Corruption Perception Index 2021 - stagnation in global ABC efforts

On 25 January 2022, Transparency International (TI) published its Corruption Perceptions Index (the CPI) for 2021, ranking countries and regions based on their "perceived levels of public sector corruption", according to jurisdictional experts and business people. 

The 2021 index aggregates data¹ in respect of 180 countries from 13 corruption surveys and assessments, collected by various institutions (including the World Bank and the World Economic Forum). Countries are then (i) scored between 0 and 100, with 0 being "highly corrupt" and 100 being "very clean", and (ii) ranked in accordance with their position relative to other countries in the index. 

Some of the key findings of the 2021 CPI include:

• Overall scores did not improve. 2021's global average score (43) remains "unchanged for the 10th year in a row", which TI suggests demonstrates "anti-corruption efforts have stagnated worldwide", despite commitments having been made by more than 130 countries to combat corruption. Over the last decade, 154 countries have either declined or not progressed on the index.
• "Clean" countries. The "cleanest" scoring countries for 2021 were New Zealand, Denmark and Finland (88). Western Europe (including the EU) was the highest scoring region (66). The UK scored 78, ranking the 11th cleanest country in the index. Despite these high scores, TI states the countries in this region have recently been struggling with "transparency and accountability in their response to COVID-19". Further, in the last decade, material declines in scores have been recorded for Cyprus (-13), Hungary (-12), Poland (-7) and Luxembourg (-4), whereas improvements have been recorded for Estonia (+10), Latvia (+10), Greece (+13) and Italy (+14). Australia scored 73, ranking as the 18th cleanest country in the index. While Australia remains within the top 20 cleanest countries globally, this score reflects a significant 12 point decline since 2012 (when it scored 85).
• "Highly corrupt" countries. The most "highly corrupt" scoring countries were South Sudan (11), Syria (13) and Somalia (13), with Sub-Saharan Africa being the lowest scoring region (33). Transparency International indicates the lower-scoring countries are those likely to be experiencing "armed conflict or authoritarianism", and where corruption cannot be easily controlled.
• Biggest movers since 2015. In the last 6 years, countries with the most significant changes in scores were: Armenia (+14), Angola (+10), South Korea (+8), Uzbekistan (+6), Moldova (+5), Ethiopia (+4), Venezuela (-4), Honduras (-6), Nicaragua (-6) and Canada (-8). Notably, the United States has dropped from 76 in 2015, to 67 by 2021, thereby dropping out of the top 25 "cleanest" countries on the CPI for the first time.
• Safeguarding human rights. This year's report highlights the impact that corruption has on enabling human rights abuses. TI's views reflect those widely held by NGOs and authorities around the globe who are increasingly seeking to pursue corruption, money laundering, tax evasion and other financial crimes as part of ESG enforcement strategies.

Although the CPI is based purely on perception, its scores and rankings provide an indicative (and influential) measure for businesses to assess the general corruption risks associated with the jurisdictions in which they operate. Indeed, many businesses rely on the CPI as a key metric when assessing risks in their supply chains or third party relationships. The publication of the CPI is a timely reminder for businesses to assess and, where necessary, recalibrate their internal systems and controls to take into account changes in the ABC risk landscape. 

Authors: Neil Donovan, Emily Lemaire and James Clarke

1. The CPI is calculated using a wide range of data points, covering various categories of public sector corruption, including: bribery, diversion of public funds, prevalence of officials using public office for private gain, effective criminal prosecution, and legal protection for whistleblowers when they are reporting bribery and corruption.