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Defence Manufacturers' Association and Society of British Aerospace Companies Conference

The Rt. Hon. John Hutton MP,  Secretary of State for Business, Enterprise & Regulatory Reform
London,  16 June 2008

Good morning everyone. I’m delighted to have this opportunity to speak to you today.

I’d like to start by congratulating the Defence Manufacturers Association and Society of British Aerospace Companies for organising this conference and also for their continued focus on anti-corruption work across the UK defence sector.

It is important that we work together to ensure the highest levels of transparency and accountability in British business - both of which are today vital to the long term success of any company.

Success of the UK Defence Industry:

And in this context we should never lose sight of one obvious fact – that the UK Defence Industry contains some of this country’s most important and successful businesses.

That together drive cutting-edge research and technological innovation; power growth and productivity across the UK economy; and ultimately help keep our nation and our international allies safe and secure.

And with a workforce comprising around 300,000 people, you continue to lead the way for UK companies of all sectors into new, emerging and often challenging markets. Consistently winning over 20% of the global defence export market. It’s a record we can all be proud of.

In 2006, the UK defence industry won new export orders worth 5 and a half billion pounds. And tomorrow we’ll be announcing the considerable success you and other UK defence companies achieved in global export markets in 2007.

I am 100% focused on ensuring you have the opportunity and capability to build on this success.

The recently launched UKTI Defence and Security Organisation is dedicated to boosting the profile, status and reputation of the UK’s Defence and Security sectors overseas.

And we recently appointed Richard Paniguian, currently a BP Group Vice-President, as the new Head of UKTI DSO. He and his team will ensure your voice is heard across Government and promote the UK as the world’s partner of choice.

But in this intensely competitive global industry a trusted brand is one of any company’s most critical business assets. And reputations are defined by every contact, meeting and transaction that you make.

So I believe the presence here of so many business leaders reflects how seriously UK defence companies take these issues. You are right to do so.

Today I want to talk about how important that commitment is to the future prosperity of our economy and country. And to set out the ways in which we can together, best tackle the problem of corruption, both at home and overseas.

Government Commitment:

Throughout its history, this country has relied on open, global trade to prosper as a nation.

And it continues to be central to our ambitions to help improve the lives of millions of people in our own, and other countries across the world. Maintain the international success of our financial institutions and businesses. And tackle organised crime and terrorism.

Corruption threatens that progress. It undercuts honest businesses and destroys professional reputations.

This Government is committed to fighting dishonest practices, wherever they exist – here and around the world.

Government Action:

Over nine years ago, the UK ratified the OECD’s Convention on Combating Bribery of Foreign Public Officials. And since then we have been a dedicated supporter and participant of the OECD Working Group, which monitors steps taken by its members to eliminate bribery.

Central to activity led by this country, is the UK’s Anti-Corruption Action Plan. A programme of work designed to deliver the focus, resources and infrastructure we need for lasting results.

Recent measures include the creation and development, through additional public funding, of dedicated anti-corruption units at the Serious Fraud Office, City of London Police and Metropolitan Police Service.

We’ve strengthened powers to pursue foreign bribery enquiries through the Criminal Justice and Immigration Act 2008.

We’re tackling corrupt foreign officials, seizing the proceeds of bribes and also prosecuting UK citizens implicated in money-laundering the proceeds of corruption.

But we can and must always look to do more.

Future Measures:

To that end, we are fully participating in the OECD’s current review of our anti-corruption systems. The OECD has already expressed appreciation of this high-level cooperation. And we will consider their findings in more depth, when released in the autumn.

This report will coincide with the final publication of our own review of UK bribery laws, conducted by the Law Commission. Alongside which, the Commission will also produce a Draft Bill to reform the criminal law of bribery.

Current UK legislation dates back to before World War One, when Britain was one of the first countries to legislate against corruption.

Our aim in launching this Review and Draft Bill - which we plan to bring forward in the next Parliamentary Session - is to develop a more modern, efficient and streamlined scheme of bribery offences for the digital, global age.

That will enable our prosecutors and courts to take effective action against all types of bribery in the UK and overseas.

Global Standards:

Events like this are important to raise awareness, not just of the risks of international bribery and corruption, but also of the various tools for managing these risks.

These include corporate responsibility standards such as the UN Global Compact and OECD Guidelines for Multinational Enterprises, which set out essential anti-corruption procedures for any UK business trading overseas. And the ‘Building Integrity in Defence Establishments’ initiative developed under the Euro-Atlantic Partnership Council.

This initiative offers partner countries assistance in improving transparency and reducing corruption within their defence establishments. And the UK will be developing a foundation course to improve our anti-corruption education and training in the near future.

We also welcome the publication of the Woolf Committee Report into business ethics. And are now considering the range of observations it makes on the role of Government in ensuring the defence industry has the highest ethical business standards.

Working with industry:

But ultimately, it’s you and your employees, who must promote and meet those ethics and standards that will put you ahead of your competitors. And I strongly support the powerful measures the industry has already taken to go beyond legal requirements and improve transparency and accountability.

Since its creation two years ago, the UK Defence Anti-Corruption Forum has worked hard to bring together representatives from your industry with Government, NGOs and experts in business ethics to promote the prevention of bribery and corruption in the international defence market.

One of its most important contributions has been to develop, along with European Partners, the Common Industry Standards. And I believe the industry’s commitment to strengthen CIS, and ensure as many companies as possible sign up is another important step forward.

And I ask anyone here, that has not yet done so, to implement CIS or sign up to a similar code of practice as soon as possible.

The CIS, and similar measures, can help your employees follow and promote the very best in industry practice across your organisation and supply chain. It offers a clear sign of company excellence to potential and existing customers. And can ensure a level-playing field to help honest businesses compete on the quality of their products and services.

Further support is now available within UKTI DSO - who will be working with a Defence Advisory Group to encourage adoption of the CIS - and wider UKTI organisation to offer help and advice on best practice.

Conclusion:

Trust is a vital element in the success of any society and economy. And in a UK defence sector that consistently defines technical and service excellence within the wider industry - it’s critical that transparency and the highest business standards are maintained.

Government is committed to working with you both here in the UK and in all of the markets you operate in, to eliminate the corruption that holds back development and progress, and unfairly disadvantages the vast majority of businesses that operate within the law.

The reputation of the UK and the global competitiveness of UK defence companies can both be enhanced by the work we do together to promote the highest standards of ethical conduct. There is now a great opportunity to make real progress in this area. Let’s take it with both hands. Thank you.