Sub-Saharan Africa (Corruption and the Economy)

Jeremy Lefroy Excerpts

Wednesday 1st July 2015 Commons Chamber

[Grant Shapps]

Once again, my hon. and learned Friend is right to point out these problems, which indeed exist in many places in the world, and particularly in some of these markets. Last week, however, I was in a school in Zomba in Malawi announcing £11.6 million in DFID budget. In that case we have chosen to work with USAID, because it has an established programme. It has the contractors in place and we can be certain, as it is properly audited, that the money is being well spent. He is right to point out these issues and it is right that the Department works to clamp down on all these practices. Clearly, we must protect British taxpayers’ funds and we must, for the reasons he outlined, ensure that the worst-off people in the world—Malawi is in the world’s bottom five for income, with an average income of £179 a year—are not being subsidised, through corruption, by one of the wealthiest countries in the world, which we are fortunate enough to live in.

[Jeremy Lefroy (Stafford) (Con)]

Does the Minister agree that some of the most effective international development work is often done by small, local, community organisations? We may be talking about building schools, working in community health centres or other such things. One problem they find is accessing the funds that DFID or others provide. We often hear people say, “We would like to work with these people but we cannot do so because the grant size is too small.” Yet these organisations are probably the least corrupt and often the most effective.

[Grant Shapps]

My hon. Friend will be interested to hear that we were having that conversation in the Department only yesterday, and he is right to highlight it.

Let me turn to some of the things we are doing to combat these problems of corruption. First, we track and trace activities and funds. DFID works in and with developing countries to ensure that public bodies and public funds are serving the people. Over recent months, DFID country teams have been undertaking analyses of some of the constraints to growth, and the message is clear: corruption negatively influences investor confidence, as we have already established. To address that, we fund track and trace activities to shine a light on corruption and recover stolen assets. DFID has been supporting the extractives industry transparency initiative since 2002, working in 23 sub-Saharan African countries. DFID supports the International Centre for Asset Recovery, which provides practical legal assistance to countries trying to track, trace and recover funds; it has cases worth potentially $235 million in Kenya, $227 million in Tanzania, which I visited and where I discussed some of this just a few weeks ago, and $30 million in Malawi, which I was in last week. An awful lot of work is going on in track and trace.

We have also built capacity to stop behaviours and reduce the opportunities for corruption. We work with partners on the ground to build the capacity of civil society organisations and partner agencies. For example, in Nigeria, DFID has worked to reduce government funds being lost or stolen. That has resulted in some £1.5 billion of assets being recovered, and DFID is supporting 2,670 investigation cases. My hon. and learned Friend will rightly point out that that must have something to do with the scale of the problem, but none the less he will be pleased to know that UK-based police and intelligence units, and many other organs of the British state, are helping in the swift recovery of assets.

Thirdly, we are applying pressure to our international partners, and that is at the heart of this matter. We are working on that UN convention against corruption in partner countries and with the World Bank and the International Monetary Fund on strengthening financial action taskforces around the globe. We have been taking real leadership in these areas. DFID works with other G8 and G20 members, and through the UN, to strengthen the international architecture to combat corruption and illicit financial flows. I remind the House that the United Kingdom took the lead when we chaired the G8 in 2013, implementing a number of measures which have put the UK in a leadership position.

It is, however, important to continue raising our game and it goes without saying that we also take our responsibilities very seriously. All DFID offices must complete and regularly refresh anti-corruption and counter-fraud country strategies that highlight the critical barriers. I can provide my hon. and learned Friend with the assurance that as a result of this evening’s debate I will be taking even more interest in that matter over the coming weeks and months.

My hon. and learned Friend mentioned the ICAI report on DFID’s work in this area in 2014, when DFID’s resources on counter-fraud and anti-corruption were said to have been “fragmented”. We have taken a number of steps since then to address these things, but because of a lack of time I will not produce the entire list.

I want to touch on tax—the issue of tackling tax avoidance and tax evasion in developing countries—to which my hon. and learned Friend referred. As I mentioned, the UK led on the issue during its G8 presidency. What I did not mention was that more than 90 countries have now signed up to principles such as automatic tax information exchange and helping to tackle offshore tax evasion. We are working to champion the OECD’s base erosion and profit-shifting project. This is in relation to multinational companies moving profits in order not to pay tax where it should be paid.

A huge amount of work is going on across Whitehall. The Minister of State, Department for International Development, my right hon. Friend the Member for New Forest West (Mr Swayne), sits on a body that is responsible, across Whitehall, for trying to build the capacity to monitor these areas. The body has done a huge amount of work already in Britain to prevent corruption, and it is now turning its attention internationally.

Tackling global poverty is the right thing to do, and it is also in Britain’s interests. We will continue to insist that every Department and organisation that we fund adopts a zero-tolerance approach to corruption. We will also continue with our focus on tackling tax avoidance and tax evasion in the developing world. As I mentioned to the House a moment ago, as a product of this debate, my own attention will be more highly focused on the matter.

Question put and agreed to.