Leaders miss chance to stem global corruption
New Zealand cleanest state - Transparency International
November 18, 2009
By Patrick Donahue Washington
US and world leaders had fallen short in efforts to combat global corruption as policies to fight recession lost urgency, a Transparency International official said yesterday.
Francois Valerian, the director of Transparency International's private sector programmes, said the Group of 20 (G20) leaders had not used the opportunity presented by initiatives meant to steady the world economy to also cut corruption levels.
Valerian spoke as the group released its 2009 Corruption Perceptions index.
"The sense of urgency that we had (a year ago) seems to have vanished, for the simple reason that the capital markets seem to have recovered," he said. "Our concern is that we are back to business as usual."
This year's index, which measures the perception of corruption in countries, showed that 129 of the ' nations reviewed scored below five on a 0-to-10 scale, with 10 indicating the least corrupt, Transparency said.
New Zealand climbed to the top of the list as the cleanest state, followed by Denmark and Singapore. At the bottom were countries burdened by war, lack of infrastructure or dictatorship: Afghanistan, Somalia and Myanmar.
The US slipped a notch to 19th place from 18th, even though the country's score climbed to 7.5 from 7.3.
Transparency cited "widespread concerns" about the US's oversight of the financial sector. US legislators had failed to strengthen regulation of executive pay, derivatives trading and bankruptcy protection, Valerian said.
"Clearly they did not play the role they should have played before the onset of the crisis," he said.
US President Barack Obama's administration was expected yesterday to announce an effort by government agencies to combat financial fraud, according to a person familiar with the matter, who spoke on condition of anonymity.
The US recession has caused an increase in economic crimes, including mortgage fraud, white-collar crime and health care fraud, according to the Justice Department.
In industrialised countries, fraud can turn away investors. In developing countries, corruption fuels a cycle of poverty as non-functioning institutions fail to provide goods and services, according to Transparency.
Bribery - excluding investment losses and damage to development and economic growth - siphoned off $1 trillion (R7.3 trillion) a year from the global economy, Transparency said, citing a 2004 World Bank Institute report.
The group said corruption was a "substantial threat to a sustainable economic future".
Valerian faulted the G20 for not proposing sufficiently far-reaching plans to increase regulation, such as for derivatives, which he cited as a primary cause of the financial crisis.
He said the G20's financial stability board, which includes central bankers, regulators and finance ministers, had been tasked with delivering reports rather than ensuring that reforms were implemented.
"They've done a lot of talking and public discourse," Valerian said. "But they are falling short of real and quick implementation of what was urgently needed last fall."
Countries that improved in their rankings included China, Poland, Russia and Bangladesh - all of which instituted anti-fraud programmes.
On the downside were Greece and Latvia, which drew attention because of corruption scandals. The Czech Republic, Slovakia and Ukraine also fell in this year's index because of shortcomings in the public sector, the group said.
"Examples of corruption range from public posts for sale and justice for a price to daily bribing for basic services," said Transparency International of Afghanistan.
The index, which combines data from 10 independent institutions, has become a benchmark of perceptions of corruption and an assessment of risks for investors. - Bloomberg
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