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:

Continue reading

Forget FIFA: China Battles Corruption by Banning Golf

President Xi Jinping has made fighting many different kinds of corruption a priority of his administration, and so far 180,000 party officials have been caught and punished in the government’s wide-ranging anticorruption campaign. As part of this campaign, the Chinese government recently banned golf memberships for Communist Party members — all 88 million of them. The complete ban is part of an anticorruption strategy that involves cracking down on many of the lavish banquets and other types of conspicuous consumption by public officials that have caused widespread public anger in recent years, anger both at corruption, and at the country’s deepening economic inequality. The golf ban comes after months of tightening restrictions on how officials can play golf, following a scandal involving a suspicion that a top member of the commerce ministry allowed a company to improperly pay his golf expenses, as well as reports that some officials were playing golf during working hours.

The golf ban is not an isolated anomaly: A significant part of the Chinese campaign has involved tightening restrictions on various forms of conspicuous consumption by public officials. For example, officials are now prohibited from staying in five star hotels with public money (a move that led 56 hotels to ask to be downgraded to four stars so that they can continue to accept government clients), while lavish banquets, once a mainstay, have been limited to “four courses and one soup.” Golf is the latest luxury activity to fall under government regulation. But while these crackdowns could help the government look like they are taking corruption even more seriously, banning golf and other types of conspicuous consumption may actually serve to worsen the problem.

Continue reading