Byers will block aid to firms that bribe for foreign contracts

British companies involved in corruption will be barred from receiving Government backing for their projects abroad, the Trade and Industry Secretary Stephen Byers will announce this week.

British companies involved in corruption will be barred from receiving Government backing for their projects abroad, the Trade and Industry Secretary Stephen Byers will announce this week.

Mr Byers will promise to cancel Export Credit Guarantees, a form of Government insurance, for companies which are found guilty of offering bribes to win contracts.

Balfour Beatty, a British construction company which hopes to win official backing for its role in building the controversial Ilisu Dam in Turkey, is facing prosecution in Lesotho over alleged corruption payments over a dam project there. Its US offices were raided by the FBI earlier this year, though the firm strongly denies any wrongdoing.

Mr Byers' announcement follows demands for a change from the House of Commons' International Development Select Committee, which called for "black-listing" of UK firms guilty of corrupt practices.

In response to the committee's report, published in July, Mr Byers will say a conviction for bribery or corruption will in future be grounds for refusal of an application to the Export Credit Guarantee Department (ECGD).

Likewise, inclusion on a list of firms ineligible for World Bank financing because of fraud or corruption will also bar firms from receiving ECGD cover. In the current version of the list, 36 of the 54 companies listed are British, though there is no record of any of them having ECGD cover.

Mr Byers will add that firms which have already received cover will have it withdrawn if they are found to have been involved in wrongdoing. His announcement follows a series of Government and European moves to clamp down on corruption. Earlier this year a Home Office Minister, Charles Clarke, announced plans for a new anti-corruption law which would make UK firms liable in the British courts for their actions abroad.

A European convention on corruption, signed by Britain last December, obliges the UK to make "trading in influence" a crime. That was defined as promising undue advantage to someone who claimed to be able to influence decisions.

The firms most likely to be affected by the changes are those tendering for major contracts abroad in industries such as construction, defence and energy. In the past they could not be prosecuted for offering inducements abroad in return for contracts.