The Organisation for Economic Co-operation and Development (OECD) has warned that Brexit could damage the UK´s fight against corruption and urged the country to continue backing its Serious Fraud Office (SFO).
It came as part of the OECD´s latest report, Implementing the OECD anti-bribery convention, phase 4 report: United Kingdom, the first such report in five years.
In its report, the Paris-based organisation highlighted concerns that UK companies could use the threat of relocating to the EU due to Brexit as a bargaining tool should they face allegations of bribery and corruption.
Independent fraud policing
Against the backdrop of Brexit uncertainty, the authors of the latest OECD report also used the opportunity to encourage the UK government to maintain the SFO´s independence and bolster its funding.
A decade ago, the OECD was especially critical after the UK government led by the then Prime Minister Tony Blair called an end to an SFO inquiry into alleged bribery in Saudi Arabia involving defence company BAE Systems
High profile breakthrough
However, this time around, the OECD did have some praise for the UK. It applauded the success of recent probes, such as the long-running investigation of aero-engine maker Rolls Royce that resulted in the company paying penalties totalling £671m.
The company is said to have paid sweeteners to secure deals in Indonesia, Russia, China, Nigeria and Thailand. Rolls Royce was alleged to have paid intermediaries as much as $36m to clinch deals with Thai Airways to supply aero engines.
These days such investigations are taking on a decidedly international aspect. The Rolls Royce breakthrough was the culmination of five years of painstaking work by investigators in the UK, US and Brazil.
The UK´s SFO has labelled the Rolls Royce case as the single biggest investigation it has ever undertaken.
The OECD report comes as the UK authorities conduct a review into the future of the SFO. The OECD wants the SFO to maintain its political independence; it sees this as imperative particularly as the UK navigates the uncertainty of Brexit and the accompanying large scale corporate lobbying of ministers.
Many companies operating in the UK have threatened to relocate to other countries within the EU. For its part, the UK government appears desperate to avoid as many high-profile departures as possible.
In the aftermath of the Brexit vote, the government conducted secret talks with car manufacturer Nissan, appearing to offer the carmaker assurances so that it would maintain its European base in the UK.
Russian shell companies
The review of the SFO´s role and status also comes as the UK authorities consider whether to launch an investigation into recent allegations that Russian shell companies used UK banks for widespread money laundering.
At the same time, the latest OECD report also urged the UK to enhance anti-money laundering measures in order to improve detection of foreign bribery.
Outsized finance sector
While noting the UK´s progress in investigations such as the Rolls Royce case, the OECD pointedly underlined how the number of such cases was relatively low relative to the UK´s huge significance as a financial services centre.
The UK accounts for 17% of the total global value of international bank lending and 41% of global foreign exchange trading.
“The attractiveness of its financial sector, combined with close links to offshore centres, expose the UK to significant risks of corruption and foreign bribery-related money laundering, as recognised by both government and law enforcement agencies,” said the OECD report.
The authors noted how the UK had already designated money laundering and corruption as high priority areas.