Sport is a global phenomenon which engages billions of people and generates annual revenues of more than US$145 billion. Corruption in sport has many forms. Referees and players can take bribes to fix matches. Club owners can demand kickbacks for player transfers. Companies and governments can rig bids for construction contracts.
Organised crime is behind many of the betting scandals that have dented sport’s reputation. And money laundering is widespread. This can take place through sponsorship and advertising arrangements. Or it may be through the purchase of clubs, players and image rights. Complex techniques are used to launder money through football and other sports. These include cross-border transfers, tax havens and shell companies. However attempts to stop corruption in sport are still at an early stage.
WHAT HAPPENED AT THE SUMMIT?
Governments and other leaders at the Summit signed up to the communique, stating:
The International Sport Integrity Partnership was launched in Lausanne at the International Forum for Sport Integrity in February 2017.
This initiative is now known as the International Partnership Against Corruption in Sport (IPACS). In December 2018, IPACS held its 4th steering committee meeting in London, which was organised by the UK Government, as well as the first IPACS summit. In July 2019 IPACS decided to set up a new task force to increase cooperation between criminal justice authorities/law enforcement and sport organisations.
Information about the December 2019 IPACS General Conference, organised by the UN Office on Drugs and Crime, can be found here.
Increasing global demand is driving new oil and gas discoveries. Over the next 20 years, it is expected that 90 per cent of production will come from developing countries. Yet many countries rich in oil and gas are home to some of the world’s poorest people. How can this happen? Too often, wealth stays in the hands of politicians and industry insiders. Revenues don’t get published. Payments made to governments to exploit resources remain secret. Bribery and embezzlement go unchecked.
Many oil and gas companies protect the identities of their equity holders and subsidiaries. This allows corrupt leaders to hide stolen funds unnoticed. Inadequate financial statements make it easy to disguise corrupt deals, and impossible for any of us to monitor them. Many oil and gas companies don’t publish information country by country. This allows them to hide the royalties, taxes and fees they pay. But without this information, we can’t hold governments to account for the money they receive.
In January and February 2018 the UK co-chaired the Ninth Meeting of the Policy Dialogue on Natural Resource Development, in which participants “agreed on a roadmap to develop a global reporting template for payment disclosure by companies involved in commodity trading; to operationalise due diligence guidance to tackle specific risks of rent diversion and corruption; and to develop a template to support SOEs in selecting buyers, linking up different strands of work across the OECD and coordinating with other international organisations, including international financial institutions”.
In June 2018 the UK co-chaired the Tenth Meeting of the Policy Dialogue on Natural Resource Development. Key outcomes included recognition by companies of the importance of trade-related payments transparency. At the Eleventh Plenary Meeting in December 2018, participants “reached common ground” on the types of information that should be included in a global reporting template for commodity trading payments.
The UK opened a call for evidence on a beneficial ownership register to increase the transparency of overseas investment in property and public contracts in April 2017. The results of the consultation were published in March 2018 – and confirmed that the Government intended to require the overseas companies that win public contracts, rather than those that bid for public contracts, to provide their beneficial ownership information. TI-UK considers this a downgrade of the original commitment, as it will not help to address the risk of corrupt practices during the bidding process.
In the consultation on a draft version of the Registration of Overseas Entities Bill published in July 2018, the Government stated that it was “considering mechanisms including the Contracts Finder Service” to hold this information. The Cabinet Office has not yet published any updates on which mechanisms it intends to use for this register.
In the UK Anti-Corruption Strategy Year 2 Update, the Government commits to “launching a public consultation paper to seek views on the financial threshold that should be applied to this policy.”
At the same time, mySociety and SpendNetwork have been working on a project for the UK Government Digital Service and Prosperity Fund looking at beneficial ownership in procurement (see their blog series here). They note:
TI-UK calls on the Government to deliver on its original commitment to legislate for a public register of the beneficial owners of all overseas companies that bid for public contracts. The new proposed approach, to collect information only for the overseas companies that win public contracts, creates a perverse timeline of checks in which it is only after a contract has been awarded that it will be established whether or not that contract should be awarded. This approach is inefficient, fails to mitigate the risk of collusion between bidders, and could be easily addressed by capturing the beneficial ownership information of all bidders in pre-qualification questionnaires.
The Open Contracting Data Standard was created by the Open Contracting Partnership as “a global, non-proprietary data standard structured to reflect the complete contracting cycle”.
WHAT HAPPENED AT THE ANTI-CORRUPTION SUMMIT?
Open Contracting and public procurement were two of the most committed to issues at the Summit. The Summit communique saw governments promise to:
The UK implemented the Open Contracting Data Standard (OCDS) in November 2016. In doing so, it became the first G7 country to commit to the Open Contracting Data Standard for contracts administered by the Crown Commercial Service. The whole process of awarding public sector contracts is now visible to the public for the first time.
It is common for corrupt individuals to use a global web of anonymous companies, trusts and other legal entities situated across multiple jurisdictions to transfer and hide their illicitly sourced funds. These structures shroud the identity of the individuals who own and control companies and other legal entities. Illicit money is laundered through the UK, and then used to fund luxury lifestyles.
Layers of secrecy facilitated by secret company ownership prevent effective investigations by police and checks by those working in sectors such as property. This means that UK assets can be acquired anonymously and anti-money laundering checks can be bypassed with relative ease.
Public registers of the real owners of companies – the beneficial owners- have been a central demand in the fight against corruption, money-laundering and corporate secrecy.
Then-Prime Minister David Cameron said that public registers of beneficial ownership information were the “gold standard”, and every country should ultimately aim to have them.
WHAT HAS HAPPENED SINCE?
The UK’s public register of beneficial ownership information was published at the end of June 2016, and was the first of its kind in the world.
In 2018 the UK launched a global campaign to make public registers of beneficial ownership a global norm, and in 2019 it launched a public consultation on reforms to Companies House to ensure the data held in the UK’s register is verified and accurate.
As of July 2020 the Government has not yet published the results of this consultation, but has said it will publish an official response with proposals for the way forward in due course.
In 2013 Transparency International UK called for the UK Government to produce a world class anti-corruption strategy. In 2014 the Government published its Anti-Corruption Plan; it was not perfect, but was a very credible attempt to bring together existing activities within a more coherent framework, set timetables and take ownership of an issues that other governments have ignored.
Without an over-arching anti-corruption strategy there was no discernible long term vision or goal to which the Plan was contributing or view of what a coordinated government approach to corruption would look like. And since the Summit, there have been a number of occasions – whether MPs taking second (or third) jobs, the introduction of a new anti-money laundering watchdog, or repeated revelations on the UK’s role in facilitating global corruption – which an Anti-Corruption Strategy would have given the public clarity on the Government’s attitude to certain issues.
In line with the Strategy commitments to publish updates on the gov.uk website, and provide an annual written update to Parliament, the Government published its UK Anti-Corruption Strategy: 1 Year Update in December 2018, complete with a ‘RAG’ chart classifying commitments according to the Government’s progress against them.
The Government was due to publish its annual written update on progress made under the Strategy in December 2019, but publication was halted due to a general election being called. As of July 2020 the update has not been published.
Corrupt people cannot steal public funds unless they have a safe place to hide them. There is growing evidence that the UK has become a safe haven for corrupt individuals and their assets. In March 2017 we identified London properties worth a total of £4.2 billion that were bought by individuals with suspicious wealth.
Currently, UK law enforcement has limited power to seize corrupt assets. At present, little can be done to act on highly suspicious wealth unless there is a legal conviction in the country of origin. In cases where the origin country is in crisis or the individual holds power within a corrupt government, this can take decades to obtain or is unlikely to be achieved at all, producing a mere trickle of results against a torrent of corrupt illicit funds.
Since 2015 Transparency International UK has been advocating for the introduction of Unexplained Wealth Order (UWO) powers, an investigative tool that helps law enforcement act on suspicious wealth.
Suspects issued with a UWO would be required to explain legitimate and legal sources of wealth for suspicious UK assets or transactions, provided there is enough initial suspicion of criminality. An inadequate response to a UWO – or no response whatsoever – together with the initial grounds for suspicion, could then be grounds to kick-start a civil recovery process against the assets in question.
WHAT’S HAPPENED SINCE?
The UK passed Unexplained Wealth Orders into law on 27 April 2017, and issued the first of these orders in February 2018. In October 2018 the identity of the first Unexplained Wealth Order respondent was revealed. A second case using Unexplained Wealth Orders was announced in May 2019, involving £80 million worth of property belonging to a Politically Exposed Person believed to be involved in serious crime.
TI-UK continues to call for UWOs to be used on the £4.4 billion worth of UK property bought with suspicious wealth identified in our 2017 report, Faulty Towers.
As UK law enforcement continue to use UWOs to pursue corrupt assets – and as these are challenged in the courts – Transparency International UK continues to monitor their progress. According to the UK Anti-Corruption Strategy Year 2 Update, the National Crime Agency has obtained 15 UWOs relating to four cases, worth an estimated £143 million.
For more up to date information on UWOs in the UK, see our press releases.
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