“Fidesz has set the large controlling organizations and the independent branches of power to manual control”

Although it has earned a prestigious award in the United States of America, the Hungarian professional journals have not published the study made by István Jávor and Dávid Jancsics investigating corruption. The two sociologists research corruption with a new method that differs from the previous practice; in their in-depth interviews company executives and party politicians tell about their experience on corruption. Dávid Jancsics is a graduate of the ELTE University in Hungary, at present he works at the City University of New York. We quote here some parts of our interview him; the full Hungarian version can be accessed here.

What kind of examples have you met during the course of the interviews with company leaders and politicians?

The most extreme case of corruption is when your manager tells you to find a method by which nobody can spot the fact that a friend is the winner of the tender. For this you have to find various technical “solutions” – and this is the stage where all those little details become incorporated into the tender which leads to the result that only the “chosen” person or company is able to win. All this originates from the organizational subordination. Of course, there are variations but everything is based on very harsh dependency relationships, where everything may be used, and where blackmailing is just the first step. At this point you are forced into such a deep level of the corruption that you cannot afford not to take part in it.

What do you think, as a researcher – which direction is Hungary drifting towards in this field?

I do not really see a purification, especially not if we regard the top-level corruption. What I see is that these networks are organized in an increasingly professional manner, and that there was a qualitative leap with the government change of 2010 when FIDESZ became the governing power. In theory, corruption is a secret agreement that circumvents the existing rules, but now – by contrast – the rules and the structure of the state are tailored to fit the corrupt transactions. In the previous era the networks of strong economical and political actors were tied in into police organizations, the prosecution or the National Tax and Customs Authority, by which the controls could be switched off in some cases. Now that FIDESZ has set the large controlling organizations and the “independent” branches of power to manual control, they also switched this control completely off. There is no need to such „arranging persons” or middlemen anymore, because the system itself is in an almost continuous switched-off state, and this fact imposes a huge risk of corruption.

Does it have a measurable effect on the operation of the state?

On many areas – yes. A number of studies prove that if corruption is institutionalized to a great extent, then the state distributes resources in a way that deviates from the optimal level. It is characteristic for this case that education and health care do not get sufficient public funds. Hungary is on the very last place in Europe – the Balkan included – with regard to the proportion of the GDP devoted to health care. The numbers also show which investments do actually get the enormous funding – it is obvious that these channels are used for pumping out money. A road construction project has a much better ratio of extracting money from the system than corruption in the health care. But – all in all – everything becomes much more expensive than it should be.

Corruption can deteriorate the quality of management on a local level, the operational efficiency of a given state institution and the quality of the services provided to citizens. Nevertheless, corruption in Hungary has not only an effect on the output side of public politics, but it has started to have an effect on the input side as well, namely legislation, regulation and the setting of goals.

Senior member of the Hungarian Academy of Sciences, István János Tóth says: “The database of the Public Procurement Council is useless for analysis. Nevertheless, it is not an option not to be in a position to measure how the state uses the money of Hungarian and European citizens.” The politics-driven public procurements are hidden in the useless database.

The term “technicization” which you introduced earned a great acclaim in the USA. What is the reason for this?

One of its reasons is the lack of interview-based research digging deep into the organizational operation – which serves as the background for deeming the operation of the corrupt organization as a “black box”. Everything that describes the operational mechanisms of organizational corruption is of high interest in the USA, because they do not know much about it there. The dominant research is based on an economic approach and deem corruption as a bilateral principal-agent relationship, which takes into consideration rational decisions, contractual relationships and penalties – from the point of view of the corrupt “agent” who sells of organizational resources.

These descriptions do not take into account the fact that if you are part of an organization, you have many people around you. Your colleagues, your managers, your customers and the authorities constitute a complex system of power and trust, not to mention the friends and family members. Our study shows this type of corruption that is nestled both organizationally and socially. Technicization describes the phenomenon in which middle-level professionals manage to convert the corrupt agreements made by their top-level managers into legally correct contracts, technical solutions and economic calculations.

What can be done against the system of corruption?

There are no miraculous ways. There are great problems, and the whole political culture is infected. It might sound great, but there is an urgent need to eject all the politicians from the cockpit and to change the nomenclature, and now I do not only refer to FIDESZ but to all those who have managed to entrench themselves in the political sphere. It is only a bedtime-story that there would be a chance for change if a new and clean power (with the same old actors) could establish a new government.

There are risks of corruption on state and organizational level – and other places as well – that should be assessed. On the organizational level even the slightest changes could bring serious results, for example: the authorization for procurement should be dependent on the signature of several persons. Training programs should be implemented and the incentive and penalty systems should be established in an organized way. The classical Weberian elements of bureaucracy, such as the meritocratic selection or the possibility of a long-term career-planning are also essential for a corruption-free public administration.

Beside these there is a need for establishing anti-corruption organizations that are independent (both in finances and personnel) from the state, the police or the prosecution, and that have investigative as well as secret data-collecting powers – within state operated institutions and outside them. At the moment the ombudsman does not have the power necessary to take the adequate countermeasures. Independency in this case is a very important factor, because governments are keen to use state institutions for the elimination of opposition party politicians parties or competing business entities.

Several excellent professionals, researchers, investigative journalists and NGO’s have accumulated valuable knowledge on corruption over the years and they have ideas and methods on using this experience in comprehensive, long-term anti-corruption strategies. However, there is no one on behalf of the state who is interested in this knowledge – quite the opposite is true.

The full study by István Jávor and Dávid Jancsics, The Role of Power in Organizational Corruption: An Empirical Study (Winner of the 2014 Best Article Award from the Public and Nonprofit Division of Academy of Management) can be downloaded here.