Corruption Perceptions Index 2020 – an Americas perspective

On 28 January 2021 Transparency International launched the 2020 edition of its Corruption Perceptions Index (CPI), which ranks 180 countries and territories by their perceived levels of public sector corruption, according to experts and business people. The CPI is a helpful tool for businesses and public sector organizations to use in assessing the corruption risk level of the public sector in a particular jurisdiction.

The Americas maintained its average score of 43 for the fifth consecutive year. As one of the regions most affected by COVID-19, the Americas have faced many challenges to address and overcome the effects of the ongoing pandemic - spanning from increased corruption risk in the procurement of medical supplies to delays in the implementation of anti-corruption laws - contributing to an erosion of trust in public institutions. This year’s ratings reflect the effectiveness of each country’s response to the pandemic and its consequences.

Results

While the highest scoring country in the region this year was Canada, with a score of 77, that represented a drop of seven points since 2012. Uruguay placed second in the region with a rating of 71, and the United States tied for third with Chile at 67 points. Venezuela scored the lowest in the region, with a score of 15, followed closely by Haiti at 18. According to the report, long-standing concerns with corruption in Venezuela have contributed to the country’s current humanitarian crisis, which has been exacerbated by COVID-19, as the pandemic created more opportunities for corruption given existing shortages in necessary medicines and medical supplies.

Despite the COVID-19 crisis, certain countries’ scores increased this year, an improvement driven by their efforts to hold accountable those responsible for corruption. Ecuador, at 39 points, increased seven points from 2012, based in part on its judiciary having taken action against former government officials who accepted USD15 million in bribes. Peru’s score improved by two points following investigations of corruption cases and the approval of anti-corruption legislation. Despite these milestones, both countries still face significant corruption related to the procurement of medical supplies, according to the report.

Other countries saw their rankings decrease in 2020. The U.S. reached its lowest score (67 points) since 2012. This new ranking reflects the country’s struggles in responding to this global health crisis, and in addressing ongoing political conflict, particularly with respect to the recent presidential election. In 2015, the U.S. enjoyed its highest rating over the past eight years, with a score of 76, one point below Canada’s current rating. The U.S.’s rating was a two-point drop from last year’s score (69), and represents its third consecutive year with a declining score. The report cited the recent expansion of U.S. anti-money laundering laws and the new presidential administration as positive indicators.

Impact of COVID-19

COVID-19 significantly impacted the Americas region and halted anti-corruption efforts in some vulnerable countries. As witnessed in other global health crises, such as Ebola or the swine flu, corruption tends to increase during periods of crisis, and many countries face enhanced corruption risk in connection with the procurement of medical supplies. For example, El Salvador remained stagnant at a score of 36 for the eighth year in a row, as a law anticipated to better combat corruption was suspended due to the pandemic and the country faced possible corruption from the use of emergency funds. In Venezuela (15), the pandemic increased medical supply shortages. Honduras (24) also demonstrated a lack of preparedness as to COVID-19 related purchases and a lack of transparency in connection with public procurement processes.

The report further notes that “COVID-19 has highlighted deep social and economic inequalities, with its disproportionate effects on vulnerable populations”, in countries with weak institutions. In many countries, government authorities imposed emergency measures that restricted civil rights and led some countries to shift to “an alarming concentration of power in the executive branches.” Overall, the coronavirus pandemic increased corruption risks across the region and slowed anti-corruption efforts that were underway.

Conclusion

CPI’s 2020 ranking of the Americas reflects the challenges that the region has faced for decades, which were exacerbated by the ongoing global health emergency, particularly with respect to the procurement of medical supplies. Companies operating in the life sciences sector, or highly involved in public procurement, are more vulnerable than ever and are encouraged to take proactive steps in both identifying key risk areas and implementing enhanced measures aimed at minimizing the risks of corruption. For instance, companies should (i) ensure that the Compliance function remains visible and that the compliance monitoring tools work effectively despite business disruption; (ii) evaluate existing anti-corruption and policies and procedures; (iii) conduct online refresher trainings; (iv) proactively engage in third-party due diligence; and (v) monitor the effectiveness of financial anti-corruption controls, including increasing the level of oversight for financial transactions.