India and China fare badly in Asia-Pacific corruption study

The findings will be worrying news for the many companies now trading in, or with, India, and risk managers helping their organisations to achieve their goals in the country.

According to the Hong Kong-based Political & Economic Risk Consultancy Ltd (PERC) firm that carried out the study, on a rating of one to ten India rates 8.67 on the ‘Corruption Impact on the Business Environment’ scale. With 10 the worst possible grade only the Phillipines, 8.9, Indonesia, 9.25, and Cambodia, 9.27, fare worse.

China did only a little better coming in sixth worst, with a rating of 7.93. The other major trading partners and economies in the region scored much lower than these two emerging economies. Australia scored 1.39, Japan 1.9 and the US 2.39, putting them all in the top five.

On the ‘Political Corruption’ scale India scored 8.54. Only Cambodia, 9.07, and Indonesia, 9.11, scored higher.


According to the report, in India the issue of corruption ‘has grown and overshadowed’ the second term in office of the Congress-led coalition headed by Prime Minister Manmohan Singh.

The government has been wracked by a series of scandals involving the sale of cellular phone licenses, the preparations for the Commonwealth Games, a land scam involving high-level military officers and improper property loans made by state-owned financial institutions.

Investigations into the allegations are underway but Indians are questioning whether Prime Minister Singh has the political muscle to act, the Asian Intelligence report on Asian Business and Politics says.

A recent Wikileaks report that the ruling Congress Party paid off parliamentarians back in 2008 to pass the US-India civil nuclear deal underscores the levels of corruption, it adds.

“It is getting hard to find senior officials at the national or state level who are not tainted by corruption,” the report says. “It takes two to tango and the level of corruption in the public sector would not be possible if there were not plenty of private businessmen willing to pay bribes and work the political system,” it continues.

According to PERC some leading businessmen are bemoaning the telecommunications scandal for the way it has let the genie of corruption out of the bottle by revealing how business is conducted in India.

“”The recent scandals have prompted a pointed debate about whether India, as its economy gallops ahead, can become more transparent or will forever be mired in a culture of corruption,” the report concludes.

The report says that China’s Central Government freely admits that ‘rampant corruption is one of the country’s biggest problems’.

The dollar-value of corruption has grown along with the expansion of its economy, PERC says.

From 2003 to 2009, prosecutors at all levels investigated more than 240,000 cases of embezzlement, bribery, dereliction of duty and rights infringement. According to PERC’s figures, last year alone the Central Commission for Discipline Inspection and its sub-agencies received almost 1.43m petitions and tip-offs. They punished 146,517 officials for corruption and recovered 9.87bn yuan in economic losses for the state.

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