6 Conclusion
132. Support from the taxpayer via ECGD is not unqualified
support for British exports. The UK public is more aware now than,
say, thirty years ago of the ill-effects of corruption, particularly
on developing countries and is not prepared to support business
tainted with bribery and corruption. ECGD has a clear policy to
combat corrupt practices, which we fully endorse. It is not acceptable
to pay it lip service while carrying on business as before. The
policy has to be implemented effectively to reduce as far as is
reasonably practicable the risk of ECGD supporting contracts tainted
by corruption. We have concluded that ECGD's procedures, which
came into operation on 1 July 2006, should be workable and will
go a considerable way in reducing the risk of ECGD supporting
contracts tainted by corruption. In some areas it may have been
possible to have gone further, but given the tortuous development
of the July 2006 procedures now in operation we are reluctant
to recommend further changes.
133. We consider that the July 2006 procedures give
ECGD the powers and scope to seek out and challenge bribery and
corruption by those seeking their services. ECGD will have the
power to audit the accuracy of exporters' representations on bribery
and corruption. Breaches of the new procedures will entitle ECGD
to terminate the relevant insurance policy, or, in the case of
other ECGD facilities, to seek financial redress from the exporter
where the taxpayer has suffered loss. We consider that ECGD now
has to show that it has the expertise and the will to use the
procedures. If it cannot, we conclude that the adequacy of a regime
based on private law will be open to question.
134. Tightening the procedures has a cost to exporters
in terms of carrying out inquiries and submitting additional information
to ECGD. Unlike most other areas covered by the Trade and Industry
Committee, there are no comprehensive or reliable statistics on
bribery and corruption to measure the effect of the changes. The
Corner House said in its evidence that "the next steps are
to monitor [the] procedures and to publish the results of the
monitoring of those procedures periodically, openly, so that all
stakeholders can have basic information on how they are being
implemented, and that will provide the basis for on-going improvements
to which everybody can contribute".[200]
The Minister said that he would consider whether ECGD should report
on its use of the July 2006 procedures in consultation with the
Export Guarantees Advisory Council before coming to a final view
on the need for monitoring.[201]
We agree with the Corner House. We recommend that the Government
monitor the operation of the July 2006 procedures and at least
once a year report publicly to the Export Guarantees Advisory
Council the outcome of the monitoring.
135. There is a wider question which we consider
will continue to surface: whether ECGD should have regulatory
and investigatory powers to tackle bribery and corruption committed
by exporters. We would be concerned if the need for these powers
emerged in the charged aftermath of the publicity surrounding
a high profile corruption case. There is a risk that such powers
would be hastily formulated, draconian and grafted onto ECGD's
current operations. In our view it would be much more satisfactory
if the Government were to consider the need for such powers, including
the role of ECGD, over the next three years and, if necessary,
to bring forward proposals.
136. Finally, the main lesson we draw from the saga
of the development of the procedures is the gap between ECGD's
policy statement committing it to consultation with interested
parties and what has happened in practice since 2002, especially
in the first half of 2004. We are concerned that it appears that
no one in a position of responsibility acknowledged that in implementing
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.
200 Q 99 Back
201
Appendix 7 Back
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