Corruption continues to threaten development

The 2005 Index bears witness to the double burden of poverty and corruption borne by the world's least developed countries.

"Corruption is a major cause of poverty as well as a barrier to overcoming it," said Transparency International Chairman Peter Eigen. "The two scourges feed off each other, locking their populations in a cycle of misery. Corruption must be vigorously addressed if aid is to make a real difference in freeing people from poverty."

Despite progress on many fronts, including the imminent entry into force of the United Nations Convention against Corruption, seventy countries - nearly half of those included in the Index - scored less than 3 on the CPI, indicating a severe corruption problem. Among the countries included in the Index, corruption is perceived as most rampant in Chad, Bangladesh, Turkmenistan, Myanmar and Haiti - also among the poorest countries in the world.

The world has set its sights on halving extreme poverty by 2015. Corruption hampers achievement of the Millennium Development Goals by undermining the economic growth and sustainable development that would free millions from the poverty trap. Fighting corruption must be central to plans to increase resources to achieve the goals, whether via donor aid or incountry domestic action.

Moreover, extensive research shows that foreign investment is lower in countries perceived to be corrupt, which further thwarts their chance to prosper. When countries improve governance and reduce corruption, they reap a "development dividend" that, according to the World Bank Institute, can include improved child mortality rates, higher per capita income and greater literacy.

Nineteen of the world's poorest countries have been granted debt service relief under the Highly Indebted Poor Countries (HIPC) initiative, testifying to their economic reform achievements. Not one of these countries, however, scored above 4 on the CPI, indicating serious to severe levels of corruption. These countries still face the grave risk that money freed from debt payments now entering national budgets will be forfeited to greed, waste or mismanagement. The commitment and resources devoted to qualifying for HIPC must also be applied to winning the fight against corruption.

Stamping out corruption and implementing recipient-led reforms are critical to making aid more effective, and to realising the crucial human and economic development goals that have been set by the international community.

"Corruption isn't a natural disaster: it is the cold, calculated theft of opportunity from the men, women and children who are least able to protect themselves," said David Nussbaum, TI's Chief Executive. "Leaders must go beyond lip service and make good on their promises to provide the commitment and resources to improve governance, transparency and accountability."

Progress has been made against corruption

An increase in perceived corruption from 2004 to 2005 can be measured in countries such as Costa Rica, Gabon, Nepal, Papua New Guinea, Russia, Seychelles, Sri Lanka, Suriname, Trinidad & Tobago and Uruguay. Conversely, a number of countries and territories show noteworthy improvements - a decline in perceptions of corruption - over the past year, including Estonia, France, Hong Kong, Japan, Jordan, Kazakhstan, Nigeria, Qatar, Taiwan and Turkey.

The recent ratification of the United Nations Convention against Corruption established a global legal framework for sustainable progress against corruption. The Convention, which will enter into force in December 2005, will accelerate the retrieval of stolen funds, push banking centres to take action against money laundering, allow nations to pursue foreign companies and individuals that have committed corrupt acts on their soil, and prohibit bribery of foreign public officials. Low-income countries that embrace and implement the Convention will have a head start in the race for foreign investment and economic growth.

Wealth does not determine progress against corruption

Wealth is not a prerequisite for successful control of corruption. New long-term analysis of the CPI carried out by Prof. Dr. Johann Graf Lambsdorff shows that the perception of corruption -Transparency International Corruption Perceptions Index 2005, page 2 of 12 - has decreased significantly in lower-income countries such as Estonia, Colombia and Bulgaria over the past decade.

In the case of higher-income countries such as Canada and Ireland, however, there has been a marked increase in the perception of corruption over the past ten years, showing that even wealthy, high-scoring countries must work to maintain a climate of integrity. Similarly, the responsibility in the fight against corruption does not fall solely on lower-income countries. Wealthier countries, apart from facing numerous corruption cases within their own borders, must share the burden by ensuring that their companies are not involved in corrupt practices abroad. Offenders must be prosecuted and debarred from public bidding. The opportunity for ensuring sustainable progress also lies in the hands of the World Trade Organization, which needs to actively promote transparency and anti-corruption in global trade. The lessons are clear: risk factors such as government secrecy, inappropriate influence of elite groups and distorted political finance apply to both wealthy and poorer countries, and no rich country is immune to the scourge of corruption.

Transparency International urges the following actions:

By lower-income countries

• Increase resources and political will for anti-corruption efforts.
• Enable greater public access to information about budgets, revenue and expenditure.

By higher-income countries

• Combine increased aid with support for recipient-led reforms.
• Reduce tied aid, which limits local opportunities and ownership of aid programmes.

By all countries

• Promote strong coordination among governments, the private sector and civil society to increase efficiency and sustainability in anti-corruption and good governance efforts.
• Ratify, implement and monitor existing anti-corruption conventions in all countries to establish international norms. These include, the UN Convention against Corruption, the OECD Anti-bribery Convention, and the regional conventions of the African Union and the Organization of American States.

Note to Editors

The TI Corruption Perceptions Index is a composite survey, reflecting the perceptions of business people and country analysts, both resident and non-resident. It draws on 16 different polls from 10 independent institutions. For a country to be included, it must feature in at least 3 polls. As a result, a number of countries - including some which could be among the most corrupt - are missing because not enough survey data is available.

The Corruption Perceptions Index provides a snapshot, with less capacity to offer year-to-year trends. Nevertheless, time-series data for the CPI have been analysed for the first time this year by Professor Johann Graf Lambsdorff at Passau University in Germany.

TI is advised in relation to the CPI by a group of international specialists. The statistical work on the index was coordinated by Professor Graf Lambsdorff.

Media Contact for the CPI 2005
Berlin
Sarah Tyler/Ines Selvood
Tel:	+49 30 3438 2019/45
Mobile:	+49 173 206 9550
eMail:	presstransparency.org
London
Barbara Ann Clay
Tel:	+44 (0) 7963 912 304
Jesse Garcia
Tel:	+49 (0) 162 419 6454
Additional general and technical CPI information
Prof. Dr. Johann Graf Lambsdorff, Passau University, Germany
Tel:	+49-851-509 2551
eMail:	jlambsduni-passau.de

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