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OECD ANTI-CORRUPTION REPORT ON UK

Organisation for Economic Co-operation and Development

17-Oct-2008

OECD Anti-Bribery Convention and the United Kingdom

Report on the Application of the Convention on Combating Bribery of Foreign Public Officials – approved 16 October 2008.

THE REPORT

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UK taken to task for laxity on bribes

By Michael Peel in London

Published: October 18 2008 03:00 | Last updated: October 18 2008 03:00

British business was branded yesterday with an unprecedented corruption health warning by leading industrialised nations.

They were angered by London’s dropping of an inquiry into BAE Systems’ Saudi Arabian arms deals and its failure to pursue other cases of suspected foreign bribery.

The CBI, the British business lobby group, hit back at claims that foreign multinationals and international institutions dealing with UK companies faced higher costs because they needed extra care to avoid corruption.

The British government launched a rearguard action in response to a stinging 79-page report issued by the anti-bribery group of the Organisation for Economic Co-operation and Development, the Paris-based club of industrialised nations.

Mark Pieth, anti-bribery group chairman, said the warning did not mean that British companies were intrinsically “worse than others” but it did show that they were riskier to deal with because they came from a country where the approach to tackling bribery was too lax. He said: “If a country is not up to standard, if the companies are under-regulated, in dealing with them you have to be a bit more careful. . . . That is a very costly procedure.”

The OECD group has no formal powers to impose sanctions against Britain or force companies to change their behaviour. But its criticisms will be widely noticed worldwide. In a scathing investigation, the 37-member group, which includes many of the world’s leading economies, said it was “disappointed and seriously concerned” by Britain’s failure to honour an international anti-bribery convention.

The group called for reform of corruption laws and tougher action against errant companies. Only one has been prosecuted to date under a 2001 law passed explicitly to outlaw bribery of foreign public officials.

The group’s attacks highlight London’s slide towards pariah status over its failure to bring bribery prosecutions against its leading multinationals at a time when other European countries and the US are pursuing their companies.

Jack Straw, the government’s new anti-corruption tsar, said legal reforms were a key part of changes planned to combat bribery.

OECD slams Britain for failure to punish bribery

PARIS (AFP) — The OECD slammed Britain on Friday for failing to tackle corporate foreign bribery, and suggested London consider reopening a blocked probe into a huge arms deal between a firm and Saudi Arabia.

A panel from the Organisation for Economic Cooperation and Development, complained that London has failed to successfully prosecute a single firm for bribery, despite ratifying the body’s anti-graft convention 10 years ago.

“We’re sounding the alarm bell. We need adequate laws and we need them now,” Mark Pieth, one of the rapporteurs, told a news conference to launch the report at the OECD’s headquarters in Paris.

“The legal deficiencies cannot go on,” he warned, saying it was widely acknowledged that British legislation was sub-standard.

“We’ve been trying to persuade the UK for years to update its legislation. There is a question of political will.”

A statement said the OECD was “disappointed and seriously concerned about the country’s continued failure to address deficiencies in its laws on bribery of foreign public officials and on corporate liability for foreign bribery.”

The body called on Britain to rapidly bring its legislation into line with its international obligations.

Justice Secretary Jack Straw said the government welcomed the report and would study it carefully.

“It is crucial that we get these reforms right and I appreciate the OECD’s contribution to this process,” he said.

“The UK is fully committed to combating foreign bribery, which hurts honest companies and raises the costs of doing business.”

The OECD panel urged Britain to make sure national economic interests do not affect the decision to prosecute foreign bribery cases, and to ensure police can act independently from the Attorney General.

The OECD made similar recommendations in 2003, 2005 and 2007.

The Serious Fraud Office investigated claims that BAE Systems, one of the world’s biggest arms makers, ran a 60-million-pound slush fund for Saudi officials to attract contracts.

Graft rumours have long swirled around the Al-Yamamah arms deal, a rolling programme of shipments of high-tech military hardware which represents Britain’s biggest ever export contract and supports thousands of skilled jobs.

Police ditched the probe in 2006, however, before anyone was prosecuted, after the government came under pressure from the Saudi government.

Britain and Saudi Arabia have maintained close defence ties and last year signed a 4.43-billion-pound deal to supply 72 Eurofighter planes to Riyadh in one of London’s largest ever export orders.

Then prime minister Tony Blair defended the decision to shelve the probe, which was strongly criticised by anti-corruption campaigners, saying it could threaten intelligence links at a key point in the “war on terror”.

The OECD report recommended that Britain “consider reopening the Al-Yamamah investigation if the UK were satisfied that the circumstances that led to the decision to discontinue the investigation were sufficiently changed”.

In July, the House of Lords overturned a ruling that the Serious Fraud Office acted unlawfully by stopping the probe.

The OECD report gave London credit however for setting up a well-funded, powerful new police unit for bribery inquiries, and for drawing up a strategy to strengthen the fight against corruption.

Pieth said the OECD would give Britain “the benefit of the doubt” concerning its determination to improve the situation.

“The test is what’s going to happen to the 16 ongoing cases” involving bribery allegations in Britain.

He warned the lack of adequate anti-bribery legislation made it complicated and expensive to do business with British companies abroad.

“When you are a contracting partner, or if you are the World Bank sponsoring a dam, you have to be very sure the company is following the rules.”

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