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Africa: Corruption

My Lords, I begin by congratulating the noble Lord, Lord Chidgey, on arranging the debate and on the succinct way in which he has given the House an ideal summary of the report from the All-Party Group on Africa. I join him in congratulating those who produced the report. Like the noble Lord, I must declare an interest as being an officer of the All-Party Group. Although, I hasten to say, I did not take part in the steering group which produced the report, I want to compliment the group on the amount of work it put in and on the clarity of the evidence before us. It is in order to pay tribute to the Royal African Society, which provided the administration for the committee, and to KPMG and Deloitte for providing the finance to produce the report. I want to put on record my thanks to Penny Jackson, who drafted the report, and to Richard Dowden of the Royal African Society for his editorial advice. Corruption is not a victimless crime. Everyone affected by it knows what they are doing. If I show a slight difference of opinion from the noble Lord, Lord Chidgey, it is that it does not wash for companies to say that they do not understand the legislation. The companies who are in the business of corruption and bribery know exactly what they are doing. They know exactly how to get around the law as it exists and will always complain that any law produced will be too complicated for them to understand. Corruption occurs in many different ways. At its lowest level it begins with the poor individual who, trying to get a form processed, slips a few notes into the hands of a public official, hoping that will bring the form through the process rather quickly. It extends to the massive corruption by states and immense multinational corporations which put millions and millions of dollars through their hands. The report shows that a whole number of things happen. Corruption breeds inefficiency and contempt and corrodes the whole society in which it occurs. There are so many different forms of corruption and bribery that we cannot go through them all this evening. I want to concentrate on one particular form which needs to be addressed. I refer particularly to what is known as mispricing. This simple practice of corruption is extremely widespread. Alarmingly, the report says that the extent of this mispricing scam is much under-reported. It is a practice to move money illegally between countries by individuals or companies. It is sometimes used for tax avoidance and sometimes for embezzlement. How do we find out what is going on? These are secret agreements and, as with all secret transactions, it is difficult to arrive at a precise figure for how much is entailed. However, research has suggested that mispricing draws between $100 million and $200 million each year from developing and transitional countries. That is a massive amount of money, clearly damaging the countries and the people concerned. Indeed, one study has suggested that 60 per cent of all trade transactions in Africa are mispriced by an average of 11 per cent. That practice is common not only between governments and suppliers; it operates between companies themselves. After importing goods at vastly inflated prices and showing them in the books for much less, the difference then goes into private profits in offshore accounts. The fact is that these things can sometimes be resolved fairly clearly, by greater transparency or knowledge. It might help in cases of mispricing if both parties to the agreement actually signed both bits of it, so that they agree both on the selling and buying prices. That may not seem like an enormous thing to do, but there is no magic bullet that can eradicate corruption almost at one fell swoop. Yet there are things that we can do and, as the noble Lord has said, one important thing is that mechanisms used to try to stop corruption must be vigorously enforced. That can make a significant difference. We must ensure that the giver of bribes is regarded as no less guilty than the taker.