What action has been taken since the launch of the UK anti-corruption strategy in 2017? Simon Ray discusses the ‘year one update’ reviewing progress so far and considers what developments practitioners can expect to see in 2019.
What has been the impact of the strategy so far?
The strategy was launched in 2017. It is a five-year plan (2017–22) designed to provide a framework to guide the government’s anti-corruption policies and actions. The ‘year one update’ is the first published review of the progress achieved by the strategy.
The aims of the strategy are wide in scope and the update provides a review of six key topics and objectives:
- reducing the insider threat in high-risk domestic sectors
- the UK as an international finance sector
- the promotion of integrity across the public and private sector
- reducing corruption in public procurement and grants
- improving the business environment globally
- work with other countries to combat corruption
The update acknowledges that:
‘2018 has been primarily about laying the groundwork for the action we are planning to take…Work has been scoped, operational and delivery plans devised, resources secured, infrastructure put in place and personnel hired. The impact and effectiveness of this will not be known for some time…’
That said, among the prospective aims and objectives cited in the update, it is possible to identify certain tangible developments—for example:
- in 2018 and for the first time in ten years, the Financial Action Task Force assessed the UK and found that the UK has the strongest anti-money laundering and counter terrorist finance controls of any country assessed to date
- the Serious Fraud Office’s (SFO) funding model was reviewed and its core funding was increased from £34m to nearly £53m per year. In addition, the SFO will continue to have access to reserve and ‘blockbuster’ funding
- as part of the goal of achieving greater transparency over who owns and controls companies and other legal entities, the Registration of Overseas Entities Bill was published in draft in July 2018. The Bill will establish a public register of beneficial ownership of overseas legal entities owning UK property. The Bill is due to be introduced to Parliament in 2019 with a view to establishing the register in 2021
- a multi-agency team (including the National Crime Agency (NCA), the Financial Conduct Agency, HMRC, City of London Police, Crown Prosecution Service (CPS), Home Office and the SFO) is designing and building the new National Economic Crime Centre (NECC). The appointment of a Director General of the NECC is expected early in 2019
- since the coming into force of the relevant parts of the Criminal Finances Act 2018, three Unexplained Wealth Orders (UWOs) have been granted. The first, in February 2018, related to two properties worth more than £22m. A UWO requires a person who is politically exposed or is reasonably suspected of involvement in, or being connected to a person involved in, serious crime to explain the nature and extent of their interest in particular assets and explain how those assets were obtained
Of particular interest to criminal law and asset recovery practitioners may be the announcement that in 2018, the UK became the ‘first and to date only country in the world to introduce new principles on governing compensation to overseas victims of bribery, corruption and other economic crime’. The update cites a case study of a Civil Recovery Order involving Chad and states that:
‘In 2018 we introduced the Compensation Principles Agreement between the CPS, the NCA and the SFO. This establishes a common framework to identify cases where compensation is appropriate and to ensure swift action in such cases to return funds to the affected countries, companies or people… [in 2018] the SFO successfully obtained a civil recovery order to the value of £4.4m which represented the proceeds of corrupt deals in Chad. Subject to a potential appeal, [the Department for International Development], which is already investing in humanitarian programmes in Chad, is looking at how the money can best be returned for the benefit of the people of Chad.’
What have been the challenges to progress?
In his foreword to the update, the Prime Minister’s Anti-Corruption Champion, John Penrose MP, acknowledged the need, ‘…perhaps, to reset the UK’s public anti-corruption debate, which currently focuses more on the extreme wealth and superficial glamour of international money-laundering, at the expense of equally serious but grittier threats, for example from criminals trying to corrupt public officials or win contracts through bribery’.
Not mentioned in the update, but potentially linked, is the difficulty that the prosecuting agencies have sometimes encountered in persuading juries in this jurisdiction to convict in cases involving allegations of historic overseas corruption. It is impossible to divine a general theory to cover all such cases, but a perceived remoteness of the criminality in geography and time may play a part. If the UK’s commitment to remaining ‘in the vanguard…’ of an international commitment to anti-corruption is to be backed by effective domestic enforcement, finding a way to speed up the time it takes to investigate and make charging decisions in corruption cases would be a very positive development.
The update does acknowledge, implicitly at least, the tension between combatting overseas corruption and allowing UK companies to remain competitive abroad. In August 2018, the Prime Minister announced an initiative to strengthen support to UK companies, ‘so that they can operate and succeed with integrity’. The new Business Integrity Initiative is ‘designed to provide new practical guidance to help companies overcome barriers to doing business in frontier markets, including guidance on dealing with requests for bribes and human rights issues in supply chains’.
What is the impact of Brexit on progress in this area?
To state the obvious, the impact of Brexit remains to be seen. The report optimistically states that, ‘Brexit gives us the unique opportunity to position ourselves as a place to do business with integrity’. The conclusion to the review of ‘the UK as an international finance centre’ observes that, ‘the integrity of the UK as a global financial centre is essential to our long-term reputation and prosperity, especially as we become an independent trading nation’. The aim is to attract, ‘high-quality investment to the UK as we are increasingly seen to be a reputable place to do business’. The challenge may be in maintaining these aims in the face of post-Brexit demands to reduce regulation.
In addition, it is not yet clear what will replace the current framework for judicial and law-enforcement cooperation within the EU.
What are the priorities for 2019 and what developments can practitioners expect to see?
The update lists the following as priorities for 2019:
- prosperity—pressing the case that combatting corruption is critical to a nation’s prosperity
- increasing the UK’s hostility to illicit finance and beneficial ownership
- strengthening the evidence base for anti-corruption
- continuing to secure a more ‘joined-up’ and strategic approach to tackling corruption in critical domestic public sectors (prisons, borders, policing, defence and local government)
- international partnership
Practitioners can expect to see the continued and increased use of UWOs, an increased emphasis on company beneficial ownership transparency both in the UK and abroad, and perhaps an increase in enforcement action against what have been described elsewhere as ‘professional enablers’ of financial crime and money laundering.
This article was first published on Lexis®PSL Corporate Crime on 18 January 2019.