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UK: British Companies Demand Relaxed Regulations

by David Hencke and Terry MacalisterGuardian (UK)
November 17th, 2004

UK: Three of Britain's blue chip companies told the government they would boycott its export guarantee scheme unless tough new rules over bribery and corruption were relaxed, MPs were told yesterday.

Rolls-Royce, the Airbus Consortium and BAE Systems were named by John Weiss, deputy director of the Export Credit Guarantee Department, as the main objectors to rules which came into force last May and are to be watered down from next month.

The revelations come days after the Serious Fraud Office started an investigation into an alleged slush fund connected with BAE's involvement in a huge jets deal with Saudi Arabia.

Mr Weiss released the names after tough questioning from MPs on the Commons trade and industry committee yesterday on why his department had agreed a U-turn to satisfy complaints from the business world, including the CBI and the British Bankers Association.

The new rules led to advice from lawyers to companies and the banks who guarantee the company loans that firms should not sign up to ECGD deals because they could not know that all the people involved in the project were not involved in any bribery or corruption.

Mr Weiss told MPs: "Lawyers advised them that they could not sign the agreements under the new rules. In hindsight, it was our fault as we had not consulted them before they came into force."

He told MPs that following lobbying from companies the rules were being changed to meet their objections. Asked to spell out the changes by Martin O'Neill, the Labour chairman of the committee, he listed five major concessions.

Companies will no longer have to guarantee that their affiliates or joint venture partners are not involved in bribery. ECGD has also dropped a requirement that all employees and directors must have no record of corrupt practices - this will now apply only to directors. Agents will no longer be required to be clean either. In future ECGD also agreed that it will not ask for audited accounts in the run-up to an application unless allegations of bribery are brought to its attention.

BAE declined to comment on why it wanted less stringent regulations. "We are saying nothing. All questions should be referred to the CBI because they acted on behalf of the whole industry," said a company spokesman. Rolls-Royce was unavailable for comment.

Mr O'Neill said yesterday after the hearing: "The civil servants had been hung out to dry by ministers. These new guidelines were not produced in a political vacuum and they are not being withdrawn without ministerial guidance.

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