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Russian Public Works Contractors Lead Bribery Index (Update2)

By Howard Mustoe

Dec. 9 (Bloomberg) -- Russian companies seeking public works and construction contracts are the most likely to bribe foreign officials, while Belgian fishing firms are the least inclined to do so, a survey by monitor Transparency International found.

TI’s Bribe-Payers Index ranks 22 of the wealthiest and most economically influential countries by the propensity of their companies to offer bribes abroad. The measure also lists the likelihood of bribes by industry.

Belgium and Canada attained the highest score, 8.8 out of 10, while Russia and China got the lowest, reaching 5.9 and 6.5 respectively. A higher score reflected a low likelihood of bribery.

The index shows that companies from major exporting countries “still use bribery to win business abroad, despite awareness of its damaging impact on corporate reputations and ordinary communities,” TI Chairwoman Huguette Labelle said today in a statement. “The inequity and injustice that corruption causes makes it vital for governments to redouble their efforts to enforce existing laws.”

TI Managing Director Cobus de Swardt said at a news conference in London that he wanted stricter punishments to be imposed in nations prone to corruption.

“Often, the punishment for petty theft, thefts of perhaps only a few pounds, can have the same punishment as for those who embezzle millions,” de Swardt said.

Wielding Influence

The monitor interviewed 2,742 chief executive officers, directors, managers, owners of businesses and other decision- makers, either over the phone or in person for the report. Interviews and phone calls were conducted by Gallup Inc.

In the rankings, Switzerland fell two places after coming top of the index in 2006, the last time it was published. The U.K. gained one place from sixth in 2006 while the U.S. stayed in joint ninth.

Russia came 28th out of 30 in 2006, beating China and India. This year, India ranked 19th, while China remained second to last.

Separately, Berlin-based TI ranked industries by bribery of public officials and bribery aimed at wielding influence on government rules and regulators.

In bribery to public officials, fisheries, followed by banking, finance and information technology were found to be the cleanest, with scores of 7.1 to 7 and public works contracts and construction scored worst with 5.2.

‘State Capture’

When it came to influencing government rules and regulations, light manufacturing and fisheries were least likely, with scores of 7.2 and 7.1 respectively, while banking and finance scored 6.6.

“The banking and finance sector is seen to perform considerably worse in terms of state capture than in willingness to bribe public officials,” TI said, “meaning that its companies may exert a considerable undue influence on regulators, a significant finding in light of the ongoing global financial crisis.”

Bribery increases costs for participating companies and organizations by about 10 percent, de Swardt said, citing research by TI based on figures from the World Economic Forum, the World Bank and its own global corruption report.

TI explored three types of bribery -- the bribery of high- ranking politicians or political parties, bribing low-level public officials and the use of personal relationships to win public contracts.

“Misuse of personal relationships can be about nepotism and family contacts,” TI’s Director of Policy and Research Robin Hodess said at the news conference. “There’s a fine line between trading on your reputation and exercising undue influence.”

Hodess said she wanted to see an open bidding process for contracts, in which the criteria for tendering and the results are easy to access by interested parties.

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net.

Last Updated: December 9, 2008 09:05 EST

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