Select Committee on International Development Fourth Report


Corruption undermines development and growth and constitutes a serious threat to attempts to eliminate poverty. The elimination of corruption should be central to a responsible development strategy. But it is not only a matter for the Department for International Development (DFID). The actions of the Home Office, the Department of Trade and Industry (DTI) and a host of regulatory and investigatory bodies have a profound effect on corruption in the developed world. Our investigation has revealed a lack of coherence, focus and determination across Whitehall in tackling this subject.

The Nature of Corruption

Corruption takes many different forms. Petty corruption - the payment of small bribes for services - has a severe and direct impact on the poor and must be addressed if efforts to reduce poverty are not to be undermined. Grand corruption - bribery relating to large scale deals - discourages investment and hampers growth, whilst depriving developing countries of much­needed resources.

Causes of Corruption

Corruption is principally entrenched by weak institutions. Where the criminal justice system is weak, the rule of law can be unevenly applied providing a fertile breeding ground for corruption. The level of bureaucracy has a bearing on how pervasive corruption becomes. Pay in the public sector is one of the main drivers of petty corruption. Wage levels and management controls and systems must be addressed in any public sector reform programme that aims to reduce corruption.

The Impact of Corruption on Development

Corruption has a devastating impact on the poorest people in society by denying them access to public services since they are frequently unable to pay the necessary bribes. The quality of services and the efficient allocation of resources are both adversely affected by corruption. Corruption also deters foreign direct investment, with a resulting impact on economic growth.

Tackling Corruption in Developing Countries

The Committee supports the Department for International Development in its work with developing country governments fighting corruption. Improving governance and building better institutions are key parts of DFID's strategy.

Sector wide and budgetary support are only suitable where a government has demonstrated a real commitment to tackling corruption. Where a government is unwilling to make the necessary commitment donors will need a flexible approach to the provision of development assistance in order to ensure the necessary safeguards can be put in place. This may include providing support at a regional or sub­regional level or providing assistance through NGOs.

Civil society and local people should be directly involved in tackling corruption and can fulfil a useful role by externally monitoring services. DFID should ensure that local people are involved through participatory poverty assessments and social audits.

Tackling Corruption - Action in the UK

The Government aims to limit corruption by supporting anti­corruption strategies in developing countries, safeguarding development assistance, eliminating bribery from international business and tackling money laundering.

The Committee criticises the fact that the Government has yet to introduce legislation to implement the OECD Convention on the Bribery of Foreign Public Officials in International Business Transactions after current legislation was found to be inadequate by the OECD. Simple and clear legislation should be brought forward as a matter of urgency.

Legislation exists to control money laundering but it is unclear who enforces it and in what circumstances it is enforced. Corruption and money laundering cannot be tackled effectively without better coordination across Government.

The private sector must examine the contribution that it makes to corrupt practice and take greater responsibility for eliminating it, including ending the practice of facilitation payments.


We must continue to help developing countries build an environment that will eliminate corruption. We must not only support developing countries who have made a real commitment to tackle corruption but must also put our own house in order. The Government cannot credibly continue to make improvements in governance a condition for development assistance when it has failed to implement the OECD Convention on the Bribery of Foreign Public Officials. The lack of focus and coordination is hampering efforts to tackle corruption and money laundering in the UK. There is a need for one department or body to take a lead and provide a focus for current activity. We urge the UK Government to act on these issues swiftly.

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Prepared 4 April 2001