Failure to disclose structures, holdings and key financial information has allowed corruption to thrive, finds Transparency International study

Advertisements for telecom operators at a store in Mumbai, India
 Advertisements for telecom operators at a store in Mumbai, India. Indian firm Bharti Airtel was adjudged the most transparent company. Photograph: Bloomberg/Bloomberg via Getty Images

The majority of the biggest companies from emerging markets are failing to lift the lid on their operations and scoring badly on country-by-country reporting, creating an environment where corruption can thrive, according to a study from Transparency International.

With growth-sapping corruption damaging the economies of these countries even as they struggle with the effects of a global growth slowdown, the report called on companies to become more transparent.

Emerging markets, and the so-called Brics economies of Brazil, Russia, India, China and South Africa, account for roughly 30% of the world’s output.

“Pathetic levels of transparency in big emerging market companies raises the question of just how much the private sector cares about stopping corruption, stopping poverty where they do business, and reducing inequality,” said José Ugaz, chair of Transparency International.

“Although many companies say they want to fight corruption, this is not enough. Action speaks louder than words,” he added.

Transparency International studied 100 of the fastest-growing companies based in 15 emerging markets countries. The firms are active in 185 countries. Researchers evaluated their anti-corruption programmes, disclosure of structures and holdings, and disclosure of key financial information, on a country-by-country basis.

They found that 75% of companies scored less than five out of 10, while 72 firms disclose no tax information in foreign countries.

The overall average score was 3.4 out of 10, slightly worse than in 2013, when the last report was published, but almost on a par with the 3.8 overall score obtained in a 2014 Transparency International report assessing the world’s 124 largest multinationals.


Indian telecommunications firm Bharti Airtel was adjudged the most transparent company, while Chilean retailer Falabella was the only one to score 50% or more in all categories.

“Despite some scattered signs of improvement since 2013, the overall results of the assessed companies remain weak, a clear indication that emerging market multinationals still practise low standards of transparency,” the report said, adding that reform was critical as these economies sought to extend their footprint.

“Their most dynamic firms will continue to seek business opportunities at home and abroad. And, like other leading multinationals, they must play their role in fighting corruption and raising standards of integrity and transparency in business.”

Overall, publicly listed companies did better than state-owned or privately held firms. On one criterion, organisational transparency, they outperformed the publicly listed firms in the 2014 report.

Country-by-country reporting – a key demand of global advocates of tax reform – was the weakest area for most of the multinationals, but they still managed a higher average than the world’s largest multinationals achieved in the 2014 report. Of the emerging firms, 43 companies scored zero in this category.

Chinese companies were of particular concern, scoring an average of 1.6 out of 10 on the overall index, with just one making it to the top 25.

“The performance of Chinese companies continues to be disappointing overall, but there are a few notable exceptions, particularly with regard to the disclosure of anti-corruption programmes. Chinese entities have different standards of disclosure: levels of transparency for China-based, state-owned parent companies are lower than those adopted for their publicly listed foreign subsidiaries and associated entities,” the report said.

The report noted that public statements on anti-corruption programmes cannot be equated with actual performance. For example, 84 companies said they were committed to the law, including anti-corruption measures, but only 19 said they ban “facilitation payments” or bribes.

Even so, Transparency International says public disclosure can drive improvement, and it called on all companies to pursue comprehensive public reporting, and make anti-corruption programmes publicly available to stop bribery, and enable whistleblowers to report corruption.

“Customers should demand the companies they patronise live up to the highest anti-corruption standards or risk losing their business,” Ugaz said.

Companies must provide “exhaustive lists of subsidiaries, affiliates, joint ventures and other entities” and make them easily accessible, while governments must enact strong anti-bribery laws, like the UK bribery act, Transparency International said.

Technology companies came top in the anti-corruption programmes category with an average score of 74%, compared with an average of 65% for 35 global telecommunications firms assessed last year. The 19 Indian companies assessed in the report achieved the best score of any country, with an average 77%.

One of the sustainable development goals – the blueprint adopted by world leaders last year to end inequality and poverty by 2030 – is to tackle corruption and bribery.

“The findings of this report show that emerging market multinationals have work to do before they have in place the policies and programmes that are needed to help achieve the SDG target,” the report said.

The sometimes opaque workings of the world’s multinationals came into sharp focus after the leaking of the Panama Papers this year, which fanned public anger over the use by corporate giants and the global elite of legal loopholes to avoid taxes.

“The Panama Papers and other recent scandals have put the spotlight on the urgent need to end corporate secrecy, and add to the momentum towards corporate transparency that is already under way,” the report said.

“Emerging market multinationals will not be able to escape these trends, given their expanding business footprint. As this study shows, they must raise the bar on their transparency performance if they are to do business competitively in a global marketplace.”