The normalisation of corruption and public opinion
David Whyte considers the 'spirit of the law' when it comes to bribery and corruption.
See also the e-Bulletin article by Eversheds which explains how businesses should comply with the legal obligations of the Bribery Act and the Modern Slavery Act.
However, should businesses merely comply or should they consider a broader definition of corruption and desist from practices that although compliant are still immoral?
The UK is currently the 10th least corrupt country in Transparency International’s benchmark Corruption Perceptions Index (CPI). It has been an unusual rise up the charts from 20th place in 2010, a period in which we have witnessed a series of criminal frauds involving the major players in the UK banking sector (for example the fixing of LIBOR and Forex), a series of police evidence-rigging and bribery scandals (not least Hillsborough, the IPCC investigation into Sapphire Command and the Ellison Review), several political corruption scandals in the headlines (widespread Parliamentary expenses frauds and the periodic re-emergence of ‘cash for influence’ and ‘cash for honours’ scandals).
Robert Barrington, the head of Transparency International UK, qualified the result by pointing out there are ‘good reasons why people are sceptical about whether Britain really merits a top 10 ranking’.
There are indeed. The same week that the CPI was published earlier this year, the criminal case against five people accused of the LIBOR frauds collapsed. The following day two more stories about corruption in British institutions broke. The first reported the news that European Commission was investigating complaints that Google’s £130m settlement with the British government amounted to ‘special treatment’ and the second reported that that the Prudential Regulation Authority will investigate the potentially criminal role of HBOS's senior management in the near-collapse of the bank, seven years after the event.
If it seems as though a lot of corruption of various forms was being reported in the same week that the newspapers were reporting the UK’s miraculous climb up the anti-corruption charts, there was nothing unusual about this. In the UK over the past few years, reports of major corruption scandals of various kinds in the public and private sectors have become daily fodder.
We are overwhelmed by the scale, frequency and variety of corruption cases in this country, from police manipulation of evidence, to over-charging in out-sourced public contracts, by way of election funding and cash-for-access scandals involving prominent politicians and price fixing, market manipulation and fraud in key sectors of the economy.
But in the UK, our corruption is – for the most part – respectfully hidden. Although the bribery of public officials goes on sometimes, it is not a visible part of everyday life. In most UK cities, we do not (yet) have the option of bribing traffic wardens to avoid a parking ticket or the option of bribing police officers to avoid being charged for a petty offence. Our corruption is of a different order.
Economists sometimes distinguish between collusive corruption (where two parties collude for their common benefit) and extortive corruption (where one party is compelled to make a bribe payment to another). It is less common, for example, to have to bribe a public official in the UK than some other countries. Extortive corruption is not a major problem in this country, though it is probably more widespread than we tend to think it is.
It is extortive corruption that surveys like the CPI are primarily concerned with. But the British style of corruption that we are increasingly exposed to is collusive. And collusive corruption is not done merely for personal gain, but is largely done for the benefit of the organisation or the institution. Police rigging of evidence for example is typically done to avoid criticism of the police (as in the Hillsborough case). The rigging of LIBOR doubtless benefited the traders that colluded, but benefited the banks and their shareholders much more.
A poll commissioned with YouGov earlier this year asked a representative cross-section of the British public about how they regarded a range of collusive relationships between the public and private sectors.
The survey revealed a public sentiment strongly in favour of prohibiting some of the practices that are normal and routine in government – especially those that indicate a close – collusive – relationship between the public and the private sector. In this survey almost three quarters of the respondents said that the practice of ministers or senior civil servants accepting corporate boardroom appointments on leaving office should be banned. Almost two thirds said that inviting private corporations into government to help shape the regulation of business should be banned and more than two thirds said that current PFI arrangements for public projects should be banned.
In other words, the British public want rid of many of the practices that have become part and parcel of the British way of doing business and doing politics. It is not difficult to see why. The revolving door, and the involvement of the private sector in public functions, have proven to be both a symptom and a cause of institutional corruption in the neo-liberal period. Since the 2008 financial crisis, the UK’s brand of crony capitalism has enriched the few in a very harsh economic climate that has disproportionately punished the poor.
The UK government conveniently avoids its growing reputation as a crony capitalist state par excellence, preferring in its own Anti-Corruption Plan to more or less follow the World Bank definition of: ‘the offering, giving, receiving or soliciting, directly or indirectly, of anything of value to influence improperly the actions of another party.’
The same Anti-Corruption Plan makes it clear that it is government policy to remain fixated on extortion by criminal gangs, rather than collusion between powerful corporations and government departments. Yet, as the Tax Justice Network’s Financial Secrecy Index shows, if all of the British Overseas Territories were counted along with the United Kingdom, then the UK would be number one provider of financial secrecy.
This level of potential corruption is not merely a problem that can be described as ‘extortion’, but is a routine practice that is used for maintaining and extending the power of corporations, governments and public institutions. The British brand of corruption arises from practices that have become normal in business and politics.
David Whyte is the editor of How Corrupt is Britain? This article is an edited and updated version of a piece published by Open Democracy.