Compliance & Investigations Beijing/Hong Kong/Shanghai Client Alert China Improves by 17 Places in Transparency International’s 2015 Corruption Perception Index On 27 January 2016, Transparency International launched its latest 2015 Corruption Perception Index (“CPI”). China’s ranking significantly improved from last year, moving up seventeen places from 100 to a rank of 83. This suggests that the Chinese government’s anti-corruption campaign may be taking effect and resulting in a more positive perception of the level of public sector corruption in China. Significance of the CPI The CPI Index was established in 1995 as a composite indicator used to measure perceptions of corruption in the public sector in different countries around the world. Since then, it has been used as an important gauge by companies in managing corruption risks when conducting businesses in foreign countries. A country or territory’s score indicates the perceived level of public sector corruption on a scale of 0 (highly corrupt) to 100 (very clean). A country or territory’s rank indicates its position relative to the other countries and territories in the index. Highlights of the 2015 CPI The following are some key points arising from the 2015 CPI: • Two-thirds of the 168 countries on the 2015 index scored below 50. • More countries improved on their CPI scores than declined. • China’s rank improved from last year, moving up 17 places to #83 from #100, although its CPI score only increased by one point. • Hong Kong dropped one spot to #18 from #17, but improved on its CPI score by one point. • In Asia, India, South Korea, Thailand, Indonesia and Vietnam see improvements in their rankings, suggesting a reduced perception of the level of public sector corruption in those countries. • Singapore, Australia, Japan, Malaysia and Philippines, among others, have declined in their rankings. • Globally, Denmark takes the top spot for the second year running, with North Korea and Somalia being the worst performers. Brazil was the biggest decliner in the index, dropping seven positions to a rank of 76. January 2016 www.bakermckenzie.com Beijing Suite 3401, China World Office 2 China World Trade Centre 1 Jianguomenwai Dajie Beijing 100004, PRC Tel: +86 10 6535 3800 Fax: +86 10 6505 2309 Hong Kong 14th Floor, Hutchison House 10 Harcourt Road Central, Hong Kong Tel: +852 2846 1888 Fax: +852 2845 0476 Shanghai Unit 1601, Jin Mao Tower 88 Century Avenue, Pudong Shanghai 200121, PRC Tel: +86 21 6105 8558 Fax: +86 21 5047 0020 2 Baker & McKenzie | January 2016 The table below sets out some key jurisdictions in the Asia Pacific region showing their 2015 CPI rankings and scores against their 2014 position. Extract of AsiaPac Countries Global Rank CPI Score 2015 2014 2015 2014 Singapore 8 7 85 84 Australia 13 11 79 80 Hong Kong 18 17 75 74 Japan 18 15 75 76 Taiwan 30 35 62 61 South Korea 37 43 56 55 Malaysia 54 50 50 52 India 76 85 38 38 Thailand 76 85 38 38 China 83 100 37 36 Indonesia 88 107 36 34 Philippines 95 85 35 38 Vietnam 112 119 31 31 Myanmar 147 156 22 21 Actions to Consider & Conclusion The latest CPI should remind companies that rely on its rankings to review their global compliance programs and make regional adjustments accordingly. Companies should pay attention to those countries and regions that have dropped significantly in the their rankings and scores, and identify any compliance risks that may be previously undetected. For companies doing business in China, despite improvements in China’s ranking, we recommend continued vigilance and regular review of compliance policies and business practices. The recent Ninth Amendment to China’s Criminal Law, which became effective last November, demonstrates the Chinese government’s continued pursuit of the antigraft campaign in China. As discussed in our previous alerts, the anticorruption landscape has become more stringent than ever in China, with an increased focus on bribe-givers and the introduction of additional compliance risks for executives in responsible positions. Should you wish to obtain further information or want to discuss any issues raised in this alert with us, please contact: Mini vandePol +852 2846 2562 firstname.lastname@example.org Simon Hui +86 21 6105 5996 email@example.com Vivian Wu +86 10 6535 3860 firstname.lastname@example.org This publication has been prepared for clients and professional associates of Baker & McKenzie. Whilst every effort has been made to ensure accuracy, this publication is not an exhaustive analysis of the area of law discussed. 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