Joint Committee on The Draft Corruption Bill Report

7  Other Matters

Guidance notes or Code of Practice

155. Since the criminal law of corruption derives its normative standards (its requirements as to how people should and should not behave) from pre-existing civil law obligations, the Committee does not regard the criminal law of corruption as being principally a mechanism for laying down minimum standards of conduct, whether in public life, in business, in local government or elsewhere. Rather, the Committee regards the criminal law of corruption as a means of punishing some of the grosser breaches of standards that should be laid down elsewhere. In many areas in which corruption is possible there is already relevant guidance available. The major area in which a Code of Practice is required as a matter of urgency is to give guidance to businesses attempting to procure contracts overseas. Lord Falconer told us that an Approved Code of Conduct might be helpful.[166] As the CBI told us:

"There will be a need for very clear guidance on these points and I can see the case that some of the fairly specific and technical issues we referred to could lend themselves very well to guidance".[167]

156. Consideration could be given to the possibility of including in the Bill powers to make or approve Codes of Practice. This would enable the Government to put any Guidance before Parliament for approval as a Code of Practice. Whilst such a Code would not be legally binding, it would have persuasive force in encouraging companies to introduce procedures which ensured compliance. The overriding consideration is that the Bill should - on its face - clearly establish what is and what is not corrupt.

The Relationship of corruption law to the Proceeds of Crime Act 2002

157. The relationship between the Bill and the Proceeds of Crime Act has been raised in some of the evidence.[168] There are the issues of reporting requirements and whether confiscation should apply to the net or gross sum involved in corruption.

158. On reporting requirements, an offence under the Bill would be a predicate offence for the purposes of the Proceeds of Crime Act 2002, generating a reporting obligation on accountants and auditors within the regulated sector to report any instance of corruption by or against a UK client. Concern was raised as to the weight of this obligation in the absence of an exception as de minimis or for facilitation payments.[169]

159. Confiscation orders and civil recovery proceedings are both computed gross.[170] No deductions are allowed for expenditure incurred by the criminal in the commission of crime. This makes a certain sense when applied to a drug dealer's expenses (though even the drug dealer is allowed to deduct from his liability to tax expenses which are not themselves unlawful).[171] This has significant consequences in the case of corruption. It means that in the case of a corruptly acquired contract all the benefit income of the job is vulnerable either to a confiscation order or to civil recovery proceedings. This will create significantly greater uncertainty and risk in commercial transactions.

160. For example, by bribing some of the directors of A Plc, B Plc is able to take over A Plc. The entire company (A Plc) and/or all its property is liable to a confiscation order or to civil recovery proceedings under the Proceeds of Crime Act 2002. Anyone who has extended unsecured credit to A Plc will lose.

161. Although this is not explicitly covered by the Bill, the Committee considers that both Houses may wish to debate whether this is wrong in principle and whether it would be a violation of the First Protocol to the ECHR.

166   Q537 Back

167   Q704 (Mr Cridland) Back

168   Ev 145-148 para 3(c) and 12 and 13 Part 4 (18-22) PricewaterhouseCoopers DCB 16. Back

169   Ev 147 DCB 16.  Back

170   Ev 147 para 21 Proceeds of Crime Act 2002 ss. 76(4) & (7), Proceeds of Crime Act 2002 s.242 respectively. Back

171   Ev 149  Back

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