Just How Corrupt is the UK?

By Ian Fraser and cross-posted from his blog.

Over the past few days, quite a few people have been insisting, on social media, that Britain isn’t corrupt. They’ve been claiming they see absolutely nothing wrong with Cameron describing countries such as Afghanistan and Nigeria, whose leaders were in London for the Anti-Corruption Summit in Lancaster House this week, as “fantastically corrupt”. When Cameron was caught on camera uttering these words in what he thought was a private conversation with the Queen, his clear insinuation was that their former colonial master is, by comparison, whiter than white.

On social media, many people subsequently claimed they could see nothing wrong with Cameron’s remarks. As evidence they cited Transparency International’s Corruption Perceptions Index, according to which Britain is the 10th least corrupt country of the 168 countries surveyed. Or, to be precise, Britain is ranked as the 10th= “least corrupt country”, alongside Luxembourg and Germany. By contrast, Afghanistan, where Britain fought a war from 2001-14, was ranked 166th, and Nigeria, which was a British colony until 1960, was ranked 136th.

Unfortunately, however, the methodology used by Transparency International to produce its corruption index is flawed. One issue is that it is based on subjective “perceptions” of corruption garnered from pre-existing surveys and interviews — whose very subjectivity means there’s a risk of reinforcing existing stereotypes — rather than from primary research.

Another issue is Transparency International’s somewhat narrow definition of “corruption”. Its annual survey focuses solely on whether politicians and public officials demand, and get, bribes. This follows the World Bank’s narrow definition of corruption: “the abuse of public office for private gain”.

In a recent piece in the Washington Post, Sussex University professor Dan Hough wrote:

“The Corruption Perceptions Index . . . says nothing about corruption in private business – say, the Libor scandal in Britain, or the recent VW emissions scandal in the United States. These events involve private actors, but they have very real public impacts, whether on the interest rates that people pay on their mortgages or on public health.”

In the FAQs section of its latest CPI report, Transparency International acknowledges that its approach is at best partial, stating: “The Corruption Perceptions Index is an indicator of perceptions of public sector corruption, i.e. administrative and political corruption. It is not a verdict on the levels of corruption of entire nations or societies, or of their policies, or the activities of their private sector.”

In short, TI acknowledges its index falls short of giving the full picture.

Off the Scale

Even though “brown envelopes” are less ubiquitous here than they are in places like Afghanistan and Nigeria, there can be no doubt that Britain is seriously corrupt.

The failure to prosecute any of the bankers who are widely believed to have committed fraud in the run-up to the banking crisis and our so-called “two-tier justice system” are clear evidence for that. This was yesterday encapsulated by the announcement from Scotland’s state prosecutor, the Crown Office and Procurator Fiscal Service, that it had found “insufficient evidence” to press criminal charges on Fred Goodwin or other former directors of RBS, despite what is widely considered to have been the bank’s fraudulent rights issue in April 2008. That was capped by the appointment of the Lord Advocate who presided over the inquiry, or should I say “whitewash”?, Frank Mulholland, as a judge in Scotland’s top commercial court, the Court of Session.

The bailing out of kleptocratic banks with more than £1.3 trillion of taxpayers’ funds in 2008-9 without demanding or enforcing structural or behavioural change on the banking sector is another sign of, at best, “crony capitalism” and, at worst, “corruption”. One might argue that the rebranding of criminal fraud as “mis-selling” and “misconduct” is another; as is the UK government’s shameful kowtowing to the congenitally corrupt HSBC, which saw Cameron’s government last year water down much-needed post-crisis banking reforms, after Europe’s largest bank rattled its sabre and threatened to remove its headquarters from the UK.

Other signs of insidious corruption in the UK include the ability of the former prime minister, Tony Blair, to: (i) appease bankers by enfeebling City regulation, mainly in 2002-07, a period when he and fellow Labour cabinet ministers repeatedly intervened to prevent the FSA from doing its job in order to protect banks from much needed scrutiny; (ii) take a $3m-a-year senior advisory role with JPMorgan Chase within weeks of leaving Downing Street. And don’t get me started on the other roles Blair has fulfilled since 2007, including his notorious £5m deal to launder the image of Kazakh president Nursultan Nazarbayev, a man accused of horrendous human rights abuses.

The revolving door between Westminster/Whitehall and the City of London/private sector is not the exclusive preserve of former prime ministers. Former chancellor Alistair Darling is now a director of US banking giant Morgan Stanley and former chief secretary of the Treasury Danny Alexander, who lost his Inverness, Nairn, Badenoch and Strathspey parliamentary seat in the May 2015 general election, is now vice-president and corporate secretary of the Asian Infrastructure Investment Bank. And of course another former Labour prime minister, Gordon Brown, last December joined the global advisory board of Pimco, the world’s largest bond fund manager.

According to a piece in the Daily Mail these four are just the tip of the iceberg. Nearly 400 former government ministers and senior civil servants have, since 2008, cashed in on their experience of government in order to pass through the gilded revolving door into lucrative private sector and regulatory jobs. The revolving door also works in the other direction with, for example, Stephen Green, former chairman of HSBC, ennobled by Prime Minister David Cameron so he could become a trade minister. As the door has spun at warp speed, so the scope for corruption has intensified

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