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Rt Hon Kenneth Clarke, QC, MP Lord Chancellor and Secretary of State for Justice Ministry of Justice 102 Petty France London, SW1H 9AJ
16 June 2011
Dear Secretary of State, As members of the Bond Governance Group and other civil society organisations committed to international development, we welcome the government’s recognition that ‘corruption undermines the fight against poverty in developing countries. It threatens economic growth, wasting resources and deterring investment.’1 Not only is there a compelling moral argument to be made for curbing corruption, there is a business case too. Corruption raises the costs for UK businesses that operate overseas and discourages UK companies from entering new markets. Corruption diverts public revenue away from service provision and entrenches poor governance in aid-recipient countries which, in turn, undermines the impact of UK aid and tax payers’ value for money. We warmly welcome the UK Bribery Act and the announcement of a date for its implementation as a crucial step in ensuring that the UK does not exacerbate corruption overseas. It is sound legislation which went through extensive consultation with relevant stakeholders, including civil society and business, and which enjoyed strong cross-party support in Parliament. However, we have significant concerns about the Ministry of Justice’s interpretation of the Act, and the political will to resource its effective enforcement. We therefore call on you as the government’s Anticorruption Champion to ensure that enforcement of the Act leads to prosecution of serious and complex cases of overseas bribery, while levelling the playing field for responsible UK businesses by taking into account the points below. Interpretation of the Bribery Act We are concerned that the Ministry of Justice (MOJ) guidance for companies could potentially mislead companies and interfere with the work of those charged with enforcing, especially with regard to the following points: -
Extra-territoriality: The Act needs to be broadly interpreted in order to prevent an unfair playing field for UK companies and to create a global norm. This means including all companies listed on UK stock exchanges and foreign companies that operate subsidiaries in the UK.
Subsidiaries and joint ventures: We believe companies should be held liable for bribes paid by their subsidiaries and joint venture partnerships, even if they benefit only indirectly by virtue of their relationship with them. Excluding certain subsidiaries and joint venture partnerships creates a potentially dangerous legal loophole.
Prosecutorial discretion – ‘public interest’: A failure to prosecute bribery leads to deterioration in governance in locales where both UK businesses and UK aid programs operate. There is therefore a clear public interest in ensuring that UK businesses have the ability to flourish in stable investment climates and that the impact of UK aid money is not undermined by corruption and poor governance. For both of these reasons, there is a public interest in prosecuting all serious instances of bribery.
Implementation of the Bribery Act -
Adequate resources: Resource constraints should not undermine the capacity of law enforcement authorities to enforce the Bribery Act. Sufficient dedicated resources to pursue prosecutions under the Bribery Act must be a priority in order for the Act to remain credible.
Joint investigation and prosecution: We welcome the announcement by the Home Secretary that the Serious Fraud Office (SFO) will continue to exist and operate as it has done. However, the Government should immediately clarify its long-term plans with regards to the SFO in order to create certainty and continuity about how bribery offences will be investigated and prosecuted. Investigation and prosecution of bribery cases must not be split up into two different government bodies. Corruption should be a priority for any successor agency to the SFO.
Governmental capacity: There must be ample capacity, awareness, political backing and will in overseas diplomatic posts to assist UK companies in dealing with corruption risks. This will mean dedicated anti-corruption training and continued governmental support for those staff who work with UK businesses overseas.
Information sharing: Government agencies must be able to share information seamlessly on matters related to anti-corruption work. The FCO, DfID, BIS, Treasury, the MOJ and UKTI should work together to ensure that their policies compliment and strengthen one another.
Penalties: Penalties associated with the Act must be substantial enough to ensure that the law acts as a strong deterrent against bribery. High penalties would also encourage companies to self report and strengthen prosecutors hand in negotiating settlements.
Whistleblower protection: Whistleblowers and others who seek to report corruption must receive the full support and protection of the UK Government. There should be a designated contact point for whistleblowers and the Government should actively encourage whistle blowing at corporate level in the interests of creating an effective deterrent to bribery.
Finally, as bribery is only one facet of corruption, the UK Government should go further by adopting a comprehensive cross-Whitehall anti-corruption strategy in-line with the Bond Anti-Corruption Paper. We call on you, as the government’s Anti-Corruption Champion, to develop and publicly announce a timeframe for the development of such a strategy, in conjunction with relevant stakeholders including civil society. This would be particularly timely given recent evidence of the destabilising impacts of corruption in North Africa and the Middle East.
The UK is not acting alone. There is a global movement against corruption enshrined in multilateral agreements such as the UN Convention Against Corruption and the OECD Convention on Bribery. The US Foreign Corrupt Practices Act has led the way in deterring bribery amongst US listed companies. Other countries are beginning to follow suit. The G20 is considering new anti-corruption measures and both China and Russia have recently outlawed foreign bribery. If the UK is to protect its business reputation it must take steps to lead these efforts. We look forward to a thorough response to the concerns outlined in this letter and the rigorous implementation of the Act. Yours sincerely, Bond members: Advocates for International Development
International Refugee Trust
Canon Collins Trust
Methodist Development Relief Fund
Peru Support Group
Christian Outreach for Relief and Development
RESULTS UK Tearfund
Engineers Without Borders TIRI EUCLID Network Transparency International UK Other organisations: Bahrain Transparency Society
Socio-Economic Rights and Accountability Project (SERAP) – Nigeria
The Fight Against Corruption – South Africa
Fundación Poder Ciudadano – Transparency International Argentina (Diego Martinez)
TORO Creative Union - Transparency International Ukraine
Global Poverty Project
Uniting Church in Australia, Synod of Victoria and Tasmania
In copy to: Rt Hon David Cameron MP, Prime Minister Rt Hon Andrew Mitchell MP, Secretary of State for International Development