Correspondence

World anti-corruption day newsletter: December 2020

Published 9 December 2020

Anti-Corruption Champion’s foreword

The pandemic has made it a pretty difficult year for everyone but, with vaccines arriving, World Anti-Corruption Day has a slightly more hopeful lens to review what’s been happening recently, as well as to look ahead at some better prospects on the horizon too.

Law enforcement agencies have scored a number of major wins, including the Airbus Deferred Prosecution Agreement which saw the company pay over £3 billion in fines for their failure to prevent bribery and a prison sentence for former Unaoil executive Basil Al Jarah, who tried to bribe his way to winning contracts in Iraq.

Beneficial ownership transparency took some big steps forward too, with all of the Crown Dependencies and inhabited Overseas Territories now committed to introducing publicly accessible registers. The next steps must be the UK’s long-planned Register of Overseas Entity Beneficial Ownership bill and Companies House reforms, and we will all need to lobby hard for the necessary Parliamentary time to make them happen.

Internationally, the UK has been positively reviewed for its compliance with the UN Convention against Corruption (UNCAC) and Ministers reiterated the UK’s commitment to this agenda at a recent G20 meeting of Anti-Corruption Ministers. Next year’s G7 meeting ought to be a good opportunity to raise the profile of illicit finance and the dangers it poses, whilst the UN General Assembly Special Session on Corruption also presents us with a great opportunity to push forward anti-corruption work with our global partners.

As challenging as this year and the response to the coronavirus has been it has also been a salient reminder of how important it is that we maintain our strong standards and protections in public procurement; publishing contract award details quickly and within stated deadlines, ensuring that proper audit trails are maintained and that proper due diligence and quality control checks are undertaken. A failure to do so, at best risks creating the perception of wrongdoing even where none has occurred and at worst creates opportunities for those who wish to do wrong to exploit.

The NAO’s recent report contains valuable recommendations that can help the government avoid this problem, and I hope it leads to a broader and more fundamental improvement in how government contracts can be made more open, digital, transparent and efficient in future. I have also been pleased to see the work the UK has undertaken to help other countries reduce vulnerabilities to fraud and corruption, particularly through the Government Digital Service whose domestic work has won plaudits from the Institute for government in their report ‘Digital government during the coronavirus crisis’.

John Penrose MP The Prime Minister’s Anti-Corruption Champion

Law enforcement activity in the news

• SFO enters into €991m Deferred Prosecution Agreement with Airbus as part of a €3.6bn global resolution
• SFO secures £1.2m following investigation into West London property linked to Brazilian bribery scandal
• SFO enters into Deferred Prosecution Agreement with Airline Services Limited, for failure to prevent bribery and gaining an illicit competitive advantage
• former Unaoil executive sentenced for paying bribes to win $1.7 billion worth of contracts
• three former G4S executives charged with fraud against taxpayer, in relation to a multi-year scheme to defraud the Ministry of Justice
• money launderer sent back to prison after second NCA investigation

COVID-19 and procurement

In November, the National Audit Office (NAO) published their report into government procurement during the COVID-19 pandemic. Contrary to allegations of potential conflict of interest in the awarding of contracts, the NAO makes clear “we found that the ministers had properly declared their interests, and we found no evidence of their involvement in procurement decisions or contract management”. Public assurance in the integrity of our procurement processes is vital, which is why it is one of six priority areas in the UK Anti-Corruption Strategy. There is, however, more to be done on how we can make procurement more transparent, including through greater use of open contracting.

Leaving the EU provides us with the opportunity for bold and radical reform of the public procurement framework. The Cabinet Office has announced it will publish a Green Paper on transformation of the UK procurement framework, with a formal consultation. Consideration is being given to the whole procurement process, including greater transparency, and will be informed through continued engagement with stakeholders. Interested parties are strongly encouraged to respond to the consultation when it is launched.

Public integrity

The UK was the first country to undergo the Council of Europe’s Group of States Against Corruption’s (GRECO) 5th evaluation round which included an evaluation on prevention of corruption in the highest levels of government. The government has used this evaluation to review our systems and strengthen where appropriate. Progress will be discussed at the GRECO plenary this spring. For example, the government has committed to commencing post-legislative scrutiny in 2020 of Part 1 of the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014 which established the statutory register for consultant lobbyists.

The independent Committee on Standards in Public Life announced in September that it will be carrying out a review of the institutions, processes and structures in place to support high standards of conduct. The review will look at best practice and identify any themes and gaps in the way the Seven Principles of Public Life are promoted and maintained.

This month, the Law Commission reported on its review into the common law offence of misconduct in public office, recommending it be replaced by an offence of corruption in public office and an offence of breach of duty in public office. The government will issue a response in due course.

Corporate and extractives transparency

In September, we published our response to the 2019 consultation on Companies House Reform; it recommends a series of reforms to strengthen Companies House and increase the accuracy of the valuable information it holds.

We have also continued to implement the Extractive Industries Transparency Initiative (EITI) and launched a new website earlier this year, which brings together key information on the UK oil and gas, and mining and quarrying industries. Today UK EITI published its annual review 2020, which provides an overview of progress in implementing the EITI Standard and includes data on the payments between extractive companies and UK government bodies and agencies in calendar year 2019. This is the sixth year that the UK has conducted this reconciliation exercise, meaning that we have now put on public record six years’ worth of verified data on the financial flows between government and industry, covering 2014-19. The Review was launched by Lord Callanan, UK EITI Champion and Minister for Climate Change and Corporate Responsibility, at a virtual event.

Beneficial ownership

All the inhabited Overseas Territories have joined the Crown Dependencies and have now either committed to introducing publicly accessible registers of company beneficial ownership – or in the case of Gibraltar, have already implemented them. This is a major shift and will make it easier for campaigners, journalists, financial institutions and law enforcement to identify the real owners of companies, contributing to the fight against money laundering and improving transparency. We are also encouraged by progress in the US towards the establishment of a private federal company beneficial ownership register. Over the last 18 months both the Champion and officials have been active in sharing our experience with US counterparts.

UN Convention against Corruption

The full report of the review of the United Kingdom, Crown Dependencies and British Virgin Islands implementation of the United Nations Convention against Corruption (UNCAC) was published on 16th November. The report highlights the good progress made so far and makes recommendations for further improvement which we are acting on.

The UK government will extend its ratification of the UN Convention Against Corruption to the Cayman Islands who will join the Crown Dependencies, Bermuda and the British Virgin Islands in being covered by the convention. The UK government will today send the notification of extension to the Secretary-General of the United Nations. This demonstrates the Cayman Islands’ commitment to tackling corruption and will give it access to expert advice from the UN Office on Drugs and Crime.

Ministry of Housing Communities and local government

Earlier this year, MHCLG published a review into the risks of fraud and corruption in local government procurement. Produced in collaboration with local government partners and the Anti-Corruption Champion, the Review sets out practical examples and case studies showcasing how councils, who collectively spend around £55 billion a year on procurement, can strengthen their processes and implement prevention measures.

The Local Government Association, in partnership with the Chartered Institute of Public Finance and Accountancy, launched a local government fighting fraud and corruption locally strategy alongside a number of tools including training and a good practice bank. It was also reassuring to see the speed at which they issued guidance on how local government can protect itself from COVID-19 related fraud. Allegations of corruption in local government currently in the news show we cannot afford to be complacent.

UK retains active enforcer status against foreign bribery

In October, the UK was once again rated as an ‘active enforcer’ of anti-bribery legislation by Transparency International – one of just four countries to be rated the highest status. TI’s 2020 Exporting Corruption report assesses the performance of the 44 countries that are signatories to the OECD Anti-Bribery Convention in their efforts to crack down on foreign bribery. This is an excellent result for the UK and reflects the efforts of the SFO, NCA, City of London Police, MoD Police and Police Scotland in combating foreign bribery.

Government Digital Service

The Cabinet Office, through GDS International, is working with countries in Latin America, Africa, and Southeast Asia under its Prosperity Fund Global Anti-Corruption Programme, and Eastern Europe under its FCDO-funded Partnerships for Development programme to build critical digital capability - focused on responding to the urgent digital demands of COVID-19 - through deployment of peer-to-peer expertise.

For example, in Colombia, GDS are supporting the development of common tools and components that allow the government to scale their ability to develop COVID-19 related services quickly as well as working on spend controls, allowing the government to respond to the ongoing need to develop more COVID services for citizens, whilst ensuring value for money and increasing transparency at a time when corruption risks have risen.

The Anti-Corruption Champion also gave opening remarks at a recent Webinar on the Role of Data Analytics in Preventing Corruption & Fraud in Southeast Asia. This was organised by the UN Office on Drugs and Crime, which GDS co-sponsored and gave an excellent presentation entitled ‘Digital government: the antidote to corruption in public procurement’.

Strengthening our understanding of corruption threats

We remain committed to better understanding the threat of corruption, in terms of both scale and nature, as well as its impact domestically and internationally. We are working with partners on an Economic Crime Business Survey (ECBS). This surveyed 5,000 participants across seven key sectors to gather data on experiences of corruption and fraud, publication of the results is expected in early 2021. We are also exploring deep dive research projects building on the ECBS. These could potentially investigate areas of key interest and risk, such as local government, construction and real estate, mining and quarrying, and the prison and probation service.

The UK has also participated in the development of a G20 Anti-Corruption measurement workstream as part of the upcoming Italian Presidency and we supported the University of Sussex in its work on an academic roundtable with the Saudi G20 presidency.

In addition the NCA’s National Strategic Assessment 2020 includes details of corruption threats (drawing from an internal annual corruption assessment). The Office of National Statistics also publishes data on corruption reports and allegations.

International Action Against Corruption

The International Action Against Corruption (I-ACT) programme provides funds to deliver specialist anti-corruption technical expertise which is not available at country level and access to international partnerships to help tackle cross-border corruption. It works to shift incentives by better prevention, detection and exposure of corruption and recovery of stolen assets. I-ACT supports a range of implementing partners who provide experts, for example in financial investigations, anti-money laundering and asset-tracing, to help countries prevent and expose grand corruption. The most recent annual review for the International Action Against Corruption programme (I-ACT) stated that components and projects have contributed to:

• 19 countries supported by the International Monetary Fund (IMF) on international Anti-money Laundering (AML) standards as part of the anti-money laundering project.
• 164 financial investigation units globally have access to training, resources and mentoring to better detect illicit financial flows and refer them to investigators.
• 7.6 million companies now registered on the global beneficial ownership register.
• I-ACT support to Transparency International (TI) has helped ensure that anti-corruption reforms are on the agenda of governments, high-level forums and organisations such as G20, OECD and the IMF.
• several defence companies are making improvements to their publicly available information over the past six months - 58 companies provided responses to TI assessments, which reflects a 43% response rate, up from 32.5% in 2015