ST Nov 17, 2009So what do we see here? Transparency International publishes its rankings of corruption levels in different countries around the world. At the same time, TI also says that it's time to put an end to banking secrecy. The way TI puts it, it sounds as if banking secrecy and corruption go hand in hand.
Stamp out bank secrecy
BERLIN - GRAFT watchdog Transparency International hit out at rich countries over shady banking practices on Tuesday as it published its annual rankings naming and shaming the world's most corrupt countries.
'Corrupt money must not find safe haven. It is time to put an end to excuses,' said the Berlin-based group's head Ms Huguette Labelle.
In the wake of the financial crisis, the Group of 20 (G-20) industrialised countries turned up the heat on tax havens, targeting rich countries with long-held banking secrecy laws like Liechtenstein and Switzerland. But Ms Labelle said extra efforts were imperative, calling for more bilateral treaties on information exchange in order to 'fully end the secrecy regime'.
Overall, the 2009 corruption list is 'of great concern', the organisation said, with the majority of countries scoring under five in the ranking, which ranges from zero, highly corrupt and 10, which is very clean.
The bottom five nations - Somalia, Afghanistan, Myanmar, Sudan and Iraq - show that 'countries which are perceived as the most corrupt are also those plagued by long-standing conflicts, which have torn apart their governance infrastructure,' TI said.
The five countries seen as least afflicted by corruption were New Zealand, Denmark, Singapore, Sweden - and Switzerland. New Zealand scored 9.4 points whereas Somalia scored 1.0 points.
The score is based on perceptions of the degree of corruption as seen by business people and country analysts.
On the other hand, TI's actual research leads to the opposite conclusion. Both Singapore and Switzerland have an extensive banking secrecy regime (Singapore's statutory banking secrecy laws are in fact modelled on Switzerland's). Yet both countries are in the list of world's top five least-corrupt countries.
So it's very simplistic to suggest that banking secrecy leads to corruption (or creates a conducive environment for it).
It's important to go back to basics and remember why banking secrecy exists in the first place. Banks hold a lot of information about their customers. If your company is planning an IPO, your bank knows about it. If your business is losing money, your bank knows about it. If you pay your suppliers through your bank account, the bank knows who they are.
In fact, just by looking at your credit card statements and bank statements and GIRO arrangements, your bank knows where you shop; what you buy; where you've travelled to; what's your salary; how much you got for your bonus; whether you use Starhub or Singtel; and what's the name and address of that other woman who's not your wife but with whom you share a joint account. Etc etc.
That's all private information. It's not anything illegal, but it's private. Banking secrecy evolved as a legal regime, precisely because the law needs to stop banks from blabbering your private information to people who have no business knowing it.
Now of course banking secrecy, as a legal regime, has its own built-in exceptions and qualifications. For example, a bank may legally disclose your information to the police, if you've become a suspect in a criminal case and the police need to know about your money matters. A bank may legally disclose your information to its own professional advisers (eg its own lawyers and auditors). And a bank may legally disclose your information to the tax authorities, if there's a tax-related investigation.
But to say that the world needs to "stamp out bank secrecy" and "fully end the secrecy regime" - that's ridiculous. Newspapers will have a fun time reporting Britney Spears' latest credit card purchases. Your nosey-parker kaypoh auntie might call up your bank to find out how much you really have in your savings account. Banks might sell your telephone number, email address and personal profile to telemarketers selling anything from insurance to club memberships to massage chairs - see how many nuisance calls you get then.