International Anti-Corruption Champion: What is the strategy?

Parliamentary Briefing Governance and Corruption International Anti-Corruption Champion: What is the strategy? Corruption is a manifestation of poor governance and is a major challenge to development and the achievement of the Millennium Development Goals. In Africa alone, the cost of corruption has been estimated at US$148 billion a year, representing 25 per cent of the continent s GDP. 1 Tearfund welcomes the implementation of the Bribery Act 2010 but recognises that corruption extends far beyond bribery. Tearfund insists that much more must be done if the UK is to play its part in tackling this crucial issue. Tearfund is calling on the Secretary of State for Justice to devise and implement a comprehensive UK anti-corruption strategy and to establish effective accountability mechanisms involving all key stakeholders. a There is an urgent need for a strategy which ensures that corruption does not undermine development objectives and for the Government to demonstrate its zero tolerance approach. b It is important to bring policy coherence and to create space to allow those most impacted by corruption to contribute effectively to the fight against it. The UK is under review for its compliance with the United Nations Convention Against Corruption, so the time is right for the UK to gets its own house in order and to ensure greater co-ordination across government departments in tackling corruption. We urge all decision-makers, including parliamentarians and government officials, to push for this cross-department anti-corruption strategy so that the UK begins to deal effectively with the global drivers of corruption. The coalition government s appointment of the Secretary State for Justice as the UK s Anti- Corruption Champion was a statement of the government's clear commitment to transparency and accountability 2 and follows the precedent set by the previous government. The Anti-Corruption Champion s role is to weave together the threads of anti-corruption work across all major government departments. For this reason, Tearfund is calling on the Secretary of State to work with a range of stakeholders in devising an anti-corruption strategy which is publicly available and which outlines specific objectives, funding commitments and a full monitoring and evaluation plan. Multi-stakeholder involvement, transparency and coordination of anti-corruption policies are essential if corruption is to be tackled effectively. Why an anti-corruption strategy and why now? 1. Corruption must be tackled Corruption is the abuse of power for private gain at the expense of others or society as a whole. It occurs in the public and private spheres, and in all societies. The impacts of corruption are far-reaching and can destroy trust, weaken investor confidence, harm economic interests and undermine efforts to tackle poverty. Corruption also undermines progress towards the Millennium Development Goals. So, for example, diverting funds that should have 1 Smith, Pieth and Jorge (2007) The recovery of stolen assets: a fundamental principle of the UN Convention Against Corruption, Briefing Paper. Prepared for the Basel Institute on Governance, International Centre for Asset Recovery. Norway: U4 Anti-Corruption Resource Centre a. This briefing outlines Tearfund s call for a cross-whitehall strategy on corruption and further develops the concepts and arguments noted in its earlier paper, Tackling corruption: joining the dots across Whitehall. b. As stated by the Secretary of State for International Development in his address to the LSE, October 2010 2 See: http://www.number10.gov.uk/news/press-notices/2010/06/appointment-of-international-anti-corruption-champion-51879

been used for building health centres undermines efforts to achieve Goal 4 to reduce child mortality. 3 2. UK corruption and its impact on international development Corruption undermines people s well-being and quality of life, particularly for the poorest and most vulnerable people. The UK is complicit in this in several ways: - Companies (including British firms) can fuel corruption actively by paying bribes or passively by failing to disclose the legitimate payments they make to foreign governments. - Financial secrecy jurisdictions (including the Overseas Territories) and the financial and legal service providers who operate in them can help the corrupt to hide their ill-gotten assets, and facilitate large-scale tax avoidance that denies revenues to developing countries. - Banks can sustain corruption by doing business with corrupt officials and accepting looted funds or bribes. Recent examples of this include the case of British banks accepting millions of pounds from the corrupt governors of two Nigerian states: Diepreye Alamieyeseigha of Bayelsa state and Joshua Dariye of Plateau state. The leaders funnelled dirty money into the UK, spending their ill-gotten gains on a luxury lifestyle which was in stark contrast to the poverty of most Nigerians. 4 3. Current fragmentation and lack of UK co-ordination Policy coherence brings together related policies to achieve an overarching goal. The current lack of co-ordination of anti-corruption plans and mechanisms in the UK is evident. The UK does not have an overarching anti-corruption strategy and the result is a lack of policy coherence. The previous government initiated the UK s Foreign Bribery Strategy 2010 (which is subject to review in 2012). 5 This document remains the only publicly available related strategy in place. While useful in highlighting the issue of foreign bribery, it demonstrates that bribery is often thought of as being synonymous with corruption. This is not the case: corruption is far broader than bribery. Corruption includes money-laundering, diversion of licit financial flows (such as aid money or company payments) and favouritism in relation to employment and/or resources. Thus the coalition government needs to establish a new, comprehensive anticorruption strategy because all forms of corruption are interrelated. 6 Eleven government departments and public bodies have a remit for corruption. 7 The Foreign Bribery Strategy Board s current remit is to oversee the Foreign Bribery Strategy and provide policy advice to the Anti-Corruption Champion. The Board consists of some but not all the eleven government departments with an anti-corruption remit. 8 At present, there appears to be little information available about these meetings and little or no input from civil society stakeholders most notably representatives of those most affected by corruption. Yet those most impacted by corruption have a crucial role to play in combating it. The current fragmentation of various anti-corruption policies and mechanisms is clearly visible in the UK s overseas operations. In contrast to the operations of many businesses, where the local country manager will be responsible for all aspects of the country office, a typical HMG country office will have numerous reporting lines on anti-corruption issues. This is because the main lines of communication are between each Ministry s officials in London and abroad. 9 This leads to fragmented communication and policies and allows the possibility of efforts being duplicated. This disconnect has the effect of undermining development objectives. While the Department for International Development works to tackle corruption through various programmes, the Export Credit Guarantee Department (ECGD) appears to fail persistently to take account of 3 Gordon, Harding and Akinyemi (2010) Corruption and its discontents. Tearfund 4 Global Witness (2010) International thief thief: how British banks are complicit in Nigerian corruption 5 Jack Straw (2010) Written questions 19 January, 2010, 6 See Bond paper: Response to the UK draft Foreign Bribery Strategy, September 2009 7 City of London Policy (2010) Overseas corruption assessment. London: City of London Police and the National Fraud Intelligence Bureau 8 Ibid 9 Ibid

corruption allegations when deciding whether or not to back projects. One well-known example is the case of Saudi Arabia, noted by the OECD s review of the UK s implementation of the OECD Convention on Combating Bribery of Foreign Public Officials. 10 In this way, the government s ECGD undermines DFID s work in helping countries fight corruption. 4. Compliance with international conventions An anti-corruption strategy is needed in order for the UK to become compliant with international anti-corruption conventions, most notably the UN Convention Against Corruption (UNCAC). UNCAC is the only legally binding, universal anti-corruption instrument with international reach. Article 5 and 6 specifically urge states to develop and implement or maintain effective, co-ordinated anti-corruption policies that promote the participation of society and reflect the principles of the rule of law, proper management of public affairs and public property, integrity, transparency and accountability. 11 Yet, the UK has failed to develop an overarching co-ordinated policy let alone implement one. This year the UK s adherence to UNCAC will come under review. This first round of reviews officially addresses Chapters 3 and 4 of the Convention, but offers the UK the opportunity to analyse the comprehensive nature of the UK s anti-corruption work. With this first round of reviews starting soon, the time is right for the UK to address its anti-corruption policies and mechanisms and ensure that it gets its own house in order. 5. Getting our own house in order In line with the Anti-Corruption Champion s role, the Ministry of Justice aims to actively help other countries work towards their international obligations and more firmly embed anticorruption principles into legislation and government conduct. 12 The UK government professes to help other countries tackle corruption but fails to have an anti-corruption strategy of its own in place. Some new EU-member states have been required to adopt and implement a National Anti-Corruption Strategy as a condition of membership. 13 In this context, there is no excuse for the UK not to do the same. If the UK government is to be an international example of best practice and tackle corruption successfully, it must take action to tackle corruption, both at home and abroad. It must recognise that corruption is not solely a developing world problem. Corruption in developing countries is facilitated and driven by external actors, many of them in the developed world, including the UK. Thus the UK must have a strategy in place that brings direction, coordination and cohesion to its anti-corruption policies and programmes of action. An anti-corruption strategy: how should it look? Strong leadership from the Anti-Corruption Champion is a pre-requisite for a comprehensive strategy to be developed. With strong leadership and political will, the Secretary of State can bring the necessary actors together to initiate the strategy and contribute to the review of its implementation. Drafting a strategy: who should be involved? Essential to the success of a strategy is the involvement of a variety of stakeholders in drafting the document. This allows stakeholders to take ownership of the plans and to ensure all the necessary elements are integrated to form a single, unified and coherent anticorruption strategy. 14 In line with UN recommendations, necessary stakeholders include representatives from the executive branch, the eleven government departments and public 10 OECD (2008) United Kingdom: Phase 2bis.Report on the application of the convention on combating bribery of foreign public officials in international business transactions and the 1997 recommendation on combating bribery in international business transactions. 11 UNCAC, Chapter II, Article 5 and 6 12 Ministry of Justice website: http://www.justice.gov.uk/news/announcement091210b.htm 13 For example, Bulgaria. See: UNDP (2005) Institutional arrangements to combat corruption 14 See: UN (2004) The global programme against corruption UN anti-corruption toolkit

bodies which have an anti-corruption remit, the judiciary, local governments, business leaders, civil society, the academic community, religious groups and the media. 15 What could be included in the strategy? There is no one size fits all approach as country contexts vary greatly. However, there are overarching principles that should be included in a UK anti-corruption strategy. For the Secretary of State to fulfil his role as Anti-Corruption Champion effectively, it is important that the strategy goes beyond foreign bribery and looks at broader international anti-corruption policies and processes. It must commit the government to a zero tolerance approach to corruption, in all aspects of its work around the world. The strategy must incorporate the UK s requirements under international obligations, most notably UNCAC. It must therefore address broad issues of prevention, criminalisation, international cooperation and asset-recovery. It must include broad principles that all government departments, public bodies and stakeholders can apply to their work. For example, principles such as top-level commitment and risk assessment 16 could be applied to a variety of organisations. In the interests of transparency, the document must be made publicly available. In addition, it must set specific objectives and actions for departments and public bodies with a particular anti-corruption remit. These must be time-specific and measurable. Regardless of which specific aims and actions are incorporated, the strategy must be fact-based, inclusive, comprehensive and impact-orientated. 17 It may be appropriate to apply some of the broad principles of Hong-Kong s threepronged approach of prevention, education and enforcement. This model is noted for its success in various contexts, such as Botswana and New South Wales in Australia. 18 Some specific areas to be covered may include: bribery, lack of transparency in companies legitimate revenue payments, illicit and harmful financial flows out of developing countries, lack of transparency in the ownership and operation of companies facilitating tax evasion and avoidance, loans fuelling or subsidising corruption, export credit guarantees potentially legitimising corruption, transparency and accountability in overseas aid, and providing safe harbour to corrupt foreign officials. 19 Implementation of the strategy and oversight Effective co-ordination of anti-corruption efforts is a long-term process. Corruption is international and therefore it is artificial to draw a distinction between UK corruption and overseas corruption. Tackling both in a co-ordinated way is essential and requires sustained leadership and political determination. 20 It is the responsibility of the Anti-Corruption Champion to use his leverage to make it a requirement for all departments to apply the broad principles within the anti-corruption strategy. Clear lines of responsibility for implementing the specific objectives of the anti-corruption strategy are required. Communication and information-sharing are essential to ensure coordination and efficiency and to prevent duplication of efforts. Consequently, the Secretary of State for Justice should convene regular meetings involving all the stakeholders noted: 15 UNDP report (2005) Institutional arrangements to combat corruption, p20 16 Similar broad principles were published in Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing (Section 9 of the Bribery Act 2010), Ministry of Justice (2011) 17 UN (2004) The global programme against corruption UN anti-corruption toolkit 18 Chene (2009) Coordination mechanisms for anti-corruption institutions, U4 expert answer 19 As noted in the Bond Anti-Corruption Paper, September 2010 20 Chene (2009) Coordination mechanisms for anti-corruption institutions, U4 expert answer

representatives from the executive branch and the eleven government departments and public bodies with an anti-corruption remit. 21 Furthermore, in overseas situations, the UK representative (ambassador, high commissioner, consul or governor) should be given the responsibility of overseeing the implementation of the anti-corruption strategy in their context. 22 Although challenging, 23 this country-wide coordination is essential to help prevent contradictions in policies, ensure consistency and improve efficiency. The government must commit specific funding allocations for its implementation. These commitments must be specified in the strategy and allocated to the various aspects of implementation. Regular reporting of the use of the budgetary allocation is also crucial. Regular monitoring and evaluation of the implementation of the anti-corruption strategy are essential. All departments must be held to account for how they implement the broad principles outlined in the strategy. Those departments and public bodies with specific objectives must be monitored and should report to parliament on their progress. In addition, it is important that the strategy is regularly reviewed as the forms of corruption always change. Meetings convened by the Secretary of State involving a variety of stakeholders would encourage greater monitoring and efficiency and improve communication. Parliamentarians must play their role in scrutinising the efforts of the executive in its anticorruption efforts. This scrutiny should involve holding the Secretary of State to account for the content of the strategy and its implementation. An Associate Parliamentary Group on international corruption could assist in highlighting relevant issues and ensure that questions are raised regarding the strategy s execution and compliance with international conventions. It is for this reason that Tearfund is working alongside other partners to initiate such a group and we call on parliamentarians to join and actively participate in this group. Recommendations The Secretary of State for Justice: recommendations initiate the drafting of a strategy, including specific objectives, funding commitments and a full monitoring and evaluation plan involve a range of stakeholders, including civil society, in developing the strategy convene stakeholder-wide meetings to monitor strategy implementation and assess its impact Parliamentarians: recommendations write to the Secretary of State for Justice urging him to draft a strategy participate actively in an Associate Parliamentary Group to learn, to call for a strategy, monitor implementation and to scrutinise the executive Briefing paper prepared by Melissa Lawson, Public Policy Officer Governance and Corruption, Tearfund Melissa.lawson@tearfund.org Tearfund is a Christian relief and development agency building a network of local churches to help eradicate poverty. www.tearfund.org enquires@tearfund.org 0845 355 8355 (ROI: 00 44 845 355 8355) 100 Church Road, Teddington, TW11 8QE Registered Charity No. 265464 (England and Wales) Registered Charity No. SCO37624 (Scotland) 21 UNDP (2005) Institutional arrangements to combat corruption, p20 22 City of London Policy (2010) Overseas corruption assessment. London: City of London Police and the National Fraud Intelligence Bureau, p39 23 Ibid. Challenges include budget cuts.