For the Love of Money: Capitalizing on Corrupt Officials’ Opulent Spending Habits to Fight Corruption

Corruption is notoriously difficult to track and discover, not least because both sides in a corrupt exchange have strong incentives to avoid getting caught. So how can enforcement officials, journalists, and anticorruption activists catch corrupt actors? Pay close attention to flagrant and excessive spending by public officials. After all, most people who benefit from corruption, whether they are officials receiving bribes or industrialists benefitting from the government action they purchased, do it for the money. And what’s the point of taking on so much personal risk to make more money if you can’t spend it on nice things? This is why you’ll see Chinese officials wearing wristwatches worth four times their annual salary and presidents spending millions on designer clothes and shoes and other luxury goods. The additional risk of being caught seems to be outweighed by the perceived social benefits of public displays of wealth. Throwing lavish weddings and banquets seems to be a particularly common trap that captures this phenomenon. The very public nature of these events, the massive guest lists, and the attendance of well known figures all but guarantee public scrutiny. But current and former government officials just can’t seem to help themselves. For example, in the middle of India’s recent anticorruption crackdown a former government minister held a lavish wedding for his daughter at a cost of over $75 million. This is in a country where a former state chief minister and potential prime minister was recently sentenced to four years in prison, banned from politics for a decade, and fined $16 million after an investigation sparked by an astonishingly opulent wedding she hosted.

Over the past decade, the spending habits of dozens of high-ranking officials have produced a number of viral news stories and have, in some cases, led to effective enforcement actions. The fact that people are willing to spend their corruptly acquired wealth so publicly, in spite of the risks involved, provides enforcement officials and anticorruption advocates with a unique and important opportunity in three respects:

  1. It provides prosecutors with powerful circumstantial evidence that a public official took bribes or otherwise unlawfully acquired money. Even in jurisdictions with poor financial disclosure laws, the discrepancy between a government official’s spending habits and her formal salary can provide a rebuttable presumption of corrupt conduct. If the accused official provides verifiable documentation of legitimate income used for the event or luxury item (or can prove that their in-laws paid for the wedding) then that might suffice to lift the cloud of suspicion. But if an official is unwilling or unable to explain their lavish expenditures or points to what turn out to be inappropriate “gifts” from others as the source, then prosecutors have a good shot at a win in a context where unimpeachable proof is hard to come by.
  2. The publicity associated with these expenditures can help communicate that the government takes corruption seriously and that acts of corruption will be punished. When enforcement resources are limited, successful, high-visibility enforcement actions can sometimes provide greater deterrence than a sustained anticorruption campaign. A similar strategy of focusing on high-profile targets has been effectively used in the context of tax evasion (see here for a great podcast on this strategy as used by the Philippines to target boxer-turned-Senator Manny Pacquiao). But this strategy does involve at least one major risk: if one of these cases is managed poorly or produces an unexpected legal result, the high visibility of the outcome could dramatically undermine anticorruption deterrence. The recent investigation and unsuccessful prosecution of former Virginia Governor Bob McDonnell provides a particularly frustrating example. (The investigation was first triggered when a businessmen paid for the catering at McDonnell’s daughter’s wedding and then became a highly visible and symbolic prosecution, the case has been discussed extensively on the blog here, here, and here.)
  3. The wide publicity and public outrage generated by these incidents can be leveraged by enforcement officials and anticorruption advocates to help spark reform efforts and establish anticorruption as a cultural norm. The viral nature of these news stories is in large part driven by a sense of shock and disgust at the hubris and opulence of the expenditures, particularly in jurisdictions where there are high levels of poverty and inequality. (See, for example, this post on how social media posts showing government officials’ lavish lifestyle contributed to anticorruption protests in the Philippines). If harnessed effectively, the powerful emotions generated by these incidents can provide momentum for reform. For example, an extravagant wedding hosted by the head of Burma’s Junta served as powerful evidence of extreme corruption that helped mobilize international and domestic criticism of the ruling clique.

To be sure, a dogged focus on conspicuous consumption might not always translate into the successes I’ve suggested. An exclusive focus on public displays of ill-gotten wealth might simply encourage corrupt officials to spend their money differently rather than reduce their corrupt behavior. Similarly, even if outrage resulting from high visibility enforcement actions translates into political pressure, governing elites might simply institute policies against public displays of wealth rather than directly addressing the underlying corruption. Indeed, some commentators have critiqued China’s anticorruption campaign as more focused on appearances rather than real corruption, pointing to directives such as the order that all officials must notify their bureaus in advance of future weddings and funerals.

That said, as long as people perceive the social benefits of displaying wealth to be higher than the social costs of corrupt behavior and the personal risk of punishment, corrupt officials will continue to consume conspicuously, and continue to get caught. This reality is disheartening insofar as it speaks to the long way we have yet to go in creating a culture that condemns corruption and does not celebrate wealth regardless of how it was accumulated. But until then, at least prosecutors, journalists, and anticorruption reformers have two key weapons in their arsenal to fight corruption: the greed and vanity of public officials and the anger and resentment their actions inspire in the public.

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