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UK: Export Credit Agency Faces Legal Challenge

by Thomas Catan Financial Times
November 20th, 2004

Anti-corruption campaigners have launched a legal challenge against plans by the export credit agency to water down its rules against foreign bribery.

The Export Credit Guarantee Department recently backtracked on its new rules following an intense lobbying campaign by British-based multinationals.

The Corner House, a campaign group, sent a letter of claim to the EGCD yesterday demanding that it hold a broader public consultation before enacting new regulations. "We hope the ECGD recognises they've acted unlawfully, otherwise we will have no option but to see them in court," said Richard Stein, a solicitor acting for the Corner House.

The ECGD said its rules remained "robust" in spite of the alterations, which were designed to make them more "workable". However, campaigners have accused the government of paying lip-service to fighting corruption abroad.

To comply with international treaty obligations, Britain enacted tough new laws prohibiting companies from bribing foreign officials abroad. The measures came into force last year.

However, questions were raised about the government's commitment to enforcing them when it emerged that the Foreign Office had advised embassies to tackle bribery by British companies through "education" rather than prosecution. The ECGD is a vital source of financing for British industry, providing nearly £3bn of loans and insurance during the past financial year.

It has not refused any applications because of foreign bribery during the past five years in spite of several recent allegations.

The Serious Fraud Office is investigating a BAE deal with Saudi Arabia. It is also aiding US and French investigators looking into whether a subsidiary of Halliburton, formerly headed by Dick Cheney, the US vice- president, paid bribes to secure a Nigerian construction project.

Halliburton said this month that it "may have" paid bribes to Nigerian officials in connection with the project which was partly financed by the ECGD. BAE denies any wrongdoing.

Copyright The Financial Times Ltd 2004.

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