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Zoltán Szántó – István János Tóth Some typical network configurations of corruption cases in Hungary Preliminary research results. The Unexpected Link June 17-18 Center for Network Science, CEU, Budapest. Topics  Introduction  Earlier results  Idealtypes  Networks  Conclusions.

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slide1

Zoltán Szántó – István János Tóth Some typical network configurations of corruption cases in HungaryPreliminary research results

The Unexpected Link

June 17-18

Center for Network Science, CEU, Budapest

topics

Topics Introduction  Earlier results  Idealtypes  Networks  Conclusions

Topics
  • Introduction: Our earlier research on business corruption in Hungary
  • Main results of the earlier research projects (conceptual framework, interview analysis, media content analysis)
  • The idealtypes of corruption transactions (basic model, bribery, extortion, embezzlement, fraud)
  • Network configurations of corruption transactions: interpersonal and institutional embeddedness of corruption – some typical corruption cases in Hungary
  • Conclusion: The evolution of corruption networks – corruption as an institutionalized process?
introduction our earlier research on business corruption in hungary financial support ers

Topics  Introduction Earlier results  Idealtypes  Networks  Conclusions

Introduction: Our earlier research on business corruption in HungaryFinancial supporters
  • Transparency International Magyarország
  • TEXTREND [NKFP_07_A2-TEXTREND, OM-0002/2008]
  • Corruption Research Center of the Institute of Sociology and Social Policy at Corvinus University of Budapest
introduction our earlier research on business corruption in hungary

Topics  Introduction Earlier results  Idealtypes  Networks  Conclusions

Introduction: Our earlier research on business corruption in Hungary
  • Conceptual and theoretical framework of corruption research
    • Misuse of public power for private benefit (J.G.Lambsdorff)
    • Principals, agents, and clients
  • Media representation of suspected corruption cases in Hungary: pilot research (2007)
  • Background research studies to the Corruption Risks in the Business Sector (National Integrity System Country Study – Part Two) Transparency International, 2008 (http://www.transparency.hu/part_two) and
  • Business corruption in Hungary: From various angles – Research summary, In: Szántó Zoltán – Tóth István János (szerk): Korrupciós kockázatok az üzleti szektorban – kutatási háttértanulmányok (http://www.wargo/crc/index.html )
    • Review of the Hungarian research literature on corruption
    • Interviews with business leaders (qualitative analysis)
    • Media content analysis (2006-2007: 737 articles/news, 176 corruption cases)
introduction our earlier research on business corruption in hungary1

Topics  Introduction Earlier results  Idealtypes  Networks  Conclusions

Introduction: Our earlier research on business corruption in Hungary
  • Corruption Research Center of the Institute of Sociology and Social Policy at Corvinus University of Budapest (2008)

(Founders: György Lengyel, István János Tóth, Zoltán Szántó)

http://web.uni-corvinus.hu/szoc/intezet_kutatas.php

  • Suspected corruption cases in the Hungarian media. Content analysis of on-line newspapers. Research report by the CRC, 2009
    • 8 internet news portals and online versions of newspapers between1 January 2001 and 31 December 2007
    • Keywords: „korrupt” (corrupt), „korrupció” (corruption), „csúszópénz” (slush fund), „kenőpénz” (palm-greasing), „veszteget” (bribe), „pénzmos (money laundering)
    • Total of 3469 articles/news on 444 corruption cases
main results of the earlier research projects conceptual framework

Topics  Introduction Earlier results Idealtypes  Networks  Conclusions

Main results of the earlier research projects: conceptual framework
  • Misuse of public power for private benefit (J.G. Lambsdorff: The Institutional Economics of Corruption abd Reform. CUP, 2007: 16-20)
  • Private benefit: receiving money or valuable assets, increases in power or status, favors for relatives and friends etc.
  • Public power is exercised by bureaucrats (appointed to their office) and by politicians (elected to their position)
  • Public power is exercised in a variety of sectors: judiciary, public procurement, business regulations, granting of permits, privatization, foreign exchange, taxes, police, subsidies, public utility, government services etc.
  • Misuse: a behavior that deviates from the formal duties of a public role
interview analysis

Topics  Introduction Earlier results Idealtypes  Networks  Conclusions

Interview analysis

The size and scope of business corruption in Hungary

  • Widespread in Hungary
  • Corruption in the business and government sector cannot easily be separated, often intertwined

Business corruption trends in Hungary

  • Corruption on the rise over the past 5-10 years, but not clear about exact size of increase
  • Increase of corruption between government and business
  • Unclear about reason for increase:Penetration of political influence?

Personal experience of interviewees

  • Personal cases

Promoters of countering corruption

  • Government and politicians seens as primary promoters
  • Possibly a bottom-up strategy (small institutions and local government as initiators)
  • Business leaders can have important role
main results of the earlier research projects summary

Topics  Introduction Earlier results Idealtypes  Networks  Conclusions

Main results of the earlier research projects: summary
  • Corruption is widespread and increasing in Hungary
  • Earlier research results only show perception and judgement but not actual mechanisms and motivations
  • Corruption has been developed to a systemic – regular, predictable, quasi-institutionalised – transaction
  • The ratio of multi-player, chain-like, networked corruption is increasing year by year
the idealtypes of corruption basic model

Topics  Introduction  Earlier results Idealtypes Networks  Conclusions

The idealtypes of corruption: basic model
  • Principal-agent-client triad (Lambsdorff 2007: 18-19)
  • The agent is entrusted with power by her superior (the principal): The principal delegates a task to the subordinate (the agent), sets up the formal rules as to how this task is to be fulfilled, and pays salary to her/him
  • The agent is supposed to serve the client in accordance to these rules
  • Different forms of corrupt behavior: the agent defects some ways from her/his rule bound behavior – the principal’s rules are trespassed and his/her interests are hurt
the idealtypes of corruption bribery

Topics  Introduction  Earlier results Idealtypes Networks  Conclusions

The idealtypes of corruption: Bribery
  • The client acts as a briber, and makes a payment (bribes) to the agent (the bribee)
  • In return the client obtains an advantage (such as a service or a license) (s)he is not entitled to obtain (for example a tax rebate or a public contract)
the idealtypes of corruption extortion

Topics  Introduction  Earlier results Idealtypes Networks  Conclusions

The idealtypes of corruption: Extortion
  • The agent (as an extorter) uses her/his power to extract money (or other benefit) from the client (the extortee)
  • The client (the extortee) may have to pay for a service, although (s)he is legally entitled to obtain it without such payment
  • The agent (the extortee) uses coercion, violence, or threats to obtain this payment
the idealtypes of corruption embezzlement

Topics  Introduction  Earlier results Idealtypes Networks  Conclusions

The idealtypes of corruption: Embezzlement
  • Theft of public resources by the agent (the embezzler)
  • The disloyal agent (the embezzler) steals from the principal (the embezzlee)
the idealtypes of corruption fraud

Topics  Introduction  Earlier results Idealtypes Networks  Conclusions

The idealtypes of corruption: Fraud
  • Information asymmetry: the agent is commomly better informed about details of her/his daily tasks and her/his efforts devoted to their fulfillment
  • (S)he can benefit from informational advantages (hidden information, hidden action, moral hazard)
  • The agent can also actively conceal information from the principal (swindle, trickery, manipulation of information, facts etc.) - fraud
slide42

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

Network configurations of corruption transactions: interpersonal and institutional embeddedness of corruption – some typical corruption cases in Hungary

  • Relations:

Personal relationship: actor actor

Business relations: actor actor

Ownership relation: owner owned

Bribe:agentclient

Advantage: agentclient

False service: „seller” „buyer”

False price „seller” „buyer”

  • Actors

P1: (real) principal

P2: (hidden) principal

A: agent

C: client

B1, B2 : brokers

1 1 simple model two actors non regular corruption

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.1. Simple model, two actors, non regular corruption

P1

A C

1. case:

bribery of police officer in the highway Budapest -Miskolc

1 1 simple model two actors non regular corruption1

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.1. Simple model, two actors, non regular corruption

P1

A C

1. case:

bribery of police officer in the highway Budapest -Miskolc

1 1 simple model two actors non regular corruption2

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.1. Simple model, two actors, non regular corruption

P1

A C

1. case:

bribery of police officer in the highway Budapest -Miskolc

1 1 simple model two actors non regular corruption3

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.1. Simple model, two actors, non regular corruption

P1

A C

1. case:

bribery of police officer in the highway Budapest -Miskolc

1 2 simple model two actors with personal relationship regular transaction

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.2. Simple model, two actors with personal relationship, regular transaction

P1

A C

2. case:

bribery of custom officers at the Hungarian – Rumanian border

1 2 simple model two actors with personal relationship regular transaction1

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.2. Simple model, two actors with personal relationship, regular transaction

P1

A C

2. case:

bribery of custom officers at the Hungarian – Rumanian border

1 2 simple model two actors with personal relationship regular transaction2

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.2. Simple model, two actors with personal relationship, regular transaction

P1

A C

2. case:

bribery of custom officers at the Hungarian – Rumanian border

1 2 simple model two actors with personal relationship regular transaction3

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.2. Simple model, two actors with personal relationship, regular transaction

P1

A C

2. case:

bribery of custom officers at the Hungarian – Rumanian border

1 2 simple model two actors with personal relationship regular transaction4

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.2. Simple model, two actors with personal relationship, regular transaction

P1

A C

2. case:

bribery of custom officers at the Hungarian – Rumanian border

1 3 simple model two actors resource conversion

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.3. Simple model, two actors, resource conversion

P1

A C

3. case:

the „Hunvald’s model”- real estate selling of local government (Budapest, VII. district)

1 3 simple model two actors resource conversion1

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.3. Simple model, two actors, resource conversion

P1

A C

3. case:

the „Hunvald’s model”- real estate selling of local government (Budapest, VII. district)

1 3 simple model two actors resource conversion2

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.3. Simple model, two actors, resource conversion

P1

A C

3. case:

the „Hunvald’s model”- real estate selling of local government (Budapest, VII. district)

1 3 simple model two actors resource conversion3

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.3. Simple model, two actors, resource conversion

P1

A C

3. case:

the „Hunvald’s model”- real estate selling of local government (Budapest, VII. district)

resource

1 3 simple model two actors resource conversion4

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.3. Simple model, two actors, resource conversion

P1

A C

3. case:

the „Hunvald’s model”- real estate selling of local government (Budapest, VII. district)

false price ( < market price)

1 4 simple model two actors two principals

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.4. Simple model, two actors, two principals

P1

A C

[P2]

4. case:

political party financing with simple transaction: the Zuschlag-model (HSP)

1 4 simple model two actors two principals1

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.4. Simple model, two actors, two principals

P1

A C

[P2]

4. case:

political party financing with simple transaction: the Zuschlag-model (HSP)

1 4 simple model two actors two principals2

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.4. Simple model, two actors, two principals

P1

A C

[P2]

4. case:

political party financing with simple transaction: the Zuschlag-model (HSP)

disloyalty

1 4 simple model two actors two principals3

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.4. Simple model, two actors, two principals

P1

A C

[P2]

4. case:

political party financing with simple transaction: the Zuschlag-model (HSP)

1 4 simple model two actors two principals4

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.4. Simple model, two actors, two principals

P1

A C

[P2]

4. case:

political party financing with simple transaction: the Zuschlag-model (HSP)

1 5 simple model two actors two principals resource conversion

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.5. Simple model, two actors, two principals, resource conversion

P1

A C

[P2]

5. case:

political party financing with resource conversion – buying a real estate by local government

(Békés county)

1 5 simple model two actors two principals resource conversion1

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.5. Simple model, two actors, two principals, resource conversion

P1

A C

[P2]

5. case:

political party financing with resource conversion – buying a real estate by local government

(Békés county)

1 5 simple model two actors two principals resource conversion2

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.5. Simple model, two actors, two principals, resource conversion

P1

A C

[P2]

5. case:

political party financing with resource conversion – buying a real estate by local government

(Békés county)

1 5 simple model two actors two principals resource conversion3

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.5. Simple model, two actors, two principals, resource conversion

P1

A C

[P2]

5. case:

political party financing with resource conversion – buying a real estate by local government

(Békés county)

1 5 simple model two actors two principals resource conversion4

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.5. Simple model, two actors, two principals, resource conversion

P1

A C

[P2]

5. case:

political party financing with resource conversion – buying a real estate by local government

(Békés county)

resource

1 5 simple model two actors two principals resource conversion5

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

1.5. Simple model, two actors, two principals, resource conversion

P1

A C

[P2]

5. case:

political party financing with resource conversion – buying a real estate by local government

(Békés county)

false price ( > market price)

2 1 three actors one broker with a ownership and business relations

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

2.1. Three actors, one broker with A, ownership and business relations

P1

A C

B1

6. case:

Reconstuction of a building – feasibility study - bribery of local government offical

2 1 three actors one broker with a ownership and business relations1

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

2.1. Three actors, one broker with A, ownership and business relations

P1

A C

B1

6. case:

Reconstuction of a building – feasibility study - bribery of local government offical

2 1 three actors one broker with a ownership and business relations2

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

2.1. Three actors, one broker with A, ownership and business relations

P1

A C

B1

6. case:

Reconstuction of a building – feasibility study - bribery of local government offical

2 1 three actors one broker with a ownership and business relations3

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

2.1. Three actors, one broker with A, ownership and business relations

P1

A C

B1

6. case:

Reconstuction of a building – feasibility study - bribery of local government offical

2 1 three actors one broker with a ownership and business relations4

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

2.1. Three actors, one broker with A, ownership and business relations

P1

A C

B1

6. case:

Reconstuction of a building – feasibility study - bribery of local government offical

false service

2 1 three actors one broker with a ownership and business relations5

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

2.1. Three actors, one broker with A, ownership and business relations

P1

A C

B1

6. case:

Reconstuction of a building – feasibility study - bribery of local government offical

false service

2 1 three actors one broker with a ownership and business relations6

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

2.1. Three actors, one broker with A, ownership and business relations

P1

A C

B1

6. case:

Reconstuction of a building – feasibility study - bribery of local government offical

payoff

false service

2 1 three actors one broker with a ownership and business relations7

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

2.1. Three actors, one broker with A, ownership and business relations

P1

A C

B1

6. case:

Reconstuction of a building – feasibility study - bribery of local government offical: „countryside case”

payoff

3 1 three actors one broker with c business relations

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

3.1. Three actors, one broker with C, business relations

P1

A C

[P2] B2

7. case:

Political party financing – a complex model

C = media agencyB2 = TV channel P1 = ministry P2= political party

3 1 three actors one broker with c business relations1

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

3.1. Three actors, one broker with C, business relations

P1

A C

[P2] B2

7. case:

Political party financing – a complex model

C = media agencyB2 = TV channel P1 = ministry P2= political party

3 1 three actors one broker with c business relations2

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

3.1. Three actors, one broker with C, business relations

P1

A C

[P2] B2

7. case:

Political party financing – a complex model

C = media agencyB2 = TV channel P1 = ministry P2= political party

3 1 three actors one broker with c business relations3

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

3.1. Three actors, one broker with C, business relations

P1

A C

[P2] B2

7. case:

Political party financing – a complex model

C = media agencyB2 = TV channel P1 = ministry P2= political party

3 1 three actors one broker with c business relations4

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

3.1. Three actors, one broker with C, business relations

P1

A C

[P2] B2

7. case:

Political party financing – a complex model

C = media agencyB2 = TV channel P1 = ministry P2= political party

bribe = service (advertisement)

3 1 three actors one broker with c business relations5

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

3.1. Three actors, one broker with C, business relations

P1

A C

[P2] B2

7. case:

Political party financing – a complex model

C = media agencyB2 = TV channel P1 = ministry P2= political party

false price > market price

false price < market price

bribe = service (advertisement)

3 1 three actors one broker with c business relations6

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

3.1. Three actors, one broker with C, business relations

P1

A C

[P2] B2

7. case:

Political party financing – a complex model

C = media agencyB2 = TV channel P1 = ministry P2= political party

false price > market price

false price < market price

bribe = service (advertisement)

3 1 three actors one broker with c business relations7

Topics  Introduction  Earlier results  Idealtypes Networks Conclusions

3.1. Three actors, one broker with C, business relations

P1

A C

[P2] B2

7. case:

Political party financing – a complex model

C = media agencyB2 = TV channel P1 = ministry P2= political party

false price ( > market price)

false price > market price

false price < market price

bribe = service (advertisement)

conclusion the evolution of corruption networks corruption as an institutionalized process

Topics  Introduction  Earlier results  Idealtypes  Networks Conclusions

Conclusion: The evolution of corruption networks – corruption as an institutionalized process?
  • The evolution of corruption networks in terms of
    • the number of actors
    • the comlexity of network configurations
    • the level of interpersonal and institutional embeddedness
    • the multiplicity of relationships
  • Corruption as an institutionalized process in terms of
    • stability
    • mixing the reciprocity, redistribution and market forms of economic integration