Robert Barrington. Executive Director of Transparency International UK, reflects on the opportunities and challenges for the UK Government in engaging the business community over the national Anti-Corruption Strategy.

As part of its widely-acclaimed national Anti-Corruption Strategy, the UK Government aims to engage the business community.  There is good reason to do so.  Businesses can be the victims of corruption, when they lose out on contracts to corrupt competitors or are shaken down by corrupt officials.  Some have been given the responsibility to be the nation’s front-line defences against corruption, in the case of anti-money laundering activities.  A mess up by a few companies could severely damage the brand of UK plc at a time when the Government is trying to make it as attractive as possible.  Moreover, Britain’s post-Bribery Act compliance and investigations industry has an exportable product.

Yet bribery and corruption are complex for business.  Some corruption is not against the law, and so there is an ethical and reputational case for avoiding it, but not a legal case. That makes it harder for companies to believe that their shareholders might want them to do it.  Some forms of corruption  – notably bribery –  are very much against the law, but this is the norm in many markets that are the most obvious post-Brexit export markets.  And even today there are still cynics trying to make the case (though intellectually lazy and not substantiated by the evidence) that companies lose out by tackling corruption but do not gain by operating with integrity.

The government’s Anti-Corruption Strategy sensibly proposes that business should be engaged to help resolve some of these dilemmas and deliver some of these objectives.  This could be done well or badly.  Doing it well will engage the genuine experts within the business community and find an alignment between the objectives of the Anti-Corruption Strategy and business success.  Doing it badly would allow special interest lobbying and produce solutions that tackle the fringes of the problem rather than the core, while claiming immense success.

There are some good opportunities to take forward aspects of the national Strategy through engaging business; but there are also a few bear-traps.  Fall into a couple of these, and the Government will be rightly accused of doing it badly.  Here are some of those bear-traps:

1. Public-private partnerships.  Ideally, any solutions would be non-ideological and would survive a change of government.  An example of where this could go off the rails is the government’s much-vaunted JMLIT solution to anti-money laundering.  It is opaque, unaccountable and there is no publicly available evidence that it is successful.  There is the inescapable irony that representatives of the companies guilty of some of the world’s biggest money laundering cases are sitting in secret sessions with government to monitor their own performance (see below for more on the perils of secret sessions).    In its defence, the government says that it works.  But the NCA’s estimate of £100bn laundered annually through the UK, compared to the £7 million it says has been recovered via JMLIT, suggests this could be an optimistic view.  In hindsight, what probably looked like a good idea in the age before open government, now looks like something from a bygone age.  If the government were even considering a public-private partnership approach to the anti-corruption strategy [what would that look like?  The CBI, BAE Systems, Rolls Royce and their lawyers sitting round the table  with the government to set the anti-bribery rules?], it should make sure that it does not blindly repeat the questionable solutions of the past.

2. Re-visiting the Bribery Act’s official Guidance.  Time has also moved on since the Guidance was originally published.  There is a body of work worldwide on standards and systems, not least that from US Department of Justice, and indeed we at TI have updated our own guidance to take this into account.  When the UK’s Guidance was originally drafted, the Ministry of Justice convened an expert committee to oversee it.  There were two civil society representatives (of whom I was one) and about half a dozen from the private sector.  But there was a broad consensus, which surprised me after the bruising fight to get the Act passed into law in the first place, when the CBI and a small but powerful group of FTSE-100 companies almost succeeded in de-railing it.  The final version of the Guidance suffered from a last minute attempt from the City to get it watered down, which was partially achieved through a Foreword from the Secretary of State – though that was courageously slapped down by the then Director of the Serious Fraud Office, so the watering down failed.  However, the lobbying could so very easily start again – and may be underway right now.  We have yet to hear the result of the House of Lords’ review of the Act, which could result in revised Guidance.  It would be an excellent chance for the Government to tighten the loopholes – but an equally good chance for recalcitrant industry lobbyists to get a foot back in the door.

3. Secret consultation sessions.   Of course it’s tempting for a group of civil servants to sit with people from the private sector behind closed doors and think up solutions.  It seems a bit quicker and simpler, and has its own sense of legitimacy to private sector stakeholders who are consulted.  In the anti-corruption sphere, secret sessions are pretty much always a big mistake; at worst, they allow special interest lobbying, and at best they exclude from the room those who have valuable expertise to contribute while at the same time negating the principle of transparency that sits at the heart of the most effective anti-corruption solutions.  This does not mean I would argue that every meeting with a government official should be an open meeting; but in the anti-corruption sphere, I would certainly argue for independent experts and external scrutiny being applied to meetings where companies may be influencing the rules, regulation or operating environment that affects their own commercial activities.  Those with a stake in the outcomes are not just the private sector; and for any solutions to work, they will ultimately need the support and buy-in of a wider range of stakeholders.  At minimum, the government should publish details of which meetings are taking place, and who is involved, and provide an avenue for other experts to give input on the private sector; ideally, such independent experts should be regarded as an integral part of finding solutions.  Who do I mean by independent experts?  To be clear, this is not a push for TI to be in the room.  The UK is blessed with many experts – certainly from civil society ( the excellent GIACC comes to mind) but also academics, former officials, and various others who will be looking for solutions that are both business-friendly and deliver the anti-corruption Strategy – and the key point is that you don’t let companies set their own rules, in secret.

4. Forgetting SMEs.  SMEs have fewer resources to assess and manage bribery risk.  The prosecution record shows that they are easier and more frequent targets for UK prosecutors than global multinationals.  And with uncertainties over the EU market, there is more pressure to export to areas of the world where corruption is highly prevalent.  Yet SMEs are poorly served by the current set up of Government advice and guidance, and there is little help when they are approaching trouble.  It is a habit of government to imagine that consulting business means speaking to large companies, or the law firms and accountants that act for them.  Don’t forget the SMEs.

It’s not all about bear-traps – there are some opportunities as well.  Here are a couple:

1. Trade agreements.  The Strategy states that it will consider (section 5.3) how to include transparency and anti-corruption provisions in the post-Brexit trade agreements.  That could be much stronger.  For a country that claims to take seriously the fundamental concepts of free trade and a level playing field, such provisions should be front and centre.  The Government should be asking companies’ ABC specialists what they would really like to see in those deals.

2. Collective Action. One thing is for certain: lots of anti-corruption solutions for the private sector settle on collective action as a key principle.  Where might the Government look for something that works and could be adapted?  There is the work of the Basle Institute; but also a number of sustaniability initiatives in other fields.  Think of the advances on climate change pushed by the Carbon Disclosure Project or WeMeanBusiness.  A note of caution is that in the history of the ESG/corporate responsibility movement, we have seen before that solutions for corporate environmental and social issues do not necessarily work for corruption. But it’s always worth looking at what has worked elsewhere.  Closer to home, a noted initiative in the transparency arena is the EITI – collective action, prioritises transparency…and a multi-stakeholder initiative.

Whether avoiding bear-traps or taking opportunities, the points above have a certain commonality: involve other experts, not just business, in anti-corruption solutions for business; don’t give in to special interest lobbying; set up structures that are enduring and not ideological; and above all, be open and inclusive.  We await developments with interest.