1. In the White Paper, 'Eliminating World Poverty:
A Challenge for the 21st Century' economic growth is recognised
as "the prime means of creating income and employment opportunities"
and the private sector as "the main impetus of economic growth".
It became clear to us, as a result of a seminar we held on the
role of the private sector in development, that corruption was
the single most important single factor which discouraged both
domestic capital formation and foreign direct investment in poor
countries. It was also clear that it is the poor who disproportionately
pay for corruption. Therefore, the Committee decided it was essential
to investigate the nature of corruption and ways in which corruption
could be at least reduced if not eliminated altogether. Tackling
corruption is an essential part of development work if that work
is to be sustainable, and for the benefit of everyone in a country,
especially the poor.
2. Mark Malloch Brown, Administrator of the United
Nations Development Programme (UNDP), told the Committee that
historically aid had tended to follow geopolitical alliances.
Anglo American noted that, prior to the end of the Cold War, donor
countries often turned a blind eye where large amounts of aid
were being misspent or subject to high levels of corruption. With
the end of the Cold War, corruption and good governance started
to be openly discussed, as old alliances became less important.
In 1996, James Wolfensohn, President of the World Bank, made his
'cancer of corruption' speech raising awareness, both inside and
outside the Bank, of corruption. Prior to his speech, corruption
had been a taboo subject in the World Bank. Despite efforts to
tackle corruption, it continues to present a significant barrier
to development and good governance.
Today, developed and developing countries are both placing a much
greater emphasis on the need to tackle corruption.
3. Whilst this is the first time the Committee has
examined the subject of corruption in detail, we have, in various
Reports throughout the Parliament, emphasised the importance of
good governance and anti-corruption measures. In the Committee's
Report on the Development White Paper,
we welcomed the White Paper's emphasis on good governance and
the Government's determination to fight corruption. In our Report
on Conflict Prevention and Post-Conflict Reconstruction,
we noted that corruption invariably led to higher prices, fewer
employment opportunities, the diversion of scarce resources away
from poverty elimination, constraints to growth due to the uncertainty
and unpredictability of costs to prospective investors, reduced
representation for the poor and the perpetuation of elites.
We went on to recommend that the Government bring in legislation
to criminalise the bribery of foreign public officials and cease
the tax deductibility of such bribes. We also expected businesses
dealing with the developing world to have in place clear and regularly
monitored anti-corruption standards. We return to both of these
issues in this Report and discuss them at length below.
4. Our inquiry had wide terms of reference and covered
a large number of issues. Given the complexity of the subject,
we are conscious that such an inquiry can only begin to scratch
the surface of what are formidable development issues. A general
election is imminent and uncertainty over its exact timing has
curtailed the time available to us to analyse and consider all
the matters raised by this inquiry. In this Report, the Committee
does not intend to provide a comprehensive, in-depth analysis
of every issue. However, we will cover a number of the important
questions raised and highlight the concerns we have about the
way corruption is being addressed, particularly by the United
Kingdom Government. Over the course of the Inquiry the Committee
has received evidence relating to the late General Sani Abacha
and attempts by the Nigerian Government to recover the funds looted
during the former president's time in office. Much of the evidence
relates to matters that are sub judice and it would be
inappropriate to comment on them in this Report. However, the
Committee has deduced a number of general points from the specific
evidence, particularly in relation to the controls on money laundering
and the freezing of assets, and these are included in the Report.
5. In Section 1, this Report will examine the nature
of corruption before going on to look at its causes in Section
2. We assess the impact of corruption on development in Section
3, before considering how developing countries are tackling corruption
in Section 4. Section 5 examines the ways in which development
assistance can be protected from corrupt practices, while Section
6 deals with the actions needed in the UK to curb our contribution
to corruption in developing countries. George Staple, Clifford
Chance, said in his evidence to the Committee, "You have
received, of course, a huge amount of evidence, from a wide range
of experts, throughout your hearings, and, reading through it,
I find it difficult to find anything really that had not been
touched upon in the course of the hearings".
The evidence taken by the Committee is appended to this Report
and we hope that this will provide a useful resource for policy
makers and researchers alike.
6. During the course of the inquiry, the subject
of corruption has rarely been out of the news. President Estrada
has been forced from office in the Philippines following allegations
of corruption; President Wahid of Indonesia has been accused of
corruption; aid to Kenya has been suspended after the Kenya Anti-Corruption
Commission was ruled unconstitutional and the Nigerian Government
has been trying to recover funds looted by the Abacha regime.
During our recent visit to Vietnam and Cambodia, corruption was
an issue that came up on numerous occasions. No corner of the
world is untouched, with reports of corruption scandals from China
to Peru. Corruption is not only an issue for developing countries
but continues to impact on most, if not all, developed countries
in some way.
1 Eliminating World Poverty: A Challenge for the 21st
Century, White Paper on International Development, DFID, Cm 3789,
3 Q.313 Back
4 Q.309 Back
Report from the International Development Committee, Session 1997-98,
The Development White Paper, HC330 Back
Sixth Report from the International Development Committee, Session
1998-99, Conflict Prevention and Post Conflict Reconstruction,
HC 55-I Back
9 Q.590 Back