THE BLOG

DFID's Efforts Undermined As The Government Stalls On Anti-Corruption

16/01/2017 11:08 GMT | Updated 16/01/2017 11:08 GMT
Ed Freeman via Getty Images

Corruption hits the poorest hardest. It is no accident that the countries languishing near the bottom of Transparency International's Corruption Perceptions Index - such as Afghanistan, South Sudan and Yemen - are the same as those which rank lowest on UNDP's Human Development Index.

It is also no surprise that these countries remain high priorities for aid agencies trying to improve the lives of the poorest people in the world, including the UK Department for International Development (DFID).

As Chair of the International Development Committee, I have seen the very real effects of corruption on inequality and poverty in countries like Nigeria and the Democratic Republic of Congo (DRC). Corruption diverts funds that could be used to provide basic services, such as healthcare and education, or means that those with incredibly low incomes have to pay bribes to access them.

Unfortunately, whilst DFID prioritise anti-corruption efforts to try and help the world's most disadvantaged people, other parts of the UK Government are falling short.

David Cameron's London Anti-Corruption Summit last May positioned the UK as a global leader on fighting the scourge of corruption.

However, in the response to the IDC's recent report on the subject, published today, the Government has disagreed with our recommendation to lobby the UK's Overseas Territories and Crown Dependencies to make information on who profits from company ownership public; a move that would increase transparency around off-shore companies and trusts, which can be used to avoid taxation.

Although this is a standard the UK has held themselves to, publishing the world's first open register of beneficial ownership last year, it is not one they will fight for in some of the world's biggest tax havens. When an estimated $240bn in tax revenue is lost each year due to tax avoidance, with developing countries hit the hardest, the Government's line here must be stronger.

Also disappointing is the Government's refusal to publically disclose the information it will collect on where UK-based multinationals are making profit. If made public, this information could help tax authorities and civil society, including in the world's poorest countries, work out where multinationals are avoiding paying tax. This would make it easier for authorities and civil society to pressure these corporations to pay appropriate levels of tax in the countries where they are operating and would make it harder for corporations to shift profits made in developing countries to other low-tax jurisdictions.

Tackling corruption is a vital part of the fight to tackle extreme poverty around the world and has become a key priority for DFID. Finding out 'what works' in different countries is something the Department is continuing to develop, by investing in research and developing its understanding of local context. Such efforts can take a long time, especially in countries where corruption is endemic and I am pleased that today's response shows DFID will be heeding the advice of the both the Committee and the Independent Commission on Aid Impact (ICAI) to develop rolling anti-corruption strategies with a 10 year horizon.

However, DFID's support for efforts to tackle corruption in developing countries will fall flat if the wider Government does not continue to push for global advances on tax avoidance and tax evasion. If corporations are allowed to continue profiting from the poor, and stashing the proceeds elsewhere, developing country governments will remain unable to provide basic services and their citizens will be forced to engage in petty corruption in order to survive. The cycle will continue and the world's poorest people will continue to suffer.

Stephen Twigg is the Labour MP for Liverpool West Derby and chair of the International Development Committee