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 7not 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
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
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 servicewhatever.
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
Q744 Lord Bernstein of Craigweil:
Particularly the clarity in the relationship between public and
Mr Berkeley: Public and private
acts, public and private capacity. You could have a private companythat
is, something owned by shareholdersnevertheless, 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
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
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 crimebut 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 thisif one may call it suchextraneous?
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 backhandersif
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 casesyou
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?