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Corruption and Organised Crime: A Comprehensive Literature Review and Research Directions

Literature Review

In order to explore the questions of this research paper based on an extensive review of literature on corruption and organised crime, this section of paper identifies the main areas of research, which provide insightful information on the subject of matter and identifies possible further research directions for this dissertation. Furthermore, this chapter will explore the concepts of organised crime, corruption and their relationship in order to provide an overview of the background of the research. The literature review is divided into two main sections of corruption and organised crime and begins each section with an explanation of concepts, theories, issues and background both in Lithuania and the world. The examination of previous empirical data is required to understand and conceptualise the findings and whether they fit within the research framework, highlighting the prominent themes and findings for the research question.

Although extensive research has been conducted on the concepts of corruption and organised crime as separate, research to date has failed to address the possible correlation between these two concepts. Therefore, there is a clear lack of academic literature on relationship between corruption and organised crime in Lithuania, making this study an important factor inexanimating the perceptions of influential law enforcement services outlook on modern Lithuania.

Defining Corruption

Back in the 1980s, corruption was considered as a “behaviour of public officials, which deviates from the accepted norms in order to serve private ends” (Huntington 1989: 377). In the recent years, the Transparency’s International (2013) definition become universal in defining corruption as “the abuse of entrustedpower for private gain” which yet fails to recognise the social, economic and cultural factors that often influence the labelling of corruption (Walton, 2015). However, until recent years, the involvement of private sectors in corrupt cases has led to the re-evaluation of the definition of corruption (Harrison, 2007; Hansen, 2011). Many scholars and organisations nowadays refer to the abuse of power and trust for private profit or a gain in power or status; depending on the sector it occurs and the amounts of money that are lost, it can be classified as grand, petty and political (Campbell, 2016;Harrison, 2007; Transparency International, 2019a; Rose-Ackerman, 1978; Nye, 1967; Johnston, 2005). Similarly, bribery is the most common and known indicator of corruption (Andersson, 2017; Vargas-Hernández, 2011). However, the term of corruption incorporates a variety of explicit activities such as fraud, extortion, nepotism, graft, embezzlement and cronyism (U4 Anti-Corruption Resource Centre, 2015). This shows that, corruption is much broader, and an all-encompassing concept of which bribery is one of the manifestations and should not be considered the only indicator (Campbell, 2016; Andersson, 2017).

Conceptualising Corruption

This paragraph provides the origins of corruption theorising. The two different theoretical approaches equally contribute and offer a better understanding of corruption dynamics. Because of equal importance, there should not be a "choice of one conceptualisation of corruption over the other" (U4 Anti-Corruption Resource Centre, 2015). In most definitions such as Transparency's International (2013), corruption is constructed from relations between principal and agent. The influential work of Rose-Ackerman (1978) and Robert Klitgaard (1988) aimed to explain the nature of corrupt behaviour as the role of individuals', emphasising the interactions between the agent and the principal, and rational choices of whether to engage. Corruption thus occurs, when a principal is unable to monitor an agent effectively and he or she betrays the principal's interest in the pursuit for self-interest (Persson et al., 2013). The principal-agent theory identify corruption only as an agent problem, with the principal's ineffective monitoring due to the lack of information (Andvig and Fjeldstad, 2001).

Collective action theory

Heavily influenced by Mancur Olson (1965), it focuses on the relevance to individuals’ decisions of group dynamics highlighting the trust and actual or expected behaviour of others. Costs and benefits of corruption has been derived from the cost of being the first to opt-out of corruption, how many other individuals in the society are expected to be corrupt (U4 Anti-Corruption Resource Centre, 2015). However, the collective action problem could be found more advantageous in the cases of systemic corruption with low social and political trust levels (Booth, 2012). This theory highlights and particularly contributes to understand the challenges of coordinated anti-corruption efforts (Marquette and Peiffer, 2015).

Theories of Causes and Consequences of Corruption

Corruption results from opportunities, dynamic relationships and interactions, strengths and weaknesses in socio-political systems (U4 Anti-Corruption Resource Centre, 2015). This includes the most common factors of corruption such as economic, political, morality, demography, customs and traditions (Albanese, 2018).

Social constructivism and deviance

Huntington's (1989: 377) definition mentioned in the previous paragraph emphasises the importance of social constructivism, meaning that, the accepted norms change over time and corrupt behaviour is differently considered in certain places and time (De Graaf, 2007). Individual's behaviour is influenced by the way they apprehend corruption, because of social constructivism people might consider certain activities as normal and would not link them to corruption (Walton, 2015). Psychic costs like moral shame and social stigma of corruption were introduced by Chang et al. (2000). It described that, increasing the monetary punishment for such criminal activity is detrimental because of the circumstances established by social norms. If corruption is not perceived as an issue by the nationals, it will be less likely to be reported to local authorities (Walton, 2015).

Democracy and Capitalism

Corruption in the 1980s was often seen as a consequence and a cause of undeveloped liberalisation in economics, therefore politics and public institutions were often seen as the major obstacles to the process of development (Johnston, 2005). However, corruption in the modern age is often affected by capitalism and democracy, which are responsible for inequality (Bukovansky, 2006; Hansen, 2011).Previous research shows that democracy does not guarantee clean and transparent governance at all and democratic systems are still fighting against corruption (Ferrin, 2016, Mcmann et al., 2017; Unslaner and Rothstein, 2016). It is argued that, democracy breeds competition, which subdues anything of the nature of favouritism (Forson et al, 2016). This damages the democratic institutions and the rule of law are being impaired by corruption, as it hurts all the parts of society but especially the vulnerable (Heimann and Pleth, 2018; Gustauskas and Laucius, 2007). However, some suggest that, increasing democracy association with corruption rates can only be seen in newly democratised countries (Rock, 2008). While others even suggest that, democracy has a positive impact in reducing corruption (Kolstad and Wiig, 2016). However, due to different forms the effect of democracy likely varies across the countries. This shows that, developing democratic countries and institutions should be particularly focused on developing strategies to reduce corruption. As corruption often leads to the dishonesty in the allocation of recourses, which in many cases greatly affects the performance of authorities and business investments (Levi et al., 2013).

Corruption as a Global issue

During 1950-1990, corruption was not considered as an issue and noticed with passiveness, disapproval and doubt. The Soviet Union, The United States of America and their allies have extensively used blackmail and bribery to progress with their aims in the Cold War. A lot of associations were allowed to deal with bribe payments by their local authorities to gain foreign orders as tax-deductible business costs. Corruption was even justified by the economy experts and was considered as an equaliser that helped the over-regulated economies to operate (Heimann and Pleth, 2018). As we find out from the previous paragraph, corruption is a grave issue and it undoubtedly affects the democratic and economic development of any country (Nakrosis, Vilpisauskas and Jahn, 2018). Global authorities in most of the countries are beginning to be highly concerned about corruption and its effect to democracy, human rights and the Rule of Law(Heimann and Pleth, 2018; Gustauskas and Laucius, 2007; Pasculli and Ryder, 2019; Schumacker, 2013).

The issue of prosecuting corruption cases lies within the authorities who are either involved in corrupt conduct or are not willing to put enough effort and resources minimising such crimes (Campbell, 2013; Lord, 2016). For example, in Turkey, corruption affects public policies of healthcare increasing mortality rates as poor people are not able to afford a bribe for a treatment (Dincer and Teoman, 2019). Crimes of corruption are described by a large amount of latency, due to the fact that, other parties also get benefit by keeping the crimes in the shadow (Gutauskas and Laucius, 2007). In corrupt countries, like Turkey when public officials embezzle millions of dollars from the healthcare budget, it causes severe damage to quality of healthcare, inequality of income distribution and overall retribution policies (Dincer and Teoman, 2019; Sims, Gong and Ruppel, 2010). The investigation process of corrupt offences is significantly difficult than other crime investigation and presents some complications in establishing enough evidence to prove the offence or complications in getting any evidence (Gutauskas and Laucius, 2007).

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Corruption in Lithuania

Due to their difficult past countries from Eastern Europe to East Asia are especially vulnerable to developing corruption issues nationally (Magyar and Madlovics, 2019). According to Transparency International Lithuania in 2019 was ranked 35th with the overall score of 60 in the perceived levels of public sectors corruption (Transparency International, 2019). However, the corruption perception index is often criticised for its subjectivity, as well as its impact on the society as it may have worse consequences than the corruption itself, as it creates a so-called “culture of distrust” (Melgar, Rossi and Smith, 2010). Lithuanian Corruption Map of (2011), the most corrupt institutions were the health care sector, the parliament, the courts, the police, and the local authorities. Bribery is perceived to be the main form of corruption by most Lithuanians, while businesspeople and civil servants respectively identified nepotism and party patronage as the most frequent forms of corruption. In 2019 Corruption was listed as a very serious problem by 36% of the population and ranked 4thamong the most relevant problems to the Lithuanians, there is a decrease of 4% compared to the 2018 (Lithuanian Corruption Map, 2019).

Although Lithuania’s anti-corruption legislation is well developed where the government continues creating opportunities for abuse of power and does not apply the laws effectively and sufficiently (Gustauskas and Laucius, 2007; Nakrosis, Vilpisauskas and Jahn, 2018). In 2016, the government approved three major initiatives to make public institutions more accountable to society, reduce corruption and increase transparency, while also increasing public engagement. However, implications have been undermined by a “lack of measurable targets and meaningful collaboration with civil society” (Nakrosis, Vilpisauskas and Jahn, 2018: 34). One of Lithuania's key corruption prevention measures is an anti-corruption assessment of draft legislation, which grants the Special Investigation Service the authority to carry out the corruption tests (Nakrosis, Vilpisauskas and Jahn, 2018: 34).

Organised Crime

Defining Organised Crime

Organised crime is not a new phenomenon but rather it has always existed in a cycle of changing and adapting, which made it difficult to define and caused an ongoing debate among many policymakers and academics (Allum and Gilmour, 2019). The concept of organised crime is characterised as the “ongoing activities of those collectively engaged in production, supply and financing for illegal markets in goods and services” (Mclaughlin and Muncie, 2013: 300). Other scholar points out that, organised crime is structured by the networks or mafia seeking influence in areas that the authorities cannot effectively control and regulate (Reichel and Albanese, 2014). Organised crime rather than a deviation from a lawful activity is a continuing criminal enterprise designed to generate profit primarily from crime and it requires both organisation and rationality in its commission (Campbell and Lord, 2018: 29). If the crimes and their apparent organisation do not fit the imagery of cunning, trafficking and violence, then most citizens would think that, there was not a problem of ‘organised crime’(Levi, 2016). UK government’s Organised Crime Strategy (2013) sets the criteria on what ‘organised crime’ can be “for the purposes of this strategy, organised crime is serious crime planned, coordinated and conducted by people working together continuingly” (HM Government, 2013). Their motivation is often, but not always, financial gain’ (Levi, 2016).

Theories of Causes and Cost of Organised Crime

Globalisation and Capitalism

While globalisation has obvious advantages for the population, it has been depicted that, the conditions gave rise to the scope of organised crime (Coker, 2014). It has had detrimental effects upon the safety of the public, local communities and companies (Levi, 2016). Globalisation has been beneficial for most sectors and people who participate in legal or illegal economies have also favoured (Findlay, 2000). Human Development Report (HDR 199: 103) identified “virulent synergy between globalisation and organised crime”. Internationalisation of capital, the concept of generalised consumerism and the consolidation of global markets that are not balanced had an influence on authorities resulting in the aetiology of crime as a market condition (Findlay, 2000). The term "black holes of international capitalism" is characterised by unemployment, youngster abandonment, alienation, which give rise for the perfect environment for criminal recruitment of drug traffickers (Karofi and Mwanza, 2006). The crimes that are particularly concerned with large-scale harm and high cost include extortion, intellectual property crimes, fraud against private businesses and national VAT (Levi et al., 2013). Organised crime may have higher social costs when there are several offences directed towards the poor and vulnerable victims, compared to the effect of greater in size crimes committed against businesses or governments who have the financial freedom and flexibility (Levi et al., 2013). Furthermore, the damage of organisational behaviour is comprised of political and law-enforcement corruption, along with the sub-standard, overly charged quality of manufacturing and other services, as well as a threat to businesses and other foundations of economic progression (Levi et al., 2013).

Organised Crime in Lithuania

In the post-soviet Lithuania Organised criminal groups are developed from two areas: the first was from those criminals who had been imprisoned under the communist regime for 'traditional' crimes of black marketing, racketeering, smuggling arid so on (Doig, 2006). Even after Russian troops had left the country militarisation of the police remain pervasive because of exponentially rising rates of crime, and especially of organised crime. In chaotic immediate post-independence conditions, violence, insecurity and fear of crime became omnipresent and the police responded with at times violent clampdowns on organized crime. Laws on organised crime were changed to facilitate such police actions; the para-military commando-style detachment Aras was established to carry out surveillance, control and apprehend the Lithuanian Mafiosi. It was only by 1997, when the most prominent organised crime syndicates in Lithuania had been dismantled that the first attempts to restructure, de-centralised and de-militarise the force were initiated (Juska and Woolfson, 2012: 408-409).

Organised crime groups in Lithuania are typically involved in gambling, smuggling, nightclubs/bars, cybercrimes, and financial schemes (Jurka, 2015). The second area was the 'new generation' of criminals who developed during the 1990s involved in drugs, people and cigarette smuggling which involves corruption of border guards, police and customs officials (Juska and Woolfson, 2012). Due to its membership in the Schengen Area and location between Belarus and Kaliningrad, both of which are significant sources of criminal activity, and Lithuania is a transit state for smuggling activity. The State Border Guard Service has registered an increase in smuggling activity primarily of cigarettes, alcohol, drugs and petrol on the Kaliningrad-Lithuania and Belarus-Lithuania borders (OSAC, 2019). The geography of the financial transactions of organised criminal groups is also influenced by the geographical location of Lithuania, which is especially attractive for drug transit (Jurka, 2015: 72). Due to the regional scope of organized crime networks and activities, law enforcement cooperates closely with counterparts in the EU, the Baltic countries, Russia, and, to a lesser degree, Belarus, to fight and prevent any organised crime activities (OSAC, 2019). In the 2011 Eurobarometer survey, 58% of respondents in Lithuania either disagreed or totally disagreed with the statement that their country was doing enough to fight organized crime, compared to an EU-27 average of 42%. However, in recent years public trust in the police has increased. In November 2016, a record high 71% of respondents in Lithuania expressed confidence in the police, according to a Baltic survey. A similar level of trust in the police (72%) was recorded in September 2017, while 71% indicated that they trusted the country's military forces (Nakrosis, Vilpisauskas and Jahn, 2018: 25).

Corruption and Organised Crime

Organised crime and corruption are interrelated concepts and are “sometimes linked, but not always in a clear way” (Campbell and Lord, 2018: 28). In order to understand the linkage of corruption and organised crime, it is critical to discover the degree that both of the concepts are interconnected by calculating the frequency of corruption in organised crime and the scope of it. As reported by some authors, to carry out such an analysis is very problematic and demanding, while others state that it is virtually impossible (Bezlov, 2010). Additionally, others state that, organised crime cannot be analysed separately from corruption (Kuchalskis, 2018). There also been an absence of commonly used practises and techniques to assess the concepts of organised crime and corruption, although an effort has been made to evaluate them and also, some have even tried to determine their linkage (Bezlov, 2010). In a serious and organised crime context, corruption is defined as “the ability of an individual or group to pervert a process or function of an organisation to achieve a criminal goal” (Campbell, 2016: 121). It is also believed that, organised crime is “usually linked to imply collusion with or direct involvement of the public sector” (Blackburn, Neanidis and Rana, 2017: 227). The United Nations Naples Declaration (1994-1995) identified that organised crime has a “corrupt influence on social, economic and political institutions” and that organised crime networks frequently use “coercion, intimidation and corruption to profit or control territories or markets”. In 2006 Eurobarometer survey revealed that 50% of European citizens believe that most of the corruption is connected to organised crime (Blackburn, Neanidis and Rana, 2017: 228). Organised crime does encourage and fosters corruption in authorities targeting different areas such as the judiciary, police, councils and political parties (Blackburn, Neanidis and Rana, 2017). The failed states globally have been seized by the corrupt interest which exploited the states as the base for illegal activities of smuggling, trafficking, extortion and fraudulence (Heimann and Pleth, 2018). The general conclusion of most observers and practitioners is that organised crime flourishes most when the functioning of society’s public institutions is undermined by corruption (Blackburn, Neanidis and Rana, 2017).

Political-criminal Nexus

Many authors have questioned the characteristics and definition of organised crime (Smith 1975; Woodiwiss 2001; Von Lampe 2016). Several policies have been put into action at the national, international and regional degree to improve the confiscation guidelines, control, and prevention (Dugato, Calderoni and Campedelli, 2019). Sampford et al. (2006) have addressed the issue of calculating organised crime utilising subjective indicators with connection to different offences, such as corruption.

Criminal groups are engaged in criminal activities, and sometimes they are representatives of the “upper world”, for instance, law enforcement agencies are directly involved in criminal activities, such as drug smuggling, and provide protection to other smugglers (Diamond, 2008). Organised crime can be described as an “unholy alliance of state, market and crime” or, in other words, a political-business-criminal nexus (Williams, 2001: 113). Organised crime can be understood as a network of affiliations of "underworld" and "upper world" actors with complex reciprocal relationships (Liddick, 1999: 1). These public actors are individuals and groups in law enforcement agencies, political parties, the business sector and the world of crime. The underworld is, in principle, illegal and self-contained, and the "upper world" is made up of legitimate, official structures and includes the government (Chambliss, 1988).

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