World Economy

Corruption Thriving on Lack of Transparency

Corruption Thriving on Lack of TransparencyCorruption Thriving on Lack of Transparency

Multinational corporations colluding with corrupt officials are shielded by a lack of transparency, a new report says. These unscrupulous practices are exacerbating poverty, the document adds.

A report by Berlin-based Transparency International released Monday found that three quarters of the 100 fastest-growing companies based in 15 emerging market countries and active in 185 countries scored poorly in transparency tests, DW reported.

The report's findings highlight the urgent need for big multinationals to do more to fight corruption, TI said.

"Pathetic levels of transparency in big emerging market companies raises the question of just how much the private sector cares about stopping corruption, stopping poverty where they do business and reducing inequality," Jose Ugaz, chair of Transparency International, said in a statement.

The TI report follows the "Panama Papers" revelations which exposed the use of shell companies and offshore tax havens, often for illegal purposes such as tax evasion and money-laundering.

The report covered 100 companies in 15 emerging market countries which also included Brazil, Mexico and Russia. The overall score slipped since the last Transparency in Corporate Reporting survey in 2013, falling a fraction to 3.4 out of 10, with three quarters of companies scoring less than half.

The average score fell slightly by 0.2 compared to the last time the survey was taken in 2013, it said.

India Top, China Worst

Indian companies are the most transparent while Chinese firms the most opaque, the global anti-graft watchdog said in its report that assessed efforts of emerging companies to fight corruption.

The TI said: “Indian companies have the highest average score of any country—they all score 75% or more—in organizational transparency largely due to the Companies Act.”

Indian firms dominated the top spots with Telecom company Bharti Airtel taking the first place with a score of 7.3 out of 10, followed by six units of conglomerate Tata and technology company Wipro, the report said.

“In India, the Companies Act requires firms to disclose key financial information on all subsidiaries wherever they are located, resulting in Indian companies achieving the strongest score in this dimension,” the anti-graft watchdog said.

Nine companies (eight from China and one from Mexico) were awarded the lowest possible score of 0%.

Fifty-four out of the 100 companies score above average (50% or more).

Chinese companies, which account for a third of those assessed, had the weakest overall performance, scoring an average of 1.6 out of 10 with just one, telecom gear maker ZTE, making it to the top 25.

“The very weak Chinese results stem from weak or non-existent anti-corruption policies and procedures, or a clear failure to disclose them in line with international best practice,” it added.

Meanwhile, Hungary received a poor rating from TI, ranking 21st among 28 EU member states.

The study took into account three different ways in which companies can address corruption. They include the reporting of anti-corruption programs such as policies to ban bribes or "facilitation payments," the disclosure of company structures and holdings, and the disclosure of key financial information for each individual country in which they operate, such as tax payments.

Researchers said this information was gathered from corporate websites and other publicly available sources.