The inability of the Irish political and judicial system to hold people to account for wrongdoing may impact Ireland’s economic recovery.
“If investors believe government decisions are being swayed by political or private gain, it could have a harmful effect for our economic recovery,” said John Devitt, Chief Executive of Transparency International (TI) Ireland, this week. “Small, open economies are much more exposed to reputational risk than their more powerful counterparts. Risk-averse and politically-aware investors will also look elsewhere when deciding where to locate or do business if they suspect that favoured businesses and government are in bed with one another.”
TI suggests that Ireland’s worst ever ranking can be attributed to the fact that “corruption is a bigger problem here than in some developing nations, including Uruguay and the Bahamas.”
Countries such as the US have gone up (six places); however, Ireland’s (down six) and the UK’s (down one) scores have worsened.
Ireland is currently ranked 25th out of 176 places in the Corruption Perceptions Index conducted annually by TI. Similarly to last year’s report, the worst-performing countries are Afghanistan, North Korea and Somalia. The top-ranking countries have also remained in their relative positions. Denmark, Finland and New Zealand are perceived to be the least corrupt countries of those surveyed.
Credit risk agencies such as Standard and Poor’s regularly utilise the index to assess the likelihood of sovereign debt default, according to TI.
Trying to shed some light on Ireland’s sliding in ranking, Mr Devitt suggested the poor results come after “a succession of political controversies.” The Moriarty and Mahon Tribunals published negative findings against politicians and business people after 15-year-long investigations into corruption and payments to government ministers.
“Ireland’s ranking shows how little faith investors have in our ability to prevent the abuse of power. Our failure to hold people to account for wrongdoing is also having a negative impact on international perceptions of Ireland. There appears to have been very little action taken on foot of the publication of the final Moriarty Tribunal report, while The Taoiseach’s decision to make public appearances with Denis O’Brien after the publication of the report will have done our international reputation no favours,” said Mr Devitt.
A recently-published European Commission-sponsored report by TI acknowledged the progress the Irish Government had made in reforming corruption law and its ambitious plans to protect whistleblowers.
Unfortunately, according to Mr Devitt, the anti-corruption group has “warned against delaying further commitments to clean up public life.” Devitt added that “it has also highlighted the Government’s failure to implement reforms aimed at promoting transparency in the public sector and sharing more power with the Oireachtas.”
“We will still attract companies looking to avail of our low tax rate, but our reputation for cronyism and other forms of corruption will drive many honest businesses towards more open and well-regulated economies,” Mr Devitt said.
TI Report
According to TI, a 2008 PricewaterhouseCoopers survey found that 45 per cent of businesses have been deterred from investing in a country because of its reputation for corruption.
TI Ireland estimated in 2009 that Ireland could be losing 1 billion euro a year in foreign direct investment because of its relatively low position in the Corruption Perceptions Index. Ireland has slipped 11 places in the index since then.
According to the Eurobarometer survey for 2012, 86 per cent of Irish people said corruption is part of Ireland’s business culture, compared to the much lower EU average of 67 per cent.
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