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What does Brexit mean for the UK’s fight against corruption?

Written by Robert Barrington on Monday, 27 June 2016

Leaving the EU will have profound consequences for the UK.  But will it be good or bad for the fight against corruption?  Robert Barrington looks at some of the possible consequences.

The current government has said and done more about tackling corruption than any other UK administration since the second world war.  That is in line with other governments around the world taking corruption more seriously than ever, as understanding grows about its links to global insecurity, inequality, public anger and economic malaise.  However, our government is about to change, and any successor will be distracted for years to come by a combination of the complicated divorce from Europe, economic uncertainty and very possibly domestic political instability.  These are not the best conditions for an effective fight against corruption.

The key message is this: a Brexit need not automatically mean that corruption gets worse in the UK.  But there is a risk that at a time of economic downturn and searching for new international partners, the UK’s anti-corruption standards will decline.  The new government will need to be clear about how it intends to prevent that.

Twelve possible consequences of Brexit are outlined below – most indicating that the fight against corruption could be set back.  In due course, we at Transparency International will be looking at how to overcome these challenges; but for now, here are they are:

  1. EU legislation

There are a number of areas in which EU legislation is relevant to anti-corruption efforts in the UK – two of the most obvious are the directives on anti-money laundering and transparency over corporate reporting.  However, it is also the case that the UK has had stronger anti-corruption legislation in some areas, and more consistent enforcement – an example is the Bribery Act.  There will be far less impact in the legislative area than, for example, on the environment or human rights; but as in those areas, the existence of a supra-national body has been a backstop to temper outrageous decisions by national governments.  Without such a backstop, the UK will rely on the quality of its parliament and government, as well as other bodies such as the OECD.

  1. Exports

One of the rationales for Brexit has been that it would unleash energy for a wave of exports to emerging markets.  Of course, in many such markets, there is a much higher prevalence of corruption than in many EU countries.  This will raise the levels of corruption risk for UK exporters, which may result in renewed business pressure to weaken the Bribery Act.

  1. Inward investment

The UK will want to ensure it is still seen as an attractive place to invest, especially during the anticipated longish period of economic uncertainty.  That means it is less likely to turn away undesirable partners, and companies and public bodies in the UK will be eager for investment. Those looking to invest in a post-EU UK may, for example,  be companies looking to invest in infrastructure, emerging markets companies wishing to take over British companies, or individuals wanting to use the UK as a safe haven for corrupt assets.  On the upside, if the UK looks less stable, it may attract fewer corrupt oligarchs and foreign public officials in the first place; but it’s very possible that those that come will be given a warmer welcome than they deserve, and that a blind eye may be turned to their corrupt dealings overseas for the sake of attracting investment to the UK.

  1. UK influence and standing

The UK has had a disproportionate influence in the exercise of soft power in the world, which has helped promote the global anti-corruption agenda.  This was visible at May’s Anti-Corruption Summit, when world leaders gathered and signed up to some stretching commitments.  If the UK’s standing in the world is reduced, or if post-Brexit politics is mainly internally focused, the world community will lose a powerful anti-corruption voice.  Even worse, this could open the door to countries that are traditionally very keen to water down or shoot down anti-corruption progress.

  1. New alliances

If the UK’s focus does indeed turn away from the EU in political, diplomatic and economic terms, one obvious group of countries for more engagement is the Commonwealth.  Good news here.  The new Secretary General, Baroness Scotland, secured the position on an anti-corruption ticket.  Likewise, NATO – where there has been a new drive towards ‘building integrity’- may become more important to the UK and other member countries.

  1. Institutional cooperation

There has been a recent and very welcome move to bolster cooperation among law enforcement agencies over corruption, and notably in the fields of money laundering and asset recovery.  Much of this is at the operational level and not the political.  But where it requires political momentum or support, the chances are that things will be far less smooth.  And the UK will no longer qualify to be a member of Europol.

  1. New legislation

Periodically, new anti-corruption legislation will be necessary.  The current government has already committed to this in several areas, including Unexplained Wealth Orders, failure to prevent economic crime and a register of the beneficial owners of UK property held by foreign companies.  But experts predict that the EU divorce will clog up the legislative timetable for up to a decade, with little or no room for anything else.

  1. Government commitment

So much of the fight against corruption depends on political will: resource allocation, prioritisation (sometimes of ethics over economic gain), rapidly closing the door to abuses, and so on.  For a new government with many things on its plate, corruption will be easy to overlook.  Those are exactly the conditions in which corruption can take hold in our public institutions and the private sector, and once it takes root, eradication is much, much harder.  The challenges of organised crime, global insecurity and corruption-fuelled economic malaise will not disappear due to Brexit: but the political will to tackle them may well decline.

  1. Economic uncertainty

During the financial crisis, many business surveys revealed that senior corporate managers and directors were willing to cut ethical corners during difficult times for the economy.  If we return to a period of economic uncertainty, we can expect this attitude to return.

  1. Funding prevention and enforcement

If the economy dives, so will funds for enforcement – yet that is already one of the key gaps in the UK’s current defences.  There are ways to offset this – transparency and public reporting mechanisms, to name but two – but those mechanisms will need to be put into place.

  1. Accountability of UK politicians

There are deep-seated problems in UK politics, not least an almost complete denial about the existence of corruption: yet it is demonstrably possible to buy a seat in the House of Lords, honours are given out to those who unrepentantly abused the MPs’ expenses scheme, MPs and Peers caught out in scandal after scandal have been let off the hook under a system of self-regulation,  lobbying and the revolving door are ineffectively monitored and regulated.  The faceless bureaucrats of Brussels have been for years the favoured scapegoats for many ills in UK politics; but it may be that there will now be more scrutiny than ever on the transparency, accountability and basic conduct of our parliamentarians.

  1. The rise of people power

The referendum vote demonstrated that a large number of ordinary citizens in the UK are anti-establishment and angry: about elites, inequality which tilts the playing field and society’s benefits in favour of those who already have power, access and money, about the unresolved festering wound of the financial crisis and that the interests and voices of ordinary people are left behind.  All over the world, the transparency revolution has seen a rise in people getting angry about corruption, with very unpredictable results.  Anger at perceived corruption, linked to the arguments about inequality, could mean that politicians and business leaders are in for a rough ride.

All in all, the UK’s next government will have challenges ahead on the corruption front, which it will be easy to ignore when there is so much on the government’s agenda.  But standards slip easily, and the risk here is that they could slip further and faster than anyone imagines, because that is how corruption operates – like a gathering tsunami, not like a series of raindrops.  What happens in the UK will not be ignored by the rest of the world.  Indeed, Brexit is such a cataclysmic event that many eyes will be on the UK to see how we deal with the multiple challenges, and some will want the UK to fail.

Top photo: Flickr / Dan Forest.

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Read 2203 times Last modified on Monday, 27 June 2016 17:51
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Robert Barrington

Robert is TI-UK's Executive Director. You can view his full bio here, and tweet him @TIukED.

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