Essays and Reports

Exporters to identify agents and face random audits in anti-bribery drive

Exporters will have to identify middlemen and face random audits to detect potential bribes under tough anti-corruption rules issued by the government yesterday.

Political opponents contrasted the government’s tough stance on
kickbacks paid by exporters with allegations that Labour accepted
multi-million pound loans in return for peerages.

Ed Davey, the Liberal Democrat trade and industry spokesman, said:
“It’s somewhat ironic that these – welcome – new anti-bribery
procedures have been published on a day when the prime minister is
under mounting pressure about loans to the Labour party that Number 10
failed to disclose.

“Business is looking for government to take a lead and will expect Tony Blair to put his own house in order.”

The new rules for the Export Credits Guarantee Department will come
into effect on July 1. Yesterday’s announcement is the culmination of
tortuous negotiations stretching back to May 2004 when the main export
agency angered business by imposing strict new rules without

The government carried out two subsequent U-turns, relaxing the rules
in secret before bowing to a court challenge from campaigners and
opening the issue to consultation in January 2005.

Ministers have dropped proposals to limit the agency’s right to audit
information given by exporters to cases where it has reasonable grounds
to suspect bribery. The agency will be able to conduct random audits in
future, although it will be required to give companies five days’

The government has also dropped a provision that would have exempted
exporters from disclosing which agents or other intermediaries were
being used where the commission was below a set amount and not included
in the price of the contract.

Under the new rules, the identities of middlemen will always have to be
disclosed. The agency has pledged to treat this information in a way
that protects commercially confidential data and will now consult
business on these internal procedures.

Ian Pearson, the trade minister, said that thegovernment’s key concern
was to “reduce the risk of ECGD supporting contracts tainted by
corruption . . . in a way that is workable for exporters”.

Anti-bribery campaigners welcomed the new rules, saying the government
had agreed several important changes to tighten loopholes on potential

Susan Hawley, a consultant for The Corner House, said: “This is a
genuine and important step in the right direction which will help go
some way to restoring the ECGD’s and ultimately the UK government’s
reputation on fighting corruption. The ECGD deserves credit for taking
a fair but robust line.”

Business, however, rejec-ted suggestions that it had lost the
negotiating battle, saying its core concern had been to ensure that the
new rules would be workable and practical, rather than to weaken
bribery controls.

Andy Scott, director of international and UK operations at the CBI
employers’ group, said: “We welcome the fact that the ECGD has accepted
large elements of the business case.

“Yes, these rules are tougher than before May 2004 and, yes, they’re
tougher than what many of our competitors are required to do. But they
are much more workable than the rules imposed in May 2004.”

Jean Eaglesham, Financial Times, April 5, 2006

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