But it generally is, relative to the other forms of government. Democracy is the only form of government where you can prosecute corruption or end corrupt regimes without violence, and in my book that's close enough. For a simplified game mechanic, this is intuitive and makes sense. Anything more nuanced, and it isn't a game anymore.
http://blog.transparency.org/2009/11/17/cpi2009/
And Civ is not responsible for the CPI