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Introduction
What is the cost of corruption and associated financial malfeasance in public transit? This is the general question to be considered with a focus on two American agencies: the Metropolitan Transit Authorities (MTA) in both New York and Los Angeles. The New York MTA is the largest transit agency in the USA, while the Los Angeles MTA is one of the newest, with one of the larger new capital programs. Both have suffered from scandals ranging from major cost-overruns, shoddy construction, accounting and budgeting irregularities, and outright indictments and criminal charges. At least some of these problems may stem from lack of accountability: the two MTAs are independent authorities with little legislative or executive oversight. There is also the issue of these being public monopolies.
This paper reviews the literature on corruption, mismanagement and malfeasance in the public sector generally and the factors which are believed to lead to these phenomena; assess the relative presence of both the problems and their causative factors in public transit agencies, the MTAs in particular; and examine policies that might be crafted to ameliorate present problems and prevent future ones.
Corruption and other crimes
The obvious question always is: what is corruption and, in this context, what is public corruption?
One could argue that corruption is like the US Supreme Court's famous dictum on pornography: you know it when you see it. In fact, though, the term corruption is more malleable, the label being applied somewhat elastically.
A very standard definition, used by the World Bank, is "the abuse of public power for private benefit." For those more legalistically inclined, there is the more neutral formulation of "intentional non-compliance with arm's length relationship aimed at deriving some advantage from this behaviour for oneself or for related individuals." ([33] Tanzi, 1998, p. 564, fn. 11). An economist offers the following:
[Public] corruption ordinarily refers to the use of public office for private gains where an official (the agent) entrusted with carrying out a task by the public (the principal) engages in some sort of malfeasance for private enrichment which is difficult to monitor for the principal ([2] Bardhan, 1997, p. 1321).
Of course corruption in the sense offered above is not always illegal, nor is illegal behaviour always corrupt....