Is corruption on the rise or is the current focus on corruption merely the result of increased media coverage?It is difficult to tell whether corruption is on the rise. Certainly it is much more visible today than it has ever been, as in today’s world the press has an improved ability to perform its role in exposing corruption. The fundamental problem is that acts of corruption involve two or more people, each of whom benefits from the transactions being kept secret and none of whom gain from "blowing the whistle". Unlike an iceberg, we cannot calculate how much corruption "ice" lies unseen below the surface as no-one knows.No-one has yet found a credible means for measuring actual levels of corruption and its costs. We can only measure "perceptions" as in our Corruptions Perceptions Index. What we can say for sure, however, is that the extensive media coverage that corruption is now receiving reflects a sharp and hopefully lasting increase in global awareness of this problem. Events such as the recent collapse of the Asian economy have shocked the financial world into the realisation that corruption is everybody’s problem, and that it can no longer be dismissed as a mild irritant or just a cost of doing business in certain parts of the world. Some published figures illustrate the scale of corruption. One East Asian country is estimated to have lost a stratospheric US$ 48 billion in the past twenty years due to corruption, an amount that exceeds its entire foreign debt of US$ 40 billion.

Isn’t Transparency International trying to inflict a "first world" view of corruption on the rest of the world? Surely things are done differently in different parts of the world, and in some it is part of the culture that the "big man" gets a big profit? And if by conforming to their customs industrialised countries win business for their factories and their workforce, isn’t everyone a winner?This view, prevalent until recently, has been completely discredited. If it were true, why is it that every country in the world has laws which criminalise corruption?Further, there is no culture, anywhere and at any time in history, that anyone has been able to point to, where it has been accepted by society as a whole that their leaders are entitled as of right to make decisions in their own favour and against the group interest. No such society would survive for long. Rather the traditional evidence is that where leaders betrayed the trust of their followers they lost either their followers or their heads! Olusegun Obasanjo, a distinguished Nigerian statesman who was imprisoned by the corrupt Abacha regime because of his criticisms of its corruption, once commented that in African tradition gift giving was always in public and that where gifts were excessive they were an embarrassment and were returned. The numbered Swiss bank account, he noted, was never a feature of traditional African society but a relatively new arrival. It is true that in different cultures the lines between the acceptable and the unacceptable are drawn differently, but these are marginal rather than fundamental and the mere fact that the "gift giving" involves secrecy illustrates its unacceptability.A more recent argument has been that in today’s world the moral imperative for business in the industrialised world has changed. That there is a duty on the part of the employer to provide work for his employees rather than risk their retrenchment and that if this means bribing foreign officials, so be it as the lesser of two evils. This is to say that the end justifies the means. But more than this, business itself is increasingly conscious that to indulge in criminal behaviour by bribing foreign officials to abuse their positions is damaging to the ethics of the companies who do it. Further, staff trained to break laws and launder money through secret accounts are likely to be tempted to help themselves to part of the "commissions" as they are channelled through off-the-books accounts safe from the auditors’ eyes. Increasingly, major corporations recognise their social accountability and are enforcing anti-corruption policies internally and dismissing staff who contravene these policies.

Are there any hard figures showing that corruption damages a country’s economy?Corruption damages a country’s development in several ways. It reduces growth, it scares away foreign investment and it channels investment and loan and aid funds into "white elephant" projects of little or no benefit to the people but which carry with them high returns to the corrupt decision-makers. According to research conducted by the World Bank, widespread corruption can cause the growth rate of a country to be 0.5 to 1.0 percentage points lower than that of a similar country with little corruption. Widespread corruption can also radically reduce inward investment. A study based on the TI Corruption Perceptions Index shows that a rise in corruption levels from that of Singapore (very low) to that of Mexico’s (very high) is equivalent to raising the marginal tax rate by over twenty percent. As a single percentage point increase in the marginal tax rate is calculated as reducing inward foreign investment by about five percent, in the instance given corruption has cost the country and continues to cost the country virtually all of the foreign direct investment it might otherwise have expected to receive.

It is well-known that countries with high levels of corruption have severe difficulties attracting investors, but are there any figures that illustrate how risky it actually is for companies to invest in corrupt economies?The bond rating agency, Standard and Poor’s, has determined that the likelihood of an investor losing his entire investment within five years lies somewhere between 80% and 100% in countries such as Colombia, Iraq and Libya. Such likelihood is assessed at more than 60% in Egypt and Syria and around 50% in Algeria, Jordan, Morocco and Turkey. Several of these countries fare poorly in TI’s Corruption Perceptions Index. This means that companies are likely only to invest where the returns are extremely high and very reliable in being realised. Therefore, long term investment, most beneficial to the country, is almost wholly ruled out under these conditions.

These figures notwithstanding, why does Transparency International hesitate to publish figures on the total economic damage inflicted by corruption?Whenever a journalist is writing a story about corruption and turns to Transparency International we are asked about facts and figures how corruption has grown, what sums are involved and what damage it does financially. Our frequent - and somewhat dissatisfying - answer is as simple as it is complex: There simply are no hard-and-fast figures about corruption. But even if there were concrete figures we would hesitate to publish. Not for a lack of transparency, but simply because these figures tend to be grossly misleading. consider this case story as an example: A power plant is being built somewhere in the world, at a cost of 100 million dollar. It could be argued that -were it not for the corruption involved - the cost could have been as low as 80 million dollar. The financial damage to the public would there be at 20 million dollar. In practice, what happens quite often is that projects are being planned for the simple reason of allowing those involved in it to make huge private profits. Assuming that the power plant was simply superfluous and unneeded, the financial damage would then have to be assessed at 100 million dollar. Yet, hardly any power plant leaves the environment in which it is built untouched - the environment may be polluted, land prices in the region may be adversely affected, local people may have to be resettled, the debt load of the country increases. This calculation - although probably closest to reality - would be immensely complex. On a global scale, it seems almost impossible. But even if one were able to calculate the environmental damage, the increase of the debt burden etc. - how was one to measure the erosion of public confidence, the deterioration of a governments legitimacy that are the direct result of corruption?

Is corruption a purely economic problem then?Not at all. Corruption has many other serious damaging effects. Even if there was no economic effect at all, it would still be a critical problem. Corruption is sometimes defended as a way of "getting business done" by "circumventing bureaucratic red tape". While this may be so in some cases, what it also means is that environmental protection and public health measures (to name but two) can also be readily avoided and frequently are. Thus in some parts of the world corruption and bribery are contributing to the rapid depletion of natural resources. In the Philippines for instance, the number of logging concessions have been comparatively few, about 480 during the past twenty years, but it is estimated that they have amassed US$ 42 billion in profits, due to very low concession fees and taxes. The system enriched a few families while the livelihood of millions of others has been adversely affected by the loss of forest cover and by the displacement of local communities not to mention the public revenue foregone by squandering public assets in this way. The impact on the environment has been disastrous: almost 90% of the Philippines’ primary forest has been lost leading to heavy ecological imbalances such as erosion and changes in local climate. Similarly, it is estimated by the NGO Global Witness that US$ 50 in bribes is paid for every cubic metre of timber felled in Cambodia. In 1997 between 2.5 million m3 and 4.5 million m3 of timber was felled representing US$ 125 million to US$ 225 million in bribes alone. To this figure can be added the potential value to the state of the economic rent of the timber itself, between US$ 184 million and US$ 337 million. At the lower estimate this represents a lost revenue of US$ 309 million derived from finite state resources, over 73 % of the national annual budget of US$ 419 million. Official forestry revenue contributed US$ 12.4 million to the budget during the same period.Increasingly, a wide range of NGOs, from those concerned with human rights to those who deliver emergency humanitarian aid are becoming active in the fight against corruption because of its negative impact on their own specialist areas of concern.

Is corruption more prevalent in certain parts of the world than in others?Transparency International believes that every society is as corrupt as its institutions and practices allow. In every society there are those who will try to "beat the system" and if the system is vulnerable, there will be more of them. Thus there is no "moral superiority" among the less corrupt countries. They simply have more developed and stronger institutions and practices to control the menace. According to the United Nations’ World Development Report 1997, 15 per cent of all companies in industrialised countries have to pay bribes to win or retain business. In Asia this figure is at 40%. In the countries of the former Soviet Union 60 per cent of all companies must pay bribes to do business.

Many of the companies using tax havens are simply making use of off-shore financial centres as a legal means of reducing their tax burden. Why does Transparency International propose outlawing offshore banking centres?Transparency International does not ask for their complete abolition. However, there are those who tacitly or otherwise foster businesses which launder the proceeds of corruption and other forms of serious crime by setting up company registers which are secret and having banking secrecy laws which have no rational justification. Some also advertise that people can "hide their assets from the prying eyes" of husbands, wives and creditors (i.e. invite people to use their facilities to defraud their spouses or their creditors). As Transparency International believes there is no rational justification for the extent of the secrecy created in many off-shore financial centres, Transparency International argues that financial centres that do not comply with agreed international standards of supervision, transparency and assistance in investigations should be declared to be "banking outlaws" and be excluded from the international financial system. Many of these offshore banking centres would not exist if it were not for the handling of illicit wealth. If they were excluded from the banking system, they would be far less profitable businesses. Swiss authorities reckon that Russians have stashed away US$ 40 billion in bank accounts in their country. Nearly half of that money is believed to have been criminally acquired. The amount of money hidden in Britain’s tax havens totals between £ 200 and 400 billion and it is estimated that about a third of the wealth of the world’s wealthiest is held offshore, out of reach of the tax authorities.

If corruption is as widespread as it is believed and its effects so dire, what can be done to curb it and what makes Transparency Internationals approach special?There is no "quick fix", no "magic bullet" for curbing corruption. But given its negative consequences, corruption is a phenomenon that has to be confronted and contained. Realistically, we can’t expect to eradicate corruption completely but we must aim at curbing the "grand corruption" (at the level of senior public figures) which paralyses and distorts development. We are trying to achieve this by working at two different levels. First by assisting developing nations and countries in transition in mobilising efforts to confront their corruption problems.We strongly believe that the involvement of civil society is essential for such efforts to be successful. Each country must find its own solutions to its own problems. Solutions cannot be forced upon them from the outside. Transparency International therefore works with local national chapters and feeds experience elsewhere into national discussions to ensure that this is fully informed, but Transparency International is essentially a facilitator of an internal discussion, not a "consultancy" offering off-the-shelf solutions.On another level, we work with leading international organisations in articulating anti-corruption policies and also lobby the governments of industrialised countries so that they prevent their corporations from paying bribes around the world.

Are there countries where corruption is on the decline?This is not easy to answer over a short period of time, because of the impossibility of measuring actual corruption levels, as opposed to perceptions. We do know that wen a country starts to fight corruption seriously, this gives rise to increased press coverage and to a public perception that corruption is an even worse problem than they had previously thought. It may well be the case, therefore, that where countries are in fact making progress the public believes they are falling further behind. Its is generally accepted that there are no quick fixes and even a country where there was a strong and successful anti-corruption campaign such as in Hong Kong, it was some years before public confidence was won and progress started to be made. It is clear that there is a much more open discussion of corruption than ever before, and that there is a wider recognition that corruption cannot be legislated away simply by passing new anti-corruption laws but rather demands a holistic approach which emphasises prevention (rather than rely on prosecution) and is ethics based, not just punitive in character. Transparency International has now punitive in character.