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The Global Corruption Report 2004 provides an overview of the state of corruption around the world. It covers national and international developments, institutional and legal change and activities within both the private sector and civil society for the period from July 2002 to June 2003. This year the Global Corruption Report focuses on political corruption. It presents 34 country reports and the latest research on corruption.

Political corruption: the scale of the problem
Political corruption is the abuse of entrusted power by political leaders for private gain. The scale of the problem can be vast. One of the world’s most corrupt leaders, Mohamed Suharto of Indonesia, allegedly embezzled up to US $35 billion in a country with a GDP
of less than US $700 per capita. Corruption in political finance takes many forms, ranging from vote buying and the use of illicit funds to the sale of appointments and the abuse of state resources. Not all are illegal. Legal donations to political parties often result in policy changes, for example. A 2003 World Economic Forum survey finds that in 89 per cent of the 102 countries surveyed the direct influence of legal political donations on specific policy outcomes is moderate or high.

Controlling political finance
The legal regimes governing political finance are generally inadequate. Standard regulations control the public financing of parties, establish limits on contributions and spending, and obligate parties and candidates to disclose the sources of their funding. But even disclosure requirements – the least controversial of regulations – are lacking in one in four countries. Worse yet, one in three countries still has no overall
system in place to regulate political party finance. In addition to direct funding, regulations must take account of in-kind donations to parties, particularly free or subsidised media access. In Guatemala and Uruguay, media owners have gained significant political leverage by offering free air time to governing parties. In Italy, Prime Minister Silvio Berlusconi is simultaneously the largest private broadcaster and the regulator of three public networks, pointing to a conflict
of interest.
Laws regulating political finance must be followed up with effective enforcement.