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Africa: Corruption

rose to ask Her Majesty’s Government what action they are planning in response to the recent report of the Africa All-Party Parliamentary Group, The Other Side of the Coin: The UK and Corruption in Africa. The noble Lord said: My Lords, we speak readily of welcoming the new era for the African continent in which we, in the old industrialised world, are committed to supporting new initiatives, investment and enterprise within and between nations that have been overlooked and neglected for too long. But if we are to do that, we must face head-on that scourge of Africa—the culture and practice of institutionalised corruption—and we must recognise that the UK, among others, is part of this corruption process. We must look at the other side of the coin. I therefore welcome this debate with your Lordships on the report of the Africa All-Party Parliamentary Group, The Other Side of the Coin: The UK and Corruption in Africa. The report has gained the attention of the national and international press. It has been highly complimented by the South African Finance Minister. I presented a copy myself to the President of Botswana and his Cabinet, where it was also well received. I therefore hope that the Minister will take this opportunity to set out our Government’s response to the recommendations made in the report. In that context, I declare an interest as a vice-chairman of the Africa All-Party Parliamentary Group. I should like to acknowledge the contribution made to the group’s work by, among others, the noble Lord, Lord Lea of Crondall, and the noble Baroness, Lady Whitaker, both of whom are here tonight and I understand will contribute later. The Africa All-Party Parliamentary Group inquiry into corruption and money laundering recognises that institutionalised corruption and the attendant capital flight present a huge obstacle to development in Africa. The report concentrates on the United Kingdom primarily because of the group’s United Kingdom parliamentary reference. The group’s wish is to see the United Kingdom in the vanguard of international efforts to address this issue, recognising our increasing overseas development assistance. Our Government, particularly DfID, were helpful to the group in bringing together and providing detailed written evidence. The group welcomed the Government’s commitment to produce a consolidated cross-Whitehall response, inferring at least increasing cross-departmental working on these matters. The report cannot be exhaustive, but there are three areas where in particular the UK should contribute to the fight against corruption in Africa: first, tackling the supply side of corruption—bribe payments and mechanisms in international trade and credit that facilitate corruption; secondly, tackling the laundering of the proceeds of corruption; and, thirdly, safeguarding aid to ensure that it does not become caught up in corruption or inadvertently support corrupt leaders. The World Bank estimates that some $1 trillion is paid globally in bribes each year. The sums embezzled or stolen from public funds and assets by corrupt officials and the unquantified volume of fraud within the private sector could well triple the overall scale of global corruption. Corruption hits and hurts the poorest people hardest. It obstructs development. It fetters business growth. In a survey of nine African countries, the World Bank ranked corruption as the major impediment to their development. The money lost through corruption has a knock-on effect on development. The indirect effects include losses in investment, in private sector development and in economic growth. Where corruption becomes endemic, development is stifled. The World Bank estimates that where good governance and corruption control have been firmly established, the long-term dividend can be as much as a three to fourfold increase in income per capita, together with an extra 2 per cent to 4 per cent in annual economic growth. Although corruption is and must be seen as a global problem, Africa has gained a particularly bad reputation for corruption from the highest level down through the system. The continent as a whole suffers, with 10 of the 20 most corrupt countries to be found in that continent. Africa also suffers a sort of double whammy, where the proceeds from corruption are then banked or spent outside of the continent. Capital flight is a huge financial problem for Africa. Estimates of the total amount of illicit proceeds coming out of Africa are, by their nature, not precise, but they are thought to be in the range between $100 billion to £200 billion each and every year, a sum that totally dwarfs aid and debt relief to the continent. Moreover, most of the outflow of illicit funds is permanent, with as much as 80 per cent to 90 per cent of it not returning from those shady accounts tucked away in the world’s financial centres. The organisation Transparency International defines corruption as,"““the abuse of entrusted power for private gain””." Within our report, corruption is considered to include offering, soliciting and accepting bribes. The report points out that embezzlement through mechanisms which include siphoning off funds to non-existent companies and through fake and mispriced transactions is rife throughout much of Africa. Up to 60 per cent of transactions are reckoned to be mispriced, with an average of 11 per cent being skimmed off the top. Together with fake transactions, they account for an annual flight of capital in excess of $150 billion. It is abundantly clear that much needs to be done in our own backyard if we are to contribute in any significant way to tackling corruption from the other side of the coin. In its report, the group highlighted six out of 38 recommendations to the Government as key candidates for action. Of these I will emphasise just three. The first is to rigorously enforce existing laws and sanctions against international bribery, corruption and money laundering. The issue here is enforcement, as the problem is that investigations are complicated and expensive, while prosecutions are difficult. Yet we now have the Serious Organised Crime Agency: its priorities must embrace corruption and not allow it to be sidelined by concerns over illegal drugs and terrorism, however important and relevant those may be. Secondly, I emphasise the recommendation that the Government should appoint an anti-corruption champion for a two-year period, to co-ordinate policy coherence and implementation across Whitehall and to work with devolved Executives, Crown dependencies, overseas territories and our international partners. I would like particularly to hear from the Minister whether the Government will consider this proposal from the group seriously. The champion could be a Minister or an official with clout within the financial and business sectors—such a person could, I suggest, certainly bang a few heads together to get something moving. The third recommendation that I want to emphasise suggests bringing to Parliament a new anti-corruption Bill before the end of 2006, to address the concerns raised by the Joint Committee about the 2003 draft Bill. The Minister will be aware that the Joint Committee severely criticised the Government’s 2003 draft Bill, concluding unanimously—from all parties and in both Houses—that it would not be understood by the police, prosecutors, jurors or the public. Most important, they concluded that it would not be understood by the business and public sector communities. It is therefore welcome that the Government have relented and initiated public consultation. In parallel to this process and to the work of the Africa All-Party Parliamentary Group, the Minister will be aware that Transparency International has sponsored the preparation of a draft corruption Bill that meets many of the legislative objectives of the group’s report. That Bill was introduced in another place under the 10-minute rule by Hugh Bayley MP, chairman of the Africa All-Party Parliamentary Group. In consultation with group colleagues and Transparency International, I have checked with the Public Bill Office, which has confirmed that it is in order to introduce the same draft corruption Bill in this House. In the event that pressures on the Government’s legislative programme prevent Ministers from progressing with the draft Bill in the other place, I plan to bring it forward in this House as a Private Member’s Bill after the summer Recess. That will at least allow your Lordships the opportunity to debate and scrutinise it through all its stages. In conclusion, I would be very grateful if the Minister could give some indication on whether this proposal would be given serious consideration by the Government in due course.