Today at the State Department the President of the United States gave an historic speech on US policy for the Middle East.

New Chapter in US Middle East policy

Describing “a new chapter in American diplomacy” Obama highlighted the fight against corruption as central pillar of its new Middle Eastern policy.

Obama emphasised that “…in a global economy based on knowledge, based on innovation, no development strategy can be based solely upon what comes out of the ground. Nor can people reach their potential when you cannot start a business without paying a bribe.”

The new policies are a top priority that Obama said “must be translated into concrete actions, and supported by all of the diplomatic, economic and strategic tools at our disposal.”

Starting with Tunisia and Egypt

Starting with Tunisia and Egypt Obama declared that fighting and exposing corruption was a cornerstone of the new US Middle East policy stating  “the corruption of elites who steal from their people; the red tape that stops an idea from becoming a business; the patronage that distributes wealth based on tribe or sect.  We will help governments meet international obligations, and invest efforts at anti-corruption — by working with parliamentarians who are developing reforms, and activists who use technology to increase transparency and hold government accountable.  Politics and human rights; economic reform.”

Risk of detection increases

In early March we wrote that the unrest in Africa was an opportunity for the SFO and quoted Richard Alderman saying “I expect as well that the changes we are witnessing each day in various countries will also lead to more corruption being exposed. We may well learn far more about what corporations have done in order to secure contracts than we ever knew before. We shall be looking out for all of this information in the SFO together with our partners in other jurisdictions.”

We followed up in May with an article which highlighted the prosecutions taking place in Egypt and the detention of the Mubarak family.

Richard Alderman has since confirmed to us that he is already looking at one Egyptian case and anticipates that there will be more.

The new US foreign policy on the Middle East kicking off with concrete proposals for Egypt and Tunisia to target corruption underscores Richard Alderman (Director of the SFO) earlier statements and the risk in relation to anyone who is involved in unethical behaviour in those jurisdictions has significantly increased.

There is already a strong track record of co-operation between the US and the UK in the investigation and prosecution of corruption offences. We anticipate that the revolutions in the Middle East will inevitably reveal transactions entered into under the previous regime who themselves are, in many cases, in prison awaiting trial on corruption charges as new governments seek to discredit the former rulers.

We have highlighted before the risk posed by regime change.  The pledge by Obama to target corruption as a top priority in the new US Middle Eastern policy amplifies the point.

In the wake of the new policy the risks of transactions tainted by the conduct of those related to the previous regime have risen. We advocate businesses with operations in these jurisdictions consider reviewing them to confirm that they are, and have been, operating ethically and, if not, to be pro-active in addressing the position.

In our view this approach is likely to generate a better outcome than hoping for the best and dealing with any issues which emerge reactively, when it is too late.