Bribery and corruption are back in the news, with a new Bribery Act coming into force next month. But what exactly is bribery or corruption? In a recent article in the Daily Telegraph the head of the criminal and regulatory department at the law firm Kingsley Napley wrote that the essence is ‘the transfer of loyalty from an entity to another person as a result of inducements (i.e. bribes)’. He also described as ‘sensible’ the Labour government’s decision to put the onus on companies to demonstrate that they have adequate procedures to combat bribery. The only way that these two positions can be reconciled is to assume that in any conflicted situation an ‘entity’ is always wrong and a person is always right!

Thus if  I ‘transfer my loyalty’ from Monarch to EasyJet because the latter offers the inducement of 20% off, or persuades Europe Car Rental to offer a cheap deal for EasyJet fliers, then, according to this argument, EasyJet is corrupt.  Similarly if Waitrose offers me 50% off an ‘An affordable Art Fair in London’ (negotiated with AAF) and I therefore ‘transfer my loyalty’ from Morrisons to Waitrose, then Waitrose is corrupt. This cannot be correct.

Surely there are only two ways that corruption can take place in a deal where A is seeking to supply B. The first is if a representative of A offers a sweetener to a potential customer without agreeing this with his colleagues – i.e. a transfer of loyalties from A to B. The second is where the entity of A offers a sweetener to a representative ofB, who then accepts on behalf of his colleagues without disclosing the personal sweetener; a transfer of loyalties from B to A.

If we now assume, for the sake of argument, that in the BAE-Saudi case, all BAE’s directors and shareholders were happy to give an inducement to an individual within the purchasing entity, the onus is on that individual to clear it with his colleagues. If he does not, then he, and nobody else, is corrupt. Therefore, the corrupt parties were the officials within the Saudi government, who by failing to disclose their sweetener, transferred their loyalty from that government to BAE.

Given the massive corruption in government itself, it seems to me that the real agenda is to protect governments and their officials by agreeing with their equivalents abroad to shunt the corruption elsewhere.

We now read in the Sunday Telegraph that NHS Chiefs have routinely accepted sports hospitality for awarding companies lucrative health service contracts. The government and the political class will no doubt try to sweep it under the carpet and to the extent that fails, to argue that the supplying companies were the perpetrators. Under my approach, the relevant NHS employees (and nobody else) are the culprits and we must nail the highest level of authority which sanctioned the behaviour – government, NHS bosses, NHS Trusts, and beneficiaries, as the case may be.

Terry Arthur 154x154

IEA Pensions and Financial Regulation Fellow

Terry Arthur is a fellow of Pensions and Financial Regulation at the Institute of Economic Affairs and has written on this subject for a number of publications, working closely with Philip Booth, Editorial and Programme Director at the IEA.

1 thought on “Official views of corruption make the innocent guilty”

  1. Posted 23/03/2011 at 07:12 | Permalink

    What is the point of a Conservative Govt if they continue to let such legislation thru? The recent equalities ruling were bad enough. I appreciate Clegg’s mob are in there too but if this is what we get then we may aswell have kept Gordon in office.

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