{"id":1070,"date":"2019-12-04T14:18:29","date_gmt":"2019-12-04T14:18:29","guid":{"rendered":"https:\/\/scscsussex.wordpress.com\/?p=1070"},"modified":"2019-12-04T14:18:29","modified_gmt":"2019-12-04T14:18:29","slug":"are-uk-aid-funded-enforcement-efforts-to-end-the-uks-role-in-corruption-working","status":"publish","type":"post","link":"https:\/\/blogs.sussex.ac.uk\/centre-for-the-study-of-corruption\/2019\/12\/04\/are-uk-aid-funded-enforcement-efforts-to-end-the-uks-role-in-corruption-working\/","title":{"rendered":"Are UK aid-funded enforcement efforts to end the UK\u2019s role in corruption working?"},"content":{"rendered":"

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<\/a><\/strong>, 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
\n<\/em>
\nSince 2006, the UK\u2019s Department for International Development (DFID) has given \u00a348.5 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:
\n\u2022\tFor corrupt individuals from developing countries to launder their money in the UK; and
\n\u2022\tFor UK companies and individuals to pay bribes in developing countries. <\/p>\n

The funding is an important recognition of the \u201coutsized role\u201d the UK plays, as a major financial centre, in facilitating global corruption. Back in 2006 when the funding started, there were few<\/a> 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\u2019s, through London banks. <\/p>\n

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<\/a> of the funding from 2006 to the present day is published, the question is: does funding enforcement actually reduce incentives for corruption?<\/p>\n

Successful \u201cto some extent\u201d \u2013 key findings from the evaluation
\n<\/strong>
\nDFID has always seen investment in enforcement as bringing good returns and the project has consistently<\/a> met or exceeded its milestones. In 2019, law enforcement reported<\/a> that \u00a3783.3 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.<\/p>\n

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. <\/p>\n

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\u2019t easy.<\/p>\n

However, the evaluation\u2019s key findings are broadly positive. It finds that:<\/p>\n

1.\tThe DFID funded law enforcement has \u201cto some extent made the UK less attractive for Nigerian PEPs (Politically Exposed Persons)\u201d wanting to launder corrupt wealth but not deterred them completely. <\/strong><\/p>\n

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\u2019s introduction of UWOs in January 2018 caused the hotline<\/a> for Nigeria\u2019s Voluntary Assets and Income Declaration Scheme to crash.<\/p>\n

However, the review found that the supply of corrupt funds to the UK from Nigeria to the UK \u201ccontinues to remain very high\u201d and that Nigerian PEPs are resorting to \u201cindirect means and new \u201ctricks\u201d\u201d to launder money into the UK, \u201cincluding the use of shell companies and routing funds via third countries.\u201d The report also suggests that Nigerian PEPs are using alternative \u2018easier\u2019 locations for laundering money including Dubai, the British Virgin Islands, Ghana and the Caribbean islands, as well as keeping cash in Nigeria.<\/p>\n

This increased use of new \u2018tricks\u2019 has made UK professional enablers \u201ca more important actor\u201d 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. <\/p>\n

2.\tBritish companies are less likely to pay bribes since the DFID funded program came into existence. But that\u2019s not all down to the program.<\/strong><\/p>\n

The review found that the DFID-funded law enforcement has helped create a \u201csanctions environment\u201d 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. <\/p>\n

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. <\/p>\n

While the SFO is meant to focus on the large players, the DFID-funded NCA\u2019s 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 \u201cwould be highly impactful.\u201d<\/p>\n

Lessons for the future<\/strong><\/p>\n

The UK government has announced<\/a> 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?<\/p>\n

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, \u201cthe evidence indicates that actual prosecutions are a more powerful catalyst for behaviour change.\u201d 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.<\/p>\n

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. <\/p>\n

The message is: keep going. Aid-funded law enforcement is working \u2013 at least to some extent. But more convictions are crucial to long-term success.<\/p>\n

Addition 12 Dec 2019: <\/strong>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.<\/p>\n","protected":false},"excerpt":{"rendered":"

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…<\/span><\/p>\n

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