Examination of Witnesses (Questions 140
- 159)
TUESDAY 14 NOVEMBER 2000
MR LAURENCE
COCKCROFT, MR
GRAHAM RODMELL,
MR MANZOOR
HASAN AND
MR JOHN
BRAY
Mr Rowe
140. Can I just say that one of the things that
shook us when we went to Malawi was we were impressed by the Anti-Corruption
Bureau but discovered to our horror that they felt they were being
blocked by the British Home Office in one of their investigations.
The second point I want to make is I think it was in Malawi, things
do blur a bit after a while, when we were told that the Public
Accounts Committee had never met because they could not afford
the fares to get together. It was certainly in one of the countries
we went to, I think it was Malawi, they said they had never actually
met, although they existed on paper, because the individual Members
of Parliament could not afford the costs of coming to meet.
(Mr Cockcroft) I would like to respond to that in
two ways. First of all, in relation to Malawi there is some good
news that you may be aware of because we referred to it in our
text. Gilton Chiwaula, the Director of the Anti-Corruption Bureau,
gave a speech at a conference we organised in London in July in
which he said that there were seven cases involving British companies
in which he had asked the Home Office to support his investigation
and he had not even received a reply, never mind a negative one.
I am glad to say that Peter Hain was present and within three
days of Chiwaula's return to Malawi a representative of the British
High Commission was on his doorstep asking for details of what
these cases actually were. That represents some kind of progress.
I think in relation to the Public Accounts Committee, I cannot
comment on the Malawi one but it is quite important to make this
comment in relation to corruption and aid flows, as a matter of
fact in quite a number of Commonwealth countries Public Accounts
Committees have been considering reports of the Auditor-General
for quite a long time. If we take the case of Kenya, the Auditor-General
has been reporting on major cases, including Goldenburg and the
major dam project and a number of other recognised scams, and
these reports have been tabled, they are in the public domain,
you can get them if you go to the Auditor-General's office, and
the Public Accounts Committee has debated them, but it has made
singularly little difference to any donor policy. That, of course,
is now changing because of everything that has happened in the
last three years, but the fact of the matter is that it is not
as if many of these cases are completely sub rosa, they
are splendidly in the public domain. The best account of the Goldenburg
scandal is that of the Auditor-General, which is in the public
domain and has been there for about seven years.
Chairman
141. This Parliament has difficulties of that
kind as well. What other conditions must exist in a country if
anti-corruption commissioners are to be successful?
(Mr Cockcroft) I think it is clear that there has
to be some popular reaction against what is going on. Obviously
in any society, and I think if we take Nigeria under Abacha that
would be an example, there is a degree of cynicism which is reached
which makes it highly implausible that any change is going to
happen and it then becomes very difficult for anybody, whether
from outside or from within, to generate forces of change. I think
in all these cases there has to be some identifiable domestic
force which is pushing for this outcome. That might be the church,
or it might be the mosques, or it might be civil society groups,
or it might be professional organisations. In a number of cases
professional organisations have behaved quite courageously. As
we mention in our report, the action taken by the Law Society
of Kenya in actually bringing a court case against eight people
associated with the Goldenburg scandal was remarkably courageous.
The Law Society personnel involved might have been wiped out at
any moment. One has to recognise that. Then from our own TI perspective,
although the Abacha regime was, one might say, pretty close to
being a hopeless case, the fact of the matter is that TI-Nigeria
was founded in 1994 by some rather courageous Nigerians and is
one of our strongest chapters and did develop during the mid-1990s
during the period when President Obasanjo was in jail. I think
one has to have those kinds of beacons of commitment before there
is much which can be done.
142. Is a free media an essential part of this?
(Mr Cockcroft) Yes, but I think that cuts both ways.
Obviously a free media is essential and the extent to which corruption
is now being discussed in many of the countries that I am sure
all of us have in mind is quite remarkable because it is firmly
on the agenda in a way which was unthinkable ten years ago. On
the other hand, in TI we have been responsible, with others, for
sponsoring workshops on investigative journalism because there
is a lot to be learned in terms of better practice in journalism
in reporting cases. I am sure other Members are familiar with
Uganda and one can see in the Ugandan press that there are a lot
of very wild statements made which may not necessarily be helpful
to the anti-corruption cause. They are generally helpful but it
does not do any harm to, as it were, register a note of caution.
Barbara Follett
143. Talking about communications in general,
has there been an incident of a media campaign that has been funded
by donor organisations about corruption? Mr Hasan mentioned the
electronic media. I know in a very limited fashion we are also
beginning to get the worldwide web and the Internet. There are
new ways of getting to the public. I wondered if there had been
an incident of this? I am just going to tack on my last question:
do you feel that the Department for International Development
is doing enough to eradicate corruption?
(Mr Cockcroft) I think on the first point, the role
which the media can play is, as we have already agreed, very important.
New forms of communication are relevant but probably more relevant
in Asia than Africa. Maybe Mr Hasan would like to say something
about that in a moment. Internet coverage in Africa is still very
small. Press campaigns have been used rather well by TI-South
Africa which in a Sunday newspaper has had a supplement on corruption
related issues for nearly two years now. Awareness building was
a key part of the success of the Hong Kong Anti-Corruption Bureau
and any history of that bureau, which was a success story from
the 1970s onwards, stresses the outreach that they achieved in
terms of raising public awareness. The Hong Kong story is a classic
case of that and that lesson has been learned, for example, to
revert for a moment to Malawi, because in the first year of operations
of the Malawi Anti-Corruption Bureau the Director and his team
held meetings in every district and as a result got 5,000 complaints
of corruption related issues within the first year. Something
of this is going on but probably not enough. It probably is something
to which more attention could be paid. Before addressing your
last point, I think Mr Hasan might want to add something to that.
(Mr Hasan) I would certainly agree with what you have
said in terms of communication. I think, given the fact that the
electronic media is becoming more liberalised, more people working
in this particular sector, there is a tremendous potential and
I do not think we are really exploring it properly. We feel that
media, of all different forms, can create an enabling environment,
if I can use that cliche. I think that it is important when we
are dealing with corruption and bad governance that it is not
basically setting up new institutions and having new laws, we
are actually trying to tackle people's attitudes and tackling
them from a very early stage, for example school and college students
as they grow up. We are really trying to reinforce certain ethical
values. I think the media can play a very, very important role
in that particular aspect. I would say that certainly when DFID
and other donor agencies are looking into this, it is important
to bear in mind the software side of development rather than just
the hardware side and to look at it as an holistic approach, not
just looking at one particular aspect or institution but how can
that affect other institutions. I put that in my conclusion but
I would say certainly institutions like the Auditor-General, setting
up an Ombudsman, the separation of the judiciary, which was mentioned
earlier on, repeal of certain acts which are very outdated, like
the Official Secrets Act, access to information, the right to
have information, these are some of the areas where I think donors,
and particularly DFID, could really try to focus and encourage
the civil society and an organisation like ourselves to be more
effective in tackling the issue of corruption.
Mr Worthington
144. Can I just quickly go back to a Bangladesh
question again. When we went there we saw these very, very large
NGOs like BRAC and Proshika who were delivering on education.
We found that the Bangladesh Government was not delivering on
education, they put money in but the teachers did not come out.
What would you do as DFID? Would you reward success or try to
clear up the mess?
(Mr Hasan) In terms of NGOs providing services, it
is important to bear in mind that they do not really become an
alternative source. They can provide a way forward but it has
to be the Government which has to take on the responsibility of
providing the mass of the population with education, health and
other basic necessities. We cannot really put the responsibility
on to the shoulders of big, large NGOs, they have their limitations.
Because of over-emphasis on what they can achieve they can get
into a mood of complacency themselves and I think lack of accountability
and transparency within the NGO movement is another very important
factor. I think there are limitations. I would say that the work
of NGOs needs to be seen as what can be done rather than replacing
what government should be delivering to its citizens.
Chairman
145. Before we get on to the question of UK
law and bribery, this seems to be the right point to ask you,
Mr Cockcroft, on the issue you raised in your introduction which
was that you had come to the conclusion that aid needed to be
tapered in countries where corruption was not being tackled and
was not reducing. I wonder whether you would like to comment about
donors withdrawing aid from corrupt countries. Do you have examples
of countries where donors should withdraw from government funding,
in particular lending to the departments like education, like
health, directly to, in fact, go to assist the government to deliver
those programmes? Would you think that those programmes have to
be reduced, in fact possibly stopped, if there is corruption,
like in Malawi where a considerable amount of British aid is going
into the education department and I understand schools are being
built which have never actually appeared on the ground? What do
you think we should do about that? Do you think aid in those circumstances
should be withdrawn?
(Mr Cockcroft) Could I respond to that but respond
to it in the context of Mrs Follett's last question, which I also
did not answer but there is at least a relationship between the
two.
146. Yes, it carries on from that.
(Mr Cockcroft) If I may just respond briefly to your
question of what it is DFID should be doing in relation to anti-corruption.
I think it is important to note that DFID is doing a lot and a
lot of that is well thought out and quite imaginative. One has
to recognise from a TI perspective, and any other perspective,
that this is a very difficult thing to do because, as I have said
several times, changing attitudes to corruption at the end of
the day have to come from within any society rather than from
without. So the business of identifying the key to change agents
is very crucial. I think one should note that reform of the judiciary
is something which is reasonably practical. Long-term technical
support to offices, such as the Auditor-General's, is practical.
In many societies where one party states have been dominant, the
tradition of commercial law has almost evaporated and that does
have a direct effect on foreign direct investment because investors
feel when they are negotiating, say with an Attorney-General's
department, that nobody in that department has any vague idea
about what their needs as investors are. So support in the area
of commercial law is quite significant. There is now quite a lot
of growing interest in regional appeal courts, so that under the
new East African Secretariat arrangements there is going to be
an appeal court which will make some difference to whether or
not a case gets stuck at country level. In summary, one can say
that DFID is doing a good deal and much of that is commendable.
Obviously it could do more. The key thing is to recognise that
one needs a long-term perspective and what one is really doing
is trying to support local change agents. If I may come on to
your point, Chairman. Again, the statement that we made was in
relation to whether or not governments themselves should be the
key recipients of aid. I am aware that your question relates to
increased DFID participation in the active disbursement of funds
in the education sector in particular. I think from a TI perspective
there are significant dangers in that. If one is taking the view
that in order to spend the money effectively one has to spend
it directly, this then becomes a neo-colonial type of arrangement
which may be sustainable for four or five years, but probably
not much more, and then the inevitable question becomes is there
an exit strategy, what happens after the aid programme for education,
for example, has been disbursed, can the country concerned then
administer it effectively? One has to express a certain amount
of doubt. This may be an approach to channelling and disbursing
increased quantities of aid to a particular sector but is it really
a response to the critical factors which determine the level of
corruption in any one society? From a TI perspective we would
rather doubt that. The conclusion then becomes still that the
tapering of aid in very corrupt countries which show no interest
in reform is justified but in the context, first of all, of supporting
key institutions, such as those we have mentioned several times
this morning, and trying to maximise the benefits which aid can
achieve working through NGOs and civil society organisations.
147. It is difficult to see exactly where you
would actually taper aid in view of your answer, is it not? Let
us take China. The Department for International Department is
increasing hugely its aid to China, which happens to have the
unfortunate distinction of being the most corrupt country in your
league table. Therefore, if we should taper our aid it stands
to reason, does it not, that we should taper it in China?
(Mr Cockcroft) As a matter of fact, with the greatest
of respect, I am not sure that is a very good example because
the Chinese Government is now clearly extremely interested in
the issue of corruption. In fact, it invited a delegation from
TI to China six months ago in order to try to bring itself up
to speed with international best practice and TI is having an
internal debate as to the extent to which it should, as it were,
be a part of this activity or whether or not the objectives of
the Chinese Government may have some degree of ambiguity. Your
key question is are there specific countries which should be dropped?
148. Yes.
(Mr Cockcroft) I think it would be very unfortunate
if one used this argument to identify individual countries. The
total number of countries would probably be quite small. One is
reluctant to be drawn into that. I think I would rather discuss
a possible mechanism which one could use in such a situation.
That would be to develop a trust fund approach in which aid is
made available in limited quantities to a trust fund with a board
of trustees that represent both international and, maybe in the
case of DFID, UK individuals but also more enlightened elements
of local society. That trust fund will then be responsible for
disbursing funds to individual local NGOs in that framework. I
say that, and maybe the intention behind the suggestion is more
important than the actual mechanism. TI's whole existence and
its emphasis on national chapters is based on the view that in
any society there are elements who are attempting to address the
issue of corruption or are sufficiently concerned about it to
make a move. When we began to formulate and think through TI in
1991 and 1992, there were inevitably many people who said this
was impossible because there were very high levels of endemic
corruption. In fact, TI has only been able to establish its 80
chapters, of whom at least two-thirds are in the south or in transition
economies, because in each of those countries it has been possible
to find people who are prepared to address the question. Our TI
perspective, which is not that of an official donor—TI is
not an organisation which is in the business of corroborating
donor conditionality—is to identify those progressive routes
within civil society and find ways in which they can work. As
a result of the Annual General Meeting, which we have just held
in Ottawa, it has been agreed that there will be a process through
which national chapters within TI are invited to make proposals
in relation to the debt relief discussion and how conditionality
could best be linked into that. So this would not be, as it were,
a set of ideas emanating from Western branches of TI or its Secretariat
but it would reflect the views of as many chapters as possible
on the ways in which conditionality could best be developed in
relation to their particular country.
149. I am just a bit worried whether your answer
is a little bit influenced by the fact that the Department for
International Development gives you large donations.
(Mr Cockcroft) If I might say so, Chairman, I think
that is a little unfair because I have made a very specific comment
(in relation to the current and fairly new DFID strategy of building
up and working through government departments) which is not DFID
policy and, in fact, if it was taken seriously it would be in
opposition to it. If I might say so, I think that does represent
a willingness to challenge DFID's position.
Chairman: I am glad you have cleared
that unfair question. Can we move on. In your memorandum you talk
about mending the UK law on bribery and corruption and I think
Tony Colman is going to lead us on this.
Mr Colman
150. Can I say that I am afraid I have to leave
at 12.15 to speak in Westminster Hall, so I have asked Mr Andrew
Rowe if he can continue on this particular line of questioning.
In your introductory statement you were hard hitting in the penultimate
paragraph: "The UK is currently gravely at fault to an extent
which can be described as a national disgrace. We", that
is the UK, "have no legislation adequate to deter overseas
bribery." If I may act as the Devil's advocate, looking at
your Bribe Payers' Index I see that the United States is at number
ten, we are at number 13, yet the United States have had legislation,
the Foreign Corrupt Practices Act 1977, obviously for the last
23 years. What evidence is there, in fact, that introducing legislation
actually reduces corrupt practices? How are these United States
companies getting away with it?
(Mr Cockcroft) If I might be allowed to make a slightly
lighthearted comment. That finding caused some concern in the
TI-USA national chapter, not least because they had been instrumental
in raising the funds to pay for the survey. I think I would rather
answer that from a slightly different perspective. One can certainly
see that many major US companies are extremely sensitive to the
implications of the FCPA and very few major US companies like
to be fined $25 million, as GE was for a bribe paid in Egypt only
about three or four years ago. The compliance procedures which
many companies now operate clearly do have some implications for
those individual companies. To what extent this applies to US
companies further down the scale and to what extent mechanisms,
such as offshore tax arrangements of the kind that have recently
been attacked by the EU and taken to the WTO, provide a mechanism
for getting round that is an open question. Of course, as has
been pointed out many times, the fact that joint ventures have
been exempted from the FCPA until very recently, although that
is now a hole that has been plugged, has some implications for
that. I think that John Bray may have something to say about that.
(Mr Bray) Mainly to endorse the point about US companies
actually taking this really quite seriously and having detailed
compliance procedures. There is a technical aspect of this, a
legal aspect, which is that under the Federal Sentencing Guidelines,
judges are authorised to give lesser penalties to companies who
can demonstrate that they have compliance programmes but have
nonetheless been let down by an individual. What the lawyers say
on this—I have heard them say it—is "you own
the companies, you want to have your own compliance programmes,
you do not want to have the Department of Justice setting it up
for you because if you do it will be very tough and very painful".
They do hear that message. I would agree with Laurence's point
about unorthodox arrangements. The other point which is often
made by competitors is the extent to which the US Government uses
its influence on behalf of its own companies and this raises the
question when is that practice legitimate. There are some cases
where it may be regarded as bullying and not legitimate as distinct
from fair representation.
151. Your damning of the UK is quite strong
at the very least. What evidence do you have to support your allegations?
Again, in your evidence you say that "those bribing overseas
seem to have a rather comfortable regime in the United Kingdom".
What evidence do you have for that?
(Mr Cockcroft) The evidence that whereas domestic
bribery legislation was first introduced in 1896, and private
to private bribery was outlawed in 1906, there appears to be no
single case in which any UK company has been brought to court
or charged in any way for the payment of a bribe overseas, although
the UK claims in OECD circles that the existing legislation is
adequate and simply needs modernisation. Our view is that modernisation
is actually an inadequate phrase because the existing arrangement
needs to be replaced. I think that Mr Rodmell may have something
to add to that.
(Mr Rodmell) Yes. I think the description of our position
is right to be strongly put because during the whole of the negotiation
of the OECD Convention the impression we had was that the UK was
telling all the other delegations that our laws are perfectly
adequate and it is up to the rest of you people to catch up, with
the exception of the USA. In fact, TI-UK was forever pointing
out to the department that was not a view shared by anyone outside
the department.
Chairman
152. This department being the Home Office?
(Mr Rodmell) The Home Office department. Also reflected
in the DTI who were very much involved in the delegations to the
OECD. In fact, it is all based on some kind of internal opinion,
which is referred to as such in the published material of OECD.
It has never been made available, so no-one can look at it and
test it. I am not a lawyer with any expertise in the criminal
law area but I have spoken to a number of lawyers, including our
honourary solicitors and so on, and spoken to counsel, and I have
not found anyone who actually agrees with that view. I think it
was probably less than honest to try to convince our OECD partners
that, in fact, our laws were in good shape. When it came to the
peer review of phase one of the evaluation of each country's performance
and the degree to which their laws complied with the Convention,
we had to fail, there was no way we could do anything else. The
report on the UK is extremely critical. If I may just correct
one impression that was given at the hearing a fortnight ago.
If the Home Office's current proposals, which for the most part
we very much welcome, were to be put into legislation, somebody
said—I am not sure whether it was Mr Ceri Smith or Lorna
Harris—that would put right all the points of the OECD requirements.
That is simply not the case. There are a number of points which
I have referred to in the paper, which is attached to the submission
to this Committee, which make it clear there are other issues
to be addressed. For example, the requirement for the consent
of the Attorney-General to a prosecution for an offence of corruption
is to be preserved apparently, notwithstanding the fact that the
Law Commission recommended it should go. It seems to me a completely
unnecessary hurdle. I do not want to get into one particular issue
but there are other issues where not the whole of the OECD requirements
are being met.
Mr Colman
153. In relation to that peer review, we asked
the officials that we saw on 31 October to provide us with information
on other countries that had also been criticised. I think it would
be useful if you could, through your chapter organisation, provide
a commentary on what they have done.[6]
If I may go on to what happened on 31 October at our evidence
session at which the Treasury, the Home Office, DFID and DTI were
present. The Treasury witness questioned the view of Transparency
International that bribery was tax deductible in the UK. I have
to say as somebody who was there on the basis of giving evidence
he, in fact, felt this was not an area he was an expert in. Although
he said he would clarify it in writing, I have just checked with
the Clerk and there has been no such clarification as yet as to
what the situation is. What is the position according to TI? Is
there any estimate of how much corrupt money is offset in this
way against tax liabilities in the UK by UK companies?
(Mr Rodmell) I am sure the second part is
going to be impossible to answer but let me just deal with the
first one. The Treasury advice issued to Inspectors of Taxes,
which is public information, says quite clearly that if a bribe
payment is made offshore and everything takes place offshore,
it is paid, agreed, everything is offshore, there is nothing whatever
that tax inspectors in this country can do about it, and its economic
effect is it is a deductible expense in the UK. It is true that
Parliament has tackled the issue. There was a Finance Bill amendment,
I think it is now section 577(a) of the Taxes Act, which says
that a payment that constitutes a criminal offence is not deductible,
but because we do not have legislation which says to bribe a foreign
public official is a criminal offence it remains deductible. In
my discussions with the Treasury I have to say that one thing
I find disturbing is that there is more interest in getting a
large revenue take than in examining the criminality of a particular
payment. In other words, they will admit that they come across
extravagant commissions and they may be disallowed as payments
without consideration, but they are not disallowed because they
are criminal. Moreover, the whole tax investigation operates under
very strict, I suppose rightly, conditions of confidentiality.
I think when crime is detected, and the Home Office do believe
it even now to be a crime, even though they have not got the new
legislation, these gateway provisions ought to be looked at very
seriously to allow information to be passed to the authorities.
Why we say there is a comfortable regime here is because there
is quite a lot of information in the public domain that would
suggest the bribing of foreign public officials at least: press
articles, cases in other courts, World Bank blacklists and so
on. I am not aware of any follow-up which ever results in prosecution.
That is reflected in other areas, like money laundering which
is a huge factor in corruption. The ease of money laundering is
what pushes up the rate of extortion. Vast sums are money laundered
through London because, as you heard through Mr Ceri Smith, London
is the final rinse, it is the ultimate cleaning of the money,
it comes out legitimate from London. I would question what was
said there because he said that we were the victims of our own
success in London because we have such a wonderful regime. I would
suggest to you, Chairman, that the Committee might be interested
to find out why it is that there are 15,000 reports a year of
suspicious transactions and hardly any prosecutions at all.
Chairman
154. We are so successful because we do not
have any legislation.
(Mr Rodmell) We do not have legislation on the corruption
side, but on the money laundering side we do not either have the
enforcement or the will.
Chairman: That would make us look successful,
would it not?
Ann Clwyd
155. Does it not undermine our whole credibility,
the fact that we have not introduced legislation? We have signed
up to all the international conventions, as far as I can see,
yet we take no action. Somewhere in your evidence you talk about
the arms industry and the construction industry being particularly
keen to bribe to get overseas contracts. We are the second largest
arms exporters. Are we protecting our own defence industry? Could
that be one of the reasons why we have not introduced the necessary
legislation?
(Mr Rodmell) It is difficult to speculate, is it not?
I do wonder why it is that the UK has become so soft on corruption
when countries that we would more readily associate as engaging
in corrupt activities, some not very far from us in Europe, for
example, have actually taken the necessary steps. It is a relatively
simple matter, we are only looking at one offence and the necessary
extra-territoriality. I am not an expert but I am advised that
it is a matter of two or three sections in a short Bill that we
proposed that we thought we would save the Minister for Trade
some degree of embarrassment going to the inter-ministerial meeting
in June by being able to say something was in hand, you know.
Nothing is in hand. It ought to be non-controversial.
Chairman
156. Is this next June or last June?
(Mr Rodmell) No, last June, the inter-ministerial
meeting at which was published the critique of the UK's performance
under the OECD Convention.
157. A short Bill might be more attractive to
the Government at this point in the electoral cycle.
(Mr Rodmell) Indeed. I think it is all wrapped up
at the moment in the minds of the Home Office and the DTI that
it has to be dealt with with corruption but it is actually just
a financial crime. We have accepted the international obligation
to make it a crime, we should get on and do it. If there is a
Bill coming earlier, for example the Financial Crimes Bill might
make it earlier, it would fit very neatly in there. There are
various ways of doing it.
Ann Clwyd
158. You did say that it is difficult to speculate,
but would you just like to speculate as to why it has been blocked?
(Mr Rodmell) I do not know why it is. I would not
like to think that it is because we are protecting certain industries
and so on. I have to say that in talking, as I do, and I think
TI-UK generally has a very good relationship with the departments,
we get a lot of co-operation and help from them, otherwise with
the limited resources we have we could not keep up to date on
the issues, so I do appreciate a lot of what departments do. When
we talk to ministers, and for example when we read what the Home
Secretary says in the foreword of the White Paper, he recognises
corruption as a deadly virus but we will deal with it when parliamentary
time allows. If it is a deadly virus it does not wait for parliamentary
time, especially when the parliamentary programme is in disarray
towards the end of the—
Chairman: Never believe that excuse.
Mr Rowe
159. Really this is almost confirming what you
were saying. When we had the Treasury and DFID and DTI in front
of us I did ask myself the question about the fact that money
laundering is never proceeded against and Ms Harris replied: "Money
laundering is criminally actionable in the United Kingdom. The
point I was making was that normally what is actually prosecuted
by the authorities is the predicated offence. Very often the person
who committed the predicated offence is the launderer as well.
The prosecution will then decide not to prosecute the same person
for the laundering." This seems to me—
(Mr Rodmell) Can I just comment on that? I think that
is a misconception of what money laundering offences are all about,
particularly in London which is the major financial centre of
the world. It is necessary under present legislation to prove
that there is a predicate offence, be it drug trafficking, be
it corruption and so on, but what one is tackling with money laundering
is the knowing handling of the proceeds of crime. It has been
commented that quite a lot of firms of lawyers, accountants and
others would not even recognise payments if they saw them coming
through the accounts but banks, for goodness sake, if they apply
rudimentary rules of knowing their customer, understanding where
the money is coming from, should recognise when payments are really
the laundering of funds.
6 Note by witness: Having looked into this,
it would be very difficult to give a throughly objective view
without first undertaking a comparative study of all the published
Phase I evaluations. So far as I am aware, this work has not been
undertaken by the OECD secretariat and TI(UK) does not itself
have the necessary resources to do this. The best I have been
able to do is speak with Professor Mark Pieth, Chairman of the
OECD Working Group on Bribery in International Business Transactions.
He tells me that as the UK has been found not to have implemented
the Convention, the UK has to be grouped with Turkey, Brazil,
Argentina and Chile. Professor Pieth fears that, in consequence
of its failure to implement the Convention, one or more other
states may well move to exclude the UK from participation in the
evaluation of other states in Part II of this process which will
be commencing this year. This would not of course preclude the
UK from being itself evaluated, but the UK would be seen to be
in an inferior capacity, relative to other signatory states. TI(UK)
would suggest that this is a particularly unsatisfactory situation
for a G7 state. Back
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