Oral Answers to Questions
Debate between Catherine McKinnell and Michael Fallon
Michael Fallon
This Government and the regulator have introduced simpler tariffs and clearer bills and made it easier to switch. The regulator has fined companies a total of £30 million since 2011. Last year it fined a single company, SSE, £10.5 million.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Last December the Secretary of State declared that Ofgem was fit for purpose. Is not last week’s reference to the CMA evidence that it is not fit for purpose and needs to be scrapped?
Michael Fallon
It is Ofgem that made the reference, so I do not follow the hon. Lady’s logic. We have strengthened the powers of the regulator, and for the first time ever, the regulator has referred the energy markets to the competition authorities. That is evidence of a strong regulator doing its job.
Corruption (International Business)
Debate between Catherine McKinnell and Michael Fallon(10 years, 11 months ago)
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The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
This is an important topic and I, too, congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on securing this debate. The trade and investment White Paper, published in 2011, stated:
“Bribery and corruption are barriers to trade and growth. They hinder development, distort competition and perpetuate poverty.”
That is the Government’s view.
The hon. Lady paid tribute to the United Kingdom’s strong reputation for tackling corruption. Earlier this month, the respected non-governmental organisation Transparency International released its latest corruption perceptions index, which ranks 177 countries and territories around the world on the perceived levels of public corruption. Of those 177 countries, the United Kingdom was ranked 14th. Transparency International’s 2011 bribe payers index ranks 28 of the world’s largest economies according to the perceived likelihood of companies from those countries paying bribes abroad. The United Kingdom ranks joint sixth, alongside Australia, Canada and Singapore. We are ahead of the United States and France.
In its “Exporting Corruption: Progress Report 2013”, which assesses enforcement of the OECD convention on combating foreign bribery, Transparency International recognises the United Kingdom as one of only four active enforcers of foreign bribery. That is the challenge. Beyond the United Kingdom, Germany, Switzerland and the United States, enforcement effort is poor or non-existent.
The United Kingdom is a signatory to the United Nations convention against corruption and the OECD bribery convention. Those conventions require the signatories to criminalise the bribery of foreign public officials by individuals and companies. Transparency International believes that 20 countries, accounting for about a quarter of the world’s exports, including major exporting nations, such as Japan, the Netherlands, South Korea, Russia, Mexico, Brazil and Turkey, do little or no enforcement. Enforcement in France, Canada and Argentina is limited.
To be effective in tackling corruption and bribery, both the demand and supply of bribes must be addressed. That means that we cannot address the problem alone; it requires a concerted and co-ordinated effort, and other countries must contribute more equally to tackling corruption. The reality is that the risks of wrongdoing being discovered and of being prosecuted around the world are uneven. To address that, we are increasingly leading the international agenda on these issues.
When we held the G8 presidency earlier this year, my right hon. Friend the Prime Minister championed an agenda of tax, transparency and trade, and put tackling corruption at the heart of the G8 agenda. At Lough Erne he secured landmark agreements on tax transparency, transparency in the extractives industries and transparency of company ownership and control. That is in the interests of British firms, and those across the world, that play by the rules. It is about ensuring a level playing field for companies, so that trade delivers the benefits that it should for both rich and poor countries.
We are now taking forward those commitments, including establishing a central registry of company beneficial ownership information, and will be ensuring that the other G8 countries meet their obligations, too. We are working actively with our international partners in the fight against foreign bribery. UK law enforcement departments and agencies have provided training and technical assistance to a wide range of overseas law enforcement and anti-corruption agencies, including the Afghan Attorney General’s Office and Bangladeshi prosecutors, and we have participated in a number of joint investigations.
One of the strengths of the OECD convention is that 40 countries have signed it: more than just the OECD members. Through the OECD bribery working group, the monitoring body of the OECD bribery convention, countries are held to account for their efforts to tackle corruption through peer review. We are fully committed to the OECD bribery convention and we make a full contribution to the working group, which is meeting in Paris at the OECD this week and includes a review of the position in Ireland, in which the UK is a lead reviewer.
Catherine McKinnell
I apologise for taking the Minister back slightly, but he somewhat glossed over the register of beneficial ownership. I welcome the Government’s making a verbal commitment—he said that they are working on producing that register—but will he comment on the specific requirements that I proposed about the detail in respect of how it will be produced? He must accept that it is not enough simply to have a registry that is titled “Beneficial Ownership” but has no practical function, as such.
Michael Fallon
The hon. Lady knows that we are about to publish our formal response to the “Transparency and Trust” discussion paper and we will take forward primary legislation to implement a publicly accessible central registry, as soon as we find parliamentary time to do so. I will, if I may, respond to the hon. Lady in detail in writing on her specific point about monitoring.
The working group on bribery has not been shy about shining the spotlight on the UK. In 2008, it made a point of criticising the UK for having prosecuted no legal persons. Today only nine of the 40 signatory countries—Canada, Germany, Italy, Japan, Korea, Norway, Switzerland, the United States and the UK—have sanctioned a company for foreign bribery. Italy’s first corporate sanction was a temporary ban on public procurement. The German corporate sanctions have all been administrative fines. Our first corporate conviction for foreign bribery in July 2009 may well be the first in the European Union.
The Bribery Act 2010 provides the legal foundation here. In that Act, we have a modern, effective law against bribery that is second to none. It encourages and supports the establishment of ethical standards that are meaningful in the commercial world and society generally. The offence in the Act of failure to prevent bribery reflects the best practice from the working group, in terms of an effective model of corporate liability for foreign bribery. That has better equipped investigators and prosecutors to tackle bribery in the 21st century. Alongside the Act, investment in dedicated anti-corruption police resources has seen a dramatic increase in the number of investigations into allegations of foreign bribery by UK nationals and companies—up from just four investigations in 2006 to more than 20 live cases currently.
Foreign bribery offences are complex and demand considerable international co-operation, and can take years to investigate and bring to court. Consequently, although there have been several domestic bribery convictions using Bribery Act offences, we have yet to see a foreign bribery prosecution using those same offences.
The Serious Fraud Office also continues to pursue foreign bribery cases under the law that preceded the Bribery Act. In August, it charged four individuals with the first Bribery Act offences in relation to corporate behaviour.
Our ambition is to go beyond minimal technical compliance with the various UN and OECD conventions and to maintain a leadership position through best practice legislation that provides a fully effective deterrent to rogue traders. That means ensuring that we have the right tools. The Serious Fraud Office was given new legal tools to investigate foreign bribery allegations and confiscate the proceeds of crime through civil recovery. Earlier this year, we consulted on the introduction of deferred prosecution agreements for use in cases of economic crime, including Bribery Act offences, by corporate offenders. A new scheme for deferred prosecution agreements is provided for in schedule 17 to the Crime and Courts Act 2013, which received Royal Assent in the spring. We intend to implement that legislation in spring next year.
It is understandable that businesses will want to know how they can best comply with the law. We have published advice and guidance on UK Trade & Investment’s overseas business risk website, to ensure that businesses do not spend unnecessary time on disproportionate measures.
The issues that we are debating today are important for the well-being of our economy and the global economy, and for the standing of British businesses across the world. We are committed to ensuring that the UK leads the fight against practices of bribery and corruption. We have come a long way, but we are not complacent. Many points made in this debate challenge us to go further.