File on 4: Part II

“The British companies, of course, would say . . . we wouldn’t dream of bribing anybody, but we just think the rules are too complicated, we can’t possibly know what our associates abroad are doing, so we can’t apply these rules.”

SCOTT: Many in the business community fully accept the need to have rules, regulation, legislation which outlaws and which then comes down hard on illegal and on unethical practices. That isn’t in debate, that has always been accepted by business. But many would have also said that the ECGD has the provisions to ask the sorts of questions which it legitimately is entitled to ask. Now when they introduced those enhanced positions in May of this year, they did so on a unilateral basis. They didn’t consult with business, we were not aware of them until it was formally announced on their website that these new provisions were to be introduced, and as a result – really rather unsurprisingly – there were an awful lot of practical issues which have made it very difficult for certain businesses to be able to comply with them.

ABRAMS: Surely what ECGD was trying to do was to put Britain in the forefront of moves to combat corruption, and what you were trying to do was basically to water down the provisions that they were bringing in? That doesn’t really give a very good signal, surely?

SCOTT: Well, I don’t think it’s that at all. What we were at pains to want to ensure was that we at least had something which was practicable, we at least had a workable solution, we had something which had a degree of certainty to it. And also something which was not going to place the UK – i.e., ECGD – at a competitive disadvantage, because at the end of the day this is a competitive environment.

ABRAMS: A few weeks ago, ministers announced a climbdown. Companies would no longer be required to investigate before declaring they knew of no plans to pay bribes. They’d no longer have to vouch for the honesty of their venture partners. And if they didn’t want to disclose the names of their agents, they wouldn’t have to do so. Andy Scott says our rules are still stricter than those of other industrialised countries.

SCOTT: They have given the ECGD enhanced provisions on guarantees, on audits, on agents and commissions. What we have been able to do is find a workable solution such that the companies are then able physically to comply with those, and that’s really frankly what we’ve been looking for from day one in this.

ABRAMS: You mention agents, but if you look at just that one issue, you could take three or four countries that would be ahead of us now on that. Holland requires details of agents, Australia and Japan require companies to give guarantees their agents won’t bribe. Norway says it will hold companies liable if they find that an agent has paid a bribe. And yet now our companies are not being asked to give any guarantees about their agents’ activities. Surely that means we’ve slipped backwards?

SCOTT: I don’t think it does. I mean, I think if you look closely at what indeed has been of the provisions, there is indeed more information which is required on the agents. A number of other countries may have stronger provisions in certain of those areas, but then many others don’t. So again I think it’s a question of looking at this in the round.

ABRAMS: But when you look at the detail, for example, on agents, there’s a rule that says if the agent’s commission is more than a certain amount of the contract then you should name the agent. And then the rules go on to say, but if you don’t want to name the agent, you have to give a reason. Surely that’s just a huge loophole, isn’t it?

SCOTT: Well, it’s not a huge loophole. It comes back to what is practicable. In certain areas, if there is a non-disclosure agreement, which is a perfectly acceptable and normal part of business practice, which by disclosing the details of that agent you would be in breach of, that would be a criteria which would justify not disclosing the agent’s name. It doesn’t mean that ECGD then might not indeed ask for more information or indeed ultimately might not provide that finance, if it felt that for whatever reason the name of that agent had been withheld unreasonably.

ABRAMS: The row has led to numerous questions in the House of Commons, with MPs demanding to know why ministers caved in so readily to pressure. The Trade and Industry Select Committee now wants to question ministers about their commitment to tackling bribery. After all, the Prime Minister himself has led the government’s anti-corruption drive. Martin O’Neill, the committee’s chairman, says they’ll have some tough questions to ask.

O’NEILL: The Secretary of State should come and tell us why there has been this step change, because it is quite a significant change, and I think for many people – myself included – a rather disappointing one.

ABRAMS: Who would you hold responsible for that?

O’NEILL: Aggressive lobbying combined with vacillating ministerial and civil service responses. They didn’t stand up to these people. This is profoundly disappointing. If people are serious about addressing the issues of corruption in its myriad forms, then Britain might be a softer touch then they had anticipated, and I think that’s regrettable, because we were beginning to carve out, I think, a credible position as a country that set and maintained high standards.

ABRAMS: And the government is likely to face more criticism in the coming months. The OECD has been in the UK to review progress on implementing its anti-bribery convention, and it’s likely it will have serious criticisms. In Paris, Judge Van Ruymbeke says the convention and the rules which are meant to enforce it mean nothing if they’re not applied, and he questions whether Britain’s doing enough.

VAN RUYMBEKE: There is a political choice to do. Do you want to protect your companies, close your eyes, or do you want to clear the place and to apply the convention and to fight against the briberies? It’s a political choice, but you can’t sign the convention of OECD and at the same time refuse to co-operate, to check, to investigate.

ABRAMS: The British companies, of course, would say we are very much against bribery, we wouldn’t dream of bribing anybody, but we just think the rules are too complicated, we can’t possibly know what our associates abroad are doing, so we can’t apply these rules.

VAN RUYMBEKE: I don’t understand why they can’t apply these rules. Do they want to say, we want to pay briberies? That’s what they say today?

ABRAMS: They would say not. They would say no, we don’t want to pay bribes.

VAN RUYMBEKE: What is the problem? If they don’t pay, what is the problem? There is no problem.

ABRAMS: So if Britain is dragging its feet on the OECD convention, what message is that sending to other countries like France and Italy?

VAN RUYMBEKE: The message is clear – our companies will get more contracts than you.

To read part one of this transcript, please go to:

British Broadcasting Corporation, November 30, 2004

Categories: Corruption, Odious Debts

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