Examination of Witnesses (Questions 110
- 119)
TUESDAY 20 APRIL 2004 (Morning)
TRANSPARENCY INTERNATIONAL
(UK)
Q110 Chairman: Mr Cockcroft, I am
right in assuming you are going to introduce your colleagues and
say a couple of words about Transparency International?
Mr Cockcroft: Thank
you very much. It is a pleasure to be here. Thank you very much
for inviting us; we much appreciate that. I will introduce my
colleagues very briefly. On my left is Graham Rodmell, who is
our Director of Corporate and Regulatory Affairs and focuses very
much on legal issues and the international regulatory environment
in relation to corruption, and on my right is Neill Stansbury,
who is a lawyer who has worked in the international construction
and engineering industry for 20 years or and so has particularly
focused on issues arising from questions of arbitration. In relation
to Transparency International, I would simply like to say that,
as I am sure you are basically aware, TI, as we call it, was formed
rather more than 10 years ago in order to focus on the impact
of corruption globally. In a nutshell, I would say that our perception
is that corruption generally takes two or three partners and that
those partners are most frequently between the developed world
and the developing world and the former Soviet States. So our
perception is that corruption will not be rolled back in the developing
world without some form of international collaboration. Putting
the UK role in that in context, we conduct every two years a Bribe
Payers Index, which is a survey conducted in 19 developing countries
of the propensity of exporting countries to pay bribes. The methodology
of this survey has not been seriously challenged. It is conducted
by Gallup and is based on interviews with more than 800 people
in those countries. In 1999, which was the first time this survey
was conducted, it was established that the UK score out of 10,
where 10 is good and one is bad, was 7.2. In the year 2002 it
was 6.8 and of the 19 exporting states, well, 21 exporting states
in the survey in 2002, the position of only two had declined,
and those two were the UK and the US. All other countries improved
their position and their score. I would like to make one other
point based on the same survey, which is that in those importing
countries, 23% of those surveyed thought that things were getting
better in terms of the propensity of international companies to
bribe, and 21% thought they were getting worse, with the remainder
taking a neutral position. So that indicates that this question
is very much in the balance and that the position adopted by individual
exporters really can make a difference to the outcome. I wanted
to say those few words as an explanation of why in TI we believe
this issue to be so critical.
Q111 Chairman: I think it is the
extent to which you might say the ECGD is involved in this that
we have invited you here, as it were, observers of international
business and trade. Some of the NGOs who have provided us with
evidence and who will be perhaps participating this morning have
questioned the need for the ECGD; on the other hand industry has
stressed that it provides vital support to exporters. Do you agree
that the ECGD's function of supporting exporters in the way that
it does is a function that is valid for government or should it
be the responsibility of the private sector?
Mr Cockcroft: We are quite happy
to comment on that informally, as it were. It is not our concern
to take a position institutionally on ECGD but more on its modus
operandi, given the fact that it is an organisation that exists
and is doing business. We have no business to question the concept
that ECGD is providing a necessary and useful function. The question
of whether or not it should be fully privatised is obviously quite
difficult. We would share a general government concern, or a general
business concern, that that might make it more difficult for some
UK companies to do business in very difficult states, which is
not our objective. Our concern is that they should do business
in a non-corrupt way in those states, which we believe to be feasible.
Q112 Sir Robert Smith: As you say,
it is not really your core area in giving evidence here today,
but I suppose a counter argument from businesses that do business
without any support would be should the state be intervening to
support some businesses and not others in terms of where they
export and whether it would be better if the whole thing was in
the private sector?
Mr Cockcroft: Well, we would not
argue in favour of the principle of national champions. I think
that is a position which has now been rather debunked, and we
certainly would not argue for it in those sectors where it tends
to be argued for, such as the defence industry, but the principle,
not of providing quasi subsidies to individual UK companies as
a kind of strategic goal, but the principle of enabling British
companies to do business in difficult countries is one which we
would support, in general terms.
Q113 Sir Robert Smith: In that context,
do you see it as part of the way of tackling corruption that there
should be anti-corruption policies in both the business principles
in which ECGD works and in the activities of the Export Guarantees
Advisory Council? You are suggesting in section 3 of your memorandum
that it should be higher up. How would you like to see that achieved?
Mr Cockcroft: I think I would
like to ask my colleague, Graham Rodmell, to deal with that question.
Mr Rodmell: I am not quite sure
I understand the question?
Q114 Sir Robert Smith: In section
3 of your memorandum you argue for greater emphasis on anti-corruption
policies in both business principles to which ECGD works and in
the activities of the export?
Mr Rodmell: I think it was an
observation based on the way that it was drafted, but, to be honest,
I think what matters much more than what is listed in the objectives
is what the ECGD actually does. It has, since we put in that submission,
greatly improved its anti-corruption procedures and, provided
those translate in turn into real action, concern and due diligence,
then I think that that is much more important than what is actually
written: because what you have here is a hierarchy of a mission
statement, then you have objectives, then you have business principles,
then you have policies, and corruption comes in in a big way in
policies where it talks about integrity and transparency. So it
could have been worded in there with sustainable development,
but I am not sure that much rests on it.
Q115 Sir Robert Smith: We just want
to test that. Others will be coming on to the stuff that was announced
in April and questioning you on that. So in a sense when you wrote
this memorandum it was a way of highlighting the need for them
to—
Mr Rodmell: --- to emphasise the
anti-corruption issue, which has been a concern of the ECGD for
some time, but they have clearly taken another major step forward
in their latest procedures.
Q116 Chairman: So what you are saying
is that they have gone from the implicit to the explicit?
Mr Rodmell: In terms of the procedures,
yes.
Q117 Chairman: We have yet to see
whether or not—
Mr Rodmell: ---it works.
Chairman: ---6.8 becomes 7.3 or something
like that.
Sir Robert Smith: We would be less concerned
about seeing new objectives as long as the practice is—
Chairman: That is what matters throughout:
the reality of the thing rather than the form.
Q118 Mr Evans: In section 4 of the
memorandum that you have submitted, the section right at the end
where you talk about corruption and bribery being bad for business,
bad for exports, you say, "There also needs to be a coherent
policy across departments for tackling corruption." That
is 4.4. What do you mean by that? Right at the very end.
Mr Rodmell: Well, I think that
in the context of our more general work in dealing with anti-corruption
and our meetings with various government departments there is
not always a coherent view as to how one should be dealing with
anti-corruption issues, and, in fact, when you are dealing with
issues like investigation, prosecution, and so on, there is considerable
confusion as to who should be responsible for dealing with international
bribery, for example. That has now been criminalised. It became
effective in February 2002, I think it was, and you have to have
a memorandum between about 13 different organisations to decide
how you deal with any allegations that come through the system
as to any particular event of bribery. It can come through the
Embassies and the High Commissions, through the Foreign Office
and then it has to be referred to the National Criminal Intelligence
Service. Then they decide whether it goes to the Serious Fraud
Office or whether it goes to one of 43 constabularies, and the
whole thing is very confused. So one needs a much more coherent
view of how you deal with this and make enforcing this very important
crime a reality.
Q119 Mr Evans: In the perhaps confusion
and buck-passing that may be going on, do you have a solution
to that particular problem or do you have a recommendation as
to how you could make it more effective?
Mr Rodmell: Well, we do. I had
not anticipated that this Committee would be that concerned directly
with it. We have proposed that there should be a body which is
an amalgam of the most effective bits of the enforcement machinery
which would embrace the National Criminal Intelligence Service,
it would embrace the National Crime Squad, it would embrace, in
fact, the SFO and probably the most effective bits of the Crown
Prosecution Service. However, very recently the Government, through
the Home Office, has announced the intention of setting up a Serious
Organised Crime Agency, and they have left the Serious Fraud Office
out of that. We shall obviously be inquiring into that and making
representations, because we think that they have probably missed
an opportunity here to get this whole question of how you deal
with international economic crime sorted out.
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