“ Fraud ” is an economic crime that involves some kind of trickery, swindle or deceit. Fraud involves a manipulation or distortion of information, facts and expertise, by public officials positioned between politicians and citizens, who seeks to draw a private profit. Fraud is when a public official (agent), who is responsible for carrying out the orders or tasks assigned by his superiors (principal), manipulates the flow of information to his private profit; hence the widely used principal-agent or incentive theory employed by economists to study this phenomenon (Eskeland and Thiele 1999; Fjeldstad 1999). Fraud is also a broader legal and popular term that covers more than bribery and embezzlement. It is fraud for instance when state agencies and state representatives are engaged in illegal trade networks, counterfeit and racketing, and when forgery, smuggling and other organised economic crime is propped up by “official” sanction and/or involvement. It is fraud when politicians and state agents take a share for closing their eyes on economic crimes, and it is serious fraud when they have an active role in it.

“ Extortion ” is money and other resources extracted by the use of coercion, violence or the threats to use force. Blackmailing and extortion are corrupt transactions where money is violently extracted by those who have the power to do it, but where very little is returned to the “clients” (perhaps only some vague promises of exception from further harassment). “Protection” or “security” money can be extorted in the classical, well-known mafia style, where organised criminals use insecurity, harassment and intimidation to extort money from individual citizens, private businesses and public officials. Corruption in the form of extortion is usually understood as a form of extraction “from below”, by mafias and criminals. Corrupt practices of this kind can, however, also be “from above”, when the state itself is the biggest mafia of them all. This is for instance when the state, and in particular its security services and paramilitary groups, extorts money from individuals, groups and businesses. With more or less concealed threats, taxes, fees and other resources are extracted from travellers, market vendors, transporters and other private sector businesses. Furthermore, various state officials may extract “under the table” fees and “gifts” from individual citizens as they approach the state as clients, customers, patients, school children etc. These practices may be interpreted as “informal” forms taxation.

“ Favouritism ” is a mechanism of power abuse implying “privatisation” and a highly biased distribution of state resources, no matter how these resources have been accumulated in the first place. Favouritism is the natural human proclivity to favour friends, family and anybody close and trusted. Favouritism is closely related to corruption insofar as it implies a corrupted (undemocratic, “privatised”) distributio n of resources. In other words, this is the other side of the coin where corruption is the accumulation of resources. Favouritism is the penchant of state officials and politicians, who have access to state resources and the power to decide upon the distribution of these, to give preferential treatment to certain people. Clientelist favouritism is the rather everyday proclivity of most people to favour his own kin (family, clan, tribe, ethnic, religious or regional group). Favouritism or cronyism is for instance to grant an office to a friend or a relative, regardless of merit. Favouritism is a basic political mechanism in many authoritarian and semi-democratic countries. In most non-democratic systems, the president has for instance the constitutional right to appoint all high-ranking positions, a legal or customary right that exceedingly extends the possibilities for favouritism. It easily adds up to several hundred positions within the ministries, the military and security apparatus, in the parastatal and public companies, in the diplomatic corps and in the ruling party.