The scourge of corruption in Malta was in the news again recently, when the UN published its Sustainable Development Index. Corruption has become so ingrained that the record negative score achieved by Malta was almost relegated to a footnote in the news reports. It has been normalised, but its deleterious effects remain nonetheless.
We can hardly sink any lower. According to control of corruption estimates by the World Bank, Malta had a score of 0.10975 in 2023. This is the lowest score in 10 years, and is a whopping 87 percent drop on the 2013 score.
Of course, corruption is an old phenomenon. The prime minister of an Indian king had already written a book discussing it two millennia ago. Dante's repugnance for corrupt behaviour is evident from him consigning bribers to the deepest parts of Hell. Corruption plays a prominent role in some of Shakespeare's plays, while the American Constitution provided for the impeachment of a U.S. president in the case of bribery.
It is not a coincidence that increasing corruption has coincided with the growing role of governments in their economies. There has been a large increase in the levels of public spending and taxation in many countries, while regulations and government controls on economic activities have multiplied. This has meant that opportunities for corruption have escalated, and the disease has become contagious.
According to a Special Eurobarometer survey in 2024, 95% of the Maltese people believe that corruption is running rampant, surpassing the EU average of 68%. This ranked Malta in third, only falling behind Portugal and Greece. Almost three-quarters of those surveyed believe bribes are accepted and distributed by political parties, while more than half said the same thing about local politicians and officials responsible for issuing public tenders and building permits.
The same perceptions are ripe among businesses in Malta, with 84 per cent saying that favouritism and corruption are hampering competition, 64 per cent viewing bribery and the leveraging of connections as the easiest way to obtain public services, and 70 per cent seeing close links between the business and political arenas. These percentages tend to be double those in the EU.
Most people have the sense to know corruption when they see it. It could be, for example, a public official taking a bribe in exchange for providing a financial or political gain. However, corruption can be much broader. Rather than merely being a transaction between two parties, corruption can take the form of the "privatisation" of public policy". It happens when powerful elites in business and politics collude to control public institutions, capturing the policy-making process, and monopolising government contracting and procurement.
Corruption refers to the misuse of resources or power for private gain. Transparency International defines corruption as "the abuse of entrusted power for private gain". There are many types of corruption: bribery, embezzlement, payments to secure or expedite action, fraud, collusion, extortion, patronage, and nepotism.
Political corruption takes place at the highest echelons of political authority, involving politicians, government ministers, senior civil servants, and other public office holders. It is nothing less than the abuse of office by those who set the rules of the game, that is decide on laws and regulations, and the basic allocation of resources in a society. Sometimes, the scale of corruption and the considerable sums of money involved are mind-blowing.
Then there is bureaucratic corruption, which occurs when bureaucrats and public administration staff implement policy. It entails corrupt acts among those who implement the rules. Corruption may include transactions between bureaucrats and private agents (for example, somebody contracted to provide security services).
Such agents may make hush payments to win contracts for government services; pay money to reduce bureaucratic obstacles; or bribe officials to close their eyes and bend the rules and regulations. It could also involve bribes or kickbacks to obtain posts or secure promotion. It is often called "petty corruption", reflecting the small payments often involved, though the sums may be large in the aggregate.
Corruption is widely acknowledged to have a negative impact on economic growth. Growth is depressed by over-investment in rent-seeking, underinvestment in productive activities, and the perpetuation of inefficient policies. The economic costs of corruption are substantial.
Recent research has shown that corruption lowers the quality of public infrastructure, biases state expenditures towards inefficient projects, lowers expenditures on education and health, and significantly boosts the shadow economy. Moreover, corruption can be considered as a tax that undermines the quality of the bureaucracy and trust in the administration.
The costs to society and to the private sector are staggering. Various estimates by the World Bank and other institutions put the global cost at $1 trillion. The joint UN Office on Drugs and Crime-World Bank Stolen Asset Recovery Initiative (STaR) estimates that "criminal activities, corruption, and tax evasion" account for between $1-1.6 trillion lost every year.
Recent research has shown the quality of public infrastructure suffers when there is corruption, state expenditures can more easily be directed towards inefficient projects, funding for education and health is depleted, and the shadow economy accounts for a higher share of the economy. Moreover, corruption can act like a tax, undermining the quality of the bureaucracy and the trust in the administration.
However, apart from the direct economic costs of corruption, there are indirect consequences such as the loss of public trust in government, higher levels of inequality in political influence, the deterioration of public values and, ultimately, the diminution of citizens' well-being or quality of life. These non-economic costs create a vicious cycle of under-performance of the public sector that is harmful to the economy in the long-term.
A Eurobarometer survey held in November 2023 revealed that only 36 percent of the Maltese people tend to trust their government; it was a significant decline on the percentages in previous surveys. Those who tend not to trust it increased to 51 percent. This was in contrast with the level of trust in the EU, which averaged 61 percent.
It is easy to become fatalistic or passive about corruption. This is the case in Malta, where tribal loyalties blind large swathes of the population to the practice when their party is in government. The last time the PN was in government in 2012, Malta ranked 43rd, not far from this year's rank of 46th. Mutual accusations have little effect when the standard defence, when caught out, is that "the others did it too."
Yet, with well-focussed and determined efforts, corruption can be reduced, even if not to zero. The problem is that there is no government willingness to do it, in spite of protestations to the contrary. It can only happen when the leadership shows zero tolerance to it, demand for corruption is dampened by scaling down unnecessary regulations, transparency becomes the bedrock of policy, and political parties are prevented from sleeping in bed with businesses.
Frans Camilleri is an economist. He studied at Oxford and University of East Anglia, is a former corporate head at Air Malta, and has served on various public and private boards.