Bad News for Corruption in 2023, Along with Some Bright Spots

The 2023 Transparency International (TI) Corruption Perceptions Index (CPI) shows a global decline in justice and the rule of law since 2016. The rise of authoritarianism in some countries is contributing to the unfortunate trends, with some governments undermining justice systems and restricting freedoms. The CPI released this week shows that only 28 of the 180 countries rated by the index have improved their corruption levels, while 34 countries have significantly regressed, according to the organization. The CPI ranks 180 countries and territories by their perceived levels of public-sector corruption, relying on 13 independent data sources and using a scale of 0 to 100, in which a rating of 0 means a country is perceived as highly corrupt and 100 is very clean.

• Analysis of the data shows that more than 80 percent of the world’s population lives in countries with CPI scores below the global average of 43, and democratic countries have a CPI average of 73, while average score in non-democratic regimes is 32.
• No country has scored 100 this year, but for the sixth year in a row, Denmark, Finland, and New Zealand top the rankings at 90, 87, and 85 scores respectively.
• Countries experiencing conflict or with weak democratic institutions score the worst in the CPI, with Somalia, Venezuela, Syria, and South Sudan featuring at the bottom of the index, with Somalia scoring 11, and the other three tied with a score of 13 each.

The three bright spots in the 2023 index are Ukraine, Bulgaria, and Moldova, with Ukraine and Moldova each gaining three points since 2022, and Bulgaria gaining two. Both countries are making substantial reforms to their justice systems, according to Transparency International, to mitigate impunity for corruption in elite circles. Bulgaria is the lowest-scoring country in the EU, owing mostly to substantial weaknesses in the rule of law.

• Despite continuing Russian attacks against the country, Ukraine has made judicial reforms in hopes of joining the EU and has made several high-profile arrests in 2023, including a Defense Ministry official accused of embezzling the equivalent of $40 million and oligarch Ihor Kolomoisky, who was arrested in a fraud investigation. Ukraine early last year also appointed the last of eight new members to a judicial oversight body in an effort to reform the country’s judiciary per EU recommendations.
• Moldova’s ambitious anticorruption agenda has resulted in multiple transparency initiatives. The EU noted late last year in its 2023 report on Moldova that the track record of high-level corruption convictions in Moldova increased slightly, amendments to country’s whistleblower laws were adopted by Parliament in June, and new legislation for trials in absentia that entered into force in July 2022 was used to finalize a judgment in the case against two well-known oligarchs, including fugitive Ilan Shor, who was sentenced in absentia to 15 years in prison for stealing $1 billion from Moldovan banks. Separately, a member of the Superior Council of the Magistracy resigned over his failure to reveal his involvement in a criminal corruption case.
• The United States and UK early last February sanctioned eight Bulgarian individuals for corruption, but has made an effort to address high-level corruption. Bulgaria in May agreed to form a government led by two rotating prime ministers to tackle corruption. The EU in September also highlighted that the country had made sufficient progress in meeting its anti-corruption commitments for EU accession when it joined the EU in 2007, but that specific obligations still remained. Bulgaria completed that work in 2023, according to the European Commission.

Unlimited corruption, leads to a kleptocratic system that steals resources, stifles dissent, and attacks its neighbors when those resources are exhausted. Corruption enables authoritarianism and aggression, not just against the citizens of the countries judged to be most corrupt, but also against neighboring nations. Protests are stifled via government force, free speech is suppressed, and those who speak out are arrested and sometimes lose their lives.

The CPI can help firms and financial institutions inform their risk decisions about what vulnerabilities exist in a given country. It can provide insight into just how prevalent corruption is and whether potential or current customers or business partners could be involved. The CPI is not the only tool that should be used in risk assessments, but it provides vital indicators of risk. The Institute for Financial Integrity has additional resources and tools to help you gauge risk.

Because risk never rests.