Memorandum from the CBI (DCB 17)
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 Billand the broad issues
to which the proposed measures are relatedare 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 Antiterrorism
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.
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
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
(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 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
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
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 sitewww.tradepartners.gov.uk/corruptionoverseas/corruptionoverseas/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
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
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.