Select Committee on International Development Minutes of Evidence



The Government's Proposals for the Reform of the Criminal Law of Corruption in England and Wales



  The following are the principal points to emerge from the comments of TI-UK

—  Proposals for amendment of the domestic law of corruption and those relating to Members of both Houses of Parliament are broadly supported.

    —  The proposed legislation needs to be clear and effective, especially to give effect to the UK's obligations under the OECD Convention.

    —  The equivalent laws in Scotland, Northern Ireland and the Crown Dependencies need to be brought swiftly into line.

    —  Legislation to implement the OECD Convention must be in place by the end of 2000.

    —  There remains a need to distinguish between public officials and others for the offences of trading in influence and bribery of foreign public officials.

    —  The reverse onus provision in the 1916 Act should be included in new legislation.

    —  There should be a separate section in the legislation for the offence of bribing foreign public officials.

    —  The requirement for the consent of the Law Officers for prosecution should be abolished.

    —  There should be an urgent and thorough high-level consultation to identify weaknesses in current investigation and prosecution procedures.

    —  The jurisdiction of the Serious Fraud Office should be extended to include corruption.

    —  Inland Revenue confidentiality rules should be relaxed to facilitate prosecution of corruption.


  1.1  Transparency International is a non-governmental organisation dedicated to curbing both international and national corruption and, in this connection, to increasing government accountability. It is the only global non-profit and politically non-partisan movement with an exclusive focus on corruption. It was founded in 1993. It has an international secretariat in Berlin and national chapters in about 80 countries. Transparency International (UK) (TI-UK) is the UK national chapter.

  1.2  TI-UK's primary concern has been with fighting corruption in international trade and investment. However, it is also concerned with the domestic law of corruption, both because of the need to curb corruption within the UK and because it is the foundation of any attempt to deal with the "supply" side of international corruption.


  2.1  TI-UK welcomes the publication of the Government's policy paper (the Paper) and is broadly supportive of the proposals made. However, it does have a number of concerns, which are referred to in the remainder of these submissions. TI-UK thinks it is right that evidence in relation to alleged corruption by Members of Parliament and members of the House of Lords should be admissible notwithstanding the Bill of Rights of 1689 and offers no comments on this part of the Paper.

  2.2  TI-UK made submissions to the Law Commission in respect of the original consultation paper (No 145). It was apparently due to TI-UK's intervention that the final report contained some proposals for dealing with the international dimension. Unlike the Law Commission's report (No 248) "Legislating the Criminal Code: Corruption" (LCR), the Government's Paper does not include a draft Bill. The Paper indicates that it accepts in principle the proposals made by the Law Commission. Some of the points addressed in these submissions can only be fully developed when the text of proposed legislation is available. TI-UK is willing to co-operate in the process of briefing parliamentary counsel or to work with Government in whatever way may be thought most helpful in securing the common objectives expressed by the Home Secretary, the Rt. Hon Jack Straw MP, in his foreword to the Paper.

  2.3  TI-UK's criteria in commenting on the proposals in the Paper, are consistent, whether considering domestic or international corruption. Will they be clear? Will they be effective? Unless the legislation is clear, it certainly cannot be effective. Effectiveness however embraces other factors, especially the will, mechanisms and resources to detect and prosecute offences covered by the new legislation.

  2.4  Clarity and effectiveness may call for statutory measures not yet included in the Paper or the LCR (see the proposals below regarding the jurisdiction of the Serious Fraud Office (SFO) and the limited lifting of confidentiality restrictions on information supplied to the Inland Revenue).

  2.5  In examining how the Paper's proposals may fulfil the UK's international obligations, TI-UK looks especially at the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the OECD Convention), the OECD 1997 Recommendation and the Country Report for the UK issued by the OECD on 27 June 2000 (OECD Review).

  2.6  For that purpose, as for other commitments made on behalf of the UK in this field, it is imperative that substantially similar legislation to that proposed for England and Wales is enacted for Scotland and Northern Ireland and that the Crown Dependencies and the UK Overseas Territories can be brought within the scope of satisfactory anti-corruption laws to tackle international corruption without delay. The UK must not, by default, embrace its own "haven jurisdictions" for corrupt dealings.

  2.7  As a starting point, the enactment of proposed legislation for England and Wales is VERY URGENT. The OECD Working Group on Bribery in International Business Transactions (the Working Group) found that the UK laws were not in compliance with the standards of the OECD Convention and urged the UK to enact appropriate legislation as a matter of priority, taking into account the observations of the Working Group, who will review the situation by the end of 2000. TI-UK urges the Government to follow-up a "fast-track" consultation on the Paper, with a commitment to legislate in the Queen's Speech at the opening of the 2000-01 session and to construct a "fast-track" for the legislation to be in place by December 2000. This is a measure that should command all-party support and Government should contrive to demonstrate that the UK is capable of using its parliamentary machinery to meet the well-founded concerns of the Working Group within the generous time allowed.

  2.8  Failing this, there remains a strong case for enacting a short and uncontroversial Bill, to create the offence required by the OECD Convention, together with the proposals for extra-territorial jurisdiction in the Paper. This offence, the bribery of foreign public officials (FPOs), is a serious international economic crime which can logically either stand apart from, or be part of, the UK's domestic anti-corruption law. To delay enacting this offence could severely damage the future success of the Convention, which relies on the basic assumption that the same rules will apply to all major exporters. It is particularly damaging that the UK as a G7 nation is still seen as one of the few laggards in curbing a practice that has devastated economies and resulted in appalling poverty.

  2.9  The Home Secretary has rightly recognised corruption as a "deadly virus", that left unchecked, "weakens economies, creates huge inequalities and undermines the very foundations of democratic government". It is normal practice to treat deadly viruses urgently and not "when parliamentary time allows"!


  3.1  In broad terms, the Paper's proposals to abandon the present distinction between private and public sector corruption, to introduce the "agency" concept and to have a definition of acting corruptly are logical and welcome. In theory, they should simplify our domestic law. This, combined with the repeal of the current statutory offences and the abolition of the common law offence of bribery, should certainly remove present uncertainties as to their scope and overlap.

  3.2  However, there are aspects of "agency" in the draft Bill published in the LCR that are untested, notably the concept of a person being "an agent performing functions for the public if the functions he performs are of a public nature". One recognises the factors that have resulted in the concentration on functions rather than bodies, with the increasing number of public sector functions that have been privatised or contracted out in recent years. The legal concept of "the public" being a principal in an agency relationship, separate and apart from relevant public bodies, is quite difficult and will depend on judicial interpretation. The impossibility of "the public" giving consent to an agent is already noted in the Paper (para 2.7). A review of clauses 10 and 11 of the LCR Bill suffice to show the complexity and difficulties that may be encountered in applying this novel concept in the law of corruption. Moreover, with the passage of time, and less recent memory and recognition of services now in the private sector as having once been in the public sector, it will become more difficult to determine whether functions are "of a public nature".

  3.3  For reasons stated in the Paper (para 2.15) and in these submissions (paras 5.1 and 6.4) there will remain a need to distinguish between public officials and others.

  3.4  As the Government recognises (para 2.6 of the Paper), it is important not to criminalise legitimate business activity. In the LCR Bill this depends on the definition of acting corruptly and the exception of remuneration or reimbursement. In dealing with "tips and gratuities", it might be helpful to introduce into the Bill the concept of remuneration or gratuities which are fair and reasonable and openly and fully accounted for in appropriate business records. Transactions that are open and transparent are unlikely to amount to corrupt activity.


  4.1  On grounds of effectiveness, it is regrettable that the Paper proposes to abolish the presumption (at present in the 1916 Act) that money or gifts or other consideration paid to public servants from those having or seeking contracts in the public sector are given or received corruptly. Whenever a reward is received in these circumstances, it is reasonable that the recipient should have to demonstrate that it was received innocently. This is because the briber and the agent will be the only people who know the real purpose of the reward. Under the proposals, the prosecution will have to prove beyond reasonable doubt that the briber believed the agent would act primarily in return for the reward, which may prove very difficult without the existing presumption. This reverse onus provision does not amount to a presumption of guilt and, notwithstanding the provisions of the European Convention on Human Rights, is thought to be reasonable. Its removal could present an additional hurdle to successful prosecution. To preserve the presumption would require the distinction between public and private officials to be maintained.


  5.1  TI-UK endorses the proposal in the Paper to criminalise "trading in influence" in a manner required to comply with the Council of Europe Criminal Law Convention on Corruption. The Government recognises the need for this purpose for the Bill to deal separately with public officials (para 2.15).


  6.1  The OECD Convention affords governments and business the best opportunity so far to make a real difference in achieving competition in international trade and investment based on quality, efficiency and price, rather than the ability to bribe. The more widely this is promoted, the greater the progress that can be made in isolating the extortioners, driving down the level of corruption and theft of national resources and improving integrity in national governance programmes.

  6.2  The Paper's proposals, when finally implemented, will substantially comply with the OECD Convention, but TI-UK has reservations as to the legal solutions proposed. However tidy and comprehensive the drafting of the legislation envisaged by the Paper, if this is to be modelled on the LCR Bill, it will present problems to those charged with ensuring compliance with the Convention and to those detecting and prosecuting an offence of bribing a FPO. The LCR Bill may work well in the context of the law and practice within England and Wales, with the common law tradition of Courts interpreting statutes and building over time a system of precedents. However, in the international context, for our laws to be effective in combating the bribery of FPOs, they need to be instantly recognisable from their language as addressing this offence.

  6.3  Working on the basis of the LCR Bill, in order to establish the single offence of a bribe having been paid by or on behalf of a British national to an FPO in another country, it will be necessary to refer to and interpret clauses 1, 3, 4, 6, 8, 9 and possibly 10. The concept of an agent performing functions for "the public" (based on function rather than on some agency for a government or public body with a constitutional or legal persona) will have to be related to the OECD Convention wording. Reliance will need to be placed on the rather indirect approach adopted in the Bill (clause 9(4)) that "Subsection (3) has effect even if the person has no connection with the United Kingdom, and "public" is not confined to the public of the United Kingdom or of any part of it." This approach seems to endure in the Paper's Summary (para 6) which says that "the corruption of, or by, a public official is not confined to the public of the United Kingdom." Rather than an indirect approach, it would surely be clearer and more effective to declare the offence more positively, as will be needed for the offence of trading in influence (para 5.1 of these submissions).

  6.4  TI-UK advocates that the legislation to implement the Paper's proposals should contain a separate section worded along the lines of Article 1 para 1 of the OECD Convention, so that a person commits an offence under the Act if he intentionally offers, promises or gives any undue pecuniary or other advantage, whether directly or through intermediaries, to a foreign public official, for that official or for a third party, in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of international business. This section would contain its own definition of "foreign public official", "foreign country" and "act or refrain from acting in relation to the performance of official duties", substantially along the lines of Article 1 para 4 of the Convention. It would not be necessary to follow the Convention's words slavishly and parliamentary counsel will know best how to incorporate this offence into the draft legislation. It would leave no doubt at all that the OECD Convention had been incorporated into the laws of England and Wales. It would not rely on future interpretation. It would not replace but merely supplement the other new offences to be created by the legislation.

  6.5  A section as suggested in the preceding paragraph would create a clear "Convention offence". This would strengthen the laws on related issues of money laundering offences, mutual legal assistance in the form of search and seizure, extradition and disallowance of tax deductibility, which are linked to the existence of a criminal offence under our law. Such an offence might exist from the interpretation of a combination of sections in the LCR Bill, but to enact the "Convention offence" would place this manifestly beyond doubt. The definition subsection would ensure that the offence applies to foreign members of parliament and foreign judges, which is by no means certain under the LCR Bill. In this way, all the valid objections of the Working Group expressed in paras 1.1, 1.2 and 2 of the Evaluation in the OECD Review would be met.

  6.6  The Section discussed in paras 6.4 and 6.5 of these submissions would be the core of the separate Bill referred to in para 2.9, supplemented by the widening of powers referred to below in paras 8.4 and 8.5.


  7.1  The Law Commission recommended that the requirement under corruption statutes for the consent of a Law Officer for prosecution should not apply to the offences to be created by the new legislation (para 7.26 of the LCR). This followed careful consideration of most of the relevant issues and the views of respondents following the earlier consultation paper. The Paper, following discussion with the Law Officers, proposes not to adopt this recommendation. It claims that a consent provision remains necessary because corruption is an offence which creates a high risk that the right of private prosecutions will be abused and the institution of proceedings will cause the defendant irreparable harm (paras 5.2 and 5.3 of the Paper). The same could be said of fraud offences, but no consent of the Law Officers is required for those offences. The LCR had already dealt with the extensive remedies that already exist for dealing with this circumstance (see para 7.25 of the LCR). In the area of private/private corruption, the parties may be expected to be sufficiently resourceful to prevent abuse of the judicial system.

  7.2  All prosecutors are obliged to view matters dispassionately and to take account of questions of public interest. To preserve the Law Officers' consent therefore amounts to needless duplication.

  7.3  The one very important factor that the Law Commission did not consider in this context was the need to comply with Article 5 of the OECD Convention. Investigation and prosecution of the bribery of a FPO is not to be influenced by considerations of national economic interest, the potential effect upon relations with another state or the identity of the natural or legal persons involved. TI-UK would not suggest that any particular Law Officer would exercise his or her powers improperly. However, the Law Officers are members of the Government and in considering a case objectively, could give different weight to different aspects than might prosecutors outside government. Thus in theory, consent to prosecute could be withheld to protect people or transactions for considerations fully within the ambit of Article 5 of the OECD Convention. It is for this reason that the Working Group recommended the UK to reconsider this requirement (para 5 of the Evaluation in the OECD Review)

  7.4  The Government proposes to disregard the considered recommendation of the Law Commission, the views of respondents and the recommendation of the Working Group for an insufficient reason. TI-UK would reinforce the recommendations and urge the Government to abandon this proposal.


  8.1  Para 2.8 of these submissions referred to the finding of the Working Group under Phase I of the review of performance of the UK under the OECD Convention. Phase I deals only with legal implementation. The proposals in the Paper with the modifications suggested in these submissions would enable the UK (or at least England and Wales) to fulfil its Convention obligations. Phase II of the monitoring process will evaluate enforcement programmes in each country. It will be thorough and involve country visits. Unless there are radical changes in the UK's enforcement agencies, procedures and priorities, the outcome of the Phase II evaluation is likely to be as negative as that for Phase I. Some of the necessary changes may require amendment of our laws and these should be included in the legislation to follow the Paper's proposals.

  8.2  Preliminary enquiries undertaken by TI-UK reveal a disturbing uncertainty as to which agency or agencies would investigate and prosecute the offence of international corruption, particularly one where all significant components of the offence take place outside the country. There has of course been no directly relevant experience. The OECD Convention came into force for the UK on 15 February 1999. So far as is known, no additional financial or human resources have been applied to the investigation of cases giving rise to the new offence, although there have been reports in the public domain of cases that would merit investigation. For example, the majority of companies and individuals debarred, for fraud and corruption, by the World Bank are British.

  8.3  The difficulties of detecting the offence and gathering evidence cannot be over-estimated. TI-UK recommends that senior officials from within the various law enforcement agencies, with experienced criminal law practitioners, should consult with the Home Office as a matter of urgency to consider current procedures and their likely effectiveness right from first report, through investigation and evidence gathering to trial, to highlight weaknesses, especially those that could be corrected or minimised by the proposed legislation. This consultation would also prepare the UK for Phase II of the OECD Convention monitoring process.

  8.4  Many cases of bribery of FPOs are likely to fulfil the current criteria of the SFO for the acceptance of cases as set out in the SFO Annual Report for 1999/2000. The investigation should be in the hands of those who would be responsible for the prosecution. The sum involved would frequently be at least £1 million. The case would be likely to give rise to national publicity and public concern. The investigation would require highly specialist knowledge and would obviously have a significant international dimension. There would be a need for legal, accountancy and investigative skills to be brought together as a combined operation. The suspected bribe would frequently be complex and one in which the use of the powers in Section 2 of the Criminal Justice Act 1987 (CJA) might be appropriate. TI-UK recommends that the jurisdiction of the SFO should be expressly widened to include the new offences of corruption. Many cases of corruption could include fraud and so would already fall within the SFO's jurisdiction. Many cases could equally not amount technically to fraud and therefore a very small amendment should be made to the CJA to confer jurisdiction.

  8.5  There should be no barrier to the Inland Revenue's passing information to those prosecuting the new offences of corruption; rather there should be an obligation to pass to the relevant agency any information tending to show that the crime of corruption has been committed.. The proposed legislation, or the first available Finance Bill (if considered more appropriate by those responsible), should include whatever is necessary to achieve this. Prosecution of bribery, particularly with an international dimension, will be difficult enough without artificial barriers such as exist in the current rules of confidentiality that apply to the tax authorities. This would also meet the recommendation of the Working Group in Part II of the Evaluation in the OECD Review.

July 2000

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