Last week, following weeks of investigative reporting, The Washington Post compiled their various investigations into a piece called ‘A Pandemic of Corruption’, which was influenced by the growing concern “about the percentage of the taxpayer dollars — and euros and yen and pesos and more — lining the pockets of corrupt bureaucrats, crony contractors and crime syndicates.” A concern that has been validated through the ongoing reporting by NGOs including the OCCRP, and which through its ‘Crime, Corruption & Coronavirus’ project provides the most comprehensive reporting of pandemic-related corruption, which began with the opaque coronavirus procurement deals in Europe, and escalated to allegations of a G7 member nation granting public contracts to alleged fraudsters.
In response to the unprecedented scale of government responses worldwide, and with trillions being shelled out “in what analysts are calling the largest financial response ever to a single global crisis,” it’s no surprise that Transparency International was early in sounding the alarm on the rising threat of global corruption. In a letter, the international watchdog warned the U.S. Congress on March 23rd that stimulus packages must include anti-corruption measures, which start with requiring beneficial ownership information for every company, and their subcontractors, with whom the U.S. government enters into a contract. Given lessons learned from past outbreaks, coupled with the United Nations Office on Drugs and Crime estimate that approximately 10-25% of all money spent on procurement globally is lost to corruption, the recommended measures appear to be good governance.
While the G7, which represent the most advanced economies, have established institutions in place, the unprecedented nature of the crisis has revealed some chinks in their armor. Even the United States, which through the Foreign Corrupt Practices Act pioneered international anti-corruption enforcement, has hit a new low in Transparency International’s 2019 Corruption Perception Index (CPI) and represented its worst score in the 15 year plus history of the global corruption index. With questionable procurement contracts occurring on both the federal and local level, the current outbreak has demonstrated that no country is immune to the pandemic of corruption.
Even without a pandemic, the OECD estimates that corruption amounts to 10% of the total overall cost of doing business globally. With more than $1 trillion in bribes paid annually, the detrimental effects are particularly felt by developing nations, which lose an amount that is roughly equivalent to the combined size of the economies of Switzerland, South Africa and Belgium. More critically, according to the World Economic Forum, the annual dollar value of corruption would be enough to lift 1.4 billion people above the poverty line and keep them there for 6 years