APPENDIX 1
Memorandum by the CBI
1. CBI is the UK's leading business organisation
speaking for some 240,000 businesses that together employ around
a third of the private sector workforce. It covers the full spectrum
of business interests both by sector and by size.
2. This submission complements the memorandum
submitted by CBI to the Trade and Industry Committee in February
2005 and CBI's comments on the Committee's Fifth Special Report
of Session 2005-06 sent to the Chairman, Mr Peter Luff MP, on
6 September 2005.
COMPLIANCE WITH
THE LAW
3. We believe it is important to re-state that
CBI is against any form of bribery and corruption. UK business
is subject to some of the world's most stringent anti-bribery
legislation which provides severe sanctions applicable to both
individuals and corporations. In addition to compliance with this
legal and regulatory framework, UK companies are some of the world
leaders in integrating anti-bribery policies into their management
systems.
USE OF
AGENTS
4. The use of agents is a perfectly normal business
practice. Whilst there may be a misplaced perception remaining
in some quarters that payment of commission or fees to agents
is a method to pay bribes, this is not a reality for UK business
in today's business environment. Applicants have been resistant
to the requirement to divulge agents' details to ECGD because
in some cases the information can be extremely commercially confidential.
This is particularly relevant for the UK's largest exporters operating
in a highly competitive environment for whom the identity of their
overseas agents represents a significant commercial advantage.
DETERRENCE
5. Whilst CBI recognises that ECGD's processes
should be consistent with wider Government policy it is open to
question what additional deterrence to bribery and corruption
is provided by ECGD's latest proposed provisions over and above
the very real deterrent which arises from current applicable legislation.
Any applicant prepared to flout existing legislation will scarcely
be concerned about giving an untruthful response in an ECGD Application
form. CBI believes that procedures based on ECGD knowing their
customers—analogous in may ways to the requirements on financial
institutions for anti-money laundering regulations—could
have been preferable to a prescriptive, procedural-based system
which requires the same level of compliance whether the customer
is known to ECGD or not. CBI also questions the use ECGD will
make of the information provided by customers, given that it has
already recognised that it is not an investigatory organisation.
6. The prime issues for business have been the
workability of any procedural changes and the impact on competitiveness
of complying with additional layers of regulation. This is rightly
at the heart of the Sub-Committee's current inquiry. The UK Government's
intention to be at the forefront of introducing enhanced anti-bribery
provisions risks putting both the UK Export Credit Agency (ECA)
and UK exporters at a competitive disadvantage. In a Financial
Times report (Wednesday 15 February 2006), it was stated that
Germany, Japan Belgium and the Czech Republic were against tighter
OECD guidelines. They appear to share our assessment that the
rationale for providing names as an additional deterrent is not
proven.
THE FINAL
RESPONSE—BUSINESS
VIEWS
7. In broad terms, CBI believes that the procedures
set out in the Final Response have the potential to be workable
with the important proviso, that at the time of writing, an ECGD
consultation on the safe handling of information on agents is
still underway, with a deadline of end April 2006. A submission
has been made to ECGD, a copy of which is attached for the Sub-Committee's
information. We stress that, in order to arrive at a practical
workable solution, agreement must be reached on, inter alia:
— the applicability of the special
handling arrangements to all information relating to overseas
agents, and not just names and addresses;
— precisely what steps ECGD will take
when provided with the information on agents which they have requested.
ECGD has acknowledged that it is not an investigatory body; and
— the treatment by ECGD of information
provided to it in confidence by exporters.
8. In summary the CBI:
— supports the Government's anti bribery
and corruption objectives;
— does not accept that agents are synonymous
with bribery;
— believes that there are occasions
when details of agency arrangements should legitimately be treated
as confidential;
— is not convinced that ECGD's latest
provisions enhance the existing legislative deterrent to bribery
and corruption; and
— is concerned at the potential impact
on the UK's competitiveness of complying with additional layers
of regulation introduced by ECGD.
9. This exercise in agreeing ECGD's revised
anti-bribery and corruption procedures has cost business many
thousands of pounds and man hours in a diversion away from core
business activity. In addition, we believe that the ongoing costs
and procedures for monitoring these changes by businesses will
have an impact on companies, and particularly, though not exclusively,
SMEs. CBI now looks for an agreement on the special handling arrangements
acceptable to industry and to a period of stability which will
allow ECGD to concentrate on its primary objective of helping
UK exporters win more business.
April 2006
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