Launch of UK foreign anti-bribery strategy
19 January 2010
Chatham House, London
Justice Secretary Jack Straw has given a speech at the launch of the UK foreign bribery strategy today.
[Check against delivery: this is the prepared text of the speech, and may differ from the delivered version.]
The Right Honourable Jack Straw MP, Lord Chancellor and Secretary of State for Justice:
I am here today to launch the government's Foreign bribery strategy. As a minister I am proud to do this; as Foreign Secretary I saw the appalling consequences of bribery and corruption at first hand. But I am equally proud to do so as a private citizen. Any right thinking person knows that this is something which any decent society will not tolerate.
Impact of bribery
By definition, it is hard to assess the costs of bribery. But the estimates we do have are staggering. The World Bank estimated that around $1trillion is paid each year in bribes. Transparency International estimates that 15% of companies in industrialised countries have to pay bribes to win or keep business. In Asia it is estimated that 30% do so.
The estimate is 60% for the former Soviet Union. Politicians and officials in developing and transition states alone are estimated to receive between $20 and £40 billion in bribes; the equivalent of 20 to 40% of development assistance. And this is bribery alone. It does not include wider forms of corruption; embezzlement of public funds; theft or misuse of public assets; distortions in public procurement. And it takes no account of fraud in the private sector.
These are dreadful figures. And beyond them figures lie innumerable individual tragedies.
Let me tell you the sort of tragedy I mean. A young mother in a developing country died in childbirth along with her new born baby. The new road which she and her husband chose to travel to hospital had not been completed. In fact, part of it did not even exist, due to the corruption of a public official by a UK person. And those who blow the whistle on such practices are often persecuted themselves for having the moral fortitude to stand up against an abuse of power.
Bribery is a flagrant abuse of power. The nests of those already enjoying it are feathered, their power enhanced by illicit means, enhanced at the expense of those already vulnerable, depriving them of their rightful share of resources, with money – often international aid – siphoned off from projects designed to help them. Tax is not paid on bribes – so the integrity and fairness of taxation is undermined. Taxation income declines, so there is less money available for legitimate government business. Standards of public services plummet, as they are deprived of resources, and their planning and delivery debauched. A downward spiral is created, pushing honest people into poverty - or further into poverty - and undermines their most basic of human rights.
Bribery disadvantages those who go about their business ethically. Those who pay bribes win contracts. Those who behave properly may miss out; reputable companies choose to turn down overseas opportunities due to the threat of corruption. Fair and equal competition is distorted and additional costs accrue; the World Bank has estimated that bribery adds 10% to business costs. Standards and contracts are not met – so those who were meant to benefit suffer.
When I served as Foreign Secretary I was struck that the thing which most deprived a nation – and reduced its ability to cope in times of strain or tension – was not a lack of natural resources, an inhospitable climate or geography. It was the absence of the rule of law. The rule of law is the very basis of a functioning state; a guarantee that fair is fair. It is the oxygen of a civilised society; remove it and a vacuum is created in which corruption and exploitation can flourish.
Bribery is an inversion of what government and business should be about: Power is abused; the weak are exploited; the dishonest rewarded.
OECD and fighting bribery
However, the situation is improving. We have come a long way in a short space of time; it is only 20 years ago that bribes were tax deductible in many countries. It is only ten years since the Anti-Bribery Convention came into force. Much has been achieved in that time – and much of the credit for that is down to the OECD.
It supports the robust monitoring of the Convention. It provided the analytical muscle to drive international work on transparency in taxation, supporting last year's G20 action against tax havens and money laundering. It has overseen the agreement and adoption of December's new Anti-Bribery Recommendation. [This should do much to detect and prosecute foreign bribery, introducing new provisions for combating small facilitation payments, protecting whistleblowers and improving communication between public officials and law enforcement agencies.]
This is an important development; the Recommendation means parties to the Convention must do more than enact laws to implement it; they must put words into action. The OECD and its system of peer review will have real teeth; evaluation will focus upon what is happening on the ground. Combating bribery is not declaratory; it is more than enacting laws; signatories need to implement and enforce them vigorously.
In those past ten years the world has changed enormously; globalisation has made us all near neighbours. We have seen the emergence of powerful new economies, with increasing influence on the international stage. The challenge for us is to convince them of the value of this critical work; to help them see that cracking down on bribery is good for business, good for trade, good for their people and good for their international credibility.
The signs are promising. Dr Manmohan Singh, the Indian Prime Minister, has targeted corruption as a barrier to his country's efforts to 'march ahead as a nation' and the Indian Government regularly blacklists companies known to offer bribes from bidding for defence contracts. There have been concerns that Indonesia's Corruption Eradication Commission was under challenge, but it has continued to prosecute and imprison senior officials. Russia has announced that it intends to accede to the Bribery Convention.
This is heartening, but it does not detract from the challenges we face. We have some hard work ahead of us if we are to maintain the impetus. The worldwide economic downturn might tempt some to consider fighting bribery a luxury they could do without. I take a different view. A globalised world obliges us to create the right conditions for fairness in trade and probity in government; it means honesty cannot be restricted by national boundaries.
I am confident we can make real progress; not least because the impact of the OECD's work over the last decade augurs well for the future.
The Role of the UK in fighting bribery
The UK remains as committed as ever to play its part in fighting corruption in all its forms. The commitments we have made are bearing fruit. Our investment in the City of London Police's dedicated Anti-Corruption Unit has seen investigations into foreign bribery go up from four in 2006 to over 20 currently. The new civil asset recovery powers granted to the Serious Fraud Office led to a multi-million pound fine for a UK construction firm in October 2008 of that year for inaccurate accounting of payments by overseas subsidiaries. We are also bearing down on bribe solicitation and embezzlement; £130million of assets has been frozen and £20million recovered from money laundering by politically exposed persons.
We have worked closely with our foreign partners. In Mozambique our support for the government's customs reforms has led to a forty fold improvement in clearance times, improving the environment for business and reducing the likelihood of bribery. As a result customs revenues doubled between 1996 and 2005. With our support, the Zambian government recovered £20million in cash and assets stolen by public officials and the cabinet is using £2million of that to improve maternity services. In Uganda we helped take 9000 ghost workers off the public payroll, saving some £12million – enough to feed 1000 children a day for over a year.
The UK Foreign Anti-bribery strategy
The UK now stands at the forefront of efforts to recover the proceeds of corruption. The Foreign Anti-Bribery Strategy I am proud to launch today bolsters this work, building on the solid foundation of our existing campaigns.
It sets out how we will minimise the involvement of UK nationals and companies in foreign bribery.
First, it will strengthen the law. The authorities already have new powers. Now, the Bribery Bill, currently before Parliament, will transform the law. At present it meets our international obligations, but it is complicated; the Bill will give greater clarity. And the law needs to catch up with developments in business regulation and recognise efforts made in good faith to avoid improper payments.
Those who need to abide by the law will know their responsibilities and be encouraged to adopt safeguards against bribery. The government will have the right tools to take on bribery and see those convicted of bribery punished properly.
The Bill will:
- make it a criminal offence to give, promise or offer a bribe and to request, agree to receive or accept a bribe either at home or abroad, including bribery of a foreign public official;
- increase the maximum penalty for bribery from seven to 10 years imprisonment, with an unlimited fine;
- introduce an offence of a failure on the part of a commercial organisation to prevent bribery by a person performing services for or on its behalf. But businesses will be able to avail themselves of a defence in law if they show that they have adequate procedures in place to prevent bribery.
The Bill has had a long gestation. But that is because we have worked closely with you to get it right. The welcome it has received suggests to me we have succeeded; the Independent Chair of the OECD Working group on Bribery for example has recognised that it reflects good practice on corporate liability. We will now make sure we work with you to make the guidance on prevention of bribery right, with a view to publishing it well before the Act comes into force.
Second, we will support ethical business. We already work very well with business to help identify risks of corruption overseas and put in place practical anti-corruption standards. And we are going to do more; we are developing detailed primers on overseas corruption issues for key markets and sectors. I want UK business to be aware of the risks it faces and confident about the ethical standards it will uphold. I want UK business to compete and win in competitive global markets. I want proactive risk management by UK companies so they enjoy the trust of its partners and international agencies.
Third, we will enforce the law. We have already put resources in [to the City of London Anti-Corruption Unit]. The SFO and the Attorney General have published guidance. And this was instrumental in the first UK prosecution and conviction for a company for overseas corruption last September.
Fourth, we will strengthen international efforts against corruption. We have made a major contribution to the work of international agencies. And we have supported countries – such as Bangladesh and Afghanistan – with their own efforts to tackle bribery and strengthen accountability and transparency.
I have made it clear just how important tackling foreign bribery is; and just how committed the UK is to playing its part. Our new Strategy bears this out. But to conclude, I ask you to encourage all of our trading partners who have yet to accede to the OECD Convention to do so. Fighting bribery is about fair play in trade. It is about nurturing and sustaining the rule of law. It is about working together, so that the people we serve get a society in which they can thrive.
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