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To lie upon the Table.

Canvey Island Health Care

10.56 pm

Bob Spink (Castle Point) (Con): The people of Canvey island are deeply concerned about the two linked issues that this excellent petition addresses. First, they want to ensure that the reorganisation of health care by combining all eight of the GP surgeries on Canvey island into just two centres will not restrict access to primary health care, and that that change will improve health care rather than simply save money at Canvey people’s expense. Secondly, they want to retain “The Paddocks” for community use, rather than have it swallowed up in a grandiose central health care scheme. I congratulate the many hundreds of people who
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signed the petition, and by doing so showed that they care about their community and want to protect vulnerable people.

The petition states:

To lie upon the Table.

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Bribery in International Business Transactions

Motion made, and Question proposed, That this House do now adjourn.— [Kevin Brennan.]

10.57 pm

Dr. Vincent Cable (Twickenham) (LD): I have been fortunate during my years as a Member of this House to have secured a good few Adjournment debates, and I invariably devote them to constituency issues. However, there is another legitimate role that they can perform, which is to raise a series of questions on a topical issue that is difficult to pursue through oral and written questions. I want to follow up a debate that I introduced on 7 February in response to the statement of the Attorney-General about the Serious Fraud Office’s decision not to pursue the al-Yamamah investigation.

There have been several developments since, which I wish to touch on: the March meeting of the committee of the Organisation for Economic Co-operation and Development working group on bribery and what emerged from that; revelations about the American reactions to the British Government decision; and the report this weekend of the Foreign Affairs Committee, which commented on the damage to Britain’s reputation. I also wish to look forward to the phase 2 inquiry that the OECD committee will undertake, and to discuss how Britain has applied the OECD anti-bribery convention.

This difficult issue cuts across several Departments—that of the Attorney-General and the Solicitor-General, the Department of Trade and Industry, the Foreign and Commonwealth Office, the Home Office, the Department for International Development, and, of course, that of the Prime Minister. The responsibilities of the Minister who is to reply to the debate cut across the Foreign Office and the DTI, which are both centrally involved. I have followed his remarks, and he has made some good, strong statements about the British Government’s commitment to fighting corruption, notably in his speech in December to the United Nations convention against corruption. He said that fighting corruption was a key priority for the British Government.

The first of the issues that I want to address is the OECD working group meeting in March. The starting point is that it is the body that oversees the implementation of the anti-corruption convention. There has been an enormous change in the past decade. Some years ago, I served in the Foreign Office and in multinational business, and back then there was an assumption that corruption was part of everyday life in business. That has radically changed since the introduction of legislation that effectively makes it a criminal offence to bribe a public official overseas.

There are differing views about how Britain has performed in this respect. I have had a useful exchange of correspondence with the Minister’s colleague, the Minister for the Middle East, which has brought out the two different aspects of Britain’s role. The Minister for the Middle East has rightly argued that in many respects, British business has an admirable record. He has pointed out to me in correspondence that Britain is sixth on the Transparency International index—the
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so-called bribe-payers’ index. Put another way, Britain is second among the G7, just behind Canada. The United States is ninth in the index, Japan is 11th, France is 15th, and Italy is 20th. That reflects well on the ethics of British business. However, I was able to quote to the Minister for the Middle East the comments of the chairman of the working group, Mark Pieth, after the 2005 review; he singled out Britain, Japan and Italy as below standard in the implementation of the convention.

Unfortunately, this whole argument has become somewhat personalised around Mr. Pieth. The Minister for the Middle East said in his letter to me—it was a public exchange, so I am sure that he will not mind my quoting it—that

However, the working group is quite explicit in its criticisms. It noted after the 2005 inquiry that

When the working group met last month, it introduced its comments on the United Kingdom in the following terms:

The personalisation spilled over, as the Minister knows, into a leading newspaper article last week, in which it was alleged that the British Government had sought to remove Mr. Pieth and had attacked the reputation of the secretary-general of the OECD. I was pleased that a Minister was able to write in very forthright terms dismissing these allegations; I am sure that that is absolutely appropriate. In order to round off this point, will the Minister present make it absolutely clear that the Government have complete confidence in the OECD working group and in its chair, as a necessary background to the inquiry that is due to take place in the next year?

The second issue is the reaction of the United States, which has always taken the lead on this issue since the introduction in the mid-1970s of its own foreign corrupt practices legislation. Under President Clinton, the American Administration took the lead in trying to create a multilateral agreement—probably primarily to protect American manufacturers and to create a level playing field. The Americans have apparently been leading criticism of the UK within the OECD working party. It was revealed last week by the Financial Times that a formal complaint, albeit an oral one, had been made in January to the Foreign Office about the termination of the Serious Fraud Office inquiry. If that is correct—I have not heard it denied—can the Minister confirm that the Americans did protest in that way? It is important to be clear on that point. Perhaps the Minister could say how significant that was. For all I know, the Americans may have protested to the
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British Government about numerous issues over the years, or about very few. Perhaps he could say whether this was seen as a serious gesture by the United States.

The other development affecting the United States emerged in response to a question that I put to the Solicitor-General on 1 March. I asked him whether meetings had taken place in the past 12 months between the SFO and representatives of the US Department of Justice concerning investigations into al-Yamamah contracts, and he replied:

That implies that the British Government are co-operating with the US in what seems to be a preliminary inquiry into whether there has been a breach of US law in that matter. It would be helpful if the Government confirmed that that is indeed the case.

The third issue relates to the Foreign Affairs Committee. The debate on al-Yamamah has often taken on a party political colouration, but what was important about the report published at the weekend was that it was an all-party report. Eight Labour, four Conservative and two Liberal Democrat Members produced a consensual report that had two very important conclusions. The first, in paragraph 42, reads:

That was the consensus view. I know that Lord Drayson has since contradicted it, but it was an important acknowledgement that serious damage has been caused.

That damage is of several kinds, including damage to the Government’s reputation and to British business in general. In the past few months, leading institutions in the City—for example, Hermes, and the F&C Asset Management Group—have corresponded with the Prime Minister, expressing concern about the way in which their reputations and those of the City and financial markets have been damaged by this affair. Leading business people—for example, the chairman of Anglo—have commented that the reputation of their companies has been indirectly affected. The reputational damage has gone quite far.

The issue also affects the ability of the British Government to give leadership in the field of overseas development. An excellent White Paper published in 2006 by the Secretary of State for International Development commented extensively on Britain’s role in leading the fight against corruption. That is clearly seriously undermined if the British Government are criticised for their performance in implementation.

The second conclusion of the Foreign Affairs Committee is worth quoting. It notes:

the decision of the British Government in respect of al-Yamamah—

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The Minister will of course give a considered reaction to the report, but he may wish to give some early indication of his views tonight.

My final comments relate to where we go from here. Over the next year, there will be a phase 2 inquiry by the OECD working group. It will relate, although not primarily, to one of the issues that has concerned the working group in the past—the state of British law. A view has been expressed that the law that was introduced in 2001 to comply with the convention was simply not fit for purpose. I would be interested to know whether the Minister takes that view. Are the Government satisfied with the law as it stands, or do they feel that new legislation is required to meet the requirements of the convention?

Phase 2 is not concerned so much with legislation as with implementation of the legislation. Several specific issues will be raised, and I raise them in advance tonight to establish the Government’s broad reaction. The first is how seriously the Government are taking further investigations through the SFO. I have had helpful parliamentary answers suggesting that inquiries are continuing in respect of six cases. Those involve South Africa’s Hawks deal with BAE Systems, Romania’s fighter contracts, the Czech Republic, Tanzania air traffic control, Chilean frigates—a matter that relates to the £1 million alleged to have been paid to the late President Pinochet—and Qatar. It would be helpful if the Minister was able to say whether the British Government are receiving full co-operation from each of the different Governments that are affected. Previous attempts to pursue the investigation in relation to Saudi Arabia were frustrated by a lack of co-operation from the other Governments. If Britain is to follow through on the inquiries, it is important for us to know whether the Governments involved are co-operating.

My second set of questions relates specifically to the Department of Trade and Industry. The hon. Member for Liverpool, Walton (Mr. Kilfoyle) first brought into the public domain a description of the system of parallel contracts, a type of working relationship in which BAE Systems—and perhaps other companies as well—is involved. Under that system, an official contract is drawn up and published, but a separate and less official contract operates through a subsidiary company with an exotic name such as Red Diamond. That secondary contract arranges for funds to be paid through the British Virgin Islands, where financial disclosure is not required.

As has been reported many times, that system has been in operation with many of the contracts that have been the subject of controversy, and various individuals associated with BAE Systems have been involved. For instance, I believe that Lord Powell, an adviser to the group, has been involved in—and also been a beneficiary of—such an arrangement.

I have two questions for the Minister, in his capacity as a DTI Minister. First, is he satisfied that the arrangement involving a subsidiary company is entirely compatible with the system of company law and rules that the DTI oversees? At first sight, it seems odd that companies are able to set up subsidiaries that do not appear in their records, although I am sure that the Department has checked whether that is good practice, or even legal.

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Secondly, are the Government satisfied that moneys can flow through the British Virgin Islands, and is that compatible with the Treasury’s rules about money laundering? The working group will pursue those questions, but it will be useful to know the Government’s broad approach in advance.

My final point about the future investigation—which may have started already—has to do with the Government’s response to criticisms made in the past by the OECD working group in respect of article 5 of the convention, which specifically excludes commercial considerations when the Government make decisions about whether to proceed with a legal inquiry. The OECD has already expressed concern about the role of the Attorney-General, for the reason that it involves the possible consideration of UK interests that article 5 expressly prohibits in the context of decisions about foreign bribery cases. How such questions are answered will depend on how the working group investigates the decisions about al-Yamamah. It will want to know how the Government separated legitimate considerations of national security from commercial considerations.

One matter of some concern is that there have been reports that the key individual who communicated the Saudi Government’s concerns was Prince Bandar, the former ambassador to the US. He visited this country on November 8, and I am pursuing through parliamentary questions the matter of which Ministers he met at the time to communicate his Government’s concern. Unfortunately, the same individual is one of the three main people alleged to have been beneficiaries of the commercial arrangements, together with his father the Crown Prince and the Minister responsible for the air force.

Questions will be asked, and I am sure that they will be pursued, about how effectively the Government managed to separate the purely commercial aspects of their judgment from the entirely genuine national security concerns. This matter will keep coming back. I apologise to the House for running through the issues so quickly, because of the time, but I am grateful for this opportunity to raise it.

11.15 pm

The Minister for Trade (Mr. Ian McCartney): As is normal practice, I thank the hon. Member for Twickenham (Dr. Cable) and congratulate him on securing the debate.

I want to deal with the general principles relating to our position. I feel strongly that not only the hon. Gentleman but others have, in advance of the debate, sought to give the impression that the Government are soft on the issues. In fact, we are involved in a huge array of activities designed to root out corrupt behaviour and bring to justice those who perpetrate it. I shall deal with the concepts, principles and history of what we are doing and will continue to do.

The hon. Gentleman put a range of specific questions, of which I have had no notice—not that he is required to give me notice. Some of them were based on fact, but some were based merely on innuendo and supposition. I give the House and the hon. Gentleman this commitment: I will review all his questions and if they are not answered by what I say in the next moments—many will not be—I shall respond as
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effectively as I can by sending answers not only to him but to you, Mr. Deputy Speaker, and by placing them in the Library for the consideration of any Member who is interested in the issues and has concerns.

Let us first cast our minds back to where we have come from. A decade ago, negotiation of the OECD convention was not complete: the United Nations convention against corruption was not even a glint in the eyes of its founding fathers; Transparency International was a small non-governmental organisation, developing its now world-renowned anti-corruption tools; and the subject of corruption was still almost taboo at international meetings and in aid agencies. Businesses were almost universally shy of recognising that it existed, despite the fact that in many sectors in many countries, especially oil, gas and mining, defence procurement and construction, business depended on it.

At the same time, corrupt leaders from Mobutu to Marcos and Abacha to Suharto had shown the breathtaking venality that consigned their people to abject poverty while they enjoyed lives of luxury with impunity—all because the international community was yet to take its potential mission seriously, and the world’s financial system did not yet have in place the controls that today we regard as commonplace to limit the opportunities for such grand corruption. The Government have played a major part in moving from that scenario to where we are today in practice.

The House does not need to take that only from me. As the hon. Gentleman rightly and fairly pointed out, Transparency International’s corruption perceptions and bribe-payers’ indices ranked the UK as the highest and second-placed G7 country, respectively 11th of 160 and 6th of 30. That is many places above the United States and France, which, according to the media reports by which the hon. Gentleman seems to set such store, are our fiercest critics in the OECD. It is not just the Government’s view that the UK is doing rather better than many people, including the hon. Gentleman, would have us believe. I shall give the House a few facts to show how distorted and unacceptable that picture is.

My right hon. Friend the Secretary of State for International Development accounted for much of the work in his progress report to the Prime Minister, published on 12 March. I offer a few examples. First, we continue to push the anti-corruption agenda in international forums, such as the G8, the European Union and the UN, particularly the implementation of the UN convention against corruption, whose provisions on improving international co-operation on asset recovery are particularly important.

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