Transparency International study finds the world’s biggest companies need to be a lot more transparent

105 biggest public companies reviewed. 61 based in Ireland. Only Statoil says how much it pays in corporation tax. 68 per cent report on anti-corruption measures

Dublin, 10 July 2012

The world’s largest publicly-traded companies are reporting more than in the past about their anti-corruption programmes but still need to do a lot more to increase transparency in reporting on their operations, according to a new study by Transparency International.

Transparency in Corporate Reporting: Assessing the World’s Largest Companies scored 105 of the top publicly-traded companies based on their public commitment to transparency. 61 of these companies have operations in Ireland.  Of those multi-national corporations only Statoil publishes how much it pays in corporation tax. 89 per cent of the 61 companies reviewed with a presence in Ireland had a policy preventing retaliation against whistleblowers, while 90 per cent had internal reporting channels for employees to share concerns.

“Multi-national corporations play a huge role in the wellbeing of the Irish economy and employ 15 per cent of the Irish workforce. Yet there is much to be done to open up the way they do business in Ireland. On the one hand, it’s encouraging to see more multi-nationals have anti-corruption and whistleblower policies in place than they did three years ago and there is much that Irish companies can learn from them. However, it’s disappointing to see how few share basic financial data. It begs the question about how many companies are paying their fair share in corporation tax’, said TI Ireland’s Chief Executive, John Devitt.

Company scores ranged from 0 to 10, where 0 is the least transparent and 10 is the most transparent, and were based on public availability of information about anti-corruption systems, transparency in reporting on how they structure themselves and the amount of financial information they provide for each country they operate in.

Overall, companies showed improvement in their reporting on their commitments to anti-corruption programmes, as compared to a Transparency International study of the same companies from 2008.

Norway’s Statoil, the highest scoring company, scored 8.3. Statoil discloses significant information about its anti-corruption programmes, subsidiaries, taxes and profits across its 37 countries of operations.

Still, the study found that reporting by banks and insurers on transparency measures underperformed across the board even though opaque company structures played a contributing role in the recent financial crises and in spite of a significant focus on fixing the lack of transparency in this sector. The 24 financial companies included in the report scored an average of 4.2.

“If country-level financial information is not adequately disclosed, it is difficult to know how operations in many developing countries contribute to local governments. Experience has shown that the requirement to report encourages companies to build strong management systems supporting disclosures, and in the process improving their anti-corruption systems,” said Jermyn Brooks, Chair of Transparency International’s Business Advisory Board.

A lack of transparency makes it harder to identify where companies earn profits, pay taxes, or contribute to political campaigns. The study shows, for example, that about half of the companies evaluated do not disclose information about political contributions.

Transparency International calls on companies to fight corruption by disclosing more information about how they mitigate corruption and by making public how they are organised and how monies flow in the countries in which they operate. Only with this level of information can citizens the world over know how much money flows into public budgets, a key issue of accountability for governments everywhere.

Governments and regulators should make transparency obligatory for all companies seeking export subsidies or competing for public contracts. Investors should demand greater transparency in corporate reporting to ensure both ethical, sustainable business growth as well as sound risk management.

How transparent are multi-national corporations with a presence in Ireland? How they rank and score

Company scores ranged from 0 to 10, where 0 is the least transparent and 10 is the most transparent, and were based on public availability of information about anti-corruption systems, transparency in reporting on how they structure themselves and the amount of financial information they provide for each country they operate in.

For more information including tables of data visit www.transparency.org

International results

• Chinese and Japanese companies perform particularly poorly, reflecting the results of the TI 2011 Bribe Payers Index in which Chinese and Russian companies were ranked as most likely to bribe in order to win business abroad. The Bank of China is placed bottom on the index with a score of 1.1. Gazprom, a Russian gas company, is the only organisation to score zero on Anti-Corruption Systems.
• 45 of the 105 companies score 100% on organisational transparency, showing that this is an attainable goal and raising the question of why so many companies have fallen short in this area.
• Although several companies are reporting on their anti-corruption programmes, only a few indicate that facilitation payments are prohibited and reporting on monitoring procedures tends to be weak. 
• Country by Country reporting is weak in all companies featured in the index. Even the highest ranked company, Statoil, only scores 50% in this category.