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<DIV><B>From:</B> <A title=RKoppenleitner@t-online.de
href="mailto:RKoppenleitner@t-online.de">RKoppenleitner@t-online.de</A> </DIV>
<DIV style="FONT: 10pt arial"><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </DIV>
<DIV class=Section1>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">The Transparency International Corruption Perceptions
Index is out today</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">(8:30 GMT). The complete data and explanatory material
is available at </SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">
http://<A href="www.ICGG.org">www.ICGG.org</A> </SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">Passau University, 18 October 2005: The new CPI
index is out today: and</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">judging from history, there will soon be a wave of
international</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">anti-corruption investigations based on its work.
</SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">In the past ten years the CPI has caused over ninety
high-profile</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">investigations around the world. The unequivocal
message from these</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">investigations: corruption is disastrous to
societies. The very people who</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">deserve our help are the most victimized: the honest,
the poor and the</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">powerless. The honest are deprived because they do not
participate in the</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">shady deals; the poor are worse off because they cannot
afford the costly</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">bribes; the powerless are victimized because they cannot
escape the</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">extortionate demands of a greedy environment.
</SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">The CPI has become an important tool in fighting
corruption. It has placed</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">the fight against corruption firmly on the public
agenda. It has helped</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">spark major legislative reform. And it has helped
change the popular</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">perception that corruption was always "someone else's
problem": Firms point</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">to politicians as causing corruption; politicians
mention unscrupulous</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">private interests as being at the core of the problem;
rich countries</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">delegate responsibility to corrupt leaders of less
developed countries; for</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">poor countries the problem rests with bribe-willing
multinationals. By</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">putting countries in an integrity-league the CPI
provides a simple</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">sports-like logic. Whatever one may think about other
countries in the</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">league, one's home country is placed in a sequence of
countries rather than</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">being on top by force of xenophobic prejudice.
</SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">International investors also dislike countries perceived
to be corrupt,</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">fearing arbitrary decision making and a poor protection
of their property.</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">Countries with a higher score in the CPI, to the
contrary, suffer less from</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">capital flight and are preferred as safe havens.
According to recent</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">research, if a country were to improve its score in the
CPI by 1 point (out</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">of 10), foreign direct investment would increase by 15
percent.</SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">Here is the bad news: the following countries,
some of them very</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">high-income, have deteriorated in the CPI since 1995. A
reduction in the</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">score (in descending order of significance) was observed
in Poland,</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">Argentina, Philippines, Zimbabwe, Canada, Indonesia,
Ireland, Malaysia,</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">Israel, Slovenia, Czech Republic, United Kingdom and
Venezuela.</SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">Prosperity is no guarantee against corruption. This is
best seen in the</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">oil-rich countries, scoring poorly in the CPI. For
example, this year, for</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">the first time, Equatorial Guinea enters the index. Its
recent boom in oil</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">extraction contrasts to its 152 position in the CPI, one
of the lowest this</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">year. This underpins that high income from natural
resources produces ample</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">opportunities for corruption, rather than helping
development.</SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">But there is hope. Corruption is not a fate. It prospers
where business,</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">society and politics turn a blind eye to its damaging
effects. </SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">Here is the good news; countries can improve their
ranking in the CPI. They</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">can "compete for integrity". The South Korea
government had announced its</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">goal to belong to the top-ten countries in the
CPI. They improved their</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">ranking from 47 in 2004 to 40 this year. This is one of
the starkest</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">improvements - and evidence that the right type of
competition has been</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">initiated by the CPI. </SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">There are other signs of positive change, recent
research at the University</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">of Passau indicates significant improvements between
1995 and 2005 occurred</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">(in descending order of significance) in Estonia, Italy,
Spain, Colombia,</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">Finland, Bulgaria, Hong Kong, Australia, Taiwan,
Iceland, Austria, Mexico,</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">New Zealand and Germany. </SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">These are the places to look at when seeking good
precedent. Given the</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">international attention and support given to
anti-corruption programs, the</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">prospects of a sustainable reduction of corruption are
higher than ever.</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">Some poorer countries in the CPI are already indicative
that poverty need</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">no longer place a country in a downward spiral.
Countries such as Chile,</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">Barbados, Uruguay, Jordan and Botswana score rather well
in this year's</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">index. They are also prime candidates for improved
economic and social</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">development </SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">In a recent study two authors, Lee and Ng, show that
firms from countries</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">scoring badly in the CPI are valued lower by
international investors. If a</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">country improves by 1 point in the CPI, the valuation of
stocks of its</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">domestic firms increases by roughly 10 percent. This
illustrates that</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">fighting corruption is not only a moral obligation - it
is increasingly</SPAN></FONT></P>
<P class=MsoPlainText><FONT face="Courier New" size=2><SPAN
style="FONT-SIZE: 10pt">part of good business.</SPAN></FONT></P>
<P class=MsoPlainText><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt"></SPAN></FONT> </P></DIV></BODY></HTML>