Combating the Challenge of Corruption with the aid of Technology:
1: Introductory Generic Comments
It is undisputed that fraud and corruption are growing worldwide, and while a detailed quantitative estimate has many challenges, the MegaTrends are well understood.
Corruption can take many forms that range from the minor use of influence to institutionalized bribery. Transparency International’s definition of corruption is: “the abuse of entrusted power for private gain”. This can mean not only financial gain but also non-financial advantages.
The spread of corruption almost seems contagious, like an epidemic. It can be mathematically represented as the Gompertz curve, much like that of the growth of cancer cells.
At the recent WEF at Davos in January 2016, Klaus Schwab drew attention to the fact that we are now at the beginning of the 4th Industrial Revolution that will be driven by rapid advances in ICT and genomics.
It can be hoped that some of these futuristic technologies can actually over the next few years, bring about a significant reduction in the corruption levels. On the other hand Volkswagen and others have shown a propensity of ‘ cheating with software’
2: Quantum Computing
Although the practical realisation of Quantum Computing is still quite far away, it has caught the fancy of some prominent political leaders.
On the 16th April 2016, Justin Trudeau, the Canadian Prime Minister gave a very brief statement distinguishing a ‘traditional’ computer from a quantum computer, that has gone viral : http://fortune.com/2016/04/17/justin-trudeau-quantum-computing/
The Australian PM, Malcolm Turnbull did the same thing recently : http://www.businessinsider.com.au/watch-malcolm-turnbull-explain-quantum-computing-to-a-bunch-of-scientists-2016-4
The Australian prime minister gave a quick rundown of quantum computing which he said had the “ability to create the most unbreakable codes” and “the ability to decipher the codes of today” through its “extraordinary processing power”.
He pointed out that conventional computing was not enough to keep up with the demands of a digitised world.
3: Machine Learning is a branch of Artificial Intelligence concerned with the construction and study of systems that can learn from data. It’s applications are increasing by the day, and the IBM Watson was a major turning point. Google has just made openly available its platform ‘ TensorFlow’ that will allow many more applications of machine learning.
It would be able to detect Money laundering, Bankruptcy fraud, Ponzi schemes, Securities related frauds faster, better and with greater accuracy than human investigators ( who can also be influenced).
Preventive detection through monitoring of networks and individuals, deploying machine learning, is a clear possibility in the future.
However we will need honest leadership to ensure that the models used are fair.
4: Big Data Analytics is a method that uses huge amounts of data to uncover previously-unknown correlations (perhaps suggesting causal relationships). For instance, Big Data techniques could uncover patterns of fraud and bribery in public procurement by combing through datasets on government bidding processes (e.g. which firms bid on a job, for how much, and who had the winning bid), contracting firms’ financial disclosures, beneficial ownership of contracting firms, public officials’ tax and family records, complaints to the authorities about bribery from competing contractors and so on. We could easily
identify anomalies, outliers and underperformance, using Big Data Analytics
5: Robots & Drones
Since robot is not a human being, how come it could be corrupted? It is not possible. Robot cannot be corrupted
Automation, in routine operations. ( maybe replace corrupt personnel with robots)
6: Internet of things :
VW was the first to get caught using software to defeat environmental testing, but there’s every reason to believe it won’t be the last.
Making things smart, doesn’t necessarily mean that they are honest.
7: Blockchain technology for combating corruption:
Blockchain technology is often touted as the answer to inefficiencies in the financial sector, but it also has the potential to make a wider societal impact
Blockchain technology is to be used in a pilot project in Honduras to run the country’s public land registry ledger, making it safer, nigh-on incorruptible and more transparent
Estonia is the first real Government to use Blockchain technology ( in 2015).
Blockchain Technology has 3 “distinct advantages” in a government setting: “It has a distributed architecture, is immutable and transparent.”
These qualities allow blockchain-based apps and systems to combat fraud and corruption.
By 2025, many persons believe that tax will be collected by a Government via a Blockchain
8: EduTech for information dissemination:
Awareness raising to empower the public and inform it about its right to resist arbitrary treatment;
Reporting, to create complaint channels that can lead to concrete action and help punish violations and close loopholes;
Deterrence, by disseminating information about reported cases of corruption; name and shame
Promoting ethical attitudes with education for behavioural change, at School and Higher Education Institutions.
9: Using technology for behavioural change:
The preamble to the UNESCO constitution begins with “since wars begin in the minds of men, it is in the minds of men that the defences of peace must be constructed”
We may extrapolate this to :
‘ Since unethical conduct and corrupt action begin in the minds, it is in the minds ( and through education) that we will arrive at the solutions’.
There is more than enough evidence that mere information imparting education does not suffice.
There are a large number of Harvard graduates who found their way to prison for offences ranging from bombing to insider trading. Some notable mentions are:
Ted Kaczynski , the Unabomber
Oded Aboodi, Insider Trading
Ester Reed, fraud and identity theft
Eugene N. Plotkin, Insider Trading
Andre Shliefer, International Insider Trading
Richard Whitney, Embezzler from Great Depression Era
Jeffrey K. Skilling, former President of Enron
And our own Rajat Gupta who studied at Modern School, IIT Delhi, Harvard University was co-founder of the well known ISB Hyderabad.
In January 2016, became a free man after serving sentence in federal prison
10: Concluding remarks :
The challenge to corruption must be treated on a mission mode, on the lines of the Manhattan Project for developing the nuclear bomb. Or even more like the John Kennedy commitment in May 1961 of safely sending and bringing back an American to the moon, which was fulfilled on July 20,1969.
The approach to dealing with corruption, must change from attempts to ‘eradicate’ it like eradicating malaria, smallpox etc. Rather it has to be analogous to the development of immunity to face pathogens. That would mean that even when surrounded by corrupting influences, and opportunities for corruption, it is the intrinsic integrity which is the equivalent of immunity, that has to be enhanced.
Clayton Christensen has found the critical element of maintaining integrity. Very often focus on marginal costs can lead to bad business decisions.
Similarly, the marginal cost of doing something wrong “just this once” always seems alluringly low. You don’t see the end result to which that path leads ( sometimes the prison).
The key is to define what you stand for and draw the line in a safe place.
1: Is corruption contagious ? http://mercury.ethz.ch/serviceengine/Files/EINIRAS/92155/ipublicationdocument_singledocument/5f64cab1-f101-4891-9434-1ae4dfbcdaf4/en/WP-742-Attila%5B1%5D.pdf
2: How Big Data analytics can be used to combat corruption ?https://globalanticorruptionblog.com/2015/04/06/big-data-and-anticorruption-a-great-fit/
6: The Internet of things will be as corrupt as the companies that control it : http://www.theverge.com/2015/10/22/9591720/the-internet-of-things-will-be-as-corrupt-as-the-companies-that