Decentralized Corruption in Germany1

Abstract

ABSTRACT This article focuses on the link between administrative reform and decentralized corruption in German municipalities. It argues on the basis of survey findings, that the decentralization process of public service delivery from core administration to public enterprises during the last years has not only resulted in a shift of administrative authority, personnel and financial resources to newly established public enterprises but also in a shift towards decentralized corruption. Findings show that the perceived quantity of decentralized corruption is as high as bureaucratic corruption. In the course of decentralizing public service delivery to new administrative bodies, municipalities have missed the opportunity to adapt their audit systems. Old corruption risks have been shifted to public enterprises and new opportunities for corruption have been created. The data presented are based on a survey conducted with local audit experts and analyze the motivation, opportunity, and possibility for decentralized corruption. BACKGROUND OF THE INVESTIGATION AND RESEARCH QUESTION This article focuses on the link between administrative reform and decentralized corruption in German municipalities. It argues on the basis of survey findings, that the decentralization process of public service delivery from core administration to public enterprises during the last years has not only resulted in a shift of administrative authority, personnel and financial resources to newly established public enterprises but also in a shift towards decentralized corruption. Decentralization is the process of passing administrative authority to an appointed body (Pollitt/Bouckaert 2004: 87), e.g. public companies in German local government. Decentralized corruption is therefore understood as the acceptance or payment of bribes outside the core administration by individuals in public enterprises or government contractors, which are charged by public authorities with the fulfillment of public service delivery. The plurality of New Public Management (NPM) reform strategies aiming at the transformation of bureaucratic administrative systems have been characterized as maintain, modernize, marketize, and minimize (Pollitt/Bouckaert 2004: 186f.). Transforming the traditional Weberian bureaucracy into more flexible, economic and effective private-enterprise-like organizations resulted in what some observers now term the Neo-Weberian State (NWS) (Bouckaert 2004), as we can see in Belgium, Finland, France, Italy, and the Netherlands. These countries have introduced performance budgets, loosened personnel rigidities, extensive decentralization and devolution of authority, and quality standards for service delivery to citizens (Pollitt/Bouckaert 2004: 97). Germany, at least at the local level, has seen similar changes with regard to the New Steering Model (Reichard 2003). One important element has been the decentralizing of administrative departments from the core administration into intermediate forms, e.g. public enterprises. The interesting question, which has been at the center of a recent debate (see Maravic/Reichard 2003 and Jones 2004), is: Does the risk and location of corruption change as a consequence of this administrative transformation (Self 1993, Frederickson 1999, Doig 1995, 1997, 1998)? A number of documented corruption cases in different countries make this possibility seem plausible (see below). Rose-Ackerman's work on different corruption risks within different organizational structures gives us a first idea for exploring this topic. Her conclusion is that each organizational structure is vulnerable to the exploitation by unscrupulous officials but organizational structures differ with regard to the locus of corruption (1993: 817). Rose-Ackerman argues that the structure of the bureaucracy determines the discretionary power of an actor and the expected costs of accepting a bribe (1993: 803). As new forms of administrative systems emerge, the question of where to identify potential risks of corruption in the new administrative systems is of relevance for a better understanding of the current situation. …