CORRUPTION IS ENDEMIC in some parts of the world. It is not unusual for citizens of some countries to pay bribes to obtain basic services or to avoid problems with the police.

While this is not the case in Ireland, our economy’s heavy dependence on foreign direct investment and multinationals, particularly US multinational activity, means that it is vulnerable to changes in corruption perceptions.

These changes are measured annually by Transparency International (TI) and this year, Ireland is perceived to be the 18th-least corrupt country in the world according to its 2018 Corruption Perceptions Index (CPI), released today. 

There has been a general trend of improvement in recent years, with Ireland climbing from 25th place in 2012.

The CPI covers 180 countries and is based on surveys of business leaders and country analysts from around the world.

Ireland shares its 18th place with Estonia and Japan but is lagging behind lots of other EU countries, including the UK and Germany – both ranked 11th.

Denmark is perceived to be the cleanest country in the world, although its position may change as the country has been rocked by corruption scandals involving embezzlement and money laundering.

Somalia, a state with no functioning government and a long history of instability and violence, is perceived to be the world’s most corrupt country. Indeed, many of the countries at the bottom of TI’s ranking are also regarded as among the least peaceful countries in the world.

A large body of research has shown that corruption perceptions strongly influence investment decisions.

Multinationals, like other firms, fear exposure to bribery and the other costs of corruption like excessive red tape. Indeed, on average bureaucratic inefficiency accounts for more of the delay in getting products from factory gates to ship than low-quality infrastructure.

In these ways, corruption makes a country a less attractive proposition for investment – particularly for multinationals using a country as an export platform.

In addition, US multinationals fear investigation and prosecution under the Foreign Corrupt Practices Act, which makes it a crime for US firms to pay bribes in other countries.

Laws such as this make it a risky proposition for multinationals to operate in corrupt countries where they may face strong pressures or indeed obligations to engage in corruption.

Getting better

There are two recent changes to Ireland’s anti-corruption regime that are to be welcomed. The most significant change is the enactment of the Criminal Justice (Corruption Offences) Act 2018, which repealed and replaced seven previous corruption-related acts, dating from 1889 to 2010. The act includes many provisions to control bribery at home and abroad.

The second notable change is the establishment of a dedicated Garda anti-corruption unit, a positive step given Ireland’s weak track record on enforcement. In addition to investigating corruption, the unit has established a hotline through which people can report corruption.

While these changes are to be welcomed, there are three key areas where Ireland should take action.

More to do

The first is in restoring public trust in An Garda Síochána, which has been shaken by a series of troubling scandals. Research tells us that one of the main reasons that individuals don’t report corruption is that they believe that nothing will be done and that they will merely expose themselves to retribution.

Ireland should also take steps to improve press freedom so that the media can act as an anti-corruption watchdog.

Reporters Without Borders argues that the ownership of Ireland’s broadcast and print media is too highly concentrated. They point to the fact that gardaí cannot talk to the media without prior authorisation as an obstacle to the media fulfilling its role in society.

They also note the attempt in 2017 by the Standards in Public Office Commission to force a journalist to reveal a source in a case involving planning irregularities. To fight corruption, Ireland should do more to protect journalists and facilitate their work in a healthy and competitive media sector.

Finally, the Organisation for Economic Co-operation and Development (OECD) has drawn attention to limitations in Ireland’s efforts to tackle foreign bribery.

In the past, enforcement has been weak and that might not change, because the legislation requires that an act must be an offence in the country in which it was committed.

That inability to prosecute foreign bribery threatens Ireland’s reputation for upholding the rule of law.

Ireland has much to be proud of, and measures such as the Protected Disclosures Act and the enforcement of new anti-corruption legislation will help to improve our reputation for open government and clean business.

However, further reform and adequate resourcing are necessary – not just to enhance our international reputation but to guard against the very real harm done by corruption to Ireland’s economy, institutions, and its people.

Dr Michael Breen is Director of the MA in European Law and Policy, School of Law and Government, Dublin City University.

Dr Robert Gillanders is an economist at Dublin City University’s Business School.