Transparency International clashes with Hungary on corruption index
Tuesday, 28 January 2020
Credit: Transparency International
Last week Transparency International (TI) published its annual Corruption Perception Index (CPI) covering 180 countries.
A majority of countries are showing little to no improvement in 2019 in tackling corruption. One EU country, Hungary, decided to question the figures and published its own figures.
According to TI, corruption is more pervasive in countries where big money can flow freely into electoral campaigns and where governments listen only to the voices of wealthy or well-connected individuals.
The index ranks the countries by their perceived levels of public sector corruption, according to experts and business people. It uses a scale of zero to 100, where zero is highly corrupt and 100 is very clean. A score under 50 indicates a serious problem. More than two-thirds of countries score below 50 on this year’s CPI, with an average score of just 43.
The perception index cannot easily be dismissed as subjective. The index is based on several assessments made by banks and rating institutes. Perception matters. If a government or public administration is perceived as corrupt, citizens will have less trust in them and foreign investors may stay away.
Western Europe and the EU is again the highest scoring region with an average of 66 points and 14 countries among the top 20 countries, including nine countries from the EU alone. With 87 points, Denmark is the highest-scoring country in the region, followed by Finland (86), Sweden (85) and Switzerland (85).
This does not mean that they are immune to corruption. Countries with high scores have in recent years been rocked by money laundering scandals and other private sector corruption in trade with third countries.
On a positive note, TI writes that Italy (53) and Greece (48) have increased their scores with 11 – 12 points since 2012. Both countries have experienced concrete improvements, including legislative progress in Italy with passage of anti-corruption laws and the creation of anti-corruption agencies in both countries.
A country to watch, according to TI, is Malta. With a score of 54, Malta is a significant decliner on the CPI, dropping six points since 2015. Given political-level corruption and the murder of journalist Daphne Caruana Galizia, who was killed while reporting on corruption, the country is “still mired in corruption”.
Most post-communist EU member states are struggling to address corruption effectively, according to TI. Several countries, including Hungary (44), Poland (44) and Romania (43), have taken steps to undermine judicial independence, which weakens their ability to prosecute cases of high-level corruption.
According to TI, issues of conflict of interest, abuse of state resources for electoral purposes, insufficient disclosure of political party and campaign financing, and a lack of media independence are prevalent and should take priority both for national governments and the EU.
As regards the candidate countries, Turkey and the Western Balkans, the situation is even worse. Besides Montenegro (45), all of them have scores below 40. It is true that the validity of the ranking for a certain year and country can be put into question. However, the lack of improvement over time, despite EU support, does give rise to a useful debate on underlying casual factors and actual corruption cases.
Public procurement in Hungary
In a statement published on the website of the Hungarian government (23 January), its Communication Centre claims that TI is funded by the American-Hungarian financier and philanthropist George Soros and accuses “the Soros organisations” for having published “a false and misleading report which fails to take even the most fundamental facts into consideration”.
Soros, a Holocaust survivor who made a huge fortune as investor, has donated a large part of his wealth to different philanthropic causes and to supporting civil society and education in post-Soviet countries through his Open Society Foundations. In Budapest he provided the endowment to the Central European University, which was closed last year because of new Hungarian legislation.
Corruption in public procurement is a risk area in all countries. “In Hungary since 2010, public procurements have been fully transparent,” according to the statement which refers to figures published by the Hungarian Public Procurement Authority.
Asked by The Brussels Times about public procurement in Hungary, dr Jozsef Peter Martin, executive director of the Transparency International chapter in Hungary, rejected the claims in the statement.
“We publish annual financial reports,” he replied. “Our latest report from May 2019 shows that our biggest donor in 2018 was EU which funds more than half of our budget. The Open Society Foundations, founded by Georges Soros, accounted for 13 % of our budget. This share has hardly changed in 2019.”
As regards the total budget of TI worldwide, he cannot speak on its behalf. “As far as I know the Open Society Foundations is not among the 10 top donors and its share is even less and only around 5 %.”
The figures published by the European Commission on public procurement show a different picture than those by the Hungarian procurement authority. According to EU, the percentage of single bid public procurement tenders was 39 % in 2018, a figure which is expected to increase to 42 % in 2019.
“The procurement authority shows a decreasing trend but this can depend on methodological differences,” he explains.
“In contrast to the procurement authority, to my knowledge, EU includes bidders that have been disqualified and excluded from the tender. One has to add that single bid procedures don’t mean necessarily that corruption is involved but we see it as a serious corruption risk.”
There is probably also a methodological explanation behind the figures on the amazing trend in the decrease of public procurement procedures without prior notification. According to EU figures, this figure was 13 % in 2017 and decreased to 5 % in 2018.
The statement highlighted that the percentage of public procurements awarded to Hungarian small and medium-sized businesses has increased in recent years. “For Transparency International this is not an issue. What matters is that public procurement is transparent and does not distort competition,” Martin says.
The corruption index calls for the opposite of a complacent attitude. Corruption is an illness in society and must be uprooted by a comprehensive anti-corruption strategy, based on awareness, prevention and legal enforcement. This is important for all EU member states but even more for the countries at the bottom of the ranking and the candidate countries aspiring to join the EU.