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Corruption and the Commonwealth Summit

Written by Robert Barrington on Tuesday, 31 October 2017

Next year, the UK will host the Commonwealth Heads of Government Meeting (CHOGM), re-branded as the Commonwealth Summit.  So what?

With the UK Government looking around the world for new trading relationships post-Brexit,  its attention naturally turns to those countries with which there should be obvious synergies: a broadly common legal system, language, and state institutions.  That means the Commonwealth is about to become more economically important to the UK.  The fifty-two heads of government expected to gather in London at the Commonwealth Summit in April 2018 will be therefore be the focus of more than usual attention.  At the same time, the world is in a period of political instability, with many countries neglecting basic tenets of good governance such as avoidance of nepotism and conflicts of interest, while attacking the free press and closing down the space for civil society.  Transparency International has chapters in twenty-nine Commonwealth countries, and we have been talking to them about what they might want from a Commonwealth Summit in the current environment.

It could go right or wrong….

For those in the anti-corruption movement, the Summit is both a threat and an opportunity.  The threat is that in a rush to strike deals and renew forgotten alliances, corruption and corruption risks will be neglected. Last year’s unsavoury and undemocratic autocrats may be this year’s preferred trading partners.  Even worse, once bad practice (or a deliberate neglect of good practice) is embedded in a few deals, it will have a general polluting effect, de-grading the increasingly important bilateral deals being discussed between Commonwealth member states.  Some of those leaders that attend the Summit are no strangers to allegations of corruption and kleptocracy.  Those leaders may feel that Britain’s need to strike trade deals gives them leverage to discard the things they don’t want – like annoying insistence on the rule of law, accountability and transparency, the very conditions that help to prevent corruption and support economic growth for more than just a powerful elite.

So what is the opportunity?  It is this: the Summit is likely to focus on trade and prosperity.  A genuinely free market is a market that is not distorted by corruption.  Trade deals could reinforce good practice rather than embed bad practice; anti-corruption mechanisms like transparency can be hard-wired into government processes; and above all, the Summit could focus on governments that are willing, rather than trying to cajole those that are unwilling.

Is corruption really relevant to trade and prosperity?

It’s worth reminding ourselves that anti-corruption measures are not an optional extra in creating optimal trading arrangements, the way that some governments seem to treat conditionality on human rights.  A level playing field and reciprocal expectations about enforcing the rules are fundamental to free trade.  Likewise, insecurity – whether terrorism or civil unrest – disrupts trade, and TI’s own latest research demonstrates that corruption is all too often a cause and a perpetuator of such insecurity.  Related areas are health and education.  There are many reasons for having a healthy and well-educated population.  In pure economic terms, healthy populations make for a better workforce and better consumers: yet corruption holds back health and education in far too many countries.  Finally, an effective infrastructure facilitates trade, and open contracting procedures can help ensure that corruption is reduced through deterrent and detection.

 

Five things that should be on the agenda

The Summit’s agenda is being formed, and it is not too late to turn it towards the opportunities rather than the threats.  Here are five suggestion as to what should be addressed:

1. A level playing field for business.  Anti-bribery legislation and proper enforcement to make sure that companies don’t bribe overseas and domestic companies don’t gain an unfair advantage.  The UK could lead the way by demonstrating it is enforcing the 2010 Bribery Act with appropriate vigour and resourcing.

2. Clean procurement.   Applying basic ‘open contracting’ and transparency provisions with a requirement for accountability to the public  throughout the project lifecycle – particularly in key sectors such as health, education and infrastructure – would ensure the company with the best bid wins the contract, not the one with the best connections to the people holding the purse strings. One feature of this is the need to know who really owns and controls companies bidding for contracts: is it the Minister who will sign off on the contract, or a genuine bidder?  Beneficial ownership transparency is the answer.

3. The rule of law.  Commitments and safeguards to ensure there is an independent judiciary, with the law impartially enforced.  One mechanism for this is to safeguard the space for those who cry foul when things are going wrong: the media and civil society.

4. Financial centres.    Citizens of developing countries are understandably bitter about the leaching of stolen assets into global financial centres and related money laundering into property and other assets.  Responsible financial centres need effective anti-money laundering controls reinforced by strong asset recovery mechanisms – and there is a growing consensus about what good looks like (such as effective regulators and beneficial ownership transparency).   A sustainable business model for an international financial centre is one that is built on legitimate financial flows, not illicit financial flows

5. Corruption and insecurity. Corruption creates and perpetuates insecurity, and corruption in defence and security sectors is particularly dangerous. Opaque, unaccountable defence budgets can lead to massive diversions of funds that could instead be invested in healthcare and education; and hollowed out defence institutions result in armed forces unable to defend people against internal and external threats. Addressing government corruption in general will help reduce insecurity , and governing defence sectors in an accountable, responsible way should be at the forefront of reform efforts, especially in fragile and conflict-affected states.

Commonwealth Trade and Transparency Principles?

The UK and Heads of Government can demonstrate their leadership and political will on trade, by wrapping much of this into a set of Commonwealth Principles on Trade and Transparency, that all governments sign on to.

In addition, similar to the communique from last year’s ground-breaking Anti-Corruption Summit in London, countries could be given an additional menu of more ambitious transparency, governance and anti-corruption options to sign up to.  The best would sign up to everything; and if the context prevented others from signing everything, they could sign up to the provisions they felt most able to deliver.

The opportunity

It’s a tempting prospect: the Commonwealth Summit could set the basis for new international trade treaties fit for the 21st century, creating more favourable trading conditions and a level playing field while at the same time reinforcing the UK government’s stated intention of supporting high global anti-corruption standards. What’s not to like?

 

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Read 97 times Last modified on Wednesday, 01 November 2017 11:35
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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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