APPENDIX 6
Memorandum by the Export Credits Guarantee
Department
INTRODUCTION: CURRENT
POSITION
1. On 16 March, the Government published
its Final Response to ECGD's Consultation on its anti-bribery
and corruption procedures introduced on 1 December 2004 (the Final
Response).
2. The Government's key aim throughout the
consultation process has been to ensure that ECGD's procedures
are rigorous yet workable. ECGD will make a number of changes
to its procedures as a result of the Consultation. The revised
procedures will come into effect on 1 July 2006. The changes made
take into account many of the recommendations made by the Trade
and Industry Committee in the Ninth Report of Session 2004-05
on the Implementation of ECGD's Business Principles.
3. ECGD and Ministers are considering the
views of consultees on ECGD's proposed Special Arrangements for
handling information provided to it about the identities of agents.
ECGD hopes in the next month to be in a position to provide details
to consultees of the final form of the Special Arrangements decided
upon after taking account of representations received.
EVENTS LEADING
UP TO
THE CONSULTATION
4. In order to avoid unnecessary repetition,
the Committee will find in Paragraphs 2 to 12 of the attached
Final Response (Annex A) a brief account of the events, beginning
in 2000, which has led to the formulation of ECGD's new anti-bribery
and corruption procedures.
CONSULTATION PROCESS
5. The question on which representations
were invited was:
Do the changes made to ECGD's anti-bribery
and corruption procedures in December 2004 have the effect of
ensuring that, so far as practicable, (1) taxpayers' money is
not used to support transactions tainted with bribery and/or corruption;
and (2) an undue burden is not placed on exporters and/or banks?
6. ECGD's Consultation was carried out under
Cabinet Office guidelines. In the process of considering making
changes to its procedures, ECGD sought the views of Departments
across Whitehall as well as the Export Guarantees Advisory Council,
whose statutory purpose is to give advice to the Secretary of
State at his request in respect of any matter relating to the
exercise of his functions under the Export and Investment Guarantees
Act 1991.
THE CHANGES
MADE AS
A RESULT
OF THE
CONSULTATION
7. The main changes ECGD has made to its
procedures are summarised below.
Audit Provisions:
8. ECGD will have the power to audit the
accuracy of those representations relating to the issue of bribery
and corruption on giving notice at any time, rather than just
when it suspects that bribery has taken place.
9. ECGD now has audit rights in respect
of records held by the exporter which relate both to the obtaining
and the performance of the supply contract. These rights will
be exercisable by ECGD at any time on 5 days notice. Audit powers
in respect of records relating to the obtaining of the contract
may be used only for the purpose of verifying the accuracy of
information given to ECGD in the exporter's application.
10. A full explanation of the reasons for
the changes made can be found at Paragraphs 44 to 48 of the Final
Response.
Details of Agents:
11. ECGD's standard forms will now require
details about applicants' agent(s), including their names and
addresses, in all cases.
12. As noted in paragraph three above, ECGD
is seeking comments from consultees on its proposed internal handling
arrangements to minimise the risk of the inadvertent disclosure
of this information (attached at Annex B).
13. A full explanation of the reasons for
the changes made can found at Paragraphs 52 to 54 and 68 to 73
of the Final Response.
Representations in Application Forms and Warranties
in Contracts:
14. ECGD will require no-corruption representations
from UK exporters and investors about certain companies involved
in winning the contract for which ECGD support is being requested.
Where these representations are qualified, they will be based
on reasonable enquiries, which the applicant will be obliged to
make.
15. As a result of the changes, an applicant
will be required to make absolute no corrupt activity representations
about itself and its directors. Qualified representations (on
the basis of reasonable enquiries) will be required in respect
of the applicant's agents and group companies materially involved
in obtaining the contract and any consortium partners connected
with that contract.
16. A full explanation of the reasons for
the changes made can found at Paragraphs 115 to 126 and 129 to
135 of the Final Response.
Banks' Letter of Undertaking:
17. UK Banks will now be required to represent
that they have made reasonable enquiries about Group Companies
with a material involvement in obtaining the bank mandate and
that those enquiries do not give it cause to believe that they
have committed corrupt acts in relation to the negotiation and
obtaining of the mandate to finance the supply contract. A Non-UK
Bank will give the same representation in respect of its London
Branch only.
18. Banks will continue to represent that
they are regulated by the Financial Services Authority in relation
to, amongst other things, money-laundering Regulations. Banks
will also continue to represent and warrant that they are not
aware or, alternatively, have no reason to suspect that the Supply
Contract had been used for the purposes of money laundering or
that they have complied with their obligations under the Proceeds
of Crime Act 2002.
19. A full explanation of the reasons for
the changes made can found at Paragraphs 154 to 164 of the Final
Response.
FUTURE OPPORTUNITIES
Strengthening of the International Anti-Bribery
and Corruption Rules
20. ECGD procedures remain among the strongest
of the world's leading Export Credit Agencies. In support of the
Government's commitment to combat bribery and corruption in business
and in order to help to create a level playing field for UK exporters,
ECGD is now stepping up its work on the international stage to
persuade other Export Credit Agencies to adopt similar procedures.
As such, ECGD is playing a full part in OECD negotiations on a
revised Action Statement on Combating Bribery in Officially Supported
Export Credits, which is expected to be agreed in the course of
this year.
27 April 2006
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