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Supply-Side Corruption

The 2008 Bribe Payers Index (BPI) from Transparency International attempts to measure how much corruption the major economies export to other countries. TI hired Gallup International to survey 2,742 executives from 26 countries (at least 100 interviews per country) between 5 August and 29 October 2008. The executives came from Argentina, Brazil, Chile, Czech Republic, Egypt, France, Germany, Ghana, Hungary, India, Indonesia, Japan, Malaysia, Mexico, Morocco, Nigeria, Pakistan, the Philippines, Poland, Russia, Senegal, Singapore, South Africa, South Korea, the United Kingdom and the United States.

Interviewees were given a list of 22 countries. They were asked to score each country on a 5-point scale (from 1=never, to 5=almost always) by answering the question: ?How often do firms headquartered in (country name) engage in bribery in [your home] country?? The 22 "exporting"countries selected for evaluation represented 54 percent of the world's total trade and foreign direct investment flows in 2006.

What's measured is the perception of companies headquartered in the "exporting" countries to pay bribes when doing business abroad. Companies from Belgium and Canada came out on top as the cleanest; those from China and Russia were last.

Here's the complete 2008 BPI ranking:

1 Belgium
1 Canada
3 Netherlands
3 Switzerland
5 Germany
5 United Kingdom
5 Japan
8 Australia
9 France
9 Singapore
9 United States
12 Spain
13 Hong Kong
14 South Africa
14 South Korea
14 Taiwan
17 Italy
17 Brazil
19 India
20 Mexico
21 China
22 Russia

The survey also evaluated 19 business segments to determine which were most likely to use illegal payments to influence government decisions. Worst ranked were public works contracts and construction, real estate and property development, oil and gas, heavy manufacturing, and mining. The cleanest were information technology, fisheries, and banking and finance.

Among other things, the survey raises questions about the lack of enforcement parity among the major economies. The BRIC countries plus Mexico sit at the bottom of the survey -- their companies are perceived as most likely to use bribery abroad to win work. Yet those countries don't prosecute overseas graft. For American companies, that's bad news. The growing economic power of India and China especially will make the level playing field more elusive than ever.
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Full post as published by The FCPA Blog on September 28, 2009 (boomark / email).