Corruption Watchdog Downgrades U.S.

By Patrick Donahue
Bloomberg News
Wednesday, November 8, 2006

Congressional scandals have damaged America's standing on a global list that ranks freedom from corruption. The United States ranked 20th least corrupt among 163 countries, down from 17th last year, and scored 7.3 out of 10, a drop of 0.3 compared with 2005, according to the Transparency International Corruption Perceptions Index 2006.

Finland, Iceland and New Zealand tied for least corrupt, each with an almost-perfect 9.6 ranking. In more bad news for the United States, Iraq was next-to-last on the list.

The group's chairwoman, Huguette Labelle, linked corruption to global poverty as bribe money siphons off meager incomes and the perception of wrongdoing stanches foreign investment. About $2.8 billion in bribe money changes hands every day, equal to half the investment in sub-Saharan Africa in 2000, she said.

"Corruption eats away at the economies of poor countries," Labelle told reporters in Berlin, where Transparency International is based. "The perception of endemic corruption scares off foreign investors and has a knock-on effect on economic growth."

Almost three-quarters of the countries surveyed scored below 5 points, which means the majority of those judging them detect corruption. "Rampant" corruption is said to be apparent in 71 countries. Haiti was at the bottom with 1.8 points, and Iraq placed just above with 1.9.

The report cites among U.S. examples the case of former House majority leader Tom DeLay (R-Tex.), who is under indictment in a Texas case stemming from a campaign finance investigation and who has a former aide who pleaded guilty in the corruption probe of lobbyist Jack Abramoff.

Much campaign money has been diverted to ostensibly non-party groups, known as "527s," that are underregulated, according to Transparency. As in 2005, the group called into question the U.S. bidding system for public contracts in Iraq.

Corruption in Iraq has increased as sectarian violence between the country's Shiite and Sunni Muslims has spun out of control after the Feb. 22 bombing of the Shiite Golden Mosque in Samarra. Mass killings are common in communities in central Iraq, including the capital, Baghdad.

"Corruption in Iraq is very bad because there's been conflict across the country," David Nussbaum, the group's chief executive, said this week. "That tends to mean the systems that uphold the country aren't working."

He said the global problem must be tackled by focusing on legal and financial systems that allow corruption to occur, adding that "facilitators" include bankers, accountants and company executives.

Nussbaum mentioned former Ukrainian prime minister Pavlo Lazarenko, who was sentenced in San Francisco on Aug. 25 to nine years in prison and fined $10 million for money laundering and transferring stolen property. Much of Lazarenko's cash was sent to banks in Antigua, Switzerland and the United States. Lazarenko was Ukraine's prime minister from May 1996 to July 1997.

"These facilitators have the skills, the knowledge, the credibility and the connections to smooth the path of corruption," Nussbaum said. He called on groups such as the International Bar Association and the International Compliance Association to enforce existing codes of conduct.

The United Kingdom ranked 11th with a score of 8.6, ahead of Canada with 8.5 points. Germany was 16th with 8 points, just in front of Japan and France, with 7.6 and 7.4, respectively. Italy trailed in 45th place with a score of 4.9, while Russia's score of 2.5 points was 121st.

The index draws from 12 different polls and surveys from nine independent institutions that examine the perceptions of the level of abuse of public office or private gain, the group said. Businesspeople and country analysts are included in the surveys.

Labelle called on governments to ratify the U.N. Convention against Corruption and said Germany should use its presidency of the Group of Eight industrialized nations next year to press the issue and make "visible progress."

A deterioration in perceptions of corruption occurred in the past year in Brazil, where the Workers' Party of newly reelected President Luiz Inacio Lula da Silva has faced charges of graft, and in Israel, where the government has been dogged by corruption allegations. Cuba, Jordan, Laos, Seychelles, Trinidad and Tobago, and Tunisia also had worse scores in 2006.

Countries where the group said improvement can be detected include Algeria, the Czech Republic, India, Japan, Latvia, Lebanon, Mauritius, Paraguay, Slovenia, Turkey, Turkmenistan and Uruguay.

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