Recognising corruption in local government

By Prof Adam Graycar and Dr Allan Yates

As local government is the closest tier of government to the community, it also allows for the closest scrutiny, yet opportunities for corruption are still present. The Tammany Hall political machine, which dominated local government in New York city for over a century, is featured in many movies and novels, and Frank Hardy’s novel Power Without Glory focuses on local government corruption in inner-city Melbourne.

The Independent broad-based anti-corruption commission's (IBAC) recent report, Corruption and integrity: Perceptions of Victorian local government employees, is an important document which provides an overview of local government employees’ perceptions of corruption and integrity, assists them to better understand ethical culture and misconduct and helps to shape appropriate responses. Similar research in New South Wales (NSW) by Dr Allan Yates reports findings that are consistent with those in this report.

Dr Yates' research found that cultures of corruption exist within local government in NSW, but a disconnect exists between how corrupt practices are perceived and how they are addressed. In NSW, the Independent Commission Against Corruption receives more complaints about local government than any other sector, though not from local government authorities – despite statutory reporting obligations. This raises a real dilemma because Dr Yates' research found that 40 per cent of survey respondents claimed to have witnessed corruption in their council. Would his research yield similar results in Victoria?

The dilemma is not whether corruption exists or not, but rather, in what form it is taking place and how it is then perceived. The practices witnessed by employees were not blatant examples of bribery, fraud or extortion but subtler forms of corruption, such as undeclared conflicts of interest, nepotism or misuse of information - occupational practices that might be considered 'unexceptional' and wouldn’t make headlines. The table below reports these results.

The NSW research found that many respondents claimed to have witnessed these types of practices but did not report them. Where employees did recognise certain practices as corrupt, many weren’t sure their managers would do anything about it and so did not report. Compounding the disconnect in understanding, many employees interpreted anti-corruption measures as effective remedies against corruption (for example codes of conduct, gift and benefit policies, and whistleblowing frameworks), despite their observance of corrupt practices. The effectiveness of local anti-corruption measures is therefore limited, and corruption remains subsumed within the routine of administration.  It becomes further embedded in culture and practice the longer it is routinised. In other words, subtler forms of corruption remain 'hidden in plain sight'.

As we identified in our academic article Death by a Thousand Cuts: Recognizing, Reporting, and Responding to Corruption in Local Government (Yates, A., & Graycar, A. 2018) through corruption a council suffers an ethical demise – a death by a thousand cuts. Our research analysed data against three interdependent components: Recognition, Reporting, and Response.

Recognition: In the NSW survey three fifths of respondents thought that there was some corruption in their council, but they did not always recognise it. The four most frequently witnessed and suspected acts of corrupt conduct were not criminal offences, but more so ethical violations. As such, they may be considered permissible by some, as long as they are not legally forbidden.

Reporting: Twice as many of the NSW respondents felt that their council did enough to promote the reporting of corruption, as did those who felt that their council did not do enough. One in five had declined to report corruption that they had either suspected or witnessed. Of those who had recognised but declined to report, more than half were afraid of being branded a troublemaker. Other key responses included not having enough evidence to back the suspicion, being discouraged from doing so, feeling it was better to stay quiet, and in a quarter of cases, the belief that they would not be taken seriously. While survey respondents generally believed that their council handled the risk of corruption well, many were reluctant to report corruption that they suspected or observed.

Response: Councils typically have whistleblowing policies and Codes of Conduct, but they don’t always have effective means of response. Of those who had reported suspicions of corruption, two thirds were not satisfied with the response, or received no feedback at all. It seems there would be little encouragement or incentive for them to report further concerns or suspicions about corruption, and a similar observation is reflected in IBAC's Report (p. 14). This compounds an already difficult situation for councils, irrespective of which state or territory they might be in, as there are rarely witnesses to corruption and there can be staff uncertainty or grey areas about behaviour at the margins.

Where a council fails to see corruption, does not report it, or fails to adequately address it, a crisis of confidence exists. A key takeaway is that corruption is nuanced and understanding more about its multifaceted nature is the key to managing the risk or reality of its occurrence. Thinking about how to understand the root causes or issues, how to address them, and how to benchmark efforts are important steps. The mere existence of anti-corruption measures does not indicate that corruption is effectively managed in local government and can promote misplaced confidence.

Survey results

Respondents were asked the following questions about each type of corrupt act listed in column one in the table:

  • Do you think there is an opportunity for…
  • Have you ever suspected…
  • Have you ever witnessed…

Type of corrupt act

Opportunity

(n = 194)

Suspected

(n = 175)

Witnessed

(n = 127)

Conflict of interest

72.7%

49.7%

32.3%

Preference given to hiring friends or family for Council jobs (nepotism/cronyism)

42.3%

37.7%

29.1%

Misuse of information or material

59.8%

41.7%

20.5%

Abuse of discretion

55.7%

28.6%

20.5%

Hiring one's own company, or the company belonging to close associates or relatives to provide public services

26.3%

20.6%

7.9%

Forgery and‎/or falsification of records or data

25.8%

14.3%

5.5%

Fraud

28.4%

12.6%

3.9%

Bribery

48.5%

12.0%

1.6%

Perverting the course of justice

14.4%

6.9%

1.6%

Don't know

13.4%

22.3%

33.1%

Prefer not to say

2.6%

4.0%

8.7%

Note: not all respondents answered all questions.