Shady dealings by global companies and financial institutions played a major role in the global credit crisis, says Transparency International, the organisation that monitors the worldwide impact of corruption.

In a damning report entitled Global Corruption Report 2009, Transparency reveals how bribery, corporate fraud and cartels have had devastating consequences for the international economy.

It also says that ongoing corruption makes it difficult to realise sustainable economic growth in the world.
 

Lack of integrity
Transparency International’s Christiaan Poortman sums up the dangers of corruption for the economy: “There are conflicts of interests, insufficient transparency and accountability and a general lack of corporate integrity and governance”, he says. “These are at the heart of what the global financial crisis is about”.

In one example, Transparency investigated the collapse of several American banks which set off the global credit crisis. “There were severe conflicts of interest in the rating agencies that had to assess the risks of the banks”, Mr Poortman says. “In some cases these agencies weren’t totally transparent in the way they rated those risks which had significant consequences for what happened after that. We’re suspecting that these agencies – or their personnel – weren’t as independent as they were supposed to”.

Main factor
Although corruption has not so far been cited as the main factor for last year’s credit crisis, it has been very important in the downfall of large companies and financial institutions, Transparency International says. “There were other issues, of course, like the absence of regulation and other institutional factors”, Mr Poortman notes, “but at the heart of it, there has been an overall lack of integrity”.
 

Developed world
The Global Corruption Report is published annually by Transparency International. Usually it offers the same conclusions: corruption is widespread in regions like Africa and Asia, while Europe and North America are better in tackling the effects of fraud and corruption. But on the issue of corruption during the credit crisis, Transparency offers a different view: this time, it’s the developed world that is leading rather than Asia and Africa.

“The crisis was generated by the financial markets in the developed world”, says Mr Poortman. “So even though corruption in Africa and Asia is still rife, we can safely say that it was corruption in our regions that had the most impact on the current economic crisis”.
 

Climate change
Corruption not only harms the economic developments, it is also a danger to the worldwide fight against climate change, Transparency International adds. It says the global carbon emission market is particularly vulnerable to corruption.

In  the end, corporate integrity does pay, Transparency says. “Companies with anti-corruption programmes suffer up to fifty percent fewer incidents of corruption and are less likely to lose business opportunities than companies without such programmes”.

Read the full report on Transparency International's website

Listen to a Newsline interview with Christiaan Poortman: