Joint Committee on The Draft Corruption Bill Minutes of Evidence


Examination of Witness (Questions 400-419)

PROFESSOR MARK PIETH

2 JUNE 2003

  Q400  Mr Stinchcombe: It must be widespread in private commerce that people get huge introduction fees under perfectly lawful contracts and yet it is a disproportionate amount of money.

  Professor Pieth: I have my vision slightly restrained to the international public bribery concept where I think a Pakistani General has a need to explain why he has entered all sorts of business contracts.

  Chairman: There are a number of rather more specific areas, we can come back to the General if you want to. You have mentioned clauses 15 and 16. Mr Stinchcombe, do you want to come in on this?

  Q401  Mr Stinchcombe: Yes. You have already mentioned clauses 15 and 16 whereby effectively the Secretary of State could authorise the intelligence agencies to commit corrupt offences. Are those provisions a flunk of the OECD Convention?

  Professor Pieth: There is no such permission by the OECD Convention to do so. Of course, there could be an argument that in all international conventions there is a safeguard of interests of public security.

  Q402  Mr Stinchcombe: National security.

  Professor Pieth: National security. In a way, the advantage of what you are doing here is you are spelling out exactly what that means, whereas other countries, take France, take the US, are less explicit, at least not in this type of legislation. They might have secondary legislation somewhere else which is not easily accessible. The positive side is that you are actually saying what it means but you are also raising a big issue and this will certainly be a recipe for trouble because it will be discussed in the international arena whether this is allowed or not permitted. It is a taboo so far.

  Q403  Mr Stinchcombe: Do you believe that it does conform or does not conform with the Convention? Secondly, as a supplementary question to that, if it is of benefit to raise it publicly, would it be preferable for us to raise it publicly but then narrow down the apparent exemption it confers?

  Professor Pieth: I think if you have to do it it is probably preferable that you say what you are doing and where the limit is. My only problem is that in most circumstances, even if it goes beyond what you have in writing here, there is still usually national security privilege for more severe cases. The question is, are you really able to limit it or are we in the same situation as other countries?

  Q404  Mr Garnier: Would you suggest that clauses 15 and 16 should be completely redrafted or deleted in order to meet your concern?

  Professor Pieth: I wonder whether they really fit into this context here or whether they fit into a different kind of legislation covering the national security interests as a whole.

  Q405  Mr Garnier: Is it your view that intelligence services should never be exempt from criminal law, either in the way that it is currently drafted, where they may be given advance permission, or, to come back to our interesting law officer point, because the law officer in this country is a different creature from the Minister of Justice that you might recognise in another country, that the Attorney General should have a discretion not to prosecute?

  Professor Pieth: Let me put it this way: my uneasiness is not defence; my uneasiness is we are here talking in an economic context and we all know that secret services have been heavily involved in economic espionage. It would certainly be against the Convention to allow a secret service agency, for the purpose of furthering business, to use such an exemption. That is where we would really be very concerned.

  Q406  Mr Garnier: Just as a matter of interest, what are the sanctions for failure to comply with the OECD Convention?

  Professor Pieth: It is a so-called "soft" law. That means first of all one is publicly exposed and there is a report, as you have already, Phase 1. It has the media sanctions first of all, the media pick this up and you will have your counterparts, your major trading partners, registering it. You will be in trouble in negotiations. There is a risk of being exposed and for a G7 country this would be very, very awkward. There is the potential of a more formalised sanctioning instrument, but that has not been spelled out in that context. You might be aware of our sister organisation, the Financial Action Task Force, on money laundering. They have gone quite a bit further in spelling out sanctions against countries by actually asking for changes in a certain time frame otherwise they would make business more expensive for that country. First of all, very unattractive things and I do not want to confront you with them because they are not a real possibility. I think what you have to take seriously is your good image worldwide. We have started off on the wrong footing altogether, basically the UK and OECD Working Group on Bribery, on this issue because originally your Government felt that the old laws were sufficient, the three laws around 1900 plus the common law offences, and we said, "Sorry, we are not convinced" on the basis that there was only one case that went half way in that direction and we felt there were a lot of reasons why there should have been cases in the last 20 years of large corporations in all countries. I am not singling out the UK here but I know of quite a few cases involving UK companies. The problem would have been that you were working under the territoriality principle at the time. It is possible that there would have been no case to answer but there would have been a lot of questions to discuss and raise. My point is we had to say in the first instance, in Phase 1, "We are not satisfied. We will evaluate you again in 1 bis" and you came up with a law that is not permanent, it is transitory. It is very broad sweeping and inherits some of the deficiencies of the old law because basically it leaves the old law in place and builds on it. It is more explicit in some ways. Now you have a third chance and we are hopeful that this is going to be the ultimate and secure law.

  Q407  Mr Garnier: There is a perception in this country, it may be a wholly wrong perception, that some countries sign up to treaties almost as a matter of pro forma obligation and then ignore them and just get on with their usual activities. I am just thinking when one comes to 15 and 16, the activities of the intelligence services, whether I am being unduly cynical in thinking that some countries may have signed up to an OECD compliant law in relation to their intelligence services but then turn a blind eye when they actually do what their states require them to do.

  Professor Pieth: What I can promise you, to pick up this point, is we have this monitoring process which goes even further. We are not only looking at laws, we now have something called Phase 2 monitoring which sees whether the laws are actually applied. These are very, very heavy, four months of work in a country. We are sending teams of experts from other countries to go on site. We have just done that and you can look at the results that are on the Internet, looking at German legislation, US laws have been tested so far, French legislation is under review at the moment and Canada has just been done. It is a very, very serious peer process. We want to see the cases, case law application, and we are going into companies to see what they have done in-house. We are doing that also with countries that you are referring to that generally have got a reputation of signing up to things but not—

  Chairman: We get this in all sorts of areas. I think Lord Campbell-Savours would like to pursue one of the points you have raised.

  Q408  Lord Campbell-Savours: You are surely not saying that this organisation you have referred to should have the right to approach governments of different countries and demand access to information from within their security services about acts that they may have uncovered which could be claimed to have been corrupt because they would not tell an outside body, would they?

  Professor Pieth: It is worse than that. Excuse me for interrupting.

  Q409  Lord Campbell-Savours: They would not tell you.

  Professor Pieth: No, we do not need that. It is enough for us that there is a possibility and that would be enough to shame them.

  Q410  Lord Campbell-Savours: The possibility of what?

  Professor Pieth: Of undercutting our rules by economically oriented secret service action.

  Q411  Lord Campbell-Savours: They would not tell you. There is no way that you could establish with any machinery what was going on behind the walls of secrecy of secret services of any country in the world that I know of.

  Professor Pieth: No, but what I am saying is that if the law permits it then that is enough to start sanctioning a country.

  Q412  Lord Campbell-Savours: All that was being suggested before was a country might simply sign up to the Convention and not comply and we would.

  Professor Pieth: It is more complicated than that in the sense that if we come across cases, and we are increasingly coming across cases, take, for instance, the case of Accres in Lesotho or the case of Exxon Mobile in Kazakhstan, there are lots of cases around the world, and probably in all of our countries we have cases, we investigate and if it appeared there had been an excuse why a country would not pick up a case for some reason and we felt it was for a secret service privilege there would be very, very adverse comments on it in the world press.

  Lord Campbell-Savours: I think what you are saying is we would be better off not having 15 and 16 in the Bill, just leave them out and do not comment.

  Q413  Chairman: Is the only alternative to strike this out? Is the only real option to strike this out altogether and not have this exemption which Mr Kos describes in very strong terms as being not only not compliant but also really quite an unreasonable section to include? Is that the only real option or is it possible to define something more narrowly which would not provoke his rage in the way that it has done so far?

  Professor Pieth: I must admit that I have not tried my hand on that. My point is can it be limited to defence and public security in a very narrow sense and to exclude economic considerations? That would be my question. Frankly, talking of exemptions, clauses 6 and 7 are of more concern to me than clauses 15 and 16.

  Q414  Chairman: If we cannot draft something that would be acceptable generally we should leave it out, is that what you are saying?

  Professor Pieth: Yes. I am accepting that is not a very elegant way because we are shoving something under the carpet. Other countries have a similar problem. Here I am just saying you are raising an issue which might cause a lot of trouble because then it will have that—

  Q415  Mr Garnier: That is what we call being naively candid.

  Professor Pieth: You said it!

  Q416  Chairman: Is there any difference on this aspect between the OECD Convention and the Council of Europe's Convention or do they take the same line, the same view?

  Professor Pieth: As far as I am aware—I am not an absolute expert on the Council of Europe's newest development—here we are pretty much in the same situation.

  Chairman: Unless there is anything else on that, shall we move on. The suggestion has been made a number of times that perhaps we can deal with this problem in other ways or perhaps deal with it by adding in other offences. Lady Whitaker, you want to pursue this.

  Q417  Baroness Whitaker: One of the offences not in our Bill is trading in influence, which of course is provided for in the Council of Europe's Criminal Law Convention in Article 12. Are you concerned at this omission?

  Professor Pieth: First of all, I have to say this is an issue that leaves the area that the OECD covers, we are not looking at trading in influence. As a Professor of Criminal Law I accept that there is an interesting north/south divide on this issue. The countries in the north so far do not have trading in influence concepts and the south do.

  Q418  Baroness Whitaker: Several have entered reservations.

  Professor Pieth: Yes, and the north will not pick it up whereas Italy, Spain, France and so on will pick it up because they know what it means. Obviously we have difficulties in understanding the concept or we think it is less reprehensible. It is a very open concept, I must say. I do not see a clear distinction between lobbying and trading in influence, it gets very uneasy. That was one of the reasons why the OECD said "Let us stick to very, very straightforward grand corruption". That is why we have this very, very basic concept when we talk about bribing other foreign heads of state, for instance, whereas trading in influence is a fringe issue, something in the grey zone.

  Q419  Chairman: We have been told a number of times that it would be variable to have as an ancillary offence trading in influence and other people seem to think it is not a good idea. The fact that a number of member states of the Council of Europe have entered reservations about trading in influence as an offence, should that make us hesitate to recommend that it should be adopted or are those seven not representative of the majority opinion in the Council of Europe?

  Professor Pieth: I think it is a cultural question. You have to ask yourself what are the situations you are thinking of and are those situations you have a way of dealing with in your own country, are they a threat to you. This is a domestic issue basically. In Switzerland we have found a solution that we are probably not going to include trading in influence. It exists but people are not so alarmed about it. Maybe this is wrong because, and this is reflecting on it as a Professor of Criminal Law, the situation in Italy is that in the evening you calculate the situation you are in in money and then you hand over the money and the next day you are free for new alliances, whereas the situation in Switzerland would be you might be bound for 30 years into an alliance, an old boys network, if you want. With trading in influence we are basically aiming at old boys networks. The problem we have is that it is such an open notion that we are covering a lot of ground and things that we do not think are really criminal are also covered, so it is very difficult to make a clear distinction. Domestically we have chosen not to translate it. Again, from an OECD perspective we are very, very far away from this kind of grey area. We are really concerned by the $50 million or £50 million being paid somewhere allowing a head of state to distort democracy.


 
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