Stiaan van der Merwe (Johannesburg, South Africa) comments on Transparency Internationals "Bribe Payers Index 2002".  He was the founding CEO of Transparency South Africa and currently works as a consultant on governance, corruption and ethics.

(Tilbake til Godt styresett - for hvem?, Aktuelt 24.5.02)

The 2002 Bribe Payers Index , compiled and published by Transparency International is a much more refined product in comparison to its predecessor (the 1999 Bribe Payers Index) and its ‘sister index’, the annual Corruption Perception Index.

The 2002 Bribe Payers Index provides insight in perceptions about and experience of the ‘supply side’ of bribery. In this case it applies to bribery in 15 emerging markets namely: Argentina, Brazil, Colombia, Hungary, India, Indonesia, Mexico, Morocco, Nigeria, the Philippines, Poland, Russia, South Africa, South Korea and Thailand. According to the index these countries are among the very largest of such countries involved in trade and investment with multinational firms. The Corruption Perception Index does the same for the ‘demand side’, especially concerning public officials (politicians and civil servants) who receive bribes and are mainly in the South.

It is a pity that the two indices are not released together to allow for rare insight and a broader analyses on the two sides of cross-border bribery. In Transparency International’s language cross-border bribery is the world of Grand Corruption.

As it stands, the 2002 Bribe Payers Index makes sad reading. It leaves one with an overall sense of: the plot thickens.

Known suspects - countries where corruption is regarded as irreversibly rife - are joined by new partners in crime including illustrious names of the majority of the G8 countries and some aspiring to be part of it, topping the list in this corruption-related ‘premier league of nations’.

The propensity to bribe listed from ‘good’ to ‘bad’ and where 0 would indicate a high propensity to bribe and a perfect score of 10 would indicate a low or zero propensity to pay bribes, including the status of the OECD convention on the bribery of foreign officials, are presented. In my book a rating of 7 and below is serious (see emphases)

One needs to remember that issues related to governance, and thereby corruption, assume high priority on the agendas of development aid donor countries and ‘the international investment community’. A high premium is put on improved governance in debt reduction schemes. It is also a vital selling line of the New Partnership for Africa’s Development (NEPAD) to those countries. Improved governance is also an important item in the Millennium Development Goals and in the discussions on sustainable development in the run-up to the World Summit for Sustainable Development.

Existing consensus in development thinking has it that sustained good governance, mainly in government, is essential to reduce poverty and its off-shoots and at least give sustainable development a needed boost. The point is taken. However the underlying tone is that the matter refers to ‘those corrupt regimes in the South’. Given the above statistics, the issue needs serious debate and fingers need to be pointed in more than the usual directions.

The difficulties with perception indices aside, the packaging of countries in the Corruption Perception Index (2001) and the Bribe Payers Index (2002) may in some sense be a comparison of apples and pears.

The Corruption Perception Index deals with countries in terms of governments whereas the Bribe Payers Index deals with countries in terms of private business practices. Obviously, as far as it deals with two sides of bribery it is legitimate. The business to business bribery is not addressed.

The illusive suspects remain the governments of countries from which these businesses originate or where they are based. This is the apples and apples part of the comparison where countries are looked at and compared in terms of the actions of governments. This part is not clearly revealed and not adequately addressed neither in the Bribe Payers Index nor in the Corruption Perception Index.

If these governments are doing their bit, how does one explain, i.e. by means of the Bribe Payers Index, the percentages of business executives of whom 32% only heard of and 42% never heard of the OECD convention against the bribery of foreign public officials as agreed to by their governments?

Furthermore, if payment of bribes is such a well established and almost accepted practice why is a potential decrease of bribing not assessed in terms of public attitudes in the countries of origin and the efficacy of law and conventions not tested in the Bribe Payers Index?

The Corruption Perception Index has also not as yet tested the perceptions of corruption regarding governments (in the North) clearly not doing their bit to address corruption as far as bribery from their country is concerned. Thus far the questions and thereby perceptions of corruption have only been tested in terms of receipt of bribes. The culprits are relatively well known. The political results are obvious . The potential consequences for the South in terms of decisions on development aid and investment are dire.

The Bribe Payers Index indeed deals in a dramatic way with governments of strong exporting countries where bribes originate from.

The question related to governments using means ‘other than corruption’, i.e. other than bribery, to gain unfair business advantages for business in their countries was put to respondents. The following emerged:

• Diplomatic or political pressure 66%
• Financial pressure 66%
• Commercial, pricing etc. 66%
• Tied foreign aid 54%
• Thread of reduced foreign aid 46%
• Tied defence/arms deals 41%
• Favours/gifts to officials 39%
• Tied scholarships/education/healthcare 22%
• Other, 8%

The confusion of language aside, in my book this list looks pretty much like an indictment against such governments for downright corruption, such as blackmail and ‘yet unacknowledged’ forms of bribery.

This matter receives more geographic profile where governments involved in such actions are being listed. The G8 countries are well represented in the top 8 of such countries, listed in my order of ‘best performance’ by scoring double figures in percentages of perceptions.

The countries scoring double figures are:

• USA 58%
• France 26%
• United Kingdom 19%
• Japan 18%
• China i.e. Peoples Republic 16%
• Russia 13%
• ‘This country’ ( i.e. where the person is situated outside country of origin and which must include South Africa!) 12%)
• Germany 11%

A certain depth dimension is added in dealing with perceived incidence of bribery and increases or decreases of corruption (i.e. bribery) whereby 68% of respondents indicated that such practices exist and 26% indicate that such practices do not exist. Notably, 23% of respondents indicated an increase in corruption and 27% indicated a decrease in corruption and 13% indicated that they do not know whether corruption (read: bribery) was on the increase or on the decrease in the respective emerging market countries. Some must be more in touch with reality than others.

This part of the index also provides insight into the contextual factors (of the countries whose officials are being bribed) accounting for the perceived increase or decrease in corruption (read: bribery).

Factors listed as playing a role in the increase of corruption (read: receipt of and demand for bribery) include:

• Public tolerance of corruption 67%
• Deterioration of the rule of Law 59%
• Immunity of high public officials 53%
• Inadequate controls of money laundering 49%
• Low public salaries 44%
• Worsening public procurement practices 35%
• Increased secrecy in government 34%
• Privatisation of state assets 32%
• Increase in globalisation and competition 28%
• Changes in party political funding 23%
• Increased financial liberalisation 19%
• Restrictions on the media 6%

Factors listed as playing a role in the decrease of corruption (read: receipt of and demand for bribery) include:

• Greater freedom of the press 52%
• Government anti-corruption investigations 48%
• Greater transparency in government 47%
• Improvements in corporate governance 42%
• Stronger controls of money laundering 39%
• Increase in globalisation and competition 38%
• Improvements in public procurement practices 33%
• Privatisation of state assets 33%
• Increased financial liberalisation 29%
• Changes in political party funding 10%

Very useful information and insight (at least on the level of perceptions) is also provided on the state of bribery in certain business sectors in countries whose officials are being bribed. (The scores are mean figures from all the responses on a 0 to 10 basis where 0 represents very high perceived levels of corruption, and 10 represent zero perceived corruption. Total sample 835)

• Public works/construction 1.3
• Arms and defence 1.9
• Oil and gas 2.7
• Real estate/property 3.5
• Telecoms 3.7
• Power generation/transmission
• Mining 4.0
• Transportation/storage 4.3
• Pharmaceuticals/medical care 4.3
• Heavy manufacturing 4.5
• Banking and finance 4.7
• Civilian aerospace 4.9
• Forestry 5.1
• IT 5.1
• Fishery 5.9
• Light manufacturing 5.9
• Agriculture 5.9
3.7

As for the size of the bribe the only question asked was in which (two) sectors are the biggest bribes likely to be paid. A scale of payments converted to a common currency such as US Dollars would have been interesting.

Total sample (835)

• Public works/construction 46%
• Arms and defence 38%
• Oil and gas 21%
• Banking and finance 15%
• Real estate/property 11%
• Pharmaceuticals/medical care 10%
• Power generation/transmission 10%
• Telecoms 9%
• IT 6%
• Forestry 5%
• Mining 5%
• Transportation/storage 5%
• Heavy manufacturing 4%
• Agriculture 3%
• Fishery 3%
• Civilian aerospace 2%
• Light manufacturing 1%

The disturbing part of this information is that the contextual factors seem to apply to the context of the South only. Actions or the lack thereof of governments in the countries of origin or societal tolerance for these practices remain untested. This is besides the fact that the sets of contextual factors listed for the perceived increase and decrease of bribery are not complete mirror images. E.g. situations of improvement in the rule of law and increases/stability in public salaries, or improved anti-corruption investigations are not tested for possible decrease of ‘corruption’. Likewise, the state of corporate governance (in North and South) is not tested for potential increase or decrease of corruption (read: bribery).

As useful and impressive and even dramatic as the 2002 Bribe Payers Index is, it leaves more room for qualitative improvement.

An important element will be to clear up its use of language. Corruption and bribery should not be used as synonyms and or used interchangeably. The word corruption should be treated as a more general term and bribery as a form of corruption. The question about means of corruption should for instance have read: What means of corruption, other than bribery, do governments use to gain unfair business advantages in international trade and investment for businesses in their countries? The follow-up question should have read: Which (three) countries use corrupt means other than bribery of public officials to gain unfair advantage for businesses from their countries in international trade and investment. As indicated, the lack of clarity in use of language obscures an important part of the problem and players in this problem,.

The strong message from the Bribe Payers Index is the corruption related to bribery from the North.

However a qualitatively different global picture will have to emerge on the state of play in global or international corruption and governance. Research on such corruption will have to be done differently. For instance, Transparency International must allow the two indices to interact and questions to respondents must allow room to interrogate the foundations of perceptions on corruption in countries.

Once such changes are allowed much more penetrating and revealing questions will have to be asked, e.g. with regards to the organisational and systemic aspects of global political and economic governance both in the North and the South. This is the context within which the unethical and unlawful practices such as bribery flourish. A lack of addressing this aspect of contextual factors allows important players, including multilateral international financial institutions, to get off the hook.

It also seems as if the dominant systems and dynamics of economic and political governance are let off the hook in understanding and exploring Grand Corruption. Are these systemic matters not the issue at stake in Grand Corruption? Why would Grand Corruption be reduced to cross-border bribery, as if cross-border bribery (huge and messy as it is), is the biggest and most comprehensive form or aspect of corruption?

The challenge to Transparency International is to clarify whether the fact that these grave sides of a larger picture did not surface was due to ignorance, naivety or neglect. The smell of the latter sits in the orthodoxy of current anti-corruption thinking upheld by the dominant players in international anti-corruption thinking, whereby the problem is by and large a problem of and from the governments of the South. Neither the actions and/or lack thereof of players in the North nor the broader global political and economic governance systems and dynamics are addressed.

One cannot avoid the notion that this approach also sat in the mindset of TI’s Board, the advisory ‘Steering Committee of leading international experts in the field of corruption, econometrics, and statistics’ and seemingly also in Gallup International Association contracted to ensure ‘professional standards in the survey work’. (Quotes are from TI’s Q&A documents accompanying the 2002 Bribe Payers Index.)

Challenges to address this dominant approach to global corruption and governance also sit in the discussions round NEPAD, the Millennium Development Goals and the WSSD process. Africa and the South in general should not be found wanting regarding the larger politics in the global anti-corruption drive. Critical as we may be about the corruption in the North and the current discourse on corruption and governance, we should also not be found wanting to address corruption in Africa and in the South.