Chinese companies and tech industry giants score poorly on latest corporate transparency rankings

By Stella Dawson

WASHINGTON, Nov 5 (Thomson Reuters Foundation) - Most of the world's biggest companies get a failing grade for transparency and are far too secretive about how they operate, despite mounting pressure for business to stand firm against bribery, corruption and tax avoidance, a survey has found.

Transparency International, the leading anti-corruption watchdog, said that on average 124 global corporations with a market value exceeding $14 trillion scored 3.8 out of 10 for their level of corporate openness and for fighting corruption.

While progress has been made in recent years on the corporate anti-corruption front, businesses remain far too opaque about their structure and country operations, it said in the latest corporate transparency rankings released on Wednesday.

"What that means is that nobody knows how much tax these companies pay, how they make their revenues, what their pre-tax profits are and how much they contribute to their communities," said Ben Elers, Transparency International programme director.

"How can people start holding companies that are bigger than countries in GDP terms to account and know they are conducting their business ethically when they don't have the basic information?"

Financial services and technology companies were amongst the worst for transparency, according to the survey.

While 70 percent of companies scored well for their in-house anti-corruption programmes, 61 percent provide too few details of their corporate structure and operations, and only 6 percent make disclosures at a country level of their activities in foreign countries, Transparency International said.

The Group of 20 leading nations have targeted corporate transparency after the 2007-2009 financial crisis exposed the risks to global stability from secretive corporate structures and offshore shell companies used to avoid taxes and launder illicit earnings.

However, many reforms proposed by the G20 remain voluntary or have not yet been enacted, and face vigorous opposition.

In the United States, the Chamber of Commerce representing American businesses has led a series of lawsuits challenging new disclosure corporate rules designed to limit opportunities for corruption.

Transparency International said that global corporations have a legal and ethical obligation to conduct business honestly, which requires committing management time and resources to openness, particularly over how their operations are structured.

"We continue to see business as usual and a somewhat cavalier attitude by too many over... issues that are top of the agenda for people no longer willing to tolerate corruption," said Elers.

Italian energy company Eni topped the rankings scoring 7 out of 10, the highest average score of any company on all three measures Transparency International examined - anti-corruption programmes, corporate openness and country-level reporting.

Vodafone Group Plc, the U.K.-based telecommunications company, came second and was the only company that scored at least 50 percent on all three counts.

European companies, which have the toughest disclosure regulations, held 21 of the top 25 slots, and companies in industries requiring government licenses to operate - telecommunications, utilities and extractives - generally scored better.

Chinese companies held eight of the 13 bottom rankings, and Bank of China ranked the worst.

The technology industry also scored poorly.

Amazon.com, Apple Inc, Google Inc and IBM fail to publish a full list of countries where their subsidiaries operate, Transparency International said. IBM said by email it publishes that information annually in its 10K filing with the U.S. Securities and Exchange Commission. Other companies did not respond to requests for comment.

Additionally, 90 of the 124 companies reviewed fail to reveal any information about tax payments in foreign countries.

The companies were chosen from the Forbes list of the world's largest public corporations and the analysis covered data from the period August to October 2013.

(Reporting by Stella Dawson, editing by Alisa Tang)

Our Standards: The Thomson Reuters Trust Principles.