What happens if the people elected to protect the system are the ones rigging it?
Unfortunately, not every country has to imagine it. In fact, only seven of 181 reported countries have a Corruption Perceptions Index score of more than 80 out of a possible 100, demonstrating little corruption. According to Joe Nellis, a U.K.-based economist, corruption swallowed an estimated $5.75 trillion in 2025 alone, with bribery driving 40% of the total sum. These resources could have been instead allocated at building hospitals, schools, supporting families or investing in technology, but have been lost to fraud.
A study by Pak Hung, later cited by Forbes, found a 1% increase in corruption causes a 0.72% decrease in economic growth. This could be explained by decreased confidence in the interest of the government, leading to decreased foreign and domestic investments in enterprise, declining consumer spending and increased wealth inequality.
If the issue is so large and prevalent around the globe, why has it still not been fixed, or at least targeted with greater attention? With concerns over insider trading and questionable expenditures of tax revenue in developing and already developed countries, we need to find a way to combat the problem.
The anatomy of abuse
Why does corruption exist?
The answer to this question is not simply greed and human drive for personal benefit. Interestingly, there is an even simpler formula by famous economist and policy-maker Robert Klitgaard. It states that corruption is the result of a monopoly reinforced by discretion and strengthened by the lack of accountability. But how does it make sense?
Picture a small town which has a mayor. Suppose there are no other local government officials. This automatically gives the mayor the absolute power (monopoly) to do whatever they want (discretion) with the resources in the community, with no one to hold them accountable (accountability). That’s how corruption is born.
It is easy to understand the formula, but it is much harder to see and minimize it in practice. It requires an example: Kazakhstan could serve as one. The corruption score in Kazakhstan as of 2025 is 38 of 100, placing it 96th out of 182 countries. The Human Development Index (HDI) in 2023 was 0.837, which is considered high but also relatively stagnant.
With the recent completion of the 2026 Referendum in the Republic of Kazakhstan and the tax code, it is important to reflect on the effectiveness of legislation, budget allocation and taxation in preventing or minimizing the likelihood of corrupt activities, such as bribery, spoils systems and loyalty programs to seek employment or wealth.
The constitution — from paper to power
Firstly, it is essential to take a look at the main legislative document of Kazakhstan. Although its constitution establishes a separation of powers, several provisions grant the presidency significant control over state institutions, raising concerns about institutional independence.
Article 44 gives the president authority to create, abolish and reorganize state bodies directly accountable to the presidency, while also allowing the president to decide whether a republican referendum on constitutional issues will be held. Legislative independence is further limited by Article 54, which requires a two-thirds majority in both chambers of Parliament to override a presidential veto — a difficult threshold given the president’s influence over Senate appointments.
Executive monopoly is also affected by Article 70, which allows the president to dismiss the prime minister or government members at their own initiative. Meanwhile, the president is presented with a major role in appointing members of the Constitutional Court and proposing Supreme Court judges, creating potential concerns about judicial independence (Articles 71 and 82).
Although constitutional safeguards exist to prevent abuses of power, their effectiveness depends on the ability of independent institutions to enforce them. The concentration of authority across multiple branches of government may weaken checks and balances and increase the risk that state decisions reflect presidential priorities.
The tax code — discretion over economic decisions
Similarly, several provisions of Kazakhstan’s tax code create conditions that may increase opportunities for corruption by concentrating administrative discretion and limiting transparency.
For instance, Articles 34.3–34.5 allow state bodies to approve, extend or cancel tax benefits through administrative decisions rather than objective legal criteria. While consultations with other authorities are required, the process remains highly centralized, creating opportunities for selective treatment.
Article 45 further limits transparency by protecting tax information as a tax secret, reducing public oversight of tax administration. Article 65 also grants tax authorities the ability to review taxpayers and investment agreements for up to five years after benefits expire, giving officials significant retrospective authority that may create uncertainty for businesses and opportunities for selective enforcement or pressure.
Through the lens of Klitgaard’s formula, the tax code illustrates how corruption risks increase when administrative institutions possess a monopoly over important economic procedures, exercise broad discretion in granting benefits and enforcing tax rules and face insufficient transparency or external oversight.
The budget code — discretion and accountability
Another document that is important to analyze is the budget code. As it reveals, executive authorities have considerable influence over the allocation and management of public funds.
For example, Article 2.1 allows budget administrators to redistribute funds within approved limits, while Articles 3.12-4 and 3.12-5 permit government and local authorities to redirect unused funds through administrative decisions. Articles 3.16, 36 and 37 also provide broad authority to finance investment projects, state-owned enterprises, infrastructure and other strategic programs.
Although these powers can support government flexibility, they also leave significant room for officials to determine which projects receive funding. Article 10.3 further increases executive control during emergency budget situations by suspending normal budget laws.
Together, these provisions illustrate a recurring issue: extensive government discretion over public resources combined with limited independent oversight can create opportunities for decisions to be influenced by political priorities rather than transparent criteria.
The monuments of corruption
Let’s take a look at how these flaws have manifested into the modern history of Kazakhstan.
KazakhGate refers to the scandal involving James Giffen, an American entrepreneur and former advisor of First President of Kazakhstan Nursultan Nazarbayev. The scandal contained major accusations of bribery to the executive branch, to gain influence over the oil-rich Tengiz oil fields.
The total amount of bribes paid by James Giffen is estimated to be between $78 million and $84 million. It was the largest case at the time related to the Foreign Corrupt Practices Act, but the story did not get much attention in Kazakhstan.
Censorship and extreme executive power led to the lack of public awareness and inability of other branches to impeach the president and dismiss the prime minister. Corruption continued and Nursultan Nazarbayev resigned over a decade later, allegedly taking over $8 billion for himself.
In 2005, President Nursultan Nazarbayev advised the Akim of the capital city to develop the Light Rail Transit system as part of the 2030 Transportation Plan. By 2013, high costs and insufficient cost-benefit analysis stopped the project, switching to the Bus Rapid Transit project.
Later, in 2015, the government sought assistance from Chinese companies and construction finally began in 2017. $112 million were allocated to the construction of the transportation system. After 21 years of planning and processing, the station finally started operating in May. However, it is only expected to serve 25,000 people daily and its long-term successes have been a topic of debate, with complaints over noise, prices of tickets, inconvenient stops and frequent road accidents during construction.
Locals have several times called it “Corruption in Three Letters.”
The irony of reform
Nevertheless, there are efforts taken by the Kazakh government to combat corruption:
- Transition of corruption monitoring duties from the Anti-Corruption Agency (ANTIKOR) to the National Security Committee and the Agency of Civil Service Affairs.
- Increased reinforcement of Asset Recovery (Asset-Seizure operations) which recently recovered $30 million.
- Increased incentivized actions of whistleblowers, providing financial benefits to those who report bribery and other corrupt procedures.
These changes have contributed to greater results against corruption — after the 2022 riots against the government, the former president and his family were investigated and his associates and some family members have been charged with $1.7 billion in forfeitures, hinting a shift of government activity in whistleblowing corruption.
Still, the passage of the recent referendum introduces reinforced executive power and policing. Some of these additions are included below:
- Increased executive power;
- Immunity for the president;
- Reintroduction of a vice president;
- Single unicameral body “Kurultai” as the new legislative body;
- “The People’s Council” (Halyk Kenesi) created and appointed by the president
- Increased punishment and decreased neutrality to protesters, limiting free speech.
Interestingly, although media content filmed in major cities in Kazakhstan have shown a general opposition to the new constitution, the referendum still passed with an 88% approval rate, raising concerns over government transparency and legitimacy.
Breaking the formula
What can the Klitgaard Formula propose?
If corruption increases with monopoly and discretion while decreasing with accountability, then effective anti-corruption reforms should aim to disperse power, constrain administrative discretion and strengthen independent oversight.
Thus, introducing policies targeted at promoting authority checks, transparency and regulation, as well as reduced disproportionality of power in the national documents could theoretically help Kazakhstan achieve a less-corruption prevalent society. This would consequently contribute to the direct allocation of funds to education, healthcare, technology, agriculture and other aspects of the economy and society.
The tragedy of modern governance is that a bloated executive branch is routinely sold to the public as the ultimate antidote to corruption. Dictators and centralized regimes love to promise that a “strong hand” is required to cut through bureaucratic rot, purge crooked officials and restore order. But when the executive branch itself is corrupt and still powerful, it is necessary to strengthen the legislative and judicial governments to eliminate dependence.
Featured image by Frank Rietsch from Pixabay
Edited by James Sutton
