During the 1990s, Vladimir Montesinos, the chief of Peru's secret police under Alberto Fujimori, bought off the media, the opposition, the judiciary, and the armed forces, extracting large rents for himself and possibly Fujimori.1 Such systems of rent extraction are not rare. In fact, hybrid regimes that are democratic but lack genuine political competition represent a significant and rising proportion of the world's governments (Diamond 2002). While in some cases the goals of such regimes may simply be power itself, in most cases at least a secondary purpose is rent extraction.
This chapter examines how these systems can be disrupted. The first part of the chapter analyzes how an honest principal can deal with incidental corruption. It compares two strains of the literature on corruption—the economics of crime (prevention) and principal-agent theory—and proposes some concrete policies and reforms that could help alter incentives in incidentally corrupt systems. The second part addresses the problem—widespread in developing countries—of the sale of jobs and the effect the practice has on mechanisms of accountability. The third part analyzes corruption that involves the principal (systemic corruption). The fourth part draws on evidence from case studies of Belarus, Brazil, Kenya, and Turkey to show how systems of corruption can be exposed, disrupted, and eliminated. The chapter closes with recommendations about what various actors—citizens, the media, activists, nongovernmental organizations (NGOs), universities, foreign governments, aid agencies, the World Bank, and local governments—can do to prevent and expose systemic corruption.