A factory in Timor? Five countries where corruption is on its way out

By Naomi Rovnick ­ 

Each year, Transparency International produces its “Corruption Perceptions Index,” which ranks 176 countries based on how corrupt their people believe public officials are.  For business people, a better name might be the “brown envelope index”­for the oft-inevitable paybacks to public officials as the cost of entering or operating in certain places.

Today, media across the world will examine their own country’s performance, and those that achieve poor rankings for their notoriety (more on that later). But global business leaders who really want to get things done should perhaps focus on where corruption is on its way out.

So here’s the good news. The following countries moved furthest up the TI index  for perceived corruption in the last 12 months; the higher up a country is the less corrupt its officials. They all still have a long way to climb up the table and remain plagued by poverty and graft. But progress is being made in the nations of Timor-Leste, Sao Tome & Principe, Mongolia, Armenia, and the Philippines. The full survey is here.

Perceptions of official corruption have improved in these nations mostly because of changes in government, with new leaders promising to fight graft. Here’s a closer look:

Timor-Leste (113th place from 143rd last year), otherwise known as East Timor, is a former Portuguese colony bordering Indonesia known for its extreme poverty and regular outbreaks of violence. It also has plentiful oil and gas reserves. Having won independence from Indonesia in 2002, it remains volatile. But democratic elections in July passed peacefully. And the government has won popularity by chasing international oil majors for what it claims are billions of dollars in unpaid oil taxes. Timor’s jump up the rankings is embarrassing for Indonesia, which sees itself as more civilized than that its neighbor but plunged to 118th place in the Transparency International Index chart this year, down from 100th in 2011.

 Sao Tome & Principe (72nd from number 100 last year), another former Portuguese colony , is a tiny economy in the Gulf of Guinea with a dwindling cocoa crop and high external debt. It also has rich oil and gas reserves and has just started auctioning off exploration sites. Corruption allegations have surrounded the auction process. But peoples’ new optimism seems to have derived from presidential elections that took place last August, whichreturned former strongman ruler Manuel Pinta de Costa to power. He won the presidential race by, in part, promising to tackle graft. And it seems, for now, the people of Sao Tome believe he will not let them down.

Mongolia (94th from 120th last year) is another resource-rich, but largely poor country. Inhabiting a vast land mass between China and Russia, this democratic former Soviet satellite has for the last few years been unlocking its vast reserves of copper, coal and other minerals. Its population have been complaining vociferously about corruption and a rising wealth gap ever since the mineral boom began. And earlier this year, former president Nambar Enkhbayer was sentenced to four years in prison for graft. Amnesty International condemned the sentencing as arbitrary, and many international commentators said it was a show trial. But the country’s new president has promised to tackle corruption and introduce sorely needed judicial reforms, which seems to have sparked optimism.

The arrest of a former president has also increased perceptions corruption is improving in the Philippines (up from joint 129th to joint 105th). Gloria Arroyo, the former ruler of the impoverished archipelago, was arrested in October, accused of fraudulently transferring money from a domestic charity.  She denies the accusations. Meanwhile, the Southeast Asian nation’s economy is doing better than forecast.

Armenia (tied with Philippines, up from joint 129th to joint 105th), a landlocked country between Georgia and Turkey, has serious problems with graft.In this report, the OECD castigated Armenia for failing to implement anti-corruption laws while also failing to investigate graft-related offenses. But despite continuing evidence to the contrary, president Serzh Sargsyan has vowed he is pushing forwardto tackle rampant corruption. The nation’s economy grew at a healthy 7% clip in the year to September too, suggesting people may not be feeling happier with their public officials than they were last year, when the nation was still emerging from a financial crisis (pdf).

Meanwhile, these nations fell furthest down the graft rankings this year: Bangladesh, Albania, Indonesia, Madagascar and Eritrea.