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CORRUPTION: In a Downward Spiral with Poverty

Clive Freeman

BERLIN, Nov 6 2006 (IPS) - Transparency International has pointed to a strong correlation between corruption and poverty in a report released Monday. A cluster of poorer states sits at the bottom of its 2006 Corruption Perceptions Index.

“Corruption traps millions in poverty,” Huguette Labelle, the Canadian-born head of Transparency International(TI) told IPS at the launch of the Corruption Perceptions Index (CPI).

The 2006 CPI Index shows that despite a decade of progress in establishing anti-corruption laws and regulations, much still needs to be done before meaningful improvements can appear in the lives of the world’s poorer citizens, Labelle said.

“The machinery of corruption remains well-oiled despite improved legislation,” said Labelle, former president of the Canadian International Development Agency (CIDA).

Seventy-one of the 163 countries ranked in the CPI scored below three points, indicating that corruption was perceived to be rampant in those countries. Haiti was again at the bottom with a score of 1.8. Guinea, war-torn Iraq, and Burma did only marginally better at 1.9.

The annually published Index was launched in 1995. It ranks countries in terms of the degree to which corruption is perceived to exist among public officials and politicians, and scores corruption perceptions levels on a scale from zero to ten, with zero pointing to high levels of perceived corruption, and ten to low levels.

The perceptions are recorded on the basis of surveys, and on this basis, other countries with a worsening shift in perceived levels of corruption were Brazil, Cuba, Israel, Jordan, Laos, Seychelles, Trinidad and Tobago, Tunisia and the United States.

Finland, which has in recent years consistently earned high marks for its corruption-free practices, tops the CPI rankings with a 9.6 score along with Iceland and New Zealand. But while industrialised nations scored relatively high points, Transparency noted that “we continue to see major corruption scandals in many of these countries.”

Among other countries, the Index records praise for Algeria, the Czech Republic, India, Japan, Latvia, Lebanon, Mauritius, Paraguay, Slovenia, Turkey, Turkmenistan and Uruguay. These countries were seen to have shown “significant improvement” in combating corruption.

Denmark, Singapore, Sweden, Switzerland, Norway, Australia and the Netherlands are ranked among the top ten countries in the Corruption Perception Index.

TI chief executive David Nussbaum and head of the German wing of TI Hansjoerg Elshorst said in a statement that the weak performance of many countries was proof that the “facilitators of corruption continue to assist political elites to launder, store and otherwise profit from unjustly acquired wealth, which often includes looted state assets.”

The TI executives said: “The presence of willing intermediaries – who are often trained in or who operate from leading economies – encourages corruption; it means the corrupt know there will be a banker, accountant, lawyer or other specialist ready to help them generate, move or store their illicit income.”

John Githongo, Kenya’s former anti-corruption tsar, gave examples where misappropriation of public funds was enabled “through fraudulent contracts using sophisticated shell companies and bank accounts in European and offshore jurisdictions.”

Bribery costs Kenyans about a billion dollars a year, yet more than half of Kenyans live on less than two dollars a day, according to TI’s Kenya Bribery Index.

Transparency International advocates strong measures to curb the supply side of bribery, including criminalisation of overseas bribery under the Anti-Bribery Convention of the Organisation for Economic Cooperation and Development (OECD), a group of 30 rich states.

To curb corruption on the demand side, TI advocates measures such as disclosure of assets of public officials and adoption of firm codes of conduct.

“Firms and professional associations of lawyers, accountants and bankers have a special responsibility to take stronger action against corruption,” Nussbaum said.. Prosecuting attorneys, forensic auditors and compliance officers must become “stalwarts in the fight against corruption.”

Transparency has also called for promotion and adoption of corruption-specific codes of conduct by professional associations such as the International Bar Association and International Compliance Association, as well as professional associations for accountants.