A new report by Morgan Stanley analyst Victoria Chapelow puts a spotlight on corporate corruption and its potentially devastating impact on investors. The report includes a list of ways investors can identify corruption risks and a list of the most and least-corrupt countries, according to the 2014 Transparency International Corruption Perceptions Index.
Corruption By Country
According to the report, one of the easiest ways for investors to identify corruption risk is to look at how much exposure companies have to countries with high levels of corruption. About 68 percent of the corruption fines that the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have issued have come from the extractives and industrial sectors, and the majority have come from OECD countries.
The Transparency International Corruptions Perceptions index ranks the perceived corruption levels of 174 countries around the world. The top five highest-scoring (least corrupt) countries include Denmark, New Zealand, Finland, Sweden and Norway. The five lowest-scoring (most corrupt) countries are South Sudan, Afghanistan, Sudan, North Korea and Somalia.
Major Fines
If a company is slapped with a corruption fine by the SEC and/or the DOJ, it can mean…
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