Transparency International January 28, 2021. This year’s Corruption Perceptions Index (CPI) paints a grim picture of the state of corruption worldwide. Like previous years, more than two-thirds of countries score below 50 on this year’s CPI, with an average score of just 43. Most countries have made little to no progress in tackling corruption. Our research shows corruption not only undermines the global health response to COVID-19, but also contributes to a continuing crisis of democracy.
The index, which ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and businesspeople, uses a scale of zero to 100, where zero is highly corrupt and 100 is very clean.
Even countries that perform well in the Corruption Perceptions Index (CPI) have their own integrity challenges. As the CPI is measure of public sector corruption, there are criminal acts and even institutional weaknesses that are not reflected in countries’ scores.
Moreover, weaknesses in the public sector of one country might allow graft to take place, but the proceeds of corruption often travel somewhere else further up the CPI table. Corruption schemes involving large amounts of money and high-powered individuals nearly always stretch across multiple jurisdictions.
Companies in rich countries can take advantage of the weak rule of law elsewhere to win business through bribes, kickbacks and other corrupt deals. Astonishingly, major exporters do little to punish these crimes. Almost half of global exports are from countries with weak enforcement against bribery of foreign officials.
Here we look at some of the biggest corruption issues facing countries in the top 25 of the 2020 Corruption Perceptions Index, with scores of 67 and above.
Unaccountable financial services
In 2020, a fraud scandal broke in Germany (80/100) that sent shockwaves across the financial world. Wirecard, a FinTech company once tipped as the future of online payments, was revealed to have massively overinflated the value of its business. Ludicrously, the authorities in Germany could not decide who should have been responsible for supervising Wirecard.
Such shortcomings in supervision of the financial sector in the EU as well as the lack of EU-wide supervision is also a huge problem when it comes to stopping the proceeds of corruption from being laundered.
The US$230 billion money-laundering scandal involving the Estonia (75/100) branch of Danske Bank, the biggest lender in Denmark (88/100), showed that seemingly clean countries on the CPI can be easy targets of corrupt actors. At the same time, full accountability for enabling cross-border corruption and money laundering has proved difficult to achieve.
Enabling flows of corrupt cash
At the start of 2020, a major investigation showed how Isabel dos Santos, the daughter of Angola’s (27/100) former president, made millions through corrupt deals with the government of Angola, moving the proceeds through an offshore business empire. The United Arab Emirates (71/100) was a key part of the network, with a dos Santos company registered in Dubai allegedly receiving US$115 million in public funds from Angolan state oil company Sonangol. Criminal proceedings were launched against various companies and trusts in the Netherlands which also appear to have facilitated Dos Santos.
Jurisdictions where it is easy to set up companies with little scrutiny, and giving away little information, like the UAE or Hong Kong (77/100) often appear in investigative reporting about corruption. But it isn’t just offshore financial hubs that need to grapple with businesses greasing the wheels of corrupt transactions.
Buying luxury property is a popular way to launder the ill-gotten gains of corruption and other crimes. In some countries, professionals involved in the process, like real estate agents, lawyers, accountants and notaries, are meant to flag suspicious transactions. But evidence shows that they usually don’t, making countries like Canada (77/100), UK (77/100) and US (69/100) hot property for the corrupt. In other countries, like Australia (77/100), anti-money laundering laws are weak and have resulted in Australia being a go-to destination for money laundering in the real estate sector. Insufficient data on who owns property in these countries makes tracking down the corrupt more difficult.
Politics in the interests of a few
It was only in 2020, after a scandal involving a parliamentarian lobbying for a company from which he received stock options and a directorship, that Germany made plans to introduce a lobbying register for MPs.
After years of negotiation in Brussels, a joint transparency register for the European Parliament, the EU Council and the European Commission was recently secured, but it still falls short of being a mandatory register of outside influence on EU policy-making.
A 2020 report by Transparency International covering eight EU institutions and member states, including France (69/100) and Netherlands, found that none have adequate measures to prevent undue influence on public policies and decision-making.
Elections are also at risk of undue influence. Dark money spent through opaque online advertising is a challenge for every democracy, no matter how clean its reputation, as elections in New Zealand (88/100) in 2020 brought home. Among the myriad controversies of the 2020 US elections, it was once again painfully clear that campaign finance laws have failed to address the challenge of digital advertising.
Exporting corruption along with goods and services
A dubious record was broken at the start of 2020, with aircraft manufacturer Airbus agreeing the highest ever settlement in a foreign bribery case, almost US$4 billion dollars, with authorities in France, UK and US.
The company, registered in the Netherlands and headquartered in France, had turned an estimated billion Euros in extra profit thanks to contracts won through bribes in countries including Colombia (39/100), Ghana (43/100), Indonesia (37/100) and Sri Lanka (38/100).
While the settlement was a victory for international cooperation between the prosecuting countries, it also highlights shortcomings. Under the agreement, Airbus avoided criminal prosecution, which should only be the case when companies self-report wrongdoing. Individual executives have not been held accountable, and the victims of corruption were not compensated through the settlement.
Forgetting integrity in the panic of a crisis
Finally, the unique challenges wrought by the COVID-19 pandemic have tested high-scoring countries’ commitment to transparency and integrity in their own public sectors as never before.
When the Organized Crime and Corruption Reporting Project created a database of how public money was spent on Personal Protective Equipment at the onset of the COVID-19 pandemic, in several countries they found a black box. Belgium (76/100), Denmark, the Netherlands and Norway did not publish details of contracts awarded, even withholding information on prices and the names of companies in some cases.
In the US, the previous Administration’s challenges to oversight of the unprecedented COVID-19 relief package raised serious anti-corruption concerns and marked a significant retreat from longstanding democratic norms promoting accountable government.
Now, as we look hopefully ahead to 2021 as a year of widespread vaccinations and treatments, it is vital that there is transparency and accountability in how governments, especially in wealthy nations, acquire and distribute life-saving resources.
See full reports at the Transparency International website
Corruption Perceptions Index 2020
CPI 2020 Global Highlights
CPI 2020 Trouble at the Top: An Analysis
CPI 2020 Five Cases of Trouble at the Top