Understanding corruption

Corruption does not always involve large sums of money. It can begin with small decisions that compromise fairness, trust and impartiality, and can occur in any organisation at any level. It involves the deliberate abuse of entrusted power. People may not start out intending to be corrupt – there can be a gradual progression from poor judgement to intentional misconduct.   

Why fraud happens

Corruption and fraud rarely happen by accident. When the three factors of pressure, opportunity and rationalisation intersect, the risk of fraud or corruption increases.

How people are drawn into corruption

Not everyone who becomes involved in corruption sets out to do something wrong. Some people are coerced, compromised or gradually drawn by others into behaviour they would not otherwise consider.

Skilled manipulators can appear friendly, generous or professionally helpful. Even experienced employees may not realise what is happening until they are already compromised, at which point self-reporting is rare. Manipulation can come from outside the organisation or from colleagues and managers, and collusion between internal and external actors can appear procedurally correct, making it hard to detect.

Who is involved

Corruption can involve people in many different roles, both inside and outside an organisation. A person’s role often shapes how corruption occurs, how it is concealed and how difficult it is to detect. The following are common types of corrupt actors and the risks they present.

• Internal actors are people inside an organisation who misuse the trust or authority that their role provides.
• External actors are individuals or groups outside an organisation who seek to influence public sector employees or exploit weaknesses within processes. They may use gifts, hospitality, personal relationships, improper political pressure or informal networks to gain an unfair advantage.
• Collaborative or networked actors involve internal and external parties working together. This form of corruption is among the hardest to detect because corrupt actions can appear to follow normal business processes.
• Professional enablers are people in trusted and regulated professions, such as lawyers, accountants, bankers, real estate agents and consultants, whose specialist skills can support corrupt activity even when they do not directly benefit. They may move or conceal funds, establish shell companies or certify misleading documents.

Identifying who may be involved and how they operate is critical to understanding corruption risk and strengthening controls across people, processes and systems.

More information

• Register for counter fraud workshops and webinars, free for public sector employees
• Learn what gaps and weaknesses to watch out for in contracting and supplier management processes
• See how a robust pre-employment screening process is one of the most effective ways to reduce the risk of employee fraud and corruption in your organisation
• Carry out a fraud risk scan to identify potential areas of fraud risk within your organisation