Crimes of corruption? In Hungary? Where?

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When we hear the expression of corruption, the first things coming into our mind are the different types of bribery: bribery on business level or bribery at public offices. Besides the above, abuse of function likewise fall under the category as well as the so-called indirect corruption when someone literally makes a living out of his connections. Nevertheless, crimes of corruption usually appear as ‘necessary companion’ in case of misappropriation of funds or public procurement frauds.

Crimes of corruption are severely punished by law, depending on the circumstances; those involved in such actions might be ‘rewarded’ up to 10 years of imprisonment provided that they are caught at all. Participants of such actions however, are rarely held responsible…

Why are we not aware of the corruption around us?

If a theft is committed in the middle of a shopping mall, the case turns out immediately since the victim calls for help, notifies the body guards, the police comes to the crime scene, a police report is soon being drafted and then the criminal procedure is initiated. In such a case, we do have a perpetrator, a victim and potential witnesses, too.

Regarding the crimes of corruption – unlike in the above example – we do not have victims of witnesses in a classic sense. Anybody involved in the corrupt transaction shall qualify as perpetrators, thus, the one who gives the money, the one who accepts/asks for it and even the one who is aware of such action and agrees with that. Seemingly, every participant ‘wins’ as someone gets cash or benefits in any other way, wins without competition and whatnot. When they are caught, everybody loses and they all have to face a criminal procedure. Bearing in mind this obvious common intent, it is not a coincidence that there is massive latency in these crimes and we cannot even have an estimate upon the exact number of corruption related crimes committed on a daily basis…

How many crimes are we aware of in Hungary? Based on statistics from the past 5 years, approximately 400.000 crimes come to the attention of the authorities. Less than 1% among the crimes falls under the scope of corruption. Only 482 corruption-related crimes were discovered in 2010, while 1105 crimes had been uncovered in 2013. In addition, most of these procedures were not terminated with the sanction of imprisonment, but with fine for example. This fact again underlines that only the small-scale, petty crimes came to light.

Still, world-scale researches and studies address the effects of corruption on the economy. According to a recent estimation of the IMF, corruption each year leads to a net loss of 1500-2000 billion dollars to the world economy (that approximately equals to 2% of the total GDP). Note, that it is beyond doubt that Hungary adds more to the said 2% than several hundred petty bribery cases punished with fines.

What’s wrong?

Corrupt transactions infect both the public and the business sector. Let us think over that any scandal linked to corruption that becomes public, weakens our confidence in the institutional system that ultimately hinders the effective functioning of state administration bodies. Speaking of the business sector, business decisions passed onto dudes undermine our confidence in business byway of reducing the willingness of invest and leading to a deterioration in quality in case of existing investments while (as everybody deserves his own share…) the project becomes highly overpriced. The deterioration in quality does not only refer to assets and material resources used but human resources behind the investment; a loyal „business” partner may worth more than a good professional.

It is not a challenge to identify the consequences if investors decide to avoid the country. It hinders development, liquidates competition and transparency of economy, deprives the state from tax income, weakens the social cohesion and all this happen in regions where the opposite trend is most needed: in Eastern and Central-Eastern Europe, including Hungary.

Public Governance, Administration and Finances Law Review
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How to fight?

On the companies’ level it is worth to do more for prevention i.e. to consider the implementation of various controlling and/or monitoring mechanisms: an internal policy can be such an instrument. However, the internal policy should not only be well written, to familiarize and enforce its content is of utmost importance. Another wise tool is to organize trainings upon transactions having hidden risks of corruption (for example accepting gifts from business partners?). The first step to be taken in this regards by companies with international background or with an anyway advanced corporate culture is always to raise awareness upon requirements based on law or internal policies, the designation of boundaries and the presentation of dangerous situations.

It is also the interest of a company – if it failed to prevent – to be informed as soon as possible upon any suspicious action to take the necessary measures in order to minimize the risks and the damages arising. A system that provides the opportunity for employees to report anonymously would serve this aim.

Of course, all the above mentioned examples are just indicative proposals to prevent corruption. When the intent on the company materializes, the involvement of the right professional is strongly recommended in drawing up, applying and presenting the program to coworkers.

The international anti-corruption guide of Schoenherr has just been published in which, members of the firm address the differentia specifica of crimes of corruption with regards to Hungary as well.

 

 

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