Global corruption costs consumers billions, says report

Global corruption on a massive scale is costing consumers billions and standing in the way of sustainable economic growth, a new report has said.

Transparency International’s (TI) Global Corruption Report 2009: Corruption and the Private Sector shows how corrupt practices, such as bribery, price-fixing cartels and undue influence on public policy, undermine fair competition, stifle economic growth and ultimately undercut a business’s existence.

Research in the report also shows that half of international business executives polled estimated that corruption raised project costs by at least 10pc.

The bottom line is that it is ultimately citizens who pay. The report reveals that consumers around the world were overcharged approximately US$300bn through almost 300 private international cartels discovered from 1990 to 2005.

In developing and transition countries alone, companies colluding with corrupt politicians and government officials have supplied bribes estimated at up to US$40bn annually, according to the TI’s report.

“Fostering a culture of corporate integrity is essential to protect investment, increase commercial success and ensure the stability sought by poor and rich countries alike, especially since we climb out of a historical crisis,” said TI Chair Huguette Labelle.

Corporate integrity pays, the report says. Companies with anti-corruption programs and ethical guidelines are found to suffer up to 50pc fewer incidents of corruption and are less likely to lose business opportunities than companies without such programs.

“Winning on anti-corruption means adding to the bottom line. It is the time that corporations face up to the risk of paying millions in fines and the long-term loss of trust from their customers and shareholders,” Labelle said.

The revolving public office/private sector door
Another concern addressed in the report is how the sheer economic power of some companies and business sectors translates into inappropriate influence on political decision-making.

The revolving doors between public office and the private sector also offer a smooth path to deceitful public procurement deals where non-competitive bidding and opaque processes lead to immense waste and unreliable services or goods, the report says.

“Basing a company or fund’s future on personal relationships and unpredictable systems or just operating in a dark space without oversight and accountability is a path to guaranteed failure,” Labelle observed.

Ireland a haven for ‘legal corruption.’
The TI’s 2009 report on corruption in Ireland found that while the scale of ‘petty corruption’ here is among the lowest, it has measured anywhere in the world, Ireland is regarded by domestic and international observers as suffering from high levels of ‘legal corruption.’

“While no laws may be broken, personal relationships, patronage, political favors, and political donations are believed to influence political decisions and policy to a considerable degree. The situation is compounded by a lack of transparency in political funding and lobbying,” the TI Irish corruption report reads.