2006 Corruption Perceptions Index reinforces link between poverty and corruption

Shows the machinery of corruption remains well-oiled, d despite improved legislation

Berlin, 6 November 2006 - The 2006 Corruption Perceptions Index (CPI), launched today by Transparency International (TI), points to a strong correlation between corruption and poverty, with a concentration of impoverished states at the bottom of the ranking.

"Corruption traps millions in poverty," said Transparency International Chair Huguette Labelle. "Despite a decade of progress in establishing anti-corruption laws and regulations, today's results indicate that much remains to be done before we see meaningful improvements in the lives of the world's poorest citizens."<

The 2006 Corruption Perceptions Index is a composite index that draws on multiple expert opinion surveys that poll perceptions of public sector corruption in 163 countries around the world, the greatest scope of any CPI to date. It scores countries on a scale from zero to ten, with zero indicating high levels of perceived corruption and ten indicating low levels of perceived corruption.

A strong correlation between corruption and poverty is evident in the results of the CPI 2006. Almost three-quarters of the countries in the CPI score below five (including all low-income countries and all but two African states) indicating that most countries in the world face serious perceived levels of domestic corruption. Seventy-one countries - nearly half - score below three, indicating that corruption is perceived as rampant. Haiti has the lowest score at 1.8; Guinea, Iraq and Myanmar share the penultimate slot, each with a score of 1.9. Finland, Iceland and New Zealand share the top score of 9.6

Countries with a significant worsening in perceived levels of corruption include: Brazil, Cuba, Israel, Jordan, Laos, Seychelles, Trinidad and Tobago, Tunisia and the United States. Countries with a significant improvement in perceived levels of corruption include: Algeria, Czech Republic, India, Japan, Latvia, Lebanon, Mauritius, Paraguay, Slovenia, Turkey, Turkmenistan and Uruguay.

A concentration of so-called "failed states" is apparent at the bottom of the ranking. Iraq has sunk to second-to-last place, with pre-war survey data no longer included in this year's CPI.

While the industrialised countries score relatively high on the CPI 2006, we continue to see major corruption scandals in many of these countries. Although corruption in this context may have less of an impact on poverty and development than in developing countries, these scandals demonstrate that there is no room for complacency.

The Facilitators

The weak performance of many countries indicates 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 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.

Kenya's Anglo-Leasing and related scandals presents a case in point, where the misappropriation of public funds was enabled through fraudulent contracts using sophisticated shell companies and bank accounts in European and off-shore jurisdictions, according to John Githongo, Kenya's former anti-corruption tsar. And according to TI Kenya's Kenya Bribery Index, bribery costs Kenyans about US $1 billion each year, yet more than half live on less than US $2 per day.

Acts of corruption involve a giver (the supply side) and a taker (the demand side). TI advocates strong measures to curb bribery's supply side, including the criminalisation of overseas bribery under the OECD Anti-Bribery Convention, as well as its demand side, including disclosure of assets for public officials and adoption of codes of conduct.

But the transaction is often enabled by professionals from many fields. Corrupt intermediaries link givers and takers, creating an atmosphere of mutual trust and reciprocity; they attempt to provide a legal appearance to corrupt transactions, producing legally enforceable contracts; and they help to ensure that scapegoats are blamed in case of detection.

"Firms and professional associations for lawyers, accountants and bankers have a special responsibility to take stronger action against corruption," said Transparency International Chief Executive David Nussbaum. "But in the form of prosecuting attorneys, forensic auditors and compliance officers, they can be the stalwarts of a successful fight against corruption."

Transparency International recommends:

• Promotion and, where necessary, adoption of corruption-specific codes of conduct by professional associations for their members, for instance the International Bar Association, International Compliance Association, and professional associations for accountants,
• Professional training to ensure that honest intermediaries better understand their role;
• Legal or professional sanctions for legal, financial and accounting professionals that enable corruption;
• Greater scrutiny of the role of insufficiently transparent financial centres in facilitating corrupt transactions.

Transparency International is the global civil society organisation leading the fight against corruption.

Note to editors: On 4 October 2006, TI launched its Bribe Payers Index which looks at supply side of corruption in terms of the propensity of companies from 30 leading exporting countries to pay bribes overseas.

On 7 December, TI will launch its 2006 Global Corruption Barometer which looks at public perceptions of the level of corruption in major institutions such as the courts, parliament and the police. The Barometer is published in anticipation of International Anti-Corruption Day, 9 December 2006.