Tackling Corruption

Chloe Smith Excerpts

Tuesday 11th December 2012 Westminster Hall

[The Parliamentary Secretary, Cabinet Office (Miss Chloe Smith)]

I thank the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) for this important debate and for rightly celebrating international anti-corruption day, which fell on Sunday. We might be somewhat belated, but we are ensuring that we mark it in Parliament today.

Some interesting points have been made, which I will endeavour to answer as best I can. I will provide an update on the Government’s efforts to tackle international corruption, which, as the hon. Lady rightly said, have to go across Departments. I am sure that such efforts come with the strong good wishes of all parties. I also welcome the presence in the Chamber of the hon. Member for Glasgow Central (Anas Sarwar). He has not made a full speech today, but he is well known to the House as the co-chair of the all-party group on anti-corruption. He and the hon. Lady ought to be congratulated on their work on that agenda.

I will mirror many of the concerns that have been expressed this afternoon, and I lay out the reassurance that the Government are committed to tackling corruption at home and abroad. Corruption is a scourge that hurts individuals, businesses and social and economic development. Such injustice invariably hits the most vulnerable citizens the hardest, throughout the world, and it has a corrosive impact. Corruption can have a badly corroding effect not only on society, the rule of law and democracy but on the reputation of and trust in the state in general terms. In particular, if we look at people’s views of the ease and cost of doing business, the effect can be seen clearly in many places around the world.

The British Government’s view is that strong action to address corruption will help to move the vast resources involved to more productive ends. Instead of people’s resources being squandered to enable organised crime or to undermine the rule of law and those bonds of trust to which I referred, we seek for them to be used to support trade, commerce and growth.

The UK has played a leading role in the international fight against corruption, and I wish to make a few points about that today. I also take the opportunity to welcome the correspondence that hon. Members have had with the Prime Minister on the role of the anti-corruption champion. Indeed, I have a copy of that correspondence with me.

I am delighted to have the full support of the Minister without Portfolio, my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), as I address the issue today. I shall ensure that he hears the results of the debate, and I shall convey to him the points made by hon. Members in their desire for clarity on the breadth of his role and on his next steps.

I turn to what the UK is doing on the international stage. Over the past 20 years or so, there has clearly been progressive globalisation—not only of business but, crucially, of corruption. We must therefore internationalise the fight against corruption. The UK has taken part in the need for broader and more sophisticated legislation and co-ordination. The Bribery Act 2010 represents what many consider to be the most comprehensive anti-corruption legislation in the world, as I think the hon. Member for Newcastle upon Tyne North recognised. The Act clamps down on foreign as well as domestic bribery and addresses passive as well as active corruption. It acknowledges the international and multifaceted nature of the challenge, and I hope and believe that it will provide a template to many other legislatures around the world.

Some UK businesses might have been concerned when the 2010 Act came in so, as an aside, I reassure them that a legal system that provides a good reason not to pay bribes saves businesses money and protects their reputations. They could also point out any corruption with hope of redress if their competitors were not acting as honestly. Far from driving firms away, the Act ought to attract and to deliver something of an ethical premium in respect of doing business.

The UK has played a prominent role in co-ordinating international efforts. The hon. Lady mentioned the G20 anti-corruption working group, which the UK has co-chaired with Mexico and which has made progress on asset disclosure, mutual legal assistance and the denial of entry to corrupt public officials. The success of the group has been such that we have seen the bringing together of global expertise from civil society and, crucially, businesses.

[Anas Sarwar]

I agree with all the Minister’s comments so far, but can we tease out the details on what specific action the UK Government have taken, internationally or domestically, to clamp down on corruption?

[Miss Smith]

Without a doubt. I will carry right on and do exactly that, and I am happy to ensure that the hon. Gentleman has further information if I do not manage to cover everything in the time available.

The UK is the lead chair of the Open Government Partnership, an international initiative that has attracted 57 other countries since its launch, which is an accolade to the UK’s lead chairmanship. It allows us to help countries to build transparent governance structures which, because the battle is international, help the UK as well, demonstrating that transparency is a central plank of any effort.

The UK fully recognises the importance of the longer-term agenda, and Ban Ki-moon spoke about the millennium development goals on Sunday. That is another important point to note in the record. There is

“a golden thread of development”

and we intend that to be a central tenet of our G8 presidency in 2013. The UK intends to champion an agenda of transparency and accountability by changing the nature of the debate on development and aid. The power of open economies, open Governments and open societies can deliver that growth and prosperity that we seek and, crucially, the bonds of trust.

The hon. Lady asked about the extractive industries. The UK is leading efforts in the UK to require oil, gas and mining companies to publish key financial information for each country and project that they work on. In many ways, the UK’s work on transparency paves the way for the G8, and this is my point in answer to the hon. Gentleman.

The Department for International Development has made great strides over the last couple of years, as hon. Members recognise. We are publishing data according to the international aid transparency initiative. Through those efforts we have been able to move in one year from fifth to first place in the Publish What You Fund aid transparency index. I am sure that the hon. Gentleman will welcome that, and I know that both hon. Members will welcome the fact that the traceability of aid benefits those for whom the aid is intended. We all agree on that, and our constituents throughout the country want transparency of Governments and a reduction in waste, fraud, and corruption in the country’s aid budget.

[Anas Sarwar]

We want transparency in how aid is delivered, but one frustration for our constituents is that although they may believe in aid, they see corruption by Government officials coming the other way. We must reform our institutions here to ensure that we do not aid and abet corruption in other countries.

[Miss Smith]

The hon. Gentleman raises a wise point. If he will forgive me, I will allow a Minister from the Department for International Development to respond in more detail than I can today.

Let me turn to what we are doing on enforcement and what we are doing in the UK, because both are vital. We are playing a key role in the tracing, seizing, recovering and return of illicit assets. That is important, and in September the Prime Minister launched a taskforce to work with the Egyptian Government to gather evidence on stolen money, for example. That builds on the work of two police units that DFID has funded in that arena.

Effective enforcement is central and essential in the trustworthiness of the whole process. Laws mean very little if they are not enforced by every official who might come into contact with the process. The UK targets foreign and corrupt officials who launder the proceeds of corruption and bribery through our country, and I will give an example. James Ibori, the former Governor of Delta state in Nigeria, became one of its richest men by embezzlement. Following a British police investigation, he was sentenced to 13 years in jail, which sends a clear message to those who might seek to use the UK as a refuge for criminal acts.

In addition, the UK operates a comprehensive anti-money laundering framework which, in accordance with the revised international standards of the Financial Action Task Force, helps us to combat money laundering and terrorist financing.

[Catherine McKinnell]

Will the Minister clarify that the action that she is outlining and has given examples of is pursued under the Bribery Act 2010 and through the Serious Fraud Office? If so, will she clarify the SFO’s funding situation, and whether it has sufficient resources properly to tackle corruption on an international scale, an example of which she has given?

[Miss Smith]

I am conscious that the hon. Lady asked that question earlier, and perhaps I can return to it. I have just mentioned one case, and I can furnish plenty more than what I have been able to give on my feet this afternoon. She will appreciate from her role on the Front Bench that it will be hard for me to pre-empt future spending decisions, but we are putting a serious focus on the new UK National Crime Agency, which I am about to come on to. I hope that she will find reassurance in that.

As well as telling other countries to put their houses in order, the UK must put its house in order. We should not be complacent. According to Transparency International’s work, we are perceived to be less vulnerable to corruption than some of our friends, such as the US, France and Ireland, but we remain behind other counterparts with whom we might seek to compete. We have subjected and continue to subject our domestic systems to peer review by the OECD, the UN convention against corruption and the Council of Europe’s anti-corruption experts.

We are already working across Departments and law enforcement and prosecution agencies to see how we can make it easier for UK residents and businesses to identify, prevent and report bribery and corruption. We need to improve the intelligence picture through a more joined-up and co-ordinated approach that gives us a clearer picture of the true nature and scale of domestic bribery and corruption. We can then use that to support a stronger law enforcement response.

From next year, the new UK National Crime Agency will have a part to play, and while the details are being developed, it will seek to reduce the threat from corruption and bribery within the UK and internationally.

[Anas Sarwar]

The Minister is being generous in giving way, and I thank her for that. What role will institutions play as part of that framework? Clearly, our banks, whether consciously or subconsciously, are being used to funnel corrupt money through our institutions. Will they play a role in that framework?

--- Later in debate ---

[Miss Smith]

I see the force of the hon. Gentleman’s argument. If he will allow me, I will ensure that in due course he receives a fuller answer than I can give him in the three minutes remaining.

I want to add to some points about what has just been announced in the autumn statement. The Government have reinvested more than £900 million in HMRC to tackle evasion, unpaid tax debts and avoidance. That allocation of extra resources to HMRC during this spending review period will add a real element to what we have discussed today. Our serious compliance activity shows that the Government are committed to clamping down on tax avoidance wherever it is identified, and that is an important plank in what we are talking about in the most general terms and in preventing corruption.

The autumn statement announced the closure with immediate effect of some newly identified loopholes that were being exploited, and that will protect hundreds of millions of pounds for the UK. It also announced the introduction of the UK’s first general anti-abuse rule, which provides a significant new deterrent to abusive avoidance schemes and strengthens HMRC’s means of tackling them wherever they persist. Finally, we are cracking down on the marketing of tax avoidance schemes through proposals to introduce new information disclosure measures.

[Catherine McKinnell]

The Minister is aware that very little time is left for this debate. Apart from the measures that she has just outlined on activities at HMRC, she has not told us whether there is a cross-departmental anti-corruption strategy, or whether one is likely to be published. That would be useful information to have before we run out of time in this debate.

[Miss Smith]

I endeavoured to address that in my opening words. As the hon. Lady and the hon. Gentleman know, my right hon. and learned Friend the Minister without Portfolio is delighted to continue to be the anti-corruption champion; there has been no change in that respect following the ministerial reshuffle in September. It is with his full support that I am here today answering the hon. Lady’s questions.

It has been difficult to give a full overview of everything the Government are doing, but that is what I have endeavoured to do in this debate. I will convey to my right hon. and learned Friend her desire for a fuller response. I am sure that the all-party group’s work, which is supported across parties, will be well recognised, and I am sure that its desire for that strategy can be discussed in greater detail at a later date.

Question put and agreed to.