Managing Conflict of Interest - Organisation for Economic Co ...

Defining Conflict of Interest 29by and large put their personal interests first. Corruption in the mainhas been below the top level of government. Consequently, P.R.China has avoided the “state capture” by business interests that hasblighted Russia. Furthermore, it has been argued that Chinese corruption—becauseit is primarily at the local level—is of a competitivenature and therefore involves an element of “ market clearing.”Unlike monopoly “rent seeking” in central government, “competitivecorruption” can ensure the efficient use of the scarce resourcesthat officials control; if one set of local officials is too greedy, businessescan go to another locality.IndiaIn terms of governance, when India became independent in1947 it was fortunate in three respects. It had a democratic constitution.It had a professional higher-level civil service well known for itsintegrity and impartiality. It had political leaders who, influenced byGhandi, lacked material ambition for themselves and were whollycommitted to the economic and political transformation of theircountry. Where corruption and conflict existed, it was at low levelsof government and of a petty kind—involving “speed money” paidby the “common man” for various public services.Over the following decades, several things changed. Thestrict controls on imports and investment offered significant “rentseeking”opportunities, especially in a situation of severe foreignexchange and capital goods shortage. Punitive tax rates encouragedtax evasion and bribery of revenue officials. As the CongressParty ceased to have a near monopoly of power at the center andin the states, it needed increasing amounts of money to fight elections.Other parties also needed money. Factionalism, particularlyat the state level, and the competition for limited public resourceswas a powerful driver of political corruption. 19 Corruption by politiciansrequired the complicity of officials. Although the media havebeen reasonably effective in exposing political corruption, thisfactor has not stopped politicians with corrupt reputations or evencriminal records from getting elected: voters seem more interestedin whether the politician will deliver on his or her promises.19See Khan, Mushtaq. 2006. Corruption and Governance in South Asia. In SouthAsia 2006. Europa Publications.ADB/OECD Anti-Corruption Initiative for Asia and the Pacific