Transparency International of Germany released in October 1999 a brand new Bribe Payers Index (BPI). This ranks 19 leading exporting countries in terms of the degree to which their corporations are perceived to be paying bribes abroad. US has laws against bribing for decades and yet US corporations are widely known to use bribery to win contracts in developing countries. Central European countries, Japan and other export "tigers" in Asia also have poor BPI scores. America should be ashamed of her reputation as a major bribe payer corrupting the third world. It is hypocritical to lecture poor countries against corruption while being exposed as the major supplier of bribes.

Research on corruption clearly reveals that corruption leads to slower economic growth through reduced savings, investments and wasted resources. The burden of corruption is estimated to be about $1.67 for every dollar of corruption and should be compounded over time. Corruption is blood money, which leaves children dying in hospitals, permits crumbling infrastructure and abject poverty in developing countries. References to this research may be obtained at www.fordham.edu/economics/vinod. Recent empirical data show that stock markets become more volatile and Bank-failures become more likely as corruption increases. Some of the unbearable environmental degradation can be traced to corruption. The Pakistani example shows that corruption threatens freedom and democracy. Besides being reprehensible, corruption has unfavorable ethical side effects. Corruption tends to remove all norms of decency from society and from interpersonal relations. The middle classes also endure poor quality of life in corruption-ravaged countries. In short, reducing corruption should get a high priority from any perspective.

US policymakers can take a leadership role in persuading other international organizations to take following initiatives to increase transparency and reduce corruption. First, the international media needs better access to all public information anywhere, including details about corruption cases, names of prosecutors, nature of evidence, etc. Freedom of information and freedom of the press need active and enhanced international support.

Second, the whistle-blowers who expose corrupt individuals are at great risk and need support, protection and significant incentives. The US law called "False Claims Act" rewards those who report irregularities in government contracts. The reward is 25 to 30 percent of the loot. Another US law called "Whistle-blower Protection Act" protects in-government whistle-blowers and does not permit retaliations by corrupt superiors. Similar large and significant incentives must be available in all countries receiving US foreign aid. Why not reduce aid if countries refuse to protect whistle-blowers?

Third, laws and US traditions force top politicians and bureaucrats to disclose their income tax and list their assets. If an American President--the leader of the free world--must annually disclose his private income taxes and list his personal assets, why not a Prime Minister or a President of a developing country? Why not all top officials and their relatives in these countries? Since modern world money flows at the speed of light, this disclosure is not merely a local or internal issue for individual countries. The fiasco of crony capitalism in Indonesia hurt many other Asian countries, thousands of international investors and the reputation of the IMF. Indonesian contagion showed that corruption is an international concern. President Suharto of Indonesia, husband of Prime Minister Benazir Bhutto of Pakistan, sons of Nigerian dictator Sani Abacha and many third world leaders were never required to report their incomes and assets annually. Why not?

In the interest of stability of world financial system, the IMF or World Trade Organization (WTO) should require annual reporting of incomes and assets by all leaders and top officials. Since US and some countries already do it, this is a perfectly fair burden on other countries. Transparency International’s corruption perception index reveals horrid corruption in most third world and old Warsaw Pact countries. Many examples show why corrupt countries must disclose incomes and assets by not only by top political leaders, but also by all legislators, judges, top bureaucrats and their close relatives. The new military dictator of Pakistan has disclosed his own assets and those of all his close relatives. Let us hope that he forces all top officials, judges, etc., to provide annual financial disclosures. Only WTO or the IMF could have forced Suharto to disclose his private assets and those of his cronies. No one in Indonesia had the guts to demand such information from him. A similar reluctance to demand disclosures is common in all corrupt countries. The public in these countries is not at all aware that US Presidents, many senators and cabinet officers routinely make such disclosures. Let us suspend all international military and economic aid until these disclosures are made. In fact, such suspension of foreign aid will be good PR for America, since the general public in corrupt countries wants disclosure, but cannot demand it.

Fourth, the BPI shows that American, German, and Japanese corporations compete with each other in poor countries by giving large bribes. The supply side of bribes can no longer be ignored. American multinationals must have large slush funds held as cash or deposits of shell corporations to pay all these bribes. The bribes are obviously paid through shell corporations, local lawyers and intermediaries. The corporate slush funds have so far been hidden from stockowners, Securities and Exchange Commissions (SEC) and other regulatory authorities. The BPI scores prove that the SEC and regulators are failing to enforce existing laws. We should pry open any bribes shown as legitimate business expenses or "consulting fees" in corporate books. The IRS should not let them be deducted from corporate taxes. Such deductions are illegal in the US for decades and in Europe for the last few years. The US, German and Japanese corporations should get together and stop competing with bribes. Cooperation will save them bribe money and potential legal problems with SEC and the IRS. They should promptly convert slush funds into lobbying expense accounts. Then, as the law requires, disclose recipient names and other details. The threat of disclosures will help curb demand for corruption ransoms. An interesting option available in the US is to apply the False Claims Act to illegal tax deduction of bribes. The illegal tax deduction is obviously a false claim. This Act offers 25% reward to anyone who exposes the illegal deductions with solid documentary proofs. Since slush funds are in millions, this reward will be a powerful incentive to expose and eliminate the corrupting influence of corporate slush funds on corporate governance.

Fifth, the IMF or WTO should pressure all Banks to help reveal fraud and money launderings. Recent Senate Permanent Subcommittee on Investigations hearings have revealed complicity by American Banks and Senator Levin of Michigan criticized regulators. Citibank and some Swiss Banks have recently started requiring their depositors to name actual source of the deposited moneys. Citibank executives have testified that they use computers for searching hidden money trails. These efforts should be common to all international Banks and include exposing slush funds and shell corporations in safe havens like the Cayman Islands. It is hard to believe that multibillion-dollar financial institutions cannot get Cayman Island Banks to cooperate in exposing corruption. Senator Levin’s proposed legislation is a good start, which should be followed by getting our trading partners to pass similar legislation. Unilateral US action should be followed by IMF and WTO action. In light of the recently created vacancy, US senators should press any new proposed head of the IMF to promise such efforts during confirmation hearings.

Sixth, in the coming holiday season of charitable giving, private international charities need to focus more on fighting corruption. Investigative journalists and the police in poor countries do need concrete help in acquiring surveillance tools for apprehending the corrupt. They need judicial infrastructure, court facilities, funds to protect whistle-blowers, etc. In India, there are only about eleven judges per million people; in UK the number is 113. Currently, there is a backlog of some eleven million pending court cases in India. A high-priority case, the murder of Prime Minister Rajiv Gandhi, took seven years to decide. Indian courts obviously need management tools including computers, mobile courts in rural areas, resources to hire thousands of judges and to build brick and mortar court facilities. Many politically correct charitable activities tend to focus too much on "saving lives" by transferring Western medical technology. Unfortunately, these worthy actions reduce death rates and often have the unintended consequence of causing overpopulation. Any visitor to impoverished countries notices the severity of overcrowding. There is no elbow room left to move about in many third world cities. Private international charities should change their priorities and allocate larger amounts to support investigative journalists or help build a court facility.

Every dollar of corruption prevented saves an additional 67 cents of scarce resources in poor countries. The relatively simple initiatives listed here are not difficult to implement and can be a very useful first step. Research mentioned above reveals that long-term actions needed to fight corruption include efficient judiciary, better education, establishment of the rule of law under democratic institutions, etc. These are, however, more time-consuming and beyond the scope of any international institution. These would require coalition building against corruption inside each third world country by local citizen groups.

Along with fast food, science and entertainment, America should export Governance with Respect, Ethics, Accountability and Transparency (GREAT). In these prosperous times, American corporations can afford to give up some business deals involving bribe demands. America must improve her BPI score and not remain a big bribe payer abroad.

H. D. Vinod, Professor of Economics and Director of Fordham Institute for Ethics and Economic Policy, Fordham University, New York. E-Mail: Vinod@fordham.edu .