Photo Credit: Transparency International
The interplay of corruption and inequality feed off each other to form a destructive cycle between corruption, unequal distribution of power in a society and unequal distribution of wealth. This is the main conclusion from the recently published Transparency International’s (TI) 2016 Corruption Perceptions Index (CPI), which highlights the connection between corruption and inequality.
TI’s CPI Index scores and ranks countries based on how corrupt a country’s public sector is perceived to be. The composite index uses a combination of surveys and assessments of corruption by a variety of independent institutions specializing in business climate analysis. Each country is scored on a scale of 0-100, with a 0 indicating highly corrupt and a 100 representing very clean.
Of the 176 countries covered in the 2016 CPI, over 120 scored a 50 or below, with the global average at an alarming 43. Less than a third of the countries managed to score above the midpoint. Even more troubling is the fact that more countries declined than improved in this year’s index, highlighting the clear need to take the fight against corruption to higher levels in 2017. Ghana, Qatar, Bahrain and Saudi Arabia were the biggest decliners from 2015 to 2016. All these countries suffer from a lack of effective transparent systems that allow for accountability.
In the lower-ranked countries in the index, public institutions were characterized as untrustworthy and poorly run. Anti-corruption laws that do exist in those countries are rarely put into practice, and instead grand corruption thrives. Often businesses and politicians engage in corrupt actions that take away billions of dollars in revenue from national economies. These actions invariably only benefit a few at the expense of the majority.
The cycle, starting with corruption leading to an unequal distribution of power in society, which in turn, morphs into an unequal distribution of wealth and opportunity, needs to be broken. From the results of TI’s CPI index, it is clear that governments are failing to battle the pandemic of corruption and it looks like in 2017, businesses will have to lead the anti-corruption fight. In this current business environment where companies feel the pressure to hit specific revenue targets and appease shareholders, strong ethical leadership is required to counter the threat of corruption. Effective leadership might mean passing up on lucrative business opportunities, but by doing so, leadership is setting a tone from the top that the business will act in accordance to the highest ethical standards. Business leaders need to foster an atmosphere within their companies that internalizes the mindset that compliance is more than just following laws in order to avoid risk and it is really the foundation of doing business ethically.
If enough business leaders can instill ethics and compliance into their organizational cultures, slowly the private sector can set the bar for ethical business practices and in turn put the necessary pressure on the public sector to take more serious action against corruption. A new year marks a new opportunity to break the cycle of corruption and inequality.
Amol Nadkarni is a Program Assistant for Global Programs at CIPE