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PREVENTION, DETECTION, AND
CORRECTION OF CORRUPTION
IN LOCAL GOVERNMENT
A PRESENTATION OF POTENTIAL MODELS
II
Office of Development, Testin(l and Dissemination
I
Nallonallnstltule 01 Law Enforcement and CrimInal JustIce Law Enforcement AssIstance AdministraUon U.S. Department 01 Justice
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Jame51 M. H. Gregg Acting Administrator, Law Enforcement Assistance Administra tion
Blair' G. Ewing Acting Director, National Institute of Law Enforcement and Criminal Justice
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PREFACE
Corruption by elected officials and public employees can be a major source of pliblic
dissatisfaction with local government. When officials take money from individuals Of
firms doing business with or regulated by the city, the costs of government rise, regula~
tions go unenforced, and public health or safety may be endangered. Finally, corruption
destroys the accountability of employees to their supervisors and of officials to the
citizens they represent.
Official corruption can be as simple as a $10 payment to avoid a speeding ticket or to
"expedite" a building permit, or it can be as complex as schemes to defraud welfare
programs and tolerate organized crime. Corruption may involve a single "rotten apple"
or an entire department or city council, a single payuff or an ongoing protection net-
work. It can arise in virtually any program or activity conducted by local government.
Despite this multifaceted quality of local official corruption, many simple and inexpen-
sive steps can be taken to prevent corruption or to reduce its impact when it occurs. Sim-
ple diagnostic procedures" rill identify the areas where corruption is most likely to occur
or where it may already be taking place. Ordinances and codes can clarify expectations
of official integrity and reduce potential conflicts of interest. Systematic management
procedures can increase the ability of supervisors' to monitor the activities of their
employees and to investigate actual or potential problem areas. Finally, private organiza-
tions and individuals can monitor the performance of public agencies.
These program models are designed to summarize and analyze the experience of local
governments in the United States in preventing and responding to problems of official
corruption. As is true with othel' forms of illegal behavior, police, prosecutors, and other
criminal justice agencies have an important role to play in combatting official corruption.
We believe that an even greater role must be played by elected officials, managers, and
the public, since the first line of defense against corruption must be effective prevention,
detection, and control programs. As a result, this report focuses on the experiences of
local government agencies and citizens' groups rather than on criminal justice strategies.
While much remains to be done by way of detailed experimentation and evaluation of
corruption control programs, we hope that this report will assist local officials and
citizens to analyze their problems and develop useful and effective programs.
This document has been prepared as a capstone report to two and a half years of
research in the area of corruption in local land use and building regulation. This previous
work, performed under a grant (No. 76-NI-99-0087) from the National Institute for Law
Enforcement and Criminal Justice (NILECJ), is documented in a series of books and
reports published variously by NILECJ, SRI International, and Praeger Publishers, (see
bibliography herein). The authors of this program model performed much of the work
done under the earlier project and have accordingly drawn heavily on the findings from
the original research. On reading this report, it will be noted that this work/ itself, repre-
sents a methodology for the preventi(;>I1, detection, and correction of corruption in local
iii
TABLE OF CONTENTS
Preface........................................................................... .. iii
'Reprinted from the Cincinnati Post (January 12, 1974).
- I THE PROBLEM OF CORRUP1 IN IN LOCAL GOVERNMENT. List of Tables iv - A. Corruption Is Not Beyond Our Control " - B. Corruption Is a Widespread Problem • - C. The Cost of Corruption Is High , - D. The Anatomy of Corruption. - E. How To Defeat Corruption - II DIAGNOSING CORRUPTION - A. Where To Start Looking - B. How To Start Looking. - C. What To Look For-·Management Practices " - D. What To Look For - Elected and Appointed Officials - E. What To Look For - Records and Actions - F. What To Look For - Attitudes and Climates of Opinion - G. Subje\7tive Indicators
- III USING LAWS AND POLICIES TO FIGHT CORRUPTION - A. What Laws, Formal Policies, and Written Rules Can Do - B. Codes of Ethics - C. Conflict of Interest Legislation - D. Disclosure Policies - E. Declaration of Interest and Related Policies - F. Open Meeting and Records Policies ..................•......................... - G. Campaign Finance Regulation - H. Implementing Laws, Regulations, and Policies , ,
- IV REMEDIES IN MANAGEMENT AND ADMINISTRATION .•............... , - A. What Difference Can Management Make? - B. Management Environment. ........•.......................................... - C. Management Control. - D. Audit Control - E. Training , , - F. Investigation , - G. The Managilment Team - V REMEDIES FROM THE OUTSIDE - A. What Difference It Makes - B. What Citizens Can Do - C. Citizen Watchdog Groups - D. Investigative Journalism , - E. Public Interest Organizations and Professional Associations - A. Model Code of Ethics. APPENDIXES - B. Basic Restriction of the Common Cause Model Conflict of Interest Act - C. Example of Financial Disclosure Forms , - D. Example of Policies Regarding Conduct of Public Hearings - E. Selections from Florida's GDvernment in the Sunshine Law. - F. Internal Control ' - G. Internal Performance Audit - H. By-Laws of the Better Government Association, Inc - 1. My Town's Report Cal'd*
- BIBLIOGRAPHY - 1 Varieties of Corruption , " LIST OF T ABI~ES - 2 The Cost of a Bribe. • - 3 Scenarios with Different Elements. - 4 Diagnostic Checklist - Official Policy Toward Corruption - 5 Diagnostic Checklist - Detection Tuols - 6 Diagnostic Checklist - Management - 7 Diagnostic Checklist - Elected and Appointed Officials - 8 Diagnostic Checklist - Zoning and Building Regulation - 9 Sample Survey Instrument -- Health Inspectors
- 10 Sample Survey to Determine Public Perception of Corruption
- 11 Statutory Remedies and the Problem Areas They Address
- 12 Installing Management Controls
- 13 An Effective Audit Control System
- 14 The Sequence of an Investigation
- 15 Remedies in the Public Domain and Outside of the Government
- 16 Investigative Techniques and Principles.
Table 1
VARIETIES OF CORRUPTION
Example A - Land-Use Bribe "Nice llardware store you have here, Mr. Roe." "Thanks, you in hardware?" "No, I'm an attorney. I wanted to talk to you about the zoning for the Smithfield land." "Not much point in talking, I'm afraid. Our voters figure the town's grown too fast and we just can't afford to approve any more new developments." "Well, now, Mr. Roe, that's just why I wanted to talk to you. You're the mayor, and the coun- cil and the planning commission will listen to you. Sooner or later, you're going to accept a new development, and my client stands to make a lot of money if it happens this year; we have an option on the Smithfield property, and we'd hate to lose that money. Be worth quite a bit to my client to have that zoning changed." (After extended negotiations, they agreed that $70,000 would be divided among commis- sioners and council nll~mbers. Despite strong opposition from citizens' !51'OUpS, the develop- ment was approved.) Example B - Procurement System Payoff
The city needed 20 truckloads of crushed gravel for street repairs. The request for bids specified that only Lockport dolomite gravel could be used, although its performance charac- teristics were no better than those of several other types of stone. Only one quarry in the area produced Lockport dolomite gravel, and won the contract without contest even though its bid was high. The purchasing agent for the city received a share of the quarry profits.
Example C -- Extortion in the Permit System The architect had brought his blueprints to the Building Department office two weeks before. When he returned the first time, the plans inspector was sorry, but the blueprints seemed to have been mislaid - nothing to worry about, they were in the office somewhere. When he returned the following week, the inspector was very sorry, but he'd only had time to check out the plans fO'r the first floor. The architect would just have to wait and they'd get to the plans as soon aSI they could. The contractors were waiting to start work, so the architect called up a colleague to ask him what to do, and was told to hire an "expediter." He did, being very careful not to inquire what the expediber did with the $100 "expediting fee," and the permit was delivered the next day. Example D - Compromising Law Enforcement "What's the problem, officer?" "This is a 45-mile zonei you were doing 55. Let me see your license." "I'm sorry, officer - I guess I just didn't see the sign." "You can do your explaining to the judge - your license, please." "Look, officer, I'm on my way to the lake for a couple of weeks - could you pay the fine for me? Here's a twenty." (The officer pocketed the $20 and wrote no ticket.) Example E - Organized Crime At the victory party for large campaign contributors the Friday night after the election, the new mayor was approached by the owner of a local bar and a friend of his who was
Table 1 (concluded)
described as having "business interests" in the city. The friend wanted to discuss the selection of a police chief, and made it clear that it w!Juld be worth a good deal of money to have a chief who wouldn't make difficulties about local gambling. The mayor realized that it was more than just card games at the local lodge hall when the friend made it clear how much the syndicate was prepared to pay. The mayor agreed to let the syndicate name the police chief and the head of the vice squad. For the next three years (until all were indicted by a Federal strike force), the syndicate paid off the mayor at the rate of $500 pel' week and the police chief at $100 per week, and the gam- bling went on without interference. Example F - Disorganized Crime "Gimme a beer, Sam. Hiya, Mike -you get off early, or something? You didn't get fired from that city job, did you?" "Nah - you can't get fired if you're a friend of my alderman. I'm just taking a long lunch hour - I've got fifty bucks riding on the game and I want to see every dollar of it all the way to the end. One of the guys is covering for me - we trade off." "Well, I'm glad you didn't get fired. Hey, you told me one time you had a little cement mixer I could borrow." ''It isn't mine, exactly. I got it out in the truck, but you can't use it this weekend -I'm laying a patio for a neighbor of mine.". "Would you ask the guy you borrowed it from if I could use it next weekend?" "Don't have to ask him. It's just shtin' there in Corporation Yard. Long as the truck has city plates on it, all you gotta do is drive in, load it up, load up a couple of sacks of cement, and then bring it back on Monday. Shoot, nobody minds - guys do it all the time. They don't even check are you from Public Works or anything." "You mean you borrowed a city truck?" "Sure. How else could I get the cement mixer home?"
Times estimated that bribes relating to the construction industry alone reach $25 million a
year in New York City alone. This is more than just the ordinary cost of doing business.
The cost of a building whose permit has been held up by a corrupt Building Department
(Example C in Table 1) is increased by more than the cost of the bribe; it is increased by
the cost of having the contractors wait, and by the cost of the extra interest paid on the
contractors' loans.
Corruption such as a low assessment for property in return for a campaign contribu-
tion or a no-interest loan costs more than the bribe; it costs the local g(wernment the
missing revenue, and costs the other taxpayers in the area the difference between what
should have been and what was. The ultimate cost of even a small bribe is quite large (Ta-
ble 2). Corruption that lowers fees to governmenUundercounting electrical outlets in a
city that charges a set fee per outlet) costs the city money, and costs the taxpayers money.
It has been said that if all corruption could be wiped out, we would have found the
answer to inflation.
The cost of corruption is paid in more than money. In Example A (Table 1), the rezon-
ing of Smithfield farm from agricultural to residential, the majority of the citizens had
made it clear that they did not want more growth. A tiny minority - those who were
the pusher can offer the police more to let him stay in business than the parent can of-
fer to get him out adds to the desire of many families to abandon a corrupt city for a less
corrupt - or not corrupt - suburb.
We expect elected officials and city/county employees to serve the public interest to the
best of their ability. When officials or employees sell public contracts or immunity from
laws, the pubF..ic has effectively lost control over its government. The resentment over one
incident - even though it may not reveal itself in the next election - revea,ls itself in in-
creasing contempt for politicians and public servants, increased voter apathy, increased
resistance to tax increases and law enforcement efforts, and a strong senSI;! that "equal
treatment under the law" is a sick joke.
D. The Anatomy' of Corruption
Corruption has three main components that are controllable and one that is not. The
three controllable ones are opportunity, incentive, and risk; the uncontrollable one is
personal honesty. Many public servants over a long period of time have had the freely
available opportunity to be corrupt, a large incentive to do so, and lime risk of being
found out if they did, but ha ve refused because "it wouldn't be honest."
Although we cannot control individual honesty - or even measure it reliably in spite
of th~ £loud of psychological tests on the market - we can control the conditions under
which public employees and public officials operate. It may be true that the corrupt in-
dividual is a ''bad apple,o but we can only know that after he has committed a corrupt
act and has been found out. It s~ems much more intelligent to control those aspects we
CAn control, rather than to leave it all to individual differences that can only be dis-
covered after damage has been done.
Controlling the incentive is the most difficult:. There will be situations in local govern-
ment where a zoning change can bring a developer hundreds of thousands of extra dol-
lars of profit, where a contract is being let for a multimillion-dollar sports arena and con-
vention center, where crime syndicates stand to lose millions of dollars if the laws are
strictly enforced against gambling, prostitution, narcotics, and bootlegging. There will be
situations in local government where a small incentive exists, but the opportunity comes
up several times in the course of a day, as for building inspections, health and sanitation
inspections, or traffic violations.
Sometimes increasing the penalty is mistaken for increasing the risk that attends a cor-
rupt act. But the penalty is only one portion of the risk - if the bribetaker never gets
caught, the weight of the penalty has little effect. In fact, too extreme a penalty may dis-
courage discovery of corruption; the penalty for stealing a handkerchief in 17th century
London was death, with the result that there was a brisk trade in stolen handkerchiefs,
because victims were reluctant to press charges when the result would be the hanging of
a 12- or i3-year-old child.
E. How To Defeat Corruption
Corruption is most likely to occur where incentives ouhveigh risks, and where oppor-
tunitie!J exist (Table 3). A program of prevention, detection, and control should begin
with those aspects of local government where the incentives are large (or small incen-
tives arise very frequently), and should be based on limiting the opportunities and in-
creasing the risks. Programs that depend on personal honesty are defeated by those who
Table 3
SCENARIOS WITH DIFFERENT ELEMENTS
Great opportunity, large incentive, low risk In a state where the true owners of real estate need not be a matter of public record, and in a city where aldermen routinely vote for each other's measures without much investigation, an alderman who was actually the true owner of some land managed to get it leased to the city for a large parking facility at a price that would have given him most of a quarter million dollars over several years. (The risk was actually higher than it appeared because the land transactions of the alderman were under investigation by a citizen watchdog group.) Great opportunity, small incentive, low risk The building code of a large city requires, but does not define, Z-bars to brace building walls during certain remodeling and demolition activities. Because there is no agreed-on definition of what a Z-bar is, a building inspector can claim that what the contractor is using as Z-bars is not adequate, and order the contractor to stop work. To prevent that from happening, con- tractors routinely payoff building inspectors. Some opportunity, small incentive, high risk Employees of a midwestern suburb that has avoided corruption turn in ,- unopened - Christmas gifts from local businessmen; the city manager then has the gift opened and returned to the sender by a policeman, who rritM get a receipt acknowledging the return. Failure to turn in such a gift could be grounds for dismissal. Slight opportunity, large incentive, high .:isk A city councilman has an opportunity to vote on a project in which he has a strong but in- direct financial interest. If it passes, he stands to prdit by nearly a hundred thousand dollars. However, the city has both a financial disclosure and a conflict of interest ordinance, and all council meetings are matters of public record, by law. He abstains from vo~ing. Great opportunity, small incentive, high risk A highway patrolman stops a speeder who offers him a twenty along with the driver's license. But the patrolman is aware that there are a number of patrolmen - from another part of the state - driving unmarked cars and trying to trap bribe-taking patrolmen. He is also aware that his ticket pad is numbered, and that he must account for every voided ticket. He rejects the twenty indignantly.
believe that dirty money buys just as much as cleC'.n money. Programs that depend on
preventing, detecting, and correcting corruption by controlling opportunity and risk can
be tested by the dishonest, but are not likely to be severly damaged.
On the other hand, setting up a corruption-proof system that depends wholly on pre-
venting corruption is like setting up an unbreakable code, an intrusion-proof computer,
or an unbeatable burglar alarm. To incentive, it adds the element of challenge. Setting up
a detection system and depending entirely on that - as has been done to some extent in
New York City - results in a situation of institutional conflict and paranoia, and leaves
the government and the citizenry still vulnerable.
No canned system, no "off the shelf" program can meet all needs. A large central city
has different vulnerabilities from a swiftly growing outer suburb; a county doesn't have
the same needs as a city.
II DIAGNOSING CORRUPTION
A. Where To Start Looking
The most obvious starting place is where the incentive is greatest. In rapidly growing
areas, zoning decisions and building regulation are likely to be the places where the most
money is at stake. In older cities, very strong incentives may be created by the attempt to
enforce laws that large groups of people prefer not to observe - laws on gambling,
prostitution, narcotics, or liquor. In all large cities and urban counties, property tax
assessments, contracts, and procurements will offer significant incentives for corruption.
The next place to look is where the individual incentive is smaller but the oppor-
tunities are frequent. In rapidly growing areas, building inspections at construction sites
may be a likely target while in decaying central cities inspections of old buildings for
code violations are more likely to present corruption incentives. Traffic code enforce-
ment, sanitary code enforcemen: (as for restaurants), fire safety inspections, and process-
ing of licenses and permits all offer only small incentives for corruption, but offer them
daily.
Incentives are magnified in situations where action is not prompt; where offices have
too few staff or too little supervision for efficient processing of the workload; where am-
biguous, obsolete, inconsistent, or contradictory regulations remain on the books; and
where employees of local government receive salaries or wages that are much below the
level paid in private industry. Incentives are reduced where decisiol1s are made
promptly, processing is swift, and regulations are regularly reviewed and pruned back to
only those whose enforcement is of serious con~ern.
Incentives by themselves do not necessarily result in corruption. The next place to look
is where the opportunity is greatest; that is, where a decision is made by one or a very
few people, where it need not be accounted for or explained, and where the outcome of
the decision is not publicly visible. Opportunities for corruption are reduced when~ ac-
countability for decisions is clear and where decisions are publicly visible.
Opportunities can produce corruption even in the absence of cash incentives. If there is
no effective supervision of work crews, it may be much easier to stretch the work out as
long as possible. If no one checks time cards, or checks whether or not an employee is in-
deed on the job, there may be no incentive not to stop down the block to watch the game
on television and have a couple of beers. Similarly, if there is no effective monitoring of
the use of government cars, or other government property, it may seem acceptable to use
the government station wagon for the trip to the lake because it holds more, or to use
government tools for private work.
Finally, corruption is most likely where the risk is least. The lowest possible risk exists
in communities where there are no regulations intended to prevent corruption (TallIe 4),
where ordinances forbidding it are not enforced, where even the most flagrant abuses
result in little or no penalty, and where corruption is assumed to be the common way of
doing business. Risks are minimized in communities where jobs are protected by
patronage or by unwieldy civil service systems that allow for an almost infinite series of
appeals, or where unions perceive any employee discharge as an intolerable threat. Risk
is also minimized at higher levels of government where civic leaders and the media view
8 I J
the public exposure of corruption as an attack on the economic health of the community
or where public exposure of corruption is seen as merely an attempt to substitute a new
set of rascals for the current one.
Table 4
DIAGNOSTIC CHECKLIST - OFFICIAL POLICY TOWARD CORRUPTION
In your jurisdiction, do statutes and ordinances clearly forbid (and clearly define) bribery, extortion, and other forms of official misconduct? Does your jurisdiction have an official code of ethics specifying what conduct is officially desired and what is officially prohibited? Do these rules cover all elected officials, appointed commission memb~rs, department heads, and lower-ranking employees whose duties may offer opportunities for corrupt acts? In addition to prohibiting cash payments, do rules prohibit the acceptance of meals, gratuities, discounts, and favors from any individual or firm doing business with the city or county or subject to regulation by the city or county? Do rules forbid engaging in private business on city/county time or using city/county materials or equipment for private purposes? Is outside employment that conflicts with official duties forbidden? Are officials forbidden to represent private interests in dealing with city agencies, or take positions with firms they have previously regulated? Do campaign finance laws set limits on contributions from individuals or firms doing business with the city/county? If the answer to the above questions is "yes,j Are all pexIl1D1nnel >covered by the statutes, ordinances, and rules regularly informed of 'What is required of them in the conduct of their official position or their job? Are there :mechanisms for detecting and dealing with violations? Does every aetected violation result in an appropriate disciplinary action or in prosecu~ion? __ __ A "no" answer to any question indicates a deficiency; the jurisdiction dloes not have all of the tools aeed,ed to combat corruption.
B. How To Start Looking
Some people who participate in corruption make no attempt to hide their activities,
either believing that what they are doing is perfectly acceptable or expecting that no one
will be watching. In most cases, however, participants will attempt to cover their tracks,
both by making payoffs secretly and by attempting to provide a legitimate cover for their
decisions. Where this is true, uncovering corruption problems can be difficult. Existing
9
C. What To Look For - Management Practices Statutes, ordinances, regulations, and codes of ethics will not be effective tools in com- batting corruption unless:
- Everyone concerned is aware of them.
- They are consistently enforced.
- Penalties for violation are strong enough to providej realistic disincentives and are conj,istently applied to violations. Management practices affect both the opportunities for corruption and the risks that at- tend any act of corruption. Frequently, corruption results from poor management - management that does not use all of the tools at hand to limit the opportunities and maximizl~ the risks. Officials and employees alike feel that they can Fget away with cor- ruption if they perceive that no one is looking. If nothing bad happens as a result of one or more acts of corruption, it is likely to appear to the actors that nobody cares or even that such acts are condoned. A folklore may arise that corruption is permitted "because salaries are so low," or because the extra compensation is a perquisite that goes with the job ("supervisors get to take their cars home, and they get all the free gas they want," for example). None of the tools management can use to prevent, detect, and correct corruption will prevent, detect, or correct a corrupt act by the manager or by an elected official; in general, management tools don't work upward. In addition, the absence of management tools to combat corruption is not evidence that corruption exists, only that nothing is being done to prevent it {Table 6>- D. What To Look For - Elected and Appointed Officials The fuUlight of public scrutiny is not a guarantee that no elected or appointed official will abuse hislher position or violate the public trust, but protection from public scrutiny maximizes the opportunity for corruption and minimizes the risk. In addition, there is no more reason to suppose that elected or appointed officials will be aware of what con- stitutes ethical behavior if nobody tells them than there is to suppose that employees are born knowing what ethical considerations should govern their public service. The ultimate control over the acts of elected and appointed officials rests with the public, but exercise of th<lt control can be made easier or more difficult by the policies of law enforcement agencies, the practices of local media, and presence or absence of citizen watchdog groups. See Table 7 for a diagnostic checklist. E. What To Look For - Records and Actions Corruption can arise in virtually any area of local government activity, and wiIlleave distinct traces according to the area -law enforcement, land-use regulation, purchasing, or tax assessment. It is possible to put together a diagnostic check list that will indicate possible corruption in a particular area. Table 8 shows a sample diagnostic checklist for zoning and building regulation. Again, however, it must be emphasized that these diag- nostic checklists will not show you whether or not corruption exists in your jurisdiction, only whether or not it is likely. Audits (both financial and performance audits) may be needed to turn up specific incidents.
Table 6
DIAGNOSTIC CHECKLIST - MANAGEMENT
In recruiting candidates for positions that offer an opportunity for corruption, is information gathered about the candidates' backgrounds, and is that information verified?
Do training programs for new employees cover integrity expectations and the penalties for abuse? Are these policies reinforced in subsequent retraining programs or review programs for those in service? Does the city/county have a disciplinary COdE! that specifies policies, penalties, and enforcement procedures for aU employees? If so, is the code enforced? Are employees charged with ethics violations immediately suspended until the investigation is completed, or can they transfer, or retire and keep their pension rights? Are the actions of employees regularly reviewed by supervisors, and are the actions of supervisors, department heads, and managers regularly reviewed by the chief elected or appointed official and the board or council? Are all employees with decision-making powers required to record their decisions in writi~lg, with their name attached, and to justify any deviation from existing policy? Do rules provide penalties for failure to provide information on demand when it is a matter of public record, or failure to respond to questions or inquiries about decisions? Do rules provide penalties for failute to report a corrupt act observed or failure to deal with an instance of corruption by a subordinate?
