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Thursday, October 05, 2006

The Bribe Payers Index

In a survey of the effectiveness of the thirty countries largest exporting countries at preventing bribery, the U.S. ranks ninth:

The cost of improper payments, by Brian Whitaker, Guardian: This morning Transparency International, which campaigns against corruption, published its Bribe Payers Index for 2006. The survey covers the world's 30 largest exporting countries and ranks them according to their effectiveness in preventing bribery when their companies do business abroad.

Transparency International says the countries can be divided into four groups. In the first group - those whose companies are least likely to pay bribes - are Switzerland (which came top in the survey), Sweden, Australia, Austria, Canada, the UK, Germany, the Netherlands, Belgium, the US and Japan.

In the second group - somewhat more likely to bribe - are Singapore, Spain, the United Arab Emirates, France, Portugal and Mexico.

The third group - even more likely to bribe - are Hong Kong, Israel, Italy, South Korea, Saudi Arabia, Brazil, South Africa and Malaysia.

Finally - and most likely of all to pay bribes - are Taiwan, Turkey, Russia, China and India (which came bottom in the survey).

Before countries near the top of the list start patting themselves on the back, it's worth noting that their companies often apply different standards, according to where they are doing business. "Companies from the wealthiest countries generally rank in the top half of the index, but still routinely pay bribes, particularly in developing economies," Transpency International says. It continues:

Even high scorers are in major need of improvement. The behaviour of the Australian Wheat Board in the UN oil-for-food programme is just one example.

In March of this year, German-US motor company DaimlerChrysler admitted that an internal probe confirmed allegations of "improper payments" made by their staff in Africa, Asia and Eastern Europe. ...

The United States, which blazed new trails with its Foreign Corrupt Practices Act of 1977, ought to be leading the way, but ranks behind many OECD countries.

The United Kingdom has demonstrated minimal enforcement of the Convention, despite scandals implicating firms such as British Aerospace.

Companies often try to shrug off bribes as a way of fitting in with local customs and practices, and there is a popular notion that the recipient, not the giver, is the guilty party. Apart from the fact that such payments are often illegal, they undermine any efforts to promote good governance in developing countries. Bribes also have a corrupting effect on the firms that pay them. Often, the payments are made by local subsidiaries - allowing parent companies to pretend that their hands are clean. Transparency International warns:

Multinationals cannot be absolved of the corrupt activities of their foreign branches, subsidiaries or agents, and they must conduct due diligence before engaging with joint venture or alliance partners. ... The cost of a tarnished image "back home" can be immense. And companies with a culture of bribery overseas face a heightened risk of being undermined by the unethical acts of their own employees. In the long run, it pays for companies to take proper measures to end corrupt practices.

    Posted by on Thursday, October 5, 2006 at 01:11 AM in Economics | Permalink  TrackBack (1)  Comments (7)


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