the atlanticists 'fess up to their sins.
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From: Shahryar
Bribe Britannia
Dec 19th 2006
From The Economist print edition
From The Economist print edition
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Two steps back in the fight against corporate backhanders
TO CONNOISSEURS of irony, who often find rich pickings in politics, last week's offering was a vintage one. British delegates to the inaugural conference of the United Nations Convention against Corruption, in Jordan, were piously denouncing sleaze and promising to tackle corruption "wherever we find it—whether here or abroad". At home, meanwhile, their colleagues were busily quashing a two-year investigation into allegations of bribery in connection with the country's biggest-ever defence contract, the Al-Yamamah deal with Saudi Arabia.
Britain has long turned a blind eye to the bribery of foreign officials (until recently such business costs were even tax-deductible), but of late it has been trying to polish its public image. Much of the pressure for change has come from non-government organisations and Britain's fellow rich-country members of the OECD. America, which has banned bribing foreigners since 1977, was especially peeved that its companies were at a disadvantage while everyone else merrily bribed away.
In 1998 Britain ratified the OECD's convention against bribing foreign officials, but its commitment to the treaty has been half-hearted. Instead of passing comprehensive legislation to meet its new obligations, the government argued that Britain's existing laws against domestic corruption were sufficient. It was finally persuaded to ban explicitly the bribing of foreign officials by British citizens and companies, no matter where the offence took place, in the anti-terrorism act of 2001 .
But loopholes abound. Take so-called "facilitation payments", a high-faluting name for little bribes. Although they are technically illegal, the government says British firms are unlikely to be prosecuted for stumping up when officials insist on them in countries where they are the normal practice. Firms also get a free pass for the corrupt practices of their subsidiaries, unless it is proved that they ordered or actively connived in them. Even the Home Office concedes that the current law is an unsatisfactory patchwork in need of reform. Others agree: the OECD complained in March 2005 that Britain was dragging its feet in implementing the convention.
But progress is being made. Last year the Home Office began consulting on a new anti-corruption law. And in June it set up a team of police investigators to focus on bribery abroad by British businesses and money-laundering by corrupt foreign politicians. It has also tightened rules forcing firms that apply for support from the government's export-credit agency to provide information about the agents they employ and the commissions they pay.
Britain presents anti-corruption campaigners with a paradox. Despite the lax rules and the fact that it is neck-deep in the arms and oil trades—both especially prone to corruption—it fares well in international surveys of corruption.
A study by Transparency International, an anti-corruption campaign group, ranks Britain as the sixth most virtuous of 30 countries, ahead of America and well ahead of France. Gary Campkin of the Confederation of British Industry, which represents big business, says this shows that "British business is, by and large, fairly clean in comparison with its competitors." But many think it demonstrates that Britain is better at keeping dodgy business under wraps. The OECD finds it "surprising that no company or individual [in Britain] has been indicted or tried for the offence of bribing a foreign public official".
The Home Office reckons this is not because British businessmen are especially scrupulous, but because it is hard to gather evidence abroad. That seems a poor excuse. In the first half of this year America embarked on 50 prosecutions of alleged foreign bribery and France managed eight.
Chandrashekhar Krishnan of Transparency International attributes the lack of prosecutions in Britain to the lack of political will. Events last week would seem to bear him out.
On December 14th the Serious Fraud Office reluctantly ditched its investigation into allegations, denied by the company, that BAE paid bribes to Saudi Arabian officials in exchange for an agreement to supply, organise and train the Saudi air force, a deal that has produced up to £43 billion ($84 billion) over almost two decades for BAE. The decision came after weeks of intense lobbying by BAE and the Saudi government, which reportedly threatened to cancel a follow-on purchase of 72 Eurofighter Typhoon jet fighters.
Tony Blair said the investigation had been halted because it threatened to harm relations with Saudi Arabia, a key ally in the fight on terrorism and a partner in the Middle East peace process. But suspicions linger that an equal motive was protecting thousands of British jobs.
Whatever the intention, the decision is at least embarrassing, and may be subject to judicial review, if various pressure groups ask the courts to look at it. British delegates to the next international anti-corruption junket, meanwhile, can expect a tougher reception than at the last one. Mark Pieth, the chairman of the OECD's working group on bribery, says he will be raising the matter in a meeting with the British government next month.
"Every time a government minister goes abroad and tries to lecture a corrupt dictator they are going to see this thrown back in their face," says Neil Cooper, of Bradford University's peace-studies department. "It will undermine efforts to promote the rule of law abroad in countries like Iraq and Afghanistan."
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