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The Bribe Payer's Index and Risk Assessments

Transparency International released its Bribe Payer’s Index Report for 2011.  Companies need to incorporate this information into their risk assessment.  Most companies rely  on the annual Corruptions Perception Index, which ranks all 178 countries.

Some of the CPI rankings are questionable – most notably, China is ranked 78 out of 178.  That ranking is problematic.  Anyone who has had to focus on compliance in China knows the difficulties in dealing with bribery issues in the Chinese economy.   There is no justification for such a high ranking for China, especially if Russia is ranked so close to the bottom of the CPI rankings. 

The Justice Department and the SEC have brought over 30 enforcement actions in China over the last three years.  The number of enforcement actions in Russia pales in comparison.  The number of enforcement efforts in Russia are bound to increase over the next few years, and possibly eclipsing China.  Over the next ten years, Russia’s consumer spending is expected to increase more than any other country in the world.  Businesses will inexorably enter the Russian market and face some of the most difficult anti-corruption compliance issues.

The Bribe Payer’s Index Report also includes some interesting sector rankings.  The four most corrupt sectors are public construction and engineering; utilities; real estate, legal and business services and oil and gas.  Except for the legal and business services ranking, there is no real surprise.  The mining sector is the next on the corruption index. 

This specific information is helpful to a risk assessment.  A company cannot stand still and rely on the annual Corruptions Perception Index – this new information should be added.

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1 Response

  1. Russia is very unlikely to ever match the number of FCPA investigations seen in China. Even after Russia’s WTO accession, the amount of business done with Russia will remain a tiny fraction of China’s. Neither jurisdiction has anything to brag about re bribery and corruption.