On 2 November 2011, Transparency International, the anti-corruption non-governmental organisation (“TI”), launched its fifth Bribe Payers Index (the “Index”), which ranks 28 of the world’s largest economies according to the expected likelihood of their companies to bribe when doing business abroad. To compile the Index, TI surveyed more than 3,000 executives of companies working across all world regions, involved in business which makes up approximately 80% of global goods and services exports and investments.
The Index builds on previous versions and for the first time considers private-to-private sector bribery, as well as analysing the likelihood of low level and high level public sector corruption in given countries and business sectors. It will form a useful tool for corporates seeking to perform anti-corruption risk assessments as part of developing “adequate procedures” in the context of the UK Bribery Act 2010 (the “Act”).
The Index reveals that:
- There is clear evidence of bribery taking place between private companies;
- The likelihood of companies from a given country to bribe abroad is closely linked to the perception of business integrity and public sector corruption “at home”;
- Chinese and Russian companies were viewed as the most likely to pay bribes; and
- Across the business sectors, the Construction industry performed weakest.
For further information on the Index and to download a copy, please click here.
The countries surveyed by TI were scored on a scale of 0 to 10, with 0 equating to a view that companies from that country would always bribe, and a score of 10 a view that companies from that country would never bribe. No states obtained perfect scores, but the Netherlands and Switzerland came top of the table, each with a score of 8.8. The United Kingdom and the United States had scores of 8.3 and 8.1 respectively, placing them 8th and 10th in the table.
China and Russia came bottom of the table with scores of 6.5 and 6.1 respectively. When China’s and Russia’s results are taken in the context of the size of the investments companies from those countries make (some $120 billion in foreign direct investment in 2010 combined), it is inevitable that the way these companies do business abroad will impact on how business is conducted globally.
For more information on anti-bribery laws in China, including the new Chinese law passed on 1 May 2011, Russia and other countries, please click here to view CMS’s Anti-bribery and Corruption: An International Guide.
The Index considers the likelihood of bribes being paid by companies across 19 different business sectors. The same 10 point scale was used as for countries. The highest performing (i.e. cleanest) business sectors included Agriculture, Light manufacturing, Civilian aerospace and Information technology, with Banking and finance coming in a close 5th with scores ranging between 7.1 and 6.9.
Bringing up the end of the table are Construction, and public works contracts scoring 5.3, followed jointly by Utilities and Real estate, property, legal and business services (scoring 6.1) and then Oil and gas with a score of 6.2. All the poorest performing sectors share the characteristics of high value investment coupled with significant public sector exposure, both factors which may lead to an increased propensity for bribery. Please click here to see the results in greater detail.
Private sector bribery
The 2011 Index is TI’s first Index to include private-to-private sector bribery, i.e. bribery among businesses. Given that the Act criminalises both public and private sector bribery, this section of the Index could prove to be a useful tool to companies in carrying out risk assessments as part of ensuring that they have put in place “adequate procedures” designed to prevent bribery. The Council of Europe’s Criminal Law Convention on Corruption also provides for a prohibition on private sector bribery, indicating that awareness of this issue is becoming more widespread.
Improper payments to public officials
Beyond bribery of corporates by other private companies, TI also surveyed the perceived likelihood of improper contributions to high-ranking officials in order to secure influence over policy, regulations and legislative decisions. Higher level bribes of this type were found to be the most common but lower level bribes, including facilitation payments, were perceived as almost as common and consistently so across all 19 business sectors surveyed. This may suggest that if facilitation payments are a common occurrence in a particular country or business sector, then it is very likely that there is more widespread bribery at a higher level.