Bribery and corruption are back in the news

Governments and parliamentarians really do take the biscuit. With a few honourable exceptions, they take it as their right to take our money and spend it like there was no tomorrow. In fact, they are liars, as Janet Daley pointed out in the Sunday Telegraph of 22nd December 2012.

They mess with our pension arrangements; except their own unbelievable packages. They tax and regulate people and businesses like mad, regardless of the consequences. Many are ignoramuses, blaming others for their own misdeeds. Examples being the fiasco of railway franchises, and lashing out at businesses such as Starbucks for legal and correct efforts to pay as little tax as possible on behalf of their shareholders.

One of their greatest successes in falsely accusing others, concern the laws of bribery. This topic has cropped up again in recent months, not least with regards to Rolls Royce and its dealings in Indonesia. A couple of years ago, it was BAE and Saudi Arabia. I wrote a blog on the latter affair which was published by the Institute of Economic Affairs and is also on my own website.

I reproduce my analysis below, the basic lesson being simplicity itself. Namely, that it is governments – and not businesses – which use bribery as a matter of routine.

“Bribery and corruption are back in the news, with a new Bribery Act coming into force next month. But what exactly is bribery or corruption? In a recent article in the Daily Telegraph, the head of the criminal and regulatory department at Kingsley Napley, wrote that the essence is ‘the transfer of loyalty from an entity to another person as a result of inducements (i.e. bribes).’

Thus, if I ‘transfer my loyalty’ from Monarch to EasyJet because the latter offers 20 per cent off, or persuade Europe Car Rental to offer cheap deals for EasyJet fliers, then according to this argument, EasyJet is corrupt. Similarly, if Waitrose offers me 50 per cent off an ‘affordable Art Fair in London’ (negotiated with AAF) and I ‘transfer my loyalty’ from Morrisons to Waitrose, then Waitrose is corrupt.

This cannot be correct. Surely there are only two ways that corruption can take place in a deal where A is seeking to supply B. The first is if a representative of A offers a sweetener to a potential customer without agreeing this with his colleagues – for example a transfer of loyalties from A to B. The second is where the entity of A offers a sweetener to a representative of B, who accepts on behalf of his colleagues without disclosing the personal sweetener; a transfer of loyalties from B to A.

We can now assume that in the BAE-Saudi case, all BAE’s directors and shareholders were happy to give an inducement to an individual within the purchasing entity. The onus is on that individual to clear it with his colleagues. If he does not, then he, and nobody else, is corrupt. Therefore, the corrupt parties were the officials within the Saudi government, who by failing to disclose their sweetener, transferred their loyalty from that government to BAE.

Given the massive corruption in government itself, it seems to me that the real political agenda is to protect governments and their officials by agreeing with their equivalents abroad to shunt the corruption elsewhere.”

Back at home, government spends a lot of its time on bribery without blushing. As a simple example, NHS chiefs have routinely accepted sports hospitality for awarding companies lucrative health service contracts. The government and the political class sweeps such activities under the carpet and when that fails, argue that the supplying companies were the perpetrators. Under my approach, the relevant NHS employees (and nobody else) are the culprits, and we must nail the highest level of authority which sanctioned the behaviour – government, NHS bosses, NHS Trusts, and beneficiaries, as the case may be.

As for the shenanigans behind the recent Olympic Games, with some 50 per cent of tickets for the biggest events going to VIPs or Olympic “clients,” don’t ask.

Terry Arthur is an author of various books including “Crap – A guide to politics“, a Financial Regulation Fellow of the Institute of Economic Affairs and a Fellow of the Adam Smith Institute.

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