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Australia struggles to improve global corruption perception ranking

05 February 2020

#Dispute Resolution & Litigation

Published by:

Katerina Stevenson

Australia struggles to improve global corruption perception ranking

Australia’s foreign bribery legislation, consistently criticised as being narrow in scope and inadequately enforced, could be in line for a further shake-up following the recent release of the 2019 Corruption Perceptions Index (CPI) by Transparency International.

The CPI ranks the perceived levels of public sector corruption in 180 countries and territories worldwide, and is developed by aggregating data from sources that provide perceptions of corruption by business people and country experts, including surveys and expert assessments.

Australia did not fare particularly well in its latest CPI scoring, achieving a score of 77 out of 100 (with zero being ‘highly corrupt’ and one hundred being ‘very clean’) – the same score it achieved in the 2018 CPI. A score of 77 places Australia in 12th place on the CPI. Although it improved its rank by one point this year, it only did so because the likes of the United Kingdom (77) and Canada (77) dropped to join Australia and Austria in a ranking of 12.

Significantly, there has been no improvement in Australia’s score since 2012 – over the last seven years, it has dropped eight points on the CPI. 

The CPI rankings have been released at a time when many significant events have occurred which Transparency International says could be seen to have eroded trust in Australian political institutions. These include police raids on journalists, the prosecution of whistle-blowers and the defunding of the Commonwealth Office of the Information Commissioner. Additionally, scandals such as the alleged misuse of a sports grant program administered by Senator Bridget McKenzie and the inability of state-based anti-corruption bodies to effectively fulfil their mandates to police corruption in the public sector due to limited resources will also likely contribute to these perceptions in Australia.

More broadly, there was little improvement in the 2019 rankings.

Key findings from the report include:

  • more than two thirds of countries ranked scored below 50, with an average score of just 43
  • the top ranking countries are New Zealand (87), Denmark (87), Finland (86), Singapore (85) and Sweden (85)
  • the bottom ranking countries are Venezuela (16), Yemen (15), Syria (13), South Sudan (12) and Somalia (9)
  • since 2012, only 22 countries have significantly improved their CPI scores, including Greece, Guyana and Estonia 
  • in the same period, 21 countries have significantly decreased their scores, including Australia (77), Canada (77) and Nicaragua (22) 
  • the scores of the remaining countries indicate little change, meaning that little to no meaningful progress has been made in the fight against corruption. Transparency International says that this points to a greater need for political integrity in many countries. 

Turning to the Asia-Pacific region, despite including higher performing countries such as New Zealand (87), Singapore (85), Australia (77) and Japan (73), the region overall only scored an average of 45. That is because there is a huge diversity of score in the region, including lower performing countries such as Afghanistan (16), North Korea (17), Cambodia (20), the Philippines (34), Vietnam (37) and China (41). 

Despite many of these countries being relatively strong economic powers, the rankings indicate that they have failed to meaningfully tackle corruption as governments in the region refuse to allow transparency or participation by citizens in government affairs.

The Nordic economies dominated the top 10 rankings, but even these countries were linked to a number of corruption scandals, with Nordic-based companies found to be involved in corruption scandals in lower ranking countries – indicating that a lack of domestic corruption does not necessarily translate to a completely clean international record. For example, one of Iceland’s largest fishing conglomerates was allegedly involved in the bribery of government officials in Nambia (52) for rights to massive fishing quotas. Additionally, Swedish telecoms company Ericsson agreed to pay over US$1 billion to settle a foreign bribery case over an extensive cash for contracts campaign in countries including China (41) and Vietnam (37). 

A strong theme highlighted in the CPI report was the link between politics and corruption, as unregulated flows of ‘big money’ in politics resulted in the public sector becoming vulnerable to corruption in areas such as public policy making. It appears that the existence of comprehensive campaign finance regulations leads to stronger performance in the rankings, with these countries averaging around 70 in the scoring, whereas countries where there was little or no regulation in this area generally performed poorly, scoring an average of 34 or 35. Other factors which influenced scoring included engagement with the public in political decision making and whether political power was largely concentrated with the wealthy.

In order for countries to improve their rankings, Transparency International recommends that countries should set up the fight against political corruption, including through:

  • managing conflicts of interest and preventing undue influence being exercised in policy making
  • developing and enforcing more stringent campaign finance regulations
  • ensuring elections are fair
  • regulating lobbying activities
  • tackling preferential treatment in public service delivery and resource allocation
  • protecting civil liberties and political rights
  • reinforcing checks and balances, such as the separation of powers. 

Looking ahead to 2020

In the CPI report, Transparency International made a number of overall recommendations which, if implemented, would likely improve Australia’s score on the CPI in the future. These recommendations include:

  • the establishment of a federal anti-corruption body
  • developing more comprehensive rules against perceived undue influence between the public and private sectors, including political donations and lobbying
  • establishing more robust laws against bribery and money laundering
  • strengthening protections for whistleblowers.

Australia is already working towards strengthening its anti-corruption regime, and the progress of the following developments will be watched keenly by us in 2020:

  • in 2018, the Commonwealth Government announced plans to establish a Commonwealth Integrity Commission. However, the draft legislation has not yet been released, nor has a timetable for doing so been set
  • on 2 December 2019, the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (Cth) was introduced into the Senate by the Federal Government to amend the Australian legislation that prohibits foreign bribery and corruption. The 2019 Bill has been adjourned for further debate on 4 February 2020
  • expanded whistleblower protections commenced on 1 January 2020, with the commencement of reforms to the Corporations Act 2001 (Cth).

Throughout our many years of involvement in foreign bribery defence work, we have witnessed a growth in focus on pursuing investigations and prosecutions in this area. If the Australian Federal Police are more active in this area, we expect that 2020 will see further activity in terms of investigations and prosecutions by regulators, who have a mandate to crack down on corrupt conduct – particularly in light of Australia’s failure to improve its score on the CPI in 2019.

Authors: Howard RapkeAlana Giles & Katerina Stevenson

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Katerina Stevenson

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