Joint Committee on The Draft Corruption Bill Minutes of Evidence


Memorandum from the CBI (DCB 17)

INTRODUCTION AND SUMMARY OF CBI POSITION

  1.  The CBI welcomes the opportunity to submit this written evidence to the Joint Parliamentary Committee and to have the opportunity to input into Parliament's consultative process. The work of the Joint Parliamentary Committee on the draft Bill provides an excellent opportunity to ensure the impact of the proposals outlined in the Bill—and the broad issues to which the proposed measures are related—are fully considered before the actual Bill is introduced into Parliament.

  2.  We attach a copy of our submission to the Home Office with our comments on the draft Bill. In principle, we support modernisation of the UK's corruption laws, provided that the broad scope of the existing law, as extended by the Anti—terrorism Crime and Security Act 2001, is maintained and not widened further.

  3.  The draft Corruption Bill sets out the proposed new offences in very abstract terms, which may not be easily understood by ordinary or business people. The objective of all legislative wording should be clarity and certainty, and this is especially important in legislation that imposes criminal sanctions. It is vital that the offences attach only to conduct intended to be criminalised, but not to conduct not intended to be criminalised, or which causes other unintended consequences.

  4.  We consider that the present wording of the draft Bill does not satisfy these tests. For example, we consider that in defining the offences the emphasis should not just rely on "primarily" and the primary purpose as referred to in Clause 5, but should also apply the concept of conferring or receiving an "improper" advantage, in line with the 1997 OECD Convention outlawing bribery of foreign public officials. We also question the need or appropriateness of the offence under Clause 3.

  5.  We also believe that it would also assist clarity and certainty of the scope of the offences, if more exemptions and defences were provided. We are very unclear over the meaning and ambit of the existing exemptions in Clauses 6 and 7. There is a lack of other exemptions or specific defences, such as in respect of corporate entertaining, bona fide promotional expenditure, and payments made or advantages conferred under duress, and small facilitation payments as recognised in the Commentaries to the 1997 OECD Convention. We also consider that there should be exclusions for insurance and other commissions paid in the financial services industry and "offset" agreements or arrangements entered into by a company or contractor with a government or procurement agency to provide additional services to a third party as a condition of the contractor being awarded the main contract.

  6.  It will be important that Ministers provide a full explanation to Parliament on the meaning and scope of the proposed new offences during the Parliamentary stages, and once enacted in a satisfactory form, that detailed guidance is provided so that companies can review and update their codes of conduct and practice for their employees.

  7.  We set out below our further comments on the particular issues on which the Committee seeks views.

  8.  Perhaps we can also request, in view of the limited time we have had to consult CBI members and to receive their views on the draft Bill, that we may be allowed to make additional points or raise further issues at a later date.

PARTICULAR ISSUES ON WHICH THE JOINT PARLIAMENTARY COMMITTEE SEEKS COMMENTS

1.   What is the background to the draft Bill and what other options could have been pursued ? What are the reasons for any changes from the Law Commission's 1998 Report and the 2000 White Paper?

  The draft Bill closely follows the Law Commission's recommendations in its 1998 Report, and modernisation of the UK's corruption laws has been supported by the CBI.

  The UK's existing bribery and corruption laws are mostly very old (except for the assumption of nationality jurisdiction made in the Anti-Terrorism Crime and Security Act 2001 in order to comply with the 1998 OECD Convention). In particular the presumption of corruption in respect of public sector prosecutions has become outdated, and may indeed conflict with the Human Rights Act 1998.

  On differences from the Law Commission's Report, we strongly support the Home Office's proposal to continue to require the Attorney General's consent to prosecutions. As now, this will hopefully prevent frivolous and inappropriate private prosecutions which are not in the public interest. The requirement will also help to ensure that this new jurisprudential approach to corruption offences is kept under review and administered at the highest level.

  We therefore broadly support the approach of the Law Commission in their Report, (subject to continuation of the Attorney General's consent to prosecutions) which forms the basis of the Home Office's draft Bill. However, in view of the uncertainty over the nature and extent of specific exemptions and defences, we consider that the conduct to be to be criminalised and the offences should not just depend on "primarily" in Clause 5, but should also be expressed in terms of conferring or receiving an "improper" advantage, not simply "an advantage." This would be in line with the approach AKEN in the 1997 OECD Convention.

  We also question the Government's approach to the exemptions in Clauses 6 and 7 and in drawing a distinction between public and private activities. The Government having stated the general intention that no distinction should be drawn between public and private offences, and having abolished the reversal of the burden of proof in the 1916 Act, it would be unfortunate if the distinction between public and private acts should re-appear in the formulation of the exemption.

2.   Whether proposed definitions are workable and sufficient:

(a)  Whether they will be readily understood by police, prosecutors, jurors, the public etc

   As the CBI says in its submission to the Home Office, clarity and certainty of the new offences, as with all sanctions that are criminal, is vital. However in practice there will never be absolute certainty. Therefore, in addition to making the offences and the criminal conduct intended to be covered by the offences as clear and certain as possible, it will be helpful to provide express defences and exemptions wherever possible, in order to assist in providing clarity and certainty of the conduct intended to be criminalised.

  The draft Bill sets out the proposed offences in very abstract terms and more defences and exemptions should be provided to help make clearer the scope and ambit of the conduct intended to be criminalised, and that which is not.

  The 1997 OECD Convention qualifies the advantage which is to attract criminal sanction as "improper." In view of the uncertainty surrounding the scope of the exemptions in Clauses 6 and 7, and lack of other specific defences or exemptions, we believe that it is necessary to qualify advantage as used in the Bill as being similarly "improper".

  As noted, we consider that the present wording of Clauses 6 and 7, and the exemptions they seek to provide, is unclear and needs revision. The objective of the exemptions is not clear, and that is the first requirement in seeking to provide the necessary wording to achieve those objectives. As noted above, we do not understand the proposed distinction between public and private activities, and companies will not know into which category they, or some or all of their activities, might fall.

  We also recommend that exemptions or defences are provided, such as in connection with reasonable corporate hospitality, bona fide promotional expenditure and commissions in the insurance and financial services sector.

  We also seek the exclusion of small facilitation payments as recognised in the Commentaries to the OECD Convention and in the US Foreign Corrupt Practices Act. See our comments later this submission under this heading.

  We also seek the exclusion of "offset" contracts referred to above in the Introduction, where a government will often award a contract to a contractor on the understanding that the contractor will also carry out services for a third party, such as the provision of a hospital or other welfare services.


(b)  Whether specific offences should have been proposed for specific situations

  We think it appropriate to couch the offences in general terms and with as much clarity as to their meaning and scope as possible. We believe specific situations can generally be best addressed by providing exemptions or defences, and we have highlighted reasonable corporate entertaining and bona fide promotional expenditure, commissions in the insurance and financial services sector, and "offset" contracts.

  There should also be a defence for payments made or other advantages conferred under duress by a person in response to actual physical harm or damage or destruction to property or assets, either of that person or a third party, or the threat or reasonable risk of death to that person or third party or of damage or destruction to property or assets. This is especially important following the assumption of nationality jurisdiction, and the increased exposure to possible prosecution of UK nationals faced with such acts, intimidation or threats in foreign countries, not just the UK. However this should only extend to proven duress, and in saying this we do not intend to imply that solicitation should be a defence. We are still investigating with CBI members whether there are other examples of situations that should be taken out of the scope of the offences.

(c)  The effect of not making the new offences retrospective

  Retrospective legislation and regulation, particularly in the field of the criminal law, is generally contrary to public policy and not to be supported, unless there are only beneficiaries and no losers. There could well also be Human Rights Act considerations.

  We do not see a case for departing from this approach in this instance, and therefore do not support retrospection.

(d)   The effect of removing the presumption of corruption

  The presumption of corruption for public sector offences is no longer considered appropriate, and is now probably also contrary to the Human Rights Act 1998. Abolition of the presumption is one of the reasons why modernisation of the UK's corruption laws is necessary and appropriate.

  However the references to the public in Clauses 6, 7 and 11 go beyond abolition of the reversal of the burden of proof, and raise a fundamental doubt regarding the structure of the Bill. It is the case that following the series of privatisations of businesses, such as the utility companies, from state ownership to the private sector, but subject to controls laid down by regulators, the boundaries between the public and private sectors and between public and private activities have become blurred. Companies will often perform what may be both public and private functions, but we do not believe drawing this distinction and making it impossible for consent to be given in respect of public activities is the right approach.

  Clauses 6, 7 and 11 therefore need reviewing and re-casting to ensure that the wording, in support of the objectives sought to be achieved in this part of the Bill, is clear and transparent and also workable, practical and not burdensome.

  These provisions also seem inconsistent with the recommendation in the Law Commission Report at Paragraph 4.78 on Page 51 that the new law of corruption should not draw a distinction between public bodies and others.

(e)  Whether the agent/principal analogy is still relevant, in particular in the case of public acts

  Subject to our comments on there being no distinction between public and private acts, we believe the use of the principal agent relationship remains broadly appropriate.

  We understand that the Government believes that MPs and Peers are agents of the public for the purposes of the Bill. We support MPs and Peers being made subject to the law of corruption like everyone else in whatever is the most appropriate or simplest manner.

(f)   The treatment of facilitation payments

  Facilitation payments are not specifically referred to in the draft Bill.

  From the point of view of international competitiveness and achieving a level playing field for UK companies with other companies, CBI members would welcome a specific exemption or defence for small facilitation payments, along the lines of that provided in the US Foreign Corrupt Practices Act for US companies. This is especially important following the assumption of nationality jurisdiction by the United Kingdom for corruption overseas in the 2001 Act.

  Whilst such an exemption is not specifically provided for in the articles of the 1997 OECD Convention outlawing bribery of foreign public officials, (which UK companies seek to respect in their dealings in foreign countries), the Commentaries to the Convention do provide in Paragraph 9:

    "that small facilitation payments do not constitute payments made to obtain or retain business or other improper advantage within the meaning of paragraph 1 [Article 1 of the Convention] and accordingly are also not an offence."

  If the Bill is not amended to provide an equivalent specific exemption in the Bill, then as a very minimum the Government should make an appropriate statement to Parliament on the treatment of small facilitation payments under this legislation when the Bill is passing through its Parliamentary stages.

  Without an express defence or exemption, the continued requirement for the Attorney General's consent will be an important feature in seeking to ensure that this new legislation is applied sensibly and practically.

  UK companies currently take some comfort from the Government statement made

on the Trade Partners web site—www.tradepartners.gov.uk/corruption—overseas/corruption—overseas/introduction.

(g)  Should there be a public interest defence?

  It is not clear that there should be a public interest defence as such, although specific exemption has been provided for the security services, both in respect of the taking of bribes as well as giving them.

  It is far more appropriate that any prosecutions should satisfy a public interest test. Hence the importance of the continuation of the Attorney General's consent to prosecutions, and that prosecutions satisfy the evidential and public interest requirements in accordance with the practices of the Crown Prosecution Service.

3.   Whether the proposals are compatible with international obligations and how they compared with equivalent law in other countries

  The draft Bill does appear compatible with the OECD Convention outlawing bribery of foreign public officials and, subject to our comment in the next section, the Council of Europe Criminal Law Convention against corruption.

4.   Omission from the draft Bill of misuse of public office and trading in influence

  We anticipate that the draft Bill and its proposed new corruption offences, subject to our comments, will make adequate provision for the conduct and mischief envisaged by such offences.

  We therefore consider that the additional provision of separate offences of misuse of public office and trading in influence are not necessary or appropriate.

  We believe that this is also the view of the Home Office. In consequence we understand that the Government will make a reservation to this effect in its ratification of the Council of Europe Criminal Law Convention against corruption.

5.   Waiver of Parliamentary privilege in cases involving Peers and MPs

(a)  Attorney's consent to prosecution

(b)  Relationship with Registration of Interests, Codes of Conduct, and Electoral Commission requirements on political donations

  It is not for the CBI to comment in detail on this, save that we believe that Peers and MPs should be subject to the laws of corruption like everyone else.

May 2003





 
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