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Bribery Act - Just days away?
 

Over the weekend the Telegraph reported that the Bribery Act’s guidance notes are just days away from being released. Under pressure from the US government and the Organisation for Economic Co-operation and Development the government is now expected to publish the guidance notes by the end of this week.

Whilst we’re happy to finally hear that the guidance notes are to be published, the government’s delay has been highly worrying. Passed under an all party consensus under Labour and receiving Royal Assent in April last year, the Bribery Act is long overdue.

As we’ve blogged, the Act has come under significant lobbying and criticism from the City of London, business groups, the London Stock Exchange and, not surprisingly the multinational chairman’s group whose members, according to the Guardian include BP, Shell, Diageo, Unilever and Vodafone. Indeed, John Cridland, the director-general of the Confederation of Business Industry, or as his biography describes himself, ‘the voice of business’ has argued that the Act is ‘not fit for purpose’.

What about the voice of those who suffer the cost and consequences of bribery?

Let’s not kid ourselves, bribery is real, serious and disastrous. It is fair that the government hears all sides concerned but it is of vital importance that all voices in the consultation period are heard.

That is what we, with you, have endeavoured to do. It is our goal to give a voice to those who believe that bribery, in all its forms, should be stamped out. It’s our government, and we deserve a say in how it operates and who it listens to.

And that is what the Bribery Act campaign is about. It’s us, ordinary everyday people, joining together to take a stand- to hold our leaders to account and to demand a better standard of accountable, ethical, governance. We don’t tolerate bribery in our personal lives so why should the government allow our businesses to operate in such a way?

With the Bribery Act, the Government has an opportunity to become a leader in the global effort against corruption. It’s an opportunity it shouldn’t waste.

That’s why we at the Global Poverty Project, along with our friends at Transparency International believe that the guidance notes, which form the basis of the Bribery Act, should be released without amendment and that the Act should be implemented as soon as possible.

That’s why over the past few months we’ve written blog articles, sent out numerous email campaigns, and worked closely with Transparency International in keeping a close watch on the government.

And now, we’re about to find out.

We will continue to keep you informed and updated as to the content of the guidance notes. We expect that with the release of the guidance notes the Government will demonstrate with action, and not words, its commitment to combating bribery and the corrosive effect it has on society, business and most importantly those who suffer its’ effects the most – the poor.

 
Posted by Perrin Wilkins (Corruption Campaigner) in Corruption & Governance for column GPP - United Kingdom on Mar 28th 2011, 14:19
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UK: Live Below the Line - Why 1 pound?
 

As our Live Below the Line campaign gains momentum and groups at schools, workplaces, universities and community groups around the country sign up to take the challenge – the Live Below the Line team wanted to explore the reason behind the £1 a day Line we’ve set for the challenge this May.

Live Below the Line is a challenge designed to provide people across the UK with a small insight into the challenges faced by the 1.4 billion people in our world trapped in the cycle of extreme poverty, and to raise funds for crucial anti-poverty initiatives creating change for those who need it most.

The challenge is set at £1 a day, because this is the current UK purchasing power equivalent of the World Bank’s International Extreme Poverty Line – the US$1.25 on which the world’s poorest people survive on every day – for all their food, health, transport, education and general living costs.

As Brits we could never begin to understand the lack of opportunity and constraint in living on this tiny amount, but by just trying to feed ourselves with the same amount, we can start to get a small understanding of the lack of choice and opportunity available to those trapped in the cycle of extreme poverty.

So – how do we figure out what the UK equivalent of the International US$1.25 a day figure is?

There are a few steps involved:

1. Understanding how the World Bank arrives at the US$1.25 a day figure.

The International Extreme Poverty Line was last set by the World Bank in 2005. They came up with the number by finding the purchasing power adjusted average national poverty line of the world’s 10 – 20 poorest countries.

That is, they created the line by analysing of what it means to live in poverty in the poorest nations of our world (as opposed to what it means to live in poverty across all nations).

International Extreme Poverty Line = Average of national poverty lines in world’s poorest nations.

The national poverty lines of the poorest countries are typically set using some version of the ‘cost of basic needs’ method. This generally involves:

  • Setting a ‘Food Poverty Line’ - established by pricing a food bundle that provides a minimum calorie intake required to survive,
  • Adding an allowance for non-food spending (typically obtained from data on the non-food spending of people near the food poverty line),
  • Then setting an ‘absolute’ Poverty Line – determined using the minimum value of consumption needed to be deemed ‘not poor’ in the world’s poorest countries.

National Poverty Lines = Cost of minimum calorie intake + equivalent non-food allowance

These National Poverty Lines try to establish a level of relative deprivation that defines what it means to be poor in the world’s poorest countries. The World Ban then averages and standardises these National Poverty Lines – using a method called ‘Purchasing Power Parity’ (PPP).

This is a method used to compare the value of products across countries, by taking into account the difference in domestic prices for the same goods. That is - how much of a country’s currency is needed in that country to buy what $1 would buy in the United States. Using this method, the World Bank was able to set an international Extreme Poverty Line taking into account the comparative welfare of the world’s poor in ‘real terms’, rather than exchange rate terms, which wouldn’t reflect the different cost of basic goods in relevant countries.

International figure = National figure, adjusted to reflect comparative cost of goods (PPP)

To learn more about Purchasing Power Parity and why it’s the best measure for comparative cost of living, see this World Bank document. Or, if you’d like to find out more about how the World Bank arrives at their US$1.25 a day figure, read this World Bank document, or the full report here.

2. Translating the international figure for the UK context.

To figure out the UK equivalent of this figure, the first thing we need to do is translate it for the UK context.

Using the same method as the World Bank used to translate its domestic poverty figures to an International Extreme Poverty Line, we use Purchasing Power Parity to convert the International Extreme Poverty Line back to a domestic line.

UK equivalent = US$1.25 x Purchasing Power Parity for UK

World Bank figures tell us that in 2005 (When the World Bank’s International Extreme Poverty Line was set), for every US$1 spent, Brits needed to spend £0.65GBP to buy the equivalent things. This means that the UK equivalent of the US$1.25 figure is £0.8125GBP.

3. Factoring in inflation since this figure was set

As the World Bank’s figure was set in 2005, we need to bring it up to current figures, accounting for inflation and changes in the value of goods – such as food.

Using Bank of England figures, we can see that since 2005 the price of goods has increased by 16.5% to 2010 (when we last got updated figures), which means we need 16.5% more money to buy the same things as we could buy for £0.8125GBP in 2005 – or GBP£0.9465.

Current figure = 2005 World Bank figure x Inflation

Therefore the UK equivalent of the International Extreme Poverty Line of US$1.25 is 95p. Allowing for inflation in 2011 (which is estimated at 4%) and rounding up, we're calling it £1. This means that someone living in extreme poverty survives on the equivalent of a about £1 in the UK.
Posted by Simon Moss - GPP General Manager (Policy and Content Development) in What Can I Do?, Hunger, Poverty for column GPP - United Kingdom on Mar 25th 2011, 04:17
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Bribery Act Update - Facilitation Payments
 

Recently The Telegraph reported that the government has bowed to business pressure and the interests from the City of London in weakening the Bribery Act. According to a ‘leading lawyer’ interviewed by the Telegraph who has seen the guidance a ‘lot of what is in there will be welcomed by business’.

This is troubling.

The new guidance being prepared allows companies to avoid prosecution for some ’facilitation payments’.

So what is a facilitation payment and why should we care?
A facilitation payment is a payment made to an official to perform a function they would normally carry out as part of their job. It’s ‘grease’ money that speeds up a bureaucrat’s decision.

Examples of facilitation payments include the following:

  • Granting a permit, licence or other official document that qualifies a person to do business
  • Processing government papers such as a visa or work permit
  • Providing police protection or mail collection or delivery

It might seem like it’s not that serious - that facilitation payments are necessary to ‘get the job done’. But they are a real problem.

Indeed the OECD considers facilitation payments to have a ‘corrosive’ effect on sustainable economic development and the rule of law recommended that Member countries, including the UK should review their ‘policies and approach’ in order to effectively combat the phenomenon.

Currently, business groups argue that it is impossible to do business without making facilitation payments. Yet, facilitation payments are already illegal under current UK laws so the Act does not create a new bribery offence.

At the very least, it’s expected that the guidance notes will acknowledge that these payments are a problem that cannot be eradicated overnight.

But that can’t be used as an excuse for inaction. Already, a large majority of the 38 countries that are party to the OECD Convention ban facilitation payments, and those that legally ‘permit’ them usually only do so in specific or exceptional circumstances.

Furthermore, because they’re illegal in many countries, many companies already outlaw them entirely.

Indeed, it’s not just NGO’s and development organisations that are calling for the full implementation of the Bribery Act as originally passed. Investor groups recognise the benefits that the implementation of the Bribery Act provide.

The International Corporate Governance Network is arguing that any dilution of the act would be ‘bad’ for Britain’s reputation. Representing institutional investors across 50 countries with a total wealth portfolio of $12 trillion dollars - or more than twice the size of China’s economy - ICGN argued that it was in the interest of global investors and UK industry ‘that there is a clear and enforceable anti-bribery law in the UK’.
It’s time that the government becomes serious in its commitment to combating corruption.

Appointed last June, Ken Clarke’s role is to be the UK’s international anti-corruption champion. When they announced the position No 10 declared that it demonstrated their commitment to ‘transparency and accountability’.

Ken Clarke, went so far as to describe his role as sending out:

‘… a clear message that the UK coalition government will not tolerate bribery or corruption and that we will work together to stamp out these practices across the board.’

It’s time for the government to start listening to it’s own ‘message’. Corruption is a serious problem and watering down the Bribery Act will not curb it’s corrosive effect on those who already suffer the most – the poor.

To be kept up to date on the latest on the Bribery Act and other corruption issues, join our Justice campaign below.
Posted by Perrin Wilkins (Corruption Campaigner) in Corruption & Governance for column GPP - United Kingdom on Mar 9th 2011, 06:15
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Live Below the Line - could you?
 

Join thousands of others living below the line this May.

If you're in Australia, signup here, or in the US, here.
Posted by Guy Kirkpatrick in What Can I Do? for column GPP - United Kingdom on Mar 7th 2011, 07:46
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Proposal for UK law on resource transparency
 

On Tuesday 1 March Anas Sarwar MP stood up in the House of Commons to table a 10 Min Rule Bill requiring legislated transparency standards for companies involved in resource extraction activities.
Enjoying strong support from all three main political parties, NGOs, independent economists and leaders of the developing world the Bill makes it mandatory for companies that discover, drill and dig up oil, gas and minerals to disclose how much money they pay to foreign governments.

The Bill was tabled in the presence of about 25-30 Ministers and passed without one single nay heard or rebuttal. Below is a summary of his points including key quotes:

The Problem: The Resource Curse
Fundamentally the problem that Anas’ Bill is aimed at addressing is known as ‘the Resource Curse’. This is where; ‘In the absence of strong democratic institutions and strong governance, the people of these countries are unable to hold corrupt officials to account, as those officials siphon off public money for their own benefit instead of using it for the public good.’

The Example: Equatorial Guinea
Sarwar cited Equatorial Guinea as an example of the problem. As he pointed out ‘Equatorial Guinea had the 12th highest gross domestic product in the world in 2008, with more than $30,000 per capita. However, it also ranked 121st out of 177 countries on the United Nations human development index.’

The Solution: Greater tax transparency.
Sarwar’s Bill is based heavily on law enacted in the United States and backed by President Obama and thus; ‘In effect, the Bill would replicate the measures in the Cardin-Lugar amendment for UK listed extractive companies, supporting the move towards a global standard on the issue and a first step towards full tax justice for developing countries. The changes would enable civil society and NGOs to hold Governments to account.’

The Purpose: Stronger Governance and Citizen Empowerment
Sarwar argued that requiring companies to disclose their payments increases the available information to citizens in resource rich countries with the outcome that, ‘Transparent, effective tax systems and the reduction of corruption could allow money otherwise lost to be spent on schools, doctors, clean water and infrastructure-exactly the kind of projects on which British aid money is spent now. Improving access to their own wealth could lead many developing countries out of poverty, away from aid dependency, and into self- sufficiency and sustainable growth-the ultimate development goal.’

The Companies: The Money and the responsibility
Sarwar pointed out that that the London Stock Exchange has a responsibility to act ‘With more than 80 extractive companies listed on the London stock exchange, representing more than £1 trillion of capital, the UK has a responsibility to take action on the issue, for the benefit not only of the developing world but of UK business.’

The Context: EU Wide Push for Action
This bill comes just as this issue is picking up steam across Europe. As he acknowledged, ‘Although I have been working on the Bill for several months, its introduction could not have come at a much better time. During the recess, we had the welcome news that the Chancellor and the Business Secretary are backing President Sarkozy's plans for Europe-wide rules on the issue.’

The UK: Our Role
Sarwar made it clear that whilst the EU is acting, there is no excuse for the UK to take a back seat on this issue because, ‘Independent action by the UK would not jeopardise EU progress, but would strengthen the campaign by setting an important example. It would represent a big contribution to international development at little or no cost, while at the same time promoting the kind of corporate social responsibility of which we can all be proud.’

The Reason: Justice
Sarwar acknowledged that the theft and mismanagement of natural resource wealth is a problem that needs to be dealt with urgently. As he pointed out it is those in developing who suffer the most and as matter of justice this needs to be addressed because, ‘The amount of money disappearing every day could translate into lifting millions of people out of poverty in developing countries [and the] developing world does not have time to wait for Europe to catch up. A genuinely sustainable and cost-effective approach to international development demands that the UK Government act now.’

Our response: Act
At the Global Poverty Project we stand in support Anas Sarwar's Bill. Like him and many others we too believe it is time for the Government to act.  Join us in creating a movement of people committed in demanding the Government implement greater transparency standards in the oil, gas and mining industries. Join our movement for Justice.
Posted by Perrin Wilkins (Corruption Campaigner) in Corruption & Governance for column GPP - United Kingdom on Mar 5th 2011, 10:58
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