Corruption in United Kingdom

Introduction to Corruption in the United Kingdom

The United Kingdom, while not the most corrupt nation globally, remains a focal point for bribery and political corruption. Its status as a haven for dirty money allows criminals to exploit loopholes in the system.

Britain’s wealthy elite can easily launder ill-gotten gains through the legitimate economy and property market, causing significant disruption. This problem is exacerbated by the revolving door between public and private sectors, where high-ranking government officials take advantage of such gaps.

While the UK is on the verge of enacting whistleblower protection laws, U.S. anti-corruption laws may offer immediate recourse. Those reporting money laundering, government contract fraud, or violations of the Foreign Corrupt Practices Act may be eligible for protection and rewards.

This guide provides an overview of corruption in the UK and the U.S. transnational anti-corruption laws available to whistleblowers seeking to report concerns to authorities.

Page Contents hide

1. Introduction to Corruption in the United Kingdom

2. History of Corruption in United Kingdom

2.1. Medieval and Early England

2.2. 18th and 19th Centuries

2.3. 20th and 21st Centuries

3. Types of Corruption in United Kingdom

3.1. Big Money

3.2. Money Laundering

4. Examples of Corruption in United Kingdom

4.1. Panama Papers (2016)

4.2. The Libor Scandal (2012)

4.3. SEC Dodd-Frank Cases in the UK

4.4. CFTC Dodd-Frank Cases in the UK

5. The Effects of Corruption in the United Kingdom

6. Anti-corruption Efforts in the UK

7. Anti-Corruption Efforts in UK

7.1. Anti-Money Laundering and Sanctions Whistleblower Program

7.2. Dodd-Frank Act

8. Conclusion

9. Reporting Corruption in the UK Using U.S. Whistleblower Laws

10. Frequently Asked Questions

10.1. What is Foreign Bribery?

10.2. DOJ FCPA Guidance on Foreign Securities and Commodities Violations

10.3. UK Whistleblowers and U.S. Reward Laws

11. Relevant Articles

11.1. Adani FCPA Charges Show Scope of U.S. Laws for Indian Whistleblowers

11.2. In Landmark Whistleblower Case Raytheon to Pay $950 Million Over Charges of Bribery and Defective Pricing

11.3. Whistleblower Lawyer Talks Anti-Corruption with Prominent African Officials

History of Corruption in United Kingdom

The United Kingdom is perceived as an example of democracy and transparency. However, it has suffered a long and complex history of endemic corruption, dating back to the medieval period, which experienced bribery, excessive taxation, and the influence of the Crown on Parliament.

Below is an overview of the type of corruption over the past several hundred years:

Medieval and Early England

During this time, patronage and favoritism were major issues. These terms refer to the act of rewarding a group, family, or ethnicity for their electoral support by using illegal gifts or awarding them for their loyalty. Also common was bribery and extortion (mainly in the judicial system) which can still be seen today in modern day Britain. Also, during the Great Plague of London (1665) which happened during this time, many officials took advantage of the situation to enrich themselves.

18th and 19th Centuries

During this time, “old corruption” took precedence. This term refers to bribery, patronage, and the buying of political offices taking place during this time. Although there were reforms taking place during this type, such as the Great Reform Act of 1832, which expanded the electorate and helped to reduce the influence of patronage, corruption still existed. Subsequent reforms, such as the Second Reform Act of 1867 and the Third Reform Act of 1884, further expanded the franchise and helped to reduce corruption.

20th and 21st Centuries

The 20th and 21st centuries have seen a rise in money laundering, tax evasion, bribery, and widespread political corruption. Over the last century, the UK has seen a high volume of high-profile scandals, including the manipulation of the London Interbank Offered Rate (Libor), aka Libor Scandal, the MP Expenses Scandal, and Panama Papers, among many others.

Types of Corruption in United Kingdom

Bribery is the most common form of corruption in the United Kingdom, which is punishable under the Bribery Act of 2010, a highly criticized law. However, other types of corruption persists, which we’ll dive into greater detail.

Big Money

In the UK’s political system, big money is often solicited in return for political access and influence. It can help secure positions in the office, titles, and other recognition.

These types of appointments can expose democracy of the United Kingdom to manipulation, eroding the public’s trust, as it creates doubt on whether a “bought” official is acting in the interest of the public or for their own and those of their associates.

Political parties will continue to engage in such scandals until reforms are made. Reforms that control the supply of funding, provide great transparency about finances, and place tighter controls on election campaign spending.

Money Laundering

With Russian President’s invasion of Ukraine, dirty money has flowed into the UK, allowing criminals to launder their ill-gotten gains and take advantage of major loopholes. It has been the number one “safe haven” for illicit finance, with tens of billions of pounds of dirty money each year.

Dirty money is laundered through the real estate market, which kleptocrats, oligarchs, and other foreign nationals use to hide the source of their ill-gotten gains. It’s estimated that between 50,000-52,000 properties are held by foreign companies and hidden from the public.

Financial Fraud

This type of fraud includes investment scams and procurement fraud, where individuals or businesses engage in dishonest practices when bidding for or awarding government contracts. Other financial frauds include Ponzi schemes, accounting fraud, and market manipulation.

Tax Evasion

Tax evasion is big in the United Kingdom, where companies evade paying taxes. They do this through the establishment of shell companies, offshore banking, and other complex financial transactions that hide the source of their illicit activities.

Bribery

As stated in the introduction, bribery of public officials, including politicians, civil servants, and/or police officers has always been a major problem in the UK – whether offering or accepting bribes.

Commercial bribery is also an issue. This happens when a business offers or accepts a bribe to gain a market advantage. This might include bribing foreign officials to secure a contract.

Embezzlement

Embezzlement of public funds is a common type of corruption in the UK. This involves individuals using their positions of trust to misappropriate public money for personal gain. Embezzlement can also occur in the private sector, where employees may misuse company funds for personal purposes.

Nepotism and cronyism are still seen today, with roots dating back to the medieval period, as mentioned above in the history section. These are just some of the types of corruption that can occur in the UK. Corruption is complex and can take many forms.

Examples of Corruption in United Kingdom

Panama Papers (2016)

The Panama Papers revealed that many UK individuals and companies were involved in offshore tax evasion and money laundering schemes, including politicians, celebrities, and businesses. It also showed how offshore companies were used to launder money derived from criminal activity, like drug trafficking and human trafficking. It led to increased scrutiny of the UK’s offshore financial sector and prompted the government to take steps to crack down on tax evasion and money laundering. The scandal also damaged the UK’s reputation as a global financial center.

The Libor Scandal (2012)

The LIBOR scandal was a major financial scandal involving several major banks that colluded to manipulate the London Interbank Offered Rate (LIBOR), a benchmark interest rate used to set the price of various financial instruments. This manipulation led to significant financial losses for many individuals and businesses worldwide.

The scandal resulted in billions of dollars in fines for the banks involved, including Deutsche Bank, Barclays, Citigroup, JPMorgan Chase, and the Royal Bank of Scotland. Total fines levied on the banks involved in the scandal exceeded $9 billion, which included fines from regulators in the United States and the United Kingdom.

Additionally, the scandal led to significant regulatory changes, including the phase-out of LIBOR and the introduction of a new benchmark interest rate, the Secured Overnight Financing Rate (SOFR). The LIBOR scandal exposed serious flaws in the financial system and highlighted the importance of transparency and accountability in the banking industry.

SEC Dodd-Frank Cases in the UK

Case shown are those that are or were eligible for rewards under the SEC whistleblower award program:

Barclays PLC, Barclays Bank PLC, and Barclays Capital Inc.

SEC Charges Barclays with FCPA Violations Related to Its Hiring Practices (September 27, 2019)SEC Press Release | SEC OrderIn 2019, Barclays PLC was ordered to pay over $6,000,000 to the U.S. Securities and Exchange Commission after the bank’s Asia Pacific Region was caught employing relatives and friends of foreign officials through fraudulent and unofficial internship programs. This was done by Barclays, a UK-based bank, in hopes of gaining or extending business and benefits with government figures. An approximated 117 individuals were illy hired by Barclays between April 2009 and April 2013. Violating the books and records and internal accounting controls provisions of the Securities Exchange Act of 1934, Barclays agreed to pay $6,308,726, consisting of disgorgement of $3,824,686, prejudgment interest of $984,040 and a $1.5 million civil penalty to the SEC. Barclays did not admit to or deny the findings of the SEC’s investigation.
ADMINISTRATIVE PROCEEDING (File No. 3-17978) (May 10, 2017)
ADMINISTRATIVE PROCEEDING (File No. 3-17953; 3-17954; 3-17955) (May 1, 2017)
ADMINISTRATIVE PROCEEDING (File No. 3-17077) (January 31, 2016)
ADMINISTRATIVE PROCEEDING (File No. 3-16154) (September 23, 2014)

Standard Bank Plc.

Standard Bank to Pay $4.2 Million to Settle SEC Charges – Bank Agrees to $36.9 Million Global Settlement with the SEC and the U.K.’s Serious Fraud Office (November 30, 2015)SEC Press Release | SEC OrderIn 2015, the London-based Standard Bank Plc was charged with failing to disclose 2013 payments regarding debt issued by the Tanzanian government. Part of the $600,000,000 paid to the government was given to a firm affiliate, yet no record of this was made and it was unclear what role this affiliate had in the transaction. A $4,200,000 penalty was issued against Standard Bank Plc by the SEC, as well as charges from the United Kingdom’s Serious Fraud Office. In combination with the U.K.-imposed fines, Standard Bank Plc faced a total of $36,900,000 in relief.

Lloyds Banking Group

Notice of Covered Action (October 1, 2014)

BP p.l.c.

BP to pay $525 million penalty to settle SEC charges of securities fraud during Deepwater Horizon oil spill (November 15, 2012)SEC Press Release | SEC ComplaintWhile oil gushed out of the Deepwater Horizon rig in 2010, BP understated the damage being done to investors in hopes of keeping investors at peace. These fraudulent public statements by the U.K.-company assured that only 5,000 barrels of oil per day were entering the Gulf of Mexico, grossly misrepresenting the possible 146,000 barrels a day that could have been. Then the SEC’s third-largest penalty of all time, BP agreed to settle for $525,000,000.

CFTC Dodd-Frank Cases in the UK

Case shown are those that are or were eligible for rewards under the CFTC whistleblower award program:

Barclays PLC, Barclays Bank PLC, and Barclays Capital Inc.

CFTC Orders Barclays to Pay $115 Million Penalty for Attempted Manipulation of and False Reporting of U.S. Dollar ISDAFIX Benchmark Swap Rates (May 20, 2015)Press Release | OrderBetween January 2007 and June 2012, Barclays Bank and its relevant subsidiaries attempted to manipulate and make false reports on the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), hoping to miscommunicate interest rates. Mandated remedial steps, along with a $115,000,000 fine, were issued against Barclays “to ensure the integrity and reliability of the Bank’s benchmark submissions, and to improve related internal controls,” according to the CFTC, who carried out this investigation and charge.Examples of Misconduct
CFTC Orders Barclays to Pay $115 Million Penalty for Attempted Manipulation of and False Reporting of U.S. Dollar ISDAFIX Benchmark Swap Rates (July 22, 2015)Press Release | OrderBetween January 2007 and June 2012, Barclays Bank and its relevant subsidiaries attempted to manipulate and make false reports on the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), hoping to miscommunicate interest rates. Mandated remedial steps, along with a $115,000,000 fine, were issued against Barclays “to ensure the integrity and reliability of the Bank’s benchmark submissions, and to improve related internal controls,” according to the CFTC, who carried out this investigation and charge.Examples of Misconduct
Notice of Covered Action No. 2015-037 (May 20, 2015)In 2015, the CFTC charged Barclays Bank PLC with manipulation, false reporting, and aiding and abetting other banks’ attempts to manipulate, global foreign exchange (FX) benchmark rates. The CFTC found that Barclays, along with other banks, used private chat rooms to coordinate their fabrication of the day’s numbers and rates to report on, attempting to benefit the positions of certain traders and incentivize certain actions. Barclays was ordered to pay a $400,000,000 penalty, cease and desist from further violations, and implement a stronger internal supervision system.Examples of Misconduct
CFTC Orders Barclays to pay $200 Million Penalty for Attempted Manipulation of and False Reporting concerning LIBOR and Euribor Benchmark Interest Rates (July 2, 2012)Press Release | Order | Notice | StatementBarclays PLC, Barclays Bank PLC, and Barclays Capital Inc., the U.K. bank’s U.S.-registered capital market company, were charged in 2012 with attempting to manipulate and making false reports concerning two global benchmark interest rates, LIBOR and Euribor, on numerous occasions and sometimes on a daily basis over a four-year period. This began as early as 2005, when LIBOR submissions were made inadequately low in order to protect Barclays’ financial condition and public perception. As a result, Barclays faced a $200,000,000 civil penalty.

HSBC

Notice of Covered Action No. 2018-003 (February 5, 2018)
CFTC Orders Five Banks to Pay over $1.4 Billion in Penalties for Attempted Manipulation of Foreign Exchange Benchmark Rates (February 2, 2015)Action | Press Release | Order | Statement by Chairman Timothy MassadAlong with four other major banks, HSBC Bank plc was found to have been attempting to manipulate the global foreign exchange benchmark, as well as aid and abet other banks doing so as well. Bankers were found to be using private chat rooms in order to discuss the manipulation of figures while sharing confidential, disclosed customer order information and trading positions. Together, Citibank N.A., HSBC Bank plc, JPMorgan Chase Bank N.A., The Royal Bank of Scotland plc, and UBS AG (UBS) faced a $1.4 billion dollar total fine, $275 million of which was to be paid by HSBC.Example of misconduct

Lloyds Banking Group

CFTC Charges Lloyds Banking Group and Lloyds Bank with Manipulation, Attempted Manipulation, and False Reporting of LIBOR (July 28, 2014)Notice of Covered Action | Press Release | OrderIn 2014, Lloyds Banking Group plc and Lloyds Bank plc, both based in London, were charged with the attempted manipulation of foreign currency rates. The group, on a few occasions, was successful in the manipulation of both the Sterling London Interbank Offered Rate and the Yen London Interbank Offered Rate, and also attempted to do this with the U.S. dollar. The CFTC ordered Lloyds Banking Group plc and Lloyds Bank plc to pay a $105,000,000.Examples of Misconduct
CFTC Charges Lloyds Banking Group and Lloyds Bank with Manipulation, Attempted Manipulation, and False Reporting of LIBOR (October 1, 2014)Covered Action | Press Release | OrderIn 2014, Lloyds Banking Group plc and Lloyds Bank plc, both based in London, were charged with the attempted manipulation of foreign currency rates. The group, on a few occasions, was successful in the manipulation of both the Sterling London Interbank Offered Rate and the Yen London Interbank Offered Rate, and also attempted to do this with the U.S. dollar. The CFTC ordered Lloyds Banking Group plc and Lloyds Bank plc to pay a $105,000,000.Examples of Misconduct

Royal Bank of Scotland

CFTC Orders The Royal Bank of Scotland to Pay $85 Million Penalty for Attempted Manipulation of U.S. Dollar ISDAFIX Benchmark Swap Rates (February 3, 2017)Notice of Covered Action | Press Release | OrderAfter attempting to manipulate the U.S. Dollar International Swaps and Derivatives Association Fix benchmark between January 2007 and March 2012, The Royal Bank of Scotland plc was caught and charged by the Commodity Futures Trading Commission in 2017. This manipulation was done in hopes of benefitting from certain derivatives positions the Royal Bank of Scotland held that were priced or valued off of the USD ISDAFIX benchmark. The CFTC ordered that the Bank pay an $85,000,000 civil penalty, as well as the mandatory implementation of strengthened controls and procedures.
CFTC Orders The Royal Bank of Scotland to Pay $85 Million Penalty for Attempted Manipulation of U.S. Dollar ISDAFIX Benchmark Swap Rates (February 15, 2017)Covered Action | Order | Press ReleaseIn 2017, The Royal Bank of Scotland faced an $85,000,000 civil penalty issued by the CFTC after attempting to manipulate the ISDAFIX benchmark. Unlawful conduct took place between January 2007 and March 2012 when traders looked to benefit from certain derivative positions it held that were priced or valued off of the U.S. Dollar ISDAFIX benchmark. On top of this fine, The Royal Bank of Scotland was required to strengthen its internal controls and take extra steps in ensuring this conduct does not happen or go undetected again.
CFTC Orders Five Banks to Pay over $1.4 Billion in Penalties for Attempted Manipulation of Foreign Exchange Benchmark Rates (February 2, 2015)Covered Action | Press Release | Order | Statement by CFTC ChairmanAlong with four other major banks, The Royal Bank of Scotland was found to have been attempting to manipulate the global foreign exchange benchmark, as well as aid and abet other banks doing so as well. Bankers were found to be using private chat rooms in order to discuss the manipulation of figures while sharing confidential, disclosed customer order information and trading positions. Together, Citibank N.A., HSBC Bank plc, JPMorgan Chase Bank N.A., The Royal Bank of Scotland plc, and UBS AG (UBS) faced a $1.4 billion dollar total fine, $290 million of which was to be paid by The Royal Bank of Scotland.
CFTC Orders The Royal Bank of Scotland plc and RBS Securities Japan Limited to Pay $325 Million Penalty to Settle Charges of Manipulation, Attempted Manipulation, and False Reporting of Yen and Swiss Franc LIBOR (May 1, 2013)Press Release | Order | Chairman Gary Gensler Statement | Commissioner Bart Chilton StatementIn 2013, the CFTC charged The Royal Bank of Scotland plc and RBS Securities Japan Limited with the manipulation, attempted manipulation, and false reporting related to LIBOR for Yen and Swiss Franc. These benchmark interest rates are critical to both the financial markets and the public, who rely on the integrity of this rate to carry out financial activity. The Royal Bank of Scotland was ordered to pay a $325,000,000 civil penalty, cease and desist from further violations, and reinstate integrity and security into their bank with new and improved fraud detection practices.

One reason for the influx of UK whistleblowers to the United States was the Bank of England’s rejection of creating a Dodd-Frank style remedy in the United Kingdom. The Bank of England’s report was analyzed by our firms partner Stephen Kohn, and completely debunked, which you can read at the National Whistleblower Center:

Creating an Effective Anti-Corruption Program: A Rebuttal to the Bank of England’s Findings on Whistleblower Incentives (Download PDF Version)

This rebuttal was covered extensively by our firm and various media:

The Effects of Corruption in the United Kingdom

Corruption in the UK has major economic, social, and political effects.

Economically, corruption can deter investors from doing business in the UK, because it creates doubt and confidence in the rule of law. For instance, taxes can be diverted for personal gain or political patronage. Or bribes may need to be paid to operate.

Socially, corruption erodes public trust in government and the institutions designed to serve its people. This can lead to inequality, as the quality in public services such as healthcare, education, and infrastructure gradually decline.

Politically, corruption undermines democratic principles, weakening the government and its effectiveness, which leads to instability. This can result in protests or social unrest. Addressing corruption is a priority for the UK government and requires a comprehensive and multi-faceted approach.

Anti-corruption Efforts in the UK

While the UK’s Public Interest Disclosure Act (PIDA) offers protection to whistleblowers, many advocates argue that it is insufficient. Until the UK implements the Protection for Whistleblowing Bill and an Office of the Whistleblower, UK whistleblowers may find greater protection under U.S. whistleblower laws.

Anti-Corruption Efforts in UK

UK residents can confidentially and anonymously report foreign corruption, money laundering, and tax evasion to U.S. regulators if their information involves a U.S. individual or company.

Tips Received by SEC from UK Whistleblowers

Over 750 UK whistleblowers have filed cases with the U.S. Securities and Exchange Commission alone since Dodd-Frank’s passage. What are the laws that can be used? Below is an overview:

Anti-Money Laundering and Sanctions Whistleblower Program

This program is designed to combat money laundering and financial crimes. It not only covers money laundering, but also terrorist financing, among other financial crimes. AML laws require banks to take specific measures to detect and prevent money laundering, such as filing Suspicious Activity Reports (SARS) and conducting Know Your Customer (KYC) processes.

Whistleblowers who report violations of AML laws may be eligible to receive an award between 10 and 30 percent of what the government collects. Furthermore, whistleblowers may be eligible to report violations anonymously, which protects them against reprisal. And those who experience reprisal may receive protection under this program.

The organization responsible for investigating such claims is the Financial Crimes Enforcement Network, a bureau of the U.S. Department of The Treasury.

Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act has seen extensive use, with thousands of complaints filed by foreign nationals, demonstrating its relevance and accessibility to individuals outside the U.S.

Since 2021, over 783 UK nationals have filed complaints, highlighting it’s effectiveness in combatting fraud and corruption. While specific details of individual cases filed under the Dodd-Frank Act from the UK are generally not publicized due to confidentiality and anonymity protections, the types of cases commonly involve:

Securities Fraud – this includes misrepresentation, insider trading, accounting fraud, and other fraudulent activities related to securities and investment.
Banking Violations – activities that breach U.S. banking laws, which may involve UK-based financial institutions or transactions.
Foreign Corrupt Practices Act Violations – reports involving UK companies or individuals engaging in bribery or other corrupt practices in international business transactions.

Whistleblowers may receive an award between 10 and 30 percent if their information leads to a successful enforcement action involving securities or commodities violations, or foreign corruption such as bribery or money laundering. Whistleblowers play a critical role in helping investigations that target violations of the FCPA and anti-corruption laws.

Conclusion

Corruption remains a major issue in the United Kingdom, despite efforts to combat it. And while the country has made progress in recent years, there is still a lot to be done to address corruption and to create a more transparent and accountable government.

Whistleblowers play a crucial role in exposing corruption and holding those responsible accountable. While the UK has its own whistleblower protection laws, such as the Public Interest Disclosure Act (PIDA), many advocates argue that these laws are insufficient.

To effectively combat corruption in the UK, it is essential to:

Strengthen whistleblower protections: The UK government should enact stronger whistleblower protection laws and establish an Office of the Whistleblower to provide independent support to whistleblowers.
Increase transparency and accountability: The government should increase transparency and accountability in all sectors of society, including the public sector, private sector, and non-profit organizations.
Invest in anti-corruption measures: The government should invest in anti-corruption measures, such as training for public officials, strengthening law enforcement agencies, and improving financial transparency.
Promote ethical behavior: The government should promote ethical behavior through education, training, and public awareness campaigns.

By taking these steps, the UK can make significant progress in combating corruption and building a more just and equitable society. However, In the absence of stronger domestic protections, UK whistleblowers may find greater protection under U.S. laws, such as the Dodd-Frank Act and the Foreign Corrupt Practices Act.

Reporting Corruption in the UK Using U.S. Whistleblower Laws

Are you aware of corruption involving U.S. government fraud or foreign bribery? We can help. As whistleblowers, you face risks, but we’re committed to protecting your rights. Our firm specializes in complex cases, including the $230 billion money laundering scheme exposed by our client, among many others like this. Contact us for a free and confidential consultation.