For the second time in the space of a couple of months I find myself explaining to the leaders of an anticorruption agency that a program requiring senior officials to disclose their income, assets, and other details of their personal finances won’t end corruption or, for that matter, cure the common cold or otherwise solve all their nation’s ills. There seems to be some kind of myth floating around the development community and at least some self-anointed anticorruption “experts” that such a program can by itself lead to the exposure of a great deal, if not all, of corrupt activity.
If only it were that easy. The truth is the evidence points in virtually the opposite direction.
It is rare that analysis of an income and asset statement will, without more, reveal corrupt activity. The reason is simple: the vast majority of dishonest officials take elaborate measures to disguise the proceeds of corruption. They do not deposit large sums received as bribes in their personal bank accounts, nor do they hold expensive homes or cars realized from corruption in their own name. Rather, they open bank accounts in the name of a relative or a corporation, or find other ways to hide the ill-gotten assets from the authorities’ view.
To be sure, there are instances where a financial disclosure program alone has tripped up an unwary corruption official. He or she has registered a car or parcel of land acquired corruptly in a public registry while failing to disclose it on his or her disclosure form. Or the official reported significant assets while showing only a small income, and is unable to offer a plausible explanation when queried about the disparity. But these cases are unusual. For example, the Thai authorities have reviewed thousands of income & asset declaration forms over a ten year period, and in that time they found only seven cases where property was registered in a public registry and not disclosed on declaration. And a study of the Macedonian income & asset declaration program found that out of 176 cases of unreported income investigated over a nine year period, none was significant enough to trigger prosecution for illicit wealth.
In the first years of a country’s disclosure program, simple analysis of the submissions may reveal some cases where corrupt officials unwittingly report information that exposes corruption. But anticorruption agencies should not expect large numbers of corrupt officials will be caught this easily. Not only will most dishonest officials already be taking steps to disguise their illegal behavior, but as soon as an agency makes out one case against a corrupt official from a submission, word will spread and others will take additional measures to hide their illegal assets and income. Consider the reaction to the introduction of fingerprint technology: When criminals realized they could be caught if they left their fingerprints at the scene of a crime, all, or almost all, began wearing gloves.
Of course, the fact that savvy criminals now wear gloves hasn’t stopped the police from looking for fingerprints at the crime scene. Likewise, evasive actions by corrupt officials does not mean income and asset disclosure programs are worthless. They provide some assurance to citizens that public officials’ conduct is being monitored, a significant in countries where rumors of widespread corruption are rife. Declaration requirements that force officials to take more elaborate measures to hide their loot raise the costs of corruption, and may therefore reduce its incidence somewhat. And declarations are also useful once a corruption investigation has begun, because investigators can use a declaration to catch a suspect in a lie — for example, by comparing the income and assets reported against the suspect’s lifestyle.
But those advising anticorruption agencies owe it to their clients to be realistic about what financial disclosure programs can and cannot achieve. Making extravagant claims about the effectiveness of financial disclosure programs, or any other anticorruption initiative for that matter, does real harm. It leads policymakers to think there is an easy way to controlling corruption when the fact is that corruption control requires a patient, long-term commitment to a number of policy changes.