Where’s the Corruption Mr Cameron? Look Behind You!

By David Whyte and cross-posted from Open Democracy

Cameron’s bizarre pantomime routine with the Queen, the Archbishop of Canterbury and a couple of nervous court jesters having a go at the former colonies was the perfect platform for today’s anti-corruption celebration of British-ness. And he will not be worried about the fallout. He has the force of international (elite) opinion behind him.  Despite the panama papers revelations that implicated huge numbers of British-owned shell companies in British Overseas Territories and British Crown Dependencies, he can still plausibly claim that corruption is not Britain’s problem, but the rest of the world’s.  After all, he has the league tables to prove it.

In January of this year it was reported that the UK was now the 10th least corrupt country in Transparency International’s benchmark Corruption Perceptions Index (CPI).  It was a remarkable rise up the charts from 2010, David Cameron’s first year of office, when Britain was in 20th place. Robert Barrington, the head of Transparency International UK qualified the result by pointing our there “good reasons why people are skeptical about whether Britain really merits a top 10 ranking”.

There are indeed. The same day that the CPI was published the criminal case against 5 people accused of the LIBOR frauds collapsed. The fraud – probably the biggest in banking history – was organized at the heart of the most venerated and trusted institutions in the city of London. The following day two more stories about corruption in British institutions broke. The first reported the news that European Commission was investigating complaints that Google’s £130m settlement with the British government amounted to “special treatment” and the second reported that that the Prudential Regulation Authority will investigate the potentially criminal role of HBOS’s senior management in the near-collapse of the bank, seven years after the event.

If it seems like a lot of corruption of various forms was being reported over the same two days that the newspapers were reporting the UK’s miraculous climb up the anti-corruption charts, there was nothing unusual about this. In the UK over the past few years, reports of major corruption scandals of various kinds in the public and private sectors have become daily fodder. We are overwhelmed by the scale, frequency and variety of corruption cases in this country, from police manipulation of evidence, to over-charging in out-sourced public contracts, by way of election funding and cash-for-access scandals involving prominent politicians and price fixing, market manipulation and fraud in key sectors of the economy. And yet the UK is, according to its chart position, one of the top ten cleanest economies and rising.

There are two major reasons to conclude that Britain’s chart position is creating a false impression. The first is that the “corruption” that the CPI is concerned with is of a very particular kind. Economists sometimes distinguish between collusive corruption (where two parties collude for their common benefit) and extortive corruption (where one party is compelled to make a bribe payment to another). It is less common, for example, to have to bribe a public official in the UK than some other countries. Extortive corruption is not a major problem in this country, though it is probably more widespread than we tend to think it is.

It is extortive corruption that surveys like the CPI are primarily concerned with. But the British style of corruption that we are increasingly exposed to iscollusive. And collusive corruption is not done merely for personal gain, but is largely done for the benefit of the organization or the institution. Police rigging of evidence for example is typically done to avoid criticism of the police (as in the Hillsborough case). The rigging of LIBOR doubtless benefited the traders that colluded, but benefitted the banks and their shareholders much more.

The second reason that we should be skeptical about Britain’s rise up the charts is that the received wisdom projected by surveys like the CPI is exactly that: received wisdom rather than concrete evidence. The CPI merely measures the impressions of a large group of observers and experts around the world that are selected for the survey. In the sense that it is based on “perceptions” of groups of people who are “perceived” to be experts, the Index can actually be said to be doubly subjective. But what would a different survey look like, that asked not a bunch of handpicked experts, but a representative sample of the population?

In a poll commissioned with YouGov, we asked a representative cross section of the British public about how they regarded a range of collusive relationships between the public and private sectors.

The survey revealed a public sentiment strongly in favour of prohibiting some of the practices that are normal and routine in government – especially those that indicate a close – collusive – relationship between the public and the private sector. In this survey almost three quarters of the people we asked said that the practice of ministers or senior civil servants accepting corporate boardroom appointments on leaving office should be banned. Almost two thirds said that inviting private corporations into government to help shape the regulation of business should be banned and more than two thirds said that current PFI arrangements for public projects should be banned.

In other words, the British public want rid of many of the practices that have become part and parcel of the British way of doing business and doing politics. To the extent that they know what is going on, they want it to stop.

It is not difficult to see why. The revolving door, and the involvement of the private sector in public functions have proven to be both a symptom and a cause of institutional corruption in the neo-liberal period. Since the 2008 financial crisis, the UK’s brand of crony capitalism has enriched the few in a very harsh economic climate that has disproportionately punished the poor.

In fact, this umbilical link, in which obscene levels of enrichment can only be accrued at a massive human cost, is rarely properly illuminated. So the Panama Papers did not show exactly who were forcibly removed from their homes to ensure the windfall profits of predatory housing capital flowing through Panama. Neither did the leaks reveal how much the NHS and the education system is paying for PFI deals that flow straight out of the public purse to tax havens like Panama.

The UK government conveniently avoids its growing reputation as a crony capitalist state par excellence, preferring in its own Anti-Corruption Plan to more or less follow the World Bank definition of: “offering, giving, receiving or soliciting, directly or indirectly, of anything of value to influence improperly the actions of another party.” The same Anti-Corruption Plan makes it clear that it is government policy to remain fixated on extortion by criminal gangs, rather than collusion between powerful corporations and government departments.

Yet, as the Tax Justice Network’s Financial Secrecy Index shows, if all of the British Overseas Territories were counted along with the United Kingdom, then the UK would be number one provider of financial secrecy. This level of potential corruption is not merely a problem that can be described as ‘extortion’, but is a routine practice that is used for maintaining and extending the power of corporations, governments and public institutions. The British brand of corruption arises from practices that have become normal in business and politics, and have victimized the most vulnerable, whether those are the populations of the Global South who see much of their resource wealth syphoned out of their countries via tax havens run by the Global North countries, or, in the UK, residents who are forcibly removed from their homes, taxpayers who are ripped off by artificially inflated  costs of public hospitals, or the vast number of ordinary households that are routinely defrauded by financial products issued by high street banks.

In the midst of all of this, one might be entitled to ask why the British government still feels empowered to lead on international anti-corruption initiatives? This may not last forever, but the naked hubris with which Cameron showed off to his Queen on Tuesday is the sign of a weakened prime minister who knows very well that the British self-taught myth of the mother of all democracies now means very little to the rest of the world.   Today, for all of the hubris and bluster, his ‘initiatives’ (an OECD-led regulator and a pledge of more openness) will all add up to little more than keep calm and carry on.

When our political leaders start preaching to the rest of the world about how they need to clean up their act, we are rightly suspicious. When a major event like this one comes to our doorstep, we need to bring the debate about corruption back home. We have been evangelizing about the neo-liberal model and forcing predatory capitalism upon economies across the world. It is this model of capitalism that sows fertile seeds for a very wide range of collusive relationships and practices that sometimes avoid the law and sometimes don’t need to, but always redistribute wealth upwards. And it is this model of capitalism that is now being revealed as the primary source of corruption.

David Whyte is the editor of ‘How Corrupt is Britain?’ available to oD readershere for a special offer of £10 until the 15th May. He is also editor of the latest issue of Tax Justice Focus on British corruption, published this week.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s