Transparency International’s Corruption Perceptions Index 2017: a synopsis

May 2018 | SPOTLIGHT | FRAUD & CORRUPTION

Financier Worldwide Magazine

May 2018 Issue

Transparency International (TI) released its annual Corruption Perceptions Index (CPI) in February 2018, marking its 25th year. Sadly, the headlines are not encouraging. Notwithstanding numerous countries’ attempts to combat corruption, TI states that most countries are moving too slowly in their efforts and many countries in the past six years alone have made little, if any, progress. Moreover, TI states that countries with the lowest protections for press and non-governmental organisations (NGOs) also tend to have the worst rates of corruption.

The CPI ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and businesspeople. It uses a scale of 0 to 100, where 0 is highly corrupt and 100 is very clean (the CPI is an excellent tool for businesses when considering foreign markets and assessing risks.) Disappointingly, but not unsurprisingly, the 2017 CPI discloses that more than two-thirds of countries score below 50, with an average score of 43.

The top scoring countries in the 2017 CPI were New Zealand and Denmark, with scores of 89 and 88 respectively. Syria, South Sudan and Somalia ranked lowest with scores of 14, 12 and 9 respectively. The best performing region is Western Europe with an average score of 66. The worst performing regions are Sub-Saharan Africa (average score 32) and Eastern Europe and Central Asia (average score 34). Some key takeaways from the CPI include that since 2011, Côte d’Ivoire, Senegal and the UK significantly improved their CPI score. Conversely, Syria, Yemen and Australia’s scores have declined.

Outlined below are the primary findings in the 2017 CPI on a region-by-region basis.

Asia-Pacific

Despite top scorers such as New Zealand and Singapore, over 50 percent of Asia-Pacific countries scored less than 50 on the CPI. The average for the region was 44, and in TI’s opinion, the Asia-Pacific countries are typically failing. Relevantly, Australia’s score has fallen again, and proposed new federal anti-corruption laws are unlikely to be the panacea to correct this in the short-term. An otherwise unfortunate trend in the region is the growing attacks on the freedom of expression. The Philippines, India and the Maldives are cited by TI as among the worst regional offenders in this respect, with each exhibiting poor scores on the CPI.

Another trend identified is that civil society organisations in countries such as Cambodia, Papua New Guinea and China are permanently under threat from authorities. That said, it should be noted that China has improved its score on the 2017 CPI, with regional press suggesting this is due to President Xi Jingping’s crackdown on corruption among government officials. As for positive news in the region, Afghanistan has steadily improved its position, conceivably due to nationwide efforts to improve policies and national procurement activities. Likewise, Indonesia has improved its standing, perhaps due to the continued efforts of its anti-corruption agency, notwithstanding strong opposition from the government.

Middle East

The headline ‘Rampant Corruption in Arab States’ in the CPI says it all. Corruption remains widespread in the region, with a continued erosion of freedom of expression, press freedoms and civil society. Tellingly, 19 of 21 Arab states score below 50. Bahrain experienced the biggest drop on the 2017 CPI since 2016, with TI noting authorities have increased attacks and restrictions on freedom of expression and freedom of association and assembly. In addition, TI mentions that human rights and assaults on freedom of expression and civil society engagement have declined in Egypt and Morocco.

Moreover, TI notes that the worst performing Arab states on the CPI, namely Iraq, Libya, Somalia, Sudan, Syria and Yemen, all exhibit weak public institutions, internal conflict and deep instability. Ongoing violence, as well as internal wars and conflicts, are not conducive to good governance. However, there is some good news for the Middle East. Jordan, Lebanon and Tunisia have each made small improvements in their 2017 CPI scores. Lebanon’s improvement is seemingly credited to having joined the Extractive Industries Transparency Initiative, a laudable act. The UAE and Qatar have also improved their score, perhaps due to good and efficient management of public finances, improved public procurement and better access to public services and infrastructure. However, TI notes that these monarchies place severe restrictions on civil and public freedoms and suppress political dissent or criticism levelled at the ruling families.

Africa

Despite being the worst performing region on the CPI, several African countries that constantly fight against corruption have brought about positive results. It is important to note that some countries in Africa, for example Botswana, Rwanda, Seychelles and Namibia, performed better on the CPI than OECD countries such as Italy, Greece and Hungary. TI states that the key ingredient the top performing African countries have in common is political leadership that is consistently committed to anti-corruption, and while most countries have anti-corruption laws and institutions in place, these leading countries go an extra step to ensure implementation. To that end, Rwanda, Cabo Verde, Botswana and Mauritius are given special mention. Other notable improvements on the CPI include Cote d’Ivoire and Senegal. At the other end of the scale, TI states that the anti-corruption situation continues to worsen in a few other countries, especially where there is conflict or war. Additionally, certain countries that perform poorly on the CPI – with Liberia named as an example – are led by leaders that sought election by promising to deliver corruption-free services to their citizens, but failed to do so.

The Americas

While Latin American and Caribbean countries have made great strides in combating corruption, the CPI discloses that the region continues to be a poor performer. TI notes that countries such as Chile, the Bahamas and Jamaica have increased laws and institutions that promote transparency and accountability in the public sector. Similarly, high profile corruption investigations in Brazil, Ecuador and Peru have resulted in sanctions brought against businessmen and political figures at the highest levels. However, there remains no overarching policies in the region to address historic and structural causes of corruption, and this, TI states, has stymied the anti-corruption fight in the region.

Europe and Central Asia

With the statement “In 2017, authoritarianism rose across Eastern and South East Europe, hindering anti-corruption efforts and threatening civil liberties”, TI makes clear the position in the region is not rosy. The most telling negative feature for the region is the introduction of various national laws curbing the activities of NGOs. TI notes that in Poland, government bodies have taken over the management and distribution of vital funds for some NGOs. Likewise, the Romanian government has proposed a law which imposes disproportionate reporting requirements on NGOs. Hungary’s score in the CPI has steadily declined, conceivably prompted by the introduction of a law that stigmatises NGOs based on their funding structures and adds burdensome reporting requirements.

More worryingly, the government recently drafted new laws which threaten to restrict NGOs and revoke their charitable status. TI notes that the Ukraine’s poor score is apparently the result of continued attacks against anti-corruption activists, NGOs and journalists exposing corruption, including smear campaigns, illegal inspections, lawsuits, harassment and beatings. The situation in Turkey is also uninspiring. TI states that the 19-month state of emergency has resulted in about 120,000 public officials and legal professionals losing their jobs, and more than 40 percent of public procurements not being subject to the public procurement law (28 percent of those subject to the law are not open tenders). In the last year, Turkey imprisoned more than 70 journalists and civil society activists. To add to an already dire scenario, the Turkish Wealth Fund has not published any figures or activity reports in the last two years, and the country’s president and prime minister have a multi-million US-dollar discretionary fund with no obligation to report account details.

Staying in Europe, Finland – traditionally a defender of good governance – has seen its CPI score drop by four points. TI notes this may be due to blurred boundaries between public and private interests, where some public officials are not recusing themselves from decisions that may affect them. The lack of regulations placed on financial disclosures or conflicts of interest for the head of state is also seen to have a bearing. Thankfully, there is some positive news from the region. First, Italy has slowly increased its score on the CPI, in part due to institutional and legal structures being built to combat corruption, namely four new laws regarding whistleblowing, transparency, undue influence and anti-money laundering. Second, Albania has experienced some improvements with the passage of a groundbreaking judicial reform package. TI notes this is the first of its kind in the region.

In summary, there remains much to be done by the governments of the world if corruption is to be properly addressed. While some states have taken the initiative, and others continue to do so, there remains the need for governments to promote laws that encourage transparency and accountability through, for example, access to information, freedom of speech, independent media and political dissent.

John Zadkovich is a senior lawyer at Vinson & Elkins. He can be contacted on +85 (2) 3658 6416 or by email: jzadkovich@velaw.com.

John Zadkovich

Vinson & Elkins