Memorandum submitted by the Department
for International Development
INTRODUCTION
1.1 Governments everywhere are under pressure
to take action against corruption. Across the world, the public,
the private sector and governments are increasingly aware of the
damage corruption brings to their economies, politics and to the
lives of the people, especially the poor. Many countries are beginning
to take action but progress will depend on maintaining a concerted
global effort in developed and developing countries.
1.2 The nature and impact of corruption
are increasingly understood. There is a growing understanding
in both developed and developing countries that corruption has
adverse impacts on investment and growth. Cross country studies
by the IMF and World Bank show that overall economic growth and
investment levels are lower in countries with high levels of corruption
due to the uncertainty created, the costs of bribes and time consuming
bureaucracy. [1]
1.3 The evidence of the impact of corruption
on poor people is also striking. Participatory poverty assessments
in 23 developing countries[2]
consistently show that corruption reduces the access of the poor
to basic services. Essential medicines and supplies go missing.
Unofficial payments are often required for health, education and
other services. Individuals go without services as a result. In
many countries where the justice system is affected by bribery
the poor are unable to obtain the protection of the law and their
security is threatened by those who should protect them. This
so-called "petty" corruption affects poor people especially.
They are most often the victims and they are the most vulnerable.
1.4 "Grand" corruption that involves
leaders, politicians, senior officials and entrepreneurs in developing
and transitional countries also undermines development and economic
progress. This can take many forms. Bribes flow from developed
country firms in order to win contracts or seek other favours
from politicians and officials. Sometimes the corruption involves
looting public assets within the country. It always leads to poor
policies, discriminatory application of regulations, tax evasion
and wasted resources. Corruption obviously leads to spending on
sub-optimal projects. Cumulatively it holds back economic development
and perpetuates poverty.
1.5 This kind of corruption is usually supported
by money laundering and together they form a cycle of interdependent
and illegal activity. Corruptly acquired money is recycled through
the international financial system so that it reappears "laundered"
as apparently legitimately held funds very often in the developed
world. All parts of this cycle need to be tackled if corruption
is to be curbed effectively. Action needs to be global, as corruption
can originate in any country; and those with corruptly acquired
funds seek out weaknesses in international systems designed to
prevent laundering. Banking secrecy or lax anti-money laundering
regimes can be used to access the global financial system.
1.6 Effective action therefore requires
international cooperation between developed and developing countries
and by countries within their own regions. Governments need to
work in their own countries in partnership with the private sector
and civil society.
1.7 NGOs and civil society have played an
important part in giving greater prominence to corruption and
the need for international and national action. International
organizations and development agencies are also beginning to realise
that they will only have much greater impact if they collaborate.
There has been an encouraging growth in collaborative arrangements
affecting most aspects of anti-corruption and money laundering
work.
1.8 It is not only poor people and developing
countries that stand to benefit from efforts to curb corruption.
Corruption distorts competitiveness and constitutes an unfair
barrier to trade. Curtailing bribery in international trade would
help prevent the damage to the interests of legitimate businesses
which otherwise suffer from reduced sales and market share. Wealthy
countries are also affected when corruption flows through financial
centres such as London. Failure to attack corruption and the associated
money laundering could do substantial damage to the reputation
of these centres.
1.9 The scale of the problem is very great
but the prospects for change have never been better. In the last
five years there has been a transformation of attitudes towards
corruption. Governments are increasingly aware of the costs of
corruption and are more willing to take action. This commitment
now needs to be translated into action.
1.10 In parallel with national action there
is increased activity at the international level. The anti-bribery
conventions of the OECD and the Council of Europe illustrate a
new commitment to action by developed countries. Both developed
and developing countries are tackling money laundering in Europe,
the Caribbean and elsewhere. Parts of the multinational private
sector see the establishment of integrity standards as important
for their reputation and business. The Government believes it
is important to maintain the momentum for change by continuing
to support action in all of these areas. More needs to be done
to ensure full implementation of these initiatives.
1.11 Several Government Departments are
involved in efforts to curb corruption. The Treasury has oversight
of action against financial crime and money laundering. The Home
Office leads on the development of criminal law relating to bribery,
money laundering and asset recovery. The DTI is responsible for
UK commitments under the OECD Convention on bribery in international
trade and for improving corporate governance in the UK business
sector including adoption of codes of conduct relating to transparency
and integrity. DFID promotes action on corruption in developing
countries as an essential measure for improved poverty reduction.
It provides technical and financial support for programmes to
bear down on corruption and money laundering work in developing
countries and internationally. DFID also seeks to ensure that
other departments take account of development considerations when
developing policy on corruption.
1.12 This paper sets out the position of
the Government on corruption in general and specifically as it
affects developing and transitional countries. Sections 2 and
3 set out the policy and response being made by government in
general and by DFID in particular. Section 4 outlines collaborative
efforts between development agencies. Sections 5 and Section 6
deal with the global response to combating corruption particularly
bribery by international business and money laundering. Section
7 describes the efforts of the UK private sector to prevent corruption
affecting their own activities. The final section explains how
development agencies can protect development assistance programmes
from corruption.
SECTION 2: UK
GOVERNMENT STRATEGY
AND APPROACH
TO TACKLING
CORRUPTION
2.1 The Government has been developing a
multipronged approach to guide its efforts in curbing the effects
of corruption on international development. The key strategies
are to:
(i) support anti-corruption strategies in
developing and transitional countries committed to effective anti-corruption
strategies;
(ii) drive out bribery from international
trade and business;
(iii) deter laundering of funds corruptly
acquired in developing countries;
(iv) protect development assistance from
corruption.
2.2 Governments in developing and transitional
countries need to take the lead responsibility for addressing
corruption in their countries. The international development community
and developed countries also have an important role to play. Developed
countries need to reduce their contribution to international corruption
and constrain money laundering. International development agencies
should support policy and institutional changes in developing
countries and the development of the capacity in the state, civil
society and private sector to address corruption.
2.3 These efforts will be more effective
in this area as in many others, if international development agencies
work in close collaboration and avoid duplication and differences
of approach. A key element of government strategy is therefore
to work closely with the international financial institutions
and to encourage greater co-ordination between the anti-corruption
efforts of bilateral development agencies. This has been a weak
area in the past but progress is now being made.
2.4 The Government also recognises its responsibility
for combating bribery in international trade caused by UK companies
and the laundering of the proceeds of corruption through UK financial
systems and institutions. Existing anti-corruption and anti-money
laundering laws are under review and a higher priority is being
given to investigating and prosecuting offenders.
2.5 New legislation is being considered
which will clarify the law on bribery by British firms and nationals.
The Government has ratified the OECD Convention which seeks to
eradicate bribery of public officials by international firms.
The Convention is regarded as the primary international mechanism
for dealing with bribery in trade. Our objective is to encourage
its adoption by non OECD Countries and to push for full implementation
by existing signatories. UK compliance with the Convention had
been criticised in the OECD peer review and UK law will be updated
and clarified taking into account our obligations under the Convention.
2.6 The Government has recently been reviewing
the law on money laundering and asset recovery with the aim of
closing loopholes in the law and strengthening its enforcement.
These include recent studies conducted by the Performance and
Innovation Unit (PIU) of the Cabinet Office and an on-going review
of mutual legal assistance. Improving compliance with the law
will include strengthening oversight and investigative bodies
such as the Financial Services Authority, the Serious Fraud Office
and the National Criminal Intelligence Service (NCIS).
2.7 International collaboration in the area
of money laundering is crucial to the success of efforts to control
the problem. The intergovernmental Financial Action Task Force
(FATF) is encouraging harmonisation of laws, cooperation between
jurisdictions and exchange of information between governments.
The Government is a member of FATF and as part of its anti-corruption
effort it supports the extension of FATF-type arrangements elsewhere
in the world. A key objective over the next few years is to support
the work of anti-money laundering groups in Asia and Africa and
to build on the successful establishment of groups in the Caribbean
and Central and Eastern Europe.
2.8 Development programmes can themselves
be vulnerable to corruption in aid procurement and misuse or diversion
of development assistance. DFID has been improving procedures,
upgrading its systems and training staff to ensure that procurement
processes are open, transparent and free from bribery and that
financial controls and audit procedures are tight enough to detect
malfeasance and attempted corruption. It supports the strengthening
of procurement systems in international development institutions
and in developing and transitional countries.
SECTION 3: ANTI-CORRUPTION
STRATEGIES AND
SUPPORT FOR
DEVELOPING COUNTRIES
Anti-corruption Strategies
3.1 Strategies for tackling corruption effectively
in most countries will include three main elements. The first
involves curbing the discretionary powers of politicians and officials
and thereby reducing their opportunities for corruption. The second
involves reinforcing the positive incentives for higher standards
of integrity and professionalism in politics, government and the
private sector and eliminating the incentives for corrupt behaviour
such as poor pay. The third element involves increasing the constraints
on corrupt behaviour by holding corrupt individuals and institutions
to account, by strengthening public and political pressure for
such action and by strengthening anti-corruption laws and the
state institutions responsible for investigating and prosecuting
cases of corruption.
3.2 The need for this kind of strategy is
confirmed by World Bank studies[3]
that illustrate that low pay, poor management and weak accountability
in the public service are associated with higher levels of corruption.
Corruption flourishes where there is a low risk of detection and
punishment and the benefits of corruption are large in relation
to public service salaries.
Reducing Opportunities for Corruption
3.3 In many countries the implementation
of law and policy allows multiple opportunities for ministers
and officials to exercise their discretion in using their authority.
Where the temptation is present and the constraints inadequate,
they may use these powers to extract bribes in return for favourable
legal, tax and regulatory decisions. Policy and institutional
reforms that limit the opportunities for exercising discretion
in decisions and reduce face-to-face interactions help reduce
corruption.
3.4 The old overextended and highly centralised
states created a host of opportunities for corruption. Breaking
up state monopolies, liberalisation and privatisation, removal
of tax exemptions, and streamlining of business licensing requirements
are all part of the changes required. But in some cases the process
of privatisation was not handled well and it gave rise to new
opportunities for corruption. Privatisation therefore needs to
be carefully planned and executed to avoid creating new opportunities
for corruption.
3.5 Increasingly development efforts seek
to create effective government systems which more effectively
deliver services, provide appropriate regulation and impartial
law enforcement. Effective governance requires reduced corruption.
DFID is supporting the reform of tax systems and the strengthening
of revenue administrations in South Africa, Malawi, Zambia, Tanzania,
Uganda and Mozambique. This has reduced the scope for exemptions
to be granted on imported goods by ministers. Opportunities for
tax evasion through bribery were also reduced when face to face
contact between taxpayers and revenue officials was limited; tax
declarations were subject to more rigorous checking through computerised
systems; and far fewer forms had to be completed by taxpayers
and approved by officials.
3.6 Improving other government systems is
also important. More rigorous procurement systems that are open
to public scrutiny reduce the opportunity for companies to secure
contracts through bribery. Open and merit-based recruitment and
promotion in the public service also reduce the opportunities
for patronage.
see also Hellman, J et
al "Seize the State, Seize the day". An Empirical Analysis
of state capture and corruption in Transition Paper presented
to World Bank Annual Conference, April 2000 and also Stapenhurst
and Kpundeh "Curbing Corruption Toward a Model for Building
National Integrity" World Bank, 1999.
Altering The Incentives for Corruption
3.7 It is equally important to address the
incentives for corrupt behaviour. Much corruption in poorer countries
(and some developed countries) has its origins in politics. Vote
buying is commonplace, either directly or through projects apparently
funded by the local politician. Governments have been pressed
to adopt multiparty systems with few limits on electoral expenditure.
Such limits need to be popularised and have the support of political
parties and parliaments, combined with tight monitoring, in order
to reduce the incentive to steal public resources or sell favours
to the private sector.
3.8 In Uganda, Kenya and Zambia, DFID support
through local NGOs has helped establish a more effective lobby
for increased action on corruption, while in Zambia the programme
for education on corruption is seeking to build an effective working
relationship between the anti-corruption commission, government
departments and civil society.
3.9 When pay is below a living wage, public
sector staff are bound to seek other ways of maintaining their
families. Low pay also leads to low morale and bribes are less
likely to be resisted. But it is not the very poor who tend to
be the most corrupt. Managers and professionals have more opportunity.
Better management systems, combined with adequate pay, improve
standards of honesty in the public services.
3.10 A number of developing and transitional
countries are addressing the problem of incentives through public
service reform. A key aim is typically to improve pay and to finance
these improvements (which would not otherwise be affordable) by
reducing the numbers of staff whilst minimising adverse consequences
for the individuals involved by making severance payments. Associated
efforts to improve management capacity and strengthen personnel
systems, financial controls and service delivery systems are also
critical for improving effectiveness. DFID is supporting programmes
of this type in India, Tanzania, Kenya, Uganda, Zambia, South
Africa, Ghana and Mozambique. Efforts to improve public administration
are also being supported in Eastern and Central Europe.
3.11 The overall record on Public Service
Reform is mixed but where there is political commitment to these
programmes, they have made considerable progress. In Tanzania
average public service salaries are up by 70% in real terms and
in Uganda by a factor of ten since 1991. Together with management
changes this has improved motivation and reduced the pressure
for moonlighting and petty corruption. Opportunities for corruption
are gradually being closed off as financial systems are improved
and better payroll management reduces the number of "ghost"
workers.
Increasing Constraints and Sanctions
3.12 International experience suggests that
strengthening oversight and sanctions through independent, well-resourced
and powerful public bodies, such as audit offices and anti-corruption
commissions can reduce corruption. But corruption is greatest
where the law enforcers are themselves corrupt and act with impunity.
In such cases, cleaning up the law enforcers—the judiciary,
the police and regulatory bodies—is both a priority and
extremely difficult.
3.13 A number of countries including Malawi,
Zambia, Uganda and Sierra Leone have projects underway, which
DFID is supporting, to strengthen anti-corruption laws and establish
independent anti-corruption commissions. UK support is directed
to building up the capacity of these commissions to educate state
institutions on anti-corruption techniques, to detect and investigate
instances of corruption and to prosecute corrupt officials and
ministers. An important test of commitment is whether governments
dismiss corrupt ministers and allow them and senior officials
to be prosecuted.
Implementing the DFID Anti Corruption Strategy
3.14 The UK, through the international development
programme, is ready to support governments that are committed
to bearing down on corruption. Indeed such a commitment is a pre-requisite
for development assistance. In countries where corruption is a
major problem, governments need to translate that commitment into
a well-articulated anti-corruption strategy and to implement it.
The Government is ready to support the development of such strategies
and the wide range of governance measures that may form part of
a comprehensive programme. DFID country strategy papers include
an assessment of the scale and nature of corruption and of government's
willingness to tackle it.
3.15 The development of effective anti-corruption
programmes and the existence of accountable financial systems
is a precondition for many development agencies, including DFID,
to move to sector-wide strategies and budgetary support. In these
cases, DFID establishes special project and audit arrangements
to safeguard UK taxpayers resources and their developmental use.
3.16 Where developing and transitional country
governments are unwilling to make the commitment required to address
corruption, the level of development assistance provided is reduced.
DFID makes every attempt to protect programmes that benefit the
poor by channelling support through NGOs, local government and
other agencies but such support can not lead to the improved government
systems necessary to improve economic performance and services
for all citizens and to make reform sustainable.
3.17 In order to enhance DFID's effectiveness
in supporting developing countries, in co-ordinating with international
initiatives and collaborating in the Government's wider contribution
to tackling corruption, DFID has appointed an Anti-Corruption
Co-ordinator. DFID also plans to establish an anti corruption
resource centre that can provide expertise and practical guidance
on anti-corruption efforts.
SECTION 4: COLLABORATION
WITH THE
INTERNATIONAL FINANCIAL
INSTITUTIONS AND
DEVELOPMENT AGENCIES
4.1 The effectiveness of support for anti-corruption
programmes would be substantially enhanced by better co-ordination
between development agencies. DFID is working with the international
financial institutions and the bilateral donors to develop a common
approach and to increase direct collaboration on anti-corruption
work with joint donor funding of anti-corruption programmes in
developing and transitional countries wherever possible.
Collaboration Through Poverty Reduction Strategy
Processes
4.2 A further key objective is to build
consensus between governments, private sector and civil society
on the need for action against corruption and the nature of the
measures. An important opportunity for this is presented in the
preparation of Poverty Reduction Strategies (PRS). These are becoming
key documents, setting out how resources will be used to make
progress toward the international development targets. The preparation
of a full PRS is led by governments with the active participation
of the private sector and civil society.
4.3 While no rigid guidelines have been
set for a PRS, it is expected that countries will address major
impediments to poverty reduction such as corruption. DFID is proposing
to the IMF and the World Bank and to the countries concerned that,
where appropriate, the PRS should include an assessment of corruption
and set out action to tackle the problem. The Bank has agreed
to include these suggestions in future guidance. Commitments and
plans for anti-corruption programmes can also be assessed when
the PRS is presented to the IMF and the World Bank Boards.
Working With International Institutions
4.4 In 1996 the World Bank's President spoke
about the "cancer of corruption" and its devastating
effects on development, and committed the Bank to take action.
The Government supports the Bank's stance and its anti-corruption
strategy which has set the standard for other development agencies.
This has four main elements:
— preventing fraud and corruption in
Bank projects and programmes;
— assisting countries that ask for
help on corruption;
— mainstreaming corruption issues into
country analysis and lending decisions;
— contributing to international efforts
to tackle corruption.
4.5 The Government has also strongly supported
the more prominent role on corruption that the IMF and the World
Bank have taken in recent years. At the 1997 Annual General Meeting
of the IMF and the World Bank both organisations jointly highlighted
the importance of better governance and the threat that corruption
poses to sound economic management and economic development. In
a policy statement released in 1997 the IMF set out the contribution
it could make to improving governance in member countries including
tackling corruption. Since then the IMF organisation has been
more proactive in advocating anti-corruption policies and institutional
change to eliminate opportunities for corruption. Corruption has
been a major factor in lending decisions in Indonesia and Kenya.
4.6 The IMF Fund has continued its efforts
in detecting and acting upon incidents of both mis-reporting and
misuse of its resources. The Fund has implemented requirements
that all countries making use of its resources will publish annual
central bank financial statements that are independently audited
in accordance with international standards. They have also taken
extensive measures to deal with incidents of mis-reporting.
4.7 The UK encourages the IMF to take into
account the level of corruption and the degree of commitment to
tackle corruption. In the case of Kenya, the UK supported a suspension
of new commitments until that Government made stronger and more
convincing efforts to tackle corruption. This stance was supported
by all the major donors and, a multi donor Economic Governance
Group was established to co-ordinate the donor response and to
promote dialogue on governance issues.
4.8 The World Bank introduced an anti-corruption
plan in early 1999 which focused on improving financial and procurement
systems in borrowing countries as part of a wider effort to tackle
corruption. Internal financial management and audit arrangements
have also been enhanced. Changes have been made to the investigation
of suspected bribery in the bidding or execution of contracts
and its policy on the exclusion of companies from future tenders
where there is convincing evidence of corruption or fraud. Whistle
blowing facilities and an independent investigation committee
have been established. 44 companies and nine individuals have
been debarred from future procurement.
4.9 A review by the US General Accounting
Office in April 2000 of Bank controls over project lending concluded
that the Bank had made significant progress in implementing effective
management control systems. However concerns were raised about
the failure of borrowers to comply with Bank procurement rules
due to managerial weaknesses and lack of skilled staff. Also the
Bank did not have a system for allocating its anti-corruption
assistance among borrower countries based on the risks involved
and monitoring was found to be generally weak. The review concluded
that a more aggressive approach was needed to further strengthen
management systems and to build borrowers capacity to fight corruption.
It will take time for these efforts to have an impact and more
needs to be done to extend programmes of anti-corruption into
World Bank country programmes.
4.10 DFID is working more closely with the
Bank at country level to promote increased donor co-ordination
and to press for firm commitments and action to address corruption.
A collaborative programme is being developed which will support
the efforts of Bank staff in 14 countries in Africa, Asia and
Eastern Europe over the next few years. This will provide expertise
to countries to help design anti-corruption plans which can be
subsequently implemented with assistance from multilateral and
bilateral donor programmes. This will be led by the World Bank
Institute which aims to develop and share knowledge on corruption
issues with developing countries and to facilitate their efforts
to develop anti-corruption programmes.
The Utstein Initiative
4.11 In May this year the Utstein group
of donors which includes the Governments of the UK, Norway, Netherlands
and Germany issued a joint statement setting out their proposals
for tackling corruption in poorer countries and for a collaborative
programme.
4.12 Utstein members have committed themselves
to give a higher priority to addressing the problem of corruption
through their development assistance programmes and to do this
in close collaboration with each other and with the IMF and World
Bank. The Utstein group is also working to reduce the administrative
burden on developing countries of multiple donor programmes and
to increase the effectiveness and impact of their assistance.
DFID is working with other Utstein members to agree common policies,
to harmonise procedures and to provide joint funding and shared
programme management in the area of anti-corruption.
4.13 Utstein partners have agreed an action
plan. It covers co-ordination of programmes of support to developing
and transitional countries that are committed to reform and combating
corruption. This includes one member taking the lead in each developing
country to coordinate Utstein support and joint financing of new
work by the World Bank Institute to generate political support
for reform, as described in paragraph 4.10 above. As part of the
planned assistance, Utstein donors will support the strengthening
of financial management and procurement systems in developing
and transitional countries.
4.14 Utstein Partners will also join DFID
in developing a resource centre in their countries dedicated to
anti-corruption and money laundering expertise. The centre will
help co-ordinate activities, develop networks, identify sources
of expertise and act as a source of information and advice.
SECTION 5: GLOBAL
ACTION TO
COMBAT CORRUPTION
5.1 The increasing global concern with corruption
has resulted in the formulation and adoption of a number of international
anti-bribery conventions. As well as signaling the condemnation
of corruption by the states which are party to them, these have
highlighted the importance of halting the practice of companies
offering bribes to win business abroad. The Government strongly
supports these initiatives because as they begin to bite they
can help constrain one of the main sources of grand corruption
in developing and transitional countries.
OECD Convention
5.2 The OECD Convention on the Bribery of
Foreign Public Officials (1997) represents a major step forward
in tackling international corruption. So far 34 countries including
the UK have signed the Convention. Each signatory country takes
responsibility for the activities of its companies and what happens
on its own territory. Signatories are required to "establish
that it is a criminal offence under its law for any person to
intentionally offer, promise or give any undue pecuniary or other
advantage, whether directly or through intermediaries, to a foreign
public official".
5.3 The 1997 Revised Recommendation on Combating
Bribery in International Business Transactions also sets out measures
which countries should take in the fields of accounting and public
procurement. These require companies to maintain adequate accounting
records, adopt internal company controls, and undergo external
audits. In the area of public procurement, it is recommended that
companies found guilty of bribing foreign officials be suspended
from future public contract bids. Further, countries should cooperate
in investigations and other legal proceedings in order to efficiently
prosecute cases in which foreign public officials have been bribed.
5.4 The Revised Recommendation also urges
prompt implementation of the 1996 Recommendation on Tax Deductibility
of Bribes to Foreign Officials which calls on countries to disallow
the deductibility of bribes to foreign public officials.
5.5 The Convention is open to non-OECD countries
as well. As of June this year 21 countries had ratified the Convention
including two non member countries (Brazil and Argentina). The
inclusion of non member countries is a welcome trend. If non members
can continue to be attracted to the Convention there is potential
for it to have a steadily growing impact and geographical spread.
The UK Government also regards corruption as a constraint on international
trade and a key UK Government objective is to create a level playing
field by extending the scope of the Convention.
5.6 The Government also supports the commitment
made by the OECD to monitor progress comprehensively and rigorously.
The Convention includes a process of peer review of implementation
carried out through the OECD Secretariat. The first phase has
been assessing the conformity of signatory country legislation
with the Convention. This phase will be completed by the end of
the year and the OECD Ministerial meeting in June concluded that
considerable progress was being made in most countries. Phase
2 will focus on the application of the law in practice.
5.7 The UK is represented by DTI and the
Home Office on the relevant OECD committees and will continue
to play an active part in the management and supervision of the
review process. The growing demands of the monitoring regime have
stretched the resources of the OECD Secretariat. The Government,
together with other Utstein partners, has indicated its willingness
to provide additional finance to the OECD Secretariat for the
extension and monitoring of the Convention and for awareness raising
activities.
Implementation of the Convention by the UK
5.8 The UK ratified the OECD Convention
in November 1998 on the basis of existing statute and common law.
Work was already underway on a review of the reform of the existing
law of corruption and this review took account of the UK's international
obligations. The Home Office published proposals for updating
of the UK law on corruption[4]
in June 2000 which would involve strengthening the law and consolidation
of the existing Prevention of Corruption Acts (1906 and 1917)
and the earlier Public Bodies Corrupt Practices Act of 1889.
5.9 Subject to the outcome of the consultation
process, these proposals will be incorporated in a bill which
will be introduced when Parliamentary time allows. Consideration
is being given to parallel changes to the law in Scotland which
is now the responsibility of the Scottish Executive.
5.10 When enacted the law will include a
clear definition of the concept of corruption and enable its application
to both the public and private sectors. The law will have wider
applicability and there will be no doubt under the law that it
is an offence to bribe a foreign public official to further a
business transaction. The Government has also proposed that, exceptionally,
this offence should be subject to extra-territorial jurisdiction:
that is corrupt acts by UK nationals will be subject to prosecution
in the UK courts including when the bribe is paid abroad. In addition
the Government has proposed that jurisdiction should be taken
over offences of bribery where any "relevant event"
takes place within the jurisdiction; this is a similar pattern
to the one provided for in Part 1 of the Criminal Justice Act
1993 in respect of offences of dishonesty.
5.11 The OECD peer review of the UK was
completed earlier this year. Doubts were expressed about whether
existing legislation adequately addressed bribery of foreign public
officials and the review urged the UK to adopt appropriate legislation
as a matter of priority. The review also noted that new legislation
was under consideration. The review recommendations will be fully
addressed by the proposed legislation.
Council of Europe and Organisation of American
States Conventions
5.12 The Government strongly supports the
development of regional Conventions that which can extend efforts
to control corruption and bribery more widely. The Council of
Europe's Criminal Law and Civil Law Conventions on Corruption
are examples of attempts to create common standards for European
countries in their relations with each other and with other countries
in the region (the membership of the Council of Europe includes
Eastern Europe and former Soviet countries). The Government has
signed both Conventions.
5.13 The Council of Europe Conventions create
an opportunity for increased international harmonisation of legislation
and mutual assistance between European countries with stronger
enforcement of anti-corruption legislation. The Criminal Law Convention
covers domestic and trans-national bribery, commercial bribery,
trading in influence and money laundering. Its main features are
requirements to criminalise:
— active and passive corruption of
public officials;
— corruption of elected representatives
of domestic bodies;
— corruption of foreign public officials,
foreign elected representatives and members of international courts.
The Civil Law Convention requires states to
provide in their domestic law for civil compensation claims.
5.14 Implementation of the Council of Europe
Conventions is monitored by the "Group of States against
Corruption (GRECO) which is part funded by the UK. GRECO had 22
members as of July 2000. Its function is to assess the compliance
of its members with the requirements of the Convention. The UK
delegate to the Council of Europe sits on its committee, and HM
C&E, Inland Revenue and NCIS representatives all serve as
national experts on the evaluation teams. The first round of evaluation
(2000—01) will include visits by an evaluation team to member
countries and a questionnaire which should be issued later this
year.
5.15 The Inter-American Convention Against
Corruption, developed through the Organisation of American States
sets out common principles including acting against bribery by
firms. Such Conventions can promote mutual cooperation between
governments on a regional basis. Similar conventions could be
developed in other regions.
5.16 The Government also supports efforts
within the context of the annual meeting of Asian and European
countries (ASEM). A UK/Thailand anti-corruption initiative is
currently being developed which will promote exchange of best
practice between all ASEM members.
5.17 The UN established a Committee in 1998
to develop the draft of an international Convention against transnational
organised crime. The draft Convention calls on member states to
take action so that bribery involving public officials and the
laundering of the proceeds of bribery become criminal acts. The
General Assembly will be asked to approve the Convention later
this year. A resolution calling for the preparation of a separate
Convention specifically addressing corruption is also expected
to be approved.
1 World Development Report, The State in a Changing
World, 1997 p. 103. Back
2
Source: Global Synthesis Consultations with the Poor.
World Bank 1999. Back
3
World Development Report, The State in a Changing World,
1997 p. 104. Back
4
"Raising Standards and Upholding Integrity: The prevention
of Corruption". The Government's proposals for the Reform
of the Criminal Law of Corruption in England and Wales, Cm 4759,
June 2000. Back
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