“Corruption traps millions in poverty,” said Transparency International Chair Huguette Labelle. “Despite a decade of progress in establishing anti-corruption laws and regulations, today’s results indicate that much remains to be done before we see meaningful improvements in the lives of the world’s poorest citizens.”

The 2006 Corruption Perceptions Index is a composite index that draws on multiple expert opinion surveys that poll perceptions of public sector corruption in 163 countries around the world, the greatest scope of any CPI to date. It scores countries on a scale from zero to ten, with zero indicating high levels of perceived corruption and ten indicating low levels of perceived corruption.

A strong correlation between corruption and poverty is evident in the results of the CPI 2006. Almost three-quarters of the countries in the CPI score below five (including all low-income countries and all but two African states) indicating that most countries in the world face serious perceived levels of domestic corruption. Seventy-one countries - nearly half - score below three, indicating that corruption is perceived as rampant. Haiti has the lowest score at 1.8; Guinea, Iraq and Myanmar share the penultimate slot, each with a score of 1.9. Finland, Iceland and New Zealand share the top score of 9.6.

Countries with a significant worsening in perceived levels of corruption include: Brazil, Cuba, Israel, Jordan, Laos, Seychelles, Trinidad and Tobago, Tunisia and the United States. Countries with a significant improvement in perceived levels of corruption include: Algeria, Czech Republic, India, Japan, Latvia, Lebanon, Mauritius, Paraguay, Slovenia, Turkey, Turkmenistan and Uruguay.

The US has suffered a “significant worsening” in its perceived levels of corruption following a series of business scandals and increasing concerns over political party funding.

The US fell to 20th place from 17th last year, just behind Ireland.

Its score fell from 7.6 to 7.3, with 10 representing “least corrupt” and 0 “rampant corruption”.

“Issues of ethics and corruption have been on the front-burner for some time with the US electorate and have played a role in the election,” Nancy Boswell, president of the group’s US chapter, is reported to have said in an interview from Washington DC.

This year’s index score for Iraq of 1.9 is based only on surveys made after the invasion. The score in 2004, based largely on pre-invasion surveys, was 2.1.

“The systems for upholding integrity in Iraq, the rule of law and courts, are not functioning, or have been destroyed,” said David Nussbaum, TI chief executive.

The index also revealed a link between corruption and poverty, TI said, with all low-income countries scoring below 5.0.

The TI says that a concentration of so-called ‘failed states’ is apparent at the bottom of the ranking. Iraq has sunk to second-to-last place, with pre-war survey data no longer included in this year’s CPI. Intermediaries who began operating during the United Nations Oil-for-food programme continue to play a central role in driving corruption. The Volcker Commission reported that 2,392 companies paid kickbacks or made other illicit payments to the Saddam Hussein regime in the context of the programme, often through intermediaries.

While the industrialised countries score relatively high on the CPI 2006, TI says that it continues to see major corruption scandals in many of these countries. Although corruption in this context may have less of an impact on poverty and development than in developing countries, these scandals demonstrate that there is no room for complacency.

The Facilitators

The weak performance of many countries indicates that the facilitators of corruption continue to assist political elites to launder, store and otherwise profit from unjustly acquired wealth, which often includes looted state assets. The presence of willing intermediaries – who are often trained in or who operate from leading economies -- encourages corruption; it means the corrupt know there will be a banker, accountant, lawyer or other specialist ready to help them generate, move or store their illicit income.

Kenya’s Anglo-Leasing and related scandals presents a case in point, where the misappropriation of public funds was enabled through fraudulent contracts using sophisticated shell companies and bank accounts in European and off-shore jurisdictions, according to John Githongo, Kenya’s former anti-corruption tsar. And according to TI Kenya’s Kenya Bribery Index, bribery costs Kenyans about US $1 billion each year, yet more than half live on less than US $2 per day. But the transaction is often enabled by professionals from many fields. Corrupt intermediaries link givers and takers, creating an atmosphere of mutual trust and reciprocity; they attempt to provide a legal appearance to corrupt transactions, producing legally enforceable contracts; and they help to ensure that scapegoats are blamed in case of detection.

“Firms and professional associations for lawyers, accountants and bankers have a special responsibility to take stronger action against corruption,” said Transparency International Chief Executive David Nussbaum. “Led by prosecuting attorneys, forensic auditors and compliance officers, they can be the stalwarts of a successful fight against corruption.”