Bloomberg News

Italy, Greece Among Worst Euro Countries in Corruption Ranking

December 02, 2011

Dec. 1 (Bloomberg) -- Italy and Greece scored the lowest among euro-area countries in a global corruption ranking as their inability to tackle graft and tax evasion exacerbated the debt crisis, watchdog group Transparency International said.

Italy came in 69th and Greece placed 80th, down from 67th and 78th respectively in the 2010 ranking, the Berlin-based group’s Corruption Perceptions Index showed today. Ireland dropped five places to 19th, earning a score of 7.5 out of 10, a drop from 8 points in last year’s ranking, Transparency said.

“Euro-zone countries suffering debt crises, partly because of public authorities’ failure to tackle the bribery and tax evasion that are key drivers of debt crisis, are among the lowest-scoring EU countries,” the group said in the report.

Europe’s engulfment in the sovereign-debt crisis has exposed the failure of indebted governments to raise revenue and tackle reforms, prompting crowds of protesters to fill the streets to demand their ouster. Italy’s Silvio Berlusconi resigned as prime minister last month, two days after his Greek counterpart, George Papandreou, was forced out.

New Zealand maintained its top position in the ranking, alongside Denmark and Finland. North Korea debuted on the list with a score of 1, ranking last with Somalia, a rung lower than Afghanistan and Myanmar, according to Transparency.

The U.S. dropped two spots to 24, though the world’s biggest economy retained its 7.1 score. The index, which measures the perception of corruption in the public sector, showed that two-thirds of the 183 nations reviewed scored below five on a 0-to-10 scale, with 10 indicating the least corrupt, Transparency said.

Corruption Charges

Italy’s ranking placed it level with Ghana and lower than Saudi Arabia. Corruption allegations contributed to the slide in popular support for Berlusconi, who is on trial for bribery, abuse of power and paying for sex with a minor. He has faced dozens of corruption allegations since entering politics in 1994. Berlusconi has maintained his innocence and blames the charges on “left-wing” prosecutors who are out to destroy him politically.

The release of the report comes as a widening corruption probe threatens to topple the chairman of state-controlled defense contractor Finmeccanica SpA. The company’s board meets today to consider limiting the powers of Chairman Pier Francesco Guarguaglini after allegations by prosecutors that company executives set up slush funds to bribe politicians.

In Greece, Finance Minister Evangelos Venizelos in September announced plans to impose a special tax on all homeowners to meet budget targets for this year after admitting the country’s tax-collection system was failing.

Open Wounds

“There have been failures in the tax-collection system, tax evasion, delays, as well as the deepening recession,” Venizelos said. Greece’s measures had “opened wounds on the body of society,” which a “national struggle” against tax evasion would help close, he said on Oct. 18.

Countries in the Middle East that have been caught in the throes of the Arab Spring this year were also placed low on the list, with most of them ranking below a four. With publics rallying or fighting to overthrow governments weighed down by nepotism, bribery and systems of patronage, Transparency said the movement signified the proliferation of corruption.

Egypt, where a revolution ousted President Hosni Mubarak from power in February, plummeted 14 places in the ranking to 112th. Tunisia, where the movement began, fell to 73rd place from 59th, while Libya slid 22 slots to 168th. Libyan leader Muammar Qaddafi was killed by militia fighters in October.

“This year we have seen corruption on protesters’ banners be they rich or poor,” Transparency International’s chief, Huguette Labelle, said in a statement. “Whether in a Europe hit by debt crisis or an Arab world starting a new political era, leaders must heed the demands for better government.”

The index has become a benchmark gauge of perceptions of a country’s corruption, an assessment of risks for investors. It’s an aggregate indicator that combines data from 17 different surveys assembled by independent institutions, including country experts and business leaders.

--With assistance from Andrew Davis in Rome and Maria Petrakis in Athens. Editors: Jennifer M. Freedman, Andrew Langley

To contact the reporter on this story: Patrick Donahue in New York at pdonahue1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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