Activist countries

Corruption report doesn’t let ‘clean’ countries off the hook for enabling global financial secrecy

A worrying new normal for corruption has taken hold internationally, reports anti-corruption organization Transparency International in its annual index, while highlighting the role of facilitators in aiding corruption.

The Corruption Perceptions Index finds that levels of corruption have stagnated in the majority of countries over the past 10 years.

With accountability and transparency reduced amid the global COVID-19 pandemic, several top-rated countries are down, the group found.

Western Europe has seen several attempts to undermine anti-corruption efforts during the pandemic. The UK government has been embroiled in a procurement scandal for awarding contracts without the usual scrutiny or competition. And the European Commission has reprimanded Cyprus for selling citizenships to wealthy foreign nationals.

The United States, a top scorer, has also failed to reform itself even as it tries to crack down on financial crime. Last year, lawmakers passed legislation that would increase corporate transparency by requiring companies to report information about their beneficial owners to a government office. But persistent attacks on free and fair elections have driven the United States’ anti-corruption score to an all-time low, the report said.

Countries in Latin America, including Brazil, Venezuela, El Salvador and Colombia, have experienced anti-democratic setbacks with leaders spreading false information, stifling activism and deploying excessive police forces. Transparency International found that the Central American countries of Nicaragua, Guatemala and Honduras were at their lowest in 10 years in terms of corruption and democracy. COVID-19 was also used “as a smokescreen to introduce new restrictions on rights and liability” in Central Asia and Eastern Europe, which was the index’s second worst performing region.

Civil liberties in sub-Saharan Africa and Asia have also continued to decline, according to Transparency International. Although Chinese President Xi Jinping has instituted controls to improve economic growth, China still suffers from weak human rights, according to the report. Middle Eastern countries fare just as badly, with authorities arresting some of the largest numbers of journalists in the world over the past year.

Secrecy in “clean” countries allows corruption

The 2021 report cited examples uncovered in the Pandora Papers survey of how private sector “enablers” help corruption, even in top-rated countries.

It points the finger at business service providers, real estate agents and banks that help corrupt leaders maintain illicit networks while themselves evading regulation and accountability.

“The Pandora Papers scandal is just the latest example of how many top-rated countries are allowing politicians and oligarchs around the world to consolidate their wealth,” Transparency International said.

“Various actors in top-rated countries are only too eager to help authoritarian and kleptocratic rulers clean up not just their money, but their reputations as well.”

The Pandora Papers revealed the offshore financial assets of hundreds of politicians, oligarchs, business tycoons and criminals based on a trove of nearly 12 million documents leaked by 14 different offshore service providers based in tax havens around the world. These include countries that have historically performed well in Transparency International’s Corruption Perceptions Index.

Transparency International cited reports from the ICIJ on how entities in Singapore, New Zealand and the UK helped a Sri Lankan power couple hide their wealth overseas. He also pointed to a Pandora Papers investigation into how 17 African politicians and business leaders opened secret accounts in the UAE – ranked 24th in the Corruption Index – with the help of the offshore-based provider in Dubai SFM Corporate Services.

The report pointed to Switzerland as another catalyst for cross-border corruption due to an anti-money laundering loophole, as well as Pandora Papers reports of secret real estate ownership in countries like Australia. and the UK.

The Pandora Papers also revealed that the 27th-ranked United States is home to more than 200 secret trusts, many of which are located in Sioux Falls, South Dakota.

Singapore and Hong Kong, which Transparency International ranked fourth and twelfth respectively, are among the other top-rated countries the Pandora Papers have identified as financial secrecy hubs.

Transparency International pulls data from 13 independent sources to calculate perceived corruption levels of 180 countries and territories on a scale of zero to 100, with zero being the most corrupt.

The organization said it was up to the top-rated countries to tackle cross-border financial abuse and support the exchange of information to make accountability possible. He recommends that groups like the Financial Action Task Force, made up of G7 countries, take the lead in tackling private sector corruption and financial secrecy to ensure real progress is made.