Examination of Witness (Questions 200-219)|
20 MAY 2003
Q200 Dr Turner: I have difficulty
here. It seems to me that if this Bill were to be effective, if
it were to eliminate the sort of corruption that you are talking
about and basically buying foreign contracts with commissions,
if it were to be effective, it would stop British companies, but
it would not stop anyone else's companies, so that would then
put British companies at an unfair disadvantage, so how do you
get around that one?
Mr McKittrick: This is why I say
it has to be wider. We are actually involved in something called
Q201 Chairman: So it has got to be
a pan-world thing.
Mr McKittrick: As I said earlier,
I think if it were pan-Europe, it would probably take out 90 per
cent of it. It would then have to go a further step and become
pan-world, but without it being pan-Europe, forget it.
Chairman: But we can only pass legislation
here which is going to affect the criminal law in the United Kingdom
at the moment. What you are asking may well come with the new
area of justice being developed. We have got your point on pan-Europe
and we have got your point on what you see as the essence of it
and we will have to consider that.
Q202 Lord Campbell-Savours: You have
just said that if we cannot have it pan-Europe, we should forget
it. Forget whatthe whole legislation? Is that your case?
Mr McKittrick: Yes, I just do
not see what it is going to do.
Lord Campbell-Savours: And you are speaking
on behalf of your industry.
Q203 Richard Shepherd: You do not
mean that entirely. British national law will still prevail in
respect of British transactions within the United Kingdom.
Mr McKittrick: Yes, indeed.
Q204 Chairman: We have got to consider
this Bill in relation to things which happen here and things which
happen to British companies and subsidiaries abroad. Are you saying
that there should be different provisions, as it were, tighter
provisions dealing with British companies operating abroad than
there would be in this country or would you accept that the definition
has to be the same?
Mr McKittrick: I think it has
to be the same and I think all that will happen if this Bill goes
through is that corruption will be driven even further underground.
Q205 Lord Carlisle of Bucklow: It
seems to me that you cannot achieve what you want unless one has
an agreement which goes wider than the borders of this country
and it is not unique. There is the Bill we have just taken through
recently, I am trying to think of the name, you, Chairman, were
on the committee as well, the one dealing with terrorism where
there was a European agreement that each country would implement
a Bill in their own country. You would have to go back, would
you not, to get some European agreement that a Bill on these terms
on corruption would be taken through the individual national parliaments
of the individual countries?
Mr McKittrick: And there are many
new ones coming in from the old Eastern bloc and there are big,
big issues there, huge issues.
Q206 Baroness Scott of Needham Market:
Clauses 6 and 7, on their definitions of exemptions, rely on being
able to make a clear distinction between the principal and the
public. In practical terms, given that the distinction is more
blurred than it used to be, is this a useful one in terms of defence
or can you see problems?
Mr McKittrick: I think again there
has to be a definition which can be adhered to for the principal,
for the agent, for the public and so forth, and I do not think
that comes through adequately. I think it leaves it a little bit,
well, not a little bit, it leaves it confusing.
Q207 Baroness Scott of Needham Market:
So there could be two problems. One is with drafting the Bill
and that goes back to the earlier point about whether it is understandable,
and second is whether or not there are practical issues on the
ground, that the demarcation lines between public and private
are not as clear as they used to be.
Mr McKittrick: Maybe you could
help me. What happens to the guidance notes within the Bill? Do
the guidance notes get published with the Bill?
Q208 Baroness Whitaker: No, they
are just notes to help Parliament as it goes through.
Mr McKittrick: If the guidance
notes tried to define "principal", so on and so on,
but if you come to this as Joe Citizen reading it, I do not think
it is going to do anything.
Q209 Baroness Scott of Needham Market:
So presumably then, and I should not put words into your mouth,
but smaller companies particularly who are operating in this field
could find it very difficult if they were not able to afford banks
of lawyers to know whether or not they were in breach?
Mr McKittrick: Probably.
Q210 Chairman: You were asked earlier
about the offset contracts, and Mr Garnier asked you about that.
The CBI suggested that offset contracts could be excluded altogether.
Mr McKittrick: When you say "offset
contracts", what do you mean?
Q211 Chairman: Something done by
a third party in addition to the actual provisions in the contract
between the two main contracting parties. Do you think that there
should be a specific defence here, that what somebody is doing
is really providing a hospital or a school or whatever, and that
should not count as a corrupt act?
Mr McKittrick: I do not have an
opinion on that, to be honest. It is a very difficult area. There
are so many facets to it as to how the whole business of these
sort of contracts, PPPs, PFIs, everything else, how they operate.
I get involved in a lot of them myself and I had not really thought
that through before tonight and I would be giving an off-the-cuff
Q212 Chairman: It is a very specialised
Mr McKittrick: I really could
not give a proper opinion on that.
Q213 Mr MacDougall: You said that
the principle of this has already been well established, but one
of the things you said is that the facilitation payments must
be outlawed and yet we have talked about foreign practices in
major economic climates throughout the world where they are indeed
accepted. Do you not feel, therefore, that the practicality of
actually allowing them to happen would give companies a better
opportunity rather than trying to prevent facilitation payments
where it might disadvantage competition.
Mr McKittrick: I think we have
tried to talk about that this afternoon and I think that the debate
convinces me that possibly the way ahead is to have some threshold
of some sort for facilitation. It is always a slippery slope and
I would not like to suggest at what level it should be. As I said
in the paper, it certainly should not be a percentage because
a percentage of a very large sum is a very large sum and, therefore,
it would have to be an absolute figure if you were going to go
down that line.
Q214 Dr Turner: Corporate hospitality
and promotional expenditure: the CBI say they think that should
be an acceptable business cost and should not be caught by this
Bill. Does your Institution have any view on any limits that should
be placed on corporate hospitality or promotional expenditure?
Mr McKittrick: It is not an area
that we have discussed but, as I said earlier, again a threshold
limit on that I think would be welcome.
Q215 Dr Turner: So you feel corporate
hospitality, if it got out of hand, could turn into a level of
Mr McKittrick: Yes, look at Doncaster.
There are plenty of examples around where corporate hospitality
has been just simmering under there and used as an excuse. I would
say at a pretty low level, it would be probably per event as opposed
to per year or whatever, but it has to be an absolute figure.
Q216 Chairman: A threshold again?
Mr McKittrick: A threshold, it
has to be.
Chairman: It would perhaps have to be
different for every overseas company depending on
Q217 Dr Turner: Oil sheiks might
want a bit more.
Mr McKittrick: Who knows?
Q218 Mr Shepherd: We are reading
in the public press, etc., that Hollywood promotes its films,
for instance, by these huge staged events which cost $10 million,
$20 million. The inducement to the writers and the people that
attend that is that they meet the stars and the return is that
they are expected to flatter, only refer to and help promote the
company. That seems to me termed a corrupt event in one sense
because although no money changes hands, the scale of hospitality
that is extended is intended to affect judgment or actually the
way in which they perform.
Mr McKittrick: Without a doubt.
Q219 Mr Shepherd: Are we looking,
therefore, that industry by industry there should be different
Mr McKittrick: No, I do not think
so. We are all Jock Thamson's bairns, as we say in Scotland. I
think everybody should be equal.