House of Commons - International Development

Select Committee on International Development Written Evidence

Memorandum submitted by UNICORN

INTRODUCTION

1. UNICORN is a trade union anti-corruption network set up to mobilise and support trade unions around the world to combat corruption. UNICORN was founded by the international trade union bodies the Trade Union Advisory Committee to the OECD, Public Services International and the (former) International Confederation of Free Trade Unions. UNICORN has been working to support the implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the OECD Anti-bribery Convention) since 2001, both in the UK and at international level.

2. This submission provides evidence on the issue of the OECD and Corruption and specifically the:

a. OECD Review of UK implementation of the Anti-bribery Convention;

b. role of the "Ministerial champion" on International Corruption and the effectiveness of the UK Action Plan for Combating International Corruption.

OECD REVIEW OF UK IMPLEMENTATION OF THE ANTI-BRIBERY CONVENTION

3. On 17 March 2005, the OECD Working Group on Bribery in International Business Transactions (the OECD Working Group on Bribery), the group responsible for monitoring parties' implementation of the OECD Anti-bribery Convention, published its report[32] of the UK's implementation of the OECD Anti-bribery Convention, which highlighted the following weaknesses:

— complexity and uncertainty of existing anti-corruption laws;

— inadequacy of the basis for engaging corporate liability;

— excessive fragmentation and lack of specialised expertise among law enforcement agencies dealing with overseas corruption;

— lack of resources for investigating foreign bribery cases, processing money laundering reports and handling requests for Mutual Legal Assistance (MLA);

— high level of proof requiredby law enforcement agencies to open an investigation;

— potential for "national interest" considerations, such as damage to the UK economy, to influence the decision to open an investigation or not.

The report made a number of recommendations aimed at enhancing the UK's capacity to deter, detect and sanction foreign bribery offences (see TABLES 1-8).

4. On 14 December 2006, the Attorney General announced that the Serious Fraud Office (SFO) had halted its investigation into the BAE/Saudi Arabia Al Yamamah deal for reasons of national security.

5. On 18 January 2007, at the close of 16-18 January meeting of the OECD Working Group on Bribery, the Group issued a press release[33] stating that:

"The Working Group has serious concerns as to whether the decision was consistent with the OECD Anti-Bribery Convention and will discuss further the issue in March 2007, in the context of the United Kingdom written report on its implementation of recommendations, set out in the 2005 Phase 2 examination report on its enforcement and application in practice of the OECD Convention."

The statement indicated that the March meeting discussions would focus on two specific Phase 2 recommendations:

"the performance of the SFO and other relevant agencies with regard to foreign bribery allegations ... including in particular with regard to decisions not to open or to discontinue an investigation" (paragraph 254 a.)

"ensure that the investigation and prosecution of bribery of foreign public officials shall not be influenced by considerations of national economic interest, the potential effect upon relations with another state or the identity of the natural or legal persons involved" (paragraph 255 a.).

6. At the OECD Working Group meeting of 12-14 March 2007, the UK Government presented its "Written Follow-up to Phase 2 Report" (see TABLES 1-8).

7. On 14 March 2007, the OECD Working Group on Bribery issued a statement that:

— reaffirmed its "serious concerns" about the halting of the United Kingdom's investigation into the BAE Al Yamamah deal;

— highlighted its concerns about deficiencies in foreign bribery and corporate liability laws;

— announced its decision to conduct a supplementary review of UK implementation (Phase two bis).

8. On 21 June 2007, the OECD Working Group on Bribery adopted and approved a report setting out the Working Group's review of the UK Follow-up Report. [34]Whilst acknowledging that the UK had "satisfactorily implemented a number of the Working Group's recommendations in the Phase 2 Report" and "engaged in extensive efforts to raise awareness about the need to combat foreign bribery", the report concludes:

"...the Working Group has decided to conduct a supplementary review of the United Kingdom (`Phase 2 bis') focused on progress in enacting a new foreign bribery law and in broadening the liability of legal persons for foreign bribery. The Phase 2 bis review will also examine whether systemic problems... explain the lack of foreign bribery cases brought to prosecution. The review will also address matters raised in the context of the discontinuance of the BAE Al Yamamah investigation. The Phase 2 bis review will include an on-site visit to be conducted within one year, ie, by March 2008."

9. UNICORN believes that recent events have not only damaged the UK Government's reputation as a credible anti-corruption player, but, critically, have also undermined the collective political will of governments to tackle international bribery.

10. UNICORN considers that the UK Government should take immediate remedial action:

a. demonstrate its individual commitment to the OECD Anti-bribery Convention:

iii. improve visibility of the OECD Anti-bribery Convention at national level. Whilst the UK Government has taken a number of positive steps to increase awareness of the Convention amongst key target groups (see TABLE 2: Raising Awareness), there is a lack of basic information on the Convention and the UK's implementation at national level:

1. The document "The Steps taken by the United Kingdom to implement and enforce the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions", published on the OECD web site, identifies two departments as the "Relevant Authorities" for the OECD Anti-bribery Convention: the FCO; and the Ministry of Justice. Yet there is no clear route from the home pages of either of these Departments to information on the OECD Anti-bribery Convention, nor is there any indication that corruption is a policy area for which they are responsible, nor are there any contact points. The FCO leaflet (see TABLE 2: Awareness Raising) on "UK Bribery and Corruption Law" and its DVD "Crimes of the Establishment" are not easily found on the FCO web site, [37]though the leaflet is published on the site, [38]as well as on the UK Trade Invest site. Sites. (Links to the OECD Anti-bribery Convention are provided from the ECGD's web site). [39]

2. None of the documents published by the OECD on the UK's implementation of the OECD Anti-bribery Convention appears (on the basis of several searches) to be published on UK Government web sites.

iv. compile and publish information on how to report bribery: a key obstacle to the effective implementation of the OECD Anti-bribery Convention is the low level of reports of foreign bribery offences. Yet 10 years after the signing of the Convention in 1997, there is little accessible guidance on how and where to report foreign bribery offences. Whilst the FCO leaflet, "UK Bribery and Corruption", sets out some information on reporting, it is not easily found on the internet and the information provided is incomplete (see TABLE 2: Awareness Raising). The UK Government should take the lead and compile, translate and make public information on how citizens around the world can report foreign bribery offences involving UK companies or nationals. This information should be available on the web sites of all the relevant national authorities and embassies and links should be available from other key sites, such as the OECD, World Bank, UNODC and Transparency International.

b. help re-build collective political will by sending a high level delegation, including the Ministerial Champion on International Corruption and other high level officials, to the forthcoming Tenth Anniversary Celebration of the OECD Anti-bribery Convention, being held on 21 November 2007 in Rome. The overall aim of the event is to foster public understanding and support of the OECD Anti-bribery Convention and the purpose of the High Level meeting to provide a forum for ministers and other high level officials to reaffirm their commitment to the Convention.

ROLE OF THE MINISTERIAL CHAMPION ON INTERNATIONAL CORRUPTION AND EFFECTIVENESS OF THE UK ACTION PLAN FOR COMBATING CORRUPTION

11. UNICORN welcomes the appointment of a "Ministerial champion" for Anti-corruption and the implementation (and public reporting on) of an annual Action Plan for combating corruption. UNICORN considers that these initiatives have the potential to strengthen the UK's anti-corruption efforts by securing strong leadership and coordination.

12. To fulfil their promise, however, UNICORN believes that there is an urgent need to improve clarity, publicity and consultation:

a. there is no public information available on the respective roles of DFID, the FCO, the Ministry of Justice and the Department of Business Enterprise and Regulatory Reform (if any):

i. the revised Memorandum of Understanding (2005) does outline arrangements for implementing Part 12 of the Anti-terrorism, Crime and Security Act 2001, but it focuses primarily on the enforcement agencies and how to report, investigate and prosecute foreign bribery cases;

c. As regards the OECD and Corruption, UNICORN acknowledges that a number of activities set out in the 2006-07 Action Plan support the UK's implementation of the OECD Anti-bribery Convention. UNICORN particularly welcomes the creation of a dedicated unit for investigating overseas corruption. However, UNICORN notes that whilst the 2006-07 Action Plan includes a commitment to submit the (required) progress report on implementation of the phase 2 recommendations (point 9), it does not make a commitment to implement key recommendations of the phase 2 bribery review (March 2005), such as enacting new corruption legislation.

13. UNICORN considers that overall effectiveness could be improved by:

a. including in the 2007-08 annual action plan a description of the role of the Ministerial champion, as well as an outline of the respective departmental responsibilities, alongside the description of tasks;

b. convening a meeting of external stakeholders to discuss the final report of the 2006-07 action plan, as well as the priorities of the 2007-08 action plan;

c. ensuring that the Action Plan reflects the priorities identified by the OECD Working Group on Bribery for the Phase two bis follow-up report;

d. extending the post of the Anti-corruption champion beyond the two-year period recommended in the Report Of The Africa All Party Parliamentary Group, "The Other Side of the Coin".

Table 1

CORRUPTION LAW

OECD WORKING GROUP PHASE 2 RECOMMENDATION[41]

IMPLEMENTATION OF RECOMMENDATIONS

ADDITIONAL INFORMATION/ COMMENTS[42]

UK WRITTEN FOLLOW-UP TO PHASE 2 REPORT[43]

OECD WORKING GROUP UK PHASE 2 FOLLOW UP REPORT[44]

Corruption Legislation

Enact at the earliest possible date comprehensive legislation whose scope clearly includes the bribery of a foreign public official

(para. 248 in the Phase 2 report; no number in the UK Follow-up Report)

Corruption Legislation

The Working Group on Bribery (WGB)'s main concern over the adequacy of our law was dealt with in the Anti-Terrorism, Crime and Security Act 2001 (for England, Wales and Northern Ireland), and in Scotland by sections 68 and 69 of the Criminal Justice (Scotland) Act 2003. These Acts put beyond doubt that bribery of a foreign public official is a criminal offence. And they also gave our courts jurisdiction over crimes of corruption committed overseas by UK nationals and by bodies incorporated under UK law. The WGB's phase 1 bis review concluded: "UK law now addresses the requirements set forth in the Convention." So further legislation on corruption is a desirable measure of law reform rather than an issue of Convention compliance.

Nevertheless, initiatives to reform the UK's bribery laws have been underway for a number of years (predating the OECD's phase 1, phase 1bis and phase 2 reports). In 1997 the Law Commission[45] published proposals which were generally welcomed and formed the basis of the Government White Paper on Corruption published in 2000, which also elicited a positive public response. However, when the Government published a draft Corruption Bill in 2003 it was subject to severe criticism in pre-legislative scrutiny. The Bill was criticised by the Committee for its complexity. The Committee recommended an entirely different approach to the formulation of

the offences.

The Government remains committed to a fundamental reform of our bribery laws and we are considering the full range of structural options. This is not as an easy task. No approach commands wide assent. However, in an attempt to identify a workable approach for a new scheme of offences the Government issued a Consultation Paper in December 2005. The Consultation Paper also sought views on a proposal to amend the operational powers of the Serious Fraud Office to assist investigations into foreign bribery. The consultation closed in March last year and the Government will publish its response shortly.

Corruption Legislation

The OECD Working Group considers that this Recommendation has not been implemented.

(para.20)

The Working Group is seriously concerned that this recommendation, which reflects deficiencies in the law on foreign bribery, remains unimplemented. The slow pace of reform appears to be attributable at least in part to the UK's view, as expressed in the Follow-Up Report (at p. 1), that its current law complies with the Convention and that change is only a "desirable measure of law reform". The Working Group finds these statements in the Follow-Up report to be surprising and of serious concern, especially in light of recent events and public statements by senior UK law enforcement officials about significant defects in the law that, in their view, could preclude prosecution in important cases. The Working Group urged the UK to accelerate the process of reform of the bribery laws.

Corruption Legislation

Additional Information

Corruption Bill

23 May 2006

Transparency International prepared a Draft Corruption Bill which was introduced as a Private Members Bill by Hugh Bayley MP on 23 May 2006. This Bill ran out of Parliamentary time.

29 November 2006

Lord Chidgey introduced essentially the same Bill into the House of Lords.

5 March 2007

The Government published its response to 8 December 2005 consultation, concluding that whilst "there was broad support for reform ..." there is "no consensus view as to what that reform should look like." The Government has asked the Law Commission to look again at the issue and to come up with a model for going forward.

16 March 2007

The TI Bill had its second reading debate.

October 2008

The Law Commission has been asked to report its findings by October 2008.

Defence of the Principal's Consent

The issue of whether existing laws provide for a defence of the consent of the principal in foreign bribery cases has arisen in the context of debates surrounding the halting of the BAE/Saudi Arabia Al Yamamah investigation. In statements reported in the Financial Times, the Attorney General and the Director of the Serious Fraud Office, Robert Wardle, have pointed to the difficulties in bringing a prosecution due to the need to prove that the "agent" did not have approval from the "principal" for accepting the payment.

"In an account of his role, the attorney-general de-fended the decision to scrap the inquiry. He said the main obstacle was the difficulty of proving corruption under current laws. These require prosecutors to show the person receiving bribes—the `agent'—was acting without the approval of their boss—the `principal'."

"The reason I was concerned was because of the particular constitutional position of Saudi Arabia ... And, indeed, how, in this context, do you ever succeed in showing that? BAE were asserting that the payments had been authorised at the highest level [in Saudi Arabia]," he said. [46]

"Wardle told the Financial Times the SFO could have faced a problem in any prosecution of BAE because of the need under existing anti-corruption rules to prove that Saudi officials who had allegedly received bribes—known in law as the `agents'—had acted without the consent of the country's king, the `principal'." [47]

This issue was identified as a potential problem in the March 2005 OECD Working Group report, which also recorded the UK Government's position: "that a defence based on the consent of the principal to the agent receiving the bribe `has no basis in current UK law'".

Comments

a) the UK Government will face further embarrassment unless it implements this recommendation before the Phase 2 bis visit (scheduled to take place before March 2008). The UK Government should take action in the coming weeks, as a priority under the Action Plan, to bring the various experts involved in the development of the two Corruption Bills together, to discuss and build consensus on how to meet the OECD's requirements in the timeframe.

b) In the meantime, the UK Government should clarify, and publicise, the fact that the current law does not permit the consent of a principal as a defence in cases involving the bribery of a foreign public official.

Table 2

AWARENESS-RAISING

OECD WORKING GROUP RECOMMENDATION	IMPLEMENTATION OF RECOMMENDATIONS		ADDITIONAL INFORMATION/COMMENTS
	UK WRITTEN FOLLOW-UP TO PHASE 2 REPORT	OECD WORKING GROUP UK PHASE 2 FOLLOW UP REPORT
Public Officials Enhance existing efforts to raise awareness of the Convention and the foreign bribery offence among law enforcement authorities including the Police, judicial authorities and UK public officials involved with UK companies operating abroad (para 251.a in the Phase 2 Report 1a) in the UK Report).	Public Officials Our awareness-raising activities for UK officials have two main strands. Firstly, we include information about the risks of corruption and the obligation to report allegations against UK companies and UK nationals in standard training for Foreign and Commonwealth Office (FCO) staff preparing to go overseas as economic officers, as well as those from the Department of Trade and Industry (DTI) and Ministry of Defence (MOD) engaged in the promotion of UK exports and inward investment to the UK. We have also made this information available to staff involved in export licensing processes in the UK. Secondly, we engage in country- and region-specific efforts. The subject has featured in regional conferences for economic officers, eg for South-East Asian posts and for African posts. Since March 2005, we have also conducted specific awareness-raising sessions for staff in China, Russia, Argentina, Thailand, Singapore, Mexico, Spain and Dubai. To complement this, we issue guidance at least once a year to remind all overseas staff of their reporting obligation, drawing their attention the latest version of the guidance available on the UK legal framework (copy attached and at http://www.fco.gov.uk/Files/KFile/briberyleaflet.pdf). We have also produced a DVD on corruption (copy enclosed) and distributed it, along with the revised guidance, to overseas Posts and UK Trade and Investment (UKTI) offices in the UK, as well as to interested civil society organisations. One example to demonstrate that this policy area is now very much in the mainstream of FCO work concerns the "assessment and development centre" (ADC), which officers must pass to achieve promotion from the grade of first secretary to the FCO's senior management structure. The ADC is a demanding two-day mixture of group exercises, individual interviews and written work. One particular role-playing scenario from a recent ADC related to the creation of a unit to cover corruption and transparency, including the handling of foreign bribery allegations. As of 8 February 2007, 25 of the allegations referred to the Overseas Corruption Register have been from the FCO, of which six have been received since August 2006. The case in which searches were undertaken on 30 January 2007 was begun as a result of a referral from the relevant embassy. The Serious Fraud Office (SFO) is an independent specialist body that investigates and prosecutes serious or complex fraud. The activity of the SFO in the area of overseas corruption includes the formation of a small unit to oversee preliminary investigations and vetting. The UK has increased law enforcement capacity to investigate allegations of bribery and money laundering. DFID has allocated some £6 million over three years to the International Corruption Group which brings together the Proceeds of Crime Team within the Metropolitan Police and the Overseas Anti-Corruption Unit within the City of London Police Service. The Overseas Anti-Corruption Unit consists of A 10-person team and has a specific remit for foreign bribery investigations. Set up in November 2006, it has already taken on four investigations and made its first arrests in January 2007. The Proceeds of Crime Team now has 12 officers to combat money laundering. Recent progress in Nigerian money laundering investigations has seen up to £1,200,000 returned and £500,000 in the process of being returned. The MOD Police Fraud Squad has developed training, which is now being rolled out across the UK Police Service, and the Squad is regularly called upon to advise other forces in relation to corruption matters. In addition to the investigative work, the Mod Police Fraud Squad seeks to educate and prevent corruption and fraud in the workplace. To this end, the Squad is in the process of restructuring to provide for an anti-corruption unit with a specific remit for education, prevention and investigation of these offences. (see also 4a) below) Seven members of the new City of London Police unit have already attended the National Fraud Course and the remaining three will do so later this year. The entire team will also take the two-day MOD Police module and will benefit from ad hoc training inputs, including a presentation by the Hong Kong Police Anti-Corruption Unit. The Crown Prosecution Service (CPS) has revised its Online Guidance to all prosecutors to reflect the requirements of the OECD Convention. It has also provided explicit training materials for its specialist staff within the newly created Fraud Prosecution Service. Discussions in relation to the foreign bribery offence are raised on a regular basis at a number of cross-Government groups attended by law enforcement officials. (See also 4a) below.)	Public Officials The OECD Working Group considers this Recommendation to be partially implemented. Para 3 " ... The Working Group notes that FCO overseas missions have supplied 25 of the allegations in the Overseas Corruption Register (a list of known foreign bribery allegations maintained by the SFO), which indicates that the UK's efforts in this area have been effective in practice."	/
Trade Unions and SMEs Undertake further public awareness activities for the purpose of increasing the level of awareness of the Convention and the foreign bribery offence among trade unions and small and medium sized enterprises (SMEs) doing business internationally (Phase 2 Report 251.b), UK Follow-up Report 1b).	Trade Unions Minister for Trade, Ian McCartney, raised the issue of international bribery and corruption at the FCO-Trades Union Congress Advisory Council in November 2006. He drew trades union leaders' attention to revised FCO guidance and the corruption DVD (see 1a) above). Mr McCartney and Hilary Benn launched the DVD that month with guests at the event from a wide range of organisations, including trades unions, business groups, individual companies, NGOs, Parliament and the media, as well as officials and colleagues from law enforcement. A panel discussion gave participants the opportunity to ask questions about bribery and corruption.	Trade Unions The OECD Working Group considers this Recommendation to be satisfactorily implemented. Para 3. 2 ... "In its Follow-Up Report, the UK has also described a significant range of awareness-raising efforts targeted at unions and companies, including small and medium-sized enterprises."	Trade Unions Following a meeting in November 2006 between representatives of Amicus, the Trades Union Congress (TUC), UNICORN and the Secretary of State for International Development Hilary Benn, it was agreed to hold a joint DFID/TUC anti-corruption event in May 2007, funded by DFID, with the aim of identifying joint business and trade union strategies for combating corruption.
	SMEs We have continued our programme of specific awareness-raising sessions for UK companies with events in Russia, China, Argentina, Ghana, India and Thailand. As far as SMEs are concerned, we are contributing substantially towards the further development of the Danish anti-corruption information portal. Separately, the FCO funded the development of a website for the UK network of the Global Compact (http://www.ungc-uk.net/). This features guidance on implementing all ten Global Compact principles, including the tenth principle on anti-corruption, and has a link to the Government's anti-bribery leaflet. We published an article on bribery in a journal for the accountancy profession and have been discussing further activities with them and the Law Society to use their multiplier effect. An interview on the subject with government and business representatives will feature in a forthcoming edition of a leading construction and engineering journal. One of the reasons for increasing the range of awareness-raising activities in the UK, especially for UKTI staff and business audiences in the UK regions, is to lengthen our reach to SMEs. Through the network of UKTI's international trade advisers, we know that SMEs will have more opportunities to obtain the necessary information.	SMEs The OECD Working Group considers this Recommendation to be satisfactorily implemented.	SMEs In October 2006, ACCA funded and undertook a survey of SMEs in view of the fact that there is "limited information on the scale of the problem outside the large, multinational company environment ..." ACCA published its findings in a report "Bribery and Corruption: the Impact on UK SMEs" in March 2007. As follow-up, ACCA intends to convene a Policy Forum that will explore the issues identified in the survey and consider how accountants, Government and regulators might usefully work together to develop an effective business support service to SMEs.
	More broadly, the Government is working with companies and other stakeholders in a range of sectors to promote transparency in international business transactions. Building on the successful experience of the multi-stakeholder approach applied in the Extractive Industries Transparency Initiative (www.eitransparency.org), we have been looking to help developing countries improve transparency and value for money in procurement through new international initiatives in the construction, health and defence sectors. The initial consultation phase on the construction transparency initiative (CoST) included a broad range of stakeholders from industry and industry bodies (eg UK Anti-Corruption Forum), civil society (Transparency International, Engineers Against Poverty), World Bank, academia and procurement specialists. A stakeholder focus group has been set up to act as a reference point during the future design of CoST. There is wide support for the idea of a new initiative on transparency in health sector procurement—across Government, industry, development NGOs, donor country governments and international organisations (notably the WHO). The development of a defence sector initiative is building on a number of existing industry and NGO efforts to build integrity in the international defence sector. There is now agreement across Government on taking forward dialogue on a defence transparency initiative though a multi-stakeholder group of government, industry and civil society.
Responsibility of Parent Companies and Reporting Bribery Take appropriate measures to publicise, including in all explanatory material distributed to UK companies, the conditions under which parent and affiliate companies can be liable in connection with foreign bribery, and encourage UK companies to report to UK authorities, as well as to other appropriate authorities, instances of foreign bribery they come across in the course of their operations. (Phase 2 Report 251.c, UK Follow-up Report 1c).	Responsibility of Parent Companies and Reporting Bribery We issued revised guidance in May 2006 (see 1a) above). In the context of awareness-raising sessions with business, as outlined above, we encourage companies to report allegations to the appropriate authorities.	Responsibility of Parent Companies The OECD Working Group considers this Recommendation to be satisfactorily implemented. Para 3. ... The UK has also significantly improved its anti-foreign-bribery guidance brochure since the Phase 2 Report. It now addresses more appropriately the potential liability of parent companies relating to foreign bribery by their subsidiaries; it also contains a clear statement of an obligation for Foreign and Commonwealth Office (FCO) and locally-engaged staff in overseas diplomatic posts to report acts of bribery by UK nationals or UK companies to the Serious Fraud Office (SFO) directly or to a London-based team that transmits the reports to the SFO.	Reporting Bribery The leaflet encourages UK companies and civil servants and local employees to report bribery "If you have concrete evidence of a foreign rival company acting in a corrupt fashion then you should alert the local judicial authorities/and or the authorities of the country where the company is registered. If you report it to the nearest British Diplomatic mission, they will consider how best to take it forward. This might include contacting the country's local mission or suggesting to FCO London that we raise the matter at the OECD Working Group on Bribery." "civil servants and locally engaged employees in British Diplomatic Posts overseas, who in the course of their duties, become aware of or receive information relating to acts of bribery committed by UK nationals or companies ... must report the matter to London, either via the FCO Business Team or direct to the appropriate UK authorities. The FCO transmits such reports to the Serious Fraud Office so that the appropriate UK authorities can decide whether to pursue an investigation ..." Comments The advice provided in the leaflet on reporting bribery is incomplete. Comprehensive information on how to report bribery should be compiled and published on a web site to which competitors/ employees/citizens may be directed.

Table 3

REPORTING

OECD WORKING GROUP RECOMMENDATION	IMPLEMENTATION OF RECOMMENDATIONS		ADDITIONAL INFORMATION/ COMMENTS
	UK WRITTEN FOLLOW-UP TO PHASE 2 REPORT	OECD WORKING GROUP UK PHASE 2 FOLLOW UP REPORT
Civil Servants Establish a clear obligation for civil servants to report possible instances of bribery to the relevant authorities (Phase 2 Report 252.a) UK Follow-up Report 2a)	Civil Servants The Civil Service Code sets out the core values of the Civil Service—integrity, honesty, objectivity and impartiality—and the standards of behaviour expected of all civil servants. A revised Civil Service Code was issued on 6 June 2006. The revised Code forms part of terms and conditions of civil servants, and, for the first time, it has been made clear in the Code that it forms part of the contractual relationship between a civil servant and his/her employer. It also makes clear that civil servants should "report evidence of criminal or unlawful activity to the police or other appropriate authorities".	Civil Servants The OECD Working Group considers this Recommendation to be partially implemented (para 25)	Civil Servants The Civil Service Code was amended in 2006 to include a reference to whistleblowing legislation. Comment This is a welcome development. Compliance with this obligation in the Civil Service Code should be monitored.
Reporting to Law Enforcement Authorities/ Publicise Amongst Companies/General Public In applying its legislation in the field of whistle blowing, improve protection of persons who report directly to law enforcement authorities; and pursue its efforts to make such measures more widely known among companies and the general public. (Phase 2 report 252 b), UK Follow-up Report 2b)	Reporting to Law Enforcement Authorities Government policy on reporting also includes the encouragement of internal whistle-blowing in companies. The Public Interest Disclosure Act 1998 (PIDA) protects workers against victimisation by their employer if they "blow the whistle" on workplace wrongdoing in a responsible way. Its underlying aim of encouraging greater openness in the workplace is reflected in its design, the effect of which is that workers most readily attract protection if they make disclosures to their employer or through procedures authorised by their employer. Disclosures can also be protected if they are made more widely, however, including those to regulatory bodies prescribed by the Secretary of State for Trade and Industry. These include bodies to which bribery can be reported, eg the National Audit Office and the Serious Fraud Office. Given PIDA's underlying aim, the DTI believes that the current level of protection for those who make disclosures to law enforcement bodies is right, but, in view of the WGB's recommendation, they will consider, when they next review the list of prescribed persons, whether the police should be added to them.	Reporting to Law Enforcement Authorities The OECD Working Group considers this Recommendation to be partially implemented.	Reporting to Law Enforcement Authorities The list of prescribed persons has not been amended. There has been no public statement by the UK Government explaining why this is the case. Whilst the new Civil Service Code does improve the position for civil servants reporting to the police, there is no comparable protection for people who work outside central government—whether in local government, NHS or the private sector—reporting bribes or fraud of less than £6 million. Publicise with Companies There has been no initiative aimed at promoting PIDA amongst companies. Promote to General Public There has been no initiative to promote PIDA to the general public.

Table 4

PREVENTION AND DETECTION

OECD WORKING GROUP RECOMMENDATION	IMPLEMENTATION OF RECOMMENDATIONS		ADDITIONAL INFORMATION/ COMMENTS
	UK WRITTEN FOLLOW-UP TO PHASE 2 REPORT	OECD WORKING GROUP UK PHASE 2 FOLLOW UP REPORT
Fraudulent Accounting Offence Proceed diligently with the adoption of reforms clarifying and unifying the UK accounting legislation with the International Accounting Standards, to ensure the fraudulent accounting offence is in full conformity with Article 8 of the Convention (Phase 2 Report 253. a), UK Follow-up Report, 3a)	Fraudulent Accounting Offence In response to the Phase 2 report, the DTI assessed UK compliance with Article 8 and is confident that the requirements are met under UK company law rather than accounting standards.	Fraudulent Accounting Offence The OECD Working Group considers that this Recommendation has not been implemented. 19. The Follow-Up report also does not identify or analyse company law provisions which, according to the UK, now satisfy the recommendation to ensure that the fraudulent accounting offence in the UK is in full conformity with Article 8 of the Convention. Accordingly, the Working Group cannot meaningfully evaluate the situation and concluded that this recommendation has not been implemented.	Fraudulent Accounting Offence Comment The OECD recommendation focuses on the wrong target. This aim should not be pursued through International Accounting Standards.
Auditors Proceed with the adoption of guidance for auditors in order to explain and clarify their reporting obligation concerning possible acts of foreign bribery (Phase 2 Report (253.b), UK Follow-up Report, 3b)	Auditors The Auditing Practice Board published Interim Guidance in August 2004 on Money Laundering which covers overseas bribery. Following the WGB's recommendation, the Board issued a revised Practice Note of the Auditing Practice Board Standards and Guidance 2006, taking account of comments received during the consultation process. HMT is working with auditors and other industry parties (in the guidance working party) to ensure that it receives approval.	Auditors The OECD Working Group considers this Recommendation to be partially implemented.	Auditors Comment There is a need to move beyond the issuing of guidance to a requirement for positive reporting. Auditors should be required to publish annual reports on their role in monitoring money laundering and foreign bribery.
Tax Authorities Ensure sufficient time and resources are available to tax authorities to review tax information and allow for the detection of possible criminal conduct, including foreign bribery offences (Phase 2 Report 253.c) UK Follow up Report 3c)	Tax Authorities Her Majesty's Revenue and Customs (HMRC) has produced a compliance strategy setting out the resources available to the UK's tax authorities to review tax information and allow for the detection of possible criminal conduct, including foreign bribery offences. The strategy includes dedicated staff training, including specifically on how to identify expenses entries that might be used to disguise bribes. Detailed guidance available via the HMRC intranet sets out how Tax Inspectors should handle their review of any deductions in the accounts that either are or might be bribes, whether paid within the UK or abroad. It recommends that the advice of Head Office be sought at an early stage. The standard procedure is for staff to challenge payments that give rise to suspicion and require evidence to back up the alleged purpose. If it turns out the expense was a bribe it is disallowed and a disclosure may be made to the appropriate law enforcement agency. The 2002 Finance Act provided that no deduction is to be given for the payment of bribes made outside the UK where "the making of a corresponding payment in any part of the United Kingdom would constitute a criminal offence there." Guidance was issued to staff in October 2003 and will be revised again as necessary to take account of any developments in interpretation of the legislation. In normal circumstances an enquiry must be opened within one year of a tax return being submitted. However, where there has been fraudulent or negligent conduct which is likely in cases involving the payment of a bribe, the time limits for conducting an enquiry are extended to 20 years. There is no restriction on the length of time that an enquiry can continue once it has been opened. Separately, HMRC is in the process of updating guidance on reporting suspicious transactions —including those suspected of being a bribe—to law enforcement authorities.	Tax Authorities The OECD Working Group considers this Recommendation to be partially implemented. 17. The UK has provided bribery-related training to tax inspectors. However, the Working Group continues to be concerned about whether they have sufficient time to detect bribery in practice given the limited to time to re-open tax returns (one year) in the absence of fraudulent or negligent conduct.

Table 5

INVESTIGATION

OECD WORKING GROUP RECOMMENDATION	IMPLEMENTATION OF RECOMMENDATIONS		ADDITIONAL INFORMATION/COMMENTS
	UK WRITTEN FOLLOW-UP TO PHASE 2 REPORT	OECD WORKING GROUP UK PHASE 2 FOLLOW UP REPORT
Serious Fraud Office—Role and Resources Ensure that the role of the Serious Fraud Office (SFO) in foreign bribery investigations is confirmed and that appropriate human and financial resources are provided, and consider monitoring and evaluating the performance of the SFO and other relevant agencies with regard to foreign bribery allegations on an on-going basis, including in particular with regard to decisions not to open or to discontinue an investigation (Phase 2 Report 254.a), UK Follow-up Report 4a).	Serious Fraud Office—Role and Resources In order to assist effective investigation, the SFO took over the maintenance of the register of corruption allegations in 2005. The SFO assesses all cases where an allegation of overseas corruption is made. The possible investigation of such cases where an element of fraud is present was already part of its remit. In practice there will remain some cases, particularly those investigated by the MOD Police, which would tend to be treated as a domestic corruption case with an overseas element, eg cases involving Crown staff deployed abroad. These may remain with the CPS for prosecution. The SFO already has scope within its existing budget to allocate resources to the investigation of corruption allegations. When the need arises, eg in a substantial search operation, the team investigating such allegations can be supplemented from the greater body of lawyers and investigators within the office. The effective use of this resource is subject to ongoing monitoring in a number of ways. The SFO presents to Parliament an annual report which includes strategic performance information on progress including with corruption cases. This reporting is supplemented by more ad hoc monitoring. The Attorney General frequently answers parliamentary questions about the SFO's work on corruption. On 1 February 2007 in a debate in the House of Lords, the Attorney General publicly emphasised the willingness of the UK government to consider providing funds for the investigation of allegations of international corruption. On 31 January 2007 the Treasury approved supplementary funding of £22.8 million to the SFO for a large-scale enquiry into part of the matters outlined in the Volcker Report of 23 October 2005 into suspected corrupt and fraudulent activity under the UN Oil-for-Food programme for Iraq. This will enable the SFO to establish an enquiry team to be supported, where necessary, by the City of London Police overseas corruption team. As a small specialist unit, the SFO takes decisions on whether to begin an investigation, to lay charges against an individual or a company or not to do so at a high level- usually the Director himself. The SFO is an investigatory body as well as a prosecution authority and, accordingly, the Director has to take into account a wider range factors at different stages in the life of a case. He is guided by the Code for Crown Prosecutors at appropriate times. In the one case in which an investigation was discontinued in December 2006, the Director was not influenced by any improper considerations. He had regard at all times to Article 5 of the OECD Convention and made his decision on the basis of national and international security. In doing so he complied with Article 5. The MOD Police exists to provide a bespoke policing service, predominantly to the MOD. The Fraud Squad is a specialised department within the Force's Criminal Investigation Department. It is one of the largest Fraud Squads in the UK. The Squad investigates cases of fraud and corruption in relation to MOD contracts. These offences are the highest priority for the Force—in contrast to most other sections of the UK Police Service, which does not prioritise economic crime so highly. The Force has naturally built up considerable expertise in the investigation of public sector corruption, particularly in relation to procurement. The CPS has restructured how it prosecutes organised crime, essentially in response to the creation of the Serious and Organised Crime Agency (SOCA). This restructuring has also led to the creation of the new Fraud Prosecution Service, staffed by specialist prosecutors who are likely to be in charge of future files involving overseas bribery and corruption. The CPS has already created a new fraud course for specialists and has available to it a number of modules that centre on the UK's obligations under the OECD Convention and also UNCAC. The CPS is also due to create a specialist module on investigating overseas corruption which it is currently planning with the MOD Police and the SFO. (See also 5a) below.) The Crown Office keeps a register of corruption allegations in Scotland. The Financial Crime Unit, part of the National Casework Division, would lead on such cases in Scotland, though cases may be investigated by the relevant Area Procurator Fiscal. Separately, the UK has taken an important role in the International Association of Anti-corruption Authorities (IAACA) which was established in 2006. Sir Alasdair Fraser, Director of Public Prosecutions for Northern Ireland, is a Vice -President and Robert Wardle, Director of the SFO, is a member of the executive committee.	The OECD Working Group considers this Recommendation to be partially implemented. 8. ... The Phase 2 Report found that the very large number of investigative and prosecutorial authorities was hindering effective treatment of the foreign bribery offence. The UK has made substantial progress in giving a central role to the SFO in foreign bribery cases and it is now generally recognised as the key agency with regard to such matters ... .the rules for how the SFO attributes cases to other agencies remain unclear. 9. The UK has made significant efforts, especially in recent months, to substantially increase police capacity to investigate allegations of foreign bribery and money laundering ... 10. The Working Group recognizes these important efforts with regard to police resources. The SFO itself, however, has not received any additional funding for foreign bribery generally ... The Working Group remains concerned about the adequacy of these resources, particularly in light of the continuing absence of any prosecution for foreign bribery. In January 2007, the UK Treasury approved supplementary funding of GBP 22.8 million (EUR 33.5 million) over five years to the SFO for a large-scale enquiry into part of the matters outlined in the report on the UN Oil-for-Food programme for Iraq. ... the size of the five-year Treasury allocation raises further doubts about the overall annual SFO budget which, as noted in the Phase 2 Report, was only GBP 35 million (EUR 51.4 million) in 2005-06. The Working Group notes that on 1 February 2007, in a debate in the House of Lords, the Attorney General publicly emphasised the willingness of the UK government to consider providing funds for the investigation of allegations of international corruption ... . 22. In 2005, the Working Group recommended that the UK monitor decisions not to open or to close foreign bribery investigations. While the Working Group welcomes recent increases in resources for investigations as described above, the continuing lack of any prosecution as of March 2007 may raise broader issues.	Serious Fraud Office—Role December 2005 The Home Office Consultation on the Reform of the Prevention of Corruption Acts and SFO Powers in Cases of Foreign Bribery Officials proposed that SFO powers under Section 2 of the Criminal Justice Act 1987 (to compel the production of documents and explanations of them) be extended for the purposes of determining whether an investigation should be undertaken in cases involving the bribery of a foreign public official. 5 March 2007 In its response to the Home Office Consultation, the Government reported that "the SFO supported this extension in its powers but thought the power should be applicable not only to companies but to individuals. It sought more clarity on what is a `foreign public official', for instance there are circumstances where a person could influence the awarding of a contract on behalf of an official ..." [48]The Government agreed with the SFO that the powers should be available in respect of both companies and individuals and cover investigations where the payment was made to a third party. Serious Fraud Office—Resources 18 July 2006 In his letter to the Attorney General, published in the SFO's annual report, 2005-06, [49]the Director, Robert Wardle stressed there were "concerns about police resourcing for this new work which at present is not provided for". 1 February 2007 In the debate on Corruption in the House of Lords, the Attorney General announced that the "Treasury has recognised the importance of the SFO investigation into the humanitarian aid aspect of Oil for Food, and ... we have been provided for that purpose with approximately £22 million additional funding." [50]He informed the House that he had told the Director of the SFO "to pursue these investigations vigorously and that, if more resources are needed, every effort will be made to find them." Investigations into Foreign Bribery On 7 February 2007, the Solicitor General took the unusual step of confirming that investigations into BAE Systems were ongoing in South Africa, Romania, Tanzania and the Czech Republic as well as inquiries in Chile and Qatar. He also confirmed other active investigations related to Bosnia, Nigeria, Zambia, Costa Rica and Egypt.[51].
Ministry of Defence Police Amend the Memorandum of Understanding to clarify that the Ministry of Defence Police's investigative jurisdiction is limited to cases where the Ministry of Defence is a party to the contract (254.b)	Ministry of Defence Police The Memorandum of Understanding (MoU) setting out how Government Departments and agencies should handle cases of overseas bribery has been revised to take account of the UK's Phase 2 report. The new version was published on 1 December 2005 (copy attached). It clarifies that the MOD Police's investigative jurisdiction is limited to cases involving MOD employees or defence contracts where the MOD is a party to the contract.	Ministry of Defence Police The OECD Working Group considers this Recommendation to be satisfactorily implemented. Para. 4 MOU has been modified to limit the investigative jurisdiction of the Ministry of Defence Police to foreign bribery cases involving (i) defence contracts where the MOD is a party to the contract; or (ii) MOD employees. While the reference to "MOD employees" is not technically consistent with the Phase 2 recommendation with regard to the jurisdiction of the Ministry of Defence Police, the Working Group was satisfied that compliance with the recommendation had been achieved.
Disclosure to Non-Investigatory Departments reconsider obligations in the Memorandum of Understanding specific to foreign bribery investigations requiring disclosure of information about the investigation to non investigatory government departments (notably the Foreign and Commonwealth Office and the Ministry of Defence) (Phase 2 Report 254. c, UK Follow-up Report 4c).	Disclosure to Non-Investigatory Departments The revised MoU puts beyond doubt that the disclosure of information on specific foreign bribery investigations to non-investigatory Government Departments (notably the FCO and MOD) is possible only where this is appropriate and with the consent of the senior investigating officer.	Disclosure to Non-Investigatory Departments The OECD Working Group considers this Recommendation to be satisfactorily implemented.
Mutual Legal Assistance Increase resources for the prompt and effective handling of mutual legal assistance requests (Phase 2 Report 254.d, UK Follow-up Report 4d).	Mutual Legal Assistance All mutual legal assistance requests are actioned as soon as possible within the resources available. Within the UK Central Authority (UKCA) a number of measures have been taken to enhance procedures and to ensure resources are targeted to provide for prompt and effective handling of requests. Recent cases include requests from Nigeria, Italy, Belgium, India and Pakistan. The Crime (International Cooperation) Act 2003 set up two additional central authorities for the UK—Crown Office (Scotland) and the Northern Ireland Office—which are competent to receive requests from EU Member States where the evidence is located within their jurisdiction. The central authority for Scotland works effectively and efficiently. However, the UK is party to bilateral treaties with 32 countries which require transmission of requests via UKCA. Nevertheless, the Act also allows for outgoing mutual legal assistance requests to be directly transmitted by prosecutors to the judicial authorities in EU Member States, therefore bypassing UKCA. And HMRC has been given the power to act as a central authority for mutual legal assistance requests related to indirect taxation but not in respect of direct taxation matters. These provisions offer the potential of establishing more effective and streamlined mutual legal assistance procedures that can promptly handle the increasing number of mutual legal assistance requests. Between April and September 2006 a review of working practices in UKCA was conducted. As a result of this review, a new system of working has been introduced to streamline and standardise working practices across the unit. This should improve the efficiency of UKCA. The new system is being carefully monitored. Following the organisational improvements within UKCA discussions will take place with stakeholders to see how further response times can be improved. The Mutual Assistance Unit of the Serious Fraud Office undertakes the majority of incoming requests in cases of serious transnational corruption and fraud. That unit has recently gained an additional investigator. There is flexibility within the Serious Fraud Office such that, if the need arises, eg in a substantial search operation, the Mutual Legal Assistance Unit can be supplemented from the greater body of lawyers and investigators within the office. Between 2001 and 2006 the Serious Fraud Office received 15 requests for assistance in cases classified as bribery or corruption by the requesting state (6 including bribery, the balance alleging corruption). Since March 2005, these have included requests from Costa Rica, Zambia and the USA. Where the Director of the Serious Fraud Office is requested to use his coercive powers there is a requirement that he be satisfied that there is evidence that a serious or complex fraud has occurred. In no case has a request been turned down on the ground of not meeting the evidential threshold. There has been a case in assistance was given but there was a refusal of a request to undertake a search of domestic premises.	Mutual Legal Assistance The OECD Working Group considers this Recommendation to be satisfactorily implemented.

Table 6

PROSECUTION

OECD WORKING GROUP RECOMMENDATION	IMPLEMENTATION OF RECOMMENDATIONS		ADDITIONAL INFORMATION/ COMMENTS
	UK WRITTEN FOLLOW-UP TO PHASE 2 REPORT	OECD WORKING GROUP UK PHASE 2 FOLLOW UP REPORT
Amend the Code for Crown Prosecutors Amend where appropriate the Code for Crown Prosecutors, the Crown Prosecution Service Manual and other relevant documents to ensure that the investigation and prosecution of bribery of foreign public officials shall not be influenced by considerations of national economic interest, the potential effect upon relations with another state or the identity of the natural or legal persons involved (Phase 2 Report 255.a), UK Follow-up Report 5a)	Amend the Code for Crown Prosecutors The Attorney General and the Director of Public Prosecutions have carefully considered whether it would be appropriate to amend the Code for Crown Prosecutors in response to the UK's phase 2 review. They have decided against this course of action as the Code sets out general and public principles which apply to all prosecuting agencies in England and Wales, not just the CPS, and to all offences. The CPS has instead amended the Online Manual for Prosecutors which all CPS prosecutors, staff and the public can access via the CPS web-site. The Manual advises that, when making a decision in relation to the prosecution of a defendant for the offence of bribery of a foreign public official, the prosecutor will not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved." See also 4a) above.	Amend the Code for Crown Prosecutors The OECD Working Group considers this Recommendation not to have been implemented. 18 ... .The UK has not amended the Code for Crown Prosecutors (CCP) to ensure that the investigation and prosecution of bribery of foreign public officials shall not be influenced by considerations prohibited under Article 5 of the Convention (the national economic interest, the potential effect upon relations with another state or the identity of the natural or legal persons involved). It intends instead to amend the publicly-available Online Manual for prosecutors from the Crown Prosecution Service. Particularly in light of intervening events since the Phase 2 Report, the text of the CCP remains of concern; moreover, as of the date of the followup, no actual changes had been made to the Online Manual as reviewed by the lead examiners.	Amend the Code for Crown Prosecutors In light of the recent experience of the termination of the investigation in the BAE/Saudi Arabia Al Yamamah deal, this recommendation should be fully implemented.
Consent of the Attorney General In light of the longstanding absence of any consent requirement for the common law bribery offence, consider the appropriateness of Law Officers consent for cases of foreign bribery (Phase 2 Report 255. b), UK Follow-up Report 5b.)	Consent of the Attorney General The Government made clear in its response to the Joint Committee on the draft Corruption Bill that it will replace the existing statutory requirement for the Attorney General's consent with a requirement for the consent of the Director of Public Prosecutions or a nominated deputy. In the Consultation Paper issued on 8 December 2005, the Government announced that they intended that the Director of the SFO should also be empowered to give consents, given its lead role in foreign bribery cases. These changes will be taken forward in future legislation.	Consent of the Attorney General The OECD Working Group considers this Recommendation to have been partially implemented. 11. ... Prior to the date of the Phase 2 Report, the UK government had publicly announced its intent to replace the existing statutory requirement for the Attorney General's consent with a requirement for the consent of the Director of Public Prosecutions or a nominated deputy. Since the Phase 2 Report, the UK government has reiterated its intent in this regard and has announced in the context of its bribery law consultation process that it intends that the Director of the SFO should also be empowered to give consents. However, none of these statements have been acted upon to date. The Working Group considers that action has not been sufficiently taken to resolve the underlying concerns of the Working Group that led to this recommendation. In addition, new factual developments since the Phase 2 Report cause the Working Group to continue to focus on this issue.	Consent of the Attorney General May 2007 The Corruption Bill, prepared by TI (UK), which had its second reading in the House of Lords on 16 March 2007, removes the requirement for consent altogether. December 2006 On 21 December 2006, the Constitutional Affairs Committee announced its Inquiry into the Constitutional Position of the Attorney General which aimed to: (1) inquire into the constitutional role of Attorney General, in particular to consider what constitutional role the Attorney should play in relation to the upholding of the Rule of Law; (2) consider the interrelationship between the role of the Attorney General and the Lord Chancellor in that context; (3) examine the functions of the Attorney vis-a"-vis his role as superintending Minister for legal services provided in Government (including the Crown Prosecution Service) and whether such a role conflicts with his duties as a member of the Government. 1 and 7 February 2007 Debates in the House of Common and the House of Lords addressed the role of the Attorney General. 5 March 2007 In its response to the Consultation on the Corruption Bill, the Government confirmed the position reported by the Government to the OECD in its oral report of March 2006. Comment The requirement for the Attorney General to give consent for corruption prosecutions has been the subject of intense public debate in the UK, since December 2006, as a result of the termination of the investigation into the BAE/Saudi Al Yamamah deal and the Cash for Honours Inquiry. This recommendation should be fully implemented as soon as possible.
Corporate Liability Broaden the level of persons engaging the criminal liability of legal persons for foreign bribery offences (Phase 2 Report 255.c), UK Follow-up Report, 5c).	Corporate Liability The UK is in compliance with Article 2 as legal persons are liable under UK law for the bribery of a foreign public official according to the same principles as they are liable for other mens rea offences. Article 2 of the Convention requires only that each party should establish the liability of legal persons for the bribery of a foreign public official "in accordance with its legal principles". This is already achieved. In our view, the same principles should apply equally to all mens rea offences: it would not be justifiable to alter the basic principles of corporate liability in our law solely in relation to bribery. Reform of our law of corporate liability for mens rea offences would be a substantial undertaking requiring inputs from the majority of Government Departments and widespread consultation with industry and the commercial sector. However, a review of the legal basis of corporate liability forms a part of the Law Commission's major long-term project to codify the criminal law.	Corporate Liability The OECD Working Group considers this Recommendation not to have been implemented. 21 ... .the Working Group reiterated that UK law on the liability of legal persons for foreign bribery remains deficient and the Working Group reaffirmed that the law should be modified in accordance with the recommendation in the Phase 2 Report.	Corporate Liability In its response to the Home Office December 2005 Consultation on the Corruption Bill, the Government confirmed its previous position "that it would not be justifiable to alter the basic principles of corporate liability in our law solely in relation to bribery ... . The general issue of corporate liability forms part of the Law Commission's work on codification of the criminal law." [52] Also in December 2005, discussions were held on the various options for implementing this recommendation at a joint Crown Prosecution Service/ UNICORN seminar. Various options for complying with the OECD Working Group recommendation were discussed. A report is available on the UNICORN web site. 53[53] To date there has been no follow up.

Table 7

CROWN DEPENDENCIES AND OVERSEAS TERRITORIES

OECD WORKING GROUP RECOMMENDATION	IMPLEMENTATION OF RECOMMENDATIONS		ADDITIONAL INFORMATION/ COMMENTS
	UK WRITTEN FOLLOW-UP TO PHASE 2 REPORT	OECD WORKING GROUP UK PHASE 2 FOLLOW UP REPORT
Crown Dependencies Verify compliance of Guernsey's new legislation with the OECD Convention, invite Jersey authorities to enact a comprehensive anti-corruption statute at the earliest possible date in order to extend the OECD Convention to the islands (Phase 2 Report 256. a), UK Follow-up Report, 6a)	Crown Dependencies The Government extended its ratification of the OECD Convention to the Isle of Man in 2001. Guernsey now has legislation in place which will support the UK's extension of the OECD Convention and we are awaiting a formal request to pursue this. Jersey is expecting its Corruption (Jersey) Law 2006 to come into force on 6 March 2007. It is expected that once in force, Jersey will have legislation sufficient to support convention extension. The UK is in the process of confirming this and will advise Jersey accordingly. The UK's Department for Constitutional Affairs (DCA) continues to discuss with the Crown Dependencies (CDs) the need to publicise their commitment to the anti-corruption agenda. All have expressed an interest in having UNCAC extended to them and have give an indicative timetable of the end of 2007. DCA continues to work with the administrations of the CDs to assist where necessary in meeting this deadline.	Crown Dependencies The OECD Working Group considers this Recommendation to be satisfactorily implemented.	Crown Dependencies Comments Civil society remains concerned that the Crown Dependencies have not brought their legislation up to date, and have not provided sufficient resources for effective enforcement. It is also noted that compliance levels amongst small trust and company administration businesses are low—in Jersey, for example, it is reported that two-thirds of trust companies have not submitted any Suspicious Activity Reports in the past two years. Civil society that in 2006 the Government of Jersey enacted a new trust law which will have been approved by the UK Privy Council which allows for the creation of sham trusts. These trusts can serve no purpose other than to facilitate tax evasion. This seems to indicate that despite their commitment to cooperate with tackling corrupt practices the Jersey authorities remain committed to supporting corrupt activities.
Overseas Territories Continue to encourage the Overseas Territories to adopt the necessary legislation in line with the principles of the Convention and Revised Recommendation, and support them in their efforts. (Phase 2 report 256. b), UK Follow-up Report 6b).	Overseas Territories The Government raises the fight against bribery and corruption with the Overseas Territories (OTs) at appropriate opportunities, eg with OT Governors in May 2005 and in a session chaired by Hilary Benn at the Overseas Territories Consultative Council in November 2006. In addition, we invited the Attorneys General of the Cayman Islands, British Virgin Islands and Turks and Caicos Islands (TCI) to participate in the UK's delegation to the inaugural Conference of States Parties to the UN Convention against Corruption (UNCAC). The UK extended ratification of UNCAC to the British Virgin Islands in 2006. The TCI Government has tabled an Integrity Bill, which should enable us to extend the OECD Bribery Convention and UNCAC to them later this year. We funded the drafting of a revised Proceeds of Crime Ordinance, together with a new set of Anti-Money Laundering Regulations, drawing on best practice internationally. The drafts were presented to TCI financial services industry representatives on 30 January for a one-month consultation period, following which any necessary amendments will be incorporated and the Bill taken to Cabinet and thence to the House of Assembly. The Cayman Islands Government will bring forward draft legislation shortly which, once enacted, will enable the UK to extend our ratification of both the UN and OECD Conventions to the Islands. Thanks to various activities, awareness in Bermuda that corruption will lead to prosecution whenever there is sufficient evidence has greatly increased. The Government of Bermuda has in the past year successfully seized corrupt assets, in one case totalling $2.25 million from one individual. Bermuda has been actively involved in the post-Volcker investigation into companies based in the Bermuda jurisdiction in relation to the Oil-for-Food programme. The Overseas Territories are also likely to benefit from the outputs of a major Commonwealth Secretariat anti-corruption programme to produce tools to support UNCAC implementation, such as model legislative provisions. The FCO is providing some £0.5 million to this programme over three years.	Overseas Territories The OECD Working Group considers this Recommendation to have been partially implemented. 15. The UK has encouraged some of its overseas territories to adopt foreign bribery and related legislation and has provided technical assistance in this regard. However, these jurisdictions have not yet adopted the necessary legislation and the Convention has not yet been extended to any of them. While the Working Group notes that the UK is making good efforts to ensure UNCAC implementation, the Working Group is concerned about progress on extension of the OECD Convention.

Table 8

SANCTIONS

OECD WORKING GROUP RECOMMENDATION	IMPLEMENTATION OF RECOMMENDATIONS		ADDITIONAL INFORMATION/ COMMENTS
	UK WRITTEN FOLLOW-UP TO PHASE 2 REPORT	OECD WORKING GROUP UK PHASE 2 FOLLOW UP REPORT
Sanctions for Legal Persons Consider adopting a regime of additional administrative or civil sanctions for legal persons that engage in foreign bribery (Phase 2 Report 257. a), UK Follow-up Report, 7a))	Sanctions for Legal Persons On sanctions, any action concerning the liability of legal persons would be driven by considerations about the underlying legal principles that go beyond their application to the offence of overseas bribery. There has been progress on the anti-bribery policies of key Government Departments and agencies whose activities directly impact on business transactions overseas. The Office of Government Commerce (OGC) has been conducting a consultation with industry and Transparency International on the UK's implementation of EU public procurement directives, in particular Article 45 on exclusions. The OGC is also sharing its experience with the European Commission and other Member States. UK guidelines on the mandatory exclusion of economic operators for, amongst other things, corruption and bribery, were published at the end of January 2006 (http://www.ogc.gov.uk/documents/guide_mandatory_exclusion.pdf). In response to the OGC guidelines, DFID has reviewed its instructions to tenderers and other contracting documentation (copy attached). The main changes chiefly relate to Invitation to Tender (ITT) instructions (CB1C). The new instructions specifically refer to a range of offences and to UK Public Contracts Regulations. The changes to DFID ITT documents go further than that required by the Directives since they require tenderers to revert to DFID even if they are only being accused of offences rather than only if they have been convicted (as required by Directives/Regulations). The Export Credits Guarantee Department (ECGD) conducted a consultation exercise on revisions to its anti-bribery procedures. The outcome was published in March 2006 and drew praise from The Corner House for its position on the identification of agents. New anti-bribery rules were then introduced from 1 July 2006 (see http://www.ecgd.gov.uk/index/pi_home/policy_on_bribery_and_corruption.htm). In particular, these required the disclosure of agents' names. Civil seizure proceedings are available against persons suspected of but not charged with corruption offences—by the Assets Recovery Agency for England, Wales and Northern Ireland and by the Civil Recovery Unit for Scotland.	Sanctions for Legal Persons The OECD Working Group considers this Recommendation to have been partially implemented. 14. ... while the UK's adoption of the EU procurement directive regarding sanctions on companies convicted of bribery involved consideration of the issue of administrative sanctions, the directive will be of limited or no effect with regard to foreign bribery because of the serious difficulty in convicting legal persons for foreign bribery ...	Sanctions for Legal Persons There has been no movement on the underlying issue of the inadequacy of the test by which to attribute the actions of a natural person to a legal person and no attempt to address these limitations through alternative, administrative, means (see 255.c).
Policies of Agencies Consider revisiting the policies of agencies such as Department for International Development and Export Credit and Guarantees Department on dealing with applicants convicted of foreign bribery, to determine whether these policies are a sufficient deterrence (Phase 2 report 257. b, UK Follow-up Report, 7b).	Policies of Agencies: Export Credits Guarantee Department (ECGD): ECGD introduced new procedures from July 2006 following a public consultation. ECGD has fully implemented the OECD Council Recommendation on Combating Bribery and Officially Supported Export Credit Transactions. As a result, the UK Government believes that, as an export credit agency, ECGD has done all that it reasonably can to avoid UK taxpayers' money being used to support transactions with bribery and corruption.	Policies of Agencies: Export Credits Guarantee Department (ECGD): The OECD Working Group concludes that this recommendation has been fully implemented. However it notes: 7. Policies excluding convicted companies from access to public benefits such as export credit or development aid moneys can only be effective if companies can be convicted of bribery in the first place. Conviction of a company for foreign bribery was not a realistic possibility under applicable UK case law at the time of the Phase 2 Report and the law remains unchanged. Accordingly, while the UK has taken action since the Phase 2 Report in implementing an European Union procurement directive regarding sanctions on convicted companies, the Working Group doubts that they will be useful with regard to UK companies that engage in bribery until the law on the liability of legal persons (companies) for foreign bribery is modified ...	Policies of Agencies: ECGD In March 2006, the ECGD announced its new anti-bribery rules. The new procedures came into effect on 1 July 2006. A subsequent Inquiry by the Trade and Industry Select Committee concluded that the new procedures should be allowed to operate without further amendment, subject to monitoring and annual reporting to the Export Guarantees Advisory Council, and should be subject to formal review in three years time (July 2009). In May 2006, the OECD Export Credit Group agreed its updated Action Statement on Bribery and Officially Reported Export Credits (now a Recommendation). As regards sanctions, the new agreement requires ECAs to take measures to verify that any exporter or applicant that has been debarred, charged or convicted for foreign bribery offences has taken adequate remedial action, prior to approving credit or other support. It suggests measures that "could" be undertaken by ECAs: replacing individuals, adopting an appropriate anti-bribery management control system and submitting to an audit. These are discretionary. The new measures do not require ECAs to debar companies that have convictions for foreign bribery offences, even in cases where the exporter or applicant appears on the publicly available list of the World Bank or other IFIs, has been debarred by a national court or by an equivalent administrative mechanism, or is the subject of multiple corruption convictions by final judgment. Comment The ECGD should publish the results of its annual monitoring on its new procedures as soon as possible including its treatment of cases of suspicion or evidence of corruption.
	Policies of Agencies: Department for International Development (DFID) Before implementation of EU Procurement Directives/UK Public Procurement Directives on 31 January 2006, DFID treated each potential company convicted of corrupt/improper practices, on a case-by-case basis. Since this date, DFID has complied with the broad exclusion approach of companies convicted or corrupt/improper practices required by both EU public procurement directives, in particular Article 45 on exclusions, and UK Public Contracts Regulations, in particular article 23 on exclusions. However, neither the EU Public Procurement Directives nor UK Public Contracts Regulations specifically set out detailed sanction processes, penalties or rights of appeal. As a result, DFID is currently in discussion with interested parties, such as the OGC, the World Bank and others, with the aim of establishing/adopting a formal sanctions process to address related issues, such as: range/severity of penalties, treatment of "spent" convictions and potential processes for appeal and mitigation. The OGC is also in discussions with the European Commission to clarify these type of issues.		Policies of Agencies: DFID At 6 July 2006 meeting of the OGC consultation group (see above) DFID discussed its intention to adopt a no bribery warranty. The UK Anti-corruption Forum subsequently submitted a written proposal on the purpose, scope and operation of such a warranty but recommending that DFID undertake and commission research and further consultation and adopting before going ahead.
Confiscation Encourage prosecutors to actively pursue the necessary procedures for confiscation in all appropriate foreign bribery cases (Phase 2 Report 257. c), UK Follow-up Report 7c)	Confiscation The UK is presently executing requests from more than 24 countries. Prosecutors are encouraged to pursue confiscation in all appropriate cases to seek to remove the profit from crime. SFO and CPS both have dedicated confiscation expertise. The Crown Office has a dedicated financial crime unit for Scotland. The Revenue and Customs Prosecutions Office (RCPO) also has dedicated confiscation expertise in its Asset Forfeiture Division. Further. Powers to take civil recovery action to seize assets are being devolved to the CPS and RCPO as well as the SFO. A combination of training and incentivisation should ensure that confiscation will be pursued wherever appropriate. Police forces and prosecutors have shown a commitment to obtaining confiscation orders by appointing "champions" to pursue actively opportunities to seize criminal assets and disrupt criminality. An asset recovery incentive scheme (not operational in Scotland) means that police, prosecutors, and the courts will have a share of the money collected as an encouragement to pursue confiscation. Prosecutors have been entering into local agreements with individual police forces to ensure that potential confiscation cases are recognised and taken forward in the courts. Measures have been put in place to ensure that, once confiscation orders have been made, they are paid. Since the beginning of 2006 the Serious Fraud Office Restraint and Confiscation Unit has also been empowered to take restraint and confiscation action on behalf of overseas authorities where the request for assistance includes serious or complex fraud. The powers of the Office will be further increased to include taking civil action to seize assets in appropriate cases in which it is not possible to obtain convictions. This will occur when the Assets Recovery Agency is amalgamated with the Serious Organised Crime Agency, and power to take civil action is devolved to prosecution agencies. Scotland's Civil Recovery Unit will remain independent.	Confiscation The OECD Working Group considers this Recommendation to be satisfactorily implemented.