CPI Under Scrutiny

CPI Under Scrutiny


By Thomas Timlen

According to the World Bank, businesses and individuals worldwide pay an estimated US$1.5 trillion in bribes each year, about 2 percent of global gross domestic product. It’s an astonishingly high amount, and undoubtedly some of it will be pegged to facilitation payments for project cargo and breakbulk moves.

As countries openly clamp down on bribery, several initiatives are underway aimed at curtailing corruption at all levels, some specifically catering to international transport.

On a global level, and for the benefit of all sectors, Transparency International seeks to raise awareness to drive positive change with the annual update of its Corruption Perceptions Index, or CPI.

The CPI ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and businesspeople. Countries are ranked from the least to most corrupt and are given a score on a scale of zero to 100, where zero is highly corrupt and 100 is very clean. This year, the index found that more than two-thirds of countries scored below 50, with an average score of 43. Somalia, South Sudan and Syria are perceived as the three most corrupt countries in the world. There is no country that has achieved a perfect score of 100, with the cleanest of the clean, New Zealand, ranked in first place with a score of 89. Even here, there is perceived room for improvement.


Taking Proactive Measures

Speaking with Breakbulk, Pottengal Mukundan, director of the International Chamber of Commerce’s International Maritime Bureau, explained the importance of breakbulk-related companies taking proactive preventative measures in the face of this threat, for which the CPI serves as a sober reminder.

“Corruption has long affected business,” Mukundan noted, “but today with the UK Bribery Act and the U.S. Foreign Corrupt Practices Act and other equivalents around the world, there are stringent penalties which can result upon infringement. Persons at very senior roles in a company can and have faced criminal liability. It is common now for businesses to require their partners to comply with meaningful anti-corruption policies as a condition of their engagement.

“Financial institutions and intermediaries, such as lawyers and accountants, through which the proceeds of corruption flow, could also face charges of money laundering if they have not taken steps to verify the purposes of the movement of funds.” Yet, despite greater awareness of the risks, corruption remains a serious distortion of fair business practice, in some countries more than others, Mukundan said.

Defining the scope of the terms “corruption” and “perception” is important when determining the actual impact on business. Guy Wilson-Roberts, head of Intelligence Analysis at Risk Intelligence, said the challenge with the CPI as a source for analysis is that it combines many different levels of public service corruption perceptions, from having to pay a bribe on a day-to-day basis to access public services, to corruption of officials to secure a large government contract. “So you get different kinds of corruption in countries that are ranked similarly on the index.

“For example, Libya scores just 17 out of 100 on the 2017 index, yet it doesn’t have the same culture of ‘baksheesh,’ small payments for services, as its neighbor Egypt, which scored 32 on the 2017 index. Libya’s corruption is more at the government level and in the maritime sector it is falsified paperwork used for facilitating smuggling,” Wilson-Roberts said.

He noted that the CPI’s macro level of analysis also means that it’s not clear what the direct effect of the corruption is. “Are small bribes necessary for doing business on a regular basis, such as to get in the queue for services; or is it that the opportunity is presented to get to the front of the queue with a more sizeable payment?”

For the breakbulk sector, relatively smooth port operations can exist in countries with massively corrupt governments at the higher level, he continued, while where the port call is incident free, crew ashore may need to avoid nuisance scams from the local police.

Trends Reveal Progress

One useful aspect of the CPI is the trends that it reveals. In areas where efforts against corruption have been implemented, the respective countries’ movements up or down in the rankings, taken together with improved or worsening scores, is one way of monitoring the effectiveness of such efforts.

The 2017 CPI shows that globally, over the last six years, several countries significantly improved their scores, including Côte d’Ivoire, Senegal and the UK; while other countries declined, including Syria, Yemen and Australia. New Zealand and Denmark now rank highest with scores of 89 and 88, respectively. The best performing region is Western Europe with an average score of 66. The worst performing regions are Sub-Saharan Africa (average score 32) and Eastern Europe and Central Asia.

In addition to moves by governments to introduce anti-bribery legislation, industry groups are doing their part as well. For example, the Maritime Anti-Corruption Network, or MACN, was established in 2011 by a small group of maritime companies, and has since grown to include about 90 members globally. Among its members are shippers, carriers and law firms, including those involved in project cargo or breakbulk movements.

MACN and its members promote good corporate practice in the maritime industry for tackling bribes, facilitation payments and other forms of corruption. The network collaborates with key stakeholders, including governments and international organizations, such as the United Nations Development Programme, to identify and mitigate the root causes of corruption in the maritime industry.

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Achievements made by MACN during 2017 show that its collaborations lead to tangible actions. Such actions included:

• Increased participation in the Suez Canal ‘Say No’ campaign, an initiative that resulted in a decrease of demands from pilots for cartons of cigarettes to perform their duties.

• Development of a regulatory framework for the dry bulk vessel clearance process in Argentina, with the training of more than 400 stakeholders, and open-sourced guidance to support implementation.

• Enhanced container tracking in Indonesia.

• Ethics training for nearly 600 government officials in Nigeria.

Meanwhile, MACN’s anonymous incident reporting could help to provide empirical information for use by trade in risk assessment, alongside TI’s subjective perspectives.


Action on a Global Scale

The World Customs Organization, or WCO, with a history of government-to-government and government-to-industry collaboration, is also active on the anti-corruption front. In March the WCO Integrity Sub-committee met with a focus on curbing threats and leveraging opportunities. Customs administrations and stakeholder organizations took part to share views on the impact of corruption in the global supply chain. Customs administrations have taken several steps to address this problem, and Mexico’s anti-corruption strategy was cited as one effective approach. As Mexico is ranked 135th on the CPI with a score of 29, a score that has been moving downward from 34 over the past five years, there appears to be ample room for improvement.

Corruption and its links to organized crime is one of many activities that the UN Office on Drugs and Crime is addressing. UNODC experts see two main drivers for corruption among customs officials: the number of rules and regulations that need to be applied, and the multiplicity of border operations that increases the likelihood of criminals finding ways to circumvent the system. In order to help customs administrations reduce illicit activity, the UNODC promotes the use of risk management and is preparing a guide on corruption risk management at an organizational level.

Another stakeholder working against corruption is the Organization for Economic Cooperation and Development. OECD’s Anti-Corruption Division sees the threat that corruption poses to peace and security worldwide, and is focused on setting international standards on combating corruption, in particular via the OECD Anti-Bribery Convention, which has 43 signatories to date.


Strong Arm of the Law

Naturally, the police also have a role to play. Breakbulk’s enquiries with INTERPOL revealed that although the organization does not have any anti-corruption projects specifically addressing the transport sector, there are a number of other ways in which INTERPOL assists its 192 member countries in their anti-corruption efforts.

INTERPOL conducts training programs for investigators and prosecutors through the INTERPOL Global Programme on Anti-Corruption, Financial Crimes and Asset Recovery. At an operational level, INTERPOL coordinates working meetings between member countries to facilitate investigations which cover multiple jurisdictions. Additionally, when asset recovery is possible, INTERPOL’s Global Focal Point Network for Asset Recovery is available, a platform allowing authorized users in participating member countries to exchange information and better coordinate their asset recovery investigations.

Like MACN and the WCO, INTERPOL also works with other stakeholders on a global basis to share best practices and provide joint training. Among INTERPOL’s partners are the World Bank, UNODC, the U.S. Department of State and the Basel Institute on Governance.

As a final example of collaboration, the International Chamber of Commerce has made its ICC Rules of Conduct to Combat Extortion and Bribery and Fighting Corruption handbook available to the World Bank in support of its global anti-corruption efforts.

With an abundance of anti-corruption initiatives underway, the question remains why the CPI shows a general stagnation with respect to the perceived levels of corruption. For now, breakbulk and project cargo logisticians have an array of programs and tools available to minimize and manage the risks associated with corruption throughout the global supply chain. If for no other reason, the avoidance of criminal liability should be an effective motivator.


Thomas Timlen is a Singapore-based freelance researcher, writer and spokesperson with 28 years of experience addressing the regulatory and operational issues that impact all sectors of the maritime industry.

Photo credit: Shutterstock



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