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Compliance Professionals Should Take The Corruption Perceptions Index With A Grain Of Salt

In an annual non-event, yesterday Transparency International (TI) released its so-called Corruption Perceptions Index (CPI) (see here [1]).  As stated in the TI release, the “CPI measures public sector corruption in 180 countries and territories, drawing on 13 expert assessments and surveys of business executives to give each country a score from zero (highly corrupt) to 100 (very clean).”

The CPI generates a lot of media coverage and is a popular tool for business organizations in ranking risk (and thus prioritizing compliance). However, for the reasons highlighted in this post compliance professionals should take the CPI with a grain of salt.

For starters, just because compliance professionals should take the CPI with a grain of salt, does not mean that the CPI (or other similar rankings) should be ignored.

Indeed, in a rare appellate court decision in the FCPA space, the Second Circuit in the Bourke case listed circumstances which provided “ample evidence” to support Bourke’s trial conviction on a conscious avoidance theory under the FCPA’s third-party payment provisions and specifically stated that “Bourke was aware of how pervasive corruption was in Azerbaijan generally.”

Nevertheless, query whether the CPI is a reliable or meaningful measure of the specific risks specific business organizations face when competing in the global marketplace for the following reasons.

In short, I enjoy maps and thus each time this year look at the CPI map, I don’t think it is a very useful tool for business organizations when adopting policies and procedures designed to minimize FCPA risk.

[3]

FCPA risk is best minimized through a risk assessment unique to a business organization in which the following questions provide a good starting point.

 

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