Joint Committee on The Draft Corruption Bill Minutes of Evidence

Examination of Witness (Questions 360-379)


2 JUNE 2003

  Q360  Lord Carlisle of Bucklow: Not "dishonest" but "undue"?

  Professor Pieth: "Undue" and your own law used "undue" at the time of the common law offences. You have it in your own legal practice. I could find it in the document, in phase 1 bis report. It mentioned under common law a reference to undue advantage or something similar.

  Q361  Lord Carlisle of Bucklow: Do the words "undue advantage" have any conception in quantitative terms as well as qualitative terms? Is there meant to be implied a fairly substantial advantage in the word "undue" or is it merely that it is not an advantage to which the person is due and it is of the most minimal nature?

  Professor Pieth: Not at all. It does not give you permission to have facilitation payments as such. Some countries, I understand, have such exceptions for small—

  Q362  Lord Carlisle of Bucklow: They have separate exceptions?

  Professor Pieth: Yes, separate exceptions, and they are very explicit. They have to be specific. We insist on the word "small". We talk about £200. As soon as you are above £1,000, we believe you have to run the case.

  Q363  Mr Garnier: To come back to the question of undue advantage or payment, it is relatively easy to work out what is an undue advantage or payment in the United Kingdom, Switzerland, Germany or France. What happens where the activity might lead to an accusation of undue influence or advantage in a northern European country but which, under the culture or law of the country in which the foreign officials live and work, would not be considered to be undue influence?

  Professor Pieth: There is an exception in the Convention which says, if behaviour is permitted by written law, you are allowed to do that. If there is a law under the common law system that amounts to an equivalent to written law, which means you have to have firm prejudice and all the requirements, it is not just that you have a habit. It is more than that. It is an accepted habit. Then you would be able to have an exception but those are very rare cases. We are talking about corruption that is almost always not permitted worldwide, except that it is not usually prosecuted. That is the reason why countries in the north are trying to pick up those cases from here.

  Q364  Mr Garnier: I can understand it is in our interests to wipe out corruption and bribery and improper conduct throughout the world economy but are we going to be accused of imposing upon countries where it may be said, "This is the way you do business. We all do it. You cannot do business unless you do this" our standards which may not be the ones which they wish to have imposed upon them?

  Professor Pieth: I can see the position that you are referring to but in the ten years I have been working on this topic, in this role, I have increasingly come to the point—and I am just back from an intergovernmental conference in Seoul yesterday—where again it was reiterated from the perspective of the south that we do not have a culture of corruption and we do not want to condone corruption. It is your job to try to help stop it. We might have fringe issues, difficult, grey zones where we are talking about extortion; but by saying "extortion" I am talking about duress, if at gunpoint you were asked to do something. If it is merely that you will not do business, the rules of the game are changing. There is no exception that we would accept for so-called solicitation because we do not give it to the French or the US so why should we give it to you?

  Q365  Mr Stinchcombe: Under English criminal law, as I understand it, most crimes have three elements. They have the mens rea, the mental element in the mind, the actus reus, the physical act, and then the absence of a defence. If the actus reus in your analysis was the giving of an undue advantage, I wonder what the guilty mind element should be to conform with the OECD Treaty in particular where it might be something like the making of a payment with the intention wrongly to influence someone either to do or not to do something.

  Professor Pieth: I would be shorter. It is enough to have the knowledge of what you are doing. You do not need the "wrongly" from our side because that is already contained in the objective side. If you know that it is undue, it is by definition wrong. You are aware of the wrongness of it; you do not need to say "wrongly". If you have "wrongly" in it, we would ask, "Are you adding a further qualifier here?" For the objective element you have to have a qualifier of "undue" in some way or you can do it by exception.

  Q366  Mr Stinchcombe: Your definition would be something like "knowingly to confer an undue advantage"?

  Professor Pieth: Yes. You can look at Canadian or Australian laws and you will find exactly that kind of concept. I am a bit hesitant because, if that were an excuse to wait another two years to legislate because you have to redraft everything, I would feel more comfortable if you ran your legislation the way it goes, even though we would have difficulties as continentals in understanding it; but that you be explicit on the transnational bribery element of a foreign, public official. If you want, I can give you a very brief idea of what are the other points that I am really at odds with.

  Chairman: Perhaps the Baroness could put her question and then we will come on to that.

  Q367  Baroness Whitaker: It is a question about this foreign, public official business and it concerns where there will be a need for mutual legal assistance. With your knowledge of other legal systems, can you tell us if it would be possible, on the text of this Bill, to demonstrate to a foreign investigating agency or a judge what our offences are and what the exceptions are? Could they be translated into Polish, for instance, or Moldovan?

  Professor Pieth: They could in the same way as they could be translated to your jurors but it would take quite a bit of effort to do so and you would raise a lot of issues that would leave your opposite number puzzled. You would open the way for defence counsel to say, "Excuse me. We will go back on a certain term to the old situation in 1906." That is where the OECD comes in and says, "You will have a very difficult job to prove beyond a reasonable doubt to us that you have really covered the Convention." The situation is that the balance of proof is with the country in this process.

  Q368  Baroness Whitaker: It might not work in the international, legal setting?

  Professor Pieth: It might not.

  Q369  Lord Campbell-Savours: Did I hear you correctly? Did you say, "You are protecting your business"?

  Professor Pieth: This is a mere hypothesis. I am certainly not accusing you.

  Q370  Lord Campbell-Savours: What did you mean by that?

  Professor Pieth: It is an absolute hypothesis. I wanted to raise that point when coming to the question of consent by the high ranking law officer. That is a point which puzzles us a lot. So far, we have been giving you time to reconsider it but we have a clause saying there is, under no circumstances, the possibility to withdraw action on a case for economic, political or whatever reason. We are saying to ourselves, "The Crown Prosecution Service knows why they go ahead and they have their rules. Why would they need an additional political officer to tell them when to stop a case?" What creeps into the discourse is a very uneasy feeling that there is a possibility which is dangerous and we would have difficulties saying, "This meets the requirements of Article 5 of the Convention." We would suggest trying hard to abolish the consent. I am aware that you have a problem and that you might want to attach the consent to the prosecution of an MP. We would have no problems there. If you attach it to every case here, we would feel anxiety.

  Q371  Chairman: Are you saying that this Bill should make it absolutely explicit that it covered all attempts to bribe foreign officials in the way that the OECD Convention appears to do? Is that one of the criticisms? Not only does it not mention public officials; it does not lead to the conclusion that it would cover any bribery of a foreign official. Ought that to be explicit?

  Professor Pieth: Obviously this would be the easiest solution for us, if you had one, short clause picking up the Convention language. We read with interest what Australia and Canada have done.

  Q372  Chairman: From your point of view, would it be sufficient if the government stated, "This is what we intend"? What its effect would be in a court of law may be different but would that be sufficient from your point of view?

  Professor Pieth: For our purposes, it would be probably far preferable. I am aware that with this Bill you are trying to meet other goals as well, domestic goals, and you are trying to pick up other instruments. I understand that you might take such an approach. That is where I would like to be diplomatic. I want to see it working. That is why I would say you have two choices at the moment. If you want to be quick, you need to add a clause making it absolutely clear that even for the engineer the bribing of a foreign, public official is covered here, even though this might be repetitive. There are a lot of other things that are not, strictly speaking, necessary. Alternatively, you can choose the way that all your common law colleagues have been choosing, to write a very simple, straightforward clause, half a page, saying what is forbidden. I can leave the examples here. They are on the internet and we have pulled out a few of them for these purposes. Some of them are common law; some of them are civil law. They show you how you can do it if you want. I am convinced personally that the UK is making a very serious effort but you are exposing yourself. You are vulnerable if you come with this kind of legislation into the wider, international framework. You will be accused by the south of not living up to your standards.

  Q373  Chairman: Suppose this Bill is passed in its present form. Are you saying that the United Kingdom would then be complying with its obligations under your Convention or would not be complying?

  Professor Pieth: I would not, in my very simple language, say you flunked the exam directly but you have several two star deficiencies and several one star deficiencies. Three stars mean you have flunked. You have a problem with the foreign, public official because we request an autonomous definition of a foreign, public official. That is to say, you define what the public domain is from here—for instance, unambiguously that MPs anywhere in the world, judges anywhere in the world, members of international organisations and so on are all covered—and you do not refer back to Egyptian law. Since you are not pronouncing yourself on it, there will be a question mark here. Are you actually referring back to Egyptian law? This is at least a question we will have to ask. I have mentioned the foreign judges, MPs, representations of public enterprise and international organisations, issues that we have a question about under the laws pre-2001. We will have them again here. We have a question as to "corruptly". We are very doubtful that it is too much of a qualifier and cuts out cases that we want to see covered. We have a problem with the clauses which we do not understand at the moment. I understand that they are necessary because you are too broad in one and two, but the way they run I am asking myself: what is the public interest, for instance, if it says, "acting on behalf of the public"? Does that mean somebody who is generating jobs for British industry is acting on behalf of the public? That interpretation would certainly not be possible and I do not think it is right but the question for somebody who is not very nice with you remains open in 6(3)(b). Clause 15 is being explicit and just asking for trouble. There you will be in massive trouble with the intelligence agencies. That is going to trigger off huge debates internationally as well as the consent to the prosecution requirement. There we will have grave doubts. Summing up, our main problem is not those individual points I mention. Our main problem is it is very difficult to understand and therefore might be unclear not for the lawyer—you have fantastic, trained lawyers—but do your small and medium-sized enterprises understand it? They do not have in-house counsel. I am Swiss but—

  Q374  Chairman: You are a great expert on this from the OECD and what I want to know is what is your final assessment? If we do this, are we complying fully with our obligations? The fact that someone will not like what we have done or may pick up little bits here and there does not necessarily mean that we are not complying with the obligations under the Convention. Are we complying or not?

  Professor Pieth: It is not as clear cut as that. I am anticipating what will happen. Since there is so much complexity, we will have serious doubts whether it will really be full compliance.

  Q375  Chairman: On balance, you think we would not be complying. I know you are trying to be diplomatic.

  Professor Pieth: I have to. I cannot risk my job.

  Q376  Chairman: Let us move into the commercial sphere again. It seems clear on the Bill that this is not meant to cover overseas companies, companies operating wholly overseas, including the subsidiaries of British companies. Assuming that is right, is that acceptable to the OECD or not?

  Professor Pieth: I had a different understanding of clauses 13 and 14. They do cover British companies acting abroad. The point you are raising is more delicate. You are asking: does it also cover foreign subsidiaries of British companies. There I must admit that the OECD has a weakness inbuilt in its own instrument. We would like to see you covering your foreign subsidiaries. The problem is we did not manage to get our act together in 1997 when we drafted the Convention to make that an international, binding standard. The jurisdiction covers our framework. We are in the process of discussing whether we should go further in the OECD to pick up also foreign subsidiaries. Under certain circumstances, foreign subsidiaries would be covered also in this framework because if it were proven that in the UK somebody was aware—that is where the intent issue comes back again—not corruptly and not with some malicious intent but if they had knowledge that the UK company or its agent was involved in bribing somewhere, then we would have a case to be run in the UK under the territorial jurisdiction. You are covering some cases of foreign subsidiary and agent behaviour but you are not tackling it head on, although you are in good company or bad company, if I may say so.

  Q377  Chairman: Your working group has made the criticism that although it may be clear that it is bribery if the person paying the money, on giving the bribe, gets a benefit, it is not clear that he pays the money to confer benefit on a third party. Your OECD Treaty is explicit on this. Does not our Bill go far enough on that?

  Professor Pieth: For me it is still an open question because in the report I read that certainly interested parties—take, for instance, spouses and so on—would be covered. The problem we had with other countries was that we wanted a disinterested third party also to be covered. If I ask for payment to the Red Cross or political parties, that needs to be covered and there is a question mark there. This would be one of my one star issues where we are simply uneasy because it is not explicitly said in a clear manner. There is a reference to third parties somewhere but it is not very clear. That would be a minor point for me, whether you are really reaching out far enough into the third party area, but that is not a fundamental point.

  Q378  Baroness Whitaker: There is also a point about coverage of public officials. Are you content with the way our Bill captures the various groups of public officials? I know that the Convention means to include judges and international organisations. We are not so specific. Do you think our text covers the point?

  Professor Pieth: You are taking an approach with agent and principal. You are referring to other sources of law that are pre-existent. What we are asking for is to be absolutely secure that the Egyptian MP, judge, the official of the European Union etc., are all covered. In the first round, phase one, we had serious doubts as to whether we really had full coverage. The new law seems very sweeping and very broad. It seems to have a very broad agent concept. We will come back and ask the questions and we want to be convinced that it is really the case. We want to see case law. There might be a difficulty because there may be no case law here so there will be a question mark hanging over the UK legislation and it would be so much easier if you simply had a definition to say that it is covered.

  Q379  Baroness Whitaker: The government could give an assurance in Parliament when the Bill was passed.

  Professor Pieth: That would not be acceptable. We want a legal text. This is very much from the Swiss perspective but ordinary citizens have to understand the law. That is the French Revolution.

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