International Bribery and Corruption (Hansard, 25 February 1998)

§ Mr. Hugh Bayley (City of York)

I beg to move, That leave be given to bring in a Bill to create offences of international bribery and corruption; and for connected purposes. The Bill would make it a criminal offence for a United Kingdom resident or a United Kingdom company to bribe, or attempt to bribe, a public official in another country. It is a serious crime to bribe someone in the United Kingdom, but it may surprise some hon. Members to know that, under British law, it is perfectly legal to bribe someone abroad. It is a case of one law for the United Kingdom and another for the rest of the world.

Not only is bribery legal, as long as the act of bribery takes place offshore, but in some instances it is still a tax-deductible activity. A year ago, I introduced to the House the Overseas Development Co-operation Bill, which sought to target more of our British aid on poor people in poor countries, and to end the scandalous misuse of aid as a sweetener for arms sales, such as that which took place in the case of the Pergau dam.

Now those principles have been reflected in the Department for International Development White Paper, "Eliminating World Poverty: A Challenge for the 21st Century", and, since the 1997 general election, both the European Union and the Organisation for Economic Co-operation and Development, with support from our Labour Government, have adopted conventions against international bribery. This Bill seeks to incorporate those conventions into UK law.

There is a comforting but fictitious belief that bribery is not a serious problem in Britain—that only in the third world is it a way of life. Well, it takes two to tango. The British business man who pays a 20 per cent. commission without asking too clearly where the money goes, is as guilty as the third-world politician or general who pockets the money.

Bribery is a global problem. Only four years ago, Gordon Foxley, a Ministry of Defence civil servant in this country, was gaoled for accepting £1.3 million in bribes.

There is rapid inflation in the currency of bribery. Last year's Mr. Five Per Cent. is this year's Mr. Fifteen Per Cent. or Mr. Twenty-five Per Cent.

In the past, British business has been fairly relaxed about bribery, but no longer. Adair Turner, on behalf of the Confederation of British Industry, told the Los Angeles Times: Most British companies support the OECD goals. He also said: Corruption's become a big issue because it just costs business so much these days. However, the consequences of international bribery are most serious in developing countries. Corruption can go right to the top. Two former Presidents of the Republic of Korea have been prosecuted and indicted for bribery. A President of Brazil has been impeached on corruption charges.

The sums of money are enormous. In the 1980s, Zaire's foreign debt rose to $5 billion, but the personal wealth of President Mobutu, the country's President, exceeded $4 billion. What was true of Mobutu was true of Ferdinand Marcos of the Philippines or Emperor Bokassa of the Central African Republic.

374 The problem in some developing countries is not a shortage of capital but the fact that the capital is owned by a tiny elite and held offshore. That money ends up being invested in European and north American property markets and stock markets, instead of in the economic development of those Presidents' own countries.

Bribes—I mean big bribes—are always paid in hard currency, usually directly to an offshore bank account, which robs the developing country of the foreign exchange it needs to promote its development.

The cost of bribes falls primarily on the poor. When a corrupt contractor from this or some other rich country pays a 15 per cent. bribe, he adds that to the price of his contract. His power station or irrigation scheme will cost more, and the little people—those who buy the electricity or the water to irrigate their crops—will pay the price of that bribe. Bribery is a direct transfer of money from the poor to the rich.

According to the EC representative in Kenya, the French contractor who was awarded the contract to build the Turkwel gorge dam—there was no international competition for the project—charged 2.4 times the cost of a comparable dam and power station on the Tana river in Kenya. The Kenyan officials charged with monitoring the contract did not complain because they gained, in the words of the EC official, "high personal advantage".

When bribery takes root, people start buying things that they do not need. Last year, the chief of naval staff in Pakistan resigned amid allegations of bribery in connection with a £580 million purchase of submarines. To Pakistan's credit, the Government have since launched an "Accountability, Accountability, Accountability" campaign—I am glad to see that the rhetoric of new Labour has a global application—designed to root out corruption, and some 85 officials have already been suspended. The Pakistan President estimates that corruption in that country costs the Government 2 billion rupees a day. Many other developing countries—such as Botswana, Uganda and South Africa—take the problem of bribery very seriously.

The International Monetary Fund, which has been the unwitting financier of many big bribes in the past, is now taking a tough line. A "not for public use" document produced in September last year states: Conditionality will be attached to … safeguard the use of Fund resources. That may explain why the IMF decided last week not to restore loans to Kenya, because of continuing concerns about the failure of Daniel arap Moi's Government to stamp out corruption.

In 1977, the United States took the lead in combating corruption when President Carter's Administration secured the passage of the Foreign Corrupt Practices Act. It is still the only legislation in the world that makes international bribery an offence. The Act has worked well. It has been used, and it has led to convictions and prison sentences. It has changed the culture of American business.

My Bill seeks to do the same in this country. It is needed because it will be good for business in this country. It is needed because it will be good for international development, and, above all, because it is morally right to put it on the statute book. Politics without morality is the first step towards corruption.

§ Mr. Michael Fabricant (Lichfield)

I congratulate the hon. Member for City of York (Mr. Bayley) on presenting his Bill with such passion and force. However, I oppose the Bill, because I think that it is fundamentally naive, and that it is wrong to introduce such legislation at this time.

The Organisation for Economic Co-operation and Development is endeavouring to find a package of best practice with which to address the problem of bribery around the world. The European Union is also examining that problem at present. However, the House must consider several questions before agreeing to the Bill.

How do we define bribery? If a United Kingdom contractor pays commission to an agent, which is common practice in third-world countries, and that agent passes on some of the commission to those who must decide whether they will purchase the services offered by that contractor, does that constitute a bribe—even though it is once, twice or thrice removed? Would we make it illegal for those companies to give commission? If a company finds that, in order even to be considered for a contract abroad, it must make a percentage contribution to the corporation advertising the contract, would that company also be committing an offence?

It is not by accident that it is not illegal for bribery to be paid to overseas companies from the United Kingdom. If the hon. Gentleman's Bill were enacted, it would probably rule many British companies out of applying for contracts abroad, which would simply fall into the hands of French, German, Japanese, American and other competitors in those countries. What consideration has the hon. Gentleman given to the jobs that would be lost in this country if his Bill became law?

The question of bribery is almost like the question of unilateral nuclear disarmament. Everyone would like the world to disarm itself of nuclear weapons, but Britain and now the Government have resolutely decided that to do so unilaterally would be wrong. I argue that, if the hon. Gentleman's Bill were passed into law, it would be wrong. It would lose valuable jobs, especially in high-tech areas in the sunrise industries in this country.

Although the hon. Gentleman presented his Bill with passion, it reflected an underlying naivety about the way in which business is done in this country and around the world. I say to the hon. Gentleman: wait. His dreams for a bribeless world may well come about. As I said, the European Union is examining the issue, as is the Organisation for Economic Co-operation and Development. As the hon. Gentleman correctly pointed out, the White House is examining the problem. If the Bill is passed now, it will cost jobs in this country. For that reason, I oppose it.