IRELAND HAS BEEN given its worst ever ranking on a global corruption index.
It was ranked 25 out of 176 countries, suggesting that corruption is a bigger problem in Ireland than in developing nations including Uruguay and the Bahamas, said Transparency International (TI).
The worst performing countries are Afghanistan, North Korea and Somalia, while Denmark, Finland and New Zealand are perceived to be the least corrupt countries of those surveyed.
Political risk
The index is one of the most commonly used measures of political risk and is used by credit risk agency Standard and Poor’s to assess the likelihood of sovereign debt default.
According to John Devitt, Chief Executive of TI Ireland:
If investors believe government decisions are being swayed by political or private gain, it could have a harmful effect for our economic recovery. Small, open economies are much more exposed to reputational risk that their more powerful counterparts. Risk-averse and politically aware investors will also look elsewhere when deciding where to locate or do business if they suspect that favoured businesses and government are in bed with one another’.
The poor results come after a succession of political controversies, including the Moriarty and Mahon Tribunals.
Devitt said that Ireland’s ranking “shows how little faith investors have in our ability to prevent the abuse of power”.
“Our failure to hold people to account for wrongdoing is also having a negative impact on international perceptions of Ireland,” he added.
Background
This year Transparency International has updated the methodology for the Corruption Perceptions Index 2012. To reflect this, the Corruption Perceptions Index is presented on a scale from 0 (highly corrupt) to 100 (very clean). It says the change in methodology is not believed to have significantly impacted on Ireland’s ranking or score.
The index draws on 13 surveys covering expert assessments and surveys of businesspeople. TI Ireland estimated in 2009 that Ireland could be losing €1 billion a year in foreign direct investment because of its relatively low position in the Corruption Perceptions Index. Ireland has slipped 11 places in the index since then.
According to the Eurobarometer survey for 2012, 86 per cent of Irish people said corruption is part of Ireland’s business culture, compared to the EU average of 67 per cent.
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