1

Survey on

Perceptions

& Knowledge of

Corruption

(SPEAK)

Strengthening Transparency and Governance in Mongolia Program

March 2013

2

Sant Maral Foundation This survey is made possible by the generous support of the American people through the United States Agency for International Development (USAID). The Asia Foundation and the Sant Maral Foundation have implemented the survey, which does not necessarily reflect the views of USAID and the United States Government.

3

Table of Contents

I. Introduction…………………………………………………………………………………………………………4

II. SPEAK Objective…………………………………………………………………………………………………..4

III. Methodology……………………………………………………………………………………………………….4

IV. Key Findings…………………………………………………………………………………………………………7

V. Survey Results……………………………………………………………………………………………………..8

1. Corruption Evaluation……………………………………………………………………………….……8

2. Grand Corruption…………………………………………………………………………………………11

3. Anti-corruption Efforts…………………………………………………………………………………19

4. Impact of Corruption on the Household Economy………………………………………..27

4

I. Introduction

The Survey on Perceptions and Knowledge of Corruption (SPEAK) is an integral part of the USAID-funded Strengthening Transparency and Governance in Mongolia (STAGE) program implemented by The Asia Foundation. The SPEAK survey builds on the semi-annual corruption benchmarking survey conducted under the USAID-funded Mongolian Anti-Corruption Support (MACS) project. While the past eleven surveys probed both citizens’ perceptions and actual experience of corruption at the household level, the SPEAK survey has been expanded to capture data on perceptions and knowledge of administrative practices and grand corruption. Additionally, the SPEAK survey will be complemented by the Foundation’s newly introduced Study of Private Perceptions of Corruption (STOPP) which is designed to capture data on perceptions of corruption of business sector. Together, the surveys will provide a much broader picture of the level of corruption in Mongolia. The Sant Maral Foundation (SMF) has been The Asia Foundation’s implementing partner for both the surveys.

The SPEAK survey will be conducted semi-annually, four times over the period of STAGE program. The survey serves as a backbone to evidence-based programming, informing STAGE of changes at critical stages of the program. The survey is also linked to the monitoring and evaluation system serving both as a baseline and means to capture progress and impact. The SPEAK survey will be extensively disseminated at the grassroots level in collaboration with the USAID-funded Mercy Corps’ Active Partnerships and Public Engagement for Accountable Localities (APPEAL) which will trigger public discussions on transparency, accountability, and corruption.

II. Objective The objectives of the SPEAK survey are to i) assess public perceptions on corruption in general; ii) capture data on the actual incidence of corruption at the household level, and iii) assess public perceptions on grand corruption and administrative practices.

III. Methodology The target population of the study was adults, 18 years of age and above. Individual interviews were the only methodology used in this study. Multi-stage, random sampling with probability sample in area cluster was used in the following stages. A survey questionnaire was developed to include blocks of questions that had been consistently used since 2006, as well as new blocks of questions to expand perception data on grand corruption and administrative practices.1 At the first stage, Ulaanbaatar and up to two aimags from each of the four regions2-Western, Khangai, Central, and Eastern - were selected randomly, followed by selection of sub-districts in Ulaanbaatar and of soums in aimags. At the second stage, the Primary Sample Units (PSU) were randomly selected in Ulaanbaatar and the aimag centers. While the selection took place at the sub-district (khoroo) level in the capital, in aimags it 1 The USAID-funded Mercy Corps’ Active Partnerships and Public Engagement for Accountable Localities (APPEAL) program provided suggested inputs for inclusion in the survey questionnaire.

2 Because of the massive size of aimags, ranging from 46,000 to 142,000 sq. km., and the low population density of less than 1

person per sq. km., the survey did not cover all aimags In the country.

5

was at the bag level. In soum centers, the supervisor of interviewers determined a block of apartments or units, with eight households making up a PSU. At the third stage, the starting point and the households were determined. In apartments, interviewers in sub-districts of Ulaanbaatar were provided with addresses (building and flat numbers), whereas in ger districts, field executives provided them with street number and the starting point. From the starting point, interviewers used the right hand rule and moved door to door, skipping two houses. In aimags and soums, starting points were determined by supervisors. Interviewers then followed the right hand rule to select households. At the household level, the head of household or the household member who was most familiar with household matters was selected for the interview. Twenty pilot interviews were conducted on November 2 and 3, 2012. The questionnaire was finalized based on the feedback and learning from the pilot test. The fieldwork started November 8 and was completed by November 26, 2012. During this period, the Sant Maral Foundation (SMF) team interviewed 1,360 households in seven districts of Ulaanbaatar and in 21 soums of six aimags. The sampling distribution is shown in the table below: Table 1.1 Sample Distribution

Region City/Aimag District/Soum Interviewed households

1. Ulaanbaatar Districts

1. Khan-Uul 56

2. Bayanzurkh 126

3. Sukhbaatar 64

4. Chingeltei 71

5. Bayangol 87

6. Songinokhairkhan 126

7. Nalaikh 24

Sub-total 554

Western Region

2. Hovd Soums

1. Jargalant 83

2. Mankhan 33

3. Myangad 32

4. Erdeneburen 32

5. Hovd 25

Aimag sub-total 205

Khangai Region

3. Bayankhongor Soums

6. Bayankhongor 58

7. Buutsagaan 32

8. Bombogor 32

Aimag sub-total 122

6

4. Uvurkhangai Soums

9. Arvaikheer 56

10. Uyanga 39

11. Tugrug 34

12. Zuunbayan-Ulaan 32

Sub-total 161

Central Region

5. Dundgobi Soums

13. Saintsagaan 48

14. Erdenedalai 32

Sub-total 80

6. Tuv Soums

15. Zuunmod 48

16. Bornuur 31

17. Erdenesant 31

18. Lun 32

Sub-total 142

Eastern Region

7. Hentii Soums

19. Kherlen 40

20. Batnorov 32

21. Tsenkhermandal 24

Sub-total 96

Total 1360

All questionnaires were checked for completeness before they were coded. Based on the findings of the control, 16 questionnaires were re-administered as they did not have complete information. At the final stage, 240 questionnaires were randomly picked and quality-checked by contacting the respondents and verifying the interview. The data entry started on November 19 and was completed on November 27, 2012. Data processing took the majority of the time as the “skip logic” used in the questionnaire had to be verified and required additional checking. For the data processing and statistical analysis, IBM SPSS 19 software was used. Gender and age Among the surveyed respondents 49 percent were male and 51 percent were female. Among them, 26 percent were between 18-30 and 48 percent were between 30-50 years of age. Statistically the survey did not note any significant differences between how male or female would approach or understand corruption. That said, female respondents opted more for “don’t know” category, neutral responses, and avoided strong statements. For example, while 70 percent of the male respondents agreed with the statement, “politicians have no real interest in fighting corruption as they may benefit from it,” only 61 percent of the female respondents did so. Similarly, when asked whether they are willing to report a corruption case, only 57 percent of the female respondents said they will as opposed to 66 percent of the male respondents who are willing to do so.

7

IV. Key Findings

The following are the key findings of the SPEAK Survey:

88.8 percent of Mongolians in the 2012 survey said they believe corruption is common in Mongolia, compared to 92.2 percent in 2006 who thought so.

Concern over corruption continues to decline among survey respondents, who ranked it fifth among major problems in 2012, compared to second in 2006.

Respondents again ranked “land and property” and “mining” as the two most corrupt sectors as they have since 2006. Political parties have been ranked fifth for the last few years.

A slight increase in people’s confidence in Independent Authority Against Corruption (IAAC) is evident in 2012.

The number of people who said they preferred IAAC as the leader in fighting corruption increased from 35.8 percent in April 2011 to 44.4 percent in November 2012.

The number of households reporting involvement in bribery (petty corruption) has significantly decreased since 2006.

The average size of reported bribes has increased, from MNT 118,000 in 2006 to MNT 391,000 (without outliers) in 2012.

Respondents cited the incidence of corruption involving high-level government officials and strong political groups as the main markers of grand corruption.

Strong punitive measures and improved state supervision and civil society oversight are respondents’ top two stated preferences for countering corruption.

“Unabated corruption in law enforcement bodies” and the custom of “solving problems by corrupt practices” are cited as the two primary obstacles to preventing corruption.

The people surveyed regarded education and health institutions as the fairest institutions, while they maintained that teachers and doctors are the most corrupt professions.

The average size of reported bribes for “doctors” is the lowest, while that of “judges” is the highest among the surveyed professions.

8

V. Survey Results

1. Corruption Evaluation

In the November 2012 survey, respondents ranked corruption fifth among the most important

problems3 in Mongolia. In the survey of 2006, corruption ranked second after unemployment

(unemployment has ranked first among national problems in all eleven previous surveys).

If we compare trends in attitudes towards corruption and unemployment, there is a clear decline in

people’s ranking of corruption among the most important issues of concern. This change in perception

may indicate that people no longer link corruption to deteriorating standards of living or other major

issues as much.

Figure 1.1 Corruption ranking in November 2012

Figure 1.2 Attitudes towards corruption and unemployment

3 In surveys designed exclusively to measure attitudes towards corruption, respondents usually rank corruption

higher than when it is just one of the survey’s components . In April 2011, corruption was only part of an omnibus survey, and as a result attracted less attention.

9

Figure 1.3 and Figure 1.4 show that significantly fewer people consider corruption a vital issue today than in 2006. Earlier, more than 60 percent of respondents expressed the belief that corruption had increased considerably in the preceding three years, while in 2012 only 40 percent said so.

Similarly, in 2006 about 25 percent of respondents said they believed corruption would increase in the next three years, but in 2012 only about 10 percent expressed this belief. People’s views on the state of corruption in Mongolia have changed significantly, from extremely negative to somewhat positive.

Figure 1.3 In the past three years, how has the level of corruption in Mongolia changed?

Figure 1.4 How do you expect the level of corruption will change in the next three years?

If we compare assessments of the impact of corruption in different areas, there is a little change in people’s attitudes over time. The impact of corruption on one’s personal life is deemed to be lower (impact score is close to 2, i.e., “to a small extent”) than the impact on business and politics (impact score is close to 3, i.e., “to a moderate extent”).

10

Figure 1.5 Some people believe that corruption affects different spheres of life in Mongolia. In your view, to what extent does corruption affect lives? (1: not at all, 2: to a small extent, 3: to a moderate extent, 4: to a large extent)

Although fewer people in 2012 “agreed” that corruption affects different aspects of social life, a significant number of Mongolians still consider corruption a common practice in the country (see Table 1.1 and Figure 1.6). If we look, for example, at the November 2012 survey, almost 89 percent of respondents agree that corruption is a common practice in Mongolia.

Table 1.1 Corruption is a common practice in our country.

March 2006 November 2012

Agree 79.1% 67.6%

Somewhat agree 13.3% 21.2%

Somewhat disagree 4.8% 6.5%

Disagree 2.8% 4.7%

Total 100.0% 100.0%

Figure 1.6 Corruption is a common practice in our country.

11

2. Grand Corruption (GC)

The research on grand corruption (GC) in Mongolia is limited primarily for two reasons. First, the data or information is very difficult to obtain, and second, no equivalent term to “grand corruption” is found in the Mongolian language. It is understood differently in different countries. For example, in Russia the term “high-level corruption” is applied only to high-level judicial and government officials. In China, the word “corruption” is used without differentiating between petty and grand corruption. For the purposes of this research, GC was directly translated into “ikh avliga” in Mongolian, and interviewers explained it as corruption at the level of decision makers. As the term is not officially accepted yet, we can expect some volatility in its interpretation in the future. As such, since corruption is a much broader concept than bribery, we introduced a set of statements citing different forms of corruption so that people could understand it better and have multiple ways to assess it.

The perception of corruption in Mongolia has not changed much since 2006. A battery of questions was offered to capture what respondents considered as corruption. An interesting observation is made in connection with the new Election Law forbidding distribution of gifts and money during election campaigns. In particular, the number of people, who do not consider it as corruption, had tripled since 2009. Apparently, a part of the population does not consider “gifts” to be bribes. In addition, politicians diverting state funds to their constituents appear to be an acceptable practice to a large number of people.

Figure 2.1 Would the following actions be considered corruption? If yes, how widespread are they?

a) Using a public position to collect gifts, money

12

b) Using a public position to help friends, relatives (such as giving jobs or licenses, or favoring in bids)

c) Distributing gifts, money in election campaign

d) Politicians diverting state funds to their constituents

13

Among the new corruption definitions used, 74.2 percent of respondents said “giving presents or money to civil servants to obtain public services” was very or moderately corrupt (Figure 2.1.e), while 87.9 percent said “using a public position to collect gifts, money” was very or moderately corrupt (Figure 2.1, a). In other words, fewer people consider giving bribes to be corruption than those who deem taking bribes to be corruption.

In the next new definition, a majority of respondents (58.1%) said financing of political parties by the private individuals is a corrupt practice (Figure 2.1.f). This shows that in the public eye, people donating money to election campaigns in return for favors can be considered a contributing factor to overall perceptions of corruption.

e) Is giving presents or money to civil servants to obtain public services corruption?

f) In Mongolia, to what extent do private individuals finance political party activity?

November 2012

November 2012

14

From surveys covering 2006-2012, it is clear that the Mongolian people have more or less the same attitude towards the role of politicians, government officials, and big businesses in corruption. It can be seen from the following figures. Ninety percent of respondents agreed or somewhat agreed that politicians have no real will to fight corruption as they benefit from its prevalence and practice.

Figure 2.2 Do you agree that politicians have no real will to fight corruption as they may benefit from it?

72%

71%

19%

19%

6%

5%

3%

5%

0% 20% 40% 60% 80% 100%

Mar 2006

Nov 2012

Agree Somewhat agree Somewhat disagree Disagree

Figure 2.3 Do you agree that small and medium businesses are more negatively affected by corruption than large businesses?

61%

66%

25%

21%

9%

8%

5%

4%

0% 20% 40% 60% 80% 100%

Mar 2006

Nov 2012

Agree Somewhat agree Somewhat disagree Disagree

15

Figure 2.4 Do you agree that decision makers are less affected by corruption than ordinary people?

73%

71%

18%

21%

5%

5%

4%

3%

0% 20% 40% 60% 80% 100%

Mar 2006

Nov 2012

Agree Somewhat agree Somewhat disagree Disagree

Table 2.5 Do you agree that large business is one of the main sources of corruption?

In 2012, in response to a question about their understanding of “grand corruption,” the majority of respondents chose “cases with involvement of high-level public officials,” followed closely by “cases with strong political interest.” While the top two preferences concern political groups, the third one relates to business (cases where big local and foreign businesses are involved).

16

Table 2.1 What is your understanding of Grand Corruption?

November 2012

Cases with involvement of high-level public officials 21.3%

Cases with strong political interest 17.3%

Cases where big local and foreign businesses are involved

11.8%

Cases causing high-level damage to the country 9.9%

Cases in which bribe amounts are substantial 9.5%

Cases in which organized crime is involved 9.0%

The preferences for the remaining three categories (“cases causing high-level damage to the country,” “cases in which bribe amounts are substantial,” and “cases in which organized crime is involved”) are distributed more or less evenly. In their estimates of the lower and upper limits of bribe amounts, respondents said they could be in the range of tens of million to billions of Mongolian tugriks.

About 70.5 percent of respondents said that cash is the most common mode of bribery. Approximately 60.4 percent surveyed believed that offering positions in the administration is the most common form, which also implies that people who obtain positions this way are unlikely to promote a transparent and corruption free culture in the bureaucracy. Also, if such a corrupt culture were as widespread as perceived, it would mean that GC is self-perpetuating.

Table 2.2 What are the types of bribe that you have heard of? (multiple response)

November 2012

Cash 70.5%

Position in administration 60.4%

Major gift such as apartment or car 41.8%

Partnership or block of stock in a company 34.2%

Foreign travel 17.2%

Other sources 1.5%

The fact that the Mongolian people have maintained the same views on corruption among politicians, government officials, and private businesses has been verified by other studies over the years, especially since 2006. However, such views on personal or institutional integrity are based on a combination of personal experience, word of mouth, and mass media reports.

17

In the evaluation of institutions, it is important to note that media has a key role to play. When an institution is a subject of media focus, the overall perception of the institution changes according to how it is portrayed. However, “land utilization” and “mining” are always cited as the top two most corrupt sectors. In 2012, two new institutions were among the top four, “local procurement tenders” and “professional inspection agency” appearing in the third and the fourth spots, respectively. It is also notable that for the first time customs and judicial system were not included in the overall top five ranks and moved to seventh and eighth respectively. Table 2.3 Five sectors considered most corrupt from March 2006 to November 2012.

1 rank 2 rank 3 rank 4 rank 5 rank

Mar-06

Land Utilization

Customs Mining Judges Police

Sep-06

Land Utilization

Customs Mining Judges Police

Mar-07

Land Utilization

Customs Mining Judges Registry and Permit Service

Sep-07

Land Utilization

Mining Customs Registry and Permit Service

Judges

Mar-08

Land Utilization

Mining Customs Registry and Permit Service

Judges

Sep-08

Land Utilization

Mining Customs Judges Prosecutors

Mar-09

Land Utilization

Mining Judges Customs Prosecutors

Sep-09

Land Utilization

Judges Police Prosecutors Mining

Mar-10

Land Utilization

Mining Political Parties Customs Parliament/Legislature

Sep-10

Land Utilization

Mining Judges Customs Political Parties

Apr-11 Land Utilization

Mining Judges Customs Political Parties

Nov-12

Land Utilization

Mining Local Procurement Tenders

Professional Inspection Agency

Political Parties

18

A large number of people pointed to “banking or financial sector” as the most corrupt among those

institutions that were not listed in the questionnaire. This situation was different six years ago when

corruption in banking was considered not significant enough to report.

The results from people’s real-life experiences of petty corruption show a very different trajectory.

While doctors and teachers are considered the most corrupt among professions, many respondents

believe health and education to be among the least corrupt sectors.

Table 2.4 To what extent do you perceive the following areas or institutions in this country to be affected by corruption (from 1: “not at all” to 5: “extreme”)?

Mean Dispersion

Land and Property 4.27 .975

Mining Sector 4.19 .972

Local Procurement Tenders 4.12 .996

Professional Inspection Agency 3.92 1.062

Political Parties 3.81 1.109

Parliament / Legislature 3.81 1.115

Customs 3.79 1.073

Judicial System 3.78 1.035

Law Enforcement Officers 3.76 1.058

National Government Administration 3.68 1.143

Registry and Permit Service (civil registry for birth, marriage, licenses, permits)

3.58 1.207

Tax Office 3.46 1.201

Local Government Administration 3.44 1.149

Health System 3.41 1.104

Education 3.23 1.041

Banking System - -

Note: Dispersion shows how much variation exists from the mean value. A low standard deviation indicates that the data

points tend to be very close to the mean and high standard deviation indicates that the data points are spread out over a

large range of values.

When institutions are ranked according to the perceived level of corruption, there is no big difference between rural areas and capital. However, the survey reveals that political parties have a much worse reputation in Ulaanbaatar, while the judicial system fares significantly worse in the countryside.

19

Table 2.5 To what extent do you perceive the following areas or institutions in this country to be affected by corruption? (from 1: “not at all” to 5:”extreme”)

Ulaanbaatar Countryside

Land and Property 4.44 Land and Property 4.15

Mining Sector 4.29 Mining Sector 4.12

Local Procurement Tenders 4.24 Local Procurement Tenders 4.03

Professional Inspection Agency 4.15 Professional Inspection Agency 3.74

Political Parties 4.02 Judicial System 3.67

Parliament / Legislature 4.01 Parliament / Legislature 3.66

Customs 4.01 Political Parties 3.65

Judicial System 3.95 Law Enforcement Officers 3.64

Law Enforcement Officers 3.91 Customs 3.62

National Government Administration

3.91 National Government Administration

3.51

Registry and Permit Service (civil registry for birth, marriage, licenses, permits)

3.78 Registry and Permit Service (civil registry for birth, marriage, licenses, permits)

3.43

Tax Office 3.73 Local Government Administration 3.28

Local Government Administration 3.67 Health System 3.28

Health System 3.59 Tax Office 3.26

Education 3.38 Education 3.12

3. Anti-corruption Efforts

The percentage of citizens directly involved in corruption has gone down over the years, from 28

percent in 2006 to 12 percent in 2012. Although 41 percent of respondents do not condone corruption

at any level, about 18 percent express no problems with the types of corruption examined in the survey

(Figure 3.1). This attitude has not changed much in six years. The practice of giving bribes to overcome

bureaucratic hurdles or unjust regulations has been generally accepted by a strong majority (close to

70%) of Mongolians over the years. Nevertheless, 93 percent of respondents believe that citizens should

be responsible for reducing corruption. However, it is not clear to the respondents how could they act at

individual level to tackle corruption.

20

Figure 3.1 Do you agree that some level of corruption should be acceptable?

15%

18%

24%

22%

16%

19%

45%

41%

0% 20% 40% 60% 80% 100%

Mar 2006

Nov 2012

Agree Somewhat agree Somewhat disagree Disagree

Figure 3.2 Do you agree that the only way to overcome bureaucratic hurdles is to pay bribes?

45%

42%

19%

24%

13%

15%

24%

19%

0% 20% 40% 60% 80% 100%

Mar 2006

Nov 2012

Agree Somewhat agree Somewhat disagree Disagree

21

Figure 3.3 Do you agree that giving bribes helps to overcome unjust regulations?

47%

41%

27%

29%

11%

15%

15%

16%

0% 20% 40% 60% 80% 100%

Mar 2006

Nov 2012

Agree Somewhat agree Somewhat disagree Disagree

Figure 3.4 Do you agree that citizens should be responsible for reducing corruption?

78%

77%

14%

16%

5%

4%

3%

2%

0% 20% 40% 60% 80% 100%

Mar 2006

Nov 2012

Agree Somewhat agree Somewhat disagree Disagree

In the period 2010-2012, people indicated a preference for the Authority Against Corruption as the agency to lead the fight against corruption, followed by government. “Citizen movements” emerged as an alternative to nongovernmental organizations (NGOs) in the fight against corruption (Figure 3.5), especially in launching public protests, but they lost their effectiveness over time as the protests were mostly dispersed, irregular, and ad hoc with little impact. From 2006 to 2012 the number of people who said that the IAAC should lead the anti-corruption effort in Mongolia has increased by 8.6 percent, from 35.8 to 44.4 percent. In 2012, “government” was split into three different categories: national government, local government, and Ministry of Justice. It is

22

clear that even taken together, only 20.7 percent of the respondents have confidence in government agencies to fight corruption. Figure 3.5 In your opinion, who should lead the effort to combat corruption? (March 2010 – April 2011)

Figure 3.6 Who should lead the effort to combat corruption? (2012)

The survey evaluated the performance of the IAAC. In the earlier surveys, people expressed confidence in the IAAC. This confidence gradually declined, however, as shown in Figure 3.7, such that by March 2010 just 30 percent of respondents expressed confidence in IAAC. More recently, the confidence level has rebounded somewhat, reaching 38 percent in November 2012.

23

In evaluating the performance of IAAC, the same positive trend can be seen (Figure 3.8). The number of people who now indicate they think positively about the IAAC has increased from 7.8 to 15.5 percent in three years. Nevertheless, IAAC still needs to improve both in overall performance and in gaining people’s confidence.

Also growing is the number of people who believe that IAAC is an impartial law enforcement agency. Compared to 21.7 percent in March 2010, about 26 percent of respondents endorsed IAAC’s impartiality in November 2012.

Only 11.5 percent of respondents said that civil society groups and NGOs should lead anti-corruption efforts. As for individual initiatives to fight corruption, 53.4 and 61.6 percent of the respondents are willing to report, respectively, conflicts of interest and cases of corruption to IAAC, provided that it maintains confidentiality.

Figure 3.7 Public confidence in the ability of IAAC to curb corruption. (data in percentages)

Figure 3.8 Evaluation of IAAC’s performance in fighting corruption (data in percentage)

24

Figure 3.9 Are you confident that IAAC is an impartial law enforcement body?

Measures to be taken

The survey noted a steady increase in the number of people expressing support for “building public awareness” and “transparency in administrative decision making.” Likewise, “strong punitive measures” returned to the top of the list of popular measures (March 2010), along with “strengthening state control over public administration.”

“Increasing public employees’ salaries” had relatively high support in March 2010, with support from 15.9 percent of respondents. However, in the next two surveys, it had support of only 8.1 percent. In 2012, “the consistency in implementation of the rule of law” received support from 15.1 percent of the respondents. However, people still know a little about legal measures. Only 25.9 percent of the respondents, for example, knew that the conflict of interest law has recently been passed.

Figure 3.10 What should be done to prevent corruption? (2010-2011)

25

Figure 3.11 What should be done to prevent corruption? (2012)

With high demand for punitive measures and increased control over public administration, it can be deduced that people are more aware of instances of punitive actions. The number of respondents indicating they are aware of any official being prosecuted for corruption has grown by 10 percent in the last two years (Figure 3.13).

Figure 3.12 In your opinion, how often are public officials are getting into conflict of interest situations?

26

Figure 3.13 Since the introduction of the new law on corruption in 2006, are you aware of any official being prosecuted by the justice system on a corruption charge?

The top two factors that survey respondents said hindered the fight against corruption were “the habit of solving problems through corrupt practices” and “corruption prevalent in law enforcement agencies.” The absence of will in political leadership moved to last position. Though 90 percent of respondents consider that politicians benefit from corruption, they do not rank the absence of political will above other factors hindering the fight against corruption.

Figure 3.14 Ranking of factors hindering fight against corruption (from 1- “not at all” to 4- “a lot”

27

4. The Impact of Corruption on Household Economy

This survey has assessed general impressions of the impact of grand corruption and household experiences of corruption in the last three months. As a majority of the respondents have no direct contact with Grand Corruption, their attitudes are shaped by the media, word of mouth, participation in social events, etc. As a result, many respondents’ perceptions of the impacts of GC are rather ambiguous. 42.4 percent had difficulty assessing the effect of GC on their families (Figure 4.1). A large number of respondents (in fact one of every five) believed that GC had no negative impact on them or their families.

Figure 4.1 Do you think that GC has any negative impact on you and your family?

Many respondents, however, felt that GC had affected their standard of living (26%). Price increases and cash deficits, which are closely linked to the standard of living, are ranked second (21.6%), while 12.6 percent felt that GC affects their private activities.

Table 4.1 If there is a negative impact, can you be specific about what sort of impact it has on you and your family?

Type of impact %

We cannot secure public services 5.5

Obstacles in business and private activities because of bureaucracy, inequality

12.6

It affects the standard of living 26.0

Price increases, cash deficits 21.7

It has an impact on environment and health 8.1

It has an impact on safe and healthy food and consumer products 0.9

Lack of jobs and lack of schools (good education) 4.7

Don’t Know/ No Answer 20.4

28

Petty corruption

The proportion of households engaging in petty corruption has been decreasing since 2006. The fewest

reports by survey respondents were registered in March 2011 (8.8%), while the most were in September

2006 (28%). However, the decrease was accompanied by a growth in the average size of bribes paid,

which rose from 102,000 MNT in 2007 to 391,000 MNT in 2012 (Figure 4.3). This number is even more

significant if outliers in the bribery sub-sample are included in calculations (Figure 4.4) as was done in all

previous surveys. In this scenario, the average bribe surges from 391,000 MNT to 3,923,000 MNT. The

size of bribes paid in 2012 ranged from 5,000 MNT to 500,000,000 MNT.

Figure 4.2 Percentage of households reporting bribes in the last three months: In the past three months, have you or anyone in your household paid a bribe in any form? (“Yes” responses)

Figure 4.3 Average amount of bribe (in 1000MNT)

29

Figure 4.4 Average amount of bribe (with outliers)

The overall scale of petty bribery (without outliers) is presented in Table 4.3 Nationally, the total amount of petty bribes paid by Mongolian households increased from MNT 20.8 billion in the spring of 2011 to MNT 35.9 billion in 2012. Table 4.2 Three-month totals of petty bribes from 2006 to 2012 (approximate, based on household reports)

Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08

Average bribe (in 1000 MNT) 181 136 102 187 180 298

% of households giving bribes 26% 28% 23% 22% 19% 21%

Total amount paid (in billion MNT) 28.8 23.3 14.8 26 23.2 42.4

Number of households 611000 611000 632500 632500 645700 645700

Statistical Yearbook 2005 2005 2006 2006 2007 2007

Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Nov-12

Average bribe (in 1000 MNT) 397 308 195 416 319 391

% of households giving bribes 15% 20% 16% 13% 8.8% 12.4%

Total amount paid (in billion MNT) 40.3 41.7 21.2 38.8 20.8 35.9

Number of households 677800 677800 677800 717000 742000 742000

Statistical Yearbook 2008 2008 2008 2009 2010 2010

30

The analysis in Table 4.3 shows that although the highest frequency of bribery is in the health and education sectors, the average bribe paid to these groups is lower than the national average of 391,000 MNT. Seasonal fluctuations were also observed over time. However, even if ranked at the bottom in frequency, judges and local administrators are at the top in terms of the size of bribe received. The average size of bribe, for example, among judges (2,364,000 MNT) is three times higher than the national average of bribes. Similarly, clerks in local administrations receive significantly larger bribes than their counterparts in the national administration.

Table 4.3 Average size of bribes in petty corruption (November 2012)

Number of incidence Average size of bribe (in 1000MNT)

Doctor 48 134

Teacher 47 423

Policeman 27 574

Clerk in national administration 20 217

Clerk in local administration 10 995

Judge 7 2364

As the amount of bribes paid by citizens is increasing, so is the burden on family budgets. Our first assessment was carried out in March 2008. At that time, 16.5 percent of bribe-paying households in the survey admitted that their family budget was “seriously damaged.” This percentage increased noticeably in the wake of the 2008 global economic crisis, with 42.5 percent reporting in the spring of 2009, that their household economy was “seriously damaged.” This may mean either household income has declined for all groups or the cost of bribery has grown (as reflected in Table 4.5). In 2012, over a quarter of respondents (28.4%) reported “serious damage” to their budgets.

Figure 4.5 To what extent does bribery affect your family budget? (Percentage of those whose budget “seriously damaged”)

Although 12.4 percent of households surveyed were involved in petty bribery in 2012, not much has changed in people’s attitude towards their role in fighting corruption (Figure 4.6). The results from March 2010 showed a rather negligible difference in “willing to report corruption” or “not pay”

31

categories. It is possible that people believed that their actions or inactions would not have any significant effects on bribery.

Moreover, among those who stated they were willing to act, no major change is noted over time in the course of action they say they would undertake. While the number of people who thought they would not pay bribes rose from 28.7 percent in March 2010 to 32.5 percent in November 2012, people willing to report the incidents decreased from 20.5 percent in March 2010 to 16.7 percent in November 2012.

Figure 4.6 If you face a situation in which you are directly asked for a bribe by a public or private official, what is your most likely action?

There is also no major departure in terms of “target agencies” for reporting corruption over the years. The IAAC has been the top preference by a healthy 54-56 percent over time (Figure 4.7).

On the other hand, there is a significant decrease in the number of people who are aware of the telephone hotline for reporting corruption. While 52.1 percent of respondents in March 2010 reported that they were not aware, the number reached 71.3 percent in November 2012. Such an increase on the lack of awareness on the hotline may be linked to the overall decrease in advertisements or a lack of information dissemination in general. This has happened despite the fact that 63 percent of respondents were willing to report corruption cases (that is if IAAC accepts anonymity).

Figure 4.7 If you do, where do you report incidents of corruption?

32

Figure 4.8 Are you aware of the telephone hotline for reporting corruption?

Although doctors and teachers are the most corrupt professions in terms of frequency of bribe (Figure 4.3), the people surveyed regard the related institutions (education and health sectors) the fairest in treating people. Figure 4.9 shows the degree of fair treatment respondents say they expect from various institutions.

Figure 4.9 What degree of fair treatment do you expect to receive when contacting the following institutions?