Important information about Power Corruption Cycle

Solution Preview

"Power Corruption Cycle."
Corruption and power are closely intertwined and their links had long been recognized. It is caused by combination of economic, social, and administrative factors. In developing countries, for example, low salaries for civil servants. Corruption flourishes where the mechanisms of accountability and oversight are weak. These mechanisms can include independent audits, special investigative units or government inspectorates, NGO watchdog groups, a robust press, and vocal political opposition parties

Complicity by multinational companies is often cited as a major factor in facilitating corruption in developing and transition nations (Transparency International 2002). On the World Bank's list of firms ineligible to receive Bank contracts due to fraud and corruption, more than half were based in the United States or the United Kingdom as of November 2002 (World Bank 2003).

Example of Enron

Enron was founded on January 1, 1985 with the merger of Houston Natural Gas (Houston, TX) and InterNorth (Omaha, NE), and became the nation's largest gas pipeline system with a network of more than 34,000 miles. The company was at a compound annual rate of more than 60 percent from 1995 through 2000. The highest and amazing growth came in 2000, which its revenues increased from $40 billion in 1999 to over $100 billion just a year later. At the time it filed for bankruptcy on December 2, 2001, it was
considered the seventh largest publicly traded corporation in the United States.

Financial signals and the role of Enron's ...