Corruption has remained a significant global concern, particularly in the developing world, where its prevalence is widespread. Initial anti-corruption efforts primarily focused on corrupt practices and behaviors within the public sector. However, it was later recognized that combating corruption requires addressing it in all sectors of society, not just the public sector. Consequently, anti-corruption movements have expanded to include the private sector, with ongoing efforts to extend them to all societal institutions.
This paper aims to expose the anti-corruption gap in Ethiopia by briefly addressing unregulated corruption in the private sector and religious institutions. The scope of anti-corruption institutions in Ethiopia reveals that current efforts are limited to the public and some private sectors, leaving a significant portion of societal sectors unregulated.
Corruption Perceptions Index 2023
Defining Corruption
There are numerous definitions of corruption, but a universally agreed-upon and reliable definition remains elusive. The United Nations Convention against Corruption (UNCAC) itself does not define corruption but instead defines and criminalizes specific offenses that constitute it. Corruption takes various forms, making it difficult to formulate a generic definition encompassing all its nuances.
The way corruption is defined impacts how it is fought. Defining corruption as the abuse of public trust for private gain limits anti-corruption efforts to the public sector. A more inclusive definition, encompassing some private institutions, defines it as a behavioral problem. This definition is widely accepted among scholars and effectively explains the problem of corruption.
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Based on the etymological meaning of "corruption," it can be defined as decomposition, disintegration, loss of value, and becoming putrid and useless. From this perspective, corruption is an ethical and moral problem, representing ethical or moral disintegration.
Scope of Anti-Corruption Laws in Ethiopia
The scope of any law is determined by its definition of the subject matter it primarily addresses. However, anti-corruption laws in Ethiopia do not define corruption. Instead, they list acts of corruption. The scope of these laws is determined by examining the objectives, powers, and responsibilities of the Federal Ethics and Anti-Corruption Commission (FEACC) and the definitions of terms like "public bodies" and "public enterprises."
The FEACC is empowered to promote ethics and anti-corruption education, prevent corruption offenses and other improprieties, and expose, investigate, and prosecute corruption offenses and improprieties. However, the FEACC's powers are primarily limited to public offices and public enterprises, with the exception of ethics promotion, which may extend to other sectors.
Recognizing the limitations of this scope, the anti-corruption law was amended in 2015 to expand the FEACC's power to address corrupt acts in the private sector that have a direct connection with public funds.
Exclusions from the Scope
The law expressly excludes many organizations and institutions, including religious institutions, political parties, international organizations, and "edir" or similar traditional or religious organizations. A religious organization is defined as an organization or institution of worship established by followers of a religion to organize or promote their religion. However, this definition does not address business activities engaged in by religious organizations.
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It is debatable whether such businesses should be categorized under the private sector and included under the FEACC's purview following the "source-purpose" test. Alternatively, it can be argued that business activities of religious organizations are excluded from the FEACC's power as they are not expressly included.
At this juncture, it is clear that all religious organizations are excluded from the FEACC's reach, except when they engage in charity activities. To sum up, the law expressly excludes many organizations and institutions and hence, anti-corruption commission does not exercise its powers in these institutions and organizations.
Inclusions within the Scope
The law empowers the FEACC to deal with corruption in public offices, public enterprises, and public organizations. The inclusion of public organizations is a new addition. A public organization is defined as any organ in the private sector that administers money, property, or any other resource collected from members, the public, or any money collected for the benefit of the public, including appropriate companies.
An appropriate company is a private limited company established through the contribution of shares by public organizations and includes joint ventures established by such companies in association with others. A charity is defined as an institution legally registered and established exclusively for charitable purposes and provides benefits to the public.
From these definitions, we can develop guiding tests to identify whether a given private organ falls under the FEACC's power.
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The "Source-Purpose" Test
To determine the proper scope of the inclusive definitions, we can apply the "source-purpose" test. The "Source" test states that any organization with public resources (money or other resources) is a public organization. The "Purpose" test states that any organization that owns and administers resources for the benefit of the public (public purpose of resource use) is a public organization.
Any money, property, or resource collected to support, assist, encourage, or develop the whole or a section of the community is considered to be for the benefit of the public. Therefore, the "source-purpose" test does not require a cumulative requirement. It suffices to categorize an organization as public when one of the two requirements is met, i.e., the company is public when either its resource source is public or it intends to use it for a public purpose.
Therefore, private limited companies, share companies, charity organizations, and others fall under the FEACC's reach. Though the definition seems to limit applicability of this law to private limited companies and joint ventures established by them, however, the afore mentioned definition of the public organization (art.
On the contrary, if any organization has private entities or individuals as sources of its resource which it intends to exploit for private use, it fails to meet the “source-purpose” test requirements; and therefore, is purely private organization, being excluded from the reach of the Commission.
Therefore, the scope of the current anti-corruption law of Ethiopia does not include partnerships and other sole proprietorships (individual entrepreneurs) as these businesses are purely private one and do not satisfy any of the “source-purpose” test requirements.
In conclusion, corrupt behaviors and acts, if any, in the religious institutions and in purely private sector institutions-as stated here above-are excluded from the reach of the Commission. Therefore, corruption in these institutions fall under “unregulated corruption” in Ethiopia.
Valid question at this point is, therefore, not about sectors in which corruption is unregulated; it, rather, is, is there corrupt acts and behaviors in those societal sectors which are excluded from the Commission’s purview of power?
Unregulated Corruption in Ethiopia
The scope of the FEACC is limited to dealing with corruption mainly in the public sector and in private sectors that have public at large either as their source of resource or as ultimate beneficiary of the resources. Except this partial address, there are many sectors in the society that either are not clearly put under the Commission’s purview or those that are clearly excluded from its scope.
Exhaustive analysis of all those sectors that remained out of the shadow of anti-corruption institutions may require much more finance, time and effort. Accordingly, this study is purposely made to focus on the uncovered part of the private sector, and the religious sector.
Corruption in the Private Sector
Corruption can and is committed routinely in both the private and public sectors. Private sector corruption is perpetrated by private sector actors within the private sector. It is an abuse of entrusted power within and/or between the economic zones under the ownership of private entities. It is known also as private-to-private corruption because both the corrupter and corrupted are private entities or individuals.
Private sector corruption is as widespread as public corruption. The prevention and criminalization provisions of UNCAC explicitly address private sector corruption after an intense debate among member states.
At national level, existence of corruption in private sector is also admitted by the Ethiopian legislature where it extends the power of the Commission to deal with corruption in businesses-called public organizations. Many have agreed that exclusion of purely private business from the current legal extension does not imply absence of corruption in those businesses; it rather is exclusion made on the basis of administrative and financial feasibility.
Private sector corruption, in the study area take a variety of forms, including bribery, embezzlement, trading in influence, trading information, abuse of power and favoritism. This type of corruption may take many forms, such as bribing an agents or employees in charge of purchasing or hiring, bribing labor representatives and commercial bribery. An effort was made to detect whether any of these forms of corruption has existed in the study area.
The result has affirmed that there are number of ways in which employees of others are corrupted. Corrupting experts to compromise the quality, supply continuity or to trade in information are often committed forms. Suppliers of similar goods or services often deal with high level experts of the competing business for the above mentioned purposes.
The other form of corrupting employees of another is by bribing sales-persons of another employer. This is common in butcher businesses where salespersons are often bribed by customers. The same form of corruption happens where things exact amount of which cannot be precisely pre-determined are offered.
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This form of corruption, especially what is termed as “commercial bribery” may be committed either directly, or in the form of gifts or entertainments or even in the form of subsidies to the retailer. The effort made to study football and taekwondo sport activities (as the two are engaged in by many youth) show that there are many corrupt acts in these sporting activities.
Some football clubs repeatedly claim that bigger clubs with better financial stand often win the championship by bribing the competent clubs’ players, coaches and arbitrators. The same allegations are made by the taekwondo clubs in the city.
Forms of Corruption in Ethiopia
Several sectors are contributing to corruption in Ethiopia, where businesses are particularly vulnerable. Businesses also face corruption in obtaining permits and licenses due to complicated bureaucracy. Corruption has been linked to human rights violations, which have been reported to cause widespread unrest in Ethiopia since 2015. A change in the country’s leadership in 2018 saw some arrests and was hoped to bring a change to the status quo.
On Transparency International's 2024 Corruption Perceptions Index, Ethiopia scored 37 on a scale from 0 ("highly corrupt") to 100 ("very clean"). When ranked by score, Ethiopia ranked 99th among the 180 countries in the Index, where the country ranked first is perceived to have the most honest public sector. For comparison with regional scores, the average score among sub-Saharan African countries was 33.
The Ethiopian Federal Ethics and Anti-Corruption Commission (FEACC) is an anti-corruption institution that was established in 2001. Ethiopia has witnessed significant corruption cases, accompanied by human rights violations and unrest. Corruption is in all forms: clientelism, kleptocracy, rent-seeking, and state capture. Facilitation payments and bribes in the government are rampant where land is leased to the state in order to obtain government contracts.
Corruption in Ethiopia's judicial body greatly affects companies and business enterprises by overturning judges' decisions using favoritism. Some companies indicated that they are frustrated by the court system preventing them from conducting their businesses.
Corruption is highly prevalent in the police force, becoming the main issue. According to a 2016 survey, half of the respondents believe the police are corrupt, with over half of the companies saying they paid for their own security. In January 2015, the Dire Dawa High Court convicted four police officers for misappropriating sisa drugs in 240 carton boxes while on duty. According to Afrobarometer (2024), about one-third (32%) of respondents said that the police force is corrupt.
Corruption within government public provision threatens companies, with petty corruption, extortion, fraud, embezzlement, nepotism, cronyism, and bribery common in public service. Businesses are involved in such cases of corruption in order to undertake them quickly. Foreign companies blamed the Ethiopian Electric Power as the most corrupt electricity provider.
Corruption is the most prevalent in land administration in Ethiopia, where property rights are poorly protected by the government. The corruption includes bribery and land grabbing, causing a lack of transparency, resources, and poor policy in strong institutions.
Corruption in tax administration includes bribery, irregular and facilitation payments. Tax regulation is the major obstacle to business, impeding investment and economic growth in Ethiopia. The Ethiopian Revenues and Customs Authority is perceived to be the most corrupt institution.
Corruption in customs administration involves bribery, where the Ethiopian Revenues and Customs Authority is frequently cited as the most corrupt institution. These corruptions are committed at the border, during the import process, and with tariffs. Corruption lags the customs procedures, which impacts its efficiency in terms of time.
Corruption in Ethiopia's legislature includes clientelism, kleptocracy, rent-seeking, and state capture. The Assets and Property Registration Law is solely responsible for collecting assets of government officials and has the power to deny the registry.
Civil society is facing frequent censorship by the government. Although freedom of expression and press are guaranteed in the Constitution, there are instances of the Criminal Code limiting the rights in favor of controlling obscene communication and defamation of public officials. For instance, during the 2016 nationwide protests, a state of emergency was declared that led to harassment, detention and prosecution of journalists by the government forces.
Corruption and Property Rights
Property rights are crucial in explaining corruption. They are the essential institution to mitigate economic scarcity. On the other hand, corruption is the informal institution for corrupting individuals to obtain property and defy relative legally defined balance under scarcity. The significance of public involvement is considerably contributed by the close involvement of property rights in corruption since they usually require government definition and enforcement. The private parties will then react to the current situation.
When enforcement is not sufficiently compelling, some may find the opportunity cost of corruptive activities to be less than their associated benefit. Also, public definition or enforcement can be in poor shape, leading to unavoidable corruption efforts to obtain necessary rights and protection. Land is one of the most important properties for all economies, especially to developing ones such as Ethiopia.
Corruption in the Land Sector
Three kinds of corruption in the land sector are prevailing:
- The elite class and senior officials are capturing land assets in a disproportionate manner.
- Implementation of land policies and laws is subject to corruption as well. For example, informal fees are, to a great extent, institutionalized.
- Forged land documents are rampant. Ethiopian land record system loses its impartiality and ironically became the robust support for fraud and bribery.
Matching theoretical rationale and practical observations, we do find a failing distribution system of property rights in Ethiopia, either due to inherent imbalance or following distortion, is crucial to emergence and spread of corruption in the country. Minimum attempt has been made to formalize the extralegal property system in Ethiopia.
Corruption Risk Map for Ethiopia
The flawed system causes a persistent divergence between utilization and ownership of properties. Upper classes, who claim the properties, can rapidly accumulate capital while the lower classes are struggling to sustain themselves. Over time, lasting disparity leads to concentration of resources and power in a few hands. This enormous capacity provides the possibilities and incentives for elites to “legalize” unlawful trespass to property rights of others through public entities or tools, including state corporation, expropriation, and so on. Allegiance-based plunder in 2005 is the best example of its kind.
On the other hand, the majority in Ethiopia have no choice but to expense extra costs, through corruption, in exchange for the minute amount of property rights and protection that are supposed to be fully available for free. Clearly, this type of informal, abnormal fees has been so prevailing in Ethiopia that they have almost become the formal/normal.
Ramifications and Remedies of Corruption
All economic activities are constituted by transfers of property rights. The exchanging mechanism can only function as desired when property rights are defined with unambiguous, publicly accepted rules and enforced by an irrefutable, impartial government. The problem with corruption is that it imposes a threat to the foundation for these basic mechanisms as mutual trust, and fair settlement is jeopardized.
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