Financial Times FT.com

Exporters to identify agents and face random audits in anti-bribery drive

By Jean Eaglesham, UK Business Editor

Published: March 17 2006 02:00 | Last updated: March 17 2006 02:00

Exporters will have to identify middlemen and face random audits to detect potential bribes under tough anti-corruption rules issued by the government yesterday.

Political opponents contrasted the government's tough stance on kickbacks paid by exporters with allegations that Labour accepted multi-million pound loans in return for peerages.

Ed Davey, the Liberal Democrat trade and industry spokesman, said: "It's somewhat ironic that these - welcome - new anti-bribery procedures have been published on a day when the prime minister is under mounting pressure about loans to the Labour party that Number 10 failed to disclose.

"Business is looking for government to take a lead and will expect Tony Blair to put his own house in order."

The new rules for the Export Credits Guarantee Department will come into effect on July 1. Yesterday's announcement is the culmination of tortuous negotiations stretching back to May 2004 when the main export agency angered business by imposing strict new rules without consultation.

The government carried out two subsequent U-turns, relaxing the rules in secret before bowing to a court challenge from campaigners and opening the issue to consultation in January 2005.

Ministers have dropped proposals to limit the agency's right to audit information given by exporters to cases where it has reasonable grounds to suspect bribery. The agency will be able to conduct random audits in future, although it will be required to give companies five days' notice.

The government has also dropped a provision that would have exempted exporters from disclosing which agents or other intermediaries were being used where the commission was below a set amount and not included in the price of the contract.

Under the new rules, the identities of middlemen will always have to be disclosed. The agency has pledged to treat this information in a way that protects commercially confidential data and will now consult business on these internal procedures.

Ian Pearson, the trade minister, said that thegovernment's key concern was to "reduce the risk of ECGD supporting contracts tainted by corruption . . . in a way that is workable for exporters".

Anti-bribery campaigners welcomed the new rules, saying the government had agreed several important changes to tighten loopholes on potential corruption.

Susan Hawley, a consultant for The Corner House, said: "This is a genuine and important step in the right direction which will help go some way to restoring the ECGD's and ultimately the UK government's reputation on fighting corruption. The ECGD deserves credit for taking a fair but robust line."

Business, however, rejec-ted suggestions that it had lost the negotiating battle, saying its core concern had been to ensure that the new rules would be workable and practical, rather than to weaken bribery controls.

Andy Scott, director of international and UK operations at the CBI employers' group, said: "We welcome the fact that the ECGD has accepted large elements of the business case.

"Yes, these rules are tougher than before May 2004 and, yes, they're tougher than what many of our competitors are required to do. But they are much more workable than the rules imposed in May 2004."