Countries with greater press freedom have lower incidence of bribery involving public officials

Countries with press freedom have significantly lower problems with the bribery and corruption of public officials by business, a major new study has found.

Researchers from Dublin City University (DCU) have published a new research paper, ‘The Role of a Free Press in Combating Business Corruption’, which has found that “a free press is associated with a substantial reduction in the percentage of firms that report corruption".

The findings underline the role of an independent media in combating corruption.

The research addresses the question of corruption in business by using data directly from firms, including those who, at some point, were solicited for a bribe of an illegal payment or gift.

Significantly, the DCU study is the first to consider the media’s role “in shaping everyday corruption, as seen through the eyes of ordinary business.”

Dr Robert Gillanders, Economist and corruption expert from DCU’s Business School and one of the study’s authors, commented: “Many studies find a strong link between press freedom and corruption perceptions, but no previous work examines this topic from the perspective of firm’s experiences.”

The researchers cited the cases of Telia Co AB and VimpelCom Ltd., who paid over $800 million each to regulators in fines for corrupt payments to government officials, uncovered by media investigations.

“Our findings suggest that press freedom is an important weapon in the fight against corruption domestically and globally. International efforts to control corruption such as the OECD’s Anti-Bribery Convention should be matched by efforts to promote press freedom, which, although it is considered a fundamental human right in several international treaties, is continuously under threat across the globe,” Dr. Gillanders added.

Their conclusion from extensive research into both corruption and press freedom is that countries with greater press freedom have significantly lower incidence of bribery involving public officials and fewer business in these countries report that corruption is the biggest problem they face.

“It appears that press freedom is most effective in combating collusive corruption, and that its impact is highly concentrated in democracies and near-democratic societies,” Dr Gillanders said.

The authors also suggest that corruption provides some businesses “with unfair advantages” while raising the cost of doing business for everybody.

The study uses World Bank global surveys of firms' experiences in dealing with corruption involving public officials asking for a gifts or bribes to "get things done" in terms of easing or by-passing customs, taxes, licenses, regulations, services etc for firms prepared to pay up.

The study shows that press freedom can explain cross-country differences in the percentage of firms who say that a "gift was expected or requested" during meetings with officials, in seeking construction permits, water and electrical connections, import and operating licenses and paying taxes. The press is most effective in curbing corruption related to tax and construction arrangement - contexts in which State oversight can be most compromised by corruption.

The study's combined data set consists of 110 countries over the years 2006-2016.

Norway has the best press freedom score, with North Korea the worst, while, on average, 7.4% of firms regarded corruption as the biggest obstacle to their operations, varying from zero in some countries to a high of 32.5% in Panama.

The study has significance for firms who are considering foreign direct investment or moving part or all of their business or production to another jurisdiction or engaging in cross-border activities. It also reinforces the idea that the media plays a vital and irreplaceable role in ensuring a strong and effective State.

“Business pursuing opportunities in emerging markets may find it useful to consider the press freedom in such countries...specifically, freedom of the press is associated with a reduction in corruption in 116 out of 193 of our observations. We find that fewer firms in countries with press freedom report that corruption is their biggest constraint…our findings therefore support the notion that a free press serves as an effective deterrent to corruption in business,” Dr Gillanders concluded.

KEY FINDINGS

• On average, 15.28% of public transactions involved a bribe request.

• The variation of such public transactions is large - from 0% of firms in some countries to 65.2% in the Republic of Yemen.

• Norway has the best press freedom score.

• North Korea has the worst press freedom score.

• On average, 7.4% of firms regarded corruption as the biggest obstacle to their operations, varying from zero in some countries to a high of 32.5% in Panama.

RESEARCH TEAM

• Nouf Binhadab, DCU Business School

• Dr Michael Breen, DCU School of Law and Government

• Dr Rob Gillanders, DCU Business School