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UK, Zimbabwe, India and Indonesia are prime movers and shakers in new global corruption study by Maplecroft

India and Indonesia make significant improvements in ranking following anti-corruption drives and UK expenses scandal nudges UK from low to medium risk. Zimbabwe still shows no improvement.

08/09/2010

The UK is now considered medium risk for corruption in part due to the 2009 parliamentary expenses scandal, according to a new ranking of 196 countries by global risks analysis firm, Maplecroft.

Having dropped from 181 to 171 in the ranking, the UK has for the first time entered the 'medium risk' category of the Business Integrity and Corruption Index. The Index rates all countries on the extent and duration of corruption in the public and private sector, as well as governments' efforts to combat corruption.

According to Maplecroft, the revelations surrounding the illegitimate exploitation of the parliamentary expenses system by many MPs is responsible for the UK's drop in the rankings. Despite this, the country continues to perform well overall and represents less risk than Japan (148), USA (156) and Germany (159), which are also in the 'medium risk' category. The entry into law of the Bribery Act may also improve the UK's ranking in next year's Index.

The Business Integrity and Corruption Index, has been developed by Maplecroft to enable companies to identify exposure to corruption within international operations, supply chains and investments. It is particularly relevant to businesses or individuals based in the United Kingdom, as the Bribery Act 2010 is scheduled to come into force in April 2011. As well as creating a discrete offence of bribery of a foreign official, the Act also makes it an offence if a company fails to prevent bribery. In this context, the Index can potentially play a key part in a company's overall risk management system.

Countries at the bottom of the ranking are categorised as having governments that fail to protect the populace against corruption and that have a culture of impunity within government and business. Countries in the index falling within this category include Cambodia, DR Congo, Equatorial Guinea, Myanmar, Somalia and Zimbabwe, which are ranked as the joint highest risk countries.

It is, however, the major emerging economies that are of particular interest to multinational companies because of the extensive role they play in supply chains and foreign direct investments. Those in the 'extreme risk' category include Nigeria (9), Russia (21), Pakistan (25), Iran (44), Bangladesh (47), Vietnam (59) and Mexico (62), whilst China (78) and Brazil (87) are rated as 'high risk.'

Business Integrity and Corruption Index 2010

Legend
Extreme risk
High risk
Medium risk
Low risk
No Data

Rank	Country	Rating
1	Cambodia	Extreme
1	DR Congo	Extreme
1	Eq. Guinea	Extreme
1	Myanmar	Extreme
1	Somalia	Extreme

Rank	Country	Rating
1	Zimbabwe	Extreme
7	Sudan	Extreme
8	Turkmenistan	Extreme
9	Nigeria	Extreme
10	Haiti	Extreme

© Maplecroft 2010

Two important emerging economies have made significant improvements in the index with Indonesia making the greatest jump, moving from 24 ('extreme risk') to 76 ('high risk'). This reflects steps taken by President Yudhoyono's government to combat corruption, including an increase in activity by Indonesian anti-corruption agencies, such as the KPK, which made several high profile arrests of government officials in 2009. India's ranking has also improved dramatically, with the country rising from 44 to 71. This is due to increased anti-corruption efforts, such as the introduction of a text service for citizens to report officials who seek bribes. However, the country remains in the 'extreme risk' category, as corruption is still widespread.

"Businesses that operate in countries where corruption is prevalent are at risk of association with corrupt business partners" said Maplecroft analyst, Chris Dixon. "In such contexts, companies need strong management systems in place to ensure that they can identify and mitigate these corruption risks - and so avoid serious legal and reputational harm."

Maplecroft CEO Professor Alyson Warhurst strongly advises "that businesses put in place an anti-corruption policy and programmes including training to support employees in implementing the policy when working in high risk countries". As a board trustee of Transparency International (UK), she suggests companies draw on resources like those offered by www.transparency.org.

The countries with the least corrupt governments and which feature in the 'low risk' category of the Index - include Norway (191), Singapore (190) and Australia (184), plus Sweden, Netherlands and France, which are ranked joint 179. However, Australia and France's rankings will likely be affected in next year's Index by business scandals and the ongoing election finance scandal involving President Sarkozy.

Maplecroft assesses corruption for each country over the 2009 calendar year, based upon the most recent information available in human rights and related reports published by the US State Department, Amnesty International and Human Rights Watch.

The latest Business Integrity and Corruption Index, forms a central component of Maplecroft's Human Rights Risk Atlas 2011, which analyses 30 separate human rights violations. An early bird subscription is available for the Atlas, which will be launched later this year.

To purchase the index or for more information contact Maplecroft at info@maplecroft.com or call +44 (0)1225 420000. Register for trial access to see examples of Maplecroft's indices, maps, scorecards, briefings and in-depth reports.