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Bribery Act Update - Facilitation Payments

 

Recently The Telegraph reported that the government has bowed to business pressure and the interests from the City of London in weakening the Bribery Act. According to a ‘leading lawyer’ interviewed by the Telegraph who has seen the guidance a ‘lot of what is in there will be welcomed by business’.

This is troubling.

The new guidance being prepared allows companies to avoid prosecution for some ’facilitation payments’.

So what is a facilitation payment and why should we care?
A facilitation payment is a payment made to an official to perform a function they would normally carry out as part of their job. It’s ‘grease’ money that speeds up a bureaucrat’s decision.

Examples of facilitation payments include the following:

  • Granting a permit, licence or other official document that qualifies a person to do business
  • Processing government papers such as a visa or work permit
  • Providing police protection or mail collection or delivery

It might seem like it’s not that serious - that facilitation payments are necessary to ‘get the job done’. But they are a real problem.

Indeed the OECD considers facilitation payments to have a ‘corrosive’ effect on sustainable economic development and the rule of law recommended that Member countries, including the UK should review their ‘policies and approach’ in order to effectively combat the phenomenon.

Currently, business groups argue that it is impossible to do business without making facilitation payments. Yet, facilitation payments are already illegal under current UK laws so the Act does not create a new bribery offence.

At the very least, it’s expected that the guidance notes will acknowledge that these payments are a problem that cannot be eradicated overnight.

But that can’t be used as an excuse for inaction. Already, a large majority of the 38 countries that are party to the OECD Convention ban facilitation payments, and those that legally ‘permit’ them usually only do so in specific or exceptional circumstances.

Furthermore, because they’re illegal in many countries, many companies already outlaw them entirely.

Indeed, it’s not just NGO’s and development organisations that are calling for the full implementation of the Bribery Act as originally passed. Investor groups recognise the benefits that the implementation of the Bribery Act provide.

The International Corporate Governance Network is arguing that any dilution of the act would be ‘bad’ for Britain’s reputation. Representing institutional investors across 50 countries with a total wealth portfolio of $12 trillion dollars - or more than twice the size of China’s economy - ICGN argued that it was in the interest of global investors and UK industry ‘that there is a clear and enforceable anti-bribery law in the UK’.
It’s time that the government becomes serious in its commitment to combating corruption.

Appointed last June, Ken Clarke’s role is to be the UK’s international anti-corruption champion. When they announced the position No 10 declared that it demonstrated their commitment to ‘transparency and accountability’.

Ken Clarke, went so far as to describe his role as sending out:

‘… a clear message that the UK coalition government will not tolerate bribery or corruption and that we will work together to stamp out these practices across the board.’

It’s time for the government to start listening to it’s own ‘message’. Corruption is a serious problem and watering down the Bribery Act will not curb it’s corrosive effect on those who already suffer the most – the poor.

To be kept up to date on the latest on the Bribery Act and other corruption issues, join our Justice campaign below.

Lots to celebrate, more to do

 

Tuesday March 8 is International Women's Day. In celebration, here's a post from Global Poverty Project team member, Julie Cowdroy, which was originally published on the ABC Drum.

This week we celebrate 100 years since the first official International Women’s Day (IWD). Women celebrate the constitutional rights, civil liberties and privileges that are enjoyed today. We reflect and applaud the women who navigated their way through the last hundred years.

One example of improvement for women in the West over the last century, is in the area of maternal health. Up until 1920, high maternal mortality rates occurred in the US despite improvements in access to health care and antibiotics. Yet major reductions in the Maternal Mortality Rate did not occur until the achievement of women’s right to vote.

Similar political struggles for women are still occurring around much of the world. Achieving women’s rights has not been easy, and in fact on a global level, there is still much to be done. Globally, women still suffer disproportionately to men. Women make up approximately half the world’s population, yet two thirds of those who live in extreme poverty are women. Women perform two thirds of the world’s working hours, yet only earn ten per cent of the world’s income and less than one per cent of the world’s property.

However the problem should not be measured or described as purely an economic one. While estimates by the United Nations suggest it would cost $83 billion to achieve gender equality, naming a price can underestimate the complexities of the issues. Economic solutions for women can achieve some results, but as we observed in the US, the issue of women’s marginalisation cannot be addressed only with money.

For instance, Sri Lanka has managed to halve its maternal deaths since 1935 even thought Sri Lanka only spends three per cent of Gross National Product (GNP) on health care each year. On the other hand, India spends five per cent on health care, yet Indian women are eight times more likely to die in childbirth. Sri Lanka is seeing improvement due to higher education and literacy rates, excellent monitoring and data collection through a strong civil registration system and an effective functioning health care system in rural areas. All of these factors come from a strong political will by the Sri Lankan people, themselves.

In his best-selling book, Half the Sky, Nick Kristof quotes the journal Clinic Obstetrics and Gynecology:

“Women are not dying because of untreatable diseases. They are dying because societies have yet to make the decision that their lives are worth saving.”

When considering how women’s rights can be achieved globally, it is important to be reminded of the complexities of our own development history. Development in other contexts will not just happen with a step-by-step process, a “tick the box” plan, or with a whole lot of capital or economic growth. Poverty reduction for women is not just about an increase in resources, it is about removing the barriers that inhibit access to these resources. Local cultural and political factors can limit access, but so too can international institutions, rules and norms – or put simply, political will at the international level.

Improvements are possible when the international community champions global rules and institutions that strengthen gender equality, such as increasing the number of women in decision-making roles in the health sector. Real progress will be made when both local and global actors work to support women’s greater bargaining power and control at a local level. Positive examples can be found in the Top 10 Maternal Health Highlights in 2010 report issued by maternal health campaign organisation, Women Deliver.

IWD 2011 provides us with the opportunity to celebrate the rights and privileges we enjoy in Australia today, but also provides us with the chance to reflect on why women remain the most marginalised group in the world, and what we can do to rectify that.

Posted by Julie Cowdroy in Women & Gender for column Issue Analysis on Mar 8th 2011, 08:20

Live Below the Line - could you?

 

Join thousands of others living below the line this May.

If you're in Australia, signup here, or in the US, here.

Posted by Guy Kirkpatrick in What Can I Do? for column GPP - United Kingdom on Mar 7th 2011, 07:46

Proposal for UK law on resource transparency

 

On Tuesday 1 March Anas Sarwar MP stood up in the House of Commons to table a 10 Min Rule Bill requiring legislated transparency standards for companies involved in resource extraction activities.
Enjoying strong support from all three main political parties, NGOs, independent economists and leaders of the developing world the Bill makes it mandatory for companies that discover, drill and dig up oil, gas and minerals to disclose how much money they pay to foreign governments.

The Bill was tabled in the presence of about 25-30 Ministers and passed without one single nay heard or rebuttal. Below is a summary of his points including key quotes:

The Problem: The Resource Curse
Fundamentally the problem that Anas’ Bill is aimed at addressing is known as ‘the Resource Curse’. This is where; ‘In the absence of strong democratic institutions and strong governance, the people of these countries are unable to hold corrupt officials to account, as those officials siphon off public money for their own benefit instead of using it for the public good.’

The Example: Equatorial Guinea
Sarwar cited Equatorial Guinea as an example of the problem. As he pointed out ‘Equatorial Guinea had the 12th highest gross domestic product in the world in 2008, with more than $30,000 per capita. However, it also ranked 121st out of 177 countries on the United Nations human development index.’

The Solution: Greater tax transparency.
Sarwar’s Bill is based heavily on law enacted in the United States and backed by President Obama and thus; ‘In effect, the Bill would replicate the measures in the Cardin-Lugar amendment for UK listed extractive companies, supporting the move towards a global standard on the issue and a first step towards full tax justice for developing countries. The changes would enable civil society and NGOs to hold Governments to account.’

The Purpose: Stronger Governance and Citizen Empowerment
Sarwar argued that requiring companies to disclose their payments increases the available information to citizens in resource rich countries with the outcome that, ‘Transparent, effective tax systems and the reduction of corruption could allow money otherwise lost to be spent on schools, doctors, clean water and infrastructure-exactly the kind of projects on which British aid money is spent now. Improving access to their own wealth could lead many developing countries out of poverty, away from aid dependency, and into self- sufficiency and sustainable growth-the ultimate development goal.’

The Companies: The Money and the responsibility
Sarwar pointed out that that the London Stock Exchange has a responsibility to act ‘With more than 80 extractive companies listed on the London stock exchange, representing more than £1 trillion of capital, the UK has a responsibility to take action on the issue, for the benefit not only of the developing world but of UK business.’

The Context: EU Wide Push for Action
This bill comes just as this issue is picking up steam across Europe. As he acknowledged, ‘Although I have been working on the Bill for several months, its introduction could not have come at a much better time. During the recess, we had the welcome news that the Chancellor and the Business Secretary are backing President Sarkozy's plans for Europe-wide rules on the issue.’

The UK: Our Role
Sarwar made it clear that whilst the EU is acting, there is no excuse for the UK to take a back seat on this issue because, ‘Independent action by the UK would not jeopardise EU progress, but would strengthen the campaign by setting an important example. It would represent a big contribution to international development at little or no cost, while at the same time promoting the kind of corporate social responsibility of which we can all be proud.’

The Reason: Justice
Sarwar acknowledged that the theft and mismanagement of natural resource wealth is a problem that needs to be dealt with urgently. As he pointed out it is those in developing who suffer the most and as matter of justice this needs to be addressed because, ‘The amount of money disappearing every day could translate into lifting millions of people out of poverty in developing countries [and the] developing world does not have time to wait for Europe to catch up. A genuinely sustainable and cost-effective approach to international development demands that the UK Government act now.’

Our response: Act
At the Global Poverty Project we stand in support Anas Sarwar's Bill. Like him and many others we too believe it is time for the Government to act.  Join us in creating a movement of people committed in demanding the Government implement greater transparency standards in the oil, gas and mining industries. Join our movement for Justice.

Darwin's Nightmare: Film Review

 

A documentary-style film by Hubert Sauper, Darwin’s Nightmare examines the subject of globalization and what this can mean for poorer societies across Africa. Nominated for an Academy Award for Best Documentary in 2006, this film offers an account of a very real and inconvenient truth about Western Tanzania’s imports and exports.

The film begins by presenting the devastating account of how a large fish called the Nile Perch was introduced into Lake Victoria (the source of the river Nile, known to many as the birthplace of humankind) only to consume the entirety of the smaller species of fish native to the lake. Despite the ecological damage inflicted by the Nile Perch, it’s significant demand from the European market has led this issue to be overlooked.

In order to fulfill this large demand, enormous cargo planes from abroad (often Eastern Europe) fly in and out of Tanzania, exporting up to 55 tons of fish per day for consumption in wealthier countries. Aside from the obvious commercial activity, locals have been unable to fish due to the Nile Perch wiping out all else in the lake. This lack of fish has left residents with limited food for themselves and their families with no choice but to scrounge for festering, discarded carcasses that the planes won’t take - having been bypassed on the food chain.

The second and perhaps even more significant finding from the documentary is the exposure of other, more sinister uses for the planes. There is evidence to suggest the ‘empty’ planes entering the country are actually filled with weapons and ammunition to support civil war in Africa. The documentary even hints that the fish trade may simply be a useful smokescreen to mask the real, politically based motive for the flights.

This documentary has been an eye-opener and if nothing else, can educate us further as to some of the complex issues countries like Tanzania face.
 

Posted by Rosie Sanger in Hunger for column Film Reviews on Mar 4th 2011, 10:38