interview of the month
Hilary Benn, Secretary of State for Development, UK
By Amber Poroznuk
This month Transparency Watch spoke with the Honourable Mr. Hilary Benn, Secretary of State for Development in the United Kingdom. Appointed last summer by British Prime Minister Tony Blair to be the minister responsible for fighting international corruption, Mr. Benn is well known for his outspoken views on corruption and aid.
Transparency Watch (TW): You have recently been quite vocal on the issue of World Bank aid conditionality. How would the anti-corruption framework you envision compare to the one on the table at the September World Bank/ International Monetary Fund meetings in Singapore?
Hilary Benn (HB): There are two issues here – fighting corruption and conditionality. Firstly, we had a good discussion in Singapore of how to improve governance and fight corruption in order to make faster progress in reducing poverty. We welcomed the Bank’s response and agreed that corruption is the product of bad governance; although linked, they’re not the same thing.
The paper tabled in Singapore sets out a framework for taking the Bank’s work forward as this, and further, consultations are now underway. We also agreed that the Bank’s Investigations Department (INT) should complete investigations as quickly as possible and it should be more transparent in how it operates.
I strongly believe that progress on governance and corruption has to come from within each country, with donors giving support according to their strengths, but not doing it all themselves or simply transferring models from rich to poor countries. As long as governments are determined to deal with the problem, donors need to work with, not around them. But where governments aren’t willing to tackle the problem, we will act to protect our own money, but we mustn’t turn our backs on poor people because of corruption among politicians and officials.
You also asked about conditionality. Last year, the World Bank adopted new good practice principles on the conditions it attaches to aid. Fifty million Euros of our support to the Bank depends on it implementing these new principles. I asked for the evidence I need to release that money and I have just received the Bank’s report, which I’m now considering.
TW: The article How Much is a Seat on the Security Council Worth? Foreign Aid and Bribery at the United Nations by Ilyana Kuziemko and Eric Werker (recently featured in The Economist and upcoming in the Journal of Political Economy) found that a country’s US aid increases by 59 percent and in UN aid by 8 percent when it rotates onto the UN Security Council as a non-permanent member. This effect was found to have increased during years in which key diplomatic events take place, when members’ votes should be especially valuable. Do you regard this behaviour of using aid as a political mechanism to influence decisions in international organisations as corruption?
HB: While the article makes an interesting read, it’s too simple to conclude that donors increase aid to countries because they are sitting on the UN Security Council. Such increases in aid, for example, may come about because developing countries are themselves using the additional leverage they have at that time.
I don’t believe that aid should be used to buy votes or to achieve unrelated political decisions. That’s why I have implemented a strong aid conditionality policy for the UK, which sets out our position. The UK has three conditions that it places on its aid: first, that it helps reduce poverty and reach the Millennium Development Goals; second, that human rights and other international obligations are upheld; and finally, that financial management systems are in place to ensure accountability and avoid corruption.
TW: You have stated on a number of occasions that you are serious about tackling the supply side of bribery. As a signatory of the Organisation for Economic Cooperation and Development (OECD) Convention, bribery of foreign officials by British companies and nationals is illegal. How many prosecutions have been undertaken in Britain since the ratification of the OECD Convention in 1999?
HB: In the UK, several cases are under investigation, but we have not yet prosecuted any. Indeed, only a handful of OECD Convention countries have so far brought successful prosecutions, so we all have to do more – where there is the evidence of course. We are not complacent even though Transparency International’s Bribe Payers’ Index (which ranks the likelihood of companies paying or offering bribes in their business activities) places the UK in a strong sixth place on the list of 30 developed and emerging economies. We know that there is still work to do.
To enable us better to investigate cases, the UK Department for International Development (DFID) is funding a new International Corruption Group. It will bring together the experience of the Serious Fraud Office and Serious Organised Crime Agency with new capacity in the Metropolitan Police and the City of London Police to strengthen the UK’s capacity to investigate corruption occurring between developed and developing countries.
TW: What are some of the challenges that lie ahead for the new International Corruption Group set up to investigate allegations of money laundering in the UK and bribery by UK businesses overseas? How do you propose to measure its success?
HB: Through the new International Corruption Group, the Metropolitan Police will have more scope to investigate and recover the proceeds of money laundering by Politically Exposed Persons through the UK’s financial system. The City of London Police will also have more capacity to investigate and bring to successful prosecution, cases of foreign bribery by UK businesses and nationals operating in developing countries.
By their nature, such investigations are time-consuming since they often require the involvement of many different bodies, including the authorities of the countries where such activities are alleged to have taken place. Hard evidence takes time to gather. It may take two years or more to bring cases to prosecution depending on their complexity. What is more, we cannot talk about the cases, so part of our challenge is to find other ways to measure success.
There are two main ways of monitoring and measuring. The first is ‘hard results’ such as cases investigated and successfully prosecuted, and assets restrained, recovered and returned to the country from which they were stolen. The second is the way in which tackling corruption internationally builds relationships between countries, national stakeholders, the local media and civil society groups. These secondary effects will make a lasting impact on corruption.
TW: What changes can we expect to see the British Export Credit Guarantee Department require of companies to help tackle the supply side of bribery?
HB: The Export Credits Guarantee Department (ECGD) fully implemented the 2006 OECD ‘action statement’ on bribery and export credits in July 2006. The action statement is the latest step by OECD countries to avoid giving official support to export contracts tainted by bribery. It stipulates the minimum standards that members of the OECD Working Party on Export Credits and Credit Guarantees must have in place in respect to the anti-bribery and anti-corruption procedures of their Export Credit Agency.
The 2006 action statement represents considerable progress from the 2000 version. It tightens existing arrangements, improves transparency and makes useful progress towards levelling the playing field. This means more zealous standards for export contractors, including non-bribery certifications from exporters. It also requires law enforcement authorities to be notified whenever there is credible evidence of bribery in an export credit transaction.
TW: You have been vocal in pointing out that not enough has been done on the trade front – what more needs to be done? With the World Trade Organisation’s (WTO) Doha rounds stalled, what can the international community realistically expect to see on this front, and when?
HB: You’re right that I’m extremely disappointed that we have not been able to agree to a fairer global trading system so far. But the UK is committed to a successful outcome that enables poorer countries to trade their way out of poverty. Ultimately we believe that trade reform will offer developing countries both better prospects of selling their own produce and the chance to buy the goods and services that they need on better terms. We have to keep up the pressure and break this log-jam. It’s not in anyone’s interest for the Doha Development Round to fail.
Just because the Doha Round currently remains delayed, we will not give up on our attempts to create a freer and fairer trade system for developing countries. There are a number of areas where we are continuing to seek progress. Take Aid for Trade, which is vital for any country to trade effectively and have more simplistic, liberal rules of origin. There are also Economic Partnership Agreements, which are negotiations between the European Union (EU) and six regional groups of African, Caribbean and Pacific countries. Properly designed, they too can help development.
We also have a window of opportunity following the US mid-term elections to continue working with the US, the EU and other WTO members on making real progress in the Doha negotiations.
TW: What is the British Government’s policy on debarment? Do you make the lists of debarred companies public?
HB: It is now enshrined in law that purchasing authorities must exclude individuals who have been convicted of specific offences including fraud and bribery as set out in the current public procurement Directive covering public sector contracts. The UK implemented this Directive on 31 January 2006 and the Office of Government Commerce (OGC) has provided guidance notes relating to its regulations.
At present, it is not clear exactly how this is being implemented across the Member States including whether the exclusion is being applied retrospectively, for how long the exclusion is being applied, and whether the terms of the Directive (and I’m referring specifically to Article 45 (1) which concerns public sector contracts) apply to parties outside the EU. The OGC set up a small Working Group with representatives from industry, central government and NGOs to consider these and other implementation issues. Transparency International is represented in this Working Group which has met several times to work on the interpretation of the Article.
The UK has actively pursued a better understanding of the Article's implementation across the EU with the Commission, and in response, the Commission has circulated a questionnaire to all Member States seeking greater clarification. We expect to learn the results of this exercise in the New Year.
The UK Government doesn’t maintain a blacklist of companies or individuals convicted of offences related to public procurement. But each contracting authority seeks information from potential suppliers on such convictions as part of the procurement process. Where there are sufficient grounds to believe an individual concerned with the procurement process has been convicted of a relevant offence, the contracting authority can apply to the competent authorities for verification of the conviction and, if proven, exclude the tenderer from submitting their application.
TW: If, as you have stated, the challenge for national and international policy will increasingly be trying to find ways to influence behaviour and change attitudes, how can one, in your opinion, encourage people to be more ethical?
HB: The public pressure behind last year’s Make Poverty History campaign demonstrated the support in the UK to help the world’s poor. More people also seem to want to make ethical choices in the products they buy and in their lifestyles. By buying fair trade products, for example, we can be sure that stringent social and ethical standards – including a decent day’s pay for the producer – are being met. This is astonishingly powerful because you don’t have to wait for someone to make fairer trading rules, you can do something yourself today. If people want to question whether the clothes they buy are produced under ethical standards, they can find out which companies have signed up to the Ethical Trading Initiative (www.ethicaltrade.org) or ask if there are other safeguards to protect the workers in the factories.
Climate change is another issue on which we can all do our bit. As the Stern Review proves, unless we take radical action now, we face rising sea levels, droughts, hurricanes, heat waves, glacial melting, floods, crop failure and forced migration. All of this will hit developing countries the hardest. Yes, we need new international agreements to reduce emissions, but it’s something we can all contribute to as individuals. I think the message to get across on all these issues is that collectively we can make a difference.
TW: What message would you like to send to the anti-corruption movement on 9 December 2006, International Anti-Corruption Day?
HB: We all have a big job to do. Tackling corruption wherever we find it – whether here or abroad – is essential to send a strong message to those that extort, corrupt and deceive that it will not be tolerated. Together we can make progress and I welcome the efforts of the anti-corruption movement for raising awareness of the issue. But awareness is one thing; action is another. And it is down to all of us to do something, not just on one day, but every day. The best way forward is to strengthen the institutions of government, promote better transparency and accountability and give a voice to those who are hit hardest by corruption – the world’s poorest – so that they can hold their governments to account. I pay tribute to those that have done much to put a spotlight on corruption – people such as John Githongo, who turned the world’s attention to corruption in Kenya so that the government there has been forced to do something about it. And I pay tribute to Transparency International for the work it is doing, challenging corruption, giving hope to its millions of victims, and building momentum for the anti-corruption movement. Let’s make every day Anti-Corruption Day.
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