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February 21, 2016

Denmark’s 356-year long journey towards curbing corruption

Islamabad

February 21, 2016

After having concluded in their 2012 study that Denmark, along with New Zealand and Finland, was the least corrupt country on the globe, Transparency International’s International Corruption Perceptions Index 2015 has again adjudged the 8th century Scandinavian nation as a place with lowest incidence of corruption for the second consecutive year---hence negating Shakespeare's famous quote "Something is rotten in the state of Denmark."

This line was spoken by a character "Marcellus" in Act I of "Hamlet," one of the most powerful tragedies in English literature by legendary dramatist and playwright, William Shakespeare, who had lived between 1564 and 1616.

The story of "Hamlet" revolves around cold-blooded murder of Prince Hamlet's father (King Hamlet) at the hands of his real brother and the subsequent King of Denmark, Claudius, who had not only seized the throne, but had also gone on to marry his deceased sibling's widow, Queen Gertrude (Prince Hamlet's mother).

The slain King's ghost had then appeared before his son Prince Hamlet, whereby revealing that he was murdered by Claudius and had asked the throne's real heir to avenge the murder.

Although Prince Hamlet had managed to kill his uncle-the ruling King, Claudius, he too had perished later after succumbing to injuries caused by a poisonous sword ealier.

Queen Gertrude had also died after she had mistakenly drunk a glass of poisonous wine, which King Claudius had actually prepared for the young Hamlet.

The story plot of the "Hamlet" thus paints a sorry picture of the state of Denmark a few centuries ago---where blood relatives used to kill each other for the lust of power and in the greed of material gains.

And look, how Denmark has changed today.

It is astonishing to note that there is very little legislation concerning corruption in this country today. Danish criminal law only states that it is illegal to give and accept bribes of any kind or any size, both inside and outside of Denmark.

Research conducted by the "Jang Group and Geo Television Network" reveals that fighting corruption and establishing rule of law has been on the agenda of the Danish rule for more than 350 years when efforts to consolidate the rule of law had formed an integral part of the process of state building since the establishment of the absolute monarchy in 1660. Basically, the historical path to curb corruption in the Danish administration has evolved over several centuries as part of the establishment of an absolute state based on law and order. Continuous, concerted and honest efforts had helped the level of corruption in the administration of state drop to limited levels by the middle of the 19th century.

(References: "A history of Denmark by Knud Jespersen, Patrick Lingsley's book "How to be Danish: A journey to the Culural Heart of Denmark" and T. K. Derry's book "A History of Scandinavia: Norway, Sweden, Denmark, Finland and Iceland")

A glance through a study undertaken by Sweden's University of Gothenburg, with support from the Danish Research Council for Culture and Communication, and by the European Union's Framework Programme for Research and Technological Development, had noted that reforms to improve the administration in the period of absolutism between 1660 and 1849 had come to form an important basis for an administrative culture based on the rule of law which came to minimise corruption.

Saw, as history tells, Denmark wasn't purged of the menace of corruption overnight and it wasn't an easy journey to transform it into a mythical place that is known to have good political and economic institutions.

Having a population of 5.7 million, Denmark is frequently ranked as one of the happiest countries in the world in cross-national studies of happiness.

It enjoys a high level of income equality and has one of the world's highest per capita incomes.

Denmark ranks as having the world's highest social mobility. It also has one of the best/highest personal income tax rates on planet Earth.

The Tax-to-GDP ratio is Denamark is 49 per cent, about five times that of Pakistan!

Its GDP (purchasing Power parity method) had rested at $257.148 billion, while the per capita income had stood at $45,435.

Similarly, its GDP (Nominal) had stood at $291.043 billion, while the Nominal Per capita income had rested at a very impressive $51,424.

The country's total exports in 2015 were $94.1 billion.

With reference to the highly commendable level of governance in Denmark, here follow the salient features of the study undertaken by Sweden's University of Gothenburg:

Within the latest research on corruption and anti-corruption ‘getting to Denmark’ has also been used as the synonym for the ultimate goal of the ongoing focus on how the persistent problem of corruption can be fought effectively.

This historical empirical study sets out to trace and analyse the development of anticorruption mechanisms and practices in the state of Denmark between 1660 and 1900.

In Denmark, alongside the expanding role in ensuring the very early welfare of its people, the Danish monarchy had also started expanding its military ambitions, and together these two elements had played a major role in the Danish process of state-building since 1660.

This was the time when the population of early modern Denmark had consisted of a fairly small core of nobility with extensive land holdings, an urban middle class and a large peasantry.

The nobles had privileges from the Crown, including exemption from taxation and the right to own land, fish and hunt, which had enabled them to accumulate massive wealth.

Up until the introduction of absolutism in 1660 the nobility of Denmark held the majority of the offices in the central and local administration, which gave them substantial influence on the dealings of the Danish throne.

There was a constant rivalry between Denmark and Sweden between the 16th and the 18th centuries.

Denmark had suffered a military defeat at the hands of Sweden in 1658 and was hence confronted with a crippling economic breakdown that had led to a political crisis in 1660.

This military defeat had intensified the need for an efficient administration for collecting taxes to finance wars.

In 1665, the Danish King used to enjoy unrestricted and absolute power and had the authority to make laws and ordinances for his own good will and pleasure.

However, in the years after 1660, the distinctions of rank were minimised and all citizens were considered to be on a level under the absolute king. At the same time the monopoly of the aristocracy on land-owning and the higher offices in the king’s civil administration and in the military service was abolished.

Even though the noble owners of the private estates in the countryside of Denmark did maintain a large responsibility in relation to public administration in the collection of taxes from their tenants, their overall influence on state affairs was to a large extent reduced.

Gradually the aristocracy had lost its prominence in the civil service and was replaced by a new group of bourgeois bureaucrats.

By the beginning of the 19th century only 10 per cent of the royal servants had an aristocratic background, and these mainly occupied the offices in the Foreign Service.

An office of the king’s Chief Prosecutor was established to investigate and file appeals against the royal officials who had abused their positions.

Recovery of tax arrears was also part of the agenda.

In 1706, a summary system was introduced in the central administration, so vacant posts were presented separately with information about the office and a record of all the candidates. These summary reports were presented to the king who made the final decision. This had established a procedure in which the capability of the applicants was central for the King's management of appointments.

An application needed to indicate the objective qualifications and had to be accompanied by certificates. This replaced the former procedures where the assurance of good intentions or personal relations had in many cases been sufficient to gain an office.

Even in the short period from 1700 – 1701 and again in 1715 – 1716 when King Frederick IV chose to exploit his right of appointment financially by selling offices, it was documented how capability by the buyers was still a priority.

The sale of offices was used as a way of financing the Danish participation in the 1700 to 1720 war and the construction of a building for the central administration close to the King's palace in Copenhagen.

Under the Exchequer, some 47 offices were sold and under the Chancellery and 56 went for sale which equaled 6 per cent of the appointments in each department.

This way of raising money for the administration has not been used since 1716 though.

Besides, even during the period when the offices were sold, the King did not compromise on the necessity for the officers to demonstrate that they were qualified to be a royal servant in this role.

In practice, the sales of offices did not really affect the recruitment procedure, and the process was far from the French approach, where offices were put up for auction and automatically went to the highest bidder.

It was made clear from the start that the offices that were established were to be managed by the absolute king. The power those in office exercised was only a loan from the crown and they never came to own the office in person. An office could be lost at any time if the civil servant did not act according to the laws of the country and instructions of the administration.

A number of laws, which regulated the duties of civil servants and imposed harsh punishments such as life imprisonment and loss of office for crimes of corruption, were introduced to minimise exploitation in the state’s administration.  The first explicit ban on bribery and the acceptance of gifts by the royal servants was introduced in 1676 and this piece of legislation was renewed and extended in 1700. Under the law, it was forbidden to both give and receive bribes, and a reward to the person who reported the crime was granted.

Clerical, civil and military officials were covered by this law.

Forgery by civil servants was included in the Danish law and a clear ban was imposed. Embezzlements were to be judged as theft from the crown. The king issued a law specifying and regulating the penalty for fraud and embezzlements in office in 1690.

The sentence was hard labour for life unless the money was repaid to the king’s Treasury.

In an attempt to solve the persistent problem of financing the pensions, a public pension system for deserving elderly officials was established in 1712.

From the late 1700s, it became fairly standard practice to give an official at their resignation a pension that amounted to around 2/3 of the amount of their previous salary.

One of the most prominent cases in Danish history became known in 1676 shortly before the first law specifically banning bribery was adopted.

Here the chamber secretary and chancellor of King Frederick III, Peter Griffenfeld, who had played a crucial role in the writing of the Kings law of 1665, was charged. He was convicted and imprisoned for life for his involvement in the systematic sale of clergy and secular offices, embezzlement, abuse of office, acceptance of bribery and insult of the majesty.

Another prominent case at the top level of the central administration in Copenhagen was discovered in 1725 when Frederik Rostgaard, the chief secretary of the Danish Chancellery, who dealt with the affairs of the state, justice and the church, was convicted.

He had admitted to having received what he called "Diskretion" or gratuity from the people he had helped while doing his job. As defence in his plea to King Frederick IV, he had declared and assured the king that he had never acted against the will of the king after receiving the bribes or hereby against his oath to the monarch. Despite his plea he was convicted, lost his office and was banished permanently from the capital

Throughout the 18th century, the ban on bribery was reinforced and targeted at specific groups of officials such as for example the custom officers.

In 1813, due to its involvement in the Napoleonic wars, the Danish state had gone bankrupt and the country was hit by a severe economic crisis lasting until about 1830.

It was during this period that there were a larger number of prosecutions of civil servants in regional and local administration in particular, but also in the central administration, for crimes relating to corruption.

Royal officials were allowed to borrow from the public funds.

They just had to repay the money when the audit took place. If they could not repay the loan, it was to be considered as a crime of corruption.

Sweden's University of Gothenburg's investigation had identified 203 cases from 1740 to 1936, whereby public officials in the civil secular part of the administration were discharged on grounds of misconducts of malfeasance.

In 1803, an initiative was taken to strengthen control over the local and regional administration and to ensure practice was conducted according to the law and the instructions of the civil servants.

One of the deputies in the Danish Chancellery was to travel to the provinces of the country to inspect the administration every year.

It was the deputy’s job to review the organisation of the administration, how books were kept etc. and guide the local or regional official if errors or omissions were found.

This system had continued until 1807 when it was suspended because of the war.

During the years 1811 to 1830, the number of officials convicted of and sentenced for corrupt crimes escalated to a level of about two or three cases a year.

Many civil servants were put on trial for their corruption in the years after 1811.

During several of the trials at which civil servants were convicted of corruption after 1810, the salary system and insufficient wages were mentioned in their defence.

In 1814, Denmark had also experienced the greatest loss of territory in its history with the transfer of Norway to Sweden.

In 1819, regular inspections of public offices and civil servants were reinstated after the Danish Chancellery had received a large number of complaints about civil servants’ administration, made by the ordinary citizens to the king.

In the years between 1819 and 1830, several top officials from the central administration and judges from the Supreme Court were sent to the different regions of the country to audit the administration and especially the account books of the officials.

In the reports made by the delegates who travelled through the regions of the country to monitor the administration, one of the clear conclusions was that the standard procedures for check, audits and accounting in general were out of date, badly organised and inefficient.

In 1824, this situation had led the king to appoint a committee of top officials to prepare a new set of laws to regulate the state’s accountancy.

The situation was directly characterised as an "Epidemic of embezzlements" in the Danish administration indicating the increase in the number of cases of malfeasance was real and perceived as very serious at the time.

The commission had worked on this complicated and difficult task until 1835 and came up with a recommendation that led to the adoption of a new law for the administration of public accounts in 1841.

In the year 1835, the state budget was published for the first time.

Publicity and transparency in the administration was definitely not a characteristic feature of the absolute rule, and the news of the size of government debt caused great concern or almost consternation in the country.

It is worth mentioning that during the reign of King Frederick VI, who had ruled between 1808 and 1839, his closest advisors had feared a revolution, and the corruption of the king’s civil servants was most likely perceived as a threat to the rule.

The increase in administrative and economic misconduct among the civil servants presumably drew the crown’s focus as something that needed to be handled and punished if the king was to maintain absolute power.

By 1840, a new general penal code was introduced which included a new law on misconduct in office. The crimes of malfeasance as embezzlement, fraud and forgery were described in far greater detail than in the former laws.

When corruption was discovered, the civil servant was usually suspended while his case was investigated thoroughly before he was put on trial.

The Danish constitution of 1849 had stated the right of civil servants to receive a retirement pension at the age of 70 or in case of illness.

The detailed rules of the retirement reform were furthermore specified in an act in 1851, which also stated that the right to a pension could be lost in case of misconduct in office.

By the late 1850s, salaries had been raised and civil servants in general had become a part of the well-to-do middle class.

By 1860, courtesy rule of law, Denmark had reached a very low level of corruption.

In 1861, a new law on the salary system for the state’s civil service was passed which abolished the fee system and granted fixed salaries to all categories of officials.

The 1840 penal code was changed again in 1866 to include a separate chapter specifying the forms of misconduct of public servants in even greater detail and it also introduced the general principle of no punishment without law.

Research further tells that when Tom Norring, the Ambassador of Denmark to Hungary, was asked in Budapest during March 2013 as to why Denmark continuously topped the statistics of being one of the least corrupt countries in the world, he had replied: "No, Danes are not immune to corruption-like behaviour as such. But we have over the years developed a tradition, a culture which makes it more natural to take a certain high moral or ethical stance."

The March 19, 2013 edition of "The Budapest Times" had further quoted Danish Ambassador Norring as saying: "The main reason for this stance is, in my view, that we in Denmark have a very high degree of trust in other people and in the system. This trust is strengthening and supporting our entire integrity system. Over the years we have developed a welfare system – the so-called ‘Danish Model’ – which is an important part of the Danish integrity system. Fair working conditions, social security, health arrangements, decent salaries and pension schemes are among the things that contribute to giving the Danes reasonable living conditions. The fact that it is possible to live on one’s salary, that people are protected if they get sick and likewise if they are fired makes it easier to refrain from corruption."

He had viewed: "In Denmark, we have a high tax burden that contributes to maintaining our welfare state. This means that Danes do not have to pay for their children to go to primary school or high school and they do not save for years to put their children through university. They do not need insurance to go to the hospital, get medication or see a doctor, and if they lose their job, relatively generous unemployment benefits are supplied by a combination of insurance and public funds. The elderly do not need insurance and do not have to pay out of their pocket to get necessary help with cleaning or personal assistance, and most of the costs associated with day care for children are also tax-financed. In other words one does not have to put money aside for bad times, as you will be provided for."

Ambassador Norring had opined: "The high pressure of taxation in Denmark also contributes to the unwillingness to pay even more for, for instance, social benefits than has already been paid. Danes expect a fair treatment without paying extra. In Denmark we have a very inclusive political culture as well, and both public and private institutions are highly transparent, which makes it easier to hold for instance politicians or companies responsible for irregularities. The media has a very defining role in the Danish integrity system and is sometimes referred to as the fourth power of the state, which has the role of watching over the other three, making sure they behave."

Meanwhile, a December 2012 report of the University of Copenhagen had noted: "Denmark is the world leader in two dimensions "government accountability and criminal justice" and places in the top 10 in all dimensions of the Rule of Law Index published by the World Justice Project assisted by scholars and practitioners, including Professors Morten Broberg and Jorn Vestergaard from the Faculty of Law. Denmark's public institutions are transparent, efficient, and free of corruption. The country is relatively safe from crime and the criminal justice system is effective in bringing offenders to justice."

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