Joint Committee on The Draft Corruption Bill Minutes of Evidence

Examination of Witnesses (Questions 740-759)


11 JUNE 2003

  Q740  Lord Bernstein of Craigweil: In your written submission you say that the Bill would be difficult to understand, or something of that nature. You are not alone in saying that. Other witnesses have said something similar. In one specific case, one witness said that it would be hard for foreign businessmen to have this translated into their own language so that they can understand it. On the other hand, you did say earlier that you thought the broad approach of the agent-principal relationship was a sensible median course. Is it the agent-principal issue which is difficult to understand or is it something else?

  Mr Cridland: I do not think that the Government have gone far enough on the key definitions. Hence the debate we have already had about "improper" as a proposal. We have particular problems about the overlap of clauses. We have touched on Clause 3, without re-entering that debate. There has been a lot of negative comment from employers about the ambiguity in Clauses 6 and 7—not necessarily the intent of that construct, but the ambiguity. I think that employers find it very difficult to get to the bottom of how Clauses 6 and 7 would operate.

  Q741  Lord Bernstein of Craigweil: In effect, that is the qualification of the agent-principal relationship. It is not qualified sufficiently clearly to understand.

  Mr Cridland: Just so.

  Q742  Lord Bernstein of Craigweil: The word "improper" or "dishonestly" —would that help?

  Mr Cridland: Yes, it would.

  Q743  Lord Bernstein of Craigweil: Are there other things that you think should be done? Are there more specific instances in Clauses 6 and 7 which should be addressed?

  Mr Berkeley: Yes, there is one point which we have mentioned in our submission. That is, on the question of the principal's consent and the reservation in the Bill that the public should never be deemed to have given consent. Therefore, if somebody is acting in a public capacity, that particular defence is not available. Our point is this. It is very difficult nowadays for a company to be able to say whether it is acting in a public capacity or not. We are thinking perhaps of utility supply companies or the press or the media, the television service—whatever. How is a company to know whether, for the purposes of the Bill, it is acting in a public capacity or not? We think that the jurisprudence which has emerged from the human rights legislation is not sufficiently clear to give a guidance on that. That is a technical point in the Bill where we really do believe that some redrafting should be done.

  Q744  Lord Bernstein of Craigweil: Particularly the clarity in the relationship between public and private enterprise?

  Mr Berkeley: Public and private acts, public and private capacity. You could have a private company—that is, something owned by shareholders—nevertheless, for the purposes of the Bill, performing a public function.

  Q745  Lord Bernstein of Craigweil: I take it then that you think the agent-principal method that the Bill adopts is satisfactory, if it is qualified and if the exceptions are made clearer?

  Mr Cridland: Yes, I think that is broadly our position.

  Q746  Lord Bernstein of Craigweil: Then there is the big question. Will the Bill reduce corruption?

  Mr Cridland: I think that is almost impossible to answer. Our members judge that a Bill is essential to modernise law in an area where there is considerable uncertainty. We are very supportive of the principle of having modern, effective legislation in this area, so long as it is clear to business what they are being expected to adhere to.

  Q747  Chairman: Is this Bill going to cover things which were not corruption before?

  Mr Cridland: Our policy position and the wish of our members is that the Bill should not go beyond the existing legal protections, but that it is a Bill of modernisation.

  Q748  Lord Bernstein of Craigweil: To sum up and to be clear in my mind, you are very much in favour of the Bill if it can produce more certainty.

  Mr Cridland: Absolutely.

  Q749  Lord Bernstein of Craigweil: At the moment you are unclear about whether it will do so.

  Mr Cridland: Highly doubtful. However, that is exactly our position.

  Q750  Lord Waddington: Do you think that the present law is uncertain? We have heard from a lot of witnesses that in fact it does not seem to have presented any great problems to prosecutors. What is wrong with the present law?

  Mr Berkeley: There is one aspect of it which definitely puts it into question. That is the Terrorism Bill, and the extension of nationality jurisdiction so that, wherever in the world he is, a British citizen is subject to United Kingdom domestic law. That means he is subject to the 1906 Act and the 1898 Act, or whatever it is. I am not sure that those would export quite as easily as, if you like, a bespoke, new Act, designed to fit in with that.

  Q751  Chairman: Let me ask you something else on which we have spent quite a lot of time. That is, the agent-principal test which, at first glance, would appear to exclude acts between people who were not in a principal-agent relationship but you might think were, to say the least, dodgy or perhaps even corrupt, but they are not included in the present definition. Do you see any problems with that? Is that a lacuna, or is that desirable and we should use the principal-agency test? If you read the definition, the whole emphasis is on the principal-agent, and breach of loyalty between principal and agent. Is that too narrow?

  Mr Cridland: I am not aware that we have had a lot of comment on that point. With respect, I should again put in a health warning that we have looked at this very much from a lay business point of view. I am not saying that we would have spotted everything, but I am not conscious of there being a lot of debate on it.

  Q752  Chairman: Let me give you two examples we have been given. The principals of two self-owned businesses do a deal to prevent something happening and one provides the other with either money or fails to do something he otherwise could have done. Most people would say, "That is not right. It is not an honest way to behave". Should that be covered by the Act or not?

  Mr Berkeley: I think my answer to that is probably not, because there are other parts of the law designed to deal with that; in particular, the law of anti-trust, competition, and other forms of business regulation, and the old torts of interference with business relations and so on that one learned as a law student.

  Q753  Chairman: People always prefer to be sued in tort than to be prosecuted in crime—but some act that is outside the principle—

  Mr Berkeley: I am being rather facetious, and I am sorry about that. I really mean to say, I think, that no, it is not necessary, because there are other parts of the criminal law which are designed to deal with it.

  Q754  Chairman: If it is corrupt in the sense intended, from what you have been saying and what the Law Commission said, why limit it to the principal-agent relationship?

  Mr Berkeley: If it is already covered by other legislation or other common law offences, and so on, why try to extend a new Act, which is dealing with a very serious problem, to this—if one may call it such—extraneous?

  Q755  Chairman: I suspect that if it would be criminal between two principals elsewhere, it might equally be criminal elsewhere as between principal and agent.

  Mr Berkeley: Perhaps.

  Q756  Lord Carlisle of Bucklow: I have just been contemplating what you were saying. Is the principal-agent basis essential for this Bill? As my Lord Chairman has said, you can have corruption between two principals: one making a payment to another to persuade him not to tender for the same contract that he is tendering for, or something of that nature.

  Mr Berkeley: The other structural way of dealing with this topic of the Bill is the concept of breach of duty which, for instance, is used in the Council of Europe Convention; but breach of duty has its own limitations as a principle, as no doubt you have discussed.

  Chairman: There are some defences in the Bill, of course. Lord Carlisle, would you like to pursue that?

  Q757  Lord Carlisle of Bucklow: I think that we dealt with the defence that if, for instance, the principal is aware of the agent's actions then you see no difficulty in that, even if the agent is personally taking backhanders—if it is to the knowledge of his principal.

  Mr Cridland: Yes.

  Q758  Lord Carlisle of Bucklow: Because you think it is reasonable, or because you think that it is covered by some other criminal offence?

  Mr Berkeley: The actual illustration given by the Home Office says that in certain cases—you used the word "backhanders"—this payment to the agent is part of his remuneration and is recognised as such by the principal. That is the Home Office's interpretation.

  Q759  Lord Campbell-Savours: Can I take you back to this question of principal-to-principal and give you an example, Mr Berkeley? Supposing a principal set out to bribe another dozen principals not to bid for a particular contract. He wanted everyone out of the field and he bribed everyone. Where would that be dealt with within the law? You were saying that there is other law that could deal with these problems. What actual law would do that?

  Mr Berkeley: You are talking, for instance, about four or five contractors, equally principal, and they agree amongst each other that they will not offer x, y and z to any bidder. Is that the sort of thing?

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