There is a story — apocryphal perhaps — that used to make the rounds in Turkish political circles. When he was the mayor of Istanbul, Turkey’s current prime minister, Recep Tayyip Erdoğan, was paid a visit by some of the country’s leading businessmen about a major construction project.

At the end of the meeting, after he had given the project his general blessing, the businessmen asked him what he wanted in terms of his own cut, suggesting that the usual 10-percent bribe might be reasonable. “Is that the best you can do?” Erdoğan is alleged to have stormed. After meeting privately, the businessmen came back with a higher offer of 15 percent.

Again, Erdoğan asked, “Is that the best you can do?” After another round of private discussions, 20 percent was put on the table. Erdoğan asked the same question again. This time, the reply was in the affirmative. “Fine,” said Erdoğan. “I am not going to take the bribe, but I am going to cut your contract by 20 percent.”

A large part of Erdoğan’s public appeal was his carefully cultivated image as Mr. Clean and the fact that he was no ordinary politician. As mayor of Istanbul, he brought a new level of professionalism to the city’s administration and its delivery of public services like clean water and proper sewage disposal, especially to the city’s poorer neighbourhoods. His AKP (Justice and Development Party) ran on an electoral platform that included a commitment to liberalize Turkey’s economy, promote transparency and eradicate corruption. When he became prime minister, Erdoğan followed through on those commitments.The Turkish economy boomed and its successful, moderate, market-based Islamic-style democracy became a model for other Islamic countries. Erdoğan handily won election after election with bigger and bigger majorities.

Today, however, as the Turkish economy slumps and protesters take to the streets over Erdoğan’s heavy-handed and autocratic ways, his reputation has taken a big hit. But what has perhaps been most damaging are corruption charges that have been levelled against his inner political circle. Three cabinet ministers, several major business leaders and even Erdoğan’s son have been dragged into a scandal involving shady oil-for-gold swaps with Iran and bribery for major construction projects allegedly approved by Erdoğan himself, among other allegations.

Turkey’s corruption scandal is a sad story that repeats itself over and over again in many emerging markets and developing countries. The figures are sometimes mindboggling, as in the case of Russia, where unscrupulous contractors and officials siphoned off billions as the country struggled to ready itself for the Sochi Winter Olympics, driving up the cost of the Games to a staggering $50 billion.

Corruption is a massive global problem. As countries get richer, so, too, do their unscrupulous political and business elites. Corruption makes it hard for Western-based firms to do business in emerging markets because they are often forced to line some official’s pockets to secure contracts. This is one reason why, some years ago, the Organization for Economic Co-operation and Development introduced the Anti-Bribery Convention. It targets corruption by introducing penalties against bribery in international business transactions carried out by companies based in the conventions member countries. The goal of the convention is to level the playing field when companies compete for contracts overseas.

But corruption’s deeper toll is that it threatens the lifeblood of democratic development, good governance, political stability and market-based reforms, where such institutions are needed the most.

A hundred years ago, American Supreme Court Justice Louis Brandeis popularized the nostrum that sunlight is the best disinfectant. Brandeis made the comment in reference to the U.S. Congress’s investigation of Wall Street bankers, who were alleged to control the nation’s finances through a series of shadowy dealings.

Corruption — commonly defined as the abuse of public office for private gain — can be obvious and obscene, or subtle and part-and-parcel of “ordinary” retail politics. A good example of the former is Indonesia’s late president Suharto, who allegedly embezzled as much as $35 billion during his years in office. In democracies, as anti-corruption think-tank Transparency International (TI) points out, big political donations can change public policies. Politicians who receive the donations benefit. So, too, do donors, who presumably gave the money because they expect it will buy the change they desire. Public confidence, however, can take a hit if the public sees too-big money in politics. This is one reason some countries — such as Canada — cap personal political donations.

However, the line between benign and malignant corruption is a murky one. In Thailand, opponents of Prime Minister Yingluck Shinawatra threatened to shut down the government, because, they allege, she is nothing but the puppet of her brother, former PM Thaksin Shinawatra (himself democratically elected, but deposed in a coup in 2006).

Thaksin’s crime, according to the Bangkok Post’s Voranai Vanijaka, is that even in a country plagued with corruption, he went too far. “Thai people are quite pragmatic…we understand that everybody takes a little bite of the apple. The problem with Thaksin is that he put a sign on the whole apple tree saying ‘property of the Shinawatra family’…that’s dangerous to do here.”

In Bangladesh, the country’s notoriously corrupt public sector has contributed to the string of violent hartal [protests causing a massive shutdown of shops and offices] that overtook the country in 2013 and the increasingly hostile competition between the Awami League and the Bangladesh National Party (BNP). Transparency International ranks Bangladesh the third-most corrupt country in South Asia.

Bangladesh’s public sector is widely acknowledged to be staffed by political appointees and insiders. Even the Electoral Commission, which is supposed to ensure the freedom and fairness of Bangladesh’s elections, is considered fair game for political meddling. The results can be seen in Bangladesh’s election earlier this year. While the opposition BNP boycotted the election, the Electoral Commission allegedly permitted a number of procedural lapses that allowed 150 sitting MPs to reclaim their seats unopposed. More than 20 people died in election-related violence, and the prospect of reconciliation between the League and BNP seems remote. It is perhaps no wonder then that some employees of SNC Lavalin felt that they had to resort to bribery to secure a major contract, though thits does not justify their actions.

As a new government takes power in Kiev, reforming the political system and breaking the power of oligarchs is a top priority. In a poll taken before the current crisis erupted, the same number of Ukrainians who said the former Tymonshenko government was ineffective at battling corruption said the same thing about her deposed successor, who enriched himself, his family and friends at public expense. Public concern about government corruption crosses partisan lines and finding a way to fundamentally change a democratic system where lining your own pockets has been the norm will be a daunting task, but it is the key to the country’s long-term political stability and economic survival.

Corruption promotes a law-of-the-jungle mindset. It erodes public confidence in government and political institutions and the effect is corrosive. Mexicans, for example, rate corrupt political leaders among their country’s top major problems, just after drugs, crime and human rights abuses. The challenge is that drug trafficking and violent crime flourish in Mexico, in part, because of the corruption of public officials. State officials in Mexico are regularly implicated in drug trafficking. Many are under investigation. A former governor of Tamaulipas has been indicted in the United States. And the low regard for public officials extends to state police and the judiciary.

Corruption also engenders the politics of patronage. If democratically elected leaders are supposed to rule in the best interests of their citizens, corruption threatens to short-circuit that relationship. Thaksin Shinawatra famously declared that “provinces that give us their trust deserve special care.” Government becomes a path to riches and pits citizens against their governments and against each other.

Many studies have shown that even in otherwise attractive investment environments, the more people believe that the private sector is corrupt, the slower the economy will grow and the fewer foreign dollars will be invested. There is also strong evidence that corrupt countries, even if they are nominally democratic today, may well be less democratic tomorrow. Freedom House’s  Freedom in the World Index and Transparency International’s Corruption Perceptions Index show that the more corrupt the public thinks a country’s public sector is, the more likely it will be less free five years later. In other words, if today’s corruption is allowed to go unfettered, there will be a real loss of freedom tomorrow.

As American philosopher Eric Hoffer once wrote: “It has often been said that power corrupts. But it is perhaps equally important to realize that weakness, too, corrupts. Power corrupts the few, while weakness corrupts the many.”

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.