The annual list is a must-read for global businesses
The anti-corruption NGO Transparency International has released their annual report into perceptions of corruption and bribery across the world. This list forms a critical part of any organisation’s bribery and corruption risk assessment. Countries within the supply chain or which are significant markets or resources should be assessed for their bribery and corruption risks, with the Transparency International Corruption Perception Index (CPI) forming a key source for bribery mitigation measures.
If a country which forms a critical part of the supply chain, base of operation, or otherwise plays a significant role in a business, a lower score on the Corruption Index should be incorporated into a bribery risk assessment, and would necessitate further anti-bribery risk mitigation measures.
What is the Corruption Perception Index?
The CPI ranks 180 countries by their perceived levels of corruption and bribery, including in the public sector, from a range of data sources. It ranks countries on a scale of 0 – 100, with 100 being the least corrupt.
The majority of countries are failing to stop corruption, with over 80% of the world’s population living in a country with a below average CPI score.
What countries are the least corrupt?
Countries with strong rule of law processes and well-functioning democratic institutions tend to be at the top of the index.
For the sixth year in a row, Denmark is at the top of the list with a score of 90, followed by Nordic neighbours Finland, Norway and Sweden. New Zealand also scores highlight, along with Switzerland, Germany, and The Netherlands. Unusually for non-democratic countries, Singapore also scores highly, at 83.
What countries are the most corrupt?
Unsurprisingly, countries experiencing conflict or with highly restricted freedoms and weak governance institutions score the worst. Yemen, Somalia, Venezuela, Syria, South Sudan, Nicaragua, North Korea, Haiti, Equatorial Guinea, Turkmenistan and Libya all score very poorly at the bottom of the CPI.
For global supply chains, Myanmar also scores very low at only 20 points, along with Cambodia, Bangladesh, Mexico, Sri Lanka, Philippines, Thailand and Turkey all hovering around the lower ends of the CPI.
What countries have become more corrupt?
Worryingly for the global economy, 34 countries have significantly declined in recent years, while only 28 countries have improved. The United Kingdom has fallen down the rankings, along with Sweden and Ukraine. Turkey’s fall is one of the most significant at 11 points since 2014, which follows its grey-listing by the FATF for money laundering failures.
Countries to watch
North Macedonia
The country’s parliament has been working to undermine the rule of law in the country, amending the criminal code to reduce prison time and shorten the statute of limitations for the abuse of public positions. Around 200 suspected corruption cases involving high ranking officials are expected to be dropped as a result of the reforms.
Poland
The country has recently scored quite low (54) for an EU nation as a result of the Law and Justice party’s campaign against the judiciary. This reduced checks on government power and undermined the judiciary, leading to punitive sanctions against Poland by the EU. However following an election at the end of 2023, a reformist government has taken power, so Poland could be expected to improve in the coming years.
Bulgaria
Despite scoring higher than Poland at 67, Bulgaria is currently being buffeted by serious issues of corruption and bribery. Bulgaria joined its fellow EU member state Croatia as a jurisdiction of concern for various financial crime deficiencies, mandating enhanced due diligence on transactions coming from these countries.
Bulgaria has been rocked by financial scandals at the highest levels, including sanctions against several senior politicians under the Global Magnitsky Act and various crypto scams from the country. Credit Suisse was found guilty recently after getting caught up in laundering drug money via an ex-Bulgarian tennis star.
A jurisdiction added to the FATF grey list can significantly impact doing business there, from increased legal costs to more time for due diligence. The ‘surprise’ of Bulgaria being added to the grey list highlights the importance of closely monitoring adverse media news, even for countries assumed to be ‘safe.’ In 2024, don’t fall victim to a false sense of security provided by EU membership. Keep important partner countries under review and pay attention to warning signs.
What steps to take now
For any business with a global supply chain connected to the international economy, the release of the CPI is worth investigating as part of your bribery and corruption procedures review.
Step 1: Check critical countries in your supply chain against the list
Thoroughly investigate the corruption issues within those countries. Understand the risk factors (public sector, mining, petty bribery etc), and take steps to document those risks.
Step 2: Bribery-focused risk assessment
Assess the risks of bribery and corruption related to your operations or supply chain in those countries. For example, if you source materials from Mexico which scores low on the CPI, the risks of bribery in Mexico should be understood.
Step 3: Review and update policies
In light of the risk assessment and reviewing the CPI, take a look at your organisation’s anti-bribery and corruption policies to ensure they incorporate these risks and are fit for purpose. Policies should be regularly updated and communicated. Download your free anti-bribery policy template here.
Step 4: Implement reasonable procedures to prevent bribery
It is a criminal offence for a business to not have reasonable procedures to prevent bribery. These should be proportionate to the risks faced. Training is important, along with procedures such as anti-bribery clauses in third party contracts and country-focused risk assessments.
Step 5: Automate your anti-bribery compliance
Gifts and hospitality is one of the key routes for bribery in a business. Having an automated gifts and hospitality register that can flag gifts over certain thresholds or sent to or from certain countries, such as those with low CPI scores, is critical for the business.
