The UK is unique in using overseas aid money to fund its own enforcement authorities to help fight corruption in which the UK plays a role. Sue Hawley, Director of Spotlight on Corruption, an NGO that holds the UK to account on enforcing its anti-corruption laws, discusses a new evaluation which shows that this is working, albeit slowly
Since 2006, the UK’s Department for International Development (DFID) has given £48.5 million to UK law enforcement agencies to fight UK corruption that impacts on developing countries. Its stated goal in doing so is to reduce incentives:
• For corrupt individuals from developing countries to launder their money in the UK; and
• For UK companies and individuals to pay bribes in developing countries.
The funding is an important recognition of the “outsized role” the UK plays, as a major financial centre, in facilitating global corruption. Back in 2006 when the funding started, there were few UK law enforcement agencies that would touch a foreign bribery or corruption investigation. The UK was facing international opprobrium for dropping the BAE/Al Yamamah investigation, and its role in laundering the funds of former Nigerian Dictator, Sani Abacha’s, through London banks.
There is no doubt that by providing funding for UK enforcement, DFID helped kick-start more enforcement in this area in the UK. But as a major independent evaluation of the funding from 2006 to the present day is published, the question is: does funding enforcement actually reduce incentives for corruption?
Successful “to some extent” – key findings from the evaluation
DFID has always seen investment in enforcement as bringing good returns and the project has consistently met or exceeded its milestones. In 2019, law enforcement reported that £783.3 million in corrupt assets have been restrained as a result of the program. It is also great value for money: the amount restrained has always far exceeded the amount of money invested by DFID.
But the crucial question is whether this is actually deterring corrupt individuals from investing in the UK or UK companies from engaging in bribery. That is more difficult to gauge.
Deciding what has worked because of law enforcement specifically funded by DFID, as opposed to other significant institutional and policy developments in the UK, such as the introduction of the Bribery Act and Unexplained Wealth Orders, or increased enforcement by other non-DFID funded agencies such as the Serious Fraud Office, isn’t easy.
However, the evaluation’s key findings are broadly positive. It finds that:
1. The DFID funded law enforcement has “to some extent made the UK less attractive for Nigerian PEPs (Politically Exposed Persons)” wanting to launder corrupt wealth but not deterred them completely.
The evaluation focused heavily on Nigeria since the UK has historically been one of the most attractive destinations for Nigerian PEPs seeking to launder the proceeds of corruption. The high-profile UK convictions of various Nigerian governors for corruption, including James Ibori, particularly in the early stages of the DFID funding, and the introduction of Unexplained Wealth Orders (UWOs) were seen as key successes making the UK less attractive for laundering money. And the UK’s introduction of UWOs in January 2018 caused the hotline for Nigeria’s Voluntary Assets and Income Declaration Scheme to crash.
However, the review found that the supply of corrupt funds to the UK from Nigeria to the UK “continues to remain very high” and that Nigerian PEPs are resorting to “indirect means and new “tricks”” to launder money into the UK, “including the use of shell companies and routing funds via third countries.” The report also suggests that Nigerian PEPs are using alternative ‘easier’ locations for laundering money including Dubai, the British Virgin Islands, Ghana and the Caribbean islands, as well as keeping cash in Nigeria.
This increased use of new ‘tricks’ has made UK professional enablers “a more important actor” in laundering Nigerian money into the UK, the report finds. And the evaluation is critical of how few prosecutions there have been of UK-based enablers of laundering.
2. British companies are less likely to pay bribes since the DFID funded program came into existence. But that’s not all down to the program.
The review found that the DFID-funded law enforcement has helped create a “sanctions environment” which has reduced incentives for UK companies to pay bribes. Outreach programs and education by enforcement bodies to UK companies have also been very useful, it says.
However, the DFID-funded law enforcement has only resulted directly in bribery convictions for seven individuals and one corporate. A bigger impact on driving corporate behaviour change has been the introduction of the Bribery Act and enforcement by the Serious Fraud Office (SFO) – which has notched up nine successful criminal actions against companies in the same time frame.
While the SFO is meant to focus on the large players, the DFID-funded NCA’s International Corruption Unit has yet to conclude a successful bribery prosecution against a medium-sized or small company. The report concludes that just one successful case against a medium-sized UK company paying bribes in a developing country “would be highly impactful.”
Lessons for the future
The UK government has announced that it will continue, and increase, aid funding to law enforcement bodies from 2020 to 2025. So, what are the key lessons from the evaluation going forward?
The report makes no bones about its central conclusion in relation to both PEPs and companies, which is that while the threat of enforcement action may have some impact, “the evidence indicates that actual prosecutions are a more powerful catalyst for behaviour change.” Tellingly, the evaluation cites some evidence that companies waited until the first prosecution under the Bribery Act (in 2016) before committing to properly implementing their Anti-Bribery policies. The 2012 conviction of Nigerian governor, James Ibori, also sent major ripples through the Nigerian PEP community.
Overall, the evaluation recommends increased enforcement at all levels: more intense use of UWOs, more prosecutions of medium-sized companies for bribery and increased enforcement action against UK enablers of corruption.
The message is: keep going. Aid-funded law enforcement is working – at least to some extent. But more convictions are crucial to long-term success.
Addition 12 Dec 2019: In order to ensure a fair comparison between the SFO’s overseas corruption efforts and those funded by DFID, the correct figures are that the SFO has brought 9 corporate convictions and 19 individual convictions compared to one corporate conviction and 7 individuals for DFID funded enforcement.
An informative article, well done. A comparison is made between the SFO and the DfID law enforcement team and it raises the difficulty of judging relative success. Although we are trying to change corporate behaviour, it is actually people that drive the behaviour of companies. The FATF suggests that dissuasive sanctions are what should be applied and it would be very helpful if everyone followed their lead. So in the article above I was unclear why nine ‘successful criminal actions against companies‘ by the SFO was much better than eight (seven individuals and one company) ‘bribery convictions’ by DfID funded law enforcement. Eight and nine seem about the same to me, but the timescale might be different, I guess.
A ‘dissuasive sanction’ could be a lengthy custodial sentence or a sizeable asset recovery; a conviction might, in some circumstances, be dissuasive, depending who it was given to, but it might have no impact and may not be relevant at all (e.g. the recent NCA £190m settlement with Malik Hussain). My main point is that we should always be trying to show that dissuasive sanctions were applied to people, so that we can all judge whether it was proportionate and effective (which is more FATF terminology btw). I accept that the NCA and SFO may not have published this information clearly so this is a message for them too. It is people who hide behind bad corporate behaviour, so it is the people who need to be dissuasively sanctioned. We could start by counting them.
Hi Tristram. Thanks for this comment. I think the important thing is that it’s not an either/or – you need to go after the individuals and the corporates. If you go after the individuals alone, who get the situation where the company hangs people out to dry and doesn’t retain the institutional memory of a fine that leads to changed corporate behaviour. While DFID funded law enforcement only got one corporate conviction, the SFO got nine (plus a significant number of individuals). That’s the real comparison.
The question you raise about civil forfeiture versus prosecution is a different and very interesting one. Prosecutions without confiscation of the assets I think we all agree is not enough. However, conversely is confiscation of assets with no convictions on its own enough? I hope others will wade into the debate!
Law and corruption: for better understanding the problem; “Internal Security Review” nr 21/2019