Corruption not confined to poor countries

Almost two out of five business in a recent global survey said they had been asked to pay bribes to governments in the normal course of doing business.

The latest Global Corruption Report, issued by the non-profit organisation Transparency International, also found that half of the international business executives polled believe that corruption added at least 10 per cent to project building costs. Around 20 per cent said they had lost business to competitors paying bribes.

Transparency International said that that bribery and price-fixing were influencing global public policy and costing countries billions in lost revenue. It also undermined fair competition, and stifled economic growth. It estimated that bribes paid to politicians and officials were in the area of US$20 billion to US$40 billion annually.

It estimated that consumers around the world were over-charged by around US$300 billion in the 15 years between 1990 and 2005, because of the existence of nearly 300 private business cartels around the world.

The report also ranked country by how corrupt they were perceived to be. Denmark, New Zealand, and Sweden were the most corruption-free. Hong Kong ranked 13th, the UK 17th, and the US 20th. China was ranked 72nd. The lowest ranked countries were Iraq, Myanmar, and Somalia. There were a total of 180 countries ranked.

Corruption was not confined to poor countries, and blatant bribery was only part of the problem, it said. In many places, nepotism, favouritism, and informal understandings between businesses led to inefficiencies, and waste of resources.

There were also “revolving doors” between the private and public sectors which fostered “deceitful public procurement deals where non-competitive bidding and opaque processes lead to immense waste and unreliable services or goods”.

The report noted that the world’s biggest companies all have codes of ethics, but few monitor how they are implemented.

The group’s global programmes director, Christiaan Poortman, said tackling corruption was especially important in light of the current financial crisis. He noted that financial and economic stability hinged on an efficient and transparent market.

He noted that corruption acted as a catalyst for the downturn, since ratings agencies “turned a blind eye to high levels of risk” - in a clear conflict of interest, he said. The report called on companies to issue regular reports on efforts they were making to fight corruption, and to reveal financial support donated to politicians, lobbyists, and governments.