In latest corruption index, record year for enforcement still not enough to turn global tide
Thursday, January 26, 2017
Posted by: Brian Monroe
By Brian Monroe
January 26, 2017
Even as some countries make historic strides against bribery, the sad reality is that more than two-thirds of the world is still more gripped in graft, with public sectors rife with endemic corruption, according to a global watchdog group.
Those are some of the findings from London-based Transparency International’s 2016 Corruption Perceptions Index, a trusted analysis whose release comes after an overall historic year in the fight against corruption. US enforcement agencies levied nearly $2.5 billion in monetary penalties tied to corruption in 2016.
When put in a wider global context, however, those major penalties appear as Pyrrhic victories, occurring against an overall bleak landscape where the individuals involved in the illicit intersections of government and business are generally not held to account.
Over two-thirds of the 176 countries and territories in this year's index fell below the midpoint of the Transparency International scale, which spans from 0, or highly corrupt, to 100, considered very clean. The United States dropped two points to 74, for a rank of 18, still not able to crack the top 10.
The global average score “is a paltry 43, indicating endemic corruption in a country's public sector,” according to the group. Top-scoring countries, depicted in yellow, are “far outnumbered by orange and red countries where citizens face the tangible impact of corruption on a daily basis.”
This year’s results “highlight the connection between corruption and inequality, which feed off each other to create a vicious circle between corruption, unequal distribution of power in society, and unequal distribution of wealth,” according to the group.
“In too many countries, people are deprived of their most basic needs and go to bed hungry every night because of corruption, while the powerful and corrupt enjoy lavish lifestyles with impunity,” Transparency International Chair Jose Ugaz said in a statement.
In the latest index, Denmark, New Zealand and Finland kept their lock on the top three spots, while the bottom of the ranking also saw some familiar faces – known for repressive regimes, little rule of law or functioning governments – as North Korea, South Sudan and Somalia continued their reign as cellar dwellers. It was Somalia’s 10th straight year being dead last.
Some of the countries that fell the most in the latest ranking include Kuwait, Qatar and Bahrain, while TI noted that unfortunately the uprisings and protests occurring as part of the Arab Spring have so far not broadly resulted in less corruption in the Middle East.
More countries declined than improved in this year's results, “showing the urgent need for committed action to thwart corruption,” according to the group.
Even so, 2016 will be remembered as a standout year in cracking open corporate secrecy, a popular dark corner for corrupt power brokers. The year also saw many big, international cases finally being resolved, in many cases with some of the heftiest settlements ever.
As TI noted, last year hosted the Panama Papers scandal, the largest data leak in history revealing how criminals and kleptocrats used anonymous ownership structures.
The Corruption Perceptions Index is a respected global barometer of economic and political dishonesty, and historical snapshot to gauge if countries are improving or falling in their battle against graft.
Here are some regional snapshots from the report:
Americas: From the Panama Papers in April to the record $3.5 billion Odebrecht settlement in Brazil in December, 2016 “was a good year in the fight against corruption in the Americas. But there is still a long way to go,” according to the group.
Last year saw U.S. and global settlements including the $3.5 billion resolution with Odebrecht, Brazil’s largest building firm, and Braskem, a petrochemical joint venture between that operation and the beleaguered Petrobras; a $520 million settlement with Israeli drug giant Teva Pharmaceutical Industries Ltd.; a nearly $400 million action with Holland’s VimpelCom and a $264 million order involving JPMorgan Chase, just to name a few.
As for the Panama Papers, the voluminous data dump in April of more than 11 million records shined a harsh, uncompromising light into the shadowy world of offshore secrecy havens, and emphasized how murky ownership structures can help organized criminal groups, corrupt politicians and even terror groups move funds anonymously and legitimize their assets.
Asia Pacific: The majority of Asia Pacific countries “sit in the bottom half of this year’s Corruption Perceptions Index,” according to the group. “Poor performance can be attributed to unaccountable governments, lack of oversight, insecurity and shrinking space for civil society, pushing anti-corruption action to the margins in those countries.”
Middle East and North Africa: Despite the political changes that shook the Arab region six years ago, the “hope for Arab countries to fight corruption and end impunity has not seen any progress yet,” according to the group. That explains the “sharp drop of most of Arab countries on the 2016 index – 90 percent of these have scored below 50, which is a failing grade.”
Qatar fell 10 points to 61, chiefly tied to allegations of graft tied to the bidding process where the diminutive, oil-flush country won a deal to host one of the biggest global sports tournaments, soccer’s 2022 FIFA World Cup.
Sub Saharan Africa: Last year saw elections across the African continent with the results providing a “good reflection of corruption trends in the region,” according to the group. In Ghana, for example, voters voiced their dissatisfaction with the government's corruption record at the polls where, “for the first time in Ghana's history, an incumbent president was voted out.”
Struggling countries have commonalities
The lower-ranked countries in the index are “plagued by untrustworthy and badly functioning public institutions like the police and judiciary,” according to the report. And even where anti-corruption laws are on the books, in practice they're “often skirted or ignored.”
In those regions, people must routinely bribe and extort just to get basic services that are in some cases cheaply crafted and “undermined by the misappropriation of funds,” and are given no help from authorities when they bring the issues to the fore.
“Grand corruption thrives in such settings,” according to the report.
Cases like Petrobras and Odebrecht in Brazil or the saga of ex-President Viktor Yanukovych in Ukraine show how “collusion between businesses and politicians siphons off billions of dollars in revenue from national economies, benefiting the few at the expense of the many,” according to the index.
The group concluded that, “This kind of systemic grand corruption violates human rights, prevents sustainable development and fuels social exclusion.”