The Economics of Corruption | Report

Running Head: THE ECONOMICS OF CORRUPTION
The Economics of Corruption
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THE ECONOMICS OF CORRUPTION1
Executive Summary
Corruption has lowered the rate of economic growth in almost every country. Azerbaijan in has
established an Anti-Corruption Law to fight the odds of corruption especially in the legal
sections. The country has wide spread illicit practices by legal officials as they are engaged in
appealing and taking bribes for the services they provide. Corruption increases the total
production cost of firms and lowers investment as investors find it difficult to operate in such
market structure. The paper aims at understanding the law against corruption and the way it
works. The law has been able to increase the level of domestic and foreign investments by
lowering the level of corruption and corrupt practices. Penalty in terms of fines and years of
imprisonment is given as punishments for taking bribes. The government has also incorporated
an instrument to stop the grievances that gave positive stimulus to the economy of Azerbaijan.

THE ECONOMICS OF CORRUPTION2
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Liability of Legal Person.............................................................................................................4
Incentive structure described in legal instruments.......................................................................7
Cost and benefits of legal instruments.........................................................................................8
Economic theory to help the use of legal instrument..................................................................9
Conclusion.....................................................................................................................................10
Reference List................................................................................................................................12

THE ECONOMICS OF CORRUPTION3
Introduction
Corruption has been a key problematic area in Azerbaijan, though the government has
taken quite a few measures to stop them. Azerbaijan is ranked at 122nd place in Corruption
Perception Index out of 180 countries by the International Transparency (Chayes 2016). An
initiative regarding the liability of legal persons was taken by the government for accepting the
Amendments Law to the Criminal Code of the Republic of Azerbaijan. The aim of the law is to
detect, protect and prevent the offences relation to corruption (Forgues-Puccio 2013).
The officials are reputed to derive benefits, incentives and advantages by the supremacy
of their official power. The tag of criminal legal measures are enforced to legal dignitaries who
have the legal power to present a legal entity to take decisions in favour of legal entity or to
administer the actions committed by legal persons. The liability of legal persons is applied due to
carrying out crimes by employees because officials never authorize the latter without exempting
the organization from liability.
A number of categories are enlisted relating the public officials to be subjected under the
illegal offences. The person has to be appointed in the position of government official with the
Azerbaijani laws or Azerbaijani Constitution and representing the state framework positioned on
special authority. It considers civil attendants commanding the administrative area, preoccupied
in managerial positions in government offices and operating in commercial legal presence where
state (Brewster 2014). Even the candidates registered for governmental positions fall under the
desired criteria.

THE ECONOMICS OF CORRUPTION4
Discussion
Liability of Legal Person
The action against corruption is engaged in the task of turning an activity illegal by
making it a criminal offence and considers both passive and active bribery, extortion of foreign
officials, attempted corruptions and money laundering matters. The policy does not allow public
officials to hold and operate private businesses, to work in supplementary jobs and restrict them
from getting gifts. A Legal entity is established that has undergone official registration in regard
to property ownership, bearing responsibility for obligation of ownership, acquiring property
rights from its name to personal property (Ardigo. and Inaki 2016).
In Azerbaijan, the liability of legal persons is kept under the following criteria
(ABDULLAYEV 2015). Abuse of office by misuse of official powers which is contrary to
interests and has caused essential harm to the legal rights and legitimate interests of people by
using of official powers for personal or other self-interest, would lead to heavy penalty. They are
also removed from the government position and are deprived from the right to hold certain posts
up to three years. In few instances, imprisonment of three years is given with a penalty of 2
thousand Manats under Section 308.1.
In section 309.2, the legal entity committed with the application of corruption,
application of threats, usage of weapons will result in deep consequences such as provision of
imprisonment up to 7 years with confiscation of policy (Sadigov 2018). Causing a harm to legal
right by the government officials or interest of state will be charged with a fine over 2,000
Manats. Actions related to infringements of legitimate interests and rights by natural legal people
by portrayal of official powers are fined with a rate of 5,000 to 1,000 Manats. The person might
do corrective work for 2 years or public works for 200 hours or accept 3 years of imprisonment

THE ECONOMICS OF CORRUPTION5
as the punishment, under Section 310. Receiving, acting and requesting the citizens to offer any
material privileges directly or indirectly, by third parties or intermediaries with the intension to
insert improper influence over decision making of the legal person shall sentenced for 3 or 7
years or fined with 3,000 to 5,000 Manats with confiscating property. The measure is similar
when the legal person exerts improper influence by promising, offering and giving material
values (Mungiu 2017).
Section 313, addresses the legal punishments for creating obvious unreal data in the
documents of official accounts or making of amendments to specific data by regulating the
authentic content which is claimed under service forgery. Section 314, involves the criminal
negligence as described by the inefficient performance or failure of official responsibilities
outstanding to negligent behavior or unfair approach of the service that entails adequate harm to
legitimate interest of organizations and local citizens preserved by law. The punishment includes
penalty of 1,000 Manats or corrective works for 2 years or imprisonment about 6 years or doing
public works for 6 months. If the similar act causes death of the victim or other negative
consequences shall be sentenced up to 5 years (Strimbovschi 2016).
Section 314-1, considers decision relating to the illegal transmission of land plots to
people who are alienated by law on having excusive ownership over the land. Officials are
imprisoned for 2 to 5 years. These legal persons are deprived from the legal right to work for
government or imprisoned up to 5 years due to lease and usage of municipalities. In Section 314-
2, violation by officials regarding the authorization of construction, allotment of land and
erection works of statutory order are expelled from the official position and has to engage in
corrective work for 1 year or imprisonment up to 3 years withy/ without deprivation of authority
of certain posts till 3 years. This allotment of unauthorized land or erection works includes area