Very crude dealings

Speculation that BP lobbied the UK to release the Lockerbie bomber in order to snare an oil deal with Libya highlights governments' moral inconsistency on bribery and corruption.

There was much talk of the special relationship between the UK and the US this week; both David Cameron, UK prime minister, and Barack Obama, the US president, kept mentioning it at the White House. But the more intriguing relationship is that between BP and Libya.

There is no evidence that the oil company directly lobbied the British government for the release of Abdel Basset al-Megrahi, the Lockerbie bomber, but it admits to backing a prisoner transfer deal with Libya in 2007. Two years later, Mr Megrahi was home and BP had its offshore drilling rights. Crude oil indeed.

Even if Megrahi had been released in a direct quid pro quo for BP obtaining the contract, rather than on dubious health grounds, no law would have been broken. Had BP bribed Libyan officials with hard cash, it would have been in trouble under the US Foreign Corrupt Practices Act, but commercial realpolitik is not illegal.

This makes no moral sense. The US senators outraged at the alleged link between the release and the oil contract, denied by both BP and Cameron, will be ethically correct if any damning evidence emerges. What difference is there between a company paying a bribe and a government striking a dirty political deal on its behalf? Surely none.

The gap between the justice meted out to corrupt companies under the FCPA or the new UK Bribery Act and the relative immunity enjoyed by politicians is an incentive for large companies to use governments as corporate shields. It reinforces the military-industrial complex (now the military-energy-industrial complex) of which Dwight Eisenhower warned.

"Bribery hurts the least powerful. It is not consistent with human dignity for business to be conducted one way in America, and another way in Africa or Latin America,” says Mark Brzezinski, a partner of law firm McGuire Woods.

That also applies, although he does not say it, to political palm-greasing. It has the same effect of entrenching the elite in corrupt economies. Yet little can be done about it and the US has been no stranger to dubious deals with foreign governments that benefit both its strategic interests and US companies.

Trade promotion is harmless enough, although it begs the question of what business it is of a government to drum up orders for its private sector. The fact that Prince Andrew flies around the world promoting British companies gives UK taxpayers some return on their royal investment.

The revolving door between state capitals and the private sector – many former ministers transfer into glad-handing on behalf of banks – is more questionable. When it gets to trade-offs between commercial and state interests – a military contract here and an oil refinery deal there in return for political favours – morality takes a back seat.

This is in stark contrast to the aggressive stance taken by the US, and now the UK, on bribery of foreign officials. Enforcement of the FCPA, which was passed in 1977 has been sharply stepped up, and has recently caught not only US companies such as Halliburton, the oil services group, but European companies such as BAE Systems, Daimler and Siemens.

The large penalties levied on US-listed foreign companies – Siemens had to pay $US1.3 billion and BAE $US400 million – smack of extra-territoriality. But it is justified in this cause: bribery of foreign officials must be addressed by cutting off the supply since demand is out of control.

There remains a big grey area between bribery and political deal-making. Transparency International’s 2009 index of corruption perceptions gives very low scores (indicating a high perceived level of public sector corruption) to Middle East oil producers such as Iraq and Libya, and a poor one to Saudi Arabia, a big customer of BAE.

Fining companies for bribing officials while treating business deals with state rulers as an unfortunate necessity makes strategic sense but is morally incoherent. If the result is a close relationship between Western oil and arms companies and Middle East dictators, no one – not even senators – should be surprised.