This Commons Library briefing discusses the international summit on anti-corruption held in London on 12 May 2016 and what so far has emerged from it.Jump to full report >>
This briefing paper examines
The UK Government hosted an international anti-corruption summit on 12 May. The UK was represented by the Prime Minister, David Cameron.
Defining what is (or is not) corruption is by no means straightforward. There is, though, a degree of consensus in the current and ongoing debate about corruption that it includes (at the least):
The stated aims of the summit were wide-ranging and far-reaching:
A more detailed agenda for the summit was not published.
In the Global Declaration against Corruption, governments and others at the summit reiterated their commitment to stamping out corruption. Existing international agreements would be developed and implemented, leaving “nowhere to hide”. Action would be focussed in three main areas –
The summit communiqué elaborated on how governments and others would work to tackle corruption. It covered a broad range of issues, including
In his closing remarks to the summit, the Prime Minister suggested that there was now political will to address these longstanding problems. Fighting corruption was an idea whose time (he argued) had come.
After the summit, many governments, regional and international organisations and other bodies issued statements of support or set out the actions they would be taking. These included the UK government, the United States government, the OECD and the World Bank.
Senior figures from law, accountancy, property and professional services firms also issued a statement lending support. On the eve of the summit, the Law Society also published a statement on behalf of professional bodies concerned with law, tax and accountancy in the UK. This stated that the professions stood united in the fight against corruption.
The debate on corruption was given enormous impetus by the publication by the International Consortium of Investigative Journalists of a searchable database of offshore companies on 9 May 2016. These are commonly called the Panama papers.
The Guardian has published a useful summary of the release of the Panama papers and their origins.
In a statement to the House on 11 April 2016, in response to the publication of the Panama papers, the Prime Minister said that the Government would continue to lead the international agenda to “crack down on tax evasion and aggressive tax avoidance”.
The Prime Minister focused on three areas for action:
There was an Opposition Day debate on tax evasion and avoidance on 13 April 2016. Responding to the debate, the Economic Secretary to the Treasury, Harriet Baldwin, said that no government had done more to crack down on those who do not pay the tax that they owe. The motion was defeated by 300 votes to 266.
Further to the Prime Minister’s statement, HMRC published a consultation document on 17 April 2016. The consultation closes on 10 July 2016.
The Guardian has published its own survey of commentators’ views on whether tax avoidance might become more or less difficult if the UK were to leave the EU.
Some campaigners have argued that the UK should compel the overseas territories to disclose information about beneficial ownership. On the UK Constitutional Law Association blog, Graham Wheeler has commented on the constitutional position of the territories in this context, in particular the issues that arise of self-determination and (qualified) constitutional autonomy.
In April 2014, the Prime Minister wrote to these jurisdictions to encourage them to follow the UK’s example.
The Cabinet Office and Foreign and Commonwealth Office (FCO) have published a compendium of the arrangements between the UK and Crown Dependencies and British Overseas Territories for the sharing of information about beneficial ownership.
A commonly held view is that too few people are prosecuted for corporate failings.
The focus of the Bribery Act 2010 was essentially corporate bribery to gain contracts etc.
Section 7 of the Bribery Act 2010 created the offence of a commercial organisation "failing to prevent" bribery by its employees. It statutorily requires companies to prove they have carried out "adequate procedures" to prevent it. This general requirement, which some have argued should be extended to a broader range of offences, was part of a broad Anti-Corruption Plan.
It was announced in the Queen’s Speech on 18 May 2016 (under the heading of ‘increasing our national security’) that legislation would be brought forward on corruption, money laundering and tax evasion. The executive summary to the background briefing notes on the Speech offers a brief overview of what the Bill will include:
This Bill will cement the UK’s leading role in the fight against international corruption, crack down on money laundering and people profiting from crime, so that we root out corruption. It will include:
The Ministry of Justice (MoJ) announced on 12 May 2016 that it would consult on extending the criminal law around failure to prevent economic crime, to encompass other forms of crime beyond bribery and tax evasion.
Justice Minister Dominic Raab said that the Government would adopt a vigorous and robust approach to holding large corporations to account. Commentary from the industry, though, has suggested that this may not be straightforward. The Chartered Institute of Taxation (CioT), for example, has argued that there is already enough relevant law and holding a company responsible for an individual’s actions could be problematic. The new law (it went on) must not place an unreasonable burden on business.
The UK country statement released after the summit said that the UK would create a public register of beneficial ownership of foreign companies owning or buying property in the UK:
The UK will also establish a public register of company beneficial ownership information for foreign companies who already own or buy property in the UK, or who bid on UK central government contracts.
In the foreword to the volume of essays accompanying the summit, though, the Prime Minister indicated that this was still a matter for consultation:
So we are consulting on ways to make property ownership by foreign companies much more transparent – and considering whether to insist that any non-UK company wishing to bid on a contract with the UK government should publically state who really owns it.
The consultation paper – Beneficial ownership transparency: Enhancing transparency of beneficial ownership information of foreign companies undertaking certain economic activities in the UK – was published by the Department of Business, Innovation and Skills (BIS) in March 2016. The paper’s proposals concerning provision of information to the Land Registry (and publication of that information) would apply to England and Wales, but the paper also seeks views on whether the Government should work with the devolved administrations to ensure a UK-wide approach. The closing date for responses was 4 April 2016. BIS is currently analysing the feedback received.
Transparency, corruption and bribery (SN 03806 19 December 2013)
Tax avoidance: a General Anti-Abuse Rule (SN06265, 19 April 2016)
Evolution of UK money laundering law (SN02592, 21 April 2016)
Corporate Economic Crime. (CBP 07359, 2 November 2015) and
Banking services: reform and issues (CBP 07234, 20 April 2016)
Commons Briefing papers CBP-7580
Author: Gabrielle Garton Grimwood