Curb extortion to fight graft

Authorities in the developing countries having resource constraints should give more emphasis on curbing extortion than bribery to combat corruption effectively, said Prof Fahad Khalil, a visiting fellow of BIDS, yesterday.
"Extortion and bribery are just two forms of corruption and both should be eliminated. But the authorities should first deter extortion, because it seriously affects development," said the professor of economics at the University of Washington, while presenting a study titled 'Bribery vs Extortion: Allowing the lesser of two evils'.
In 2007, Professors Fahad Khalil, Jacques Lawarree and Sungho Yun of the University of Washington conducted the study which was presented during a seminar at the Bangladesh Institute of Development Studies (BIDS) in the capital.
Prof Khalil said bribery occurs when a supervisor accepts a payment in return for misreporting an information to benefit the agent, while extortion occurs when the supervisor obtains a payment from the agent by threatening to misreport the evidence that was favourable to the agent.
Thus, with bribery the supervisor and agent forge information to maximise their joint surplus, while with extortion, the supervisor acts alone by threatening to suppress evidence since he/she is acting against the agent's interest, he added.
Extortion, therefore, seriously hampers business, said Prof Khalil, adding, "Our results suggest that organisations that must rely on soft information may need to allow bribery."
Developing countries with less resources, technological abilities and weak legal environment have also less capability to make information hard, and therefore they should be expected that bribery is a more pervasive problem.
"The fight against corruption should therefore focus on the reliance on hard evidence," said Prof Khalil.
He said bribery would not be reported other than by whistleblowers, but extortion may be relatively easier to deter using an appeals process for agents subject to extortion.
Asked how morality other than legal framework or technological capacity plays role in checking corruption, Prof Khalil said honesty surely is the most important element in eradicating corruption, but whenever any framework is designed to deter such menace, qualities like morality or honesty should not be considered.
"You have to make the legal mechanism in such a manner that all engaged in the process are accountable," he added.
Academics and development experts were present at the seminar.