Efforts by the UK government to tackle corruption at home and abroad must take on a new urgency if its championing of legitimate business practices is to remain credible, says Christian Aid.
The international development agency says countering corruption is of fundamental importance in the battle against global poverty because of its impact on developing countries.
Corruption takes money out of the pockets of the poor, and reduces their access to essential public services such as health and education by undermining economic development. It also undermines democracy by encouraging apathy and mistrust which can lead to violent conflict.
In a new report published today to coincide with the UN International Anti-Corruption Day (December 9), Christian Aid says Western governments have an important role to play in curbing corruption. But some, it says, are not doing enough.
The report highlights further action the UK government must take if it is truly serious about tackling the problem. The necessary measures include full compliance with the Organisation of Economic Co-Operation and Development’s Anti-Bribery Convention, and full implementation of the United Nations Convention Against Corruption (UNCAC).
The UK should also encourage other governments to do the same, say advocates.
"The UK government makes all the right noises on the world stage about tackling corruption, but in practice it doesn’t live up to the rhetoric," says report author Olivia McDonald, Christian Aid’s senior governance adviser.
She continued: "More resources are needed to investigate and prosecute domestic firms accused of bribery overseas. Another priority must be the return of the billions in stolen foreign assets held in British banks, and the freezing of assets of people in the UK, including foreigners, who are under investigation for corruption."
The report, From Local to Global: Stopping corruption from stunting development, is Christian Aid’s first in-depth examination of a subject that aid organisations often avoid addressing out of a fear of upsetting the governments of developing countries where they work, a reluctance to reinforce negative stereotypes, and a concern that donations might fall.
Christian Aid has itself encountered corruption in some of the countries where it works. If it is discovered that money dispersed to a partner agency is being used corruptly, further transfers of cash are suspended while an inquiry is held. Pending on the outcome of that investigation the partnership may be severed. In all cases, Christian Aid strives to get the funds returned, and in serious cases the Charity Commissioners in London are notified.
Christian Aid does not, however, regard the existence of corruption in a country as a reason to stop helping people in poverty. Nor should its existence be used as an excuse by governments to withhold aid. Indeed, the greater the prevalence of corruption, the greater need to provide vulnerable communities with assistance.
The report looks at Nigeria, Kenya and Tajikistan where corruption is rife, and Peru, where it was recently a major problem. As well as documenting the prevalence of petty corruption such as bribe taking by junior civil servants, it examines instances of state and private sector corruption too.
The report says: "Corruption is a major development issue. It is widespread in our world, from small bribes to traffic police to insider trading in the City or on Wall Street."
It goes on: "Some Western firms have secured contracts overseas through bribery, or avoided paying tax in countries where they are located because of complex accounting loopholes. Many Western banks have accepted deposits with no questions asked that have turned out to be funds embezzled by politicians, officials and businessmen in developing countries."
The report continues: "Greater transparency in business dealings and banking transactions, and greater commitment to investigate and prosecute people accused of bribery overseas are needed."
The report’s contention that the UK government could do more in the fight against corruption reflects recent criticism from several quarters.
In June 2008 the anti-bribery working group of the Organisation for Economic Co-operation and Development (OECD) wrote to the British government criticising it for failing to bring a single overseas bribery case (there has now been just one) or to deliver on a year old pledge to update its anti corruption laws.
The working group returned to the attack in October saying it was ‘disappointed and seriously concerned’ about the UK’s continued failure
to address deficiencies in its laws on bribery of foreign public officials, and on corporate liability for foreign bribery, which it said ‘has hindered investigations.’
Campaigning group Transparency International, which each year issues an index showing how ‘clean’ countries are with regards corruption, announced in September they had dropped the UK from 12th position to 16th because of its "engrained complacency over its failure to take international corruption seriously."
In November 2008 the Law Commission criticised the UK’s existing anti-bribery laws as "complex, fragmented and out of date." It recommended that they be replaced with a law making it an offence to bribe a foreign public official, and a law applicable to corporate bodies of negligently failing to prevent bribery by an employee or official.
Campaigners who hoped that new legislation would be announced in the Queen’s Speech last week were disappointed.