Arms, farts and bribe fairies

*John Entwhistle, the now dead bass player for The Who,* once said that liking heavy metal music was akin to passing wind; you didn’t mind the smell of your own farts but object to everyone else’s. Given Entwhistle’s proclivity for cocaine it is a small miracle that he could smell anything. However, in the world of government and big business nowhere is this analogy truer than with regard to bribery and corruption. For some reason governments cannot stomach bribery unless their companies are involved in it, when its rancid stench is sweet rose petals to their nostrils.

Cast your mind back to the 2005 G8 summit at Gleneagles and all that rich world concern about ‘corruption in Africa’. You could be forgiven for thinking that bribery was a practice that involved only one party. Had anyone approached the British government delegation at Gleneagles and asked ‘What of the companies that pay the bribes?’, civil servants and Whitehall mandarins would have looked aghast: ‘People pay bribes? Good Lord, I thought it was the bribe fairies.’ It was almost as if African leaders went to bed at night, leaving entire nationalized industries under their pillows and woke up with Swiss bank accounts full of money.

So let us consider Britain’s endeavours to combat multinational corruption and the most bribe-licious of industrial sectors: the arms trade.

Britain didn’t get a law making the bribing of a foreign official illegal until 2002. That’s right folks, up until that point companies like BAE Systems – Britain’s largest arms manufacturer – would get caught making payments into Jersey bank accounts owned by the Sheik Hamad bin Jassim bin Jaber al-Thani, Foreign Minister of Qatar at a time when BAE was negotiating an arms sale with... guess which country... Qatar. In keeping with past precedents of the ruling class looking after its own, the British authorities decided that no investigation would take place into those payments as it was not in the public interest. Meanwhile BAE announced that they had done nothing that broke the law, which is kind of true as there was no law at that time.

Back in 2001, I spoke to Mark Peith, chair of the Working Group on Bribery in Business Transactions at the Organization for Economic Co-operation and Development (OECD). Britain had signed up to an OECD treaty to introduce laws and effective measures to fight bribery but was just not doing it. I asked Mark Peith how the other members of the OECD saw Britain?

‘They no longer regard Britain as a peer,’ he replied.

‘When it comes to fighting corruption and bribery, who are Britain’s peers now?’ I asked. Without hesitation he replied: ‘Brazil, Turkey and Argentina’.

None of which seems a particularly firm platform from which to criticize others. During a massive rearmament programme in South Africa involving arms companies from all over the world and nigh constant allegations of corruption, BAE Systems had secured a piece of the pie. The deal was supported by the Export Credit Guarantee Department – the department that underwrites British business abroad, so if someone fails to pay their bills the British taxpayer steps in and stumps up to cover the losses. Amidst the investigations and court cases involving government officials it emerged that BAE Systems had paid commission amounting to millions of pounds. ‘Commission payments’ is one of those phrases that attempts to normalize the unpalatable in a similar fashion to the phrase ‘adult entertainment’. Commission payments normally go to people who help secure the deal and are notorious conduits for bribes. Trade minister Patricia Hewitt defended the BAE payment, admitting it amounted to ‘millions’, but refused to say just how many. Just that it was ‘within acceptable limits’.

Britain’s fight against corruption is just window dressing with little political will to take on the issue in a serious way.

Consider the case of The Corner House, a human-and environmental-rights organization and the Government’s Export Credit Guarantee Department (ECGD). In March 2004 the ECGD announced new guidelines to combat bribery and corruption. Given that most of the deals that it is involved with are for medium to high risk markets (ie slightly dodgy places to very dodgy places) like Indonesia or Nigeria, there was a real need to start clearing the stables of bent deals.

The new guidelines included some simple rules: provide details of commission payments, who was getting the money, where they live and what relationship the commission agents have with the deal. The ECGD extolled their new measures as a ‘balanced package... to the ultimate benefit of all UK companies’.

Sure. This measure would have been invaluable for a company like Alvis (now owned by BAE Systems) when they were selling tanks to Indonesia; the ECGD would have known then that the commission being paid for the deal was going to the President of Indonesia’s daughter Tutut Suharto.

Such a measure would have been useful for Rolls Royce when they were working on another ECGD-backed deal in India, the Godavari power station. In this case the commission paid for the deal was going to Towanda Services, a company in the British Virgin Islands, owned by the managing director of the Godavari power station, responsible for awarding the contract.

In May 2004 the ECGD Advisory Committee noted that the new anti-corruption guidelines were not proving popular with its ‘major customers’. Who were the major customers upset by the quest to stamp out bribery? BAE Systems, Airbus (then 20 per cent owned by BAE Systems) and Rolls Royce, to name a few. They promptly held a series of meetings with the ECGD and proceeded to whittle the anti-corruption measures into something more palatable, effectively submitting the anti-corruption guidelines to death by a thousand cuts. The British government had watered down its anti-bribery work.

It was Nick Hildyard and Sue Hawley from The Corner House who spotted that this had occurred and threatened to take the Government to court. Facing up to the might of a government which was working at the behest of BAE Systems and Rolls Royce, not to mention the Confederation of British Industry, is a pretty big deal. But that is exactly what Sue and Nick did. And they won. They forced the Government into one of its most humiliating climb-downs, leading to the revival of the anti-corruption guidelines. Which isn’t bad going.

Britain is being forced slowly to change its ways. But it will be the work of activists and campaigners and academics that get us there and certainly not government or its allies in the arms trade and other dodgy businesses. •

New Internationalist issue 396 magazine cover This article is from the December 2006 issue of New Internationalist.
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