February 2016 Monthly Article – Corruption

Posted on Posted in Monthly Article

By Jerry Pacheco

 First of a two-part series on corruption:      

I was captivated by a February 8, 2016 story in the Washington Post that talked about Crystal City, Texas, a town of 7,500 people, approximately 130 miles south of San Antonio. On February 4, the city’s mayor, mayor pro tempore (both voting members of the city council), a city council member, the city manager, and a former city council member were arrested by the FBI on charges of taking bribes and assisting the operator of an illegal gambling operation. Another city council member was arrested a month before on human smuggling charges.  Only one city councilor was left standing who could show up for work.

The developments in Crystal City came amid the release of the Corruption Perceptions Index Report 2015 (CPI 2015) by the Berlin-based group, Transparency International, which ranks countries around the world based on levels of perceived corruption.  According to the report, the CPI 2015 is calculated “using 12 different data sources from 11 different institutions that capture perceptions of corruption within the past two years.” The information is then converted to a 0-100 scale, where the higher the score equals lower perceived corruption. Countries are then ranked from 1 to 167.

Denmark (91), Finland (90), Sweden (89), New Zealand (88), and the Netherlands (87) have the least perceived levels of corruption on the scale. With a score of 76, the U.S. ranks 16, behind Canada (9th with a score of 83), but ahead of Mexico (95th with a score of 35). The worst performers on the scale tend to be countries that are racked by war/violence or run by totalitarian regimes: Angola (15), South Sudan (15), Sudan (12), Afghanistan (11), North Korea (8) and Somalia (8). The world’s most populous nations, China and India, rank 83 and 76, respectively.

The report claims that more than 68 percent of all countries worldwide, and half of the G20, have serious corruption problems. What is striking is that the report’s conclusion that more than 6 billion people live in countries that have “serious corruption problems.”

Countries that improved on the list include Greece, the United Kingdom, and Senegal. Countries that saw their position deteriorate on the list include Brazil, Libya, Turkey, and surprisingly two affluent countries – Australia and Spain.

Corruption, let alone perceived corruption, is a difficult element to identify, measure and quantify via a scale. Transparency International does an admirable job in its report. However, extensive expert opinion can vary in its accuracy and predisposition to countries that historically rank low or high in corruption. Even though Canada ranks ahead of the U.S. in terms of lower perceived levels of corruption, does it necessarily mean that Canada is a less corrupt country? A major point that the report makes is that even third-ranked Sweden has a company, TeliaSonera – 37 percent owned by the Swedish government, that is facing charges it paid millions in bribes to do business in Uzbekistan, a country ranked 153rd on the list.

When I worked in Mexico City during the 1990s, among us expatriates, Canadian businesses were notorious for using bribes to secure business with the Mexican government. Does this mean that companies from less corrupt countries play a different game, albeit more corrupt game, when operating in countries that tend to have higher perceived corruption?  Possibly. It appears that the effort to crack down on overseas corruption is not seeing a lot of success. The report states that “half of all Organization for Economic Cooperation and Development countries are violating their international obligations to crack down on bribery by their companies abroad.”

Poorer countries on the list that have a higher perceived level of corruption are losing an estimated $1 trillion dollars per year to corruption, a portion of it fueled by foreign companies contributing to the problem. Much of this money ultimately affects needy citizens, who like those in Angola, live on less than US$2.00 per day. Unfortunately, in poorer countries such as Angola and Haiti, when natural disasters or health crises occur, corruption rears its ugly head and the people most in need can be robbed of national and foreign assistance. And this doesn’t only occur in poorer countries. New Orleans Mayor Ray Nagin, who was in office during the 2005 Hurricane Katrina disaster, was sentenced to 10 years in prison for bribery, money laundering, and corruption.

I have traveled to many regions in the world and to poorer regions in the U.S. While there is no failsafe way to measure corruption, the Transparency International report highlights general perceived levels of corruptions, trends and general effects. It serves as a measuring stick for countries, even if it is an embarrassing one, to look internally at ways to improve their score.