Transparency International released its 20th edition of the Corruption Perceptions Index (CPI) today, available here. The 2014 CPI ranks 175 countries based on the perceptions of public sector corruption. Denmark is at the top of the list with a CPI score of 92. Similar to the last several years, North Korea and Somalia are at the bottom of the list, scoring 8 each.
More than two thirds of the countries ranked in the Index score below 50 on a scale from 0 (perceived to be highly corrupt) to 100 (perceived to be very clean) implying that levels of bribery and corruption in the public sector are still perceived to be very high.
Among the emerging economies, Brazil ranks 69th (score of 43), India 85th (score of 38), China 100th (score of 36) and Russia 136th (score of 27). Although the Chinese government has recognized the need to crack down on corruption and focused on corruption by some party members, China’s 4 point drop in score from the 2013 CPI indicates more work needs to be done in China to eliminate corruption. Measures China can undertake include greater transparency in its prosecution system, consistent enforcement of laws and robust whistleblower protections.
The United States ranks 17th, with a score of 74, essentially unchanged from its score of 73 for the 2013 CPI. The United States ranks third in the Americas behind Canada and Barbados. Its score is lower than numerous other OECD and G20 countries, including Australia, Germany, Japan and the United Kingdom. While we cannot say with certainty why the United States lags behind many of its OECD and G20 partners, we have previously noted the transparency and corruption issues that plague the United States — i.e. the lack of transparency in the campaign finance system and the spate of high profile state and local corruption cases, including the 2014 conviction of former Virginia governor Bob McDonnell and the scandals and debate in New York regarding reducing corruption by elected New York officials. Polling by Gallup also indicates that perceptions of widespread corruption in the U.S. government have been increasing over the past seven years.
The overall poor scores of countries in the CPI highlights the need for coordinated global action to ensure that corrupt officials are not allowed to conceal and enjoy their illicitly obtained assets in the global financial system, including the financial sectors of developed countries. Transparency International’s new initiative, Unmask the Corrupt, was launched this year to promote specific reforms by individual countries to end this impunity.
According to the World Bank’s Stolen Asset Recovery Initiative, the amount of money stolen from developing and transition jurisdictions and hidden in foreign jurisdictions each year is approximately $20-$40 billion- a figure equivalent to 20-40 percent of flows of official development assistance. Shell companies or anonymous companies are often used to mask these public funds and the identities of corrupt officials. The need for transparency in beneficial ownership is not new but action to address it has been painfully slow. The G20 countries recently endorsed High Level Principles on Beneficial Ownership Transparency to prevent the misuse of anonymous corporations for illicit purposes.
More urgent progress is needed in the United States, which still lacks legislation to tackle this issue, despite the fact that the White House has repeatedly endorsed the need for such legislation. Bipartisan legislation has been introduced in both the U.S. House of Representatives and the U.S. Senate in past sessions of Congress but the likelihood of passage is dim at this time.
To be fair, the U.S. has been doing much to tackle global corruption, including its strong enforcement of the U.S. Foreign Corrupt Practices Act, the recent settlement of the civil forfeiture case against assets in the United States owned by the Teddy Obiang, (the first U.S. legal action of any kind to target the family of a sitting head of state) and the denial of visas earlier this year to six Hungarian public officials suspected of corruption.
We hope that the 2014 CPI release will raise awareness at all levels of government in the United States of the work needed to be done to tackle corruption and that federal, state and local officials will implement the reforms needed to combat corruption in the U.S. and around the world.
Shruti J. Shah is a contributing editor of the FCPA Blog. She’s a Senior Policy Director at Transparency International-USA, responsible for the promotion of TI-USA’s anti-corruption law and regulation policy agenda. She can be contacted here.