Memorandum from Rt Hon Malcolm Wicks MP,
then Minister of State at the Department for Business, Enterprise
& Regulatory Reform
As you will recall some issues arose during
my appearance before the Committees on Arms Export Controls on
19 May which I promised to follow up in writing. I am now
in a position to provide information on these issues as follows:
ZIMBABWE
In my letter to the Committees dated 22 May
2008 I stated that HMRC, as the enforcement body for export
controls, are fully aware of the alleged involvement of a UK company
in a shipment of arms to Zimbabwe. Subsequently the Foreign and
Commonwealth Office were reassured by the Chinese authorities
directly that the original arms shipment destined for Zimbabwe
was en route back to China and had not been offloaded or rerouted
to Zimbabwe by other means.
In this context, Sir John Stanley requested
both during the evidence session and afterwards, that I write
to the Committees and explain how current trade controls apply
to trading to Zimbabwe. I can confirm that, because Zimbabwe is
an embargoed destination, the current trade controls would apply
to controlled activities (as set out in the Trade in Controlled
Goods (Embargoed Destinations) Order 2004), whether these are
carried out from within the UK; or by "United Kingdom persons"
anywhere in the world. The term "United Kingdom person"
is defined in the Export Control Act 2002 as a United Kingdom
national, a Scottish partnership or a body incorporated under
the law of any part of the United Kingdom. The Embargoed Destinations
Order prohibits directly or indirectly supplying or delivering,
agreeing to supply or deliver; or doing any act calculated to
promote the supply or delivery of any controlled goods to any
person or place in an embargoed destination without an appropriate
licence. Unlike the other trade control Orders, there are no exemptions
in the Embargoed Destinations Order for those whose sole involvement
is in transportation services, financing or financial services,
insurance or reinsurance services or general advertising and promotion.
Therefore in determining whether a breach has
occurred in the case of the alleged supply of arms to Zimbabwe,
the test would be whether the trading or "any act calculated"
were carried out either from within the UK, or by a UK person
anywhere in the world. The key issue would therefore be the nature
of the involvement of any UK person. I should however stress that
that is not to say that there is evidence of such involvement.
ECGD PROCEDURES
I was also asked by Mike Gapes, whether the
Export Credits Guarantee Department checks for the potential for
bribery and corruption when assessing applications. Having consulted
officials on this matter I am now able to provide you with a document
showing key aspects of the ECGD's anti-bribery and corruption
procedures. It is attached at annex A for the Committees' attention
and I hope you find it useful.
THE OECD REVIEW
I was asked by Marsha Singh, whether the OECD
review of the UK is any kind of indication that we have been systematically
failing in areas of anti-corruption and bribery. I do not accept
that this is the case.
The current OECD review of the UK is an established
part of a routine procedure whereby all signatories to the Convention
on Combating Bribery of Foreign Public Officials in International
Business Transactions are required to undergo detailed examination
of their implementation and enforcement of anti-bribery policies,
as part of the peer review process. Japan, Luxembourg and Ireland
have all been through, or are going through, similar exercises.
Future supplementary reviews have also been agreed for Chile and
Turkey. The current supplementary or "Phase 2 bis"
review is not an investigation into the Government's handling
of the BAE/Saudi case, but a wider examination of UK laws, procedures,
systems and resources focused on combating foreign bribery.
ANNEX
A
KEY ASPECTS
OF ECGD'S
ANTI-BRIBERY
AND CORRUPTION
PROCEDURES
These:
— Require applicants to provide copies
to ECGD of their codes of conduct and to confirm that they have
applied them in tendering for the award of the contract for which
ECGD's support is sought;
— Require applicants to provide the name
of any Agent involved in obtaining the contract, the amount payable
to the Agent and where it is to be paid, and the nature of the
services to be provided by the Agent;
— Require applicants to declare that neither
they nor any of their directors have admitted to, or been convicted
of, engaging in any form of bribery or corruption;
— Require applicants to disclose whether
they, or anyone acting on their behalf, is under charge in a UK
court for bribery of a foreign public official;
— Require each applicant to make reasonable
enquiries concerning any of its group companies, agents or consortium
partners who, in each case, are involved in the contract for which
ECGD's support is sought and to confirm that, on the basis of
those reasonable enquiries, the applicant has no cause to believe
that any of those parties, or any of their directors, has admitted
to, or been convicted of, engaging in any corrupt activity;
— Require each applicant to confirm that
neither the applicant nor anyone acting on the applicant's behalf
has engaged in corrupt activity in relation to the contract for
which ECGD's support is sought;
— Enable ECGD to obtain information with
a view to ascertaining whether any improper payments involving
agents have been made;
— Give powers to ECGD to audit the accuracy
of representations relating to the issue of bribery and corruption
made to it in application forms and the performance of contracts
which it has supported;
— Remind applicants of their obligations
to comply with UK anti-corruption legislation; and
— Remind applicants that ECGD will refer
all allegations of bribery, corruption or money laundering to
the appropriate authorities.
11 July 2008
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