Sub-Saharan Africa (Corruption and the Economy)

Richard Fuller Excerpts

Wednesday 1st July 2015 Commons Chamber

[Stephen Phillips]

My hon. Friend is right. I cannot speak specifically about Rwanda, but unless and until all countries bear down on corruption, this will be a problem that endures.

Very little progress has been made since the Secretary-General made those remarks two years ago. Still the procurement managers sit in their air-conditioned offices marking the passage of time on their gold Rolexes; still corporate interests buy their way out of laws designed to protect the environment and to ensure that they pay proper amounts of taxation; still wealthy individuals and businesses ease their passage through difficult lawsuits by ensuring that the judiciary across Africa knows which side is more likely to pay more for the “right” result.

Let us take but one area. In its report “Making a Killing”, published this year, Save the Children estimated that the lost tax revenues to developing countries in sub-Saharan Africa due to illicit financial flows was in the order of $15 billion—a figure that dwarfs this country’s annual aid budget and would pay for 1.8 million healthcare workers. That is a loss of revenue to sub-Saharan Africa in just one area, which is largely made possible by a corruption that allows the maintaining of tax laws and treaties that favour rich corporations which are prepared to bribe Governments and parliamentarians to secure their favoured status. The report fails to take account of perhaps even larger revenues that are lost because a blind eye is turned—once it has been paid for—to direct tax evasion. That is morally wrong. It sustains endemic poverty, and, as I have said, it threatens our own security.

We are not without an international framework within which to deal with the issue. In 2003, the United Nations opened for signature the international anti-corruption convention, which the majority of countries in the world have now ratified. It established some common standards in relation to, for example, criminalisation and law enforcement in chapter III, and international co-operation in chapter IV. However, although monitoring finally began in about 2010, it has been patchy and inconsistent. It also suffers from the major failing that review takes place principally “in region”, thus opening up a whole new field to corruption as non-compliant countries with mutual interests are able to score one another for compliance. One issue that the Minister could usefully discuss with his counterparts in the Foreign and Commonwealth Office is how the convention can be updated to ensure proper monitoring.

I believe that the OECD anti-bribery convention has been ratified by only 41 countries. What efforts are the Government making to ensure not only that it is more broadly adopted, but that it is actually enforced by those who have signed it? In its most recent report on the implementation of the convention in 2015, Transparency International found that there was “little or no enforcement” of it in many states, including the Republic of Ireland. There was “active enforcement” only in the United Kingdom, the United States, Germany and Switzerland.

The conventions are, however, only part of the solution. They assist in establishing common international standards, but without enforcement—or, for that matter, the institutions that are necessary to ensure enforcement—they are essentially meaningless.

[Richard Fuller (Bedford) (Con)]

My hon. and learned Friend has mentioned the Foreign Office and other Departments. Is he satisfied with the current position, or does he believe there is an opportunity for greater understanding and co-operation between the Foreign Office and the Department for International Development when it comes to tackling some of the problems that he is outlining?

[Stephen Phillips]

Co-operation between the two Departments is obviously critical. Indeed, the Government as a whole must focus on the need to bear down on corruption where it exists, whether here or anywhere else in the world.

One of the problems is that very little effort appears to have been devoted to ensuring that institution building is carried out by donors who too often prefer to focus on the sexier aspects of development, such as education and health—funding areas that are, in any event, losing more money than they are receiving because of the corruption that pervades the region. So it is, although he may not know it, that the Minister is funding education programmes which pay teachers who do not exist; so it is that he is paying for the planting of crops which cannot grow in soil that cannot be maintained; and so it is that he funds programmes as a result of which money routinely finds itself in the hands of the governing class, despite the best efforts of those in his Department who work so hard to ensure that that does not happen.

Unless and until there is an unrelenting focus on changing the institutional environment throughout sub-Saharan Africa, which at present there is not, very little will change. As Dr John Mukum Mbaku argued in his 2007 book on corruption in Africa,

“the institutional environment, not cultural norms, determine a society’s propensity to engage in corruption and other forms of opportunism ...The incentive structures that a country’s market participants face—which are determined by the country’s institutional arrangements, may create opportunities for corruption and provide an environment in which even honest and highly ethical individuals may be forced to engage in corrupt activities in order to survive. Such perverse incentive structures can be changed or modified through democratic constitutional reforms.”