CAPITAL FLIGHT – this is money that shifts out of a country, whether legally or illegally. Illegal capital flight is intended to disappear from any record in the country of origin. Earnings on the stock of illegal flight capital outside of a country do not normally return to the country of origin. Illegal flight capital can be generated through a number of means, including trade mispricing, bulk cash movements, hawala transactions, smuggling, among others.
CHECKS AND BALANCES – these are a common reference to the institutional mechanisms for preventing power abuse. Often, they are constitutional controls whereby the three branches of government (executive, legislative and judiciary) and other state institutions have powers over each other so that no single branch will dominate.
CIVIL SOCIETY – the arena, outside of the family, state and market where people associate to advance a common set of interests. Voluntary and community groups, non-governmental organisations (NGOs), trade unions and faith-based organisations commonly are included in this sphere, making the term broader than an NGO.
CLIENTELISM (see PATRONAGE) – a form of patronage in which an informal relationship exists between people of different social and economic status: a ‘patron’ (boss, big man) and his ‘clients’ (dependants, followers, protégés). The relationship includes a mutual but unequal exchange of favours, which can be corrupt. Patrimonial and clientelist practices can institutionalise hegemonic elites and political corruption, often reaching the highest ranks of state power.
COLLUSION – a secret agreement between parties, in the public and/or private sector, to conspire to commit actions aimed to deceive or commit fraud with the objective of illicit financial gain. The parties involved often are referred to as ‘cartels’.
COMPETITIVE BIDDING – a selection process based on the principle of open and transparent advertisement of an item or service, which ensures that the best bidder wins according to qualifications, value and other objective criteria (and consequently not according to family or friendship ties, bribery or threats). Competitive bidding processes are often required by law on public contracts and purchases above a certain value.
COMPLIANCE – the procedures, systems or departments within public agencies or companies that ensure all legal, operational and financial activities are in conformity with current laws, rules, norms, regulations, standards and public expectations.
CONFLICT OF INTEREST – this arises when an individual with a formal responsibility to serve the public participates in an activity that jeopardises his or her professional judgment, objectivity and independence. Often this activity (such as a private business venture) primarily serves personal interests and can potentially influence the objective exercise of the individual’s official duties.
CONTROLLED OR UNCONTROLLED CORRUPTION – in some countries you will find centralised, co-ordinated and disciplined corruption, while decentralised, disordered and irregular corruption exists in others. These are ideal types – most countries can be characterised as somewhere in-between.
In cases of controlled corruption, for example in the former Soviet Union or South Korea and Taiwan, the ruling elite have a relatively strict control of the processes and proceeds of corruption. Businesses will also be able to forecast and estimate the level of corruption, and include it as a measurable expense – controlled corruption, therefore, will not be a major impediment to investments and trade.
In countries with uncontrolled corruption, corruption tends to be more common and unpredictable. The rulers are not in command of who will gain how much, or from what. Uncontrolled corruption is generally considered more harmful for a country’s economy, although controlled corruption also can have harmful economic effects in the long-term.
CONVENTIONS – these are international and regional agreements signed or formally adopted through ratification by multiple states that establish rules, laws and standards on issues which are typically cross-border in nature and require a common approach for effective, multilateral cooperation.
COOL DRINK MONEY – in the South African context, a bribe or payment to secure a desired outcome. For instance, to make a traffic fine ‘go away’ or to obtain a driver’s licence without passing the test.
CORRUPTION – According to the Prevention and Combating of Corrupt Activities Act, corruption occurs when one party gives another party anything of value with the purpose of influencing them to abuse their power. A broader definition, used by Transparency International, is the abuse of entrusted power for personal gain. Corruption Watch’s definition is similar, “the abuse of entrusted power for personal gain”.
CRIMINAL FORFEITURE – following a criminal conviction, criminal forfeiture refers to the confiscation by the state of proceeds of a crime for which a conviction has been recorded.
CRONYISM (see CLIENTELISM and PATRONAGE) – this refers to the favourable treatment of friends and associates in the distribution of resources and positions, regardless of their objective qualifications.
CUSTOMER DUE DILIGENCE – this is the obligation for financial institutions to implement processes for the identification of those customers on whose behalf they maintain or operate accounts or conduct transactions.
