ANTI-CORRUPTION SCORECARD A MID-TERM ASSESSMENT OF THE UK COALITION GOVERNMENT’S RECORD ON TACKLING CORRUPTION SEPTEMBER 2013 •
26 categories rated – Red 6; Amber 14; Green 6
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Absence of national strategy for corruption leaves UK vulnerable
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Dismantling of key institutional defences against corruption will create future problems
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Reluctance to address failures in parliamentary ethics
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Generally good record in international initiatives
www.transparency.org.uk
Transparency International (TI) is the world’s leading nongovernmental anti-corruption organisation. With around 100 Chapters worldwide, TI has extensive global expertise and understanding of corruption. Transparency International UK (TI-UK) is the UK chapter of TI. We raise awareness about corruption; advocate legal and regulatory reform at national and international levels; design practical tools for institutions, individuals and companies wishing to combat corruption; and act as a leading centre of anti-corruption expertise in the UK.
Publisher: Transparency International UK Published: September 2013 Disclaimer Every effort has been made to verify the accuracy of the information contained in this document. All information was believed to be correct as of September 2013. Cover photo: www.istockphoto.com
Methodology The traffic light categorisations in the Anti-Corruption Scorecard are rated as follows: •
Red – signifies that significant or urgent action is required to improve the situation.
•
Amber – signifies that moderate action is required to improve the situation; note also that the situation may rapidly deteriorate if no action is taken.
•
Green – signifies that little or no additional action is required to improve the situation.
Our ratings are based on evidence that a corruption problem actually exists, rather than one that might exist because there are poor controls. Thus the abolition of the Audit Commission and decline in public audit led to an amber rating for Local Government because, although we believe this will create a preventable corruption problem in the coming years, the changes are recent and the problem has not yet become visible. It is important to note that we have not attempted to assess the impact of our proposed changes or rank sections against each other in terms of priorities – therefore improvement in an amber-rated category x might lead to a greater impact on fighting corruption than improvements in a red-rated category y. Comments on the approach taken are welcome as we seek to refine our methodology.
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ANTI-CORRUPTION SCORECARD A mid-term assessment of the UK Coalition Government’s record on tackling corruption
SCORECARD SUMMARY Of the 26 categories of UK life assessed by Transparency International UK: Red: 6 categories are rated as red. Amber: 14 categories are rated as amber. Green: 6 categories are rated as green WHAT IS THE SCORECARD? This Anti-Corruption Scorecard gives the UK’s Coalition Government a mid-term ‘corruption health-check’, drawing on Transparency International’s research. The assessment will be repeated in future years and used as a basis of assessing the major political parties’ commitments to an anti-corruption agenda. Our assessment looks at five broad categories. In general, we have selected areas which appeared vulnerable to corruption in our 4-volume report of 2011, ‘Corruption in the UK’. We have separated out Parliamentary Ethics and Conduct into its own category as, since 2011, scandals have continued unabated, and there seems to be reluctance by UK political parties and parliamentarians to accept there is a problem and implement appropriate solutions. We believe this is a critical area for the UK’s political leaders to address.
HOW CORRUPT IS THE UK – AND WHAT SHOULD BE DONE? Corruption Perceptions Index UK Results (2003-2013)
If you have had any contact with any one of the services listed, have you paid a bribe for any of these services?
2003
5%
2004 2005
Year
2006 2007 2008
Yes
2009
95%
2010
No
2011 2012 0
5
10 UK Position
15
20
The Corruption Perceptions Index, an annual ranking of around 170 countries according to perceived levels of corruption in the public sector, has seen the UK slip from 11th position to 17th in the last decade (the higher the ranking, the cleaner a country is perceived to be). At present, the UK is struggling to remain in the top 20, let alone achieve a place in the top 10 alongside the Scandinavian countries and New Zealand.
The Global Corruption Barometer is an opinion survey repeated every two years that asks ordinary people how frequently they have paid a bribe in the past twelve months. In 2013, for the first time, the UK results showed that 5% of people surveyed said that they had paid a bribe at least once in the past twelve months to one of eight public services, including the judiciary and the police.
Transparency International UK’s view is that: • While corruption is not endemic in the UK in the sense that it is in some other countries, the UK has some significant problems that need to be understood and acted upon. • There are clearly pockets of corruption in the UK that are not being addressed, and perhaps as disturbingly, the trend seems to have worsened in recent years. This can be seen both in reported cases of corruption and in ‘institutional integrity’ – or, in other words, the strength of the defences that key institutions have against corruption. • There is an apparent complacency within the Government and other institutions about the existence of corruption in the UK, as signified by a number of red and amber lights in our scorecard. • By contrast, the UK seems to be doing much better in the international fight against corruption, which is signified by several green lights. • Of considerable concern is that the government – presumably unintentionally – has been gradually removing some of the UK’s defences against corruption. For instance, the abolition of the Audit Commission, without replacing some of the anticorruption functions, demonstrates a lack of understanding of the level and nature of corruption risk in Local Government. • One potentially significant change is the creation of the National Crime Agency, although it is unclear at this point what institutional arrangements will be made with regard to combatting corruption.
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1. THE GOVERNMENT’S OVERALL APPROACH Area of Concern
1.1 Anti-Corruption Strategy and coordination
Comment
TI-UK Recommends
• There is no coordinated strategy or action plan to combat corruption in the UK. • Data on corruption are not currently collected or are subsumed with other data such as fraud. • There are at least 12 different agencies or government departments with partial responsibility for corruption, plus police forces. It is unclear whether they share information, collaborate on investigations, or share good practice on corruption prevention.
• The Government must create a coherent and crossdepartmental action plan for combatting international and domestic corruption with specific targets to be reported on a regular basis to Parliament. • In the absence of a single coordinating body such as an Anti-Corruption Agency, the Anti-Corruption Champion should be responsible for implementing and monitoring progress of the action plan. • Data on corruption should be collected and made publicly available, e.g. in the NHS and social housing – this will give public policy makers a better idea of the scale of the problem and how to prevent it. • Concerted effort should be made to develop strategic cooperation between UK Government departments, bodies and organisations charged with investigating and reducing corruption and those tackling organised crime. • A corruption risk assessment should be carried out in a consistent manner for all government departments and agencies. • The Government should introduce a corruption reporting mechanism for use by the general public.
1.2 The Government’s Anti-Corruption Champion
• Despite the continued appointment of an Anti-Corruption Champion and its extension to domestic corruption, the role is not resourced, and lacks both a strategic plan and clear channels of accountability; this is symptomatic of the lack of coordination surrounding Whitehall’s anti-corruption efforts.
• The Champion’s role has been maintained and the remit has recently been extended to include corruption at home and abroad – this is positive but appears to be a token measure with no apparent substance. • The Anti-Corruption Champion must have the capacity and resources available to effectively oversee cross-departmental anti-corruption efforts. • A formal accountably mechanism should be introduced to review the role’s work. • We recommend that the Anti-Corruption Champion should provide an annual report to Parliament on how the role is being discharged.
1.3 Resources to Combat Corruption
• Resources available to the institutions responsible for fighting corruption have been significantly reduced by the Government. • Notably, the Serious Fraud Office’s budget has been cut from £51 million in 2008-9 to £33m in 2012-13. Its budget is expected to fall further to
• The UK is still rated by TI as an active enforcer of the OECD Anti-Bribery Convention, but this rating is at risk. • The Government should increase resources to boost law enforcement capacity to combat bribery, corruption and money laundering. • It should prioritise increased resources for the Serious Fraud Office (SFO), the Overseas AntiCorruption Unit of the City of London Police and the Proceeds of Crime Unit of the Metropolitan Police in order to achieve more convictions under the Bribery Act. • The mechanism for one-off grants from the Treasury opens the door for political interference in the selection of cases by the SFO.
£29m by 2014-15.
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Area of Concern
1.4 Freedom of Information (FoI)
Comment
TI-UK Recommends
• FoI requests play a vital role in the fight against corruption. • However, the Government is seeking to amend the FoI Act to make it easier for authorities to refuse requests on cost grounds. • The Government is also proposing to allow unrelated requests from one person or group of people to the same authority to be refused if
• The Government should reconsider its proposed changes to the FoI Act.
their number is overly burdensome.
1.5 Judicial Review
• This Government is threatening to reduce the ability of civil society and others to use judicial review mechanisms.
• Judicial review can play an important role in corruption cases. It promotes accountability and helps to prevent corrupt decision making. • The Government should reconsider its proposed changes to Judicial Review.
1.6 Legal Aid
• Resources for Legal Aid are being cut extensively, for example in areas such as immigration. • This is likely to deny access to justice to individuals and groups who are victims of corruption, such as immigrants who are sexually abused in detention centres.
• The Government should review the impact of changes to Legal Aid on corruption and the victims of corruption • If such a review confirms the risks that victims of corruption will be denied access to justice, the Legal Aid cuts should be reversed in relevant areas or the Government should put in place suitable alternative mechanisms.
1.7 Public Audit
• The Government’s Localism Act abolished the Audit Commission, which in addition to overseeing and commissioning audit for local government and other bodies like the NHS, had statutory functions for investigating financial management and value for money. • There was insufficient public discussion and consultation on the decision to abolish the Audit Commission and the alternatives to it. • The foundations of effective public audit are independence of auditors and audit selection, empowerment of auditors with the right tools and powers to do their job and public rights. The auditors’ duties and the expectations on auditors’ need to be publicly stated in a Code of Audit Practice. All of these have been removed or significantly impaired by the recent and proposed changes.
• Public audit has an important role in fighting corruption. • There has apparently been no examination by the Government of the impact on UK corruption if public audit is scaled back and/or replaced by private audit. • Auditing mechanisms that replace public audit functions must have corruption as part of their remit and have in place adequate safeguards against corruption risks. • A mechanism should be put into place to guarantee and safeguard the independence of auditors. • The replacement of public audit functions should be considered as a trial that will be reversed if it proves unsuccessful in deterring and detecting corruption.
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2. SECTORS AND INSTITUTIONS Area of Concern
Comment
TI-UK Recommends
2.1 Local Government
• The Localism Act significantly changed the governance arrangements in English local government. • For example, ‘Standards for England’, the body responsible for promoting ethical standards in local government, was abolished. • The Local Government Code of Conduct has been made voluntary rather than statutory. • Local Standards Committees that were previously required in each local authority were made voluntary and had their statutory duties removed.
• The changes in oversight mechanisms and introduction of a voluntary code of conduct for local government could have serious adverse consequences for ethical standards in English local government. • The Government should consider its changes to be operating on a trial basis, gather evidence of their effectiveness, and be willing to revers them if they prove ineffective in deterring and detecting corruption.
2.2 Police
• Corruption is probably not endemic in the UK police but disturbing incidents of bribery and corruption have periodically surfaced. In
• The movement of individuals between jobs in the police and jobs in the private sector (e.g. private investigating firms) should be
February 2012, Deputy Assistant Commissioner Sue Akers told the Leveson Inquiry that journalists had made frequent payments of up to £80,000 to police and other public officials in exchange for stories. Later that year, the Hillsborough Independent Panel Report revealed that police statements had been altered – the majority of which had been amended to cover up negative comments regarding the policing of the 1989 tragedy. • TI-UK’s ‘Corruption in the UK’ report identified significant opportunity for corruption of and by individual officers and support staff. • A TI-UK report for the Association of Chief Police Officers (ACPO) recommended that common integrity standards, that are robust, clear and consistent, should be embedded across all 43 police forces in England and Wales. ACPO has supported this recommendation.
properly regulated. • ACPO should assist Forces to move from a reactive approach to a stance of active promotion of integrity, based on the principle of zero tolerance of corruption. • Further consideration should be given to disciplinary measures in the context of The Police (Conduct) Arrangements of 2008 - a good practice integrity programme should be founded on a zero tolerance approach to integrity violations. Any relaxation of disciplinary measures could undermine an effective integrity programme. • ACPO should take the lead in developing a common nationwide standard for public reporting by Forces.
• A leaked Metropolitan Police Investigation in 2006 estimated that there were then around 1000 corrupt prison officers currently employed. A further 600 were involved in an inappropriate relationship with a prisoner. • Corruption risks within the prison service are routinely ignored by policy makers and the police. • The prison service has apparently reduced its capacity to monitor and investigate corruption, although lack of data make this difficult to assess.
• The Home Office should commission an independent assessment of corruption risk in the prison service and its relationship with organised crime in order to identify priority areas for reform and action.
2.3 Prisons
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Area of Concern
Comment
TI-UK Recommends
2.4 Media
• The Leveson enquiry and associated criminal investigations revealed a disturbing picture of the cosy relationship between politicians and the media, the bribing of police officers by journalists and the lack of will to hold the media accountable even when laws had clearly been broken. • Concentration of media ownership remains a significant corruption risk. • The Government has thus far failed to implement the Leveson reforms or any alternative.
• A free press is a critical component in fighting corruption; however, abuses must be curbed and media ownership should not be concentrated such that it can corrupt the political process. • The Government must implement a new system of press regulation with four key characteristics: 1. Free from political interference; 2. Allows victims of unjustifiable abuse, intrusion or allegation to seek recourse to an extent that is proportionate to the damage they have suffered; 3. Not a mechanism that is open to abuse by those seeking to silence the press for their own ends; 4. Have genuine and effective powers of enforcement. • Any incidents of corruption by or within media organisations must be sanctioned with strong penalties to remove any doubt that corruption is tolerated.
2.5 Private Sector and overseas bribery
• The Bribery Act has succeeded in encouraging many private companies to implement adequate procedures to combat corruption. • However the Government has reduced resources for investigation and prosecution. • The Government has recently announced a review of the Bribery Act which creates uncertainty for business and risks backpedalling on the UK’s international commitments
• The Government should work to increase awareness among UK companies, especially small and medium sized, of the importance of adopting and reporting on, strong anti-bribery programs. • It must work with UK companies to promote collective action to raise anti-corruption standards, notably in industries that are particularly vulnerable. • Resources should be in place to enable prosecutions to be secured under the Bribery Act. • The review of the Bribery Act should be shelved.
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3. PARLIAMENTARY ETHICS AND CONDUCT Area of Concern
Comment
TI-UK Recommends
3.1 The Revolving Door Between Government and Business
• The ‘Generals for hire scandal’ in October 2012 suggests that the current system of controls and oversight of movement between the Government and the private sector is insufficient. There have been too many similar scandals. • In July 2012 the PASC recommended that ACoBA be replaced by a new, statutory, Conflicts of Interest and Ethics Commissioner. • This recommendation has been ignored by the Government.
• ACoBA must be replaced by a new statutory body with sufficient power and resources to regulate the revolving door. • The rulings of this new body should be mandatory. • This regulatory body must be given sufficient resources to carry out its role. • Strong sanctions should be applied to both individuals and their employers for breaches.
3.2 Lobbying
• The Government has taken some steps in the right direction in this area. • It has changed the ministerial code to require all minsters to declare all meetings with lobbyists
• The Lobbying Bill, as proposed, needs to be replaced by a Bill that is fit for purpose. • The definitions of ‘lobbying’ and ‘lobbyist’ should be simple, capture the broad range of lobbying activity,
and it has banned lobbying by former ministers for two years. • The Government pledged to introduce a statutory register of lobbyists in the coalition agreement. However, the Lobbying Bill, as proposed, is inadequate.
not disincentivise citizen lobbying and be easy to implement in practice. • Regulation needs to address both those who seek to influence inappropriately and those who are being lobbied. • Transparency, including a properly-constituted register of lobbyists, should be seen as a partial solution. • Proper sanctions should be available to use on those who breach lobbying regulations.
• The Government has failed to address the problems with political party funding. • Cash-for-access scandals indicate that donations to political parties are a major source of vulnerability to corruption. • Current funding rules lead to a lack of public trust in political parties. • 42 per cent of voters believe that donations of over £100,000 are designed to gain access and influence over the party.
• The Government should introduce of a cap of £10,000 on donations (per donor per year) to political parties. • A lower ceiling (compared to the current £19 million) on overall election spending by parties on a national level should be introduced. • The Government should carry out research into the impact of any increase in state support for political parties.
3.3 Political Party Funding
3.4 Ethical Oversight of Politics
• The MPs expenses scandal in 2009 raised many questions about the ethical standards and integrity of Parliamentarians. • There are currently several oversight bodies that include a mixture of elected and appointed members. At times, such bodies have been criticised for being ineffective, or having a remit that is not fit for purpose. For example, the notionally ‘independent’ Adviser on Ministers’ Interests only investigates cases on the initiation of the Prime Minister. • The large number of scandals of recent years suggests that the current system of ethical oversight is not working and is in need of a comprehensive review.
• All matters relating to parliamentary ethics should be brought together into a single, coordinated, unified body that has the unambiguous support of all political parties and genuine powers of censure and sanction. • A comprehensive review of the current system of ethical oversight must be undertaken. Although it is one of the current oversight bodies, the Committee on Standards in Public Life is probably best placed to undertake such a review. • Political parties should take stronger action against party members, at local and national level, for ethical breaches.
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4. UK INITIATIVES – OVERSEAS CORRUPTION Area of Concern
Comment
TI-UK Recommends
4.1 Money Laundering
• It has been estimated that billions of pounds of dirty money is laundered into and through the UK each year. • Currently the UK and its Overseas Dependent Territories and Crown Dependencies do not require companies to declare who the ultimate beneficial ownership are of companies and trusts. However the Prime Minister has committed to implement a register of company ownership. The government is currently running a consultation on this issue, including whether the register should be public or private. • There has not been enough action taken against the facilitators and enablers of corruption, for example, the lawyers, bankers and accountants that handle corrupt transactions.
• The government should conduct an independent review of the UK’s anti-money laundering regime to assess its effectiveness and how it can be improved • The beneficial owner of all trusts and companies should be declared in a public register. • The government should ensure that the UK’s Crown Dependencies and Overseas Territories fully implement laws that are compatible with UK and international best practice (see below), and ensure there is in each territory a public register of beneficial owners of trusts and companies.
4.2 Overseas Dependent Territories (ODTs) and Crown Dependencies (CDs)
• In British ODTs and CDs, modernisation and reform of criminal law and procedure has been largely ignored for decades leaving these jurisdictions vulnerable to money laundering and corruption. • During the G8 Summit, the Prime Minister committed to press for change in the ODTs and CDs. • The Treasury has announced that British overseas territories with financial centres have signed agreements on sharing tax information.
• The UK should take the lead in ensuring that its ODTs and CDs: • Fully implement laws that are compatible with UK and international best practice and major international anti-corruption conventions, notably UNCAC and the OECD Anti-Bribery Convention; • Are sufficiently resourced to combat illicit financial flows; • Do not allow loopholes in the global financial system which can be exploited.
4.3 Procedures on Looted Assets
• The UK’s failure to freeze and return looted Egyptian assets highlights the failure of the procedures in place in the UK to return the proceeds of corruption.
4.4 UK Overseas Aid
• DFID should be commended for its commitment to aid transparency having come top of the Publish What You Fund Aid Transparency Index. • DFID published an ambitious open data strategy in June 2012 which, if implemented correctly, will increase transparency and help citizens to trace the impact of aid funding. • However, public concern remains about corruption and the proper use of UK aid funds.
• The UK Government must strengthen and improve procedures to help developing countries to recover looted assets and the proceeds of corruption and, if necessary, introduce new legislation.
• DFID should continue to implement its open data strategy, continue to prioritise the fight against corruption and continue to use the UK’s aid budget to combat corruption in DFID priority countries. • Recipients of DFID grants should be required to follow the Bond Anti-Bribery Principles. • Anti-corruption initiatives should form a key component of all DFID-supported funding and projects.
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5. INTERNATIONAL INITIATIVES – UK INVOLVEMENT Area of Concern
5.1 Compliance with the OECD Anti-Bribery Convention
Comment
• The Bribery Act 2010 was introduced to update and enhance UK law on bribery including foreign bribery in order to address better the requirements of the 1997 OECD Anti-Bribery Convention. • Whilst it is now among the most rigorous legislation internationally on bribery, there have yet to be any significant prosecutions under the Act. • The Act cannot simply act as a deterrent, it must also be enforceable. • The introduction of Deferred Prosecution Agreements may stimulate more action.
TI-UK Recommends
• The Government must ensure that the Bribery Act is enforced effectively, ensuring that the UK is fully compliant with the 1997 OECD Anti-Bribery Convention. • More resources must be allocated to prosecute bribery. • Deferred Prosecution Agreements should be used appropriately and not allowed to become a soft option. • The Sentencing Council should recognise the seriousness of bribery and ensure that its guidelines for the Bribery Act are sufficiently robust. • The UK can help create a level playing field through the OECD Convention by: pressing signatories to the Anti-Bribery Convention to be active enforcers of the Convention; pressing signatories to close the loopholes and exemptions that exist in some countries, notably the USA, on facilitation payments; and ensuring that no excuse is given to others by watering down the UK’s own Bribery Act.
5.2 Extractive Industries’ Transparency
• The Government supported the recent EU extractive industry transparency directives. • TI-UK has strongly welcomed the UK’s commitment to sign up to the Extractive Industries’ Transparency Initiative (EITI).
• The UK should be the gold standard on EITI to set an example for other countries. • The UK’s role in commodity trading should be included in the UK’s EITI implementation. • The UK should press for an international level playing field in global transparency legislation.
5.3 Anti-Corruption and the G8
• The UK Government made transparency and anti-corruption key priorities during the UK’s presidency of the G8. • The Government must act to ensure that this rhetoric is matched with commitments by the G8 for effective change.
• The UK’s presidency offers a unique opportunity to act as an example to other countries to help showcase international best practice and help ensure that this is adopted in the G8 and beyond. • The Government should harness the momentum gained at the G8 by encouraging other countries to make progress on supply-side bribery, extractive transparency, and the implementation of public registers of the beneficial owners of companies.
5.4 The Millennium Development Goals (MDGs) post-2015
• The Prime Minister has played an active role in leading the UN panel deciding what should replace the MDGs after 2015. • The UK should make good governance and combatting corruption a key focus of on-going discussions.
• Transparency International has welcomed the High Level Panel proposal to make transparent and accountable governance a cornerstone in the drive to end world poverty and reduce inequality. The UK should continue to support this aim.
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Area of Concern
Comment
TI-UK Recommends
5.5 Open Government Partnership
• In June 2013 the government published the UK’s draft Open Government Action Plan, which was developed with extensive input from members of UK civil society. • The draft plan includes a number of important open government commitments. However, there are a number of areas in which many NGOs feel the Government can and needs to do more.
While the draft plan makes good progress on some issues, there are other areas in which the Government is in serious danger of undermining its open government credentials: • Government plans to weaken Freedom of Information (FoI) rights should be halted and the Government should widen the scope of the FoI Act to apply to any organisation delivering public services. • The UK Government should commit to much greater transparency over lobbying. • Commitments on adequate resources for enforcement of the Bribery Act and the initiation of a cross-Whitehall anti-corruption action plan should be included in the plan.
5.6 UNCAC
• The UK signed UNCAC in December 2003 and
• The UK has in place a legal framework that is in overall compliance with UNCAC. However, further enhancement is needed in the areas of anti-bribery enforcement, action against facilitators or enablers of corruption, and public awareness on whistleblowing legislation.
subsequently ratified it in February 2006. • The UK authorities were transparent and inclusive in the recent UNCAC peer review process. Civil Society groups were proactively engaged by the government during the official country review of the UK. • The UK has a sound legal framework in place that complies with most of the relevant provisions of the UNCAC. However, compliance with the Convention is not yet complete.
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