TRACE Bribery

TRACE International released its 2018 ranking of bribery risk in countries around the world. The list, which covers 200 countries, analyzes the possibility of companies being asked to pay bribed to foreign officials, and takes into account four major factors:

• The nature and extent of government interaction with the private sector;
• Societal attitudes toward bribery and the government’s ability to enforce its prohibition;
• The degree of governmental transparency;
• The ability of civil society to monitor and expose corruption

TRACE obtains data from a variety of sources, including the United Nations, World Bank, and the World Economic Forum. This year’s list has a slight tweak to the methodology, replacing the category “proscription” with “dissuasion.” The change reflects the common issue of having the required laws on the books, but lacking the ability to enforce them. Dissuasion, in this context, measures the extent to which officials are deterred from bribery through societal norms and attitudes toward bribery. This year’s version also includes the TRACE Matrix Data Browser which, according to a press release, gives users the ability “to sort and group the data from which the Matrix scores are derived and identify trends and patterns that may be relevant in understanding the risk environment each country presents.”

“Our aim in publishing the TRACE Matrix has always been to provide the compliance community with a more detailed understanding of country-specific business bribery risks than can be gleaned from a single score or rank,” said TRACE President Alexandra Wrage. “For example, if you know that a country has a large number of government services available online, you can expect to encounter fewer opportunities for bribe demands. By making the data points underlying the country scores more accessible, this year’s introduction of the Matrix Data Browser will allow users to deepen their contextual understanding even further.”

Findings

New Zealand ranks atop the list in 2018, with a total risk score of 5, and is followed closely by the Scandinavians: Sweden, Norway, Denmark, and Finland round out the top 5. Several European and Western countries take up the next five slots, while the first non-Western country, Singapore, holds spot number eleven. The average global score was 50 out of a maximum of 100, with 82 countries garnering scores between 41 and 58. Fifty-nine companies were classified as high risk and 51 were classified as low to very low risk. Only eight countries ranked higher than 75, which placed them in the very high-risk category for bribery offenses.

TRACE has out the list together since 2014 in an attempt to fill a knowledge gap for companies seeking a more detailed, nuanced look at bribery risk on a national level. Most assessments are too broad in nature, and are unable to provide enough actionable data for compliance and governance departments to go on. According to an article written by Richard Clark, manager of legal research at TRACE International, TRACE has made a “concerted effort over the past year to work with leading anticorruption scholars to better understand the nature of bribery risk and how it can be more helpfully assessed.”

“By providing not only a top-level summary score for each country but also scores for the varied factors that contribute to bribery risk — including the degree of opportunity for bribery solicitation, the strength of deterrence efforts, governmental transparency and civil-society oversight,” Clark wrote. “[T]he Matrix attempts to go beyond reductive rankings and to explore the diverse profiles that country-level risk can assume.”

The Matrix can be helpful to companies with operations in different regions of the world, regions that each may require a different approach to assessing and mitigating bribery risk. A company based in Europe, for example, with operations in Africa, Asia, and North America, will need different compliance policies and procedures for each area. The specific, nation-based procedures supplement company-wide codes of conduct, but are nevertheless critical to avoiding risk and preventing problems on the local level.

“As the global head of anti-corruption and government compliance for a company that does business in more than 120 countries worldwide, understanding the risks of each market is a critical part of my job,” said Daniel Seltzer, Senior Director of Anti-corruption and Government Compliance at Accenture. “In my experience, there is nothing else on the market that gauges risk with the accuracy and simplicity of the TRACE Risk Matrix. It is a critical part of our risk assessment process at Accenture.”