Corruption a catalyst in financial crisis, says watchdog

Corruption acted as a catalyst for the global financial crisis and fighting it must be a higher priority for private companies and governments, watchdog group Transparency International said on Wednesday.

In its 2009 Global Corruption Report, the Berlin-based group said the corporate world had a particular responsibility to fight bribery, price-fixing and political lobbying.

”Corruption and a lack of corporate integrity was a basic underlying cause of the crisis,” said the group’s global programmes director, Christiaan Poortman.

”The ratings agencies in particular had a conflict of interest and turned a blind eye towards high levels of risk … that is of course a form of corruption,” he added.

The report, released simultaneously in New York and Berlin, said the private sector had made progress but more action was needed to reduce threats to global economic stability.

”It is not just a question of tackling corruption in business — it is also important for financial and economic stability and the ongoing reforms of the global financial architecture,” it said.

Leaders from the Group of 20 rich and developing nations meet in the United States city of Pittsburgh this week to coordinate new financial rules aimed at avoiding future economic crises.

Poortman said he hoped the weight of the financial crisis would not lead policymakers at the summit to water down efforts to fight corruption.

Transparency International, known for the corruption and bribery rankings it publishes, said in its report that corporate performance in the fight against corruption often failed to match firms’ commitments.

It called on companies to issue regular reports on the action they were taking to fight corruption, and to disclose their financial support for political parties, lobbying, and governments.

Governments should toughen their enforcement of rules, increase international cooperation and use new tools to fight corruption as they become available, it said. — Reuters

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