Fiduciary Law and Corruption

Abstract

This chapter argues that the common law of fiduciary obligation contains an anticorruption norm, which broadly (albeit inconsistently) proscribes and remedies the use of an entrusted position for self-regarding gain. Section II begins with the conventional definition of public corruption, the use of public office for private gain, to derive a general definition of corruption that is applicable to both public and private sector contexts. Corruption is generally defined as the use of an entrusted position for self-regarding gain. Section III argues that courts have aimed to prevent corruption and invoked the anticorruption norm in cases applying fiduciary law’s proscriptive rules, the no-conflict and no-profit rules, in various fiduciary contexts. These rules are generally grounded in the rationale that fiduciaries should avoid being tempted into using their positions to seek their own advantage. Section IV argues that one of the main insights to be gained from understanding that fiduciary law contains an anticorruption norm is that fiduciary law helps to preserve and promote the legitimacy of important social institutions. While this chapter principally relies on the prevailing “public-office-centered” definition of corruption, which is used by contemporary social scientists and which attempts to identify corrupt behavior, it shows how a broader, classical understanding of corruption, which emphasizes the moral decay and depravity of an individual’s character, has also informed fiduciary law.