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The Export Credits Guarantee Department's (ECGD's) bribery and corruption rules which came into operation on 1 July 2006 had a long and difficult gestation. These are the third set of revised procedures since April 2004.
The first changes came into operation in May 2004. The regrettable failure of the Government to consult on the May 2004 procedures meant that assumptions behind the changes and the ability of exporters to operate them were not tested. In the face of opposition from exporters the Government embarked on consultation with industry—excluding anti-corruption non-governmental organisations—to "clarify" the May 2004 procedures without, it claimed, departing from the principles behind the procedures. The result was not clarification, but, as the Government gave ground to exporters' concerns during the second half of 2004, substantial revision in December 2004 which watered down the May 2004 procedures. Following complaints from the non-governmental organisations, including a challenge in the courts, the Government started belated consultation on the December 2004 procedures in March 2005 which concluded in June 2006. The procedures were revised again and the latest procedures came into operation on 1 July 2006.
We conclude that had the Government followed ECGD's own Business Principles to carry out a consultation exercise on the anti-bribery rules in the first half of 2004 it could have saved exporters, the non-governmental organisations and the taxpayer a great deal of wasted time and money. It appears that no one in a position of responsibility acknowledged that in proceeding to implement the May 2004 procedures without any consultation ECGD was in breach of its own business principles. It raises a question about the extent to which the business principles permeate the operations of ECGD. We conclude that had ECGD carried out a consultation in accordance with Cabinet Office Guidelines in 2003 or early 2004 a set of procedures broadly in line with those implemented in July 2006 would have been in place by the end of 2004 and saved all concerned a lot of time and money.
Views on what ECGD can and should be doing to tackle bribery and corruption are polarised between exporters and anti-corruption non-governmental organisations. We are clear that any future changes—other than the insubstantial—must be subject to consultation, to allow the interested parties to put their views and to comment on the approach of others.
The procedures that came into operation on 1 July 2006 strengthen the procedures back, although not completely, to the May 2004 procedures. Neither the exporters nor the non-governmental organisations are completely satisfied with the new procedures but accept that they have the potential at least to be workable. We endorse that view.
Given the tortuous history of the anti-bribery procedures we conclude that they go as far as could reasonably be expected to ensure that transactions supported by ECGD are not tainted with corruption. We consider that, after the turmoil of the past two years, the new procedures should be allowed to operate without further amendment.
The Government has said that it will review the procedures in three years, which we welcome. We consider that that review should include a thorough examination of two areas. First, the operation and effectiveness of the anti-bribery procedures which came into operation on 1 July 2006. Second, whether the role of ECGD needs to change to take on regulatory and investigatory powers to tackle bribery and corruption committed by exporters. In the meantime, we recommend that the Government monitor the operation of the July 2006 procedures and at least once a year publicly report to the Export Guarantees Advisory Council the outcome of the monitoring.
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