- Denmark tops the 2018 Transparency International Global Corruption Perceptions Index list as the globe’s least corrupt nation. New Zealand comes second.
- Australia ranks 13th, the same as last year, but this is a fall of six places from 2012, when the nation ranked seventh.
- Somalia, South Sudan and Syria are perceived as the most corrupt countries.
By Roger Balch
In the Transparency International Global Corruption Perceptions Index for 2018, released in January 2019, New Zealand ranks second, behind only Denmark, in a list of nations with the lowest levels of perceived corruption. Australia, which ranks in 13th place, has a lot to do if it wants to catch up.
First published in 1995, the highly regarded index offers an annual snapshot of perceived corruption all over the globe, ranking countries and territories with scores from 100 (very clean) down to 1 (highly corrupt).
Since 2012, only 20 countries have significantly improved their scores, including Estonia and Côte D’Ivoire, and 16 have significantly declined, including Australia, Chile and Malta.
In the 2018 index, Australia ranks in 13th place with a score of 77, but six years ago it was in seventh place.
Denmark and New Zealand top the 2018 Index with 88 and 87 points respectively. (In the previous index, New Zealand was first and Denmark second.) Somalia, South Sudan and Syria are at the bottom, scoring 10, 13 and 13 points. The US lost four points from the previous year, dropping to a score of 71 and falling out of the top 20 countries in the index for the first time since 2011. However more than two-thirds of countries score below 50, with an average score of only 43.
Why New Zealand beats Australia in the corruption fight
Jarrod Baker CA, who sits on the board of Transparency International’s Australian affiliate, explains why Australia is losing out to its trans-Tasman neighbour.
“At a high level, New Zealand has invested heavily in strengthening its anti-corruption and integrity framework – even though they do not have an anti-corruption commission – as well as making a conscious decision to ramp up prosecutions,” he says.
“One thing we can’t forget is that New Zealand is a smaller country with a smaller public sector, which means that it’s easier for them to keep a spotlight on public-sector conduct. That doesn’t mean Australia should get excused because of that though,” he says.
There are two areas that Australia should pay attention to if it wants to catch up with New Zealand, according to Baker.
“There is concern Australia has not done enough to inject much-needed accountability and transparency into its political system.”
“First, and given that the Corruption Perceptions Index measures prosecution of public-sector corruption, there is concern Australia has not done enough to inject much-needed accountability and transparency into its political system. There’s a lot of debate about whether what’s been put forward by government to strengthen the anti-corruption and integrity framework at a national level meets the mark of what powers such a commission should have.”
Regarding the international aspect, he says, “If we come back to the other element of you’re a CA sitting in a company that operates in, say, South-East Asia, what you have to be mindful of when going into a country that has a perceived higher risk of corruption like Myanmar (ranked 136) or Cambodia (ranked 161), is that laws related to bribery of foreign public officials are there in Australia. To avoid falling foul of these laws, it’s about identifying your corruption risks and mitigating them by implementing an effective compliance framework.”
In his day job as Deloitte forensic investigations leader for South-East Asia based in Singapore, Baker is on the front line. He helps companies navigate the challenges in doing business overseas while obeying the laws, and is there to provide assistance should they fail to measure up to them.
Realities of doing business in corrupt countries
Transparency International colour codes 180 countries according to the level of corruption, with red indicating those “highly corrupt” then shading through orange to yellow, which indicates “very clean”.
Baker says that companies doing business in nations towards the redder end of the spectrum should make sure they have a compliance network in place and that employees are aware of what the requirements are from a legislative perspective – from both a local and an international point of view.
To ensure staff are appropriately trained, “it should be tailored to scenarios of the risks they may face in a country, which are very different from what they may face in Australia or New Zealand. The challenges are quite different for someone who’s on the ground to being back home,” says Baker.
“Quite often when they are going in-country they’ll have a business partner – maybe through a joint venture or they’ll have a sales agent or something like that – so the key is all about due diligence. That’s something we can’t stress enough. It’s important to verify the character and track record of your business partner and regularly monitor the activity they conduct on your behalf.”
The road to doing business ethically is not always an easy one. At the end of the day, some companies do come to the conclusion that doing business in a country while being legislatively compliant is just not possible. And reluctantly make the decision to step away.