The Corruptions Perceptions Index and the Private Sector

Corruption Perceptions Index 2011

The role of the private sector in any economy is to generate income by creating and supplying goods and services which leads to national development and growth.

Businesses produce economic wealth that can be redistributed to alleviate poverty and provide access to social services as well as create economic opportunities for the youth, poor and vulnerable.

Businesses are also involved in the generation of new ideas leading to innovation and the efficient use of a nation’s resources.

Without a facilitating environment, and when businesses do not perform these roles, exploitation occurs and inequalities and corruption are fostered.

As noted by the Trinidad and Tobago Transparency Institute and fully supported by the Chamber, it is in the interests for the private sector and its associations to play a role in reducing corruption. Research cited by Transparency International (TI) in 2008 showed that two in five business executives in the 26 countries polled claimed to have been asked to pay a bribe.

And one in five executives stated that they had been disadvantaged by other competition as a result of not paying a bribe.

Another one in three believed that corruption was in fact on the increase. In another study on corruption in the private sector conducted by TI in a mix of 6 African and Asian countries, more than 60 per cent of business executives reported that they had been solicited for bribe payments.

In Colombia more than 50 per cent of companies interviewed admitted that bribery was in fact an effective way of trumping their competition. In Brazil and Hong Kong more than 40 per cent of businesses felt that business opportunities were lost as a result of corruption.

These challenges pose further uncertainties in transacting business in an already volatile business environment.

While the global economy is still recovering from the financial crisis of the past three years, corporate governance remains a topical issue regarding the manner in which business transactions take place both internally and externally.

Moreover, Governments’ commitments to bailing out large companies which were hardest hit by the recession have furthered the call for greater regulation and transparency by businesses. In addition, shareholders and citizens are also calling for more accountable systems for those who engage in business activities.

Therefore, curbing corruption within the business sector remains a very necessary work in progress.

Corruption Perceptions Index 2011 Map

The Corruption Perceptions Index (CPI) is a measure of domestic and public sector corruption. It is derived from surveys undertaken by international agencies ranking various countries based on the perceptions held by senior resident business leaders and non- resident analysts of the likelihood of encountering corruption from public figures when doing business in Trinidad and Tobago.

It should be noted that the CPI is a perceptions test and does not capture the reality of corruption on the ground.

However, it is known that perceptions play a role in shaping and representing what may be taking place in reality.

The CPI uses a simple form of indexing to form a score range of 0- perceived to be the most corrupt and ten- perceived to be the least corrupt country.

In the 2010 CPI, 178 countries were polled.

TI reported that over 75 per cent of the countries scored below five, which it believes is a cause for concern.

“These results signal that significantly greater efforts must go into strengthening governance across the globe. With the livelihoods of so many at stake, governments’ commitments to anti-corruption, transparency and accountability must speak through their actions. Good governance is an essential part of the solution to the global policy challenges governments face today,” said Huguette Labelle, Chair of TI.

This should be viewed in the context of the economic downturn in which corruption played a major role and was seen to be an impediment to development.

Such great numbers of countries scoring at such high levels of corruption influence how business is conducted not only in those environments perceived to be highly corrupt but the manner in which originating business people expect transactions to be carried out.

This presents not only a localised challenge for dealing with corruption but uncovers the transnational nature of the problem. It is therefore incumbent upon governments, the business sector and civil society to fight corruption at all levels.

The nature of corruption is dynamic. It changes with societal changes and with technological advancement.

However, corruption has a personal side. It depends on people to exist. It fosters inequality, it perpetuates poverty and leads to social, political and economic instability.

Next week we will discuss Trinidad and Tobago’s ranking in the 2010 CPI and the implications of this ranking for the private sector.

Source: Trinidad Express

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