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The National (Scotland)
The National (Scotland)
National
Judith Duffy

Independent Scotland ‘must not look away’ from tackling corruption, new report says

A new report says independence will give Scotland powers to tackle economic crime

AN independent Scotland should set up an anti-corruption authority to help tackle economic crime which is costing billions of pounds every year, a new analysis has suggested.

A paper from independence project The Bottom Line has warned the UK is “decaying” and there is the risk that economic crime and corruption will eventually crowd out “legitimate economic and political pursuits”.

However it said under devolution the Scottish Parliament does not have the powers over institutions to tackle large scale financial crime and money laundering.

With independence, Scotland should take steps to make sure it does not “look the other way” when it comes to stopping corruption, the report concludes.

The Bottom Line initiative, which aims to add to the debate around the economics of an independent Scotland, involves David Simpson, founding director of the Fraser of Allander Institute at Strathclyde University, Graeme Blackett, previously economic adviser to the SNP Growth Commission, and former SNP MP and Treasury spokesperson Roger Mullin.

They state: “We argue that for too long the impact of economic crime and corruption on the working of the economy and on the lives of individuals has been ignored.

"Yet the negative impacts on the economy and on the day to day lives of individual citizens can be severe, ranging from a noticeable reduction in economic growth to a destruction of the lives of many innocent individuals through fraud.

“It is clear that small advanced economies are amongst the least corrupt and most economically prosperous.

“Scotland should aspire to match their performance, but needs the powers to have the agency to do so.”

The analysis says it is impossible to put an accurate figure on economic crime in the UK, as much of it is hidden from view.

Former SNP MP Roger Mullin

But it points to figures from the UK Government's National Crime Agency (NCA), which estimated in 2017 that the current annual extent of UK fraud was £190 billion per year.

In another report the NCA outlined a cost of £100 billion per year linked to money laundering.

“Put simply, the scale of economic crime and money laundering dwarfs the entire annual budget of the Scottish Government,” the paper states.

It noted there is no country in the world completely free from financial crime and corruption, but points to the example of Ukraine in establishing a “significantly resourced National Anti-Corruption Bureau” in 2014 after the overthrow of President Victor Yanukovych, who amassed a large personal fortune and faced accusations of cronyism and corruption.

But it added: “The UK, despite the scale of financial crime, money laundering and political corruption, has no equivalent overarching anti-corruption authority with sufficient resources to act to prevent corruption and track down the corrupt and criminal.

“Indeed, the UK Government has specifically rejected calls to establish one. The UK has a great deal of legislation and regulations that look good on paper, but which are not sufficiently enforced."

The report said Scotland’s lack of powers means it cannot use “business vehicles used to front criminal activities” such as Scottish Limited Partnerships (SLPs), which have been exposed as being used for money-laundering and tax evasion.

“Politically, the buck stops entirely with the UK Government,” the analysis said.

“This encourages a political helplessness that is harmful to Scotland’s economy and society. SLPs harm Scotland’s reputation abroad, but the UK Government denies Scotland the powers to act.”

An independent Scotland would have to take action on a number of fronts, it stated, including establishing an anti-corruption authority, strengthening regulation of major financial institutions such as banks, reforming or abolishing SLPs and tackling a “revolving door” between politicians and business by considering measure such as a time bar on taking up directorships.

“Scotland must not turn its head the other way,” the report concluded. “We have been paying too high a price for our political dependence, and it is time for change. We must look to the future.”

The UK Government has been contacted for comment.

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