Powerlessness as the Basis for Financial Crimes: A Brief Overview

Fragmentation Of State Institutions

The ‘fragmented’ nature of state institutions in developing countries is almost universally found to be the main culprit. This reasoning has a significance particularly in countries where there continues to be a question mark over the legitimacy of the state and its institutions. Powerful elites, no doubt, take advantage of the fragmentation to exert rent at all levels of interactions with citizens. It has sometimes been described as “State capture” (South Africa), “Family Fiefdom” (Angola and Guinea Equatorial) or the “Oligarch” (Russia and the former Soviet states). Others, still, have seen state fragmentation in terms of neo-patrimonialism as was the case in the Democratic Republic of Congo under the late strongman leader, Mobutu Sese-Seko. Neo-patrimonialism is made possible by non-compliance and non-conformity with formal rules. This too varies according to the size and structure of government, democracy and the political system, quality of institutions, economic freedom/openness of the economy, salaries of civil service, press freedom and the judiciary amongst others (Enste & Heldman, 2017). High-level corruption is a major problem in any event, but it does not tell the whole story.