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Britain spurns US over bribes

First Edition

BRITAIN has refused to join other governments in immediate action against bribery and corruption in trade between developed and developing countries. An appeal by a senior United States official for Britain to adopt measures to prevent companies paying bribes to obtain contracts overseas has failed to change the Government's stance.

Daniel Tarullo, an assistant secretary at the US State Department, met senior officials from the Foreign Office and Department of Trade and Industry in London last week to try to reconcile the differing US and UK positions on a 'working party on illicit payments' set up by the Organisation for Economic Co-operation and Development to decide on action to deter and punish companies making such payments.

The US has proposed that all 24 OECD countries agree to introduce measures immediately and monitor how each country performs. In particular the US wants to outlaw the payment of bribes to overseas organisations and officials and stop such payments being tax-deductible.

The British and Japanese delegations want a review carried out in each country, after which individual governments can decide on action. The French and Germans are said to be closer to the UK position. The US is the only country to have made the payment of bribes overseas illegal, following the Lockheed scandal in which massive bribes were paid to win orders for aircraft. In the UK the paying of bribes in this country is illegal but paying bribes overseas is not. Such payments are also tax-deductible. The British delegation on the OECD working party says there would be 'technical difficulties' in criminalising the payment of bribes overseas.

The OECD group meets later this month to choose between the US and UK approach. The agreed recommendation will be put to finance ministers for ratification in June.

The OECD initiative comes at an embarrassing time for the Government, as a House of Commons select committee investigates the Pergau dam 'aid-for-arms' affair in which bribes were alleged to have been offered to Malaysian ministers to win contracts for British companies.

Mr Tarullo met government officials in London and Paris last week to try to swing opinion in favour of the US plan. He also had talks with Jean-Claude Paye, the influential OECD secretary-general, to advance the US cause.

Mr Tarullo told the Independent on Sunday he had failed to win support from Britain. 'I feel confident that our position is now well understood in Her Majesty's government and I'm hopeful that in further dialogue we will come closer together,' he said.

The US was becoming increasingly impatient with the delaying tactics and intransigence of some countries, he added. 'For the past four years the ad hoc group has worked on this issue, more than enough time to establish the problem, develop an approach and draft an effective code or recommendation. Yet the most recent meeting of the group suggests that some members prefer to minimise the problem and dilute efforts to redress it.

'From our perspective, the issue is whether the recommendation that emerges will include concrete and significant steps by each member to combat corruption overseas. The alternative is the OECD initiates a review at the end of which some action may or may not take place. Our view is, everybody ought to take action now.'