Emerging market companies not doing enough to fight corruption

19 October 2013

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20 October 2013 | Gurjit Degun

Fast-growing firms in emerging countries such as China and India are not sufficiently transparent about their anti-corruption efforts.

According to a report from anti-corruption group International (TI), Chinese firms to have the weakest overall performance among the BRICS (Brazil, Russia, India, China and South Africa) nations.

Transparency in Corporate Reporting: Assessing Emerging Market Multinationals analysed 100 of the fastest growing companies based in 16 emerging markets.

Three quarters of the businesses scored less than five out of 10, where zero is the least transparent. Scores were based on publicly available information about anti-corruption measures, transparency in reporting, how the companies structure themselves and the amount of financial information they provide for each country they operate in.

Chinese companies accounted for more than a third of the assessed businesses. TI said China must take “immediate action” to raise standards.

Companies in India scored best out of the BRICS with a result of 5.4. The study said this was down to national laws obliging publication of key financial information on subsidiaries.

Some 75 of the 100 companies in the report come from BRICS nations, which have contributed 50 per cent of world growth since the financial crisis. The study said about 60 per cent of the firms evaluated do not disclose information about political contributions. TI called on companies in emerging markets to show the public what they are doing to prevent corruption and their relations with governments.

It added legislation should be introduced to make companies publish what they pay to governments in every country where they operate.

“The time has come for emerging markets to play their part in the global fight against corruption,” said TI chair Huguette Labelle. “As emerging market companies expand their influence they should seize the opportunity to play a bigger role stopping corruption internationally.”

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