In welcoming the Bill and in the light of the comments made by the Lord Chancellor, I do not think that I can start my remarks without echoing the sadness on the Conservative side of the House at the death of Michael Foot. Although, having entered the House in 1997, I never had the privilege of being in the House at the same time as he was, as a schoolboy at Westminster it was my habit as a boarder to slip over the road at 4 o’clock in the afternoon and, my father having given me a very good tea, to go up into the Public Gallery and watch the debates. There is no doubt that one of the most entertaining orators was Michael Foot. I have vivid memories of displays of pure genius at the Dispatch Box.
I was also present a little later at that famous vote when the Government lost their majority in 1979, during the debate on no confidence, when he wound up for the Government in a performance that was simply brilliant, extremely entertaining and mordant—I seem to remember some extremely barbed comments at the expense of the nationalists. It was a great display of political skills. Looking around the House today, one has that rather sinking feeling when one thinks about the eccentricities in his character, which were regarded as great marks of his quality, and the fact that we have perhaps lost something today in that we are no longer capable of accommodating such eccentricities in our political process. In fact, we might be greatly advantaged if we were better able to do so. I echo from this side of the House the remarks made by the Lord Chancellor and say that I can only look back on it as a formative experience in my life to have had the privilege of witnessing Michael Foot in action.
We welcome the Bill, as we have made abundantly clear—and not only in the welcome that, I hope, has been apparent from our interventions. It has been too long in coming. I think that the Government promised in 1997 that we would have such a Bill. I certainly do not criticise the Secretary of State, but we only got something in 2003, there was a consultation in 2005 and the process has dragged on for a very long time.
We now have a Bill, but we also have the anxiety that it is up against the wire of the end period of this Parliament. There must be some public anxiety that it might founder before it can get on the statute book. At the outset, I want to tell the right hon. Gentleman that we will do our best to help to ensure that it gets on the statute book. I would like to think, because of the degree of consensus that surrounds so many aspects of it, it should be possible to do that, although I hope that the Government will listen to some of the hopefully few but nevertheless significant areas of anxiety that we might still have about it.
We also recognise that the issue is very important. International corruption, and national corruption, ought to be of concern to everybody in this House and, indeed, to the wider public. We should be troubled both by the fact that we know that the World Bank’s estimates that the sums involved run at $1 trillion annually and by the fact that over recent years the UK has come in for increasing criticism about whether it has sufficiently robust procedures and processes in place to prevent corruption.
The Secretary of State will remember the episode surrounding British Aerospace. I do not wish to get bogged down in a piece of history, but that highlighted very clearly that inadequate procedures were in place to prevent bribery abroad. It also highlighted the fact that the law was so grey in its scope that it was always inevitable, in my judgment, that the Attorney-General and the Serious Fraud Office would come to the conclusion that there was no possible basis on which a prosecution could have been brought in the first place. National security issues are another consideration. Those issues have without doubt redounded to our disadvantage on the world stage. Indeed, as the Secretary of State will be aware, Britain’s rating on preventing corruption has slipped consistently in recent years. It is high time that we did something about that.
The Bill is broadly welcome. It covers all the main aspects of bribery and the ways in which it might be carried out, and that is exactly what we need to take matters forward. I certainly do not wish to labour my remarks, and having made a general welcome, I hope simply to highlight the areas about which we continue to be anxious regarding the methods that the Government have adopted.
Let me start with what I recognise to be perhaps the most controversial or difficult area: how consents are given for prosecutions. This is a difficult issue for the House, and there has certainly been anxiety in the past that consents to prosecutions, particularly if they lie in the hands of the Attorney-General, may be manipulated politically, or for some political reason, independently of what the wider interests of justice might be. The Lord Chancellor will know that that is never a position to which I personally subscribe because my view is that previous Attorneys-General, over many years and across many Administrations, have not been tainted by party political considerations or gaining narrow political advantage in taking their decisions, and that they have always found it quite easy to uphold public interest principles.
The problem is that the Government have taken the view, in the Bill, that the necessary consents should lie with the directors of prosecution departments. Rather than assert a standpoint on this matter, I want simply to pose a question. The difficulty that I perceive with the Government’s approach is that some such decisions will be of great public controversy and that once such a decision has been taken, particularly one that no prosecution should be brought, we are going to face difficulties regarding public anxiety about how that decision was arrived at and who in this place is answerable for it. The Lord Chancellor will be aware that the buck tends to stop in this Chamber, and it will undoubtedly be the Attorney-General—or, if he is another place, the Solicitor-General, I suppose—who will stand answerable. I wonder whether there would be the advantage that the Liberal Democrats and some others perceive that there would be to leaving final decisions in such cases to heads of departments who are not in a position to answer to the House directly.
I want simply to flag this issue up, and I do so without reaching any conclusion as to where we should go. I know that this matter has been the subject of wider anxiety. Indeed, the Liberal Democrats tabled amendments to the Constitutional Reform and Governance Bill yesterday, seeking to remove the role of the Attorney-General in all prosecutorial decisions. I happen to think that that is the wrong thing to do. That is not to say that the Attorney-General should have a say in every prosecutorial area, but this area is likely to attract a lot of public attention, and the old principle behind having the Attorney-General take the final decision is that he is answerable to Parliament. We will lose that with the system that we are setting up.
I shall return, in my speech, to the point that the hon. and learned Gentleman raises. The point that I wish to put to him now is that the anxiety about the independence of the SFO, for example, is one of the issues that has been raised—more than once, I think—by the OECD, which is concerned about political interference of any sort in corruption cases.
I appreciate the hon. Gentleman’s point, but we cannot easily get away from this matter. Of course, one can set up a prosecutorial system in which Parliament, the Executive and the Government have absolutely no say whatever in any prosecutorial decisions, but I think that is fanciful because, as we have said in previous debates, there are times when public interest elements come into play that make it absolutely essential that someone who is answerable politically should take the final decision. If the choice is between prosecuting someone and having a nuclear exchange with another country, it might legitimately fall to the Executive to take a view. We have had such problems in relation to hijackings; the situation arises on numerous occasions. I repeat that I do not have a concluded view on this. However, my gut instinct has always been that if the person who has to take the final decision has to come to the House and answer for it, that might produce a more robust political and public debate than if someone comes along and says that an independent, permanent official at a very high level has taken the relevant decision, but then be unable to give a better explanation or a better defence. I simply flag that up, but I think that the Lord Chancellor is also aware of this issue.
I am grateful to the hon. and learned Gentleman for flagging up that point, which will need further consideration in Committee. My view is that because of the, I may say wholly unjustified, suspicion in some quarters about the role of Law Officers who are also Members of this House—as I believe very strongly they need to be for precisely the reasons of accountability that he raises—it is better to have the authority resting with the relevant directors. Those directors already have a duty to inform the Attorney-General, so it is not as though the Attorney-General would have to explain the matter blind. However, we will look into this issue. May I also point out that a refusal to institute proceedings is, these days, reviewable in the courts, which have, as in many other areas, accepted a jurisdiction in such cases?
Yes, indeed, and it is arguable that it might be neutral one way or the other as to whether it is the Attorney-General or one of the departmental directors who takes such decisions under the system, but it certainly provides a mechanism by which individuals who feel that the decision has been taken wrongly can have it reconsidered.
My hon. and learned Friend makes some valid points, but I should like to tell him, as someone who has spent a lot of time overseas exporting British goods in Africa and the middle east, that the number of contracts that we lost because some of our European partners were far more prepared to give bribes than we were has been very frustrating at times. Does he share my hope that, if we are passing stringent legislation, discussions are going on in the European Union to ensure that our French and Italian counterparts are introducing similar legislation?
I certainly agree with my hon. Friend. What seems to happen, as the decades go by, is that the world view of countries’ propensity to tolerate bribery alters. When I was younger there seemed to be a widespread view that this country was intolerant of bribery and that many foreign countries, including countries in the European Union, were prepared to tolerate it, particularly in the contexts of bribing officials abroad and achieving economic benefits for that state. I seem to remember that it was rather widely suggested that the United States turned a blind eye to the bribery of foreign officials, but it is worth pointing out that, for the most part, all those countries appear to have tightened up their acts considerably. Indeed, it has been argued that the United Kingdom, having started out as a paragon of virtue, has slipped precisely because we have perhaps been rather complacent about some of the changes that were taking place, which we have not properly addressed.
We should bear all that in mind, but I certainly agree that there are two different issues: the laws that we implement and the manner of their enforcement. As our country has a good reputation, on the whole, on enforcing the laws that we enact, I am anxious—as, I am sure, is the Lord Chancellor—that we should not, as a result of enacting and enforcing vigorously the laws that the OECD wants, end up in the position of finding that our European partners are taking a much more lax approach. I certainly endorse the Government co-operating with our fellow members of the EU and the Government of the US in trying to ensure that there is a level playing field. There is no doubt that one reason why the bribery of foreign officials has taken place has been the claim, “Well, if we don’t do it, the others will.”
Until we get away from that mindset we will not bring about the changes that I think are so badly needed. Although the bribery of foreign officials may not have a direct impact here, we cannot escape the fact that it is enormously damaging to the rule of law and the integrity of the public service in the countries where it does happen. Moreover, because there is often collusion at the highest level, bribery can promote a culture of kick-backs that is not conducive to good commercial relations in the long term across the globe. For all those reasons, therefore, the bribery of officials is a pernicious phenomenon that we would do well to tackle.
I was grateful to the Lord Chancellor for going into detail on a matter that arose earlier—the question of safeguards and the security services, as covered by clause 10. We recognise that the security services must have an exemption: there can be no doubt about that, and not to have an understanding that they must be given that exemption would be to fly in the face of reality. We are pleased that the Government have restricted the exemption in the case of law-enforcement agencies, and I do not have too many anxieties about the exemptions given to the armed forces, given how they have to operate in reality, certainly in countries such as Afghanistan.
However, I am rather keener on the extra level of protection inserted in clause 10 by the other place. I shall explain why to the Secretary of State, and the matter can doubtless be teased out again in Committee. There is a considerable difference between providing a defence for something, which can be argued in court, and providing a safeguard for a public official who is carrying out a function that he believes he has been specifically told to carry out on the basis that it will not be a criminal offence.
As I am sure that the Lord Chancellor is aware, a person who is prosecuted gets put through a process that is deeply unpleasant, even when it ends in acquittal. That must not be embarked on lightly. However, when an action taken by the security services is authorised as acceptable at the highest level—even though it might otherwise be in breach of this Bribery Bill—it is pretty much inconceivable that the person involved will ever be prosecuted, as the Lord Chancellor said.
If that is the case, though, should not the ability to invoke the safeguard provided as a result of the scrutiny of this Bill in the House of Lords also be retained? I simply flag the matter up, and we can doubtless have a debate about it in Committee. If the Lord Chancellor feels that that proposal would lead to profound problems, we will be able to articulate them in Committee, as this is more a matter for Committee than Second Reading. However, we think that the Bill has been improved marginally in the other place, and that this is one example of that. We would be sorry to lose the provision, unless good reason can be shown for doing so.
I want to return to one matter in connection with clause 7, which provides for an offence of negligence. This House needs to be very careful when creating offences of negligence that can attract substantial penalties. The clause requires systems to be set up but, if those systems are absent, the defence that may exist for a corporation will disappear.
I have no difficulty with that at all. It is clearly a serious matter when commercial organisations fail to prevent bribery, and the architecture of the Bill would collapse if clause 7 did not exist. For those reasons, it has to be there but, as I highlighted to the Lord Chancellor in my interventions, I have some concerns about whether adequate guidance is in place to ensure that commercial organisations are on the right side of the law. In many respects, the provision represents a regulatory aspect of the Bill, and I think that it needs to be included.
I asked the Lord Chancellor about the US, where companies can speak to the Department of Justice and seek guidance on individual payments. That is a regulatory framework and seems to work quite well, but we are not going to have anything like it here. For that reason, it is something that will merit further attention.
Finally, there is one matter that is not contained in this Bill, but which was covered by the draft Bill—the whole issue of parliamentary privilege. The Lord Chancellor and Secretary of State will remember our debates on the Independent Parliamentary Standards Authority last summer. Opposition Members made it clear that we did not think that the criminal offences being created for Members of Parliament were suitable, because we took the view that the matter should properly be dealt with in the Bribery Bill.
We were wholly supportive of the notion that the possible defence of parliamentary privilege that might be invoked to escape prosecution for an offence of bribery should be made unavailable. That has not happened, although I am well aware why the Secretary of State has chosen not to make it unavailable. I think that he took the view that, in light of the Select Committee’s report, that approach would be much too controversial and get Parliament bogged down.
It may be that there is a slightly academic element to the argument, particularly in light of everything else that we have done in respect of setting up IPSA. Something in me suspects that such circumstances are unlikely, or will occur only very rarely, but this is unfinished business. To resolve the matter, at some point we will either have to do something in bribery legislation or—and this may be better—introduce a proper parliamentary privilege Act. Neither approach is easy, and I simply suggest to the Lord Chancellor that it might be easier to legislate on an exemption in a Bribery Bill than to have a parliamentary privilege Act, particularly in view of some of the controversies surrounding privilege. Again, I hope that we will be able to look at that when the Bill is in Committee. I am not particularly prescriptive on the subject, but the public will need some reassurance that we are taking the matter seriously in the long term.
I do not intend to take up more of the House’s time. I am grateful to the Secretary of State for exposing himself to this private grilling from the Opposition Front Bench as he has responded to the various questions asked. It is a rather uncharacteristic form of debate, but one that is probably very productive.
We wish the Bill well. We will try to ensure that it goes on the statute book in the course of this Parliament, and in a form that commands the widest possible acceptance.
I congratulate the Government on bringing forward this Bill. I have spent quite a number of years jumping up and down on these Benches to argue the case for legislation such as this, and it is good to see it before the House. I am pleased that it also has the support of the Opposition.
I want to begin by acknowledging the leadership given on this issue by Transparency International UK, and in particular the work done by Graham Rodmell, who worked for the organisation for a decade or so, lobbying this place and advising both me and the all-party panel on transnational bribery on the issues involved. I should also mention the leadership that the present executive director of Transparency International UK, Chandrashekhar Krishnan, has provided.
Transparency International UK sent a brief to Members in advance of this debate. It states that the organisation
“has been urging for a dozen years the enactment of new, effective anti-bribery legislation.”
I have been working with it over that period of time, and in 1998 I introduced under the ten-minute rule an International Bribery and Corruption Bill. It sought to incorporate the then very new EU and OECD conventions against bribery into UK law.
I am interested to hear about all the work that the hon. Gentleman has been doing on the issue over the past few years, but how much direct interaction has he had with small and medium-sized British businesses that are trying to export to Africa? Has he taken the opportunity to find out for himself the difficult circumstances that they face?
Indeed I have. Attitudes have changed over the decade or longer in which I have taken an interest in the issue. Ten years ago, quite a number of businesses shrugged their shoulders and said that the practice was unpleasant and costly but necessary if they wanted to do business in certain markets, but we are now in a situation in which all the main business organisations are absolutely clear that the United Kingdom, like other developed western economies, needs to take a stand against bribery.
When I introduced my ten-minute Bill 12 years ago, I quoted Adair Turner, the then director general of the CBI, who had said:
“Corruption’s become a big issue because it just costs business so much these days.”
He was in the vanguard, as many people in the business community at that time did not share his view that something had to be done about the problem. However, attitudes have changed, because in countries with endemic corruption, the Mr. Five Per Cent. became the Mr. Ten Per Cent., and then the Mr. Twenty Per Cent. and the Mr. Twenty-five Per Cent. It became quite impossible to do business in such circumstances.
I agreed with the hon. Gentleman’s important point that if we in the UK sign up to high standards in this area, our main competitors need to do the same. However, as the hon. and learned Member for Beaconsfield (Mr. Grieve) said, compared with many countries, we appear to be behind the pack rather than in the lead. The United States introduced the Foreign Corrupt Practices Act some 30 years ago under the Carter Administration. An American business man is prosecuted once or twice a year—it is not a vendetta in any sense—which keeps the issue in the mind of the American public. International bribery is just not acceptable in US business. France introduced legislation to make itself fully compliant with the OECD convention some years ago, and it has a longer track record of successfully prosecuting such offences than the United Kingdom. It is important that we ensure that all major western economies and OECD countries comply, but we would be in a stronger position to achieve that if we were a country with the best kind of such legislation and a strong record of applying it and enforcing it through the courts, when necessary.
When I introduced my ten-minute Bill, I said that there was a comfortable but completely fictitious belief that bribery was not a serious problem in the United Kingdom but was something that affected developing countries such as Nigeria, Pakistan or Zaire, as the Democratic Republic of the Congo used to be called—I know that the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) has worked in such countries as a businessman. However, the problem is that it takes two to tango, and if a corrupt public official in a developing country is demanding a bribe before signing a contract, there must be a bribe-giver, and that person often acts on behalf of a western corporation seeking to sell in that foreign market.
When I introduced my Bill 12 years ago, the hon. Member for Lichfield (Michael Fabricant) spoke against it, as he was entitled to do under the ten-minute rule. He called it “fundamentally naive” and made the point, which has been echoed in today’s debate, that if tough legislation is adopted in the United Kingdom but not in other countries, UK businesses will be put at a competitive disadvantage. However, we have discussed that issue, and it is now time for the UK to catch up while continuing to be vigilant so that we ensure that other countries also comply.
The hon. Gentleman, like me, is a member of the International Development Committee. He talks about OECD countries, but what about China and some of its conduct in Africa when huge sums are poured in for infrastructure projects in return for oil? Does he think that we can encourage the Chinese to regulate that practice, because their conduct distorts the market in itself?
It would not be a sensible national business strategy if we tried to create markets for our companies by out-bribing the Chinese. We need to bring China into more of the international organisations. For example, it recently joined the World Trade Organisation, since when Chinese business practices have changed significantly. I look forward to the day when China joins the OECD. Perhaps that is not so far away, because it is beginning to work with the organisation, including on this issue. We must make progress towards a better world, rather than falling back into a dog-eat-dog, 18th-century mercantilism through which we all try to obtain a trade advantage by cheating better than other countries.
May I say to the hon. Gentleman how much I agree with everything he is saying? I pay tribute to his role in bringing about such legislation. He might recall that I had a go when I promoted a Bill that had been passed by another place, yet made no progress.
Given that other countries have been ahead of ours on putting in place such legislation, I cannot understand why there was such delay on the part of the Government. Can the hon. Gentleman throw any light on why the Government have dragged their feet for so long when it is transparently necessary that we bring the UK into line with its treaty obligations and other civilised countries throughout the world?
I pay tribute to the hon. Gentleman for his interest in the issue and the importance of the Bill that he brought from the other place. Of course, I cannot answer on behalf of the Government. I have carried out a large part of my activity in the area since I left government. I have held many meetings with Government Ministers, however, sometimes on a one-to-one basis and other times on a cross-party basis. I have also met officials from the Home Office, the Department for Business, Innovation and Skills and the former Department of Trade and Industry, and the Law Officers. I think that they have, quite genuinely, been trying to craft legislation that will build a broad consensus among the voluntary bodies that take an interest in the issue, such as Transparency International and Corner House, and across the business community, who are the people at the front line who will have to deal with any legislation. Of course, there has also been consultation with the judiciary, the Serious Fraud Office and other parties. The process has been difficult.
In 2001, fairly soon after the OECD and the EU adopted their conventions, the Government introduced provisions as part of the Anti-terrorism, Crime and Security Act 2001which, for the first time in UK law, made trans-national bribery an offence. It had hitherto been seen as not just a legal but an acceptable and, in some cases, a tax-deductible business practice. So the Government acted relatively quickly—more quickly than those of some other OECD countries—to make trans-national bribery an offence in UK law, in pursuance of the requirements of the OECD convention.
In 2003 the Government consulted more widely on a draft anti-corruption Bill, which was considered by a Joint Committee of both Houses and roundly criticised by the Committee, principally because it retained the existing agent/principal relationship to define bribery. As a result of that criticism, the Government went back to the drawing board and asked the Law Commission to study the issue not once, but twice, and consulted widely on the findings.
The process has been a long one, as the hon. Member for Somerton and Frome (Mr. Heath) observed and as the hon. and learned Member for Beaconsfield said from the Dispatch Box, but the conclusion is a Bill that is fundamentally sound and fit for purpose. We may argue about clause 13 and the exemption of the security services and the armed forces from some of the provisions—I shall say more about that—but I agree with what the Lord Chancellor and the hon. and learned Member for Beaconsfield said: if, in the relatively short time available, we find that we are unable to dot all the i’s and cross all the t’s, we must not allow that to be a reason why legislation that is extremely necessary and has been very long in coming should not receive Royal Assent before a general election.
Such legislation is not at the top of the list of any Cabinet when it debates what legislation to introduce. Year after year it has been pushed back because other legislation was deemed more politically necessary and more pressing by the Government of the day. Whoever the Government are after the next election—I believe it will be a Government of the same flavour as we have now—there will be the same temptations in a first Session not to bring forward such a Bill. Let us seize the opportunity that we have now. The Bill has been through the other House. Let us get it through this House, after due scrutiny in Committee, and on to the statute book.
I thank Ministers from many different Departments who have met me over the years to discuss the issue. I thank colleagues from all parties who helped to produce “The Other Side of the Coin: The UK and Corruption in Africa”, a report that was produced four years ago by the Africa all-party parliamentary group. It made a series of recommendations, to which the Government responded favourably. The Prime Minister considered the report and responded at great length—15 or 20 pages. He responded positively to the group’s second recommendation, which was:
“Bring to Parliament before the end of 2006 a new Anti-Corruption Bill which addresses the concerns raised about the 2003 draft Bill by the Joint Parliamentary Committee and the OECD Phase Two Review.”
Well, the Government have got there and I congratulate them. The Prime Minister responded by saying:
“The Government remains committed to introducing a Bill in due course”,
and now the Bill is here.
The all-party group made some other recommendations which were more speedily implemented. One was to create an anti-corruption champion in the Government, which they did. It was initially the Secretary of State for International Development, then the post moved to the then Department of Trade and Industry. It is now where it probably should be, within the Ministry of Justice. I hope the post is retained to make sure that we get legislation on the statute book and that it is fully implemented.
We also made the point that similar legislation is needed in Crown dependencies and overseas territories. We cannot legislate for that as part of the Bill, because those jurisdictions have their own legislative powers, but it is important that once we can prove that we have achieved what the OECD requires and have a new Bill on the statute book, we have further discussions with dependent territories to ensure that they, too, follow best practice. The good reputation of the United Kingdom is at stake, because they are rightly seen as dependent territories of this country.
The hon. Gentleman says that at some stage in the future the Government should have discussions with the overseas and dependent territories so that they have a broadly similar approach to ours, but surely that should be done at the same time. Companies that are concerned about the legislation and wish to continue their former practices could simply leave the United Kingdom and base themselves in one of the overseas territories.
Some companies remain in the United Kingdom and conduct business offshore. The hon. Gentleman raises an important issue. He should join our Committee and champion the cause, but let us not fail to do the right thing ourselves because others are moving more slowly. We need to get the Bill on the statute book. Then we will be in a much stronger position to talk to other jurisdictions and persuade them of the necessity for them to introduce similar legislation.
I should like to make one or two comments on the Bill. In clause 10, the Government propose that the Attorney-General should give up his powers to consent to a prosecution. That is a fundamentally good thing for the Government to do. In the other place Lord Henley queried why the role of the Attorney-General was being so reduced. I do not think that is the case, but it is a good thing that he or she should give up the power. Bribery is an area in which there should not be political influence or even the appearance of political influence. There was great controversy when the Attorney-General advised the director of the Serious Fraud Office that it would not be in the public interest to proceed with a prosecution of British Aerospace. That attracted a great deal of criticism at home and abroad, and there was the suspicion that that was a political decision and that the issues of national security were not as compelling as the Attorney-General had suggested.
I do not know what those issues of national security were, nor I suspect does any other Member here, given that the Secretary of State for Justice and Lord Chancellor is not present at the moment. Of course, I may be wrong and the Under-Secretary of State for Justice, my hon. Friend the hon. Member for Watford (Claire Ward), may be fully apprised of the issues in the BAE Systems case. Perhaps there were good reasons why it would not have been in the national interest to prosecute, but the determination was made by a political appointee who attends Cabinet meetings when legal advice is sought, and that allowed people to make the accusation of political interference with the justice system. It is much better to have a paid professional, with tenure and an appointment, making those decisions, and I hope that there is no change to clause 10.
On clause 13, there are circumstances in which our intelligence services, security services and, indeed, military personnel on active service have to provide financial or other inducements, ugly though that may be, to safeguard the security of citizens in this country and, possibly, their own security. The Bill rightly includes an exemption to remove from those who are fighting for our security the threat of prosecution. However, I should not like to see any mission creep, through the defence that will be available to an intelligence officer who seeks important information being used by somebody who procures equipment for our armed forces but resorts to bribery claiming, “This is necessary to provide the best equipment, or a delivery date at the appropriate time, for our forces in the field.”
If we allow bribery to play a part in procurement for our armed and security forces, we will undermine our security, because a bribe increases the cost of one’s purchases. Some years ago in Pakistan, an admiral was put on trial for spending $540 million on submarines that were worth less than half that figure. The difference of course was the bribe, which he required to sign the contract. If we allow bribery into our procurement system, we increase the costs of the things that we procure and thus reduce the equipment that is available to, and undermine the effectiveness of, our defence or security forces. Importantly, therefore, we must ensure that there is no creep in the scope of the defence in clause 13.
In response to my intervention, my right hon. Friend the Lord Chancellor said that there was no intention to broaden the scope of the clause, and I accept that. He said that the exemption from prosecution of defence equipment procurement under the clause was not just unlikely but wholly improbable, which is a pretty strong reassurance that the Government have no intention of using the clause in that way. I hope that the issue will be discussed further in Committee or, possibly, on Report in order to put more flesh on the bones, because we must send a clear signal to the public and public officials involved in procurement for the armed or security services that the defence that is necessarily in the Bill for certain purposes will not cover defence procurement by any such public official.
I want the Bill to go through. It clearly has all-party support, and with a fair wind it will be on the statute book before the general election. However, looking beyond that, I say to the Government Front-Bench team that once the legislation is on the statute book, good use must be made of it. I am concerned that the Serious Fraud Office, the main investigating and prosecuting agency, does not have sufficient resources to investigate the cases that are reported to it, because of a reporting procedure that was set up in response to the Africa all-party parliamentary group’s report. Budgets are tight, but the enforcement of this law is important, and I hope that the Government will ensure that the SFO has sufficient resources to implement it once it has been passed.
It is important to maintain the post of anti-corruption champion within the Government, and I hope that in the Opposition’s winding-up speech we receive an assurance of that—in the unlikely circumstances of a change of Government. I should like the champion to report to Parliament, perhaps through a written ministerial statement from time to time, on the performance of the legal process in ensuring compliance with the OECD and EU conventions.
I should like also to see some work with the business community—the CBI and others—to ensure that British business men fully understand the change in the law. I do not want to see dozens of them being taken to court, fined or made to pay a compensatory payment in place of a prosecution. I just want business practice changed, and that is why the Government should work with business to ensure compliance with the law.
The legislation is necessary because bribes add to procurement costs. In private businesses that procure goods, it hits the profit line, and in government it adds to costs without improving public services. It is a problem at home and abroad. Despite the long gestation period, I am delighted that the Government have brought forward this legislation. I shall support it, and I hope that it proceeds swiftly through Committee, back to the Floor of the House and on to the statute book.
I, too, welcome the Bill. I pay tribute to the hon. Member for City of York (Hugh Bayley) for his work over the years in bringing us to this point, and to my hon. Friend the Member for Somerton and Frome (Mr. Heath) for his sterling efforts.
In light of what the Secretary of State and the hon. and learned Member for Beaconsfield (Mr. Grieve) said about the late Mr. Michael Foot at the start of their speeches, I should like to share their tributes. He was a very distinguished member of a very great west country radical family, even though his most famous political insult was aimed at the leader of the party that many other members of his family had served for many years. He said of David Steel, in that 1979 debate to which the hon. and learned Gentleman referred, that he had
“passed from rising hope to elder statesman without any intervening period whatsoever.”—[Official Report, 28 March 1979; Vol. 965, c. 577.]
He will be sadly missed.
As the Secretary of State said, the Bill reforms and clarifies the law on bribery in several important ways. I shall not go through them all, but it is important to realise that the Bill removes many uncertainties in the present complicated mixture of statute and common law. It removes the complications about the relevance or non-relevance of “principal” and “agent”, and those created by the legislation’s use of the vague word “corruptly”. Importantly, we now have clear definitions; we have a concentration on business and the state and a clear definition of when companies will be held responsible for bribery undertaken by people who are associated with them, including their employees. I understand that the Conservatives have some difficulty with clause 7, but I do not; I think that it is well done, and I hope that it continues its passage unaffected.
Importantly, we now have a separate and clear offence of bribing a foreign official. That is a development of immense significance.
The hon. Gentleman said that we have a problem with clause 7. Our problem is not with the clause but with businesses not knowing how it is going to work before it is applied to them.
I am glad to have that clarification. That is a significant step forward by the Conservatives from the position put forward at least by their Back Benchers in the other place. If the issue is now only about the content of the guidance, we have made considerable progress, and I welcome that.
The specific offence of bribing a foreign official is of immense importance in the fight against corruption, especially in developing countries. As hon. Members on both sides of the House have implied, there is a clear link between corruption and poverty. To see that link, one need only go to the examples of cases under the existing law. The Mabey and Johnson case, which was settled last year, involved millions of pounds in bribes paid by an infrastructure company in third world countries such as Jamaica and Ghana, with accusations relating to a country as poor as Papua New Guinea. It ended up with those countries spending tens of millions of pounds on projects that they could ill afford as a result of bribery. Countries that could not afford to waste a penny ended up wasting millions.
It is clear from the BAE cases that there is a similar problem. Obviously, I cannot go into the detail of the cases that are subject to the injunction that was successfully applied for overnight, so I cannot talk about the South African or eastern European cases. The hon. Member for City of York has already mentioned the Saudi Arabian case. However, we can mention the Tanzanian case, where there is no dispute about what the problem was. In that case, there was a £28 million contract for a military air traffic control system, and a third of that money disappeared into offshore accounts. The problem was not only that the system was out of date and did not work very well, but that it was a military system for a country that did not even have an air force and could have bought a far cheaper and better civilian system. What happened as a result was not only a matter of concern for the public authorities here but of immense concern as regards the waste of resources in a very poor country.
I should add my voice to those who have pointed out that this goes beyond the problem of corruption and the wasting of resources in individual cases. Systematic corruption undermines the market economy in general. A country where bribes are regularly asked for and given is one where, ultimately, economic confidence will collapse and international investment will become very difficult. The problem requires international action in the developed world. The money for corruption comes from companies in the western world, but those companies lobby against legislative action. They say, “Jobs are at stake” or “If we don’t do it, someone else will.” That is precisely why we have the OECD convention and international co-ordination.
As we heard during the speech by the hon. Member for City of York, the problem is not that Britain is forging ahead and other countries are not doing anything, but quite the opposite. This country has come under pressure from the OECD to improve its performance. In 2008, the OECD said that
“current UK legislation makes it very difficult for prosecutors to bring an effective case against a company”.
Other concerns have emerged in the light of the BAE cases.
If those are the circumstances, how has BAE Systems been successfully fined hundreds of millions of pounds?
I do not want to go into the detail of that case, because it is now subject to the injunction that I mentioned. BAE has never admitted to corruption—to bribery—and only to technical offences under other legislation. The same is true in the United States. That is because the current legislation has deficiencies that the prosecutors say need correcting to improve the situation.
Order. I think that the House is getting into danger. The case that is being referred to is still before the courts, so it must not form part of this debate.
Thank you, Mr. Deputy Speaker. I was trying to skirt around it as well as I could, but you are absolutely right: we cannot get any further into that without straying into an area where we should not go.
It is good that the Government have got this far with the Bill despite all the lobbying and pressure over the years, but it comes very late in the day. There is a risk, given how far we are into the Parliament, that it will not make it on to the statute book before the end of the Parliament. I hope that that is not its fate and that we are able to get it fully into law very quickly.
There are still some problems that we should discuss in Committee to try to find ways through them. One of those is to do with the role of the Attorney-General. The hon. Member for City of York is right that the Bill removes the consent power of the Attorney-General and transfers it to the directors of the Serious Fraud Office and the Director of Public Prosecutions. That is an advance, and a very good thing, for the reasons that he gave: there should not be political interference in such prosecutions. The OECD is on record as saying that it is worried about the lack of independence in our system. However, the problem remains at a slightly different level. Because the role of the Attorney-General was not reformed during the passage of the Constitutional Reform and Governance Bill, which had its Third Reading yesterday, the Attorney-General retains, despite what is in the Bribery Bill, a power of superintendence over the directors, and that power could be used in a politically motivated way. We still need to go further to protect the directors from that possibility.
The hon. and learned Member for Beaconsfield was worried about what would happen to accountability if we did go further, because if the roles were separated out entirely, the Government would be able only to issue public guidance to the prosecutors, and unable to influence individual cases. If an individual case were decided in a particular way—to prosecute or not to prosecute—the Attorney-General would be able to say in this House, “I’ve given guidance, but it’s not up to me to decide how to apply it in a particular case.” That is a problem, but to leave the situation as it is, as the hon. and learned Gentleman suggested, would not be a solution. He gave the impression that the Law Officers—the Attorney-General and the Solicitor-General—already have a proper degree of accountability in this House for that sort of decision, but that is not so.
The hon. Member for City of York mentioned the BAE case—the al-Yamamah case—where the previous director of the SFO took the decision not to continue with an investigation. We can see from the correspondence that was published as part of the court cases that the decision was taken under immense pressure from Ministers, from the Prime Minister downwards, but what technically happened was that the director himself eventually took the decision. When it came to the debates in this House and the other place, the Law Officers therefore said, “But we didn’t do it. We take responsibility for the letters that we wrote, but it was not our decision in the end.” Even in the existing system, that degree of accountability is not in place, so we cannot stay where we are.
The hon. and learned Gentleman rightly mentioned the missing clauses of the Bill about parliamentary privilege. I understand why the Government have placed that in the “too difficult” box, but there is a connection between what happens in this House under parliamentary privilege and the powers and responsibilities of the Law Officers. We have to get that sorted out completely at some stage.
Since we are all agreeing so much, I do not want to say much more, but I do wish to mention the problems that have been raised in relation to clause 13. The original exemption for the armed forces, law enforcement and the secret services was too wide, and I am grateful to the Government for the removal at least of the exemption for law enforcement. However, there are still some problems, one of which was identified in Justice questions by my hon. Friend the Member for Birmingham, Yardley (John Hemming). He pointed out the anomaly that, as clause 13 stands, it will be lawful for a secret service official, in particular, to bribe an official of the French Government but not one of the Scottish Government. That cannot be right.
More serious is the breadth of the immunity given to the secret services in clause 13. Like other hon. Members, I accept that there is a need for some protection, but it is important to remember that our secret services are charged with protecting not just national security but economic welfare. In that regard, it does not seem satisfactory to say, as the Secretary of State did, that it is all very complicated because there are overlaps between the various responsibilities. That does not work as an argument, because all that we need is for one of them to be protected. The problem with the existing draft of the clause is that when the only function being exercised is the economic one, without any overlap, it is entirely possible that that will be sufficient to attract immunity. I would prefer to preclude that possibility, for precisely the reasons that the hon. Member for City of York mentioned. We need to preclude completely any possibility of the clause being used as cover for any sort of arms supply. I suppose that there is an outside possibility of the armed forces provision being used in that way as well.
I wish to mention a problem with clause 13 that I do not believe has been brought up so far. It has so far been discussed in the context of the giving of bribes by the secret services or the armed forces, and one can see the arguments for that. However, it will also protect them from the effect of clause 2, which is about receiving bribes. Clause 2 was not properly discussed in the other place, so we have not yet heard a proper explanation as to why it is necessary for there to be a general legal protection on receiving bribes and for what purpose it is a good idea for our armed forces to accept bribes. I ask the Government to consider that in Committee.
This is a good Bill, although it needs some more tightening. I am happy to say to the Government that we will support them in any amendments that tighten it, and in resisting any attempts to loosen it. I wish to end, as the hon. Member for City of York did, on money. Improving the law is a very good thing, but the law by itself is not the same as an effective policy. For that, it is necessary for the authorities that are charged with the responsibility of enforcing the law to have the resources that they require. This might be wrong, but I am informed that for the past 12 to 18 months, the Serious Fraud Office has received not one penny from the Treasury for its anti-corruption work, and is transferring money internally from its anti-fraud work to its anti-corruption work. That is not satisfactory, and I want an assurance from the Government that the SFO and all the relevant authorities have the Government’s real backing, not just through the changes to the law in this excellent Bill but through providing the resources that they need to do their job.
I apologise to you, Mr. Deputy Speaker, and to the House for not having been here at the start of the debate. I was held up with some constituents.
I start by applauding British exporters for the tremendous work that they do around the world. There are many men and women who have set themselves up in business and who help with our balance of payments deficit by finding new markets overseas and navigating difficult red tape and bureaucracy in doing so. I spent 10 years of my life exporting British goods abroad, and I enjoyed it greatly. Unfortunately, we are not exporting as much as we should be, and we have a huge trade deficit, as all Members are aware.
My favourite expression in politics is that business is the workhorse that pulls the social welfare cart, and I am always slightly concerned about more legislation interfering with people’s ability to do their job. I say unequivocally at the outset that I am very much anti-bribery and applaud the cross-party consensus that bribery is wrong. It frustrated me greatly in my career exporting to Africa, and I am pleased that we are taking action. However, I will be concerned if we are gold-plating the Bill and moving further and quicker than some of our European partners or other countries, to which I shall come a little later.
We are not a nation populated by people who bribe. I disagree very much with the hon. Member for Cambridge (David Howarth), who says that the only reason why we are legislating is that the OECD is twisting our arm. In my experience of exporting to Africa and the middle east, I always found my fellow British business people and other British companies to be arguably the least likely to bribe. It is inherent in the nature of the British character to play fair and play by the Queensbury rules. That may sound rather old-fashioned, but it is the truth. We tend to behave appropriately overseas in our financial transactions, and I cannot say that about all the other foreign people whom I have come across when I have been competing against them in Africa and the middle east.
In the course of my 10 years, I never even considered giving a bribe, and I never knew anybody else in my company who did. However, I did come across aspects of bribery by the French, Germans and Italians. I am being told that those countries have since tightened their regulations, but have they? Will the Minister say how much the courts and Ministers in those countries are actually implementing those new regulations? I hope she can enlighten me on that and that she is working closely with the European Union to ensure that basic standards are applied throughout the EU.
I reiterate that I simply do not want British firms to suffer as a result of the Bill. We have been told that we are not allowed to talk too much about BAE Systems, so I will not, except to say that as chairman of the all-party Saudi Arabia group, I am extremely concerned at how the media sometimes tend to blow up out of all proportion various delicate issues that are intrinsic to our country without referring to anything specific. I hope that the media act more responsibly when reporting matters such as bribery, because such reports do tremendous damage to our relations with countries such as Saudi Arabia.
I feel passionately about exports to the Gulf states. I have spoken on many occasions with King Abdullah of Saudi Arabia about how to increase our exports to that country. He has informed me that the £5 billion-worth that we currently export is negligible in comparison with our European competitors. He is desperate for Britain to diversify trade with his country away from purely military components, and to increase bilateral trade. I am therefore a little bit worried. I have come here today to seek an assurance from the Minister that the Bill will not hamper British businesses that try to export.
I make no apologies for saying that British businesses are charged a great deal of money for using British embassies. British companies that want to use the British embassy in Riyadh are charged—I believe—more than £3,000, yet many of their competitors do not have to pay that to use their country’s embassies. There are not enough resources such as commercial attachés in our embassies to help our businesses to export. I spoke just this week with the Leader of the Opposition about the importance of a future Conservative Government, should we be elected, having a trade delegate—a representative of the Prime Minister—to the middle east.
The hon. Member for City of York (Hugh Bayley) said that he very much hopes that China will join the OECD, and that countries such as China and other developing nations will be bound by the new regulations and aspirations on bribery and the conduct of businesses and Governments. I hope the Minister and the Government discuss with China the possibility of it joining the OECD and do everything possible to encourage and help it to do so, because it is imperative that the Chinese behaviour in Africa is stopped.
I will never forget meeting the dictator of Sudan, President Omar al-Bashir, to talk to him about human rights abuses in Darfur and Sudan. Everywhere we went, there were all sorts of Chinese constructions. China was pouring massive amounts of money into Sudan to monopolise the market. While we are acting responsibly as a nation and refusing to trade with Sudan as long as those human rights atrocities are carried out, China basically monopolises the market to secure Sudanese oil, making it almost impossible for British businesses to secure business in the country. That is important.
Lastly, I reiterate what I said at the beginning of my speech on Government snooping. A lot of business people in my constituency say, “Look, the only reason we’re still here in Shropshire is that we feel passionately about our county. We’re thinking with our hearts rather than our minds, but if we were thinking with our minds, we would’ve shut up shop a long time ago and set up business in China, India or some other place where we do not face such huge levels of red tape, bureaucracy, interference and form filling.” I hope the Bill is not yet another example of more Government red tape and interference. There must be sufficient evidence before the appropriate body interferes and initiates cases against businesses.
I hope the Government are cognisant that British business is already desperately struggling to compete internationally in this very competitive globalised world. I do not want the Bill to hamstring them even more.
I add my respects to those of previous speakers on the death of Michael Foot, who was the dominant Labour personality when I first became involved in politics.
The quality of contributions to the debate has been high, and I congratulate the hon. Members for City of York (Hugh Bayley) and for Cambridge (David Howarth), and my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), on theirs. We are also thankful for the very productive format of allowing interventions that was offered by the Lord Chancellor in his initial remarks.
As my hon. and learned Friend the Member for Beaconsfield (Mr. Grieve) said, the Conservatives welcome this Bill and have been urging its introduction for many years. It was good to hear that all parties welcome it. It makes a refreshing change to speak on legislation that will not only reduce the number of the laws on the statute book, but update statute and case law, much of which is based on 19th century practice and in need of urgent upgrade.
International corruption is not acceptable in the modern age. We acknowledge, as the hon. Members for City of York and for Cambridge did, that it is now generally held that the UK has fallen behind the curve in dealing with bribery, and that our Transparency International corruption perception index is at all-time low. Conservatives believe that that needs urgently to be addressed.
Without doubt, the outstanding feature of the Bill has been the delay in its arrival. I believe that as far back as June 1998, the Government first published a paper on the consolidation and amendment of the Prevention of Corruption Acts. Although a draft Bill was first published by the Law Commission in March 1998, only now, more than a decade later—in the last throes of this Labour Government—are we finally seeing some action. Let us face it: things have been touch and go, as they will remain until the Bill is enacted.
The Law Commission submitted a reworked version of the draft Bill in March 2009, which has more or less been adopted. The commission deserves much praise for its work. The Bill was then scrutinised by the Joint Committee on Consolidation Bills, on which I was happy to serve under Lord Colville. The Committee was most unhappy that it was as time-constrained as it was. With adequate time, I have no doubt that we would have been better able to investigate the wider applications of the Bill as well as the law.
However, as I said, the Conservatives welcome the Bill. In particular, we are pleased that its implementation will finally make the UK compliant with the 1997 OECD anti-bribery convention. Accordingly, notwith- standing our unhappiness with the process, we shall support it on Second Reading. I like to think that reaching Second Reading has had something to do with the fact that we have called for the Bill for years. However, I suspect, as the hon. Member for Cambridge did, that the Bill’s progress has more to do with the US Department of Justice and the OECD putting significant pressure on the Government for Britain to comply with its international obligations.
The debates in the other place were thorough and informed. I am indebted to Lord Henley, and other noble Friends and Lords, whose experience has made an invaluable contribution. However, we will wish to raise in Committee a number of important issues that have arisen in today’s debate and debates in the other place.
One issue is that in a wide range of circumstances, the application and enforcement of the Bill will depend on the discretion of prosecutors. That was raised again and again in the other place and today. It needs to be recognised that that is a key concern of those looking for certainty, especially those in business. The position of business, and support for our exporters, was admirably advocated by my hon. Friend the Member for Shrewsbury and Atcham.
In many cases, we are not yet satisfied that the Government have fully tied down this issue and we will wish to discuss that more fully in Committee. The International Chamber of Commerce has provided the example of hospitality payments. On the one hand, the Government have recognised the importance to business of bona fide promotional expenditure, but on the other, the question of where a line should be drawn on this issue is still unclear. Indeed, there is continued uncertainty as to whether a line should be drawn at all. We were pleased to see that the requirement for guidance was made statutory in the other place. Guidance will doubtless be crucial to allow companies to understand what will be acceptable under the new laws. However, the problem is—the Government admitted as much in the other place—that there will always be borderline cases that may inadvertently fall within the definition of “bribery”. The difficulty for business is obvious. It is not correct to expect that businesses should instruct employees that a certain course of action, while theoretically falling foul of the legislation, may nevertheless proceed because prosecution is unlikely. The risk is that, in striving for a clear message in combating bribery, the effect of the Bill—if the guidance does not work—could actually be to confuse the situation yet further.
I was pleased to hear from the Lord Chancellor that consultation on the guidance is now well advanced. It will be important, when the Government produce the guidance, that business is consulted closely and allowed to contribute to its content. As my hon. and learned Friend the Member for Beaconsfield said, the guidance must clearly be in place prior to the offences becoming available. I was also pleased to hear the Lord Chancellor’s confirmation that that will be the case. The Government will also need to explain the position to business to help all concerned, and I would be grateful if the Minister, in her concluding remarks, could identify how the Government intend to do that.
A serious outcome of this possible ambiguity is a danger that UK companies could be disadvantaged compared to foreign competitors, as my hon. Friend the Member for Shrewsbury and Atcham said. For example, in the United States, a company can seek a public ruling from the Department of Justice in case of doubt regarding a payment. However, such a system has been rejected by the Government as being “inconsistent” with traditional practice. This argument was used by the Government several times in the other place, but I found it somewhat counter-productive and counter-intuitive. Indeed, the same argument could be used to say that the concept of “corruption” should be retained as the Bill’s use of “improper” conduct is also inconsistent with traditional practice. The fact is that this Bill is creating new law which will inevitably be tested in the courts, and we should just accept that and look to deal with the consequences of it—both intended and unintended.
It is also important that the issue of how the Bill will overlap with related legislation be considered in greater detail. Under the Bill, a company found to have engaged in bribery under clause 11(2) may be liable, if convicted on indictment, to an unlimited fine. Many businesses we have spoken to are worried that this will not be the end of the matter. Indeed, there are concerns that further action may be taken against companies under the proceeds of crime legislation. That legislation was designed to deprive individual defendants, particularly drug dealers and organised criminals, of the benefits of their criminal conduct. However, if companies convicted of bribery are fined were and then also caught by the proceeds of crime legislation, they will face serious financial penalties that could in some cases see them put out of business entirely. We will seek clarification in Committee on policy on this issue and on the use of the measures under this Bill and other existing legislation. To what extent will civil remedies be used? Does the existing legal framework support the desired use of plea bargaining? Will other laws hold up deals being made? Those are important issues—my hon. and learned Friend also raised many of them—and they should have been addressed much earlier in this Parliament.
Some prosecution issues will be of political importance, and we will wish to investigate whether the authority to prosecute should lie with the various directors specified in the Bill or, as colleagues in the other place maintained, remain with the Attorney-General. That point was addressed by the hon. Members for City of York and for Cambridge, who were keen to put the OECD’s position forward. But as others have noted, especially in the other place, that does not cater for the traditions of our own constitution. I am sure that further interesting debates will be had on this point. However, the Bill also raises various practical issues, such as which prosecutor should take the lead and in what circumstances. That remains unclear.
If the Bill is passed, the UK will have among the strictest bribery laws in the world. Consequently, we have been told that there is a real danger that UK businesses could be put at a competitive disadvantage when compared with international businesses whose domestic bribery laws will be less strict than our own. I have seen the rather flimsy anti-bribery strategy rushed out by the Lord Chancellor a few weeks ago, and I remain to be convinced that the Government understand how important this issue is. In that regard, the Minister needs to address the concerns of CAFOD, Transparency International, Tearfund and others, such as the hon. Members for City of York and for Cambridge, who are concerned to ensure that the Government intend to provide sufficient funds for the effective investigation and prosecution of bribery offences. As my hon. and learned Friend said, it is very important to ensure that the UK, in modernising its bribery laws, does not end up shooting itself in the foot in the way explained very clearly by my hon. Friend the Member for Shrewsbury and Atcham. That danger is that contracts will be lost because others bribe when we do not. To do this, serious pressure will need to be exerted on other countries to follow our lead and introduce tougher bribery laws of their own—and to enforce them.
We will wish therefore, in Committee, to review how the Government will make it a priority to put pressure on other countries to follow suit and strengthen their own bribery legislation. There are other international aspects to this, such as the EU procurement directive. The directive appears to be very rigid in that any company found to have been involved in instances of bribery must be permanently disqualified from the procurement process. Hon. Members will be able to see the problem with that. On the one hand, UK companies will be subject to the strictest bribery laws to be found anywhere in the world, but on the other, any company caught by these laws could be prevented from applying for procurement contracts. Companies are understandably very nervous about the huge impact of falling foul of the regulations, concerns that are compounded by the fact that many of the Bill’s provisions remain unclear and are reliant on guidance that has yet to appear.
By contrast, the position in the United States seems to be more flexible. Although disqualification provisions do apply, different degrees of sanctions for fault are recognised and, importantly, it is possible for such a debarment to be lifted after a period of time. Will the Minister explain the Government’s discussions with EU officials to determine what effect, if any, an offence under clause 7 of the Bill will have under the directive?
On a separate point, there is continued ambiguity on the issue of consortiums and businesses’ potential responsibility for the acts of their agents and “associated persons”. The issue was raised by the International Chamber of Commerce. It is often the nature of international businesses to operate in joint ventures. The point was raised in the other place that a company, even though it may have no control over a joint venture partner, may none the less be caught by the provisions of this Bill due to that partner’s conduct. Although the Government have attempted to explain away the problem by stating that the degree of control would be one of the circumstances to be taken into account when deciding whether an offence had been committed, it is not clear that that comfort would be effective in law.
The ICC has pointed out to us that the current wording in the Bill makes it clear that the circumstances that may be taken into account are those that are decisive for the question of whether services are being performed. Indeed, the relationship between the company and the associated entity is expressly excluded. This conflict gives rise to further uncertainty for business, and it is therefore evident that this question of businesses’ responsibility for the actions of such partners and agents needs to be resolved.
It is clear also from the contributions of the Lord Chancellor, the hon. Members for City of York and for Cambridge and my hon. and learned Friend that there are ongoing concerns about defences for intelligence services and our armed forces. As my hon. and learned Friend said, we were generally satisfied with the narrower definition agreed in the other place, but we will have to return to the matter in Committee.
There are evidently a number of outstanding issues that the House needs to address over the coming weeks. We certainly believe that it is a good Bill, but as I have indicated, there are areas of continued concern that will need to be reviewed. The tiny number of prosecutions to date for overseas bribery shows that our law in this area requires updating and enforcing, but in strengthening the UK’s bribery laws to combat corruption, it will be vital that the ability of UK companies fairly and legally to compete commercially and on the international stage is not impaired. That is the balance that we look to achieve over the coming weeks.
We have had an interesting debate with contributions from both sides of the House that in essence welcome this important piece of legislation. I welcome the fact that it has cross-party support, although no doubt in Committee there will be one or two differences of opinion. It is possibly best described, as it was in another place, as a love fest for all parties in support of the Bill. The Bill will provide modern and effective legislation to deal with bribery, whether committed at home or abroad. Its comprehensive scheme of bribery offences represents a formidable deterrent against bribery and is capable of meeting the challenges of today’s complex world of international commerce.
We understand that this matter can be difficult, but I want to respond initially to the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) and make the point that the UK’s reputation is strong. The UK is recognised as one of the least corrupt countries in the world. We are the joint 17th least corrupt out of 185 countries in Transparency International’s 2009 corruptions perceptions index, with British companies seen as cleaner than their French and American counterparts. We are also equal fifth least likely to pay bribes out of 22 countries in Transparency International’s 2008 bribe payers index. However, we must not be complacent about what happens in some companies and ensure that we continue to maintain a strong reputation. Once enacted, the Bill will enable us to do that.
Members on both sides of the House have raised a number of important points, some of which I would like to deal with now. I am confident, however, that those not picked up today will be dealt with in more detail in Committee; it appears that there will be ample opportunity to do so then. Initially, however, I wish to pay tribute to my hon. Friend the Member for City of York (Hugh Bayley) and his work in supporting a high level of commitment to achieving the highest standards of business and to ensuring that we remove opportunities for bribery and corruption. I join him in paying tribute to work of Transparency International, with which we have worked closely in developing the Bill.
Members have suggested that the Bill has had a long gestation period—even longer than an elephant’s—but it has the overwhelming support of both sides of the House and is much better than when it was first considered in its draft form. The problems with the initial proposals in 2007 meant that the Joint Committee could not accept much of the basic premise of the Bill, having to do with principals and agents, and that is why it had to be referred back to the Law Commission for further consideration. Its contribution has ensured that the Bill can, I believe, make it on to the statute book with all-party support.
Members have raised a number of issues, and I want to deal initially with the point about the Attorney-General and prosecutorial discretion. The hon. and learned Member for Beaconsfield (Mr. Grieve) was concerned about some aspects of that, and the hon. Member for Huntingdon (Mr. Djanogly) raised similar points. They asked how prosecutors would be guided in deciding whether to bring a prosecution for bribery and in ensuring that there is some understanding and certainty for business. Whether a case is dealt with by the Crown Prosecution Service or the Serious Fraud Office, all prosecutions are subject to review under the principles in the code for Crown prosecutors, which requires the prosecutor to apply an evidential and a public interest test.
Where there is sufficient evidence for a realistic prospect of conviction, prosecutors must consider whether a prosecution is required in the public interest. A prosecution will usually take place, unless the prosecutor is sure that public interest factors tending against prosecution outweigh those in favour, or that the public interest may properly be served by offering the offender the opportunity to have the matter dealt with through an out-of-court disposal. Each case must be considered on its own facts and merits, but the more serious the offence, the more likely it is that prosecution will be needed in the public interest.
The Minister will be aware that I highlighted the regulatory nature of the Bill. Clause 7 is entitled “Failure of commercial organisations to prevent bribery”. Earlier, I used the word “negligence”, but that probably was not strictly right. It is in fact a strict liability offence tempered by a defence, the burden of which is on the defendant to show that they had adequate procedures in place. As with the Health and Safety Executive, that places a great burden on the regulator or prosecutor in deciding where the public interest lies, particularly, for example, where it might consider that the company has made real efforts to improve its performance in this area.
And those issues must of course be a matter for the prosecution. Bribery is a serious offence, but in deciding whether to prosecute, prosecutors will take all those factors into account and weigh them appropriately. They might take into account whether the loss or harm can be described as minor; whether it was a single incident; whether it was a matter of misjudgment; or whether the offence was committed as a result of a genuine mistake or misunderstanding. The prosecution must consider all those factors before deciding whether to proceed.
Members have also mentioned the consequences of replacing the requirement for the Attorney-General’s consent to a prosecution under the Bill with that of the director of one of the prosecuting authorities. Clause 10 provides that responsibility for granting consent to a bribery prosecution will rest with the directors of the relevant prosecuting authorities. For offences under the Bill, we consider that to be the appropriate level at which such a judgment should be taken on the basis of what I have already said about the factors that they need to take into consideration. The Joint Committee agreed with our judgment.
We fully recognise the constitutional importance of the Attorney-General’s position and the need to maintain effective parliamentary accountability for the operation of the prosecution services, but the Attorney-General will continue to have a fundamental role in those matters. The protocol between the Attorney-General and the prosecuting authorities published last July sets out the circumstances in which the Attorney-General will be consulted and how the Attorney-General and directors will engage with one and other.
The protocol serves to underline the fact that the directors of the prosecuting authorities exercise their statutory functions under the superintendence of the Attorney-General, who is responsible to Parliament for those directors’ functions in relation to prosecutions. The Attorney-General is responsible in turn for safeguarding the independence of prosecutors in taking prosecuting decisions.
The hon. Member for Cambridge (David Howarth) asked whether there would still be opportunities for the Attorney-General to interfere, as he put it, in cases that involved national security. The only type of case in which the Attorney-General would consider directing that a prosecution not be started or not continue—or, in the case of the SFO, that an investigation not take place or not continue—would be one in which the Attorney-General was satisfied that it was necessary to do so for the purpose of safeguarding national security. Again, it is important to take the protocol into account.
When national security is under threat, the Government consider it right that the Attorney-General, having consulted other Ministers, should have the power to halt a prosecution or an investigation carried out by the Serious Fraud Office. It will be the Attorney-General—after consulting other Ministers—and not necessarily the prosecuting authorities who will have the significant relevant expertise in that area. The Government still expect most such cases to be settled by way of discussions between the Attorney-General and the relevant prosecutor. Only in rare cases would it be appropriate for the Attorney-General to give such a direction.
Is the Minister satisfied that the OECD will find that arrangement satisfactory, given its concern about the independence of the SFO in the light of the al-Yamamah case?
Without wishing to get into a discussion about a case that is still subject to the courts, I would say to the hon. Gentleman that we believe it appropriate, in those exceptional cases where it is a matter of national security, for the Attorney-General to have the ability to intervene where appropriate.
Let me turn now to facilitation payments. There was some discussion about the extent to which facilitation payments, of whatever size, large or small, would still be classed as bribery. The reality is that facilitation payments, no matter how big or small and no matter what they are called, still amount to bribery. We have not included an exemption for such payments, despite what might happen in the rest of the world, including in the US, under the Foreign Corrupt Practices Act. There is no exemption in our existing legislation for facilitation payments. The Joint Committee agreed that facilitation payments should continue to be criminalised, saying:
“A specific defence risks legitimising corruption at the thin end of the wedge.”
We share the Committee’s view that, in general, the Bill must prevent individuals from relying on local customs to justify corrupt practices or considering small facilitation payments to be appropriate.
Tackling petty bribery is a key element of changing the culture of corruption, which is so corrosive, particularly in developing economies. We recognise that many UK businesses still struggle with petty corruption in some markets, but the answer is to face the challenge head-on, rather than carve out exemptions that draw artificial distinctions, are difficult to enforce, and have the potential to be abused. Providing exemptions for facilitation payments, as the US does, is not a universally accepted practice, and not something that we consider acceptable.
The hon. and learned Member for Beaconsfield also talked about clause 10 and the amendment made in the other place. I am sure that we will return to that issue in Committee, but as my right hon. Friend the Justice Secretary set out in his opening statement, we will propose a further significant safeguard to address the concerns that were raised in the other place. We recognise the concerns about the use of the proposed defence, as well as those raised in this debate. We will propose that there should be a statutory duty on the heads of the intelligence services and the armed forces to ensure that appropriate arrangements are in place to ensure that conduct amounting to an offence under the Bill takes place only when the defence applies. Those arrangements would then be subject to approval by the relevant Secretary of State. That requirement will provide direct ministerial oversight of the internal arrangements put in place by the intelligence services and armed forces. For that reason—along with that given earlier by my right hon. Friend the Justice Secretary—we cannot accept clause 10 as amended in the other place.
The hon. and learned Gentleman and the hon. Member for Cambridge both referred to parliamentary privilege and the fact that it is not specifically mentioned in the Bill. It is common ground that MPs should not be above the criminal law. However, the Joint Committee on the draft Bribery Bill argued that any evidential problems in relation to bribery offences should be dealt with in a separate parliamentary privilege Bill. In the light of the Joint Committee’s conclusions, we decided against including provisions in the Bill on parliamentary privilege. Given the recent institution of criminal proceedings against three Members of this House, we believe it would be appropriate to wait and see what the court has to say in this matter before deciding whether to proceed with any further such legislation.
My right hon. Friend the Justice Secretary has given a good explanation of why we inserted a statutory requirement into the Bill in the other place to produce guidance in respect of the clause 7 offence. We understand that businesses are looking for better guidance and a little more detail on how such offences might apply. We have also given a commitment that such guidance will be in place before the Bill is enacted and the offence comes into play. We are in discussions with business and various industries on that guidance, but it is fair to say that many industries already have good governance arrangements and strong guidance in place. We look to work with a range of companies to find the best of that guidance and build on it. I trust that the hon. Member for Huntingdon will question me further on that in Committee.
The hon. Gentleman also asked whether the offence of failing to prevent bribery would trigger article 45 of the EU procurement directive, which requires the mandatory exclusion of suppliers for public procurement contracts for services, supplies and works. We are giving active consideration to whether conviction for the new corporate offence of failure to prevent bribery—the clause 7 offence—would require mandatory exclusion under the directive. That is not a straightforward issue, and there are a number of complex points that we need to consider. There is obviously a difference of view among European Union member states on how some aspects of the directive are being applied, but we will continue to look into the matter in further detail before coming to a view on it.
The hon. Gentleman also asked about the application of the failure to prevent bribery offence to the activities of joint ventures and similar corporate structures over which a company does not have full control. Our purpose is clear: to encourage all those involved in joint ventures and similar business structures to satisfy themselves that adequate procedures are built into their governance arrangements. An organisation will be convicted of an offence under clause 7 only if a person performing services on its behalf bribes another to obtain or retain business for that organisation. It is possible for one person or a number of people to perform services on behalf of more than one company. It will depend on the particular circumstances of the case, but it may be that a bribe by a person performing services for one company in a joint venture is rightly regarded as being paid in connection with the business of any of the companies involved in that venture. Equally, it may be the case that, on the facts, the necessary connections are not present to establish liability under clause 7 if a bribe is paid in the context of a joint venture. Ultimately, it will be a matter for the courts to determine where liability stands.
I trust that I have responded to most of the main points made by hon. Members in what I think has been a particularly good debate, in large measure because the Bill has backing and support across the House. I believe that we can, with commitment, get the Bill through the House, despite time pressures, and I trust that our opportunities to debate and consider further details in Committee will in no way hamper the Bill, which is essential to maintaining the UK’s credibility as a country at the forefront of fighting bribery and corruption. I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
bribery bill [lords] (programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Bribery Bill [Lords]:
1. The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 25 March 2010.
3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.
7. Any other proceedings on the Bill (including any proceedings on consideration of any message from the Lords) may be programmed.—(Mary Creagh.)
Question agreed to.