War On Corruption? Not Quite, Minister

Greg Palast

By Gregory Palast for The Observer/Guardian UK

“He announced with enormous pride that he personally had handed over the check to the government minister for the Pergau Dam bribe”

There’s still one bargain left in Rip-Off Britain: the price of a UK minister remains way below the cost of purchasing officials in the USA, even below traditional influence shopping centers in the developing world.

Case in point: This week, it was disclosed that the US Justice Department had sought Swiss help in tracking $60 million from British Virgin Island bank accounts which Justice contends was paid to the current President and former Prime Ministers of Kazakhstan. The account was funded by US giant Exxon-Mobil, British Petroleum and Phillips Petroleum. (There is currently no accusation of criminal intent by the oil firms who, we can assume, had legitimate reasons to send their millions on holiday to the Caribbean.)

By contrast, in 1989, prior to its merger with Exxon, Mobil paid a mere ¬¨¬£10,000 to Neil Hamilton following the MP’s attempt to scupper a tax on North Sea oil. During the trial of Hamilton’s libel suit against Mohamed Al-Fayed and the Guardian, a Mobil executive testified that MP Hamilton, then sitting on the Finance Committee in Commons, demanded cash for defending the oil company’s positions in the committee. The [Mobil] executive was “horrified,” nevertheless, the company suggested the payment be invoiced as a consulting fee, although “the reality was that we were buying off Mr Hamilton for what he had done, in connection with this tax issue.”

In what must be the most stunning, and never reported, statement during the trial, Mobil’s barrister informed its executive that, “THIS WAS THE NORMAL COURSE OF THINGS FOR SOME MP’S WHO DID ASK FOR PAYMENT.”

Really? WHICH other MP’s? And how much? And which other companies received bills from Parliamentarians-R-Us?

Most important, is this “normal course of things” still business as usual? At first blush, it would appear the game is over. Tough-guy lawman Jack Straw last week published, “Upholding Integrity: the Prevention of Corruption.” Extortionists and bribers beware. No more Hamiltonion fees for favors.

Well, NOT EXACTLY, explained a Home Office spokesperson. The Home Office would not deem a bribe payments which are for “remuneration”, consulting fees. Furthermore, Mr Straw’s proposal states that “offering a bribe” will NOT constitute an offense unless the pay-off is “PRIMARILY” the reason for a public servant’s actions. If a future Hamilton simply hates taxes on oil companies deep in his heart, and oil company payola merely stiffens his resolve, the cash is his to keep.

Then bribery is legal? Don’t be cynical. A ten-pound pay-off, says the Home Office, would be a “gratuity,” but a million pound pay-off is corrupt. It depends on the amount which the fixer believes would influence the politician’s decision. How about ¬¨¬£10,000? The functionary told me, either as a warning or an advertisement, “Ten thousand would influence ME, but maybe not some of our wealthier MP’s.” (The Home Office declines, however, to publish the legal price list for each member of Government.)

I was assured that the normal course of things remains undisturbed. “We are not trying to CHANGE the law, just CLARIFY it.” New Labour, promised the Home Office, had simply repackaged current common law and three old codes into a single new statute.

So why had Mr Straw bothered at all with this legal shuffling? Because there was a need for one change. For the first time, the anti-corruption rules, such as they are, will now apply to British corporations bribing FOREIGN officials. This was not a courageous advance toward a moral foreign policy. Rather, Tony Blair has been dragged kicking and screaming into action by the OECD’s declaring Britain out of compliance with the organization’s Antibribery Convention.

Thus, as a result of the Government’s belated and grudging move to adhere to international regulations, UK companies that oblige requests for gratuities from Col. Mustaffa Hamilton of Fanatistan will now be subject to the same diligent lack of prosecution as in dealings with the domestic Mr Hamilton.

The real test of Blair’s commitment to shutting down the worldwide casbah for favors is not whether the Home office puts English executives into leg irons but an action far less dramatic: cutting off public subsidies to companies found guilty of corruption. The World Bank has adopted this simple rule — if you pay off a potentate (and get caught), you lose your loan guarantees and your government contracts.

For the PM, this test is now. The Government of Lesotho has charged the UK construction giant Balfour Beatty (along with several European and American operators) with paying at least 22 million rand to government agents to grease approval of lucrative contract amendments in the building of the Highlands dam. It looks grim for Balfour Beatty. The Swiss government has obliged prosecutors with details of bank accounts traceable to some of the accused.

While Balfour Beatty is in the dock in Lesotho, it is drawing down funds backed by the British taxpayer through the Export Credit Guarantee Department, for the company’s work on the Ilisu Dam project in Turkey.

The ECGD says it is looking into the Lesotho case. I called Lesotho’s Chief Prosecutor about any evidence he had passed to Straw. He told me no one from the Home Office nor the Trade Ministry nor ANYONE from British government had contacted him. That does not mean there has been no UK investigation. The DTI told one watchdog organization that officials asked Balfour Beatty if the charges had merit and the company said, “No.” Well then, case closed.

“Government is so hypocritical,” says Jeremy Carver, head of international law with the firm Clifford Chance. Carver,advisor to anti-corruption campaign Transparency International, cites Jack Straw’s predilection for strong press releases and weak enforcement.

“I went to a DTI reception,” Carver said, “just after the change of government. I was introduced to somebody who identified himself as chairman of a company and we were talking about corruption. He announced with enormous pride that he personally had handed over the check to the government minister for the Pergau Dam bribe” in Malaysia. The corporate honcho, Chairman of Balfour Beatty, it turns out, was not confessing, but BOASTING. Carver noted that the Tory trade minister, learning of the pay-off, publicly congratulated Balfour Beatty on its patriotic competitiveness.

Carver looks longingly at America’s Foreign Corrupt Practices Act, the oldest, toughest such statute, the grounds for the Justice Department’s foray into Kazakstan. But he may not want to look TOO closely at the US experience.

Where, after all, did the Kazakhs get the idea of paying off a President? In 1995 and 1996, Roger Tamraz, an investor promoting US backing for an oil pipeline in Kazakhstan, secretly provided $300,000 to the Democratic Party, a violation of US election law. This did not surprise Johnny Chung, who pleaded guilty to funneling money from the Red Chinese military industries to Clinton’s campaign. Chung, who earned several meetings with the President, explained, “I see the White House is like a subway, you have to put in coins to open the gates.”

These and hoarier tales suggest that American politicians’ zeal to prevent payments of bribes abroad is motivated primarily by a jealous desire to keep all the baksheesh at home.

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Gregory Palast’s column, “Inside Corporate America,” appears fortnightly in the London Observer.