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close this bookEliminating World Poverty: Making Globalisation Work for the Poor - White Paper on International Development (DFID - The Stationery Office, 2000, 106 p.)
close this folderChapter 2: Promoting Effective Governments and Efficient Markets
View the document(introduction...)
View the documentSupporting effective government
View the documentCombating corruption
View the documentEffective government requires respect for human rights
View the documentConflict prevents development and increases poverty
View the documentMaking markets work for the poor

Combating corruption

60. More effective government and greater benefits from markets require tougher action - by developing and developed countries - to deal with corruption. The evidence suggests that investment levels are lower in countries with high levels of corruption, due to the uncertainty created, the cost of bribes and time-consuming bureaucracyvii.

61. It is poor people who suffer most from corruption. Essential medicines are diverted; unofficial payments are commonly required for water and electricity connections, as well as education and healthcare; and the police and the judiciary often respond only to bribery.

62. Often this 'petty corruption' is accompanied by 'grand corruption', involving leaders, politicians, senior officials and entrepreneurs. This can take many forms. Bribes may flow from international firms in order to win contracts or seek other favours from politicians and officials. This is often particularly acute in areas involving the allocation of natural resource concessions and their revenues. Sometimes the corruption involves looting public assets within the country. This process leads to distorted decision-making, discriminatory application of regulations, tax evasion and resources wasted on poor projects - all of which damage the prospects for development and poverty reduction and the ability of poor countries to compete in a global economy.

63. Individuals involved in large-scale corruption must be caught and prosecuted but such individuals exist in all societies. What developing countries lack are effective systems of financial management, procurement and accountability.

64. The UK Government is committed to supporting developing countries in their efforts to implement effective anti-corruption strategies. To put our own house in order, we will legislate to give UK courts jurisdiction over UK nationals who commit offences of corruption abroad. The new legislation will put beyond doubt the consistency of UK law with the OECD Convention on the Bribery of Foreign Public Officials, and make it clear that bribes - wherever they are paid - are not tax deductible.

65. Grand corruption is also closely supported by global money laundering, Corruptly acquired money is recycled through the global financial system so that it reappears 'laundered' as apparently legitimately held funds in respectable banks in the developed world.

66. We will introduce legislation to strengthen the law on money laundering, ensure financial institutions uphold their commitments under the legislation and establish good practice, and permit the restraint of assets at an earlier stage in the investigative processviii. We are jointly funding with the European Commission an initiative under the auspices of the Asia/Europe Meeting (ASEM) to develop anti-money laundering strategies in ten Asian countries. We have also provided support for anti-money laundering collaboration between Caribbean countries and in eastern and southern Africa.

67. We are also committed to greater co-operation with developing and transition countries to help them recover funds that were illegally acquired through criminal activity or corruption and subsequently deposited in the UK. We plan to strengthen the arrangements which give overseas governments access to the courts and investigative authorities in the UK so that they can pursue claims to evidence and assets more effectively. Through our development assistance programmes, we will provide advice to governments on preparing their requests. And we are working with other countries to develop an appropriate policy framework for leading financial centres to assist with the recovery of stolen assets.