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Beware bribery and corruption in Brexit’s new world

Phillip Inman
Supporters of rightwing Brazilian presidential candidate Jair Bolsonaro display a banner in support of the “car wash” (lava jato) investigation at an airport in Brazil. Photograph: Heuler Andrey/AFP/Getty Images

As Britain bids farewell to the single market, plenty of businesses are looking further afield for export opportunities.

Some are jumping aboard the trade missions organised by Liam Fox’s department for international trade, while others look to their local chambers of commerce to take them on visits to the far-flung nations trumpeted by Fox as among the fastest growing on the planet. It is an exciting prospect and one that holds out the prospect of replacing lost trade with the EU.

Unfortunately it means these businesses could also be preparing, however unwittingly, to pay bribes and enter corrupt dealings with public officials – if not directly, then through the intermediaries that provide links in the chain between themselves and foreign consumers.

Is corruption so pervasive? In Transparency International’s list of corrupt nations, the UK, along with most of western Europe, is generally virtuous. In the words of the organisation – which the World Bank and many governments rely on as a guide to global corruption – two-thirds of the 180 countries and territories surveyed in 2017, most of them beyond Europe’s borders, are “corrupt” or “highly corrupt”.

More than 100,000 businesses, households and experts are quizzed by the organisation about how much corruption they believe exists and to what extent they have been offered, or used, bribes. It is clear from its findings that the further east from Vienna and south from Munich you go, the more likely you are to find a hand that needs greasing if you want something done.

Most corruption doesn’t make the headlines: it is more mundane, involving officials on low and middle incomes

Vienna marks the boundary line that Professor Andrew Kakabadse draws when he lectures at Henley Business School on the extent of bribery and corruption in business and public sector organisations.

Mexico, Brazil and South Africa are among those spiralling into a mire that they may not be able to escape any time soon. The “car wash” scandal in Brazil is an example of how far the tentacles of corruption can reach into civil society. That investigation started as a small-time money laundering probe into a car wash operated by a local gangster, until it became apparent that a senior executive at the state oil company Petrobras was using the company as a front to pay bribes. Eventually, hundreds of officials were implicated and President Lula da Silva himself became embroiled.

There was a brief moment when it appeared the probe was going to cleanse the country of businesspeople and public officials involved in corruption. But resistance from parliament and officialdom has quickly undermined that idea. Last week, an attempt to revive a law that allows prosecuted criminals to stay out of prison while they appeal was only narrowly defeated. The decision meant that Da Silva, who favoured the law’s return, gave himself up to the courts.

However, that was a lone victory in an otherwise dire situation, and was only achieved by a five-to-four vote in the supreme court.

Most corruption doesn’t make the headlines: it is more mundane, involving officials on low and middle incomes, and operates with the tacit approval of government, rather than its active involvement.

Kakabadse says the usual scenario involves making contact with a local agent who can introduce a company to important officials. “The key introductions will be with government – local, regional or central – in order to obtain licences to trade. The agent will let the exporter know a total fee, without giving details of any bribes or foreign bank accounts used. The exporter simply has to make a payment to the agency in question as a total fee.”

Four years ago, Mexico appeared to be beginning the arduous task of tackling corruption under President Nieto. Then he was forced to defend his wife against accusations that she took kickbacks in a property deal: a brief period of hope was dashed and business as usual resumed. In the health service, whether in the private or public sector, if doctors control budgets for equipment and drugs, they can insist on bribes as the price of a contract.

Mexico imports medical equipment mostly from the US, Germany, France, Israel and the UK. Far too many companies involved will be turning a blind eye to the backhanders that their agents price into the cost of doing business.

India’s prime minister visits the UK this week. Several Indian journalists have been killed recently trying to unearth corruption. It’s not a subject that is expected to surface in talks that Fox expects to be the precursor of a trade deal.

In its 2017 report, Transparency International said: “The majority of countries are making little or no progress in ending corruption.” British companies need to beware.