I say, elevate the salary levels of the public servants - beaurocrats and politicians - sufficiently so that they do not have to resort to corruption.  If that can be done - much like in Singapore and most developed nations - then I believe the corruption can be minimized. 

How can a section officer who earns around Rs.7000 afford to rent an apartment (typically more than Rs.5000 in Kathmandu), send kids to school (typical tuition Rs.500), eat (typical monthly grocery bill for four Rs. 10,000), etc.?  With high cost of living, bribes have become not only a systemic vice but also a necessity. 

Once the salaries are appropriately raised and the inflation is kept in check, then there should be a severe penalty for those who still resort to corruption.