Asian crisis puts graft in spotlight: PERC

Asian crisis puts graft in spotlight: PERC

SINGAPORE (Reuters): The cost of corruption to Asian economies has become more apparent amid the financial crisis, but in several countries graft is getting worse, Hong Kong-based Political & Economic Risk Consultancy (PERC) said.

Business executives polled felt that corruption had fallen in five of 11 countries polled, significantly in South Korea and China.

But corruption had increased in six countries, it said in a report released over the weekend.

The survey conducted in the first two months of the year and based on responses from 427 expatriate executives, gauges perception of the problem of corruption, PERC said.

Singapore, rated as having the least corrupt system in Asia, was seen having to deal with cross-border corruption problems.

"As the downward pressure on the Singapore dollar showed in the wake of the meltdown in Thailand, Singapore is vulnerable to corruption elsewhere in the region, particularly in view of the country's status as a regional center," it said.

"That (corruption) might not be so worrying in the case of Singapore...but it is very worrying in cases like Thailand, Indonesia and Japan," the report added.

It said Japan had stumbled from one scandal to another, denying the country effective political leadership at a time when the economy was floundering.

Seven of the country's top 20 banks were being investigated for bribing finance ministry officials, while other arrests have focused on highways agency officials.

"Such regulatory generosity is almost inevitable when more than 200 of Japan's banks are run by former finance ministry officials," PERC said.

It added this had resulted in a sharp deterioration in its survey's corruption grade for Japan since the early 1990s.

PERC said that many Asian countries did not have adequate laws addressing corruption and lacked mechanisms to police it.

In communist countries like China and Vietnam, the system itself was considered to be the weak point.

But the country which registered the largest improvement in the past year was China, where anti-corruption policies were producing good results, it said.

High marks were given to Hong Kong and Singapore, however, for their legal systems and the professionalism of the people charged with policing and enforcing laws.

Overall, PERC said the Asian economic crisis could spur more action by countries to improve shortcomings in their systems.

"It is clear that corruption does have an economic cost, the implications of which can be very cross-border in nature."