An international watchdog on Friday slammed Britain for failing to punish companies for bribing foreign officials and said London should consider reopening a blocked probe into a huge Saudi arms deal.
The Organisation for Economic Cooperation and Development (OECD) complained that London lacked the "political will" to fully investigate British companies accused of paying bribes in order to win lucrative contracts abroad.
It said in a new report that Britain has failed to prosecute successfully a single firm for bribery, despite ratifying the OECD's anti-graft convention 10 years ago.
"We're sounding the alarm bell. We need adequate laws and we need them now," Mark Pieth, chairman of the OECD working group on bribery in international business, told a news conference to launch the report.
"We've been trying to persuade the UK for years to update its legislation (on corruption). There is a question of political will," he said, adding that it was widely acknowledged that British legislation was "sub-standard."
Transparency International meanwhile said Britain had "an abysmal record of prosecuting bribery" and that "the UK now has a reputation as a place where corrupt business is done."
The non-governmental watchdog group, in a statement reacting to the OECD report, said that since the OECD anti-bribery convention came into force in 1997, Britain had taken up just two cases, against 103 in the United States, 43 in Germany and 19 in France.
Britain's Justice Secretary Jack Straw said the government welcomed the OECD report and would study it carefully.
"The UK is fully committed to combating foreign bribery, which hurts honest companies and raises the costs of doing business," he said.
The OECD panel urged Britain to make sure national economic interests do not affect the decision to prosecute foreign bribery cases, and to ensure police can act independently from the Attorney General.
The OECD made similar recommendations to Britain in 2003, 2005 and 2007.
Britain's Serious Fraud Office investigated claims that BAE Systems, one of the world's biggest weapons makers, ran a 60-million-pound (75-million-euro, 110-million-dollar) slush fund for Saudi officials to attract contracts.
Graft rumours have long swirled around the Al-Yamamah arms deal, a rolling programme of shipments of high-tech military hardware which represents Britain's biggest ever export contract and supports thousands of skilled jobs.
But police ditched the probe in 2006, before anyone was prosecuted, after the British government came under pressure from the Saudi government.
Then prime minister Tony Blair defended the decision, which was strongly criticised by anti-corruption campaigners, saying the probe could threaten intelligence links with Saudi Arabia at a key point in the "war on terror."
Britain and Saudi Arabia have maintained close defence ties and last year signed a 4.43-billion-pound deal to supply 72 Eurofighter planes to Riyadh in one of London's largest ever export orders.
The OECD report recommended that Britain "consider reopening the Al-Yamamah investigation if the UK were satisfied that the circumstances that led to the decision to discontinue the investigation were sufficiently changed."
In July, the House of Lords, Britain's highest court, overturned a ruling that the Serious Fraud Office acted unlawfully by stopping the probe.
The OECD report gave London credit however for setting up a well-funded, powerful new police unit for bribery inquiries, and for drawing up a strategy to strengthen the fight against corruption.
Pieth said the OECD would give Britain "the benefit of the doubt" concerning its determination to improve the situation.
"The test is what's going to happen to the 16 ongoing cases" involving bribery allegations in Britain.
He warned the lack of adequate anti-bribery legislation made it complicated and expensive to do business with British companies abroad.
"When you are a contracting partner, or if you are the World Bank sponsoring a dam, you have to be very sure the company is following the rules."
The OECD has no powers to take any concrete action against Britain or British companies, but its reports carry moral weight and can have an impact on a country's reputation.
