Brexit could damage the UK’s efforts to tackle corruption and give multinationals leverage over the British government in bribery cases, the Organisation for Economic Co-operation and Development has warned.
Business pressure to weaken bribery laws and an inability by the government to focus on non-Brexit issues are both risks associated with leaving the European Union, according to a new report by the group.
While acknowledging the UK’s “solid progress” in pursuing recent bribery investigations, the report warned that the proportion of cases relative to the country’s importance in global finance was low.
“Efforts must be sustained to improve detection of foreign bribery and achieve stronger enforcement of its anti-bribery legislation,” it said.
The report praises the UK’s Serious Fraud Office (SFO) for recent successes in pursuing major corruption cases, including a multimillion-pound settlement with the engineering giant Rolls-Royce earlier this year.
However, several civil society groups told the report’s authors they were concerned that “Brexit could increase the risk of UK companies threatening to relocate and potential loss of UK jobs as a bargaining chip in negotiations with prosecutors over charges”.
“Given that the SFO has on its books some very large UK companies that are significant partners in the government’s industrial strategy, this is a real concern for several NGOs in the UK,” the report said.
“This concern was echoed by the business community which highlighted the risk of losing impetus in the fight against foreign bribery.”
Duncan Hames, director of policy for Transparency International UK, said the OECD report “reinforces how important it is to maintain the independence and prosecution of serious bribery offences”.
He added: “Those kind of considerations and threats shouldn’t have any influence whatever in prosecuting wrongdoing wherever we find it.”
The report also warns that any potential economic downturn resulting from leaving the EU could damage government willingness to be seen to be aggressively regulating business.
“A tightening of the economy could result in significant strain on public resources, including for law enforcement, and in pressure to weaken the Bribery Act or its enforcement to attract business,” it said.
Sue Hawley, policy director of the civil society group Corruption Watch, said her organisation had warned of this risk last year, but recent events, including the creation of settlements whereby companies can resolve investigations with a fine and apology, had already damaged the UK’s stance as a country hostile to corrupt money.
Hawley cited interference by Tony Blair’s government in the Serious Fraud Office investigation into BAE as an example of the kind of political interference about which the OECD would be concerned.
Despite condemnation by the OECD after the BAE debacle, UK guidelines to law enforcement still do not prohibit factoring economic or political considerations into any prosecution decision.
Separately, the OECD report also identifies Scotland, where highly secretive “limited partnerships” can be incorporated, as notably vulnerable to money laundering.
“The controversial limited partnership status, or so-called ‘shell’ companies, in Scotland appears to be vulnerable for misuse in money-laundering and corruption schemes,” the report said.
“This has prompted Scottish politicians to suggest that the murky nature of such arrangements is undermining Scotland’s reputation as a place to do legitimate business.”
In a statement a Cabinet Office spokesperson said: “The government welcomes this report by the OECD which recognises our active enforcement of anti-bribery laws and we are proud that the UK continues to be commended as a global leader in the fight against bribery.
“We will consider the recommendations made by the OECD as we continue to make the UK a more hostile environment for all forms of economic crime, including bribery, money laundering and fraud.”
Brexit could damage UK’s efforts to tackle corruption, says OECD – The Guardian