The British are hardly the only ones who have long thought that Britain -- birthplace of modern finance, law enforcement, the most widely imitated democratic system in the world, and even the very notion of "fair play" -- is in a position to advise everyone else on corruption and governance. Indeed, the country ranks 20th out of 178 countries -- two spots ahead of the United States -- on Transparency International's 2010 Corruption Perception Index. Its stable governance and generally robust institutions and democratic traditions make it the envy of many other countries.
At least that was the case until this month, when a long-simmering phone-hacking controversy centered on Rupert Murdoch's News of the World tabloid erupted into a full-blown scandal, badly tarnishing not only a section of the British media but also Scotland Yard and, it appears, the British government. The whole affair has revealed that Britain is hardly immune to problems more often assumed to be the particular curse of developing countries rather than developed ones. The governments that have been on the receiving end of British lectures on corruption in international forums like the United Nations, the Commonwealth, and the G-20 are probably enjoying the spectacle.
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But in fact, this is not the first time in recent memory that the fragility of Britain's institutional defenses against corruption has been exposed. In June, the organization I lead, Transparency International UK, published a report examining the level of corruption across 23 British sectors and institutions, including all those affected by the phone-hacking scandal. Our public opinion survey found a disturbing erosion of faith in institutions. Fifty-three percent of respondents believed that corruption had increased either a little or a lot in Britain in the last three years; only 2.5 percent believed it had decreased. Forty-eight percent of respondents did not think the government was effective in tackling corruption, and while nearly 93 percent wanted to report corruption, only 30 percent knew where to report it.
This public mistrust has been built on a steady drip of scandals in recent years. In 2006 and 2007, Scotland Yard undertook a major criminal investigation into claims that an 86-year-old law banning the sale of peerages and knighthoods had been broken by the Labour Party, which had allegedly nominated individuals for peerages in the House of Lords in exchange for donations and loans. No charges were ever brought, but the scandal reinforced public fears that the system of funding political parties was corrupt -- this in a country that, unlike many other major democracies, has been confident enough in the integrity of its politicians that it has never imposed a ceiling on donations to political parties.
In December 2006, the British government prematurely closed a major investigation by its Serious Fraud Office into allegations that bribes had been paid by BAE Systems to secure a huge British-Saudi defense contract in the 1980s. The government justified its action on the grounds that Britain's national security was threatened. Critics argued it was putting economic interests before the rule of law and undermining the OECD's Anti-Bribery Convention, which requires all parties to prosecute bribery of foreign public officials without being swayed by diplomatic or economic considerations. (It did not help matters that, at that time, Britain had failed to modernize its anti-bribery laws despite repeated OECD criticism.)
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