Joint Committee on The Draft Corruption Bill Minutes of Evidence

Examination of Witnesses (Questions 480-499)


4 JUNE 2003

  Q480  Chairman: So you do not anticipate a new wide range of criminal prosecutions? There will be some more obviously.

  Lord Falconer of Thoroton: There will be some more because of clarification and codification but that would be because of the law being more readily accessible rather than because the law is now catching that which it had not caught before.

  Q481  Chairman: So the only deliberate extension comes in relation to Members of Parliament perhaps?

  Lord Falconer of Thoroton: That is right. We do not believe for one moment that is going to lead to—

  Chairman: We will come on to that a little later. Lady Whitaker, I think you wanted to ask something about the meaning of "corruption".

  Q482  Baroness Whitaker: Again, in connection with the underlying concept, looking at clause 7, which is a defence against corruption, I thought of that against the context of a different way of approaching corruption: who are its victims? It seemed to me that the victims were the competitor in a rigged market, the body which agreed the money obviously if it was a public authority and they are cheated of the purpose they have, but even a private board would be a victim if the company employee had not produced best value or had undercut the market. Most of all, the end user is the victim, particularly in the case of public corruption but also in private corruption if it was a block of flats which had collapsed in an earthquake because the tender had been corruptly obtained, for instance. I cannot see how those victims, if they are the true victims of corruption, are protected in clause 7 if we were looking at the private sector.

  Lord Falconer of Thoroton: In relation to the private sector—

  Q483  Baroness Whitaker: Because that is what it is about, is it not?

  Lord Falconer of Thoroton: What we are not seeking to do in this Bill is require companies in full possession of all the facts to enter into the best possible deal. There is freedom of contract in this country and as long as they know precisely what is going on then they can enter into the contract that they wish. I am talking about in a private to private contract. What you are saying, in effect, is where the company is fully aware that the benefit they will get is, say, they can all go to Arsenal—I keep giving that as my example—if they know what is going on, that is legitimate.

  Q484  Baroness Whitaker: So even if a construction company gets a tender through bribery and the building endangers the public, that act is not corrupt, getting the tender through bribery?

  Lord Falconer of Thoroton: Suppose that I, a private individual, have two tenders to build my house and one is more expensive than the other but the person offering to build it for more money says, "It will cost you a million quid more and it will not be as good as the other one, but I will service your car free for the next year and a half", am I entitled, as a private person, to accept that?

  Q485  Baroness Whitaker: But you are not the owner, say you are the developer and it is the tenants who will have to live in the bad building and you, the developer, have got the free servicing. Is that not corrupt?

  Lord Falconer of Thoroton: If the standard of the building does not fall below any legal limits then is it not open to the developer—I must emphasise it is a private developer in your example—as long as he knows what he is doing, that he is not being cheated by his own middle management, to enter into such contracts as he deems appropriate.

  Q486  Baroness Whitaker: And the other contractor who missed out, even though he had the better value to offer, is he not a victim of corruption?

  Lord Falconer of Thoroton: I do not think that he is in those circumstances. What would happen in the example you gave is every time a particular benefit was offered by one contractor with the full knowledge of the buyer, could every other contractor try and encourage the police to bring criminal proceedings when the buyer was fully aware of what was being offered and decided, for whatever particular reason, to take the other tender?

  Q487  Mr Stinchcombe: Carrying on that same line of thought, what happens, for example, if the Ministry of Defence is putting out to tender a contract to supply armaments and two private companies agree among themselves that one will pay the other five million quid in order for that one not to put in a tender leaving a free run for the tendering company to put whatever tender it wants to, meaning the public purse pays more than otherwise it would do? That would not be an offence.

  Lord Falconer of Thoroton: It would not be corruption within the meaning of this offence. There would be other provisions in competition law which would prevent that happening, on your analysis, if the Ministry of Defence were not involved in that at all, there was nobody bribed in the story, there was no agent who was, as it were, by some sort of benefit persuaded to act contrary to the trust placed in him.

  Q488  Mr Stinchcombe: But if you got rid of the restriction that corruption could only take place where an agent/principal relationship existed then you could include that as an offence within this type of Bill.

  Lord Falconer of Thoroton: I would like to see it done. I think you would find great difficulty in identifying something which was not much, much too wide. I do not rule it out. If you can put it in such a way that it does more effectively that which we are trying to achieve, then that is possible. In the example you have given we think the much more sensible way to deal with that is to deal with it on the basis of anti-competitive practices, cartel practices, dealt with in the monopolies and competition legislation, the Competition Act.

  Q489  Mr Stinchcombe: I put tentatively a kind of way forward, I do not propose it is the right way forward. If you look at clause 1 that tells us that the elements of the offence there are "corruptly to confer an advantage", so somebody has got to confer an advantage if it is corruptly done.

  Lord Falconer of Thoroton: Yes.

  Q490  Mr Stinchcombe: It is clear that the only word there that can possibly confer illegality is the word "corruptly" because "to confer an advantage" ordinarily would not be an offence at all.

  Lord Falconer of Thoroton: Agreed.

  Q491  Mr Stinchcombe: Therefore, the word "corruptly" needs to be defined to embrace the wrongdoing that makes the illegality.

  Lord Falconer of Thoroton: Agreed.

  Q492  Mr Stinchcombe: You could, for example, put a definition of the word "corruptly" that says something like "to intend wrongly to influence somebody".

  Lord Falconer of Thoroton: Wrongly to influence? Who would you be influencing?

  Q493  Mr Stinchcombe: In my example you would be wrongly influencing somebody not to proceed their own tender.

  Lord Falconer of Thoroton: It is wrong because it is not good for the public for there not—

  Q494  Mr Stinchcombe: It may be wrong for other reasons. It may be wrong because the public purse is fiddled over a million quid, it may be wrong because company B goes bust and 30 people lose their jobs. It could be wrong for a number of reasons.

  Lord Falconer of Thoroton: It is a very wide ambit then.

  Q495  Mr Stinchcombe: It would possibly be a wide ambit. What it would do if that was, for example, the kind of definition is enable a jury on hearing the evidence that this particular private deal was done with adverse consequences for the public purse to come to a conclusion whether or not they thought that advantage had been conferred corruptly.

  Lord Falconer of Thoroton: No, because the way you put it just then all of the weight falls on the word "wrongly".

  Q496  Mr Stinchcombe: Indeed. They would have to ask themselves whether they thought it was right or wrong and that is surely exactly what this kind of Bill should require a jury to ask itself.

  Lord Falconer of Thoroton: If two employees of a company agree that one of them will not apply for a particular promotion that has come up in exchange for the other person agreeing if he does not get the job then the person who has not applied can apply for the next one, is that "wrongly"?

  Q497  Mr Stinchcombe: I would not have thought so but that would be exactly the kind of question that you could, if you are a prosecutor, ask yourself and then if you were satisfied to the relevant thresholds that it was worthy of taking to prosecution, put the evidence before the jury and see what conclusion they reach.

  Lord Falconer of Thoroton: Obviously we will think about what you have said. It feels much too wide and it feels like you would not be getting the benefit in those circumstances of a real definition.

  Chairman: There are perhaps even other concepts of "corruptly" which could have been looked at or included.

  Q498  Lord Waddington: I am sure you are aware that a number of people who have given evidence before us have asserted that in their view the definition of "corruption" in the draft Bill, far from being clear is obscure. One witness, a Mr Staple, who was the Director of the Serious Fraud Office, demonstrated how, in fact, the Bill criminalises conduct which clearly should not be criminalised. For instance, the payment of a motorway toll to a private contractor operating the toll on behalf of government would be a criminal under this Bill, the person who paid the toll would be a criminal and the person who received the toll would be a criminal. He demonstrated that by the fact that a clause 6 exemption does not apply because the motorist is not acting on behalf of the agent's principal and a clause 7 exemption does not apply where the agent is performing functions for the public. There is something seriously wrong with the Bill, surely, if that sort of bizarre result can follow. Surely there is an easy way out of this if you could only import into the Bill some element of lack of integrity, moral turpitude, breach of duty, improper advantage, as is suggested by the OECD and is a part of the OECD Convention, the EC Convention and the Council of Europe Convention. Surely if some sort of element of that nature was imported we would not have the bizarre result which has been identified by Mr Staple.

  Lord Falconer of Thoroton: You have got me on that. I had not picked up this road toll example. Can I deal with it in writing?

  Lord Waddington: He has demonstrated it fairly well. Can I just spell it out so that there is no mistake? What he says is that a motorist makes a payment in respect of a motorway toll to a private sector operator who has been given the right to collect the toll under a PFI/PPP contract with the Government. The operator is clearly acting as an agent. He is clearly performing a public function. The motorist confers an advantage, a payment, on the operator who, in return for that advantage, does an act informing his functions, ie, he allows the motorist to go on the motorway, and, as I say, the Clause 6 exception cannot apply and neither can the Clause 7 exception. There is something pretty phoney about a Bill which produces that result.

The Committee suspended for a division

  Q499  Chairman: Minister, would you like to comment on the toll?

  Lord Falconer of Thoroton: Yes, I would. As I understand the example, the private contractor runs the road and therefore takes the toll. On the working of the Bill we believe the effect of that would be that he would just be acting in a private capacity.

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