Fighting corruption involves a combination of hard law and soft influence.
For companies, the watchword is “vigilance”. Anti-corruption laws are severe. Corporate responsibility requires business probity, good faith and fair dealing.
The UAE ratified the UN Convention against Corruption in 2006. The Financial Action Task Force on Money Laundering was formed a little over a quarter of a century ago, with GCC representation almost from the outset.
Yet global progress in the fight against corruption and financial crime has been modest. In The Quest for Good Governance, the Romanian academic Alina Mungiu-Pippidi concluded that “by and large, the evaluations piling up after the first 15 years of anti-corruption work showed great expectations and humble results”.
The UAE, in conjunction with other GCC member states, has beefed up the regional response through meetings of the Heads of Bodies Concerned with Protection of Integrity and Combating Corruption, a GCC umbrella body that first met in 2014. Regarding anti-corruption measures as integral to the “protection of integrity” reflects the importance that the UAE accords to the subject. It is among countries that are increasingly sharing information through bilateral and multilateral mutual-assistance arrangements and is coordinating efforts regionally and internationally.
In the most recent Corruption Perceptions Index 2015 published by Transparency International in January, the UAE ranked a creditable 23rd, ahead of more than half of the EU member states (the UK was placed 10th). The report card for both countries might read similarly: good, but no room for complacency.
On March 16, the 15th meeting of the UK-UAE Taskforce took place in London. The task force was established in July 2010 and has promoted bilateral cooperation on a range of subjects, including justice and law enforcement, with particular reference to combating financial fraud and recovering criminal assets. At the March meeting, ministers looked forward to the forthcoming Anti-Corruption Summit that is scheduled to be held today in London, and the Proceeds of Crime Conference in Abu Dhabi on September 21-22.
The Anti-Corruption Summit will be a grand affair with big aims. It arose from a speech given by the British prime minister David Cameron in Singapore in July last year, when he referred to the “rot” and “cancer” of corruption, and the need for transparency around the world. He spoke of making “the rules and practices which govern global commerce even more resilient to threats from corruption” by supporting investigators and prosecutors, as well as those in business, civil society and the media who are fighting corruption through a drive for better governance.
Global cooperation in tracing proceeds of crime is becoming ever more pressing.
Take the example of Redwan El Ghaidouni, who was convicted in the UK of serious drugs offences in March 2011, and against whom a confiscation order was made in September 2012. In June 2014, the CPS Proceeds of Crime Service (CPSPOC) was established, with responsibility for all CPS restraint and enforcement activity. In August 2014, CPSPOC enforced the confiscation order under bilateral UK-UAE mutual assistance arrangements, resulting in the recovery of more than £300,000 (Dh1.49 million) from the sale of an apartment in Dubai Marina belonging to Mr El Ghaidouni. CPSPOC worked closely with its asset recovery adviser based in Dubai. The confiscation order was fully satisfied by the sale proceeds from the apartment and other property.
Corruption is insidious. At an individual level, it means that X is awarded a contract that should, by rights, have been awarded to Y. But the big picture is even more important: if corruption is rife, there will be many undeserving Xs, and a lot of disadvantaged Ys. At a national level, corruption then distorts competition and economic well-being.
Corruption investigations and prosecutions are time-consuming. There will be a delay between action and results.
One example will make the point. In July 2014, the UK’s serious fraud office (SFO) opened a criminal investigation into Sweett Group concerning its group activities in the UAE and elsewhere, going back to 2012. The investigation focused on how Sweett had obtained and retained business providing project management and cost consultancy services for a hotel under construction in Dubai. In December last year, Sweett pleaded guilty to an offence of failing to prevent an act of bribery, contrary to the UK Bribery Act 2010. (In pleading guilty, it avoided mandatory debarment from public sector tendering under EU law.) On February 19, Sweett was ordered to pay £2.25m (a fine of £1.4m and a compensation order of just over £850,000). It was also ordered to pay nearly £100,000 in costs to the SFO.
Sweett’s lesson was hard, but Smith and Ouzman’s was harder. The UK-based company printed ballot papers. It was alleged to have bribed officials in Kenya and Mauritania (to the tune of nearly half a million pounds) to obtain business. The company and some key personnel fought the charges. On conviction, the company was ordered to pay £2.2m, and its chairman and sales manager received prison sentences and confiscation orders.
Anti-corruption work involves both hard law, often deploying “long-arm” international criminal jurisdiction as in the UK’s Bribery Act, and the US’s Foreign Corrupt Practices Act of 1977, and softer instruments, such as the promotion of corporate social responsibility and good governance.
Recent cases demonstrate that anti-corruption laws have teeth, and bite. The wider role of business, civil society and the media must be fully appreciated too. Business must maintain strong anti-bribery internal controls and expect the same from counterparties. Civil society comprises government and the public. Governments should be zero-tolerant (and, for example, strike the names of any offending companies from approved supplier and tendering lists). The public should expect high corporate standards. The media should monitor and report.
Today’s UK summit and the forthcoming UAE conference can make a real difference, by recognising what has already been achieved, focusing attention on how laws can be enforced, altering attitudes generally and actively promoting good governance.
Michael Patchett-Joyce is a commercial lawyer and arbitrator, based in London and the UAE.
Follow The National’s Business section on Twitter