Hidden corruption: the illusion of the corruption-free country

In Sweden, we cannot and should not accept corruption. That a local government official would receive a personal benefit at the expense of local residents should not be possible. The latest ESO (Expert Group on Public Finance) report and its international corruption index indicates that Sweden is one of the least corrupt countries in the world, but simultaneously, national studies show that Swedish citizens perceive that politicians and public officials often act in their own interests rather than the public’s. There is a genuine cause for suspicion.

In light of the international investigations, the Swedish public’s perception might be dismissed as unfounded and prejudiced. But this is a problematic conclusion to draw. An example can be found in Iceland which, before its financial collapse, was ranked in the international corruption index – like Sweden – as a country virtually free of corruption. Yet, in the wake of the financial collapse a completely different reality existed – a picture that was marked by widespread nepotism with decisions being taken on far from objective grounds. The effect of this was felt all too well by Icelanders. The international studies had failed to identify the hidden corruption in Iceland and there are other reasons to take Sweden’s good rating with a handful of salt. It should be remembered that a comparison of countries does not actually say anything about the real extent of the problem. The only thing we know is that Sweden is a country that’s less corrupt than most. The ESO is like a doctor who has diagnosed 180 patients and declared Sweden among the least ill.

Local self-government

Sweden is a comparatively decentralised country. Municipal autonomy means that the lion’s share of public administration and the exercise of authority is done by Sweden’s 290 municipalities and not the state. Each year, the public sector procures goods and services worth 500 billion kronor. Of this total, approximately 100 billion kronor is received directly, i.e. procurement which is not preceded by a tendering process and where visibility is very often limited. These are particularly precarious conditions.

Calculations show that direct cost savings of 20 billion kronor of public money is only possible through the implementation of functional and competitive tendering processes. For the same money Sweden could organise the Eurovision Song Contest – every other day, for a whole year. Or build two Hallandsås Tunnels. However, inadequate procurement procedures are not only an economic loss. Besides the initial cost savings, a functional procurement process would contribute to stronger industries, where innovation and efficiency are rewarded over time.

The Procurement Committee led by Anders Wijkman has now proposed a substantial increase in the threshold for direct procurement. While a simplification of the procurement rules has long been sought after, this also increases the potential risk of contracts being awarded without justifiable, objective grounds.

Measures to combat corruption scandals

Since the Uppdrag Granskning (Mandate Review) in 2010 revealed the so-called “Gothenburg scandal”, much has changed. SKL (Swedish local and county council) guidelines on “bribery and conflicts of interest – for those who work in state authority, local authority or council” emphasise how easy it is to damage public confidence in an organisation and how laborious and time-consuming it is to re-establish it. Municipalities and companies have responded by tightening up their procedures; sometimes to the point where officials do not even dare to accept an invitation to lunch. This is an overreaction. But examples of the same conduct are plentiful in the private sector. When a company’s corruption scandal is a known fact, the decentralized decision-making structure is abandoned, invitations from customers and suppliers are handed over to the paper shredder and the bureaucracy swells.

It’s only when a company’s financial accounts show a loss of efficiency, that organisations adopt a more stable approach; where personal responsibility, external control and good business relations are balanced against each other. This over reaction reveals an ignorance of how corruption works and the forms it assumes. Corruption is using a public position to obtain an unlawful profit for oneself or others. Compensation for the act can be in the form of a bribe but may also be done without any compensation at all, what’s known as “nepotism”. It is certainly preferable to adopt clear guidelines and introduce checks, but an outright ban is too simplistic and a short-term solution that can be counterproductive. So what can those in power do about this hidden corruption?

Effective measures to preventing corruption

The ESO report proposes a number of concrete measures such as increasing the ability of citizens to review the policy maker’s actions, tighter scrutiny of local authorities and a strengthened local government audit. We welcome these initiatives, but also want to emphasize that enhanced control will not address the root causes of corruption. At its core, corruption comprises of a lack of knowledge on the procurement rules, but especially the ignorance and naivety regarding what corruption looks like and its negative repercussions. It is too easy to reduce corruption to the penal code definition of giving and taking of bribes. Corruption in Sweden spreads in a “temptation structure”, and often takes the form of friends who reward each other at the expense of their clients, transactions under the table, favouritism and nepotism. In order to curb corruption, it is not enough to introduce tighter controls, but rather all authorities should introduce procedures for staff to report any suspicion of corruption. We also need clear leadership together with effective systems and procedures. Most municipalities already have policies in this area, so the real challenge is to move from words to action. Ultimately through leadership, education, open discussion and regular monitoring it’s possible to create shared, current values that are founded on ethical guidelines.

Elisabeth André – Construction and Real Estate lawyer and Partner

Thomas Ogard – Employment lawyer

Written by Moll Wendén’s lawyers, Elisabeth André and Thomas Ogard, for the newspaper Offentliga (Public Affairs) August 2013