Bribery and Corruption: An Unholy Cocktail of Outsider and Insider Threats

Under the table: bribery and corruption risks have risen in the UK over the past decade. Image: wirat / Adobe Stock

This is the fifth in a series of articles analysing the top 10 serious and organised crime threats to the UK and how they have evolved over a decade. This article traces the journey of and response to the threat of bribery and corruption – a threat that the UK remains far too complacent about.

Bribery and corruption can no longer comfortably be seen as something that only happens overseas or is confined to the underworld of organised crime. It permeates all levels of society, poses a genuine risk to national security, exacerbates illegal migration, eats into the public purse, and undermines public trust in core institutions.

Corruption covers a dizzying array of behaviours including hostile states engaging in strategic corruption to promote their interests in the UK, and corrupt politicians in countries with a weak rule of law looting their public purse to buy luxury property and goods in the UK. It also includes UK-based multinationals bribing corrupt elites abroad to win lucrative contracts, corruption in government procurement contracts (as seen during the Covid-19 pandemic), and organised crime groups paying bribes to police, prison and border services.

Given how diverse this threat is, there is no ‘one-size-fits-all’ solution. But what is clear is that the intelligence gap on the scale and nature of corruption remains concerningly large. This is exacerbated by the hidden nature of corruption, the fragmented law enforcement response, and the absence of adequate metrics to measure the different types of corruption.

As a result, there is a risk that the UK’s response to corruption is largely a stab in the dark, and that repeatedly stated ambitions to stamp out corruption and recover and return more stolen assets remain frustratingly elusive.

Corruption’s Coming Home

A decade ago, the narrative around corruption largely focused on the UK’s moral obligation to respond to corruption overseas as a global leader on international development. Corporate foreign bribery was a political priority following international criticism of the UK by the Organisation for Economic Cooperation and Development (OECD) after allegations that defence giant BAE Systems had engaged in egregious global bribery schemes.

The threat within the UK was seen as limited to organised crime groups, with the government’s 2013 Serious and Organised Crime Strategy highlighting ‘that a significant percentage of organised crime groups in the UK are engaged in bribery and corruption’. Over the course of the decade, however, one particular threat has come to dominate media and political narratives – that of corrupt money being laundered in and through London.

The National Crime Agency (NCA)’s estimate in its 2014 National Strategic Assessment that ‘millions of pounds … [were] laundered through UK financial systems including banks and investment property’ ballooned within a year to ‘hundreds of billions of US dollars … laundered through UK banks, including their subsidiaries, each year’.

While the percentage of these laundered sums linked to corruption is unknown, the NCA noted in 2018 that ‘the UK remains a prime destination for foreign corrupt Politically Exposed Persons (PEPs) to invest in’, with Russia, Nigeria and Pakistan the most common source countries.

Both national and international events over this period have had dramatic and unforeseen impacts on the nature and level of awareness of the bribery and corruption threat in the UK.

The UK’s exit from the EU created new risks of foreign bribery and increased financial flows from high corruption-risk jurisdictions. 11 out of 20 priority markets identified by the government for post-Brexit exports fall in the lower half of Transparency International’s Corruption Perceptions Index, for instance. Meanwhile, financial flows to and from Russia, China, Hong Kong, Pakistan and the United Arab Emirates – countries deemed at high risk of money laundering – were found by the IMF in 2022 to have increased, and in some cases doubled, following Brexit.

The Covid-19 pandemic highlighted vulnerabilities in the UK’s own defences against corruption. Repeated Covid procurement and political scandals which have dominated the media agenda hugely increased public concern about corruption within the UK itself, resulting in the UK dropping from 11th to 18th in Transparency International’s Corruption Perceptions Index in 2022.

Over the course of the decade, however, one particular threat has come to dominate media and political narratives – that of corrupt money being laundered in and through London

And finally, Russia’s invasion of Ukraine has turbo-charged scrutiny of the risks posed by large flows of investment into the UK from kleptocratic regimes with hostile intentions, and of the role of professional enablers in facilitating this investment. Extensive media coverage of the lurid extent to which oligarch wealth has penetrated the fabric of the UK’s society and economy has reinforced public concern and political will to tackle this.

Over the past decade, however, a persistent theme in the NCA’s own threat assessments has been the lack of accurate data on corruption. In 2014, it called for ‘a more cohesive and consistent intelligence picture from the public and private sector’. In 2018, it acknowledged that ‘the true scale of PEP investment in the UK is not known’, and in 2020 it highlighted the lack of ‘an accurate picture of the scale and nature of domestic bribery and corruption’. The National Audit Office’s conclusion in 2023, meanwhile, was that the government ‘does not have a good understanding of the extent of corruption’ in the public sector.

Rhetoric or Reality? A Decade of Anti-Corruption Commitments

The UK has not been short on initiatives to tackle corruption in the past 10 years. Its first Anti-Corruption Plan in 2014 was followed by a major London International Anti-Corruption Summit in 2016, and a new five-year Anti-Corruption Strategy in 2017.

Legislation has flowed thick and (with a few hiccups) relatively fast. The landmark Bribery Act 2010 was followed by legislation in 2014 introducing corporate settlements or Deferred Prosecution Agreements to make it easier to tackle corporate economic crime. A new police corruption offence was introduced in 2015. ‘McMafia’ tools such as Unexplained Wealth Orders (UWOs) to tackle dirty money in London were established in 2017.

Following Russia’s invasion of Ukraine, two new Economic Crime Acts introduced crucial measures promised at the 2016 Anti-Corruption Summit to tighten up the UK’s corporate register, create greater transparency in overseas property ownership, and strengthen rules for prosecuting companies.

Both the 2014 Anti-Corruption Plan and the 2017 Anti-Corruption Strategy promised to strengthen the law enforcement response to corruption and improve the recovery and return of stolen assets from grand corruption – goals reiterated in the recent 2023–26 Economic Crime Plan.

To this end, some reforms have focused on improving consistency among the myriad enforcement bodies that have operated in this space. In 2016, two aid-funded police units – the Overseas Anti-Corruption Unit in the City of London Police and the Metropolitan Police’s Proceeds of Corruption Unit – which investigated PEPs with wealth in the UK were merged into a single International Corruption Unit (ICU) within the NCA.

Some new bodies have also been created. In 2017, a new International Anti-Corruption Coordination Centre was established within the NCA, and in 2022, following the Russian invasion of Ukraine, a new Combatting Kleptocracy Cell was created, also in the NCA.

The commitments to improve enforcement outcomes have not been made in vain. The UK was described in 2017 by the OECD’s Working Group on Bribery as ‘one of the major enforcers’ of its foreign bribery convention. This was largely as a result of the Serious Fraud Office bringing £1.8 billion in financial penalties against 15 companies for foreign bribery since 2014. However, in recent years, there have been concerns that the number of investigations opened by both the Serious Fraud Office (SFO) and the new ICU in the NCA have been dropping, with the UK losing its status as an ‘active enforcer’ of the foreign bribery convention in a 2022 Transparency International ranking.

The UK’s enforcement record on tackling the corrupt wealth of foreign PEPs has been less clear. An independent evaluation of aid funding for law enforcement in 2019 found some evidence that enforcement and new legislation was making ‘the UK less attractive for Nigerian PEPs to launder money’. It also warned, however, that they were tending to use more ‘indirect means and new “tricks”’, such as laundering money into the UK via third jurisdictions.

The NCA’s ICU has frozen or confiscated £785 million since it was established, and the NCA as a whole initially made speedy and high-profile use of the UWOs and Account Freezing Orders introduced in 2017 to go after the assets of foreign PEPs with suspect wealth. However, the use of UWOs to tackle corrupt foreign wealth has now all but dried up, and according to the author’s analysis, just 26% of the funds frozen by the ICU have actually been returned to the countries from which they were stolen. The percentage of assets frozen also represents a tiny fraction of the amount of corrupt funds believed to enter and transit the UK.

There has always been a risk that governments will favour creating shiny new enforcement bodies or units rather than bolstering existing ones

On the domestic front, the UK’s record on tackling insider threats such as corruption within Border Force – a risk highlighted repeatedly over the past decade, with successive commitments made to address it – was found in September 2023 to remain seriously lacking.

Meanwhile, considerable enforcement gaps have started to emerge. In the foreign bribery sphere, medium-size firms below the SFO’s threshold for investigation appear to face little prospect of investigation or prosecution. The NCA has increasingly defined its remit as being limited to ‘live’ or ongoing cases, potentially leaving cases where corruption has emerged some years after its occurrence without a home for investigation.

Successful enforcement actions against senior managers for foreign bribery and money laundering, particularly in larger firms, are almost unheard of. And domestic corruption remains an orphan in the enforcement landscape.

What Needs to Happen Next

With the government declaring that it will use a forthcoming new Anti-Corruption Strategy to ‘close down London as a centre for corrupt elites to launder money and enhance their reputations’, and with the main opposition party committing to making London the ‘anti-corruption capital of the world’, there is no shortage of political rhetoric about tackling corrupt money coming into the UK.

However, there has always been a risk that governments will favour creating shiny new enforcement bodies or units rather than bolstering existing ones, and rolling out new strategies without ensuring that existing ones are fully implemented.

If the UK is to move on from being a broken record, improve enforcement outcomes for corruption and recover more stolen assets, it will need to do three things.

Firstly, it must ensure that the intelligence gap around corruption is finally closed. From ensuring that high-end money laundering – which consists to a large extent of corrupt capital – is measured and reported on, to requiring government departments and local government to monitor and report on corruption risks in their annual reports, there are plenty of ways to tackle the gap. Ensuring that the newly established corruption reporting mechanism is more widely known about, and exploring whistleblower incentivisation would help significantly to address this gap.

Secondly, there must be stronger system-wide leadership and accountability for delivery. Whether it is a new Anti-Corruption Commissioner or an Economic Crime Commissioner that is answerable for anti-corruption delivery, the current fragmented response needs a system leader. It is not clear that the NCA has been able to deliver on this since it was handed the task in 2013. Far greater transparency around enforcement results and activity – and honesty where things are not working – is also essential.

And finally, the government must ensure that enforcement gaps are addressed and urgently tackle the chronic retention and recruitment issues that all law enforcement bodies face. The UK is required under the UN Convention against Corruption to have independent specialised law-enforcement bodies with ‘the appropriate training and resources to carry out their tasks’. If it is to meet the spirit of this requirement, it needs to address the resource and incentive structure issues that leave enforcement bodies such as the ICU and the SFO struggling to attract and retain truly skilled and expert staff.

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

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Susan Hawley

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