South African domestic perceptions worse than reality

Bribing public officials when doing business abroad is a regular occurrence, according to a survey of 3,000 business executives from developed and developing countries for the Bribe Payers Index released by Transparency International last week. It also exposes the fact that South Africa’s international image is not always as bad as perceptions at home and underscores the country’s much improved standing since the advent of democracy in 1994.

Indicative of South Africa’s improved international status is the fact that it has been included in Transparency International's 2011 Bribe Payers Index, which ranks 28 leading international and regional exporting countries, jointly accounting for 80% of global trade and investment, by the likelihood of their companies to bribe abroad.

In the index itself it is only Brazil from South Africa’s partners in the BRICS-grouping that is ranked one slot higher in joint 14^th position, with South Africa in the joint 15^th position. In fact companies from two BRICS-countries, Russia and China, which invested $120 billion overseas in 2010, are seen as most likely to pay bribes abroad. Companies from the Netherlands and Switzerland are seen as least likely to bribe with scores of 8.8 points.

Next on the list were Belgium, Germany, Japan, Australia, Canada, Singapore, the UK and the US. Canada and the United Kingdom saw the most significant deterioration in their scores and their country rankings fell by five and three places, respectively.

Canada and Belgium were together ranked at the top of the previous list in 2008.

The index, released last week, also looks at the likelihood of firms in 19 business sectors engaging in bribery and exerting undue influence on governments. It does not contain any major surprises on that score with public works and construction companies scoring the lowest in the survey. This is a sector where bypassed regulations and poor delivery can have disastrous effects on public safety.

Oil and gas is also a sector seen as especially prone to bribery. The extractives industry has long been prone to corruption risk. Companies operating in oil-rich Nigeria have already been fined upwards of $3.2 billion in 2010-2011 for bribery of public officials.

The practice of bribery is also not restricted to the area of doing business with the public sector. Companies are almost as likely to pay bribes to other businesses, according to the report, which looks at business-to-business (B2B) bribery for the first time. This suggests that corruption is not only a concern for the public sector, but also for the business sector, carrying major reputational and financial risks for the companies involved.

Country scores

The Bribe Payers Index is based on a survey of more than 3,000 business executives from developed and developing countries. Scores are based on the business executives' responses when asked how often firms, with which they have a business relationship, from a given country, engage in bribery with 0 representing always and 10 representing never:

Sector index

Scores based on business executives' responses when asked how often firms, with which they do business, from a given sector engage in bribery.

In a media statement at the time of the release of the index last week, Transparency International said that addressing foreign bribery is a priority issue for the international community. A year ago the group of 20 leading economies (G20) committed to tackling foreign bribery by launching an anti-corruption action plan. The progress report of the working group monitoring the action plan, which G20 leaders are expected to approve at tomorrow’s Cannes summit, will recognise steps taken by G20 countries China, Russia, Indonesia and India in criminalising foreign bribery. Transparency International welcomes the report and calls for swift implementation of the further anti-corruption measures.

“In their meeting in Cannes this week, G20 governments must tackle foreign bribery as a matter of urgency. New legislation in G20 countries is an opportunity to provide a fairer, more open global economy that creates the conditions for sustainable recovery and the stability of future growth. Governments can press home the advances made by putting resources behind investigations and prosecutions of foreign bribery, so that there is a very real deterrent to unethical and illegal behaviour,” said Transparency International Chair, Huguette Labelle.