Consultation outcome

Full details of the consultation relating to UK Export Finance's anti-bribery and corruption policy

Updated 28 January 2016

1. Introduction

UK Export Finance, the Export Credits Guarantee Department, wishes to consult on proposed changes to the anti-bribery and corruption declarations and undertakings which it requires from customers. The changes take into account that UK Export Finance is now supporting a wider range of exporters, including smaller exporters, and considers it appropriate to make the declarations and undertakings clearer. The consultation also covers the approach UK Export Finance proposes to take when making any further changes in the future to its anti-bribery and corruption procedures or their application.

2. Background

2.1 Current anti-bribery and corruption policy, principles and practices

Our anti-bribery and corruption policy was largely established in a series of Government Responses to a public consultation that were published in 2005-06. The aim was to establish how we should play our part in the Government’s efforts to combat bribery. The objective was that we should avoid supporting export transactions that may be tainted by bribery and thereby put the taxpayer at risk. A statement of our role in deterring bribery as published by the Government in 2006 is reproduced at Annex A to this document.

We apply a number of principles to fulfil the objective as follows:

• inform customers of the consequences of bribery (as established in the Bribery Act 2010)
• warn our customers that we will pass any suspicions relating to bribery, corruption or money laundering to investigatory bodies (e.g. the Serious Fraud Office)
• require customers to make declarations and undertakings that neither they nor certain classes of persons associated with the supply of the exports (e.g. any agent, group company or consortium partner) has engaged in corrupt activity or been convicted or blacklisted for engaging in corrupt activity
• require customers to supply information about the use of agents in relation to the export transactions we are asked to support
• make reasonable enquiries to inform a judgement as to whether or not those export transactions may be tainted by bribery or corruption
• obtain recourse rights so that we can recover any loss suffered where bribery or corruption has occurred in relation to those export transactions

It is also the policy of the Government that we should abide by international agreements which apply to export credit agencies. The international agreement that relates to combating bribery and corruption is the OECD Council Recommendation on Bribery and Officially Supported Export Credits (OECD Bribery Recommendation) which was adopted in 2006.

We have adapted our anti-bribery and corruption practices since 2006. In 2009, following a public consultation, we adapted our anti-bribery and corruption procedures for the purposes of the Letter of Credit Guarantee Scheme. In 2010, following a public consultation, we adapted the way we apply our anti-bribery and corruption practices in situations where we provide reinsurance to another export credit agency that is a member of the OECD and therefore follows the OECD Bribery Recommendation.

Since 2010:

• our customer base has widened: we now provide trade finance and credit insurance support to an increasing number of customers, many of whom are small and medium sized businesses (SMEs)
• we have extended our product range by introducing, for example, our bond support and export working capital schemes and a direct lending facility
• we have started on a programme of updating our product documentation to make it more user-friendly

In addition, new legislation, the Small Business, Enterprise and Employment Bill, has been introduced into Parliament which, if enacted, will broaden our powers to provide support. Among other things, we will be able to provide support to exporters, those wishing to export, and those in exporting supply chains, where the support is not linked (as is currently the requirement) to a specific export contract.

3. Proposals for change

3.1 Simple and clearer declarations and undertakings

These developments have led us to review the anti-bribery and corruption provisions that currently appear in our application forms and product documentation. We have concluded that:

• we need to simplify the provisions, in particular so that they are better suited to SMEs, who increasingly use our services
• we will need to adapt the provisions, and the anti-bribery and corruption procedures that we apply, in relation to any new products we introduce that are aimed at exporters and companies in an exporting supply chain
• in keeping with our strategy, we need to be in a position to respond, in an agile fashion, to any future changes in products, circumstances, legislation or international agreements

We consider that, by making the wording of the anti-bribery and corruption provisions in our applications and other product documentation less complex, we will have greater assurance that customers understand their meaning before signing the applications forms, insurance policies and other documents in which they appear.

By way of example, we have produced a new proposal form containing revised anti-bribery and corruption declarations for our export insurance policy (EXIP) and revised wording for the related policy document. A copy of the new proposal form containing the revised declarations can be found here. A copy of the current proposal form can be found here and an explanation of the differences between the two forms here. The explanation includes a detailed table showing how the anti-bribery and corruption declarations that we currently require for our EXIP have been reflected in the new proposal form.

A copy of our current EXIP policy document can be found here. A copy of clause 12 of that document (which contains the document’s anti-corruption provisions), marked up with complementary changes and the reasons for them, can be found here. We may make further changes to the language of this clause later this year as part of a review of the policy document’s wording as a whole.

We would welcome any representations or comments on these matters and on the proposed new documentation.

3.2 Future changes

If the Small Business, Enterprise and Employment Bill is enacted, we expect to use our widened statutory powers to increase our product range. We therefore expect further changes to continue to our anti-bribery and corruption practices over the coming years as we look to deliver our strategy to have a competitive offering throughout the economic cycle and to enhance the quality of service to our customers. For example, a likely first step will be for us to enhance our current export working capital scheme so that we are able to support general financial facilities to exporters and potential exporters, and not just facilities that are linked to a specific export contract.

If we do this, we are currently minded to adapt the anti-bribery and corruption declarations that we require and the enquiries we make as follows:

• we will require anti-bribery and corruption declarations from the customer that match the declarations that we currently seek, but omitting reference to specific export contracts (that may not necessarily be in existence at the time we provide support), consortium partners and other group companies
• we will require the facility to include an event of default that enables us, by giving directions to the facility provider, to take appropriate action if an event happens which means that the customer would no longer be able to make the declarations
• we will not seek declarations or make enquiries as a matter of course about the customer’s agents and their role in helping to obtain an export contract (that may not be in existence)

We would welcome any representations or comments on our proposed approach and, indeed, on any other matters relating to the design of the new documentation that will be needed.

When considering the form and substance of any anti-bribery and corruption provisions and procedures to be used in relation to any of our products, we will continue to be guided by the aim and objective set by the Government to deter bribery and where applicable the requirements of the OECD Bribery Recommendation, as amended or replaced from time to time, as well as any applicable UK or EU legislation. We will therefore continue to take reasonable precautions, including making reasonable enquiries, to avoid supporting exports tainted by bribery or corruption, adapting what we do according to the nature of the product and the financial and contractual structures being supported.

We make it clear that, in future, we will determine whether, to what extent, and how we should consult on any changes to our anti-bribery and corruption provisions and procedures in accordance with applicable government guidelines as published from time to time as set out in our Mission and Principles statement (including currently, and specifically, the Consultation Principles published by the Cabinet Office in 2013, a copy of which can be found here. Therefore, and irrespective of past practice, that is the basis on which we intend to make our consultation decisions going forward. There should be no expectation that we will always consult on changes to our anti-bribery and corruption provisions and procedures; or indeed any other expectation beyond that we will consider any such change on a case by case basis in line with then current guidelines.

4. Responding to this consultation

Any representations regarding this consultation should be sent by email to cxo@ukef.gsi.gov.uk so as to arrive no later than Friday, 15th May 2015.

We will have regard to any representations received before introducing the new proposal form and policy document for the EXIP or in considering in the future the terms of any new products.

All responses will be published as part of the Government’s response unless a respondent states that it wishes its response to be treated as confidential and it would not be inconsistent with our obligations under the Freedom of Information Act to do so.

5. Annex A

5.1 ECGD’s role in deterring bribery and corruption

HMG considers ECGD’s role to be as follows:

1. ECGD is expected to take reasonable precautions, including making reasonable enquiries, to avoid financial loss by becoming involved in transactions tainted by bribery or bribery and corruption.
2. Judgements about those precautions have to be made within the timescale of the commercial transactions which ECGD has been asked to support and in the absence of statutory powers of investigation.
3. Whilst ECGD must make the best judgement it reasonably can on whether a transaction is likely to involve corrupt practices, ECGD cannot guarantee that a transaction with which it is involved may not subsequently prove to be tainted because it is working at arms length from those entering into export contracts and because of the timescale referred to and the absence of statutory investigative powers.
4. It is appropriate, in consequence, that any investigations which ECGD is able to make before entering into arrangements should be supplemented by contractual powers enabling ECGD to have financial recourse to Applicants in specified circumstances should transactions subsequently prove to have been tainted by bribery and corruption.
5. The responsibility for the detection, prevention and suppression of criminal offences resides with law enforcement bodies, who carry out investigations when appropriate
6. It is legitimate and appropriate nevertheless for ECGD, in view of both the moral and business cost of bribery and corruption, to play a wider part in that effort than one restricted solely to the protection of the Exchequer interest in transactions to which it makes a commitment.
7. But that wider role does not extend to its conducting a more thorough-going pre-contract investigation of the potential existence of bribery and bribery and corruption. As a result, it cannot guarantee to expose every incident of bribery and bribery and corruption.
8. The wider role, instead, involves the deterrence of bribery and bribery and corruption, for instance: by the reporting of all suspicious circumstances to the Serious Fraud Office, with the consequence that a decision will be made regarding investigation by criminal investigative bodies; by the imposing of appropriate contractual consequences should bribery and bribery and corruption transpire to have taken place in a supported transaction; and/or by applying the principles set out in Annex D to the Interim Response on the withholding of support in future transactions for those who have been found guilty of bribery and bribery and corruption.

Source: The Government’s Final Response to ECGD’s consultation on changes to its anti-bribery and bribery and corruption procedures introduced in December 2004.