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Bribe Payers Index 2002

The Transparency International Bribe Payers Index (BPI) 2002, published on 14 May 2002, is based on surveys conducted in 15 emerging market countries by Gallup International Association. The BPI 2002 was conducted in: Argentina, Brazil, Colombia, Hungary, India, Indonesia, Mexico, Morocco, Nigeria, the Philippines, Poland, Russia, South Africa, South Korea and Thailand, which are among the very largest such countries involved in trade and investment with multinational firms. The questions relate to the likelihood of companies from 21 leading exporting countries to pay bribes to senior public officials in the surveyed emerging market countries.

A total of 835 interviews were carried out between December 2001 and March 2002, principally with senior executives of domestic and foreign companies, but also with executives at chartered accountancies, binational chambers of commerce, national and foreign commercial banks, and commercial law firms. The survey questions related to perceptions about multinational firms from 21 countries.

Transparency International Bribe Payers Index 2002

Table 1:

In the business sectors with which you are most familiar, please indicate how likely companies from the following countries are to pay or offer bribes to win or retain business in this country [respondent's country of residence]?

Rank

2002

1999

OECD
Convention
(as of 14 May 2002)

The question related to the likelihood of companies from leading exporting countries to pay bribes to senior public officials in the surveyed emerging market countries.

A perfect score, indicating zero perceived likelihood to pay bribes, is 10.0, and thus the ranking starts with companies from countries that are seen to have a low likelihood for foreign bribe paying. In the 2002 survey, all the data indicated that domestically owned companies in the 15 countries surveyed have a very high likelihood to pay bribes - higher than that of foreign firms.

* uncluded as part of China in 1999

** not included in 1999

Total sample

835

779

1

Australia

8.5

8.1

Ratified

2

Sweden

8.4

8.3

Ratified

Switzerland

8.4

7.7

Ratified

4

Austria

8.2

7.8

Ratified

5

Canada

8.1

8.1

Ratified

6

Netherlands

7.8

7.4

Ratified

Belgium

7.8

6.8

Ratified

8

United Kingdom

6.9

7.2

Ratified

9

Singapore

6.3

5.7

not signed

Germany

6.3

6.2

Ratified

11

Spain

5.8

5.3

Ratified

12

France

5.5

5.2

Ratified

13

USA

5.3

6.2

Ratified

Japan

5.3

5.1

Ratified

15

Malaysia

4.3

3.9

not signed

Hong Kong

4.3

-.*

not signed

17

Italy

4.1

3.7

Ratified

18

South Korea

3.9

3.4

Ratified

19

Taiwan

3.8

3.5

not signed

20

China (People's Republic)

3.5

3.1

not signed

21

Russia

3.2

- **

not signed

 

Domestic companies

1.9

- **

 

Bribery in business sectors

Table 2:

How likely is it that senior public officials in this country [respondent's country of residence] would demand or accept bribes, e.g. for public tenders, regulations, licensing in the following business sectors?

2002

Total sample

835

Public works/construction

1.3

The scores are mean figures from all the responses on a 0 to 10 basis where 0 represents very high perceived levels of corruption, and 10 represents zero perceived corruption.

Precise comparisons between the 1999 and 2002 figures are not possible as the categories have been modified significantly

Arms and defence

1.9

Oil and gas

2.7

Real estate/property

3.5

Telecoms

3.7

Power generation/transmission

3.7

Mining

4.0

Transportation/storage

4.3

Pharmaceutical/medicare

4.3

Heavy manufacturing

4.5

Banking and finance

4.7

Civilian aerospace

4.9

Forestry

5.1

IT

5.1

Fishery

5.9

Light manufacturing

5.9

Agriculture

5.9


Bribery in business sectors - by size of bribe

Table 3:

Among the business sectors mentioned previously, which are the two sectors where the biggest bribes are likely to be paid?

2002

Total sample

835

The results reflect the percentage of respondents who mentioned the particular sector.

This question was not posed in the BPI 1999.

Public works/construction

46%

Arms and defence

38%

Oil and gas

21%

Banking and finance

15%

Real estate/property

11%

Pharmaceutical/medicare

10%

Power generation/transm.

10%

Telecoms

9%

IT

6%

Forestry

5%

Mining

5%

Transportation/storage

5%

Heavy manufacturing

4%

Agriculture

3%

Fishery

3%

Civilian aerospace

2%

Light manufacturing

1%


OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention)

Table 4:

Which of the following best describes how much you know about the convention?

2002 Survey

 

2002

1999

FC

NC

Acc

CoC

Ba

Le

Total

835

779

261

31%

261

31%

84

10%

71

9%

80

10%

78

9%

I am familiar with the Convention

7%

6%

7%

4%

8%

13%

8%

12%

I know something about it

12%

13%

12%

10%

18%

18%

9%

14%

I have only heard about it

32%

43%

30%

33%

26%

28%

36%

38%

I have not heard about it

42%

38%

44%

45%

40%

38%

41%

29%

Not stated

7%

-

7%

7%

7%

3%

6%

6%


FC = Foreign Companies
NC = National Companies
Acc = Accountants
CoC = Chambers of Commerce
Ba = Banks
Le = Legal

Table 5:

Do you know how your organisation is responding to this OECD Convention?

 

2002

1999

Total sample

164

146

Review of practices being undertaken

13%

19%

Compliance programme already exists

35%

-

No action required, doesn’t apply

30%

43%

No decision has been taken yet

13%

18%

Don’t know how org. is responding

9%

12%

Not stated

-

8%


Table 6:

Solutions to Corruption

If you had a magic wand and you could eliminate corruption from one of the following institutions, what would your first choice be?

2002

Total sample

835

Courts

21%

Political parties

19%

Police

13%

Customs

9%

Education (schools, university)

7%

Tax revenue

6%

Private sector

4%

Building and zoning permits

4%

Medical services

3%

Employment & workplace regulation

2%

Utilities (telephone, electricity, water etc.)

2%

Immigration & passports

1%

Other

3%


Table 7:

SolutioSources of respondents' information

Please describe where your knowledge about this subect comes from?

2002

Total sample

835

Information from colleagues, friends, clients

58%

Press, media reports

55%

Personal experience

52%

Sources in other companies

38%

Direct experience of people in your company

34%

Government and diplomatic sources

13%

The Internet

12%

Don't know / other

12%

Transparency International

8%


Level of corruption

Table 8:

Overall, has there been a change in the level of corruption by foreign companies of senior public officials in this country [respondent’s country of residence] in the past 5 years?

 

2002

1999

Total sample

835

779

Increased significantly

10%

 

Increased somewhat

13%

 

Total increased

23%

33%

Stayed the same

37%

22%

Decreased somewhat

21%

 

Decreased significantly

6%

 

Total decreased

27%

25%

Don’t know

13%

20%


Table 9:

This question was posed to all those saying that the level of corruption by foreign companies of senior public officials had increased somewhat or increased significantly in the past five years.

Table 10:

Have changes and developments in any of the following factors contributed significantly to [a decrease in the level of corruption by foreign companies of senior public officials in the past 5 years]?

2002

Greater freedom of the press

52%

This question was posed to all those saying that the level of corruption by foreign companies of senior public officials had decreased somewhat or decreased significantly in the past five years

Government anti-corruption investigations

48%

Greater transparency in government

47%

Greater transparency in government

47%

Improvements in corporate governance

42%

Stronger controls of money laundering

39%

Increase in globalisation and competition

38%

Improvements in public procurement practices

33%

Privatisation of state assets

33%

Greater accountability of public officials

33%

Increased financial liberalisation

29%

Changes in political part funding

10%

Other

1%



Other means of gaining unfair advantage

Table 11:

In the business sectors with which you are familiar, are there other means by which some Governments gain unfair business advantage for companies from their countries?

 

2002

1999

Total sample

835

779

Yes

68%

69%

No

26%

31%

Not stated

7%

-

"Other means" are means besides corruption used to unfairly influence international trade and investment.



Other means governments use to gain unfair advantage

Table 12:

What means do these governments use?

 

2002

1999

Total sample

567

537

Diplomatic or political pressure

66%

53%

Financial pressure

66%

45%

Commercial, pricing issues etc.

66%

49%

Tied foreign aid

54%

35%

Threat of reduced foreign aid

46%

n.a.*

Tied defence/arms deals

41%

28%

Favours/gifts to officials

39%

36%

Tied scholarships/education/ healthcare

22%

16%

Other means

8%

11%

Not stated

5%

2%

* included under tied foreign aid in 1999



Countries using other unfair means to gain or retain business

Table 13:

Which three governments do you principally associate with practices such as those mentioned above [other means – besides bribery - used to gain unfair advantage in international trade and investment]?

2002

Total sample

567

The score reflects the percentage of responses where the country featured among the three countries cited as principally associated with other unfair practices

USA

58%

France

26%

United Kingdom

19%

Japan

18%

China (People’s Rep.)

16%

Russia

13%

This country

12%

Germany

11%

Spain

9%

Italy

5%

Taiwan

5%

South Korea

4%

Switzerland

4%

Malaysia

3%

Canada

3%

Netherlands

3%

Singapore

1%

Belgium

1%

Australia

1%

Austria

1%

Hong Kong

1%

Sweden

<1%


Perceived level of corruption in the public sector

Table 14:

 

How common are payments (e.g. bribes) to obtain or retain business or other improper advantages to senior public officials, like politicians, senior civil servants, and judges in the following countries?

How significant of an obstacle are the costs associated with such payments for doing business?

 

2002

835

835

Respondents only answered on the countries of which they have experience

1.87

2.19

Questions relate to the likelihood of public officials, politicians and judges from exporting countries to receive bribes from companies in the 15 surveyed emerging market countries.

A perfect score indicating zero likelihood to receive bribes is 0.0. The higher scores indicate a higher level of corruption within public officials in those countries.

2.48

1.86

1.84

1.68

1.78

1.73

2.96

2.35

2.37

2.10

2.01

1.89

2.28

1.96

3.00

2.68

2.45

2.17

2.77

2.80

1.88

1.72

2.98

2.48

1.70

1.80

3.15

2.58

2.64

2.20

1.50

1.40

1.62

1.19

2.74

2.13

1.81

1.72

2.07

1.96



Questions and Answers
on the TI Bribe Payers Index (BPI) 2002

What is the Bribe Payers Index?
The Transparency International Bribe Payers Index ranks leading exporting countries in terms of the degree to which international companies with their headquarters in those countries are likely to pay bribes to senior public officials in key emerging market economies. In that sense, it measures the supply side of bribery in the countries where the bribes are paid. Countries are ranked on a mean score from the answers given by respondents to the question "in the business sectors with which you are most familiar, please indicate how likely companies from the following countries are to pay or offer bribes to win or retain business in this country?"

The 21 exporters listed in the BPI 2002 are: Australia, Austria, Belgium, Canada, China, France, Germany, Hong Kong, Italy, Japan, Malaysia, Netherlands, Russia, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, United Kingdom, USA, in addition to "this country" (the emerging market economy where the respondent is resident). The survey also included a range of questions on the prevalence of bribery by foreign companies in different sectors, on levels of awareness of the OECD Anti-Bribery Convention, and company policies to implement the legislation resulting from the Convention. In drawing up the survey, TI was advised and guided by a Steering Committee of leading international experts in the fields of corruption, econometrics, and statistics. The selection of Gallup International Association ensures the highest professional standards in the survey work.

When and where was the survey carried out?
The BPI 2002 was conducted by Gallup International Association in 15 emerging market economies, via a total of 835 interviews. The interviews were conducted with 261 senior executives from foreign companies, 261 senior executives from domestic companies, 84 top executives at chartered accountancies, 71 representatives of binational chambers of commerce, 80 executives from national and foreign commercial banks, and 78 at commercial law firms.

The BPI 2002 survey was carried out between December 2001 and March 2002 in Argentina, Brazil, Colombia, Hungary, India, Indonesia, Mexico, Morocco, Nigeria, the Philippines, Poland, Russia, South Africa, South Korea, and Thailand. These countries account for more than 60% of all foreign direct investment into the developing world. It was not, unfortunately, possible to conduct a survey in China, the largest emerging market economy, due to the difficulties involved in commissioning a survey on this subject in China.

How is the BPI the "bribery in business sectors" ranking reached?
In the BPI 2002, two questions were asked: (a) how likely is it that senior public officials in this country would demand or accept bribes, e.g. for public tenders, regulations, licensing in the following business sectors? (b) among the business sectors mentioned, which are the two sectors where the biggest bribes are likely to be paid?

This second question was introduced in the BPI 2002 to see if there was any difference between frequency and size of bribe-paying. It turned out that public works contracts & construction emerged as the most prevalent sector for bribe payment in terms of both frequency and size of payment. The arms and defence sector emerged as the second most prone to bribery in respondents' answers to both questions.

Why did TI focus on the bribe-payers in emerging market economies?
The BPI survey was conducted exclusively in key emerging market countries because TI's work is focused to a large degree on international corruption affecting developing countries and transition countries. In addition, given the high levels of bribery in these countries, the BPI is conducted using interviews with senior decision-makers resident in countries where the awareness about corruption is the highest, not at the international headquarters.

What is the signficance of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention)?The OECD Anti-Bribery Convention came into force in February 1999, and by May 2002 it had been ratified by 34 of the 35 signatory countries. These countries account for more than three-quarters of global trade. The Convention outlaws bribery of foreign public officials. The BPI looks directly at bribery by international companies abroad, most of whom have their headquarters in countries whose governments are signatories of the OECD Convention. For the convention to be effective, anti-bribery compliance codes need to be implemented not only in a company's headquarters, but also in its foreign subsidiaries, branches and at local partners of the company. This requires training "in the field" as well as in the country where the company has its headquarters. In 2002, three years after the Convention came into force, only 7% of respondents were familiar with the Convention while 12% stated that they knew something about it. This is the same combined figure as in the first BPI, conducted in 1999. For more information about the OECD Convention, please see: http://www1.oecd.org/daf/nocorruption/ref.htm

Who funds the TI Bribe Payers Index?
Transparency International is funded by governmental agencies, foundations and corporations. To learn more about Transparency International, please visit www.transparency.org.

What can a country do to improve its ranking in the BPI?
As well as passing laws outlawing bribery, the leading exporting countries need to properly enforce those laws. That means providing resources to ensure that investigations and court proceedings will take place. It also means strong educational campaigns to ensure that the corporate sector is aware that bribery is illegal, at home and abroad, and that they introduce anti-corruption compliance codes in all their offices around the world, and provide appropriate training.

Why does the BPI not rank companies instead of countries?
There are more than 60,000 multinational corporations operating around the world with more than 600,000 foreign affiliates. It is almost impossible to measure and rank all these corporations. By asking senior executives to answer questions about companies from particular countries, rather than asking them to name companies, the survey was able to focus on clearly identifiable patterns rather than specific cases.