What the UK can do about corruption in the global South

Western countries are effectively giving corrupt people and companies the tools to steal from their citizens.

By Catherine McKinnell, Labour MP for Newcastle North, and Anas Sarwar, Labour MP for Glasgow Central

There is, apparently, a global day for radiators. And a global day for hugs, and Pi, and Jazz.

Understandably, there is also a bit of fatigue around global days of anything. Most of them pass without much notice in the UK. But we think it is pretty important to acknowledge that today is International Anti-Corruption Day and here’s why.

Everyone knows corruption is wrong. It keeps poor people poor and allows rich people to capture both money and power. There will be a lot of people making these points at anti-corruption day events across the developing world today.

But they will also most likely make the point that combating this problem is not entirely in their hands. When people take large bribes or syphon off oil and mining profits in resource rich states they do so with outside help. That help very often comes from the UK.

Why? Because by definition, people and companies in countries which suffer from weak governance do not want to keep their money there. They want it in safe places like international financial sectors based in countries regulated by effective legal systems, such as the UK.

To place their money here, or route it through London on the way to another finance hub, they need a few things which the UK can also provide: companies who bring a veil of anonymity to those disguising ill-gotten wealth and the lawyers, accountants and bankers who arrange the deals. Many of these professionals are based in London and/or work for London-listed firms.

So, as much as active citizens in developing countries might hold their governments to account for corruption, that is only one part of the puzzle. Unless our policy changes, Western countries are effectively giving corrupt people and companies the tools to steal from their citizens.

Not only does this threaten the aid money we rightly give, it also creates a structure which people in this country use to evade and avoid vast amounts of tax, as we have repeatedly seen.

There are various things we can do to prevent this. Most important is the government’s plan to create a public record of who actually controls firms. You would think this happens already, but the UK is actually the first country to promise to create such a record in public.

If we do this well it could encourage other countries to follow suit creating a global standard that would stop individuals and companies using shell companies to illegally take funds from poor countries into rich ones.

But making sure the register actually works is crucial, and also what seems to be at risk right now. It must provide accurate, up-to-date information in a format actually useable. The government must require individuals to submit enough information to identify them. If we only asked for a name, we would essentially give all the businessmen fortunate enough to be called John Smith a free pass.

If the UK is going to take this step, let’s get it right. Most people in government want to make sure we collect enough information to make it useful, but there are rumours of a few high-level mandarins standing in the way. If this register is undermined at the last stages by corporate lobbying or insufficient political will, it could be worse than no register at all.

As members of a cross-party parliamentary network focused on anti-corruption, we will be watching the government’s next steps on this like a hawk. We recommend you do too.

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