January 29, 2006

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Hierarchy of Bribes

An interesting anecdote over on David Warsh’s great Economic Principals site: He’s talking about corruption, and brings up Peru. When Alberto Fujimori was elected president there in 1990, he installed a guy named Vladimiro Montesinos Torres as his security chief. They totally took over the country:

They bribed politicians, judges, bureaucrats, journalists, business executives — more than 1,600 of them were kept on a regular payroll.

But here’s the really interesting part:

Montesinos’ great gift to economic science, however, was that he kept meticulous records. He required recipients of his bribes to sign receipts. […] [Two Stanford researchers] pored over the records, compiling what they described as price list for bribery, an instrument that could be used to measure the strength of countervailing forces that Montesinos was systematically disabling. They wrote, “The size of the bribes measured what he was willing to pay to buy off those who could check his power.”

What they discovered was a well-demarcated hierarchy. A politician was worth slightly more than a judge. But the owner of a television station commanded about a hundred times more than a politician — five times more than the total of all opposition politicians’ bribes. “Each channel takes $2 million monthly, but it is the only way,” he told a subordinate. “That is why we have won, because we have sacrificed in this way.” Newspaper bribes, while higher than those of judges and politicians, were much less than television. The difference had to do with scale. Montesinos explained on tape: “What do I care about El Comercio? They have an 80,000 print run. 80,000 newspapers is shit. What worries me is Channel 4… It reaches 2 million people.”

No word on bribing websites… oh well. I guess broadband isn’t exactly big in Peru yet.

Here’s the kicker:

(It was a small independent television station, one that Montesinos had never bribed, that aired the tape that finally brought the Fujimori regime crashing down.)