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Better scrutiny leads to reduced corruption and stronger democracies in all society’s institutions, including government, corporations and other organizations.

   
 

 

             
 

 

     October 2018        
                 
                 
 
 
 

 Released on October 05, 2018 at 20:00 EDT

Bigger's political troubles deepen


 Brian Bigger seeking second mandate as approval rating continually dropping

 

 

Cody Cacciotti (left) and Dan Melanson (right)  gaining ground

 

Secret Contracts Raise Eyebrows
Privacy Commissioner Investigates Access to Employment Contracts

With reference to leaked documents from legal services division,  WikiLeaks Sudbury confirms that Sudbury mayor Brian Bigger has full knowledge of General Manager Corporate Services Kevin Fowke and City Solicitor Eric Labelle’s employment contracts.

The Bigger administration has denied public access to the contracts, prompting a complaint to Ontario’s Office of the Information and Privacy Commissioner.

Leaked document from Legal services division (click here)

The secret contacts have raised eyebrows among concerned citizens about the operation of City Hall. Critics worry the scandal demonstrates Bigger’s unwillingness or inability to control his administration and is just the latest example of a civic government in disarray.

 
Fowke:  Incompetent and negligence

Open Data Policy?

Sudbury taxpayers have the absolute right to know how City officials spend and receive public funds. There can be no more pertinent example of public spending than the employment contract of a municipal official.

Transparency and accountability for public funds is a hallmark of open government.

For too long now, Sudbury’s municipal government has been bogged down by a corporate culture of opacity over how tax dollars are spent.  Brian Bigger’s mayoralty campaign (2014) ran on a platform of open and transparent government, but he has yet to deliver on this promise.  The inner workings at City Hall are as opaque as ever. Mismanagement in the Bigger administration has had a ripple effect on Sudbury residents whose taxes pay for City services.  Bigger needs to take to full responsibility for the secret dealings of municipal bureaucrats.

Investigation moved to adjudication stage

The Information and Privacy Commissioner’s investigation into the employment contract controversy has now moved to the adjudication stage.  WikiLeaks Sudbury will reveal the details of Fowkes’ and Labelle’s secret contracts as soon as they become available. Sudbury taxpayers have the right to know how their tax dollars are spent.

Political uncertainty and a dark cloud over Greater Sudbury

Greater Sudbury’s confidence in its elected officials can only be alleviated in the face of rising poverty and unemployment levels if there is strong, sustained progress toward accountability and transparency in public administration. Bigger’s administration must lower administrative costs and reduce its dependency on high property tax revenue if it wants to balance its budget.  Even increased property taxes will not make much of a dent in the fiscal gap if administrative expenditures remain high.

Fowke’s already generous package was just increased by 26%. Sudbury taxpayers have no any other options: if Brian Bigger cannot control his wasteful and secret administration, they and he should be kicked of City hall.  The clock is ticking.  

-----End----

Editorial
Released on October 05 , 2018 @ 16:10 EDT

Can salaries and re-election prevent political corruption? An empirical evidence  

  This paper mainly focuses on decisions taken by politicians that may affect the level of municipal corruption. Specifically, we study whether local politicians’ incentives to be corrupt are influenced by the wages they receive and/or their intention to run for next elections. This issue has hardly been empirically tackled before at local level.

A major problem in every political system is that politicians in office may use their power to pursue their own interests, rather than those of citizens. Politicians are in a position that allows them to divert public funds into their own pockets. In fact, it has been claimed that policymakers seek power, ego-rents and even bribes. Transparency International defines corruption as the abuse of entrusted power for private gain. Corruption generally comprises illegal activities, which mainly come to light only through scandals, investigations or prosecutions. Although previous studies have explored several factors of corruption, most of them have been conducted at national levels. In fact, the European Commission considers that no comprehensive approach of corruption has been developed at regional and local levels.

 

The evaluation of corruption is more complex at the regional and local level. There are three principal approaches to measure corruption at the macro level: (1) general or target-group perception (2) incidence of corruptive activities and (3) bribes reported, the number of prosecutions brought or court cases directly linked to corruption. The first kind of measures reflects the feeling of the public or a specific group of respondents about corruption. The second approach is based on surveys among those who potentially bribe and those whom bribes are offered. The third kind of measures groups more objective variables that are also used as indicators of corruption levels. However, at local level, the difficulty of measuring corruption levels through any of these approaches has become a major obstacle due mainly to the limited availability of surveys and database needed to measure corruption in a proper way. For this reason, as stated above, while numerous have examined the determinants of corruption in an international comparative approach, municipal research on this issue is more scarce.

According to researchers as in all organizational contexts, an agency problem exists between elected officials and voters. Voters, principals, elect a politician, agent. The interests of politicians and voters are not perfectly aligned, so politicians in office may use their power to pursue their own interests, rather than those of the citizens. Researchers model this political agency problem as one of rent extraction. Voters pay taxes to fund public goods that are provided by politicians with uncertain costs. Given that politicians know these costs, they take advantage of this information asymmetry by extracting rents from the tax collected for personal benefit, which reduces the funds available for supplying public goods. Therefore, voters’ utility decreases as the amount of rents extracted increases.

Although all of the ways of obtaining political rents can be seen as unethical, only some of them actually are illegal. According to Transparency International, corruption is defined as the abuse of entrusted power for private gain through illegal activities. This abuse of entrusted power by politicians through corruption is a threat to many modern democracies. However, while the pervasive effects of corruption have been well documented, the root causes are poorly understood.

Some recent empirical studies have explored the determinants of corruption, most of them at national levels. Furthermore, several of these factors have not been analyzed in depth. For example, while there are convincing theoretical arguments why political decisions affect corruption, the empirical evidence is rather scarce. Below, we present the literature on two main decisions taken by municipal politicians that may affect the level of corruption: politicians’ wages and their intention to run for next elections.

Efficiency wage theories posit that higher levels of pay induce higher productivity. This effect can be explained by three different efficiency models. First, sociological models postulate that employees who believe they are overpaid (comparing their wages with those of comparable employees) are more likely to work harder and be more. Second, the shirking model suggests that employees overpaid exert effort and avoid improper behaviour so as to retain their jobs and continue earning above-market rents. While the first two arguments are due to motivation reasons, the third argument is based on the selection model. This model argues that firms have imperfect information about worker abilities, thus they may attract higher quality employees by offering higher wages.

All these models support the idea that a wage increase fosters employees’ productivity. Reseachers complement the efficiency wages theories by examining the impact of relative wages on employee theft. Thus, they predict that relatively higher wages will discourage employee theft for two reasons: first, employees receiving relatively higher wages are less inclined to commit theft as they attempt to reciprocate positively to their employers and/or to retain their high-paying jobs (motivation mechanism); second, firms that offer relatively higher wages may attract a higher proportion of honest workers (selection mechanism). Researchers  also contribute to the management control literature that examines the effects of control mechanisms on employee behavior. Thus, higher wages can provide an alternative mechanism to deter fraudulent behaviour, beyond other honesty inducing control mechanisms studied in the accounting and control literature.

 However, not all politicians respond in the same way to the same incentives. Thus, regardless of the wage level, some politicians might be corrupt because of their own psychological or moral makeup, or because some of the bribes offered may be too large for some politicians to resist. In this sense, the fight against corruption pursued exclusively on the basis of wage increases can be very costly to the budget of a municipality, which may not be welcomed by citizens, and can achieve only part of the objective, since despite high wages, some individuals may continue to engage in corrupt practices

Extending efficiency wage theories to the public sector, state that paying politicians more could also improve their performance (productivity) for different reasons. First, politicians’ morale could increase as their wages rise (sociological models). Second, paying politicians better may increase their performance because of their need to hold office (shirking model) Finally, higher wages will attract more quality citizens into politics (selection model).

Editor
WikiLeaks Sudbury
October 2018

Note: This article originally published on  Spanish Accounting Review 21 (1) (2018) 19–27.  Brief overview and excerpts of the articles and concepts are noted above.  

Reference
Benito at al (2018). Can salaries and re-election prevent political corruption? An empirical evidence, Spanish Accounting Review 21 (1) (2018) 19–27.

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Can salaries and re-election prevent political corruption?



 
             
     

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