Corruption has a devastating impact on the lives of people around the world, raising income inequality and disproportionately affecting the poor. Although it is difficult to monetise its effects precisely, the ONE campaign estimate that—in developing countries alone—around $1 trillion is lost to corruption each year through activities such as illegal tax evasion, money laundering and bribery. This inquiry addresses the approach of DFID—and the wider UK Government—to tackling corruption overseas. It recognises that successful anti-corruption efforts across Government are required in order to support development in DFID’s priority countries.
Since 2010 consecutive UK Governments, led by former Prime Minister, Rt Hon. David Cameron, positioned the country as a global leader on anti-corruption. This culminated in the London Anti-Corruption Summit in May 2016. The Summit delivered 600 commitments from participating states and organisations and the UK committed to bold new measures to tackle corruption both in the UK and overseas. Whilst we welcome these commitments, there are still many areas of UK policy and programming which require improvement. It is clear that a ‘whole of Government’ approach to tackling corruption overseas is needed to be effective. This requires policy coherence on anti-corruption to ensure DFID’s efforts to reduce corruption in its priority countries are not undermined by policies and programming pursued by other Government departments.
Some individuals and businesses based in the UK have long played a role in facilitating global corruption and, whilst the Government has made significant progress, there is much more it could be doing to get its own house in order. Whilst we welcome initiatives such as the Action Plan for Anti-Money Laundering and Terrorist Financing, we would like the Government to also conduct due diligence on money that has already been laundered through the UK. It was disappointing that the Government was unable to persuade the UK’s Overseas Territories and Crown Dependencies to create public registers of beneficial ownership. Momentum should not be lost now that the Summit is over and the Government must use the full weight of its influence to continue to lobby on these issues. We welcome the Government’s progress—by accepting a significant amendment to the Finance Bill 2016—on public country-by-country reporting of multinationals’ profits and payments to governments. If implemented to its fullest extent, this will enable stakeholders across the world to check whether these companies are paying their fair share of tax. We urge the Government to encourage its European counterparts to make similar legislative progress.
The UK Anti-Corruption Plan has been a useful tool for coordinating a cross-government response to corruption. We welcome the Government’s announcement that it will develop an accompanying Anti-Corruption Strategy by the end of 2016 and ask that it provides us with an update on progress and a clear timeline for publication. We also recommend that the Government announce the appointment—or reappointment—of the Anti-Corruption Champion as soon as possible. We believe that this position should be appointed from the Cabinet to ensure the Champion can exert more influence, encourage a coordinated approach and ensure that anti-corruption efforts remain a key priority at the highest levels of Government. To deliver the UK Anti-Corruption Plan and forthcoming Strategy effectively, we also urge the Government to formalise the Joint Anti-Corruption Unit (JACU) currently based at the Cabinet Office, in recognition of the fact that tackling corruption at home and overseas requires a coordinated approach.
The Government has emphasised its commitment to multilateral processes to tackle corruption. However, building on the recommendation in our report on UK implementation of the Sustainable Development Goals, we ask the Government to reconsider whether the OECD is the best forum for discussions and decisions on international tax matters. If it is, then more must be done to ensure the voices of developing countries are heard and that policy outcomes reflect the needs of both developed and developing countries. Evidence suggests that the OECD’s flagship base erosion and profit shifting (BEPS) programme does not seem to benefit developing countries as much as it should.
The UK’s future as a leader in the anti-corruption space will be determined by the new Prime Minister’s approach, as well as the outcome of the European Union (EU) exit negotiations. The Prime Minister must ensure that the gains made, particularly at the EU level, are not lost following the UK’s departure. Following the revelations in the Panama Papers, of the involvement of individuals and businesses based in the UK and in the UK’s Overseas Territories and Crown Dependencies in tax evasion and tax avoidance, she must also make further progress on putting the country’s own house in order.
DFID’s anti-corruption country strategies, established in 2013, have been a welcome addition to its work in this area. The commitment to include other Government departments in its strategies is also a positive step. However, there has been significant criticism of the strategies’ short three to five year timeframes. Tackling corruption is a complex and long-term endeavour and the evidence suggests that future anti-corruption country strategies must cover a minimum timescale of ten years. DFID needs to allow innovative programmes which are sufficiently flexible to adapt to changing political and economic environments. Understanding of the political environment in each specific country is needed and programmes must be agile enough to be able to capitalise on opportunities for change.
There are still significant gaps in the research on ‘what works’ in tackling corruption. There is also limited evidence that donor interventions—as they are currently managed—are having a real impact on eliminating corruption in partner countries. We therefore welcome DFID’s investment in research, such as the new Anti-Corruption Evidence (ACE) Programme. It must ensure that this, and wider research being undertaken in the field, is fed back into the work it conducts on the ground in DFID’s priority countries, informing its development.
DFID has committed to spending 50% of its budget in fragile states. In these countries attempts to tackle corruption must be considered very carefully. Evidence to us has strongly suggested that anti-corruption efforts can have adverse effects in unstable situations. Where corruption is endemic, it is often embedded in societal norms which means that those committing corrupt acts can make up a huge proportion of the society. In these circumstances, supporting efforts to tackle corruption requires a nuanced and long-term approach, whilst always ensuring UK funds are protected.
Tackling corruption overseas requires a coordinated, long-term approach across Government. To be effective, it must tackle tax evasion, tax avoidance, bribery and money laundering, which requires action at the domestic and international level. It must also support developing countries to tackle the corrupt activity which is decimating their economies and depriving citizens of basic services, as well as the endemic day-to-day corruption which disproportionately affects the very poorest. The Government’s commitment to tackling corruption overseas must continue to reach beyond concern over the cost of corruption to our own economy, and extend to concern for the countries and citizens around the world who are being held back and often held in poverty by corrupt activity.
1 DFID, Why corruption matters: understanding causes, effects and how to address them: evidence paper on corruption, January 2015, p. 46
2 The One Campaign, 2014,
3 A database of the commitments made at the Anti-Corruption Summit can be found here: , Transparency International, accessed 12 October 2016
4 HM Treasury, UK aid: tackling global challenges in the national interest, Cm 9163, November 2015, para 3.8
18 October 2016