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The itch cure: replacing blockchain to fight public corruption

8 min reading

If the government tries to hide the files and details connected to Blockchain then they should remember that there every move is been recorded.


Puerto Rico recently announced that it would seek blockchain solutions to combat corruption in government, especially after the Mayor of Puerto Rico pleaded guilty to taking bribes of more than $100,000. But can distributed digital books really impact the unincorporated territory of the United States against fraud and public misconduct?

It could be done in conjunction with other public efforts. Puerto Rico could also benefit from listening to lessons from other countries that have implemented blockchain to combat corruption in recent years, including Georgia, India, and Colombia, and should not hesitate to attract foreign aid, although much key work is still needed. must be carried out by local agencies. Puerto Rico should not expect a quick technical solution.

“We have a real trust issue,” a Puerto Rican spokesperson told Bloomberg, and more transparency and accountability – the kind of blockchain technology might offer – “could be part of the solution.” For example, Nir Kshetri, a professor at the Brian School of Business and Economics at the University of North Carolina at Greensboro, believes British community officials may know something. In addition to stepping up anti-corruption efforts, blockchain technology can change the game, he said.

"Blockchain systems can maintain a full audit trail of all activities and transactions with government officials," said Kshetri, adding, "The persistence feature means government officials cannot delete files. Any changes are immediately noticed by other participants in the blockchain network." Others are less convinced, but say blockchain technology can keep governments clean when other conditions are right. “Blockchains can play a role in securing transactions and monitoring events to prevent fraud and corruption,” said Per Arvik, researcher at Chr. The Michelsen Institute (CMI) / U4, said and continued, “but not without a regulatory framework as a basis”.

Puerto Rico risks adopting an expensive system that "could have limited impact unless various issues were addressed," he added. In this sense, "lessons can be drawn from other highly digital countries such as Estonia or Singapore" - as well as from the former Soviet republic of Georgia. Technology can play a huge role in land ownership, Jonas Hedman, a professor at the Copenhagen School of Business, said, as pointed out earlier in Sweden, where such programs have been partially implemented. It can also have "major public policy implications" and elections. Imagine a government or state agency - such as Puerto Rico, CIA, United Nations, etc. - having an open book on all its expenses?

Tips for Puerto Rico

When asked about Puerto Rico's plans to fight public corruption, Kshetri said the island region should start to be most vulnerable to corruption. He has to cross-validate the received data before entering it into the blockchain, and this is where it might be a good idea to use other emerging technologies such as artificial intelligence, machine learning, and remote sensing technology instead of relying on government officials. Reform must also face resistance from participants who are currently taking advantage of the status quo, both inside and outside the government. Engaging outsiders – such as in Colombian school feeding programs – can increase informal accountability.

“Puerto Rico should not rely too much on foreign companies to implement an anti-corruption blockchain,” Kshetri said. “It has to build a local blockchain workforce,” as happened in the Indian state of Andhra Pradesh. "Local blockchain companies are more efficient at providing low-cost solutions that suit local needs."

Georgia is getting creative

Georgia is often cited as an example of blockchain being used to secure government registers, “but the story doesn't start with blockchain,” Arwick said. "This country radically reformed the entire public sector before blockchain was introduced."

This involves careful study of the problem of corruption and then implementing sometimes creative solutions, including shifting some boundary practices in the legal field. "For example, most people pay bribes to get passports or other documents they desperately need and don't want to wait," said Tamara Kovziridze, a former chief adviser to the Georgian prime minister. "Today you can get an international passport in a day if a higher fee is paid."

When Bitfury launched its Exonum Blockchain-as-a-Service solution in the country to secure land title rights, Georgia already had a functioning land registration system, Arvik said, adding that technical solutions could not stand alone. Certain requirements must be met. Or as Kovziridze CMI said: “As a rule of thumb, if the elites remain corrupt, no country can truly defeat corruption. Aarvik has this message for Puerto Rico: the blockchain experts hired to discuss solutions with the government can be technical experts or digital fintech experts, but they don't have to be solid management system designers. If the reform project does not "cover all competencies in the fields of law, social science, economics, and technology, I do not believe it will deliver the expected results".

Kshetri agrees that land registration is one area where distributed ledger technology can make a difference, referring to a promising blockchain-based pilot program in the Indian state of Andhra Pradesh. “Land management bribery is widespread in India,” he said. A typical blockchain land register entry has 58 attributes, "such as unique identification number, package code, geographic coordinates, survey number, boundary information - for example subject to change, such as owner and mortgage information."

However, a system of checks and balances must also be implemented. Kshetri added: “A blockchain-based system where multiple authorities act as nodes or transaction checkers can offset each other to ensure that no authority can manipulate the system without being noticed by others.”

The "appraisers" on the land register include the tax office, the chief land management commissioner and other officials. "If a node tries to change the data set, the landowner receives an SMS. The invariability function means that the data cannot be deleted."

Colombia deals with crooked actors

In Colombia, fraudulent contractors have inflated school lunch bills, sold the government chicken breasts in supermarkets at more than quadruple prices, and sometimes didn't ship purchased items at all, Kshetri said, thus merging the government with the World Economic Forum and Inter-American development to implement a public procurement program using blockchain to oversee the supplier selection process in the city of Medellin.

This requires bidders to publicly commit to contract terms and selection criteria before accepting bids, Kshetri said, adding: “Risks such as adjusting selection criteria after tenders are issued for certain contractors are eliminated. As suppliers compete with each other, "permanent and tamper-proof bid records based on blockchain solutions can ensure that companies cannot change the bids submitted after receiving new information about competing offers," explains Kshetri.

Add more technology

In combating public abuse, blockchain technology can be effectively combined with other emerging technologies. “In the cobalt supply chain, there are concerns that blockchain systems could break if government officials tasked with marking bags encounter smugglers and enter inaccurate data,” Kshetri said, but the introduction of artificial intelligence and drones could cross-check the data.

Traceability providers like Circulor, for example, have developed blockchain and AI solutions in the cobalt sector. When miners enter supply chain information, their identities are verified using facial recognition software.

In general, blockchain technology can be a powerful tool in combating government abuse as it introduces more “transparency into government spending” and makes corruption more difficult, as Hedman notes. But it cannot and will not work independently if the government at the top is corrupt. According to Kovziridze, the experiment in Georgia was successful because "top leaders were not corrupt".

A holistic approach to fighting public corruption is key "rather than quick technology solutions," added Arvik. But streamlining processes, improving public self-service and bypassing previous corruption-prone processes, digitization, including blockchain technology, is "a really powerful tool," he said.

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