Select Committee on European Scrutiny Thirty-Eighth Report











Initiative of the Kingdom of Denmark with a view to the adoption of a Council Framework Decision on combating corruption in the private sector.


Initiative of the Kingdom of Denmark with a view to the adoption of a Council Framework Decision on combating corruption in the private sector.

Legal base:

Articles 29, 31(e) and 34(2)(b) EU; consultation; unanimity


Document originated:

(a) 13 June 2002

(b) 2 August 2002

Deposited in Parliament:

(a) 28 June 2002

(b) 9 August 2002


Home Office

Basis of consideration:

(a) EM of 12 July 2002

(b) EM of 29 August 2002

Previous Committee Report:


To be discussed in Council:

No date set

Committee's assessment:

Legally and politically important

Committee's decision:

(a) Cleared

(b) Not cleared; further information requested




    1. In 1997 the Council adopted a Convention on the fight against corruption involving officials of the European Communities or officials of Member States of the European Union[26]. This was followed in 1998 by the adoption of a Joint Action on corruption in the private sector[27]. At that time, the Council issued a statement that it regarded the Joint Action as a first step towards combating corruption at EU level and that additional measures would be implemented at a later stage.
    2. Corruption is also being addressed by the OECD, the Council of Europe and the United Nations. The OECD adopted a Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in 1997, and a Council of Europe Convention on Corruption was opened for signature in 1999. Negotiations have also been opened in the UN for a convention on combating corruption.
    3. The draft Framework Decision

    4. Document (a), which contained the original version of the proposal, has been superseded by document (b) which sets out a revised version following consideration by a Council working party on 29 July. Article 1 of the revised version defines the 1997 Convention and the Council of Europe Convention of 1999. It also defines a legal person as any entity 'having such status under the applicable national law, except for States or other bodies acting in the exercise of State authority and for public international organisations'.
    5. Article 1 also now defines the concept of 'breach of duty', which is referred to in the definitions of 'active' and 'passive' corruption in Article 2. 'Breach of duty' is to be understood in accordance with national law[28]. However, the concept is to cover as a minimum 'any disloyal behaviour constituting a breach of a statutory duty, or as the case may be, a breach of professional regulations or instructions, which apply within the business of a person, who in any capacity directs or works for a private sector entity'[29].
    6. Article 2 of the revised version deals with what is called 'active' and 'passive' corruption in the private sector. 'Active' corruption is defined in Article 2(1)(a) as offering an undue advantage of any kind to a person who in any capacity directs or works for a private-sector entity 'in order that the person should perform or refrain from performing any act, in breach of that person's duties'. Article 2(1)(b) defines 'passive' corruption as requesting or receiving an undue advantage, or a promise of an undue advantage, 'in order to perform or refrain from performing any act, in breach of one's duties'.[30] Article 2 has been amended in the revised version so as to apply also to business activities within profit and non-profit entities.
    7. Article 3 requires Member States to provide for the offences of instigating, inciting and aiding and abetting the offences referred to in Article 2. Article 4 of the original version has been deleted. It would have required Member States to undertake to ratify the 1997 Convention and the 1999 Council of Europe Convention within one year of the entry into force of the Framework Decision.
    8. Article 5 requires Member States to introduce penalties of at least between one and three years' imprisonment.[31] Article 5(2) also requires Member States to provide for the possibility of temporary disqualification of a natural person from carrying on a business or from being a 'founding member, manager or director of any limited-liability company or company requiring special public approval'.
    9. Articles 6 and 7 contain provisions on the liability of legal persons and for penalties.
    10. Article 8 provides for jurisdiction. It requires Member States to make rules to establish jurisdiction over offences committed in whole or in part within their territory, where the offence is committed by one of their nationals and where the offence is committed for the benefit of a legal person having its head office in the territory of the Member State[32].
    11. Articles 9, 10 and 11 deal with the repeal of Joint Action 98/742/JHA, implementation and entry into force respectively.
    12. The Government's view

    13. In his Explanatory Memorandum of 12 July 2002 the Parliamentary Under- Secretary of State at the Home Office describes the original proposal. The Minister's further Explanatory Memorandum of 29 August 2002 describes the proposal as it has been revised. The Minister points out that the proposal has a wider scope than that of the Joint Action of 22 December 1998 in that it requires Member States to make active and passive corruption a criminal offence whether or not the conduct adversely affects competition or results in economic damage. The Minister explains that the offences provided for in Article 2 are already provided for in the UK in s.1 of the Prevention of Corruption Act 1906, including the case of the business activities of non-profit making entities.
    14. In relation to Article 4 of the earlier version (document (a)) the Minister expresses doubts as to whether it is appropriate for a Framework Decision to require Member States to ratify an existing EU Convention and considers that this appears to be inconsistent with the principle that Conventions are ratified by national parliaments in accordance with Member States' respective constitutional requirements. The Minister repeats those doubts in his later Explanatory Memorandum, but indicates that the UK 'would have no practical difficulties in implementing this Article if it were to be reinserted'.
    15. In relation to the penalties provided for under Article 5, the Minister refers to the proposed maximum of at least between one and three years as 'disappointingly low' and refers to the seven year maximum under domestic law[33]. The Minister further explains that the Government is considering whether to press for stronger penalties.
    16. The Minister points out that Article 5(2) provides for the disqualification of natural persons, such as company directors, from particular business activities but that, like other Member States, the UK has difficulties with the provisions of Article 5(2). The Minister explains that, if adopted in its present form, Article 5(2) would require changes to UK legislation.
    17. Conclusion

    18. We note the Minister's comment that the offences provided for in Article 2 of the proposal are already covered by the law of the United Kingdom, but we ask him if he is content that the definitions in Article 2 are sufficiently broad to cover, for example, the case where an employee of a company is persuaded by a corrupt inducement to act in breach of his contract of employment.
    19. Like the Minister, we welcome the deletion of Article 4 from the proposal. It does not seem to us to be an appropriate provision to include in a Framework Decision under Article 34(2)(b) EU, since these should, in our view, be confined to the approximation of laws.
    20. We ask the Minister for his views on the practicality of the provisions in Article 5(2) on disqualifying a natural person, who is not an officer of a company, from carrying on a business, and for a more detailed explanation of the changes which would be necessary in the law of the United Kingdom if the proposal were to be adopted in its present form.
    21. We clear document (a) on the grounds that it has been superseded, but we shall hold document (b) under scrutiny pending the Minister's reply.


26  OJ No C 195, 25.6.1997, p.2. Back

27  OJ No L 358, 31.12.1998, p.2. Back

28  It is not clear if this is to be the national law of the forum State, or the national law of the place where the act was done. Back

29  This appears to be narrower than s.1(1) Prevention of Corruption Act 1906 which refers to doing or forbearing to do any act or showing or forbearing to show favour or disfavour in relation to a principal's affairs or business. Back

30  It is not clear why Article 2(1)(b) does not refer expressly, as does Article 2(1)(a), to the duties owed by that person. 'In breach of one's duties' suggests that the duties are ones owed under the general law, and not ones particularly owed by the person in question, such as those owed under a contract.  Back

31  This level of penalty would not be sufficient to displace the dual criminality rule where surrender is sought under the European Arrest Warrant (2002/584/JHA OJ No L 190, 18.7.2002, p.1) since the offence of 'corruption' as listed in Article 2(2) of that Framework Decision must be punishable by a sentence of at least three years. Accordingly a state from which extradition is sought for the crime of corruption under the present proposal would still be able to require dual criminality as a condition of surrender.  Back

32  An earlier provision requiring jurisdiction to be established over offences committed by persons resident within the Member State has been deleted. Back

33  However, the maximum under s.1(1)(b) Prevention of Corruption Act 1906 applies also to Crown or public servants. Corruption involving persons holding positions of public trust is arguably more serious than that addressed by the present proposal. Back

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