Who fixes corruption index and why? – by Shiraz Paracha



A senior manager of the World Bank who served in the organization at a time when the Bank’s policies led Africa and Latin America into debt, destruction and extreme poverty, later on established the so-called Transparency International (TI) — a self-proclaimed global watchdog on corruption.

Launched in Germany by a group of mostly Westerners in 1993, TI annually releases a report on the level of corruption in different countries around the world. The reports, however, often focus on ‘corruption’ in developing countries. The latest report released by the organization is not significantly different from TI’s previous reports; as usual, non-Western and developing countries top the TI 2010 list of ‘corrupt’ nations.

In fact, TI reports are not flawless. They are unreliable and do not necessarily present the actual situation in a country as these reports are based on the organization’s perception of corruption, not the real condition of the country. In other words, TI reports show how some people perceive a country. At the same, developing such a perception is not a simple process and is influenced by several factors, some of which could be deceptive and misleading.

The people or ‘experts,’ who negatively perceive the condition of a country may not have access to accurate information or may be simply biased towards that country due to political or cultural reasons. The media, too, plays a key role in developing such a negative public perception about a country or culture.

TI publishes an annual Corruption Perceptions Index (CPI); as a result, third parties compile surveys to form this index. The method, however, is considered unreliable as it varies from country to country. In some countries, third parties could have their own motives and agendas and they may not be objective and transparent in organizing sample surveys. These groups may also be biased against selecting respondents with similar opinions and perceptions. Moreover, methodologies and samples used to determine CPI varies from year to year; annual comparison of the data; therefore, can be misleading.

The TI annual Corruption Perception Index has faced other criticisms as well. For instance, some reports revealed that TI has been working with Ernst & Young, a global financial company allegedly working with businesses that are not always transparent. Reportedly, Ernst & Young has several offices in sites considered as tax paradise.

The credibility of the authors of TI report has also come under scrutiny on a number of occasions. A journalist from Cook Islands reported that a TI reporter in that country has failed to mention the country’s biggest corruption scandal — a 50-million-dollar Italian hotel project — as his brother has had a key role in the hotel deal negotiations.

Fingers are, similarly, pointed at the TI’s country head in Pakistan, Syed Adil Gilani, who has been frequently accused of using the TI platform for hiding the agenda of his political masters.

Nonetheless, TI’s annual CPI hits headlines mainly due to the power of Western media and NGOs. The Index based on unscientific surveys as well as distorted and falsified information tarnishes the public image of many countries depriving them of investment opportunities and goodwill.

The question is what could be the agenda of TI? Who is behind this organization?

The non-governmental organization was founded by Peter Eigen in May 1993. Before launching the organization, Eigen was the Regional Director of the World Bank in Africa between 1988 and 1991. A German by birth, Eigen also served as a manager of the World Bank’s Latin America program. The 1980s was a time when the African and Latin American continents suffered from the direct disastrous results of the World Bank-IMF’s structural adjustment programs (SAPs) right under the nose of Eigen.

It is claimed that as the World Bank Regional Director Eigen was disturbed by the level of corruption and its devastating effects in Africa, he launched TI after leaving the Bank. Surprisingly, Eigen’s conscious did not guide him through doing something about the dangerous and devastating policies of the World Bank in Africa. Instead, Eigen and his colleagues embarked on a crusade of exposing corruption, mainly in poor countries. Eigen also joined the Africa Progress Panel, in which the former British Prime Minister Tony Blair, a known war criminal was also named as a member.

No doubt that corruption is a problem but it is one of the consequences of discrimination, exploitation and unjust policies that have been carried out by the very organization — the World Bank, for which Peter Eigen had worked for 25 years.

Let us refresh our memory of what happened in Africa as the result of the World Bank-IMP policies: In 1980s, the World Bank’s forced imperialistic and dogmatic policies pushed Africa into further crisis and as the head of the African region, Eigen shares responsibility for the devastation.

From 1980 on, the World Bank and the IMF imposed SAPs in Africa, Asia and Latin America. The implementation of SAPs, which meant privatization of public services and state enterprises, increase in exports, raise in interest rates, and reduction in trade and foreign investment barriers such as tariffs and import duties, required cuts in public spending including eliminating subsidies for food, medical care and education. The above measures were supposed to generate export-led growth that was to attract foreign direct investment and reduce debt and poverty; SAPs, however, contributed to a quite opposite result.

A report released by Asad Ismi of the Canadian Centre for Policy Alternatives stated that “under the SAPs, Africa’s external debt increased by more than 500% since 1980 and now it stands to more than USD 400 billion. Since 1980, over 300 billion dollars have been transferred to the West as a result of the SAPs. In the 1990s, African countries paid their debt three times over yet they are three times as indebted as ten years ago. Of Sub-Saharan Africa’s 44 countries, 33 are designated heavily indebted poor countries by the World Bank.”

Africa, the world’s poorest region, pays the richest countries 5 billion Dollars every year in debt servicing. This is more than the continent gets in aid, new loans or investment. In 1997, the UNDP stated that in the absence of debt payments, severely indebted African countries could have saved the lives of 21 million people and given 90 million girls and women access to basic education by the year 2000. The All-African Conference of Churches has called the debt “a new form of slavery, as vicious as the slave trade.”

While the per capita GDP growth in Sub Saharan Africa was 36% before 1980, the amount fell by 15% between 1980 and 2000. For instance in 1990, per capita income rate in Africa went down to the level reported in 1960. By 2003, more than 350 million people in Africa lived below the poverty line, thanks to the World Bank.

The UN Development Program (UNDP) reported that 80% of low human development countries — those with low income, low literacy, low life expectancy and high population growth rates — are located in Africa. In 2000, 30% of children under five were underweight in Sub-Saharan Africa; thirty-seven percent of whom were under height as well.

Between 1986 and 1996, per capita education spending fell by 0.7% each year on average. The adult literacy rate in Sub-Saharan Africa is reported to be 60%, well below the developing country in which the average rate is as high as 73%. More than 140 million young Africans are illiterate.

Africa spends four times more on debt interest payments than on health care. This combined with cutbacks in social expenditure has caused health care spending in the 42 of the poorest countries in Africa to fall by 50% during the 1980s. As a result, health care systems collapsed across the continent, creating near catastrophic conditions. More than 200 million Africans have no access to health services as hundreds of clinics, hospitals and medical facilities were forced to get closed; those remaining open, on the other hand, were left understaffed and without essential medical support.

The Canadian report concluded that the World Bank and IMF’s policies have increased economic inequality in the developing world. Domestic manufacturing sectors were destroyed in these countries in the name of trade and financial sector reforms, leading to massive unemployment of workers and small producers. Secondly, agricultural, trade and mining reforms similarly reduced not only the income of small farms and poor rural communities but also the food security.

Thirdly, flexible labor market and privatizations caused mass lay-offs of workers, leading to lower wages, less secure employment, fewer benefits and “an erosion of workers’ rights and bargaining power.” Privatization of major national assets and essential services, on the other hand, allowed multinational corporations to remove the countries’ resources and profits, increasing the price of water and electricity which hit the poor the hardest. Fourthly, cutting the health and education spending under SAPs and the introduction of user fees for such services along with high utility rates resulted in “a severe increase in the number of poor as well as a deepening of poverty.”

The above report showed that the United States has been using the World Bank and IMF as means to exploit developing countries. It could be therefore concluded that the US and other Western countries as well as the World Bank and IMF ripped off the African resources, using debts as a leverage to manipulate the continent’s economic fate in order to serve as their interests.

I am sure that the honorable Chairman of the Advisory Council of Transparency International and his zealous comrades around the world are well-aware of the dark record of the World Bank in developing countries. In fact, some of them have been part of the World Bank and IMF criminal policies, which forced developing countries to create conditions to benefit the Western corporations and governments.

TI stalwarts should fight the unjust and discriminatory policies of the World Bank and IMF, demanding that their platforms ought not to be used to pursue agendas of a few Western countries. They should campaign for more transparent international monetary system.

Is this not a corruption itself that the United States appoints the presidents of the World Bank and IMF? Is it reasonable that the US has undue and unjust voting power at both forums?

Does TI take into account wide scale US corruption in Iraq and Afghanistan where NATO commanders frequently wheel and deal with fraudulent warlords? The US military openly bribes warlords to buy loyalties and distributes cash for shifting sides. The Pentagon has paid for the arrest and transfer of hundreds of prisoners to the US jails. TI index does not indicate these items perhaps in TI experts’ point of view they are not considered as corruption.

TI reports are based on perception of corruption. Any honest survey of the international public opinion will indicate that plundering Iraqi resources by the US is the worst form of corruption. The whole drama of attacking on Iraq was a fraud. The US companies such as Halliburton and Blackwater illegally won billions of dollars worth Iraqi contracts. If TI would have taken such corrupted acts into account, the US would top the corruption index.

Instead of intimidating poor countries by exaggerated and often false corruption reports, TI should force Western corporations and companies to be transparent and open. It should divulge the corruption of the big weapon and oil industries.

The US and European multi-national corporations play a critical role in developing public policies; TI, however, does not lay a hand on them. The US Supreme Court has lifted the ban restricting business corporations from campaign funding in the US elections. Now big businesses have more power in politics and government. Where is TI?

TI is yet another tool for the racist neo-imperialist agenda, which aims at imposing the will of the western countries on the rest of the world.

Shiraz Paracha is a journalist and analyst. His email address is: shiraz_paracha@hotmail.com

Previously published by Press TV