et al., 2019 ; de Jeude, Aste & Caldarelli, 2019 ). Therefore, in the present analysis we focus on the description of the structural and dynamical features of the network of companies that were used in this scandal in order to find company corruption risk indicators, in particular, in the ownership and management structures.

The data used for the analysis comes from a dataset gathered from official sources (open to public access under Mexico’s General Law of Transparency and Access to Information) by the NGO known as Mexicanos Contra la Corrupción e Impunidad (Mexicans Against Corruption and Impunity) and the leading group of investigative journalists of the case, known as Animal Político (Animal Político, 2016 ). This dataset contains information about 354 companies and 356 people associated to those companies. For legal reasons, we have held all information regarding names and official ID’s of companies and people in anonymity. For each company, the dataset contains available information about their legal representatives, shareholders, administrators and commissars, as well as the notaries that formalized them. For the network analysis we considered a bipartite approach in which companies are related to people through five different types of edges: share-holders, legal representatives, administrators, commissars and notaries (see Fig.  1 a). As we show below, this classification is due to the fact that there are individuals with multiple work relationships within the same company or among different companies, therefore, instead of encoding this information into the nodes, we decided to encode it into the edges and to treat each category as layer of information for this network. Thus, each layer contains the same number of companies (354) and people (356).

figure 1

Components, interactions and network structures. a Components (nodes) and interactions (edges or links) of the system. Total number of people and companies in the system is indicated. b Companies connect through the “legal representative” category. The number of connected people and companies relative to the corresponding total is indicated. c Connectivity patterns for other types of edges. d Integration of the five information layers lead to one great connected network.

As previously stated, the networks do not show the government agencies that granted contracts to private companies, since the goal of this study is to explore the companies’ personnel role in the structure and evolution of the network. As network metrics we considered the density (fraction of the number of real edges of a network to the number of its possible edges given the number of total nodes), diameter (maximum distance between a pair of nodes in the network), average path length (the average distance between pairs of nodes in the network), average degree (average of the number of neighbors for each node), clustering coefficient (fraction of closed triplets to the total number of closed and open triples, where a triplet is a subset of three neighboring nodes), number of connected components (number of connected sub-sets or sub-network), and number of multi-edge node pairs (in a multigraph or multi-edge network, these are the number of multi-edges connecting any pair of nodes) (Newman, 2018 ; Barabási, 2016 ). The network was analyzed using Cytoscape, a well-known open-source software for network analysis (Shannon et al., 2003 ).

In the following sections, we will explore the qualitative and quantitative features of Duarte’s phantom-companies network through the lens of complex systems and network science: first, the components, interactions and network structures; second, the self-organizing and emergent elements; and finally, some aspects on predictability and control.

Components, interactions and network structure

The components are defined as the participating companies and people. These define two types of nodes that are linked through five categories: shareholders, legal representatives, administrators, commissars, and notaries (see Fig. 1 a). As stated before, the information in such categories is encoded within the edges and not in the nodes, due to the fact that numerous people play several roles within the same company or in different companies. Under that classification, each type of edge reveals part of a complex network structure that is comprised of five layers of information and each layer contains the same number of companies (354) and people (356). For example, the “legal representative” category produces a bipartite network that consists of a sub-set of 139 people related to 173 companies (See Fig. 1 b). In this way, each category reveals different networks within the same system (see Fig. 1 c). These features also reflect quantitatively in the network metrics (see Table  1 ).

In general, these networks have low density (not all companies connect to all people), which is characteristic of real-world networks (Barabási, 2016 ); they also have low average degree, which means that there is a great majority of companies/people that connect to at most another one people/company in each layer; clustering coefficient equal zero, due to the fact that these networks are bipartite by construction and therefore, closed triplets are impossible to be generated. This leaves the diameter (largest distant between pairs of nodes) and average path length (average distance between pairs of nodes), that are measures of the extent to which connected companies and people are present in the network due to the fact that there are multiple people connecting multiple companies at once. As it can be observed, the “shareholder” network is the one that generates more structure among the rest of the categories, followed by the “legal representatives”, “administrators”, “commissars” and finally, “notaries” (see Fig. 1 and Table 1 ).

From the previous results, one can easily see that “shareholders” are the ones that provide great cohesion to the network, since they provide more connectivity among the total number of companies. In context, this finding provides an important insight in the way corrupt companies might be investigated, specifically, given that not all actors have the same role within this type of systems, prosecutors must be aware that looking at just one individual or group might lead to missing details of bigger schemes. Moreover, since each type of edge constitutes a single layer of information within the system, then, their integration reveals a more exact version of the network. Remarkably, after aggregating all layers into one, we find that all nodes are condensed into one fully connected and complex multigraph or multi-edge network (see Fig. 1 d and Table 1 ). This finding is explained by the fact that there are several people who perform multiple roles within a single company or among different companies (as explained further below).

The previous analysis through decomposition has advantages and disadvantages: on one hand, it allows to observe the details concerning the contribution of each information layer to the system’s structure: in corporate networks, not all players provide the same amount of information; on the other hand, when considering a single category for analysis, highly valuable information concerning connectivity among companies is excluded. This is a very important insight that complexity approach provides: if we truly wish to understand complex systems such as the ecosystem of corporate networks in contracting markets, we must be aware that excluding information -- willing or unwillingly -- can hamper our perspective of the exact workings of the system. In our case, companies that might look separated or independent from one another are then shown to be connected, forming one fully connected network, when the information about their personnel is integrated.

Self-organization and emergence

The aggregated multigraph can be decomposed as a function, for instance, of the year of the creation of the companies (Fig.  2 a, b and c). This temporal decomposition by year reveals that the large multigraph emerges from a self-organization process of sub-sets of companies created in different stages in time, that in turn create fully connected networks (Fig. 2 b). Quantitatively, these features reflect through their metrics per year. Without loss of generality, the contributions of the initial and final year to the total network are negligible and thus are discarded (see Table  2 ). In all these networks (2008–2014), both the number of nodes and edges changes over time; the number of connected components clearly shows the fact that one network of companies was created per year; the density remains low, and again, the clustering coefficient is equal to zero due to the bipartite nature of the network.

figure 2

Temporal decomposition. a Decomposition of the great network of people and companies by the year in which the companies were constituted. b Extracted networks by year. The number of companies and people are indicated. c Number of companies created as function of time

Notably, metrics such as the diameter, average path length and average degree remain almost of the same magnitude per year. In short, these metrics do not provide enough information to establish corporate corruption risk indicators. However, one can take advantage of the fact that the cohesion of the multigraph arises from the total contribution of “shareholders”, “legal representatives”, “administrators”, “commissars”, and “notaries”. Here, one can measure the number of multi-edge node pairs, these are the number multi-edges connecting any pair of nodes in the bipartite multigraph. For company-nodes, multi-edge pairs correspond to the number of people with at least one role or work relationship within the company. For people-nodes, multi-edge pairs correspond to the number of companies in which a given individual has multiple roles. Remarkably, multi-edge node pairs have strong variations during the years of high creation of companies, pointing towards relevant anomalies, showing their potential as a corporate corruption risk indicator (see Table 2 ).

The behavior of separate companies is not the same as the behavior of companies acting as a whole. The self-organized dynamics of the corporate network of this case was only revealed through the full integration of all the information available on companies’ personnel. This emergent property, i.e. the way it operates as a whole complex network, is even clearer when one considers how metrics differ from each other when performed over one layer or 1 year than when performed over the aggregated multigraph. In the structural analysis per layer or in the decomposition per year, each category has its own characteristic metrics. It would be tempting to make an average of the information to infer the behavior of the whole network, however, as we can observe from the metrics of the aggregated network, these differ from simple averages (see Table 1 and Table 2 ). This is due to the fact that, in complex systems, interrelations among components are non-linear and therefore, and system properties behave in the same manner as well.

The previous results, the creation of one connected network per year and the multiplicity of edges between pairs show us that, for this network, many companies have shared the same personnel over the years, many of them with multiple roles within the same and/or among other companies, thus, reflecting a remarkable anomalous behavior in the structural and dynamical growth of this network. Also, emergent properties measured through network metrics are highly dependent on the integration of all available information across different scales of observation. Again, in complex systems, we must be aware that the temporal extension of an event like this one could reveal only a small part of the greater scheme. Excluding information -- willing or unwillingly -- can hamper our perspective of the exact workings in the system, which in our case, reveals how one fully connected network of companies is created through time.

Predictability and control

From the previous structural and dynamical analysis, we conclude that the information about the personnel associated to each company plays a key role in the description of a given event, in the definition of good corruption risk indicators, and in the possible detection of irregularities within organized schemes of network operations. Heuristically, network visualizations are a quite powerful tool that provides an intuitive base for identifying and understanding certain behaviors and patterns (Venturini, Jacomy & Jensen, 2019 ). However, the true power of network science does not entirely lie in its capacity to describe any particular system in a qualitative manner, but rather in the mathematical formalism that this framework gives to the definition, quantification and modeling of the different parts of the system. As we showed, network metrics can be defined either for each node or for the whole network, however, not all might be useful in order to characterize and detect relevant anomalies that point towards corrupt behaviors in corporate networks, specifically, multi-edge bipartite networks. In the analysis per layer or edge type, only the diameter and average length path reveal information that could be relevant for our purposes. In the analysis per year, it was the multi-edge node pairs, a measure of the degeneracy of a given node, the one that revealed interesting anomalies related to the multiplicity of work relations. Certainly, these insights could be used to define risk indicators and control mechanisms for companies participating in public procurement; but of course, they still need to be tested in further cases and in other datasets of corporate ecosystems, something that goes beyond the scope of the present article. Nevertheless, the results presented here show how complexity science along with network theory allows us to define, quantify and model a given corruption event, in order to identify and establish possible prediction and control mechanisms (Vespignani, 2012 ; Barabási, 2016 ; Ren et al., 2019 ).

Conclusions & remarks

In this article, we presented empirical evidence of a grand corruption scandal in Mexico that provides a glimpse into the complexity of events where companies are abused for corrupt practices. The analysis performed looks to fill a gap in the lack of systematic evidence on which corporate characteristics are likely to signal corruption in public procurement. To this end, we focused on the description of the structural and dynamical features of the network of shell companies of the Duarte case in order to find company corruption risk indicators, in particular, in the ownership and management structures. This was done under a complex systems and network theory approach where companies and their personnel were model as a multi-edge bipartite network:

For the structural analysis of the network (Fig. 1 ), we found that all the companies and their personnel created a one big connected component when the five layers of information were integrated. Among these, the “shareholder” layer was the one that provided more information about the connectivity of the network, followed by the “legal representatives”, “administrators”, “commissars” and finally, “notaries”. For this part, the network metrics used were non-conclusive in order to establish clear corporate corruption risk indicators (Table 1 ).

For the dynamical part (Fig. 2 ), we found that when the bipartite multigraph was decomposed into the year of companies’ creation, one connected component appeared for most years. Again, most network metrics were non-conclusive in order to establish clear corporate corruption risk indicators, except for the number of multi-edge node pairs, that provided a good measure of the degeneracy of both companies and people (Table 2 ). For company-nodes, multi-edge pairs correspond to the number of people with at least one role or work relationship within the company. For people-nodes, multi-edge pairs correspond to the number of companies in which a given individual has multiple roles.

The evidence presented here points towards the hidden complexity in other corruption events of this kind, where not all information of the parties involved is available, and the shortcomings of analysis through reductionistic eyes.

Corruption is a phenomenon that not only occurs within the complexity of private or public socio-political and technical systems, but also, it can give rise to a complex system in itself, in which the interrelations of different actors and factors acting as a whole originate characteristic self-organizing and emergent phenomena.

Empirical and multidisciplinary corruption studies are key in order to design effective anticorruption strategies. From a legal perspective, the phenomenon of corruption poses great challenges, such as the detection of concurrent practices, the correction of normative frameworks, the control and prosecution of corruption crimes, the decreasing of the incentives that feed them, and the recovery of assets. The empirical study of great corruption scandals, such as the one presented here, has revealed that corrupt activities might consist of both legal and illegal deeds, from public to private sectors, and with multi-role actors that act simultaneously over long periods of time. As a whole, they go far beyond the institutional capability and legal design of administrative controls, as well as surpassing causes of jurisdictional sanction. Nevertheless, the complexity approach has the potential to change the way in which we study and implement law. Certainly, it proves the need for improving criminal and administrative forensic investigations through the scientific innovation of studies that pertain to law and justice. In addition, great importance should be given to efforts that allow for the coordination among key actors and prosecutors, and to the exchange of information through which public and private sectors can generate relevant intelligence for the creation of effective anti-corruption networks.

Finally, complex systems science is a new paradigm for doing science as it provides a conceptual and analytical framework from which one might understand a great number of phenomena from natural to social systems. Political, economic, ecological and social systems are fine examples of complex systems that greatly impact our lives and that can be studied under the adaptive systems approach (Helbing et al., 2015 ). The major problems facing modern societies, such as climate change, migration, inequality, crime or corruption, may be more likely to be solved when public policies are based not only on science, but on a new kind of science, one that considers the inherent adaptive and systemic aspects of modern States, that is, applied complexity science (Geyer & Cairney, 2015 ). In addition, it is highly important to emphasize that the control mechanisms inferred from these types of studies will only be useful when implemented within the corresponding administrative and legal frameworks that provide them of support and operative reach (UN General Assembly, 2003 ). In this aspect, public policy based on rigorous scientific research, with complexity science as a multidisciplinary bridge, is a first step towards a new way of addressing the major issues of this century.

Availability of data and materials

The datasets used and analyzed during the current study are available from the corresponding author on reasonable request.

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Acknowledgements

We thank Arturo Ángel, Raúl Olmos and Yosune Chamizo, members of the investigative journalism group, Animal Político, and the non-governmental organization, Mexicanos Contra la Corrupción e Impunidad, for the access granted to their data records on the “Phantom Companies of Veracruz” case.

Research funded by Universidad Nacional Autónoma de México (UNAM) through the “Programa de Apoyo a Proyectos de Investigación e Innovación Tecnológica” (PAPIIT), Grant PAPIIT-IV300217.

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Both authors conceived the study, participated in the design of it, the analysis of the data, and drafted the manuscript. All authors read and approved the final manuscript.

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Issa Luna-Pla has a PhD in Media Law with relevant experience on anticorruption policy making. José R. Nicolás-Carlock has a PhD in Physics with relevant training on complexity science research. Both authors are leading researchers of the Observatory of Corruption and Impunity, hosted by the Institute of Legal Research at the National Autonomous University of Mexico.

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Luna-Pla, I., Nicolás-Carlock, J.R. Corruption and complexity: a scientific framework for the analysis of corruption networks. Appl Netw Sci 5 , 13 (2020). https://doi.org/10.1007/s41109-020-00258-2

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government corruption research paper

Challenges in combating corruption in Malaysia: issues of leadership, culture and money politics

Public Administration and Policy: An Asia-Pacific Journal

ISSN : 2517-679X

Article publication date: 7 July 2022

Issue publication date: 16 August 2022

The aim of the paper is to analyse the prevalence of corruption in Malaysia since 2004 in relation to political leadership, implementation of anti-corruption measures and the political and business culture based on money politics.

Design/methodology/approach

The paper draws from the information and data provided by the Malaysian Anti-Corruption Commission, the Malaysian government, international organisations, media reports, and academic papers.

The paper analyses the perceived extent of corruption in Malaysia by examining how successive governments have dealt with the problem through a wide range of measures. Corruption remains widespread because of ineffective implementation, a culture of money politics based on mutually beneficial crony associations between political actors and business leaders, political interference to frustrate enforcement against corruption offenders, especially prominent personalities, and the mixed impact of corruption prevention measures. The paper concludes that the political and business culture and the nature of political leadership have eroded the political will to combat grand corruption in Malaysia.

Originality/value

This paper builds on previous research on corruption in Malaysia and highlights the combined negative impact of political leadership and a business and political culture that tolerates and espouses corruption, especially through money politics, and the consequent weak political will for tackling grand corruption.

  • Malaysian Anti-Corruption Commission
  • Money politics
  • Political will

Jones, D.S. (2022), "Challenges in combating corruption in Malaysia: issues of leadership, culture and money politics", Public Administration and Policy: An Asia-Pacific Journal , Vol. 25 No. 2, pp. 136-149. https://doi.org/10.1108/PAP-01-2022-0002

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Introduction

Public and private sector corruption are rampant in Malaysia and reflected in the prevalence of bribery, embezzlement, fraud, cronyism, bid-rigging in procurement, and money-laundering at the highest levels in major investment, infrastructure, and procurement projects, logging and other concessions, and at lower levels in law enforcement, low value tenders, and business regulation. Corruption has prevailed under the Barisan Nasional (BN), a coalition of parties which ruled Malaysia from independence in 1957 until 2018, with the principal party being the United Malays National Organisation (UMNO). Prime minister Abdullah Badawi (2004-2009) and his successors have promised to stamp out corruption. However, the results have been disappointing, and corruption has in fact increased in some years.

The paper draws from information and data provided by the Malaysian Anti-Corruption Commission (MACC) and Malaysian government reports and plans, data and reports provided by international organisations (such as Transparency International, the World Bank and PwC), media reports, and various academic papers and on-line publications.

This paper examines the extent and nature of corruption in Malaysia from 2004 to 2021 and evaluates the effectiveness of the various anti-corruption measures undertaken. It also explains why these measures have been ineffective, linking their failure to weak enforcement, political leadership and the culture of money politics which has been fostered, despite the role of civil society organisations in exposing corruption.

Literature review

Dahlan and Hamizan (2018 , pp. 217-233) describe the formal legal and institutional framework for combating corruption in Malaysia and analyse its failure to combat corruption effectively. Research by Kapeli and Mohamed (2015 , pp. 525-534), Hashim and Mohamed (2019 , pp. 11-26), Durairaja et al. (2019 , pp. 1-12), Siddiquee (2014 , pp. 7-31), Siddiquee and Zafarullah (2020 , pp. 1-17) and Jones (2020 , pp. 59-72) have shown that, in spite of the policy commitments, and many legal and administrative measures to deal with corruption, corrupt practices, including those at senior levels, prevail in Malaysia. A major cause has been poor implementation and enforcement, exacerbated by political interference in the enforcement process. Also focusing on implementation and enforcement, Chong and Narayanan (2017 , pp. 66-84), compared the size of bribes given with punishment dispensed, and argued for stricter enforcement, higher conviction rates and more stringent punishment. However, Saidin and Haron (2017 , pp. 54-66) and Sajari et al. (2016 , pp. 135-141) have emphasised instead the promotion of integrity in public and private organisations by inculcating personal ethical responsibility among the managers and support staff.

For private sector corruption, Yusof and Arshad (2020 , pp. 1273-1287) examined the impact of regulatory bribery on doing business and profitability in Malaysian companies. Wee et al. (2011 , pp. 567-593), Hasan (2016 , pp. 1865-1868), Hassim et al. (2017 , pp. 1-17), Hassan et al. (2020 , pp. 694-710), Jones (2018 ; 2021 , pp. 113-128) and GAN Integrity (2020) have highlighted corruption in public procurement activities, obtaining licences, and logging concessions, with the beneficiaries being top politicians, senior administrators and their business associates. These complement studies by Gomez (2012 , pp. 1370-1389), Tan (2014 , pp. 200-213), and Azmi and Zainudin (2021 , pp. 593-606), which focus specifically on money politics linking politics and business in Malaysia, often leading to high level corruption.

Perceived extent of corruption in Malaysia

The perceived extent of corruption in Malaysia can be gauged from the Corruption Perceptions Index (CPI) of Transparency International (TI) and the World Bank’s Control of Corruption indicator. Table 1 shows that the yearly average CPI score from 2004 to 2011 for Malaysia was only 4.8 out 10 and improved slightly between 2012 and 2020 to just 51 out of 100. Malaysia’s global ranking on the CPI index fell from a yearly average of 49 to 55. In 2021 the CPI score and rank fell to 48 out of 100 and to 62 respectively. The World Bank scores for the Control of Corruption in the range of −2.5 to +2.5 as a yearly average improved slightly from 0.12 during 2004-2011, to 0.24 during 2012-2019, as did the percentile rank during those periods. The scores and percentile rank altered little in 2020.

The fall in the CPI score and rank in 2021 is particularly noticeable and reflects a perception that corruption has increased as more information has become available about the 1Malaysia Development Berhad (1MDB) scandal and other recent major corruption scandals. Overall, the TI and World Bank measures indicate that Malaysia whilst not amongst the most corrupt countries in the world still suffers from widespread corruption, creating a situation where much improvement is needed.

Useful information on private sector corruption in Malaysia is also provided by the bi-annual PwC surveys. In 2013, 19 per cent of the firms experienced bribery during the previous two years, 30 per cent in 2015, and 35 per cent in 2017 and 2019. Moreover, in 2015, 6 per cent of firms reported being asked to pay a bribe during 2013-2014. In 2017, this increased to 11 per cent and in 2019, to 25 per cent. In addition, in 2017, 11 per cent of firms reported losing business opportunities because their competitors paid a bribe. This had risen to 30 per cent in 2019 ( PwC, 2018 , pp. 6, 15; 2020 , p. 8).

The extent of corruption can also be gauged from recent corruption scandals. Examples include the Port Klang Authority concerning the Free Zone project, the Islamic Pilgrims Fund Board ( Tabung Haji ), the Sabah Water Department, the Federal Land Development Authority (FELDA), the State Government of Penang regarding the construction of the Penang undersea tunnel, and most seriously the 1MDB. These scandals have involved bribery, embezzlement, money-laundering, fraudulent transactions and extensive cronyism, often amounting to billions of ringgit, that have benefited political leaders, senior administrators, and their business associates ( Jones, 2018 , p. 41; Jones, 2020 , pp. 59-72; Siddiquee and Zafarullah, 2020 , pp. 6-8, 10).

Anti-corruption measures and agencies

Although corruption has continued to be widespread in Malaysia, efforts have been made to develop policies, legal measures and institutional structures to combat corruption.

Anti-corruption laws and agencies

The main instrument to combat corruption in Malaysia is the Malaysian Anti-Corruption Commission Act, 2009 (MACCA), which specifies a range of corruption offences. They cover any public official who demands, is offered or receives a bribe (or a gratification) in return for a favour to the bribe provider. Also included is the failure to report bribery or the intention to commit bribery. The MACCA extends such offences to dealings between private sector organisations. The gratifications include not only cash but also gifts, shares, bonds, and property ( Dahlan and Hamizan, 2018 , pp. 218-224).

The MACCA was amended in 2018 to include a new Section 17A, which stipulates that a commercial organisation is considered to have committed a corruption offence if any person associated with it corruptly “gives, agrees to give, promises or offers to any person any gratification to obtain or retain business or advantage for the organisation”. Significantly the company as a whole, including shareholders, boards of directors and management, though not directly involved, may be held responsible for an offence so committed ( Dahlan and Hamizan, 2018 , pp. 228-229).

The MACCA is supplemented by the Penal Code, which covers bribery and gratification (Sections 163-165), embezzlement (Section 378), and fraudulent dealings (Sections 415-424). Also the Witness Protection Act of 2009 and the Whistle-blower Act of 2010 encourage disclosures of information relating to possible corruption and provides protection to those who report such evidence ( Dahlan and Hamizan, 2018 , pp. 221, 229-230). In addition, the Anti-Money Laundering and Anti-Terrorism Financing Act, 2001 prohibits any organisation or individual from transferring, receiving or managing monies and assets unlawfully acquired. It also requires such individuals and organisations “to take reasonable steps” to ascertain whether the monies and assets have been unlawfully acquired ( Dahlan and Hamizan, 2018 , pp. 225-228). Another important anti-corruption measure is the Competition Act, 2010 (Sections 4, 24, 33), which prohibits bid-rigging or collusion designed to limit or eliminate competition in public and private sector tenders, and the concealment and withholding of information relating to bid-rigging ( Safinaz, 2012 , pp. 80-81; Malaysia Competition Commission, 2020 , pp. 4, 24, 28, 31, 45-46).

The responsibility for implementing the above anti-corruption measures (except the Competition Act) lies chiefly with the MACC, set up in 2009 under the MACCA, and the Attorney General’s Chambers (AGC), assisted in certain cases by the Malaysian Police Force. The MACC’s role is to investigate reports of suspected corruption. The MACC may subsequently undertake a prosecution but only with the permission of the public prosecutor in the AGC, who reviews the case before granting permission. If permission is granted, the investigation papers are forwarded to the MACC’s Legal and Prosecution Division. Its brief is to assemble the evidence, and, if there are sufficient grounds, it will undertake a prosecution. Many corruption cases are heard in the Special Anti-Corruption Courts set up in 2011 mainly to expedite the prosecution process.

The application of the Competition Act is the responsibility of the Competition Commission established under the Competition Commission Act, 2010 . It has power to investigate suspected bid-rigging, and of its own accord, can impose fines on those companies involved in bid-rigging.

Corruption prevention and promotion of integrity

In 2004, the National Integrity Plan was introduced by Badawi shortly after he became prime minister, to broaden the efforts to combat corruption by emphasising personal and organisational ethical responsibility and to tackle social norms and organisational values which encouraged corrupt practices. There was also a commitment to prevent corruption by eradicating opportunities and incentives for engaging in corruption within public and private sector organisations ( Saidan and Haron, 2017 , p. 56).

A key agency in this endeavour is the Malaysian Institute of Integrity (MII), which was set up in 2004. Its remit is to combat corruption through preventive action by means of education and training within the public and private sectors. Its work under the Ethics and Integrity Training Programme is conducted through seminars, workshops, roundtable discussions and consultations. The themes cover the need to stamp out corruption in an organisation, explaining the obligations of the public and private sectors in combating corruption under the MACCA, and explaining how evidence of corruption can be identified, and should be dealt with and reported. The themes also cover those areas of an organisation which entail a high risk of a corrupt practice, and the procedures to adopt in order to minimise this risk. The MII reaches out to the individual employee, and stresses his or her ethical responsibilities in relation to bribery, embezzlement, fraud and cronyism. It also promotes in its seminars and workshops, organisational frameworks, known as Organisational Anti-Corruption Plans. These plans identify specific corruption risks within an organisation, and the system to be implemented to prevent and report corrupt actions. In addition, organisations are expected to assess their own measures to combat corruption, known as the Integrity Assessment Tool ( MII, 2021a ).

The MACC, like the MII, also gives priority to preventing corruption in public and private sector organisations. This includes advising them on identifying and closing loopholes which provide inducements and opportunities to engage in corruption. Furthermore, the MACC coordinates the Integrity Units (see below) set up in public agencies at the Federal and State levels. Linked to this are regular meetings between the MACC, and chief integrity officers (CIOs), who are the heads of Integrity Units as explained below. In these meetings, CIOs may raise corruption issues in particular agencies. Based on this feedback, the MACC is responsible for the rating of public agencies with respect to corruption risks, which shapes the anti-corruption plans recommended for public agencies ( MACC, 2021a ). Alongside the MII, the MACC also conducts anti-corruption educational programmes, and consequently, leaders and staff of many organisations have signed a Corruption-Free Pledge or Ikrar Bebas Rasuah (IBR) ( MACC, 2021b ).

Internal anti-corruption controls

For many years, responsibility was given to public agencies to administer anti-corruption measures in relation to enforcement and prevention. In 2008, a decision was taken to appoint in each ministry and other public agencies, a CIO as mentioned above, to be certified by the MACC. The CIO could be drawn from the MACC or from the ministry or public agency itself. In 2013, Integrity Units were established in ministries, departments, and other public agencies at both Federal and the State levels, headed by the CIO, as noted above, assisted by Integrity Officers. The role of the CIO and Integrity Units is to receive complaints from the public and other agencies, including whistle-blowers, and if there is an indication of a corrupt practice, to refer the matter to the MACC. It is also within the brief of the CIO and the Integrity Unit to identify possible corrupt practices regardless of a complaint and likewise to report them to the MACC. A further requirement is to review the entire agency based on the corruption risk rating of the MACC and to put in place the necessary preventive measures as stipulated by the Commission. Every four months, the CIO is required to submit a report to the Agency Integrity Management Division of the MACC, and as already mentioned, to meet its top officials to raise matters of concern relating to corruption. Matters of particular importance are referred to the MACC’s chief commissioner and the head of the civil service (chief secretary to the government) ( Sajari et al. , 2016 , pp. 137-139; Saidan and Haron, 2017 , pp. 57-58; MACC, 2022a ).

Alongside the Integrity Unit, in 2014 another integrity entity was formed in ministries, statutory authorities and other public agencies known as the Integrity and Governance Committee ( Jawatankuasa Integriti dan Tadbir Urus or JITU), at the instigation of the Prime Minister’s Department. Its role is to provide an overall assessment of the measures and performance of an organisation in dealing with corruption and to advise the Integrity Unit if improvements are needed ( Saidan and Haron, 2017 , pp. 56, 58, 62).

It was decided in 2017 by the government to apply similar internal integrity controls in the Government-Linked Companies (GLCs). The new Pakatan Harapan Government in 2018 made it a priority of the GLCs to create Integrity and Governance Units (IGUs) to perform similar roles as the Integrity Units and JITU mentioned above. The IGU is headed by the chief integrity and governance officer whose status is equivalent to the head of Internal Audit, and is subject to the supervision and guidance of the MACC ( MACC, 2019 ).

Plans and strategies to combat corruption

Since 2004, various plans and strategies have been announced to guide anti-corruption policy and ensure proper implementation of the various anti-corruption measures. The first step was the National Integrity Plan. This was followed by two Government Transformation Programmes (GTPs). The first (GTP 1.0) announced in 2010 by Prime Minister Najib, contained several priority areas for spurring economic and social development in Malaysia and improving its governance. The GTP required ministries to specify National Key Results Areas (NKRAs) relating to each priority area and to set targets and monitor progress in reaching them. One of the NKRAs is fighting corruption requiring ministries to set targets in reducing corruption and identify the steps taken to combat corruption ( Prime Minister’s Department, 2017 , pp. 14, 54-59; Siddiquee, 2014 , pp. 15, 17, 21).

Given that the results of the GTP relating to corruption were at most modest and well below expectations, the new government in 2018 saw the need for further initiatives to tackle corruption. The upshot of this is another anti-corruption programme known as the National Anti-Corruption Plan (NACP), 2019-2023. The priorities were specifically set out, viz. to deal with continuing corruption in the political system, public sector administration, public procurement, law enforcement, judicial administration and corporate governance.

To flesh out the NACP’s priorities and ensure the effective implementation of resultant initiatives, the National Centre for Governance, Integrity and Anti-Corruption ( Governans, Integriti dan Anti-Rasuah Centre or GIACC) was formed in 2018. It is guided by the Special Cabinet Committee for Anti-Corruption, which reports directly to the prime minister. The main enforcement agency continues to be the MACC. So far the NACP has listed a total of 115 initiatives to fight corruption over the next five years ( GIACC, 2019 , pp. 32, 35-53, 65).

The reasons for the persistence of corruption in Malaysia

Weak enforcement.

The on-going prevalence of corruption is in part related to weak enforcement. One of the failings is the low number of convictions for corruption relative to arrests with only 28 per cent of those arrested eventually prosecuted and convicted ( MACC, 2022b ; 2022c ). A second weakness is the light sentencing of those convicted. This was pointed out in the NACP, 2019-2023 in a section titled “Light punishment of offenders”. It pointed out that the MACCA “does not set a minimum number of days for imprisonment” in contrast to the previous Anti-Corruption Act, 1997. In its view, “this can be interpreted as such that offenders do not have to serve minimum jail time. Consequently, this makes the Act 694 insensible and hence is outdated and needs to be amended” ( GIACC, 2019 , p. 5). In 2021, 55 per cent of convictions led only to a fine, and among those cases where a prison term was imposed, the term was often seven days or less with quite a number just one day ( MACC, 2022b ).

A third weakness is the preponderance of arrests and convictions related to minor offences with very few involving major offences committed by senior figures in politics and the corporate sector. Between 2016 and 2021, only 2.4 per cent of public officials who were arrested were classified as “top management”, while in 2021, only 9 per cent of those convicted could be classified as senior level personnel in Federal and State departments and statutory authorities, and senior or general managers of large companies ( MACC, 2022b ; 2022c ). This reflects the influence of money politics discussed below.

Politics-business nexus and the issue of money politics

A key factor to explain the persistence of corruption in Malaysia and a failure to properly implement anti-corruption measures has been the close links between, on the one hand leaders in the BN, especially UMNO, as well as individual Members of Parliament (MPs), and on the other hand, big business – referring to the politics-business nexus or money politics. This factor has pervaded Malaysian political and business culture, and is closely associated with grand corruption in the country.

Money politics is evident in different ways. At its heart, is the granting of favours to those companies closely linked to the political elite, including high value procurements and infrastructure projects, often without a competitive tender. As GAN Integrity (2020) reported, “In fact, political connections continue to be one of the main criteria in the awarding of important infrastructure projects and state contracts. The Malaysian government has passed procurement reforms to stamp out corruption but the awarding of major infrastructure and public works contracts, is often done without competitive bidding or open tenders.” Similar preferences have also been shown in the award of logging concessions, the granting of trading and import licences, the receipt of business subsidies, grants and low interest loans, tax allowances and the purchase of property ( GAN Integrity, 2020 ). Other favours include positional patronage such as appointment to executive or advisory board positions in state enterprises including statutory authorities, GLCs, government investment and financial institutions, and State Development Corporations ( Tan, 2014 , p. 203; Asia Sentinel, 2021 ). These appointments continue despite the recent changes of government.

In return for these benefits, businesses have provided financial support to UMNO and other parties in the BN (in effect, politically-based bribery). Of particular importance is the funding of BN parties and their election candidates to enhance their prospects either in a general election or a by-election. Election campaigns are expensive and even more so, when a party in government offers handouts to voters just prior to an election (vote buying) in order to entice them to vote for its candidate. This has been a frequent practice especially in poor rural areas ( Azmi and Zainudin, 2021 , pp. 594, 597-602). Much of this has been made possible as a result of poorly drafted funding rules for elections and their weak enforcement ( Gomez, 2012 , pp. 1377-1381, 1396-1397; Azmi and Zainudin, 2021 , pp. 597-599).

Support is frequently offered by businesses to UMNO politicians vying for key party posts in internal elections in the party. A feature of the party is its factionalism and members from different factions competing against each other in party elections. To secure election and promotion in the party hierarchy, the support of business people at the divisional level of the party is vital, including not only votes but also donations to finance internal election campaigns. Indeed, Gomez (2012 , p. 1387) has contended that in UMNO “business people are gaining a stranglehold on party positions at grassroots level, while they dominate delegates at the general assembly”. Again as a quid pro quo , the favours listed above are promised to business firms offering support ( Gomez, 2012 , pp. 1384-1388; Tan, 2014 , pp. 204-205, 208-209).

Money politics in Malaysia has been spurred by the increased ownership of companies both by UMNO and individual politicians. In Malaysia, a political party is allowed to have an equity stake in a company and may in fact exclusively own it. UMNO has been particularly prominent in this regard ( Gomez, 2012 , pp. 1382-1383, 1387-1388). The UMNO stake in a company is often held by nominees who act as trustees. This is sometimes not transparent as it entails a holding company or companies ( Gomez, 2012 , p. 1385; Tan, 2014 , pp. 201, 204; Asia Sentinel, 2015 ). Over the years UMNO widened its portfolio from initially media companies to 23 major companies in different sectors listed on the Kuala Lumpur bourse. Funds from these companies may be channelled to UMNO, other BN parties and individual politicians, to serve their election purposes ( Gomez, 2012 , pp. 1382-1383, pp. 1387-1388). Such companies are well placed to secure special favours such as major infrastructure projects, pharmaceutical procurements and other high value contracts. Several large projects have been awarded in recent years to UMNO-linked companies ( Asia Sentinel , 2015 ).

Money politics has also affected GLCs, because often their chairperson, board members and CEOs are political appointees. Consequently, GLCs too are a source of funds to serve the election purposes of UMNO and other BN parties. In return, they secure special favours such as infrastructure projects to the detriment of private sector companies with a better performance and greater expertise ( Gomez, 2012 , p. 1395).

But, of course bribes received by senior political figures from businesses in return for special favours may be based also on their desire for personal enrichment. Often the money given may run into millions of ringgits. Personal bribes from businesses are not limited to UMNO and its allies, but extend to other parties too. Currently subject to a trial is the alleged receipt of two bribes by the former chief minister of Penang, Lim Guan Eng (one amounting to over RM3 million) in helping a construction company secure the RM6 million project of building an undersea tunnel linking Penang to the mainland of West Malaysia and a road building project linked to the tunnel. Lim’s trial is on-going and it remains to be seen if it results in a conviction ( Jones, 2018 , p. 41).

A further aspect of money politics is the embezzlement and laundering of funds from enterprises which are linked to, and controlled by parties and politicians. Several corruption scandals mentioned above involved embezzlement and money-laundering on a large scale. In the biggest scandal, the 1MDB corruption case, Prime Minister Najib Razak together with his business associates appropriated more than RM40 billion through embezzlement, money-laundering and fraud ( Jones, 2020 , pp. 59-72; Siddiquee and Zafarullah, 2020 , pp. 6-8, 10).

According to Azmi and Zainudin (2021 , p. 603) based on their interviews with politicians and corporate leaders, the continued prevalence of the culture of money politics may be attributed in part to the tendency in Malaysia “to tolerate politicians who make money by pocketing public funds” and that so long as the projects ostensibly for the public good are implemented, “handing out and receiving money (by politicians) is something tolerable and acceptable by the Malaysian society”. In other words, in their view, social values have persisted because of tolerance of corrupt practices which “appear to be ingrained within the Malaysian society” ( Azmi and Zainudin, 2021 , p. 603).

Political interference in the investigation and prosecution of corruption cases

Money politics has also enabled political leaders to interfere by stifling investigations and prosecutions to hinder the work of watchdog and enforcement agencies such as the Auditor-General’s Department, Public Accounts Committee in Dewan Rakyat , the AGC, and the MACC ( Siddiquee and Zafarullah, 2020 , pp. 11-13). The control may be outside the legal remit of political leaders and thus may be wielded informally and covertly. This feature was pointed out in the NACP, 2019-2023 ( GIACC, 2019 , p. 5).

The 1MDB scandal provides prime examples of this. In 2016, the Auditor-General produced a highly critical report highlighting irregularities in the 1MDB. However, the investigation team was hampered by lack of cooperation from senior political figures and bureaucrats including not being allowed to see several important documents and denied access to computers and servers of the 1MDB. The sections of the report containing damaging evidence against Najib and his business associate, Jho Low, were later removed. Moreover, the report was classified under the Official Secrets Act, which greatly restricted those who could read it ( Jones, 2020 , pp. 62-66).

Moreover, a special task force was set up in 2015 to ostensibly uncover evidence of corruption in the 1MDB, but the key figures in it were soon side-lined or dismissed when they started to reveal incriminating evidence, implicating Najib himself. The task force was soon after disbanded ( Jones, 2020 , p. 66). Furthermore, the MACC stated in 2017 that it would no longer pursue allegations against the 1MDB, reportedly owing to political pressure ( Jones, 2020 , p. 66).

Limited impact of anti-corruption measures and bodies

Despite the anti-corruption measures and agencies mentioned above, their practical impact in reducing corruption has been limited. Thus the NIP and GTP 1 and 2, which contained ambitious objectives to reduce corruption, did not gain traction by the lack of the political will and determined action to achieve those objectives. This was highlighted in the NACP, 2019-2023 ( GIACC, 2019 , pp. 2-6) and explains the continuation of corruption linked to money politics.

The agencies set up to tackle corruption have also had a questionable impact. The lead agency, the MACC, according to Siddiquee and Zafarullah (2020 , p. 11), has had “at best a mixed record”. They point out its unwillingness to investigate when vested interests of the ruling elite are at stake, especially in high profile scandals. They also noted its lack of autonomy partly due to its accountability to the prime minister and inability to engage in a prosecution without the permission of the public prosecutor in the AGC ( Siddiquee and Zafarullah, 2020 , pp. 11-12). The lack of real independence of the MACC and political interference are also stressed in the NACP, 2019-2023 and considered to be among the “biggest obstacles” to dealing with high profile scandals ( GIACC, 2019 , pp. 5, 10). This was particularly evident during the 1MDB scandal as mentioned above.

The CIO and Integrity Units may also have had a mixed impact. A study by Sajari et al. (2019 , pp. 54-57, 60-65) reported favourably on their performance which nonetheless depended on the “ethical climate” in the organisation including the influence of top management. The NACP 2019-2023 indicated that 80 per cent of the complaints received by the MACC from 2013 to 2018 about possible corruption referred to the avoidance of required procedures, lack of proper internal controls and conflicts of interest, all suggesting that organisational anti-corruption plans were inadequately developed, poorly monitored or not implemented at all. This further indicates that the work of CIOs and Integrity Units in prevention may not have been sufficiently far reaching and rigorous ( GIACC, 2019 , p. 34).

As for the anti-corruption training by the MII, its effectiveness is hard to measure. Certainly, it has played a role in promoting the anti-corruption message. In 2022, it has scheduled 23 training programmes. However, from examining their content in 2020, there is a limited focus on dealing with grand corruption, especially on how to identify complicated and concealed transactions through the complex webs of intermediaries, ghost companies and banks ( MII, 2021b , pp. 55-78; MII, 2022 ).

Failures of the leadership of Badawi and Najib

Both Badawi and Najib failed to deal with corruption but for different reasons. Badawi had good intentions of reducing corruption through his National Integrity Plan and MII initiatives. However, he operated from a relatively weak position in UMNO. Many of his advisers were reform-minded intellectuals. Their anti-corruption proposals and other reforms met with resistance from the UMNO party elite, well entrenched in the Malaysian political and social hierarchy. Without the necessary power base in UMNO, Badawi could not overcome this resistance. Moreover, Badawi adopted a consultative and accommodative style of leadership, instead of a single-minded determination to oppose the powerful conservative elite in UMNO. The result was an inability to ensure the proper implementation of his anti-corruption measures ( Pandian et al. , 2009 , pp. 100-103; Ismail and Hamid, 2013 , pp. 80-88, 91-93).

In contrast to Badawi, Najib had a strong power base among the UMNO elite, which was extended through patronage and a willingness to turn a blind eye to their own corruption. The support for Najib was reinforced by his ability to harness electoral support for UMNO in the rural areas. Again in contrast to Badawi, he exercised a dominant style of leadership in which he would not tolerate dissent within his party and the BN, or any independent action against him by the enforcement agencies. Given his power base and leadership style, he was able to frustrate investigations into corruption, control top-level appointments for his own purposes, and engage in bribery, embezzlement and fraud on a grand scale, especially evident in the 1MDB scandal ( Siddiquee and Zafarullah, 2020, pp. 12-14) . This was facilitated by his close connections with high-level business through various members of his family and a core of powerful political allies and business cronies who owned or had a stake in multiple major companies both in Malaysia and overseas ( Investor.com, 2018 ). Najib thus personified the culture of money politics in Malaysia, and reflected the absence of a genuine political will to stamp out corruption.

Role of civil society organisations in combating corruption

Many civil society organisations (CSOs) were established in recent years to expose corruption at the highest levels in Malaysia, and to highlight weak enforcement as a result of political interference, and crony associations between political and business leaders. In their view, these weaknesses have prevented effective action being taken to secure convictions of those responsible who occupy senior political, administrative and business positions. They have been active in bringing to light these shortcomings in the local and international press and in social media and in gathering evidence to facilitate investigations. Their work has also entailed promoting integrity and stressing the need to fight corruption in the local community, businesses, and business associations. While the CSOs have found that previous governments of the BN were hostile to them and sought to restrict their work, they have enjoyed more freedom to campaign against corruption after the 2018 election. Foremost among these CSOs are the Business Integrity Alliance (BIA) , Centre to Combat Corruption and Cronyism (C4) , Coalition for Business Integrity (CBI) , Malaysian Anti-Corruption Foundation, and Sinar Project (SP) through its Politikus programme. The last named has been particularly active in exposing politicians, administrators and their business associates who may be linked to corrupt dealings. Its intention is “to track the positions and involvement of these people and organizations to various issues related to corruption and mismanagement” ( Sinar Project, 2021 ).

Recent changes of government and the fight against corruption

When the UMNO and its BN partners lost the general election in May 2018, and were replaced by Pakatan Harapan , a coalition of several parties with Mahathir Mohamad as prime minister, there were high hopes of a renewed and genuine commitment to stamping out corruption. One promising initiative after the change of government was the requirement for parliamentarians, government leaders and business executives to publicly declare their assets ( Hamid and Govindasamy, 2020 , pp. 334-336).

However, there followed a period of instability and confusion with two changes of prime minister and several MPs switching allegiances. Since 2020, the government consists of an alliance of Perikatan Nasional (a coalition of small parties) and the BN (now the main component of the government). The current prime minister, appointed in August 2021, is Ismail Sabri, who is also the vice-president of UMNO. His government consists of 13 BN ministers and 15 BN deputy ministers. Many are leading figures in UMNO and formerly associated with the Najib government. This development may not bode well for enhancing the fight against grand corruption in the foreseeable future given their past record of being complicit in or ignoring corruption ( Ratcliffe, 2021 ). A few weeks following the appointment of the current government, the MACC, supported by Ismail Sabri, dropped a serious corruption case against a key minister Datuk Seri Rina Harun, who was also a member of UMNO. The abandonment of the case was supported by Ismail Sabir ( Idris, 2021 ).

Lessons to be learnt

Five lessons can be learnt to improve the anti-corruption efforts in Malaysia. The first is the need for tougher sentencing guidelines and more frequent passing of a prison sentence in corruption convictions. This may require amendments to the MACCA and Penal Code.

Secondly, it is important that asset disclosures should be detailed, and not generalised as at present, and be subject to independent verification. They should also be extended to assets held by nominees and trusts and to holdings in overseas financial institutions. This may necessitate an asset disclosure law.

Thirdly, as a step towards reducing money politics, restricting the ownership of companies by political parties (UMNO) may be necessary.

Fourthly, to enhance transparency and fairness in high value procurement and infrastructure projects and in resource concessions, open tendering should be more actively promoted and awards through direct appointment (often to cronies) strictly prohibited except in clearly defined emergency situations. In addition, the criteria for awards should be openly spelt out and the reasons for the selection of a company for a government contract should be publicised.

Fifthly, ghost companies should be scrutinised and prohibited if necessary and banks required to exercise more thorough due diligence on suspiciously large deposits and withdrawals in order to stem money-laundering from corrupt activities. Another recommendation is the vetting and limitation of the appointment of board members of GLCs and advisory boards of state investment enterprises, who are senior political figures or affiliated to political parties.

Singapore’s experience in effectively combating corruption may provide pointers to how Malaysia can improve its own efforts to combat corruption. This includes, amongst other things, extensive investigation of and tough sentences for corrupt activities, public naming and shaming of those charged with corruption offences, safeguards against ghost companies used for money-laundering (recently introduced), and comprehensive guidelines for banks in identifying money-laundering, underpinned by a strong political will to combat corruption. A further barrier to corruption involving money politics in Singapore are several measures that regulate elections and political donations. Of particular importance are the prohibitions on the bribing of voters under Section 60 of Parliamentary Elections Act (Revised Edition), and under the Third Schedule of the same Act, strict limits on expenditure undertaken by candidates according to the number of registered electors in a constituency ( Law Revision Commission, 2020 , pp. 116-121, 195).

Despite the range of measures and agencies introduced to combat corruption in Malaysia in recent years, corruption continues to be prevalent. A key factor has been the deeply entrenched practices of money politics which link political parties and individual politicians to the business sector for their mutual benefit. These practices are deeply ingrained in the political and business culture of the country, and have entailed favouritism, cronyism, bribery, embezzlement and fraud. Such practices have continued partly as a result of the tolerance of corruption over the years in Malaysian society. Reinforcing the political and business culture based on money politics has been the political leadership in Malaysia which has promoted this culture, and interfered with efforts by anti-corruption bodies to root out corruption. This was particularly evident during Najib’s tenure as prime minister when he used his dominant leadership style to intensify corruption at the highest levels.

Consequently, the set of anti-corruption measures, in the words of the NACP, 2019-2023, “was not followed through in its implementation” ( GIACC, 2019 , Executive Summary). This failure according to the NACP, “is mainly due to [the] lack of political will as the main factor hindering the initiatives planned back then in addressing issues of corruption” ( GIACC, 2019 , p. 5). Thus, despite repeated undertakings to address the problem of corruption by senior political figures, the lack of political will to deal with corruption has rendered them no more than nominal commitments. It remains to be seen whether the new political landscape in Malaysia will lead to real progress in combating high level corruption, but serious doubts remain whether such progress can be achieved.

Future research could focus on how the recent changes in the politics of Malaysia and the possibilities that UMNO, though still remaining powerful, may not regain its previous dominance, may strengthen (or even weaken) the fight against corruption. A key question is whether the political changes will have any measurable impact on money politics and the ties between the political elite and business. Also with more leeway now given to the CSOs, their impact in exposing and in lobbying against corruption could be explored.

TI’s Corruption Perceptions Index measures and World Bank’s Control of Corruption measures for Malaysia since 2004

Sources: Transparency International (2022) ; World Bank (2021)

*Up to 2011 the CPI score was out of 10; thereafter out of 100

** In the CPI rank order, the highest is 1

*** The World Bank corruption scores range from −2.5 (lowest) to +2.5 (highest)

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Corresponding author

About the author.

David Seth Jones was formerly an Associate Professor in the Department of Political Science, National University of Singapore, and the Faculty of Business, Economics and Policy Studies, University of Brunei Darussalam. He is currently a Policy and Management Consultant specialising in government procurement, public finance, public management reform, and land policy and reform. He has published widely in these fields.

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Trump’s Harsh Punishment Was Made Possible by This New York Law

The little-known measure meant hundreds of millions in penalties in the civil fraud case brought by Attorney General Letitia James.

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Letitia James sits in court behind Donald Trump, who is blurred and out of focus.

By Ben Protess and Jonah E. Bromwich

The $355 million penalty that a New York judge ordered Donald J. Trump to pay in his civil fraud trial might seem steep in a case with no victim calling for redress and no star witness pointing the finger at Mr. Trump. But a little-known 70-year-old state law made the punishment possible.

The law, often referred to by its shorthand, 63(12), which stems from its place in New York’s rule book, is a regulatory bazooka for the state’s attorney general, Letitia James. Her office has used it to aim at a wide range of corporate giants: the oil company Exxon Mobil, the tobacco brand Juul and the pharma executive Martin Shkreli.

On Friday, the law enabled Ms. James to win an enormous victory against Mr. Trump. Along with the financial penalty , the judge barred Mr. Trump from running a business in New York for three years. His adult sons were barred for two years.

The judge also ordered a monitor, Barbara Jones, to assume more power over Mr. Trump’s company, and asked her to appoint an independent executive to report to her from within the company.

A lawyer for Mr. Trump, Christopher M. Kise, reacted with fury, saying “the sobering future consequences of this tyrannical abuse of power do not just impact President Trump.”

“When a court willingly allows a reckless government official to meddle in the lawful, private and profitable affairs of any citizen based on political bias, America’s economic prosperity and way of life are at extreme risk of extinction,” he said.

In the Trump case, Ms. James accused the former president of inflating his net worth to obtain favorable loans and other financial benefits. Mr. Trump, she argued, defrauded his lenders and in doing so, undermined the integrity of New York’s business world.

Mr. Trump’s conduct “distorts the market,” Kevin Wallace, a lawyer for Ms. James’s office, said during closing arguments in the civil fraud trial.

“It prices out honest borrowers and can lead to more catastrophic results,” Mr. Wallace said, adding, “That’s why it’s important for the court to take the steps to protect the marketplace to prevent this from happening again.”

Yet the victims — the bankers who lent to Mr. Trump — testified that they were thrilled to have him as a client. And while a parade of witnesses echoed Ms. James’s claim that the former president’s annual financial statements were works of fiction, none offered evidence showing that Mr. Trump explicitly intended to fool the banks.

That might seem unusual, but under 63(12), such evidence was not necessary to find fraud.

The law did not require the attorney general to show that Mr. Trump had intended to defraud anyone or that his actions resulted in financial loss.

“This law packs a wallop,” said Steven M. Cohen, a former federal prosecutor and top official in the attorney general’s office, noting that it did not require the attorney general to show that anyone had been harmed.

With that low bar, Justice Arthur F. Engoron, the judge presiding over the case, sided with Ms. James on her core claim before the trial began, finding that Mr. Trump had engaged in a pattern of fraud by exaggerating the value of his assets in statements filed to his lenders.

Ms. James’s burden of proof at the trial was higher: To persuade the judge that Mr. Trump had violated other state laws, she had to convince him that the former president acted with intent. And some of the evidence helped her cause: Two of Mr. Trump’s former employees testified that he had final sign-off on the financial statements, and Mr. Trump admitted on the witness stand that he had a role in drafting them.

Still, her ability to extract further punishments based on those other violations is also a product of 63(12), which grants the attorney general the right to pursue those who engage in “repeated fraudulent or illegal acts.”

In other fraud cases, authorities must persuade a judge or jury that someone was in fact defrauded. But 63(12) required Ms. James only to show that conduct was deceptive or created “an atmosphere conducive to fraud.” Past cases suggest that the word “fraud” itself is effectively a synonym for dishonest conduct, the attorney general argued in her lawsuit.

Once the attorney general has convinced a judge or jury that a defendant has acted deceptively, the punishment can be severe. The law allows Ms. James to seek the forfeit of money obtained through fraud.

Of the roughly $355 million that Mr. Trump was ordered to pay, $168 million represents the sum that Mr. Trump saved on loans by inflating his worth, she argued. In other words, the extra interest the lenders missed.

The penalty was in the judge’s hands — there was no jury — and 63(12) gave him wide discretion.

The law also empowered Justice Engoron to set new restrictions on Mr. Trump and his family business, all of which Mr. Trump is expected to appeal.

The judge also ordered a monitor to assume more power over Mr. Trump’s company, who will appoint an independent executive who will report to the monitor from within the company.

Even before she filed her lawsuit against the Trumps in 2022, Ms. James used 63(12) as a cudgel to aid her investigation.

The law grants the attorney general’s office something akin to prosecutorial investigative power. In most civil cases, a person or entity planning to sue cannot collect documents or conduct interviews until after the lawsuit is filed. But 63(12) allows the attorney general to do a substantive investigation before deciding whether to sue, settle or abandon a case. In the case against Mr. Trump, the investigation proceeded for nearly three years before a lawsuit was filed.

The case is not Mr. Trump’s first brush with 63(12). Ms. James’s predecessors used it in actions against Trump University, his for-profit education venture, which paid millions of dollars to resolve the case.

The law became so important to Ms. James’s civil fraud case that it caught the attention of Mr. Trump, who lamented the sweeping authority it afforded the attorney general and falsely claimed that her office rarely used it.

He wrote on social media last year that 63(12) was “VERY UNFAIR.”

William K. Rashbaum contributed reporting.

Ben Protess is an investigative reporter at The Times, writing about public corruption. He has been covering the various criminal investigations into former President Trump and his allies. More about Ben Protess

Jonah E. Bromwich covers criminal justice in New York, with a focus on the Manhattan district attorney's office, state criminal courts in Manhattan and New York City's jails. More about Jonah E. Bromwich

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The impact of corruption on government performance: evidence from South Korea

  • Published: 09 September 2022
  • Volume 79 , pages 319–345, ( 2023 )

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  • Kyoung-sun Min   ORCID: orcid.org/0000-0002-3888-613X 1  

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While some studies argue that a low level of corruption in the public sector is positively associated with a high level of firm performance, few studies investigate the impact of corruption on public organizations’ performance. Does corruption decrease performance in government agencies? Using the integrity assessment dataset and the government performance evaluation dataset, this study investigates 42 central public organizations in South Korea from 2014 to 2018. This study employs a probit model, a random-effects model, and time-lagged regression to capture the impacts of corruption. The findings show that a low level of corruption within public organizations is positively associated with a high-performance level under certain conditions. This outcome shows that fighting corruption might contribute to improved organizational performance in public organizations.

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Tables 7 and 8 display the impacts of the integrity assessment in the current year on government performance evaluations in the present year from 2012 to 2018. The dependent variable is government performance evaluations in the present year. The results in Tables 7 and 8 do not correspond with the hypotheses: a high level of external integrity, internal integrity, and policy customer evaluations in the current year is not related to government performance evaluations in the present year. In Table 7 , some control variables are statistically significant. Model II in Table 7 shows that the act of lowering assessment reliability in the present year has a positive effect on government performance evaluations in the present year with a 95 percent confidence interval. Models II, IV, and VI in Table 7 also show that organizations related to economic affairs have received better scores on government performance evaluations than other types of organizations with a 99 percent confidence interval. Models II and VI in Table 7 show that organizations with more employees achieve a high-performance level on government performance evaluations with a 95 percent confidence interval.

Tables 9 and 10 show the impacts of the integrity assessment in the present year on government main project evaluations in the present year from 2012 to 2018. The dependent variable is government main project evaluations in the present year. The results in Tables 9 and 10 partly correspond with the hypotheses. While model II in Table 9 shows that a high level of external integrity in the current year is associated with a high-performance level on government primary project evaluations in the current year, the other models in Tables 9 and 10 show that a high level of integrity assessment in the present year is not related to the dependent variable. In Tables 9 and 10 , some control variables are also statistically significant. Models II, IV, and VI in Tables 9 and 10 show that the act of lowering assessment reliability in the present year has a positive effect on government main project evaluations in the current year with a 95 percent or 99 percent confidence interval. Models II, IV, and VI in Table 9 also show that organizations related to economic affairs have received better scores on government performance evaluations than other types of organizations with a 99 percent confidence interval.

Tables 11 and 12 show the integrity assessment impacts in the previous year on government main performance evaluations in the present year from 2012 to 2017. Since the dependent variable is government performance evaluations in the next year, the values of government main performance evaluations are arranged from 2013 to 2018. The results in Tables 11 and 12 partly correspond with the hypotheses. While model VI in Table 11 shows that a high level of policy customer evaluations in the previous year is associated with a high-performance level on government performance evaluations in the present year, the other models in Tables 11 and 12 show that a high level of integrity assessment is not related to the dependent variable. In Table 11 , some control variables are also statistically significant. Models II, IV, and VI in Table 11 show that organizations related to economic affairs have received better scores on government performance evaluations than other types of organizations with a 99 percent confidence interval. Models II and VI in Table 11 also show that organizations with more employees achieve a high-performance level on government performance evaluations in the next year with a 95 or 99 percent confidence interval.

Tables 13 and 14 show the integrity assessment impacts in the previous year on government main project evaluations in the present year from 2012 to 2017. Since the dependent variable is government main project evaluations in the next year, the values from government main project evaluations are arranged from 2013 to 2018. The results in Tables 13 and 14 partly correspond with the hypotheses. Models II and VI in Table 13 show that a high level of external integrity and policy customer evaluations in the previous year are associated with a high-performance level on government main project evaluations in the present year. However, the other models in Tables 13 and 14 show that a high level of the integrity assessment is not related to the dependent variable. In Table 13 , some control variables are also statistically significant. Models II, IV, and VI in Table 13 show that organizations related to economic affairs have received better scores on government main project evaluations than other types of organizations with a 99 percent confidence interval. Models II and VI in Table 13 also show that organizations with more employees achieve a high-performance level of government main project evaluations with a 95 percent confidence interval.

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Min, Ks. The impact of corruption on government performance: evidence from South Korea. Crime Law Soc Change 79 , 319–345 (2023). https://doi.org/10.1007/s10611-022-10054-x

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  • 12 February 2024

China conducts first nationwide review of retractions and research misconduct

  • Smriti Mallapaty

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The reputation of Chinese science has been "adversely affected" by the number of retractions in recent years, according to a government notice. Credit: Qilai Shen/Bloomberg/Getty

Chinese universities are days away from the deadline to complete a nationwide audit of retracted research papers and probe of research misconduct. By 15 February, universities must submit to the government a comprehensive list of all academic articles retracted from English- and Chinese-language journals in the past three years. They need to clarify why the papers were retracted and investigate cases involving misconduct, according to a 20 November notice from the Ministry of Education’s Department of Science, Technology and Informatization.

The government launched the nationwide self-review in response to Hindawi, a London-based subsidiary of the publisher Wiley, retracting a large number of papers by Chinese authors. These retractions, along with those from other publishers, “have adversely affected our country’s academic reputation and academic environment”, the notice states.

A Nature analysis shows that last year, Hindawi issued more than 9,600 retractions, of which the vast majority — about 8,200 — had a co-author in China. Nearly 14,000 retraction notices, of which some three-quarters involved a Chinese co-author, were issued by all publishers in 2023.

This is “the first time we’ve seen such a national operation on retraction investigations”, says Xiaotian Chen, a library and information scientist at Bradley University in Peoria, Illinois, who has studied retractions and research misconduct in China. Previous investigations have largely been carried out on a case-by-case basis — but this time, all institutions have to conduct their investigations simultaneously, says Chen.

Tight deadline

The ministry’s notice set off a chain of alerts, cascading to individual university departments. Bulletins posted on university websites required researchers to submit their retractions by a range of dates, mostly in January — leaving time for universities to collate and present the data.

Although the alerts included lists of retractions that the ministry or the universities were aware of, they also called for unlisted retractions to be added.

government corruption research paper

More than 10,000 research papers were retracted in 2023 — a new record

According to Nature ’s analysis, which includes only English-language journals, more than 17,000 retraction notices for papers published by Chinese co-authors have been issued since 1 January 2021, which is the start of the period of review specified in the notice. The analysis, an update of one conducted in December , used the Retraction Watch database, augmented with retraction notices collated from the Dimensions database, and involved assistance from Guillaume Cabanac, a computer scientist at the University of Toulouse in France. It is unclear whether the official lists contain the same number of retracted papers.

Regardless, the timing to submit the information will be tight, says Shu Fei, a bibliometrics scientist at Hangzhou Dianzi University in China. The ministry gave universities less than three months to complete their self-review — and this was cut shorter by the academic winter break, which typically starts in mid-January and concludes after the Chinese New Year, which fell this year on 10 February.

“The timing is not good,” he says. Shu expects that universities are most likely to submit only a preliminary report of their researchers’ retracted papers included on the official lists.

But Wang Fei, who studies research-integrity policy at Dalian University of Technology in China, says that because the ministry has set a deadline, universities will work hard to submit their findings on time.

Researchers with retracted papers will have to explain whether the retraction was owing to misconduct, such as image manipulation, or an honest mistake, such as authors identifying errors in their own work, says Chen: “In other words, they may have to defend themselves.” Universities then must investigate and penalize misconduct. If a researcher fails to declare their retracted paper and it is later uncovered, they will be punished, according to the ministry notice. The cost of not reporting is high, says Chen. “This is a very serious measure.”

It is not known what form punishment might take, but in 2021, China’s National Health Commission posted the results of its investigations into a batch of retracted papers. Punishments included salary cuts, withdrawal of bonuses, demotions and timed suspensions from applying for research grants and rewards.

The notice states explicitly that the first corresponding author of a paper is responsible for submitting the response. This requirement will largely address the problem of researchers shirking responsibility for collaborative work, says Li Tang, a science- and innovation-policy researcher at Fudan University in Shanghai, China. The notice also emphasizes due process, says Tang. Researchers alleged to have committed misconduct have a right to appeal during the investigation.

The notice is a good approach for addressing misconduct, says Wang. Previous efforts by the Chinese government have stopped at issuing new research-integrity guidelines that were poorly implemented, she says. And when government bodies did launch self-investigations of published literature, they were narrower in scope and lacked clear objectives. This time, the target is clear — retractions — and the scope is broad, involving the entire university research community, she says.

“Cultivating research integrity takes time, but China is on the right track,” says Tang.

It is not clear what the ministry will do with the flurry of submissions. Wang says that, because the retraction notices are already freely available, publicizing the collated lists and underlying reasons for retraction could be useful. She hopes that a similar review will be conducted every year “to put more pressure” on authors and universities to monitor research integrity.

What happens next will reveal how seriously the ministry regards research misconduct, says Shu. He suggests that, if the ministry does not take further action after the Chinese New Year, the notice could be an attempt to respond to the reputational damage caused by the mass retractions last year.

The ministry did not respond to Nature ’s questions about the misconduct investigation.

Chen says that, regardless of what the ministry does with the information, the reporting process itself will help to curb misconduct because it is “embarrassing to the people in the report”.

But it might primarily affect researchers publishing in English-language journals. Retraction notices in Chinese-language journals are rare.

Nature 626 , 700-701 (2024)

doi: https://doi.org/10.1038/d41586-024-00397-x

Data analysis by Richard Van Noorden.

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