My Lords, it is fitting that we should have the Second Reading of the Bribery Bill on the United Nation’s International Anti-Corruption Day. The Government are committed to action to tackle bribery. It is an insidious offence that undermines good governance, distorts competition, saps economic and social development and eats away at the very fabric of democratic society. The impact of bribery in developing countries can be particularly acute. It can add 10 per cent to the cost of doing business in some countries and siphons off billions of pounds of development aid into the pockets of corrupt officials.
We should be proud of the fact that the UK remains largely untainted by the pernicious presence of bribery and of our strong record as a champion of the global fight against corruption. Last month, Transparency International published its corruption perception index for 2009, which ranks 180 countries according to perceived levels of corruption among public officials and politicians. Inevitably, the expenses scandal has not helped our standing in the world, but we need to put that in perspective. The United Kingdom is ranked as the 17th least corrupt country in the world. We are equal third among the G8 countries and equal fourth among the G20. But we can and should do more. Our standing has been higher in recent years, and we need to reassert our position as a leading global champion against corruption. Taking firm action to address the expenses scandal, as we have done through the creation of the new Independent Parliamentary Standards Authority, was one necessary step. The Bill before the House, which will put in place a modern and codified framework of criminal law to tackle bribery in all its manifestations, is another vital step forward.
Before I turn to the detail of the Bill, I want to make one thing absolutely clear to the House. It was evident from some of the remarks made during the debate on the Queen’s Speech that there may be some misunderstanding on whether the current criminal law on bribery meets the United Kingdom’s international obligations. Your Lordships should be in no doubt that, while the existing criminal law is clearly ripe for reform, this country was and is fully compliant with our international obligations.
The issue is not therefore one of compliance or the scope of the existing criminal law, but whether it is wholly fit for purpose. The current law consists of the common law offence of bribery dating back to at least Magna Carta, and various statutory offences, brigaded under the banner of the Prevention of Corruption Acts, enacted in the latter part of the 19th and early 20th century. Given this ancestry, it is not surprising that the Law Commission has described the current law as,
“riddled with uncertainty and in need of rationalisation”.
While it has long been recognised that the current law is in need of reform, there has been considerable argument and debate about the form that the new body of criminal offences should take. It is for this reason that it has taken us longer than we would have wished to get to the point when we could introduce a Bribery Bill commanding the necessary widespread support, not just from Members of your Lordships’ House and of the other place, but from the business community and non-governmental organisations. That we have been able to reach this position is in no small way thanks to the careful analysis and consideration, first by the Law Commission and, secondly, by the Joint Committee on the draft Bribery Bill, chaired by the noble Viscount, Lord Colville of Culross. I am delighted that he will speak in this debate. Therefore, on behalf of the Government, I record our gratitude to the Law Commission—to its chairman, in particular—and to all the members of the Joint Committee, especially the noble Viscount.
It is a testament to the Joint Committee’s cogent analysis that the Government could accept, either wholly or in part, all but one of the committee’s 39 conclusions and recommendations. The fact that this Bill has had the benefit of pre-legislative scrutiny does not, of course, mean that your Lordships will not want to scrutinise it in their usual thorough and forensic manner. I trust, however, that we have reached the stage where that examination can be about the finer details of the Bill rather than its core purpose and basic structure.
I now turn to the detail of the Bill. It creates two general offences of bribery, a third specific offence of bribing a foreign public official and finally a new corporate offence of failing to prevent bribery. Let me say a little more about each of these four offences. The general offences, in Clauses 1 and 2, cover on one side of the coin the offer, promise and giving of a financial or other advantage, and on the flip side the request, agreeing to receive or acceptance of such an advantage. These offences focus on the conduct of the payer or the recipient of a bribe and describe six scenarios, each involving the improper performance of a function, where one or other offence would be committed. These new offences will apply to functions of a public nature as well as in a business, professional or employment context.
Clause 6 introduces a bespoke offence of bribing foreign public officials. As I have already made clear, the absence of such an offence in our current law does not put the United Kingdom in breach of our international obligations. The existing general offences and, for that matter, their replacements in Clauses 1 and 2, cover the territory of the OECD convention, which does not require a separate offence. Indeed, in September last year the City of London Police secured the conviction, under the Prevention of Corruption Act 1906, of a managing director of a Wiltshire-based company in connection with the bribery of a Ugandan Government official. Having said that, we recognise that a bespoke offence would further underline this country’s commitment to international efforts to stamp out the particularly insidious practice of bribing foreign public officials, not least because of the devastating impact that such practices can have in developing countries.
This quartet of new offences is completed by the offence of failure by a commercial organisation to prevent bribery. Again, corporate liability for bribery, as with other offences, is an existing feature of our criminal law. But this is another area where there is a compelling case for a bespoke, targeted offence.
One of the core conclusions of the committee chaired by the noble and learned Lord, Lord Woolf—I am delighted that he is speaking in this debate—into the ethical policies and procedures of BAE was the need for a proactive role for a company board in securing and maintaining high standards of ethical business conduct. We agree. But these are matters that are too important to be left to the commercial sector alone. The Law Commission came to the same conclusion.
Clause 7 creates an offence of failing to prevent bribery which can only be committed by a relevant commercial organisation. The clause also provides for a defence for a commercial organisation to show that it had adequate procedures in place to prevent bribery. We recognise that there has been considerable debate about what constitutes “adequate procedures” for these purposes. As we indicated in our response to the Joint Committee, the Government agree that guidance should be made available to commercial organisations. We propose that such guidance should be available well in advance of the new offences coming into force.
Over the coming months we will develop appropriate guidance, drawing on the expertise of business representatives, Transparency International and others. Among other things, we envisage that the guidance will provide illustrative good practice examples of adequate procedures.
While guidance will be in place to assist business, the message from the Bill is clear. The payment of bribes, including facilitation payments, is unlawful. If companies pay them in order to gain a business advantage they run the risk of prosecution. Bribery on any scale cannot and should not be tolerated or condoned.
Clause 12 provides a defence for law enforcement agencies, the security services and the Armed Forces. This is a significant departure from the draft Bill which included an authorisation scheme in respect of the security services. That scheme did not find favour with the Joint Committee. We accept that an authorisation scheme, which was capable of conferring a broad exemption for the security services, was arguably cast too widely. I welcome the fact that in its briefing, Transparency International,
“accepts that the Government has responded positively”,
to the Joint Committee’s recommendation on this issue.
While we have removed the authorisation procedure, we remain firmly of the view that some provision is required to address those circumstances in which the security services, law enforcement agencies and the military may have to use financial or other inducements to enable them effectively to discharge their functions.
We note of course that the much-respected Constitution Committee of this House has expressed some concerns about this clause in the report it published last Friday. We thank the committee and its chairman for the report. Your Lordships may be assured that we will study it and its conclusions with care. We will respond to the committee in due course, having also heard the views of other noble Lords on this issue today and later on in Committee.
There is one point that is not in the Bill but which the House would expect me to mention. The general offences in the Bill apply to all those performing functions of a public nature. As such, we intend that the Bill would apply to Members of this House and of the other place. The Joint Committee did not demur from this. It is, I believe, axiomatic that no Peer or Member of Parliament should be above the law. The draft Bill sought to deal with the consequences of this by providing for Article 9 of the Bill of Rights 1689 to be waived so that the words or conduct of a Member of Parliament or Peer charged with an offence under the Bill may be admissible as evidence.
We recognise that the issue of parliamentary privilege is an emotive one, as we saw during the passage of the Parliamentary Standards Act. Members of both Houses rightly do not want to see an erosion of hard-won freedoms. The Joint Committee took the view that there were dangers in adopting a seemingly piecemeal and inconsistent approach to parliamentary privilege and suggested that the matter should more appropriately be dealt with in a parliamentary privilege Act. Given the Joint Committee’s conclusion on this matter and the complexities and sensitivities surrounding this issue, we have not included provision in respect of parliamentary privilege in the Bill as introduced into your Lordships’ House. None the less, we recognise that the House will wish to consider this issue carefully during the course of our debates, both today and during the subsequent amending stages of the Bill. We look forward to those debates and will reflect carefully on what is said on both sides of the argument.
This is an important Bill which will deliver a modern and comprehensive body of criminal law to support the work of law enforcement agencies and prosecutors in rigorously combating bribery, both in the United Kingdom and abroad. It is an outcome to which everyone can subscribe and I hope the Bill will enjoy support from all sides of the House. We look forward to working with noble Lords to ensure its speedy progress. I commend the Bill to the House.
My Lords, I warmly welcome the Bill and thank the Minister for the clear way in which he has introduced it. I also thank the Government for the required preparation. Your Lordships will recollect that a previous draft Bill was rejected by a Joint Committee of both Houses presided over by the late Lord Slynn of Hadley, to whom I pay tribute for the work he did while a Member of the House in both its judicial and legislative capacity.
The principles set out in the Bill, and the manner in which it has been put together, are very clear and acceptable. I hope that the Bill will be given a Second Reading with acclamation. I am glad that it is proposed that it will then be referred to a Grand Committee because the Minister has hinted that there a number of detailed points of a committee nature that need to be addressed. I shall mention one or two—I shall not attempt to be exhaustive—which have occurred to me on studying the background and the Bill itself.
My first point relates to what have been called “facilitation payments”. The noble Lord, Lord Robertson of Port Ellen, gave a good example of these to the Joint Committee. He referred to the captain of a ship who, when seeking to have its cargo unloaded, was told by the stevedores at the port that it would be unloaded only on the condition that a payment was made to someone nominated by the stevedores, not necessarily to the stevedores themselves. That is a very difficult position for the captain of a ship to be in, and yet, if he paid, the Bill would criminalise his payment. Another example I have come across—there are quite a number in this general area—is that of someone on a business trip who, in order to board the aeroplane at the airport, has to get a boarding pass. He is asked by the official issuing the boarding pass for money, not to pay airport taxes but as a payment to the man himself—or the woman herself, of course; it is equally dangerous when it comes from that quarter. It is a difficult issue and I wonder whether the ordinary defence of duress could be adapted and available in this situation.
The Minister mentioned the provisions about companies and one of the questions that arises is about the relationship between a holding company and, let us say, an overseas subsidiary company in regard to these responsibilities. We will want to examine these matters.
There is also a question, as the noble Lord mentioned, about the defence of adequate procedures. There have been many requests, as the noble Lord also said, for authoritative guidance in this area. Having wondered about this, I think that the department of the noble Lord, Lord Mandelson, could be responsible for giving guidance, just as the Department for Transport is responsible for the Highway Code. The provisions which give effect to the Highway Code in law would be quite adequate for dealing with this matter. It would not be conclusive one way or the other, but it would be guidance that could be referred to as authoritative with the tendency either to implicate or to exculpate according to the situation. A great deal of the difficulty would be resolved by authoritative guidance of that kind, developed by the Department for Business, Innovation and Skills after consultation with the business community. There are many different types of businesses operating overseas, where the question of what is adequate will depend very much on the nature of the business and on the knowledge it has of the situation overseas.
There are many other questions that might be raised in Committee. I am concerned about the nature of the consent required for prosecutions. These offences under the older law generally required the consent of the Attorney-General. In the Bill, that has been replaced by the consent requirement of the three relevant directors, depending on the situation. The OECD had something to say about this. I think it is highly undesirable to reduce the responsibility of the Attorney-General, who is accountable to Parliament, in this area. It is true that some people suggest that because a person is a member of the Government, his or her discretionary judgments cannot be justified or treated as trustworthy. Some people may think that, but I think that the last thing that politicians, those with a responsibility in politics, should do is to accede to that. It is very important that the person taking decisions in this area should be accountable to Parliament. A great deal has been done and I have no doubt will be done in the development of protocols between the Attorney-General and the directors and that is a good and useful development, but I find it difficult to agree that the Attorney-General’s consent should be taken out of the Bill without the full discussion that will ultimately be required under the provisions of the constitutional Bill now before Parliament.
The last point that I want to make is in relation to Clause 12 and concerns the empowerment of the law enforcement agencies, the Secret Service, including GCHQ, and the Armed Forces on active service to do what the Bill would make unlawful, but to do it lawfully because they have authority to do so. The Constitution Committee has dealt with this in great detail and in a way that I find very convincing. This is a point that requires to be considered in Committee and I have no doubt that in due course it will be.
In conclusion, we are greatly indebted to the Joint Committee for its consideration of the Bill—and very full and detailed consideration it was. Those thanks go to its chairman and to all its members. I also thank especially the Law Commission, and I venture to suggest that if its talents were used more freely in connection with the development of criminal justice legislation in this country, the system might be a good deal simpler, and a good deal better. I hope that the Government, having regard to how the procedure has developed into a Bill that is, I hope, very acceptable around the House, might find that attractive for further developments in the criminal justice system as a whole. Whatever can be said about the Bill, both in its substantive provisions and its procedures—particularly in relation to sentencing and the recovery of the proceeds of crime—it cannot be described as simple.
Will my noble and learned friend allow me to raise one matter? Having served on the Joint Committee on the Corruption Bill, will he allow me to associate myself with his remarks about Lord Slynn? Will he accept that this Bill is as clear and easy to understand as that Corruption Bill was obscure? Lord Slynn had a very hard task chairing our committee because of the difficulties with which he was presented.
I am grateful to my noble friend for his intervention, and to some extent I understand how difficult it is for a Joint Committee set up to look at a draft to come to the conclusion that it is so bad that it should not go ahead at all. However, no doubt, it has to be done sometimes, and with Lord Slynn in the chair it was done on that occasion.
My Lords, I start by declaring an interest as a member of Transparency International UK, which is the United Kingdom’s branch of Transparency International. I was also a member of the Joint Committee that considered this Bill in pre-legislative scrutiny.
As I said while speaking in the Queen’s Speech debate, this Bill is long overdue. Our current law is based on Acts of 1889, 1906 and 1916. The previous attempt to reform our legislation on corruption was abandoned in 2003, when the pre-legislative scrutiny committee was very critical of the draft Bill—here, I support the tribute from the noble and learned Lord, Lord Mackay of Clashfern, to my old friend the late Lord Slynn. However, it is virtually a unanimous view that the current Bill is a great improvement on its 2003 predecessor and I entirely agree with what the noble Lord, Lord Waddington, said on that.
So far as the work of the Joint Committee was concerned, after its first meeting I thought that we would never come to an agreement about the changes to the law that were needed, but I was wrong. The committee’s report was ultimately unanimous. I think that I speak for all its members in being very grateful to the noble Viscount, Lord Colville of Culross, for his chairmanship. Many of the recommendations of the committee were, as the noble Lord, Lord Bach, said, accepted by the Government. In particular, the Government have introduced Clause 7 of the Bill as a replacement for Clause 5 of the draft Bill, which would have made it difficult—and, I believe, virtually impossible—to obtain the conviction of a company, even if it had failed to take reasonable steps to prevent bribery. That is an extremely important change, which greatly improves the Bill.
Another issue on which the Government moved some way—although in my view not far enough—towards the recommendations made by the committee was in relation to guidance. The committee decided that guidance needs to be given on what amount to adequate procedures as a defence for a company to prosecution under Clause 7. In paragraph 16 of their response to the committee’s report, the Government propose non-statutory guidance. What the Government propose to put into that guidance seems, so far as I am aware of it, reasonable. However, non-statutory guidance presumably means that nothing in the Bill will require this Government or any future Government to produce guidance. The provision of guidance is sufficiently important to require the insertion into this Bill of a duty for the Government to provide it. In the Bill’s present form, there is no such duty.
The committee did not suggest—nor does the Bill require—that there should be any system of clearances for individual projects, as is provided for in the USA. The view taken by this Bill on that subject is quite correct. Clause 9 transfers the need for consent to prosecution from the Attorney-General to the directors of the prosecuting authorities. The Attorney-General, however, retains the power of direction. I disagree fundamentally with the noble and learned Lord, Lord Mackay of Clashfern, on this. I believe that the Attorney-General should not have a power of direction so long as she remains a member of the Government. I should add that it is perfectly possible, although it would be somewhat unusual, for somebody to be accountable to Parliament for a decision that was not that of a Minister. However, although I disagree with this provision, I do not think that that is a cause for any change in the Bill, because it is not a matter for the Bill; if the position of the Attorney-General is to be changed in this respect, that needs to be dealt with in a separate Bill.
My Lords, during the 10 years that I was a law officer—and I watched my noble and learned friend Lord Mayhew and Lord Havers before that—when acting as Attorney-General one was not acting as a member of the Government; one was acting as an independent law officer of the Crown. One would rather have been swallowed up by the earth than have allowed anything in the nature of an ordinary ministerial duty to affect one’s judgment. That was the tradition with which I came into the department.
My Lords, I have the greatest respect for the views of the noble and learned Lord, Lord Lyell of Markyate, on this. He, too, was a member of the Joint Committee. But however high the standards—and I think that they were of the highest for both him and the noble and learned Lord, Lord Mayhew—it increases the risk if somebody both holds the job of being the legal adviser to the Government and is a member of that Government. I would prefer that that did not happen. However, as I said, it is not a matter for this Bill.
I have never understood why at the time of the abandonment of the investigation of BAE’s dealings with Saudi Arabia the then Attorney-General, the noble and learned Lord, Lord Goldsmith, pushed the decision to discontinue the investigation on to the director of the Serious Fraud Office rather than taking that decision himself. It does seem that he would have been the appropriate person to take that decision.
Now I come to what I see as the most serious problem in the Bill. Clause 13 of the draft Bill gave exemption from bribery offences for acts authorised by the Secretary of State so far as necessary for the functions of—to use their nicknames—MI5, MI6 or GCHQ. The committee was highly critical of this on the grounds that, first, it was not satisfied that domestic intelligence agencies—that is, MI5 and GHCQ—in fact needed the power to bribe; secondly, the Bill was not the right vehicle for extending the powers of the intelligence agencies; and, thirdly, it was doubtful in the eyes of the committee whether Clause 13 met the United Kingdom’s international obligations, especially in so far as exemption could be extended to activities that were intended to protect the UK’s economic interests, not just to national security or serious crime.
The Government’s reaction to that recommendation was quite startling. They replaced Clauses 13 and 14 from the draft Bill, as the noble and learned Lord, Lord Mackay of Clashfern, has already pointed out, with Clause 12 of the present Bill. Not only do they fail to accept any of the points put forward by the committee, but they are substantially extending the exemptions. The security services are exempt, but so are law enforcement organisations engaged in the prevention, detection or investigation of serious crime and the Armed Forces on active service. The exemptions do not require any action by the Secretary of State in advance. Furthermore, the SFO and a senior representative of the police both said in written evidence to the Joint Committee that exemptions should not apply to them. I refer to pages 191 and 321 of Volume II, the evidence volume, of the committee’s report.
The question of giving exemption to the Armed Forces was never put to the committee for consideration. In their response to the committee, the Government have given no explanation of the circumstances in which the Armed Forces might require the use of those exemptions. It is arguable that there are some circumstances in which obtaining information could be regarded as falling within the scope of the Bribery Bill and that they therefore need some form of exemption—for instance, if MI6 were to pay a person employed in a uranium enrichment plant somewhere in the Middle East to tell it what was happening there. However, if an employee in a company that is conducting a major fraud gives information to the SFO or the police that will assist them in arresting those responsible, I cannot see that giving that information, whether paid for or not, can possibly be regarded as an improper performance of an employee’s functions. If that is right, the action of the SFO or the police in paying informers or deciding not to prosecute them is plainly not bribery. If there is any doubt about that, a simple amendment would put it beyond doubt and would make a large part of Clause 12 unnecessary. Whatever the position may be for MI6, I do not believe that the exemption is needed for law enforcement agencies and no justification has yet been put forward for extending exemptions to the Armed Forces.
There is one other matter of concern. The Bill does not deal adequately with the possible liability of a company for acts of bribery committed by a subsidiary or a joint venture company in which it holds an interest. The committee was unable to come up with proposals for how to deal with this because of shortage of time; we were allowed only a very busy 10 weeks in which to consider the Bill. As a result, the Bill does not include any recommendations for how this problem is to be dealt with. Plainly, there is a gap. Apparently, this will be left to be considered by the Law Commission when it is reviewing the law on corporate liability for crime. That may be some time off and meanwhile the absence of rules in the Bill could lead to serious loopholes in criminal prosecutions. I would have preferred to have had this matter covered by the Bill, but I am afraid, given the approach of the end of the present Parliament, it is not practical to include any amendments for this purpose during the time available. The gap will have to be closed at a later date, but that date needs to be as soon as possible.
Notwithstanding these criticisms, I believe that this is a good Bill; indeed, it is basically an excellent Bill. It is certainly important, particularly because the United Kingdom’s legislation is plainly inadequate and needs updating. There are issues that need to be debated—
I thank the noble Lord for giving way. I know that I am speaking later, but he has raised a very important question in my mind about subsidiary companies, and I agree with him. Would it be possible to put an order-making power into the Bill that would enable that point to be covered later, without having to go back to primary legislation?
I have to say, perhaps putting on my hat as the chair of the Delegated Powers Committee, that such a power might have some difficulty in getting through that committee.
There are issues that need to be debated in Committee, but I do not believe that they are fundamentally controversial and I hope that this Bill will be enacted soon.
My Lords, I join other noble Lords in warmly welcoming the Bill and commending the work of the Joint Committee. I hope that the Bill will be enacted speedily and push this country up the league table of the least corrupt countries, from a disappointing 17th place, if I understood the Minister correctly, to a Champions League position.
I will focus my comments on Clause 12. Like the noble Lord, Lord Goodhart, I regard Clause 12 as the most controversial provision of the Bill, providing as it does a defence for certain bribery offences for persons engaged in law enforcement functions, the work of the security and intelligence services, and the conduct of the Armed Forces. Such exemptions inevitably raise difficult and sensitive questions about the rule of law. As the Minister has already mentioned, your Lordships’ Constitution Committee, of which I am a member, has published a report critical of Clause 12, which I commend to the House. I should like to mention briefly my three main concerns about Clause 12.
My first concern is to understand why the Government think that it is appropriate to create an exemption for the domestic intelligence services from the criminal offence of bribery. The Joint Committee, at paragraph 203 of its report published in July, said that it had heard,
“no persuasive evidence of a need for the domestic intelligence agencies to be granted an authorisation to bribe”.
Why then have the Government not accepted the recommendation of the Joint Committee to remove the clause creating this defence? In any event, surely the Joint Committee was correct when it said, at paragraphs 202 and 203 of its report, that if the intelligence services believe that they can justify exemptions from the criminal law, the case should be put before this House and the other place by means of an appropriate amendment to the Intelligence Services Act 1994.
My second concern is that the Government’s response to the report of the Joint Committee on these defences was not to narrow the exemptions from those in the draft Bill, but to increase them. The exemption in the draft Bill was confined to the security and intelligence services. The Government now seek to include in Clause 12 an exemption for law enforcement agencies—a category which is broadly defined to cover bodies such as HM Revenue and Customs, local authority trading standards officers and environmental health officers. That is a very broad description indeed.
The Joint Committee noted at paragraph 195 of its report that the evidence it received from the police and the Serious Fraud Office on the defence for the intelligence services did not suggest that the police and SFO believed that they needed any such defence for their own activities. Why then has an exemption for law enforcement agencies now been added to the Bill? In what circumstances is it envisaged that the police, Revenue and Customs, and local authority trading standards officers should be permitted to bribe people? Is there any evidence at all that the absence to date of such a power has hindered the effective performance of law enforcement functions?
My third and final concern about Clause 12 is that in any event it does not contain the protection for the public interest contained in Clauses 13 and 14 of the draft Bill. The draft Bill confined the intelligence and security services exemptions to those cases where a prior authorisation to the act of bribery was given by the Secretary of State or a senior official. If law enforcement functions are to be added, prior authorisation should be by the Attorney-General.
It is quite unacceptable for any intelligence officer of whatever rank, any employee of the CPS or any employee of a local authority carrying out law enforcement functions to be able to decide for themselves to carry out an act of bribery. Cases of bribery by public officials in order to carry out an intelligence function, a security function or a law enforcement function would, I hope we can all agree, be very rare exceptions. Any such departure from the rule of law must surely be carefully considered in advance by very senior officers of the state—not least to avoid any later dispute as to whether the officer was genuinely acting for official purposes, as well as to ensure that such conduct was truly necessary and proportionate. Paragraph 200 of the Joint Committee’s report refers to the evidence of the noble and learned Baroness, the Attorney-General. She emphasised to the Joint Committee that the prior authorisation procedure was an important safeguard. I respectfully agree.
Those are my main concerns about Clause 12. I give notice to the Minister that I—and, I am sure, many other noble Lords—very much look forward to debating with him during the passage of the Bill whether Clause 12 is necessary, whether it is proportionate and whether it is consistent with the rule of law.
My Lords, this is a very, very well worked-on Bill and it shows it. We have had time to think about the subject—some may say, and have said, too much time, but at least the result is worth it. Particularly, the judicious and vigorous chairmanship of the noble Viscount, Lord Colville of Culross, enabled the scrutiny committee on the second draft Bill to reach unanimity in even the most difficult areas. The chairmanship of the late and much lamented Lord Slynn of Hadley was valiant too, but, as the noble Lord, Lord Waddington, said, he had a much worse original draft Bill to deal with. We on the scrutiny committees also had the benefit of in-depth analysis by Transparency International UK. I declare an interest as a member of its Advisory Council. The Government’s response has been unfailingly constructive. I would say one could welcome this Bill unreservedly would this not risk putting some of your Lordships out of their job of examining legislation.
It is important to see this Bill in a wider context. It does not just reform our outdated and piecemeal domestic law on bribery. It tackles wrongs—evils—suffered by people far beyond our frontiers. To quote the G8 2006 communiqué:
“Large-scale corruption ... can have a devastating effect on democracy, the rule of law and economic and social development. We recognise that corrupt practices contribute to the spread of organised crime and terrorism, undermine public trust in government and destabilise economies. Corruption can deter foreign investment, stifle economic growth and sustainable development and undermine legal and judicial systems. The net effect of corruption is felt most directly, and disproportionately, by the poor”.
The Government’s impact statement on the Bill, which is a very good read, gives chapter and verse about the deleterious effect of bribery on business as well as on economic and social development. Your Lordships may also know that the combination of the huge increase in global trade and the wide reach of exemplar legislation such as the American Foreign Corrupt Practices Act have changed the climate of business opinion about getting away with bribery, for good. In a way, the OECD anti-bribery convention is a subsidiary instrument to the change in reality. It is none the less the mark against which our Bill today will be judged.
I think the Bill will comply, and the UK can hold its head up among the company of OECD nations. But there is one area where I also should like to press my noble friend the Minister. This is the defence for the security services. I welcome the fact that the Government have tried to meet some of the reservations of the scrutiny committee, but I recall the OECD stricture that while the purpose of national security is a valid defence, other actions undertaken by security services—for instance, in the service of national economic interests—are not. The defence in the current Bill covers any proper function of the security services, which includes more than national security. I see that the Constitution Committee is of the same mind, as well as all previous speakers in this debate. Can my noble friend offer a further narrowing of this defence?
Other noble Lords have enumerated the many positive provisions of the Bill, both in the debate on the gracious Speech and earlier today. Indeed, the noble Lord, Lord Thomas of Gresford, from the Liberal Democrat Front Bench, called it “a beacon”. I will not duplicate what other noble Lords have said, but simply conclude by saying that this is a remarkably good Bill which has made a difficult subject manageable and implementable. Even more good will ensue when it becomes law, and that must be soon.
My Lords, in declaring all my business interests, as the Bill relates to commercial organisations in particular, I should also declare—I hope that this does not shock your Lordships too much—that I am not a lawyer either. Those are the two declarations that I should make at the beginning of my speech.
I have four points to make: on the terrible and terribly corrosive effects that bribery has; on the need for strong corporate cultures, above all else, in civil and commercial society, as the bedrock of any defence against bribery; on the beneficial effects of the new duties laid on companies and, therefore, on their directors—in particular, on non-executive directors; and on the need to ensure that our security, intelligence, police and military are not impeded in any way in their sometimes covert but often life and/or property-saving activities. From what I have heard so far, I may be a sole voice arguing that in your Lordships’ Chamber this afternoon.
First, although I must say to the noble Lord, Lord Bach, that I deplore the length of time that it has taken for the Government to table the Bill after what has been said about the issue since 1997, I am glad that they have done it. I also note that they are doing something that Ministers are usually rightly restrained in claiming, which is introducing legislation with a strong moral component. It would be risky for the Minister to say that in his own praise, but I recognise that. Bribery at home and, in particular, abroad, undermines the rule of law, attacks the excellent principles of fair competition, as the Minister said, but, worst of all, is a morally destructive crime that has devastating effects on the poor and on the human rights of those in our less well off countries.
This happens because bribery often diverts scarce resources in poor countries towards the purchase of inferior products. I have observed that in a business context. It certainly corrupts financial regulators, where there are such persons present in third-world countries, and police forces alike with devastating abandon, and sometimes leads to attendant violence. All those economic and human costs are usually felt most directly by the poor, just as development and democracy are undermined, as the noble Lord, Lord Bach, said in his introductory remarks.
Secondly, although I welcome both the economic and moral purpose of the Bill, all the new sanctions and penalties that it introduces will be of naught to companies where that sort of behaviour has been almost institutionalised unless it is paralleled by deep, lasting and profound corporate cultural change. See a company—I have observed this—where bribery has been used and, generally speaking, you are looking at a company with a weak and devious corporate culture, with scant regard for proper ethical behaviour, little or no ethical training for staff, weak or dismissive board practices and, worst of all, an absolute determination to win contracts at all costs. That characterises companies where bribery has been used—here I speak about western European and, alas, UK companies.
An example of this that has been used before is when such a company comes into receipt of proprietary information concerning products or intellectual property alike that belongs to a competitor who is chasing the self-same enticing contract. Rather than sending that information straight back unread, it uses the information to try to win the contract. That sort of company provides a positive incubating nursery for bribery. The board of that company is to blame, straight and simple. Corporate adherence to the law must always be prefigured by the construction of a strong ethical corporate culture that starts at the very top with the chairman, the chief executive, the chief operating officer and the non-executive directors, as it does in the best of the world's great companies, with ethical training being the norm.
This is certainly not the place for a quick or slow seminar on how all that can be done but, in essence, every employee, great or small, should in such companies have a lively sense of, put simply, whether they would mind what they are about to do in private being writ large in public. That is a very simple test. In other words, would you mind your family or friends knowing what you are about to do, and the media then studiously reporting it? That is the key question. It has the great benefit of also being a very simple question. I have observed good practice in international companies where that is drawn again and again to the attention of individuals.
Thirdly, directors of UK companies are moving into a new world of duties to prevent bribery, which I hope will be no mere box-ticking exercise. Indeed, it cannot be because it will demand a demonstrable set of adequate procedures being put in place to prevent bribes being paid. Only if this is demonstrable will they be able to seek mitigation and to avoid corporate liability. This is the world of strict liability as I, no lawyer, understand it.
I say with respect—which I understand is the correct term to use—to my noble and learned friend Lord Mackay of Clashfern that no amount of guidance from the business ministry will help in this context. It is the companies themselves which, if challenged, must be able to demonstrate that they have those procedures in place; appealing to some bit of ministerial guidance will not help.
It is not for the provisions of Clause 7 to spell out how this defence could be erected—that is not for an Act of Parliament to do. However, it is clear that to do so, companies would be taking a great risk merely to rest on some once-written but then quickly forgotten code of practice, which is dished out to employees on the first day that they come into service but not refreshed on an annual basis. I believe that ethics training on an annual basis is critical. It should start at the top, with the chairman, chief executive and board. They should be trained and refreshed just as much annually as those lower down the corporate structure. In other words, we need to show a continuum of corporate behaviour that illustrates that the culture of ethical behaviour is underpinned in this way.
Doubtless there will be a huge growth in the consultants industry, with people advising boards, for considerable fees, on how to do this. That is not something for consultants; it is for the boards to take on board themselves.
Fourthly and lastly, I am very glad—and thus far I am a lonely voice—that there seems to be reasonable cover in Clause 12, subject to all the forthcoming probing in Committee, for our intelligence services, police forces and Armed Forces, in that financial and related advantages may be in the interests of security. I was saddened to see the inability of lobbying organisations such as Transparency International, which has done useful work, to recognise the need to protect life and limb in this way in extremis. Notwithstanding what the Minister said in his emollient introductory remarks to Transparency International’s suggestions, in its view, recently circulated to your Lordships, it would have preferred Clause 12 to be omitted completely. That is what Transparency International said. This is a grudging acceptance, which I imagine will be played out during the debates on Clause 12; I do not envy the Minister in having to handle those particular debates.
I was equally surprised to see the conclusion of the Joint Committee on the draft Bribery Bill. It says at paragraph 30 on page 88 of volume 1 of its report, published on 16 July 2009, that there was no,
“need for the domestic intelligence agencies to be granted an authorisation to bribe”.
Tell that to those involved with the police or the domestic intelligence agencies which, domestically—not abroad in some conveniently distant uranium enrichment plant in Iran—may, using public money for the covert end of gaining intelligence via an informer, be in a position to prevent public carnage in some terrorist outrage.
I fully accept that I have not read things in great enough detail; I should have consulted the noble Lord, Lord Pannick, for a quick tutorial, because I recognise that having trading standards officers et cetera embraced in this provision is probably a little bit daft, even for someone as robust on these issues as myself. But that said, I believe that it would be entirely wrong to deny domestic intelligence, and indeed police officials, the opportunity to use public money covertly to prevent terrorist outrages. Can you imagine if they did not and there was a terrorist outrage? The whole public inquiry industry would explode around us and many people would make a lot of money from attending to it.
My Lords, as has already been anticipated by the noble Lord, Lord Bach, I shall begin by making a disclosure of my position as chairman of the committee that investigated ethical standards in the company BAE. My experience in that capacity makes it obvious that I should, and do, welcome the Bill. Legislation of this quality was sorely needed, and it is my hope that it will play the part that the noble Lord, Lord Pannick, indicated, by helping to restore the reputation of this country. I have no doubt as a result of very instructive evidence that I received from Transparency International and others, including the OECD, that the lack of legislation was something that they were very concerned about, because they felt that this country was failing to perform its natural role as a global leader of proper ethical standards. I therefore wish the Bill a speedy enactment.
I do, however, acknowledge that the difficulties of producing a workable Bill are great indeed, and obviously the history explains in some way the delay that has occurred in producing a draft Bill that is suitable to come into law. From my perspective, looking at the Bill as a whole, I believe that it is one that we should readily accept. However, as a lay member of the Constitution Committee I draw attention to the committee’s report and suggest that, when one looks at Clause 12, there is a weakness in the Bill in its present form.
I would not base my criticisms of Clause 12 on who is included or not included but would adopt a more holistic approach by suggesting that this provision is not needed. I would suggest that the defence is put there no doubt to give reassurance to those who are referred to. However, if the defence were to be available—and a very heavy burden is placed on those who seek to rely on this defence, having regard to it being necessary to do so—I would be confident that the Attorney-General, if it be the Attorney-General whose consent was required, or one of the three directors who are referred to in the Bill, would consent to a prosecution. It seems to me that if it was clear that what was done was necessary in the public interest, then that is not a situation when prosecutions should occur. It should be no problem for the agencies referred to to be able to inform the law officer or director concerned that that is the position.
As to whether it should be the Attorney-General or one of the directors concerned, I would support it being done by the Attorney-General. Recent experience has shown that there are great benefits in the person who has the onerous task of exercising that responsibility being clearly responsible to Parliament. It is also beneficial for Parliament to be able to question why a consent has not been given. Furthermore, I suggest that the message given by the presence of the defence will be seized on by detractors of this country, in so far as their activities in relation to corruption are concerned, as not giving the necessary support that those who want to eliminate corruption would expect.
The other matter I want to refer to is guidance. Normally, it is not desirable for guidance to enter into areas of criminal law. On the evidence I heard in the committee, I have no doubt that a case can properly be made that this is an exceptional Bill in this respect. What is meant by “bribery” is particularly difficult to define exactly. It is no doubt because of those difficulties that the Minister indicated in a letter of 8 December this year to the noble Lord, Lord Goodlad, chairman of the Constitution Committee, that it is the intention of the Government not only that there should be guidance but that the guidance should be issued before the legislation is brought into force. If the Government have given an assurance of that nature, which I have no doubt the Minister will be happy to confirm today, then it is of not great significance whether it is statutory or non-statutory guidance. What I apprehend will happen is the very difficult situations that can arise will seriatim be the result of decisions by those who have responsibility in this area. A common law will then develop with examples of situations which fall on either side of the line. That there has to be a line, and that it is a grey and indistinct line, is beyond doubt. One already knows of the situations that can occur: we have heard of one example, and I could give many more, showing that the industrial world is not sure how this legislation is to be applied. That it should be applied is of great importance.
It is right, as the noble Lord, Lord Patten, indicated, that there has to be a change of culture inside companies. It is very important that people in these companies should realise what they have to focus on. In practice, what is or is not corrupt is very easy to identify even though it is difficult to define. In particular, it has to be clear that for bribery it is not a sufficient justification to say, “I could not get the business otherwise”. If you have to offer a bribe to obtain business, any company concerned for its reputation will decide not to do that business. That has to be the clear message. It is difficult, in producing a criminal offence, to give that message, but it has to be made clear in guidance. So I welcome that aspect of the Bill.
My Lords, I declare an interest as a member of the Constitution Committee and of the Joint Committee on the draft Bill and as a former law officer who was involved in a number of major bribery and corruption cases during my period in office. I strongly support the Bill in principle, but it is important that we scrutinise carefully its detailed provisions. These cover: first, the law of bribery as it is to apply in the United Kingdom; and, secondly—this is particularly important—the law that in future is to apply to the bribery of foreign public officials.
There is quite properly a strong desire, led by bodies such as the Corner House and Transparency International, to seek to do everything that we can to stamp out the widespread bribery that exists in substantial areas of foreign trade and commerce. But this is a complex area. If the new law is to be successful, it must be drafted with as much clarity as possible and it must be seen to be fair.
Juries are on the whole not at all reluctant to convict for the very nasty criminal offences generally known as bribery and corruption. As the Law Commission has said, in general 95 per cent of the public have a good understanding of what these words mean. The Director of Public Prosecutions confirmed in writing to the Joint Committee on the draft Bill that the state of the current law has not in the past 15 years caused any serious problems in bringing prosecutions. I know from my own experience going back to 1979 that the same was true during that period. The main problem in prosecuting bribery has never been the law; rather, it is the obtaining of the necessary evidence. None the less, during my period in office, some very serious cases of bribery were prosecuted successfully. The first of the Guinness cases, involving Messrs Saunders, Ronson, Parnes and another, was one example of massive bribes. Other cases involved a series of carefully planned bribes in relation to contracts for the supply of expensive equipment in connection with the production of North Sea oil.
Some supporters of the Bill believe that the fulfilment of our OECD obligations, which I strongly support, would produce a radical change. Clause 7 of the Bill imposes a duty on commercial organisations to prevent bribery. This will, I think, have a significant beneficial effect. I was personally impressed by the seriousness with which the duty to prevent bribery seemed to be taken by the representatives of major businesses who appeared before the Joint Committee. But unnecessary or undue complexity, particularly coupled with any sense of unfairness, runs the risk of making offences that in concept, although usually not in execution, are quite simple unnecessarily difficult to prove. I will highlight briefly some of the key issues on which we should focus.
The first—I feel that I have an uphill task in making this point—is the complexity of Clauses 1 to 5 of the Bill and the meaning of “improper”, which has been chosen as the key word to summarise the necessary criminality. I say this with some diffidence, because no one has greater respect for Lord Slynn; I was his first pupil. He had an immensely difficult task and the law commissioners worked extremely hard on this, for which I pay them tribute. However, I share the view of some leading practitioners at the Bar that these clauses are complex and difficult to unravel.
The word “improper” in the dictionary has a large number of meanings that fall well short of criminality—“abnormal”, “incorrect”, “unsuitable”, “ill adapted”, “unbecoming”, “indecorous” and “indecent” are all examples. The noun “impropriety” includes “inappropriateness” and “unseemliness”, as well as the more pertinent “morally improper conduct”. There is a serious argument about whether the concepts of corruption and/or dishonesty should be a requirement of the offence. I think that we need to revisit that carefully.
In one of the leading cases, the Lord Chief Justice, though hesitating over whether dishonesty was essential, handed down a ruling that the conduct must at least have been the “product of an evil mind”, which seems to be a distinction without a great deal of difference. Juries understand well what is meant by “dishonesty” and, indeed, by “corrupt”. Whatever the Bill says, they will be reluctant to convict an individual unless they are satisfied that the underlying conduct was dishonest or corrupt. Provided that the prosecution can marshal and present the basic facts, the dishonesty or corruption of the conduct usually sticks out like a sore thumb.
There are alternative solutions to the present drafting, at which I hope the Government will look constructively and, if we can do a good job, perhaps favourably. One is the Australian solution, which will be well known to the department. It is not as concise as the present law in England, but it sets out the requirements very clearly and has the support of practitioners with a deep knowledge of the subject. The other is to seek to produce—this may involve some rather hard Christmas work—a shorter opening clause or clauses, amalgamating the provisions of the common law offence of bribery and the statutory provisions of the Acts of 1889, 1906 and 1916, each as amended by succeeding Acts and finally by Section 12 of the Anti-terrorism, Crime and Security Act 2001. There is a great deal of overlap in the wording of those Acts and consolidation is a proper and potentially useful approach.
Other matters on which we must focus are the absence of the defence recommended by the Law Commission at pages 128 to 136 of its October 2008 report, summarised at paragraph 7.49, to the effect that the person alleged to have offered the bribe has a defence if they show on the balance of probabilities that they reasonably believed that they were legally obliged or legally permitted to do so by the law of the foreign country in question. That may worry some colleagues and noble Lords who were on the Joint Committee; we had some discussion on it, but it deserves to be revisited. Should such a law be a written law? I am inclined to think that it should, but this is the real world. Some of the more sophisticated countries where this kind of corruption has taken place will probably find it only too easy to produce a convenient written law, but some of the less sophisticated countries may not produce any written law, but may indulge in practices that put the businesses in question in real difficulties. Maybe guidance will help; maybe it will not.
I agree strongly with my noble and learned friend Lord Mackay of Clashfern about the role of the Attorney-General. Noble Lords might expect me to say that. At present, the Attorney-General must approve all such prosecutions. There are not so many that it is an undue burden and I believe that it is beneficial to the proper control by government in its very broadest sense. I draw the distinction between government and the prosecuting authorities, because the Government do not prosecute; it is the independent prosecuting authorities who prosecute. However, it is important that somebody answerable in this House or the other place should have ultimate responsibility for that and should carry it out in as good a manner as humanly possible. Under the Bill, any Crown prosecutor could bring a case. Much more supervision is needed than that. It is not just any Crown prosecutor; it is prosecutors for local authorities and the other major prosecuting authorities.
Your Lordships’ Select Committee on the Constitution made a number of points about the security services under Clause 12. Those points have already been extremely well made by other noble Lords, so I will not repeat them, but this is something that has to be looked at with great care. In my opinion, there must be a law officer or a Minister who is answerable to Parliament.
Finally, we need to tackle the problem of debarment under EU law of any business convicted of bribery or of failing to prevent bribery from ever again competing for an international contract. The United States has been praised, to a great extent rightly, for leading the way in 1977 with its Foreign Corrupt Practices Act, but it has since put together a pretty elaborate scheme of pre-contract clearance. Germany, too, has put in quite an elaborate system: if someone looks like being convicted, you then put the case into suspended animation and in a sense put them on probation so that they do not get a conviction and are not prevented—so long as they behave themselves in the future—from continuing to compete. It is important that there should be a level playing field if we are to carry the confidence of the business community. Indeed, the noble Lord, Lord West, accepted that point when I made it in my speech on the Loyal Address. I hope that the Government will be able to say more about it in the course of our proceedings.
I well understand the Government’s desire to pass this Bill. I shall do everything that I can constructively to help and, I hope, improve it without delaying it. But a flawed Bill could do more harm than good. I wish it well and look forward to playing a part in the future.
My Lords, I was a member of the Joint Committee under the able chairmanship of the noble Viscount, Lord Colville of Culross, which made a very thorough examination of the draft Bill, heard many witnesses and published its report in July this year. In consequence, I come to the Bill now before us with some knowledge of the past legislation and the current proposals.
I say to the Minister at the outset that I support this Bill. The Government have done well to tackle the need for better legislation to deal with bribery and I hope that we can complete the examination of the Bill before the general election. In the past decade, since the United Kingdom signed the OECD anti-bribery convention at the end of 1997, there have been a number of reviews of the United Kingdom’s bribery legislation, including two Law Commission reviews, as well as the draft anti-corruption Bill in 2003, which was not taken forward. Now we are on much firmer ground and I hope that we can achieve this better legislation.
As this is Second Reading, I shall make some broad comments on the Bill. It is a major Bill and a clean-sweep Bill: it sweeps away entirely the Public Bodies Corrupt Practices Act 1889 and the Prevention of Corruption Acts 1906 and 1916 and replaces the common law offences. Clean-sweep Bills are quite rare—we do not have many of them—but I like them. In this case it was a wise decision to go the way the Government have gone. In place of these Acts, the Bill introduces two general offences: the offence of bribing another person and the offence of being bribed. It abandons the existing agent principal system and establishes a model based on an intention to induce improper conduct. We have to ask ourselves whether this is a better system. I say, unhesitatingly, yes. The existing agent principal basis has given rise to various difficulties in establishing how it applies in particular cases; the system now proposed is direct and more appropriate to the investigation and prosecution of this crime.
Although most attention has been on cases or allegations about large defence contracts abroad, it is important to stress—this has not been mentioned much so far—that the Bill applies fully to home-grown bribery in the United Kingdom as well; its application goes right across the board. That is important. It also responds directly to the criticism of the United Kingdom, notably in relation to the OECD convention, and it should be beneficial to our international standing.
In deciding what is expected of a person performing a function or activity, the test is what a reasonable person in the UK would expect. In a situation abroad, where United Kingdom laws do not apply, local practice and custom are not to be taken into account—this is an important point—unless that is required by the written law of the country in question. The net effect of this change is much stricter than the current arrangements.
The Bill creates two new offences. First, it creates the separate offence of bribing a foreign public official. This is closely in line with the OECD convention, on which the definitions draw. It has a wide coverage. However, it is realistic to recognise that there may be cases where a person seeking a bribe is not, strictly speaking, a public official; he might be, for example, an influential member of a political party in the country in question. There are difficulties. None the less, the clause as it stands is certainly justified.
Secondly, Clause 7 creates an offence of failure to prevent bribery, which can be committed only by relevant commercial organisations. Companies or partnerships must obviously examine their organisations to ensure that they do not risk breaching this new clause. I expect the first reaction of companies and partnerships to the arrival of the Bill will be to look at their organisation.
The Bill has an extra-territorial application. In general, I do not like extra-territorial application but bribery is perhaps one of the clearest examples of potential offences that cross the territorial divide. Actions abroad are caught by the Bill if the person performing them is a British national, a person who is ordinarily resident in the United Kingdom, a UK incorporated body or a Scottish partnership.
Finally, I have two points that are not in the Bill but which have been discussed already to some degree. First, there is the question of guidance on the Bill. I welcome the Government’s acceptance, in their reply to the Joint Committee, that guidance on the Bill should be available to commercial organisations. We may discuss this point and the timing more fully in Committee, but I note that the Government propose to follow the model of the Corporate Manslaughter and Corporate Homicide Act 2007 and are to publish guidance before the new bribery offences come into force. I quote the reply to the Joint Committee and I note that whatever we say in this House always has an influence. The noble Lord, Lord Bach, did not say,
“before the new bribery offences come into force”,
“well before the new bribery offences come into force”.
We are always making progress as we go along.
Secondly, I agree with the strict conclusion of the Joint Committee and with the Government that so-called facilitation payments should continue to be criminalised. However, like the noble and learned Lord, Lord Mackay of Clashfern, I have a certain sensitivity about the difficulties of this point. In this respect and in respect of corporate hospitality, it is important that the Crown Prosecution Service should respect very formally the principle of proportionality. This is important generally, but it is also important because the Foreign Corrupt Practices Act of the USA, although it is in many ways an excellent Act, none the less exempts from the bribery prohibition,
“facilitating payments for routine governmental action”.
This, it is explained in a note from the US Department of Justice, would include such action as payment of bribes for loading and unloading cargo and similar activities. So it is a serious point. At the working level for companies that are perhaps not of vast size but have some external trade or contract, these sorts of payments are important; such companies need to be clear that they will be treated fairly.
It is unusual to have a Second Reading debate that approximates to a love fest—I am sure that the Minister will take that on board—but this is a very good Bill and I repeat my view that, subject to the comments that I have made and what is going to be examined in Committee, including Clause 12, the Bill deserves to go on to the statute book.
My Lords, I add my welcome for the Bill. So many noble Lords have welcomed it that the last speaker referred to our debate as “a love-fest”. I am not sure it is quite that, bearing in mind the number of detailed criticisms that have been made, but this is certainly a more soundly based attempt than earlier ones to create a comprehensive, effective law of bribery. It owes a great deal to the work of the Law Commission, especially its 2008 report with the rather odd title Reforming Bribery. I think I know what they meant; it was just that the semantics were slightly odd. The Government are to be congratulated on implementing a major Law Commission report. The Bill will assist in the battle against bribery in all parts of our commercial and public life. I see it as significant for international trade, where bribery and corruption, if they exist, pollute the very basis of trust and integrity which must underpin healthy, mutually beneficial trading relationships. An expansion of world trade is, of course, highly beneficial to the people of the world, but that must be based on the real value of goods and services, not on backhanders that distort true competition. Clearly, if bribery in global dealings is to be adequately combated, improvements and greater clarity in our law need to be complemented by equally strong measures taken by our trading partners. Hence the importance, as other speakers have indicated, of according with the OECD convention and other conventions against bribery across the world.
This Bill is concerned solely with criminal law, but perhaps I might mention something that I think other speakers have not so far referred to. I hope that Ministers can confirm that the civil law in this country can continue to have its uses in combating and acting as a deterrent to bribery. For example, if there is a contracting party whose agent has been given a bribe to induce him to place the contract with the bribe’s donor, the contracting party may sue to recover the bribe and, more importantly, can rescind and remove the effectiveness of the contract. The civil law, usefully, applies irrespective of any proof of corruption.
I believe that the Law Commission was right to concentrate its attention on the value of criminal law in combating bribery. It was also right not only to propose two general offences—which have been described and might be summarised as active and passive bribery—but to propose the new, discrete offence of bribing a foreign official. The noble Lord, Lord Williamson, indicated that there may be problems with the phrase “foreign official”, especially if that is defined too narrowly, because in many countries key people who have tremendous influence may not hold an official post that is registered in the local equivalent of Whitaker’s Almanac, but are none the less influential. The public increasingly resent any possibility of senior company officers trying to hide behind the corporate veil and avoid individual responsibility. I am therefore glad that the Government have accepted the Law Commission’s proposal to follow Section 12 of the Fraud Act 2006 by imposing individual criminal liability on any senior company officer—and that does not mean just directors—who can be said to have consented to or connived at the commission of either of those two general offences in the Bill.
More controversially, Clauses 7 and 8 create a new criminal offence where a commercial organisation fails to prevent the offence of active bribery committed by someone performing services on its behalf. Parliament is generally more cautious about making a sin of omission a criminal offence, and rightly so, but—as others have pointed out—the organisation will have a defence if it has in place “adequate procedures” to prevent persons down the line associated with the organisation from engaging in bribery. There will be a need for a useful discussion in Committee on the guidance that the Government have said they will offer—and whether unofficial, non-statutory guidance to commercial organisations to assist business is sufficient.
Your Lordships will recall that the Law Commission devoted some 20 pages of its report to justifying this new criminal offence, and it claimed support from the earlier report entitled Business Ethics, Global Companies and the Defence Industry proposed by the noble and learned Lord, Lord Woolf, who spoke earlier in this debate.
The noble and learned Lord’s recommendation 9 involves the introduction of a proactive supervisory role at board level over decisions made further down the line that carry risks of unethical behaviour. The noble and learned Lord said that company boards must forbid so-called “facilitation payments”. The use of criminal law is justified by the need to deter companies from giving any support to a culture of bribe-taking. The statements of the noble and learned Lord, Lord Woolf, have been given added impetus by the Law Commission report and now by this Bill.
There is only one other matter that I want to mention because it has been referred to by a number of speakers. I was, as I usually am, impressed by the speech of the noble Lord, Lord Pannick. It was a speech of principle. He was concerned with the rule of law. He was concerned that Clause 12 adumbrates a number of defences that would seem to contravene the rule of law and, perhaps even more important as a practical point, that the Government have not really showed chapter and verse what the occasions are when bribes would have been helpful and would have been useful under some sort of public interest rubric.
I was also interested in the points made by the noble Lord, Lord Patten—not at the moment in his place—in which he referred to examples where a bribe is made to an informer for information and some terrible disaster occurs if that bribe is not given. The noble and learned Lord, Lord Woolf, thought that there was something in that—he will correct me if I am wrong—because he indicated that we do not really need these defences so long as the person whose consent is required for prosecution, such as the Attorney-General, is able and entitled, in the public interest, not to go ahead where the public interest suggests that that would be a bad thing to do.
I welcome the Bill. I look forward to the Committee debates.
My Lords, I must learn to run rather faster round the corridors of this House because I missed the kind words that the Minister offered me at the beginning of his speech. Thank you for those. As the chairman of the committee, I ought to say thank you to some other people as well, starting with my colleagues. We had two excellent clerks. We had the two professors, who were our expert advisers. We had a first-class back-up team. Where would we have been without the oral and written witnesses, who provided the raw material for what we said? I add to that today’s contribution of the noble Lord, Lord Patten—which was backed up by the noble and learned Lord, Lord Woolf—about the way in which corporate ethos ought to be applied to this sort of thing. There was more detail than I have heard before and I would have hoped that it was very useful for the Government. Perhaps this is an occasion when pre-legislative scrutiny by a Joint Committee has proved itself to be a valuable matter.
There have been some comments, particularly by the noble and learned Lord, Lord Lyell—who unfortunately is not in his place—about complexity. Most speakers have not complained about the complexity of the criminal offences that have been, or will be, created by the Bill. I remind the House what happened under the previous law. Professor Horder set it out on page two of the evidence book, stating:
“We started with a law governed by a very vague term, the notion of ‘corruptly’, and the courts themselves could not agree what that meant in law. There are decisions saying it involves dishonesty, there are other decisions saying that does not involve honesty”.
If that is not complex and confusing, I do not know what is. I would have thought it was better to depart from that sort of approach and look at what we have in the Bill.
It is important to have concepts that a jury will easily be able to understand and apply, and it all leads up to that. A jury will have to consider improper performance, and the judge will have to direct them on what that means because there is quite a lot about it in the Bill. The jury will have to look at the question of the good faith of the person providing the funds, and at the expectation point that is set out in one of the clauses.
Complexity could be said to arise from the cases that are listed. Those cases are only examples that the prosecutors will have before them. They will choose one or possibly two of them; they will collect the evidence and decide whether to prosecute and, if so, under what case. They will then draft an indictment with the particulars—in Scotland this would be done by the Procurator Fiscal—and present the case to the jury. On the basis of the facts thus presented, the jury will have comparatively simple decisions to take, and that must be a huge advantage in a matter of this sort. I agree with the noble and learned Lord, Lord Lyell, that one does not want complexity, but that is not written into the Bill at all.
We welcome the Government’s response to the Select Committee’s report. I am glad that they have dropped the question of parliamentary privilege; the Bill was not a good vehicle for that, and it requires more general consideration. I am glad that they have clarified the non-role of the Attorney-General and the handing over of the decisions to the directors of the other prosecuting authorities, which is in their response.
I also mention something that I do not think anyone else has: we now include Scotland. After all, the complaint by the OECD related to the United Kingdom. The original project was only in relation to England, Wales and Northern Ireland, and the Select Committee pressed the Government to see if they could not include Scotland as part of the United Kingdom. This has been done, and I am sure the necessary drafting has been correctly put in.
Then there is the question of Clause 12. I will say no more about that because it is obvious that Committee stage will be much occupied by that point.
I also welcome what has been said about guidance. The way in which companies are going to comply with this legislation is not necessarily going to be immediately obvious to them, and guidance will be very helpful, even if it is not in a statutory form. It must, however, be produced before the offences come into force. That is what the Government have promised, and I am sure that they will do what they say.
The Bill needs to be passed, and I applaud the Government for putting it into the programme for this short Session of Parliament. We have been under criticism from the OECD for a long time for not including anything, including the foreign public officials offence. We now have it for the whole of the UK. Another matter that the Government might like to apply their minds to is whether it can be extended to the Crown dependencies and the Overseas Territories, because they are also under our jurisdiction to this extent and should occupy the attention of the Foreign and Commonwealth Office.
It seems that the Government have covered most of the problems raised by the Select Committee, except for Clause 12. I would suggest to your Lordships that the criminal offences have been very carefully drafted and are workable, and I hope that the House will give this Bill the fair wind that everybody seems to have offered it this afternoon.
My Lords, I would first like to say what a privilege it was to serve on the Select Committee under the noble Viscount, Lord Colville of Culross. It was a model of how to run a Select Committee.
We have come an awfully long way from the time when Talleyrand could pocket a third of the proceeds from the Louisiana Purchase, or Lord Clive could stare into Siraj ud-Daulah’s treasury and state that he stood astonished at his own moderation. We are, as has been said, a pretty honest country.
I was very interested in what my noble friend Lord Patten, who is not here, had to say about the possibility of the police informer being bribed. I could easily be wrong here, but it seems to me that paying somebody to turn Queen’s evidence is not paying him to do something improper but to do something proper. I therefore suggest that the Bill does not cover this. If that is true, it is unnecessary for anybody who has authority in law enforcement or trading standards to have the power to bribe in the United Kingdom. That must be wrong.
To continue on the issue of trading standards, we have had a continual creeping abuse of power under the Terrorism Act, RIPA and SOCA powers. For example, a person was arrested for taking photographs of St Paul’s Cathedral, and I believe the noble Lord, Lord West, was even stopped under Section 44 of the Terrorism Act.
I am involved in running RIPA, the Act to which the noble Earl has just referred. I do not think that either trading standards or the environmental health departments of local authorities would normally be referred to as law enforcement agencies.
But if I am right, powers derived from RIPA have been used on waste disposal instances. That is what I am complaining about. On Clause 12, the Select Committee report states that law enforcement agencies,
“include not only the police, but also HM Revenue and Customs and the UK Border Agency, as well as local authority trading standards and environmental health officers”.
Those people should not be given the power to bribe. To me, it is as simple as that.
I turn to the Army and the secret services. It is perfectly reasonable that the secret services should allow James Bond to bribe the head of SMERSH. Under those circumstances, the head of SMERSH would be acting improperly according to his own lights, but we would want very much to know about it. However, such action should be taken only with proper prior authority.
There is the saying that you cannot buy an Afghan, you can only rent him. The other day it was noticed that the Italians, using traditions that go back deep into the inter-city state politics of the 12th century, bribed the Taliban to keep quiet all around them, and the area was peaceful. I do not know whether that is right or wrong, but it may be possible to argue that such behaviour should be allowed as a public interest duty. It was noticeable that after they forgot to tell the French that they had been bribing, 10 or 11 French people were killed, which was serious. We should not hamper the Armed Forces or the dirty work of espionage agents by not allowing them, with high-level prior consent, to behave in that way.
This is a very good Bill, except for Clause 12. I certainly support it and repeat that it was a privilege to serve under the noble Viscount, Lord Colville.
My Lords, I enthusiastically follow my noble friend’s encomium on the chairmanship of the noble Viscount, Lord Colville of Culross. It was a great privilege to sit on his committee—and also rather good fun.
Many of the points that I might have made on this important Bill have already been made by noble Lords. I hope that brevity will not seem superficial. I cannot refrain from making at the outset of my brief remarks a disgruntled complaint about the rushed pace at which we were obliged to work. Even the Government called it a very challenging timetable. They can say that again, although I hope that they will never have to.
The whole point of a joint scrutiny committee is frustrated if it is not given a reasonable time for its work. I think that the Government acknowledge that we should have been given a minimum of 12 weeks. We were given 10. In consequence, some aspects of our work, notably with oral witnesses, had to be inappropriately curtailed. This was a pity, because the great merit of the Bill and its proclaimed purpose is that it provides for a new scheme of consolidated bribery offences, to cover bribery here and abroad, in place of the hotchpotch of legislation—referred to already—going back at least 120 years. The Minister said that it went back to Magna Carta. This is a long-called-for undertaking which is well worth taking time over to be sure that we get it right.
The definition of bribery in the early clauses of the Bill might have yielded some of its undoubted complexity had we had more time to explore the matter. I am afraid that I continue to find it a real candidate for a cold towel around the head, and I do not envy those who will have to explain it to a jury or, in the case of legal advisers to corporations, to companies. They may well be hard pressed to explain the Act with the confidence required of them by their employers. For my part, at any rate, I shall await with a good deal of concern progressive news of how the definition works out.
It would, however be graceless not to match that disgruntled complaint, and perhaps to exceed it in importance, by congratulating the Government on abandoning the old requirement of a principal-and-agent relationship and, instead, adopting a conduct test. Time will tell whether hingeing that test upon the concept of improper performance of a relevant function or activity will prove more serviceable than relying on the simple—or at any rate, single—adverb “corruptly”. I note the evidence cited by the noble Viscount, Lord Colville, on the varying ways in which courts have treated that. It was obviously an important point.
I am also pleased that for the specific offence of bribing a foreign official the Government have provided that the conduct in question will amount to bribery when the official is neither requested nor required by the applicable written law to be influenced by the offer, promise or giving of an advantage. In other words, it has to be by written law for the conduct not to amount to bribery; evidence of established but unwritten custom or whatever will not suffice to exclude it from bribery. We went into this with witnesses with some care because it is such an important matter—in the commercial context, in particular. We elicited from them that this would be an appropriate and practical formulation and I am grateful that the Government have adopted it in this amended Bill.
Thank goodness, too, that in the new offence targeting companies which fail to prevent bribery by persons acting on their behalf, the Bill no longer focuses on whether a “responsible person” was negligent rather than on the collective failure of the company to have in place adequate anti-bribery procedures. I am grateful for the assurance that we will have guidance in that regard, and I agree with the noble and learned Lord, Lord Woolf, that it does not matter too much whether the guidance is statutory or otherwise. Keeping the concept of negligence would have introduced some quite superfluous complexity when, as I have already suggested, complexity is not exactly in short supply in this Bill, and I am very glad that the Government now agree.
We have heard a great deal about Clause 12 and I do not need to repeat it, save to say that I thought that the noble Lord, Lord Pannick, made an absolutely devastating criticism of the decision to keep it. I think that that is right and I listened with much sympathy to the speech of my noble friend Lord Patten. However, I think that we were right to recommend that the clause be removed from the Bill on the basis of the evidence that had been given. It is worth reminding the House briefly of what is said at paragraph 202 of our report:
“Transparency International UK told us that any decision to pursue these proposals should be taken through a more appropriate piece of legislation”.
I warmly agree with that. Transparency International said:
“While we welcome the Government’s openness in acknowledging that bribery may be used by the security services, we have the gravest doubts as to whether any worthwhile long-term national interest is served. If the security services can make a case for such an ‘opt-out’, they should present it for appropriate parliamentary scrutiny; and it should form no part of any general law of bribery”.
I suggest that it is very hard to argue against that. We said at paragraph 203:
“We heard no persuasive evidence of a need for the domestic intelligence agencies to be granted an authorisation to bribe. Neither are we persuaded that this draft Bill is the appropriate vehicle to extend the security services’ powers to contravene the criminal law”.
The noble and learned Lord, Lord Woolf, made a very telling point when he said that if it can be shown that it is in the public interest for such a course to be taken, that militates conclusively against a prosecution being authorised. That is another good reason why the Attorney-General should retain the jurisdiction that she has at present.
Lastly, and not only as a member of the well-known ex-Attorneys club, I was very pleased to read in the Government’s response to our report, at paragraph 25, that they do not now intend to bring forward any legislation relating to the Attorney-General. As my noble and learned friend Lord Lyell of Markyate said today, parliamentary accountability demands that the Attorney-General’s constitutional role remains in place.
We have waited long enough for an acceptable anti-bribery Bill to meet both our domestic and our international requirements. My strong feeling overall is that this offering deserves our warm support and that we should now get on with seeking to make it even better.
My Lords, the book of Ecclesiastes reminds us that there is no new thing under the sun, and bribery and corruption is certainly one of the oldest institutions known to man. It has riddled the civilisations of China, of Suma, of Greece and of Rome, and of the British Empire, in many respects. It lurks at the very foundation of every community and society in the world to some extent.
The consideration given in the past 14 years to this matter has certainly been comprehensive and rigorous. Indeed, one could start earlier than that with the Salmon commission of 1976, which dealt with the matter, but the real genesis was the Nolan Committee on Standards in Public Life, in its report of 1995. From that point onwards, there has been an irony. One can identify 12 different stages from White Papers, reports, committee examinations—including the sterling work done by the committee chaired by my noble friend Lord Colville of Culross and the work, already referred to, carried out by the noble Lord, Lord Slynn. Therefore, one has the sense of legislative soil that is well harrowed, but somehow, the Bill ended up—if I may mix my metaphors—in a rather vulgar sprint, with more rush than would have been anticipated.
Be that as it may, I am quite sure that the Bill is a progressive development and one to be greatly welcomed. I am sure that the Government were entirely correct in centring on the concept of proper or improper behaviour. Once one has the proper heart, core and kernel, the rest of the Bill falls into place. That is very much as happened with the Theft Bill 40 years ago, when the concept of appropriation suddenly took over from all the difficulties there had been with the previous Larceny Acts. Nearly everything else then fell into place. It may not be all that simple. The point has been made that the definition of impropriety may be embarrassingly wide in relation to certain prosecutions.
I wonder whether the Government have thought carefully about including, in addition to the question of impropriety, the test of dishonesty. Dishonesty is well understood by juries; it was defined very clearly by the Court of Appeal in Ghosh 25 or 27 years ago. The House will remember the two tests. First, the jury has to decide the objective test: is the conduct that has been proven against the defendant such that, according to an objective view, one would regard as dishonest? That is test one. If the prosecution overcomes that hurdle, there is the second test, which is seeing through the eyes of the defendant. Did the defendant appreciate that it was dishonest—not according to his base ideas of honesty, but according again to the standards of ordinary, decent people?
In other words, that is a totally objective test and a subjective test according to objective standards. That may sound complicated, but I do not think that it is. Judges and juries have been able to cope with that very well. Would we lose anything if we had such a test to clarify the meaning of that rather wide term “impropriety” in relation to the main structures of the Bill? I suggest not.
There may be another reason for introducing a reference to dishonesty. The Explanatory Memorandum states that it is not anticipated that there will be a very considerable increase in the number of prosecutions, nor indeed that there will be any greater pressure on prison places. One may ask rather tartly: if you are developing a new mouse trap, what is the point if it does not catch mice? But that is not the point of this legislation; it is more about the deterrent effect that it will have and the new standards that it will more clearly endorse than the number of persons who will get caught by it.
There was a note published by the Library of the House of Commons in April this year, dealing with the Bill as it then stood. It set forward this fact: between 1997 and 2003 the average number of prosecutions each year for this offence was 21. That is a very low figure, especially considered side by side with the average number of prosecutions for the offence of fraud in the same years, which was of the order of 23,000. Nobody would for a moment suggest that only 21 cases of bribery and corruption occurred in the United Kingdom during that period. Nobody would suggest that it was as low a figure as 210 or indeed 2,100.
Offences of bribery and corruption, as every Member of the House appreciates, are very different from burglary offences; you know when those have happened. With rape offences, you will know when some of those have happened, as complainants all too often will not go to the police, although when they do the offences are recorded. The same applies with robbery and so many other offences. Bribery and corruption is not like that. There is often no conscious victim. There is often no overt evidence at all that anybody can track down.
This is where we come to Clause 12. I have the utmost respect for the submissions made by the noble Lord, Lord Pannick, and the noble and learned Lord, Lord Woolf, in this matter. The defences deal with two main areas. One is entrapment, which is not the nicest way of going about a prosecution, nor something that juries like and appreciate. Nevertheless, in some circumstances it is the only way that the root of evil can ever be got at. In many cases the actual payment of money by authorities will be necessary, not because it is right to do so, but because all the other alternatives are worse.
On that basis, we must have one of two things. Either one should have Clause 12, with all the checks and reservations, including the discretion of the Attorney-General and everything else, considered in this matter. Or we might consider including the test of dishonesty in relation to these situations. If you have the test of dishonesty, it may not be necessary to have Clause 12.
The most pertinent remark was made by the noble and learned Lord, Lord Lyell of Markyate, when he said that it is not the law that is the problem, it is getting at these situations and exposing them. Unless there is a commitment by the community to invest money and human resources in order to smell out and root out these situations, then the main problem will remain with us.
I would like to apologise to the House: in the Grand Committee, there is a matter involving the Welsh language, a subject very close to my heart. I would be grateful if the House would forgive me if I leave now—meaning no any discourtesy to anybody who is going to speak—for a matter which I hope will be dealt with shortly. It is not a complete defence, but I hope it will be a substantial mitigation.
My Lords, I too was a member of the committee which considered the draft Bill. I join in the tributes that have already been paid to the chairmanship of the noble Viscount, Lord Colville of Culross, who curbed a number of us—I put myself foremost among the offenders—from asking too many questions and conducted those proceedings admirably.
This is a good Bill. It revises ancient legislation that is completely out of date and that does not cope with the present circumstances. I found the G8 St Petersburg summit communiqué of 16 July 2006 a very good statement of the current problems. That communiqué said:
“Large-scale corruption by individuals who hold senior executive, judicial, and legislative positions can have a devastating effect on democracy, the rule of law, and economic and social development. We recognize”,
said the Governments concerned at the G8,
“that corrupt practices contribute to the spread of organised crime and terrorism, undermine public trust in government, and destabilize economies. Corruption by holders of public office can deter foreign investment, stifle economic growth and sustainable development, and undermine legal and judicial systems. The net effect of corruption is felt most directly, and disproportionately, by the poor”.
That is a concise statement of the problem as it applies worldwide.
My late noble friend Air Marshal Lord Garden, whose departure I much regret, was an adviser to Transparency International on the prevention of corruption in the official arms trade. On 14 December 2006, he said to this House:
“The United Kingdom has a slightly iffy reputation on the use of money to facilitate defence contracts. I should have thought that it was in the national interest to clarify that. If—and I say if—commissions are paid in a corrupt way, it makes for an inefficient defence industry, so we pay more at home for our defence equipment, and it undermines Governments overseas, so we reduce our security”.—[Official Report, 14/12/06; col. 1716.]
That is a very wise insight into the problems of the defence industry in this country.
In introducing the Bill, the noble Lord, Lord Bach, said that he disagreed with the suggestion that the existing law is fully compliant with international obligations. I take issue with him on that. Transparency International has pointed out problems but the OECD working group on bribery also has been active. It has, going back five years, made four demands of this country that we should revise our law. Whereas the signatories to that convention number 36, 35 had complied years ago, but we had not updated our law. The working group said:
“In light of the numerous issues of serious concern, the Working Group has requested the UK to provide quarterly written reports on legislative progress”.
Furthermore, it said:
“Current UK legislation makes it very difficult for prosecutors to bring an effective case against a company for alleged bribery offences”.
That was in its report in 2008. So your Lordships will appreciate that there is a problem which is recognised internationally and that this Bill addresses that problem.
Perhaps I may first refer to the definition of bribery. The noble and learned Lord, Lord Woolf, said that what is meant by bribery is difficult to define exactly, and that is true. It depends very much on the facts and on the context in which gifts are given or awards made. I learnt my lesson very early on, as a pupil, when my pupil master successfully defended a local licensee on something to do with bottles—I cannot remember exactly, it was very small beer. But we succeeded and the licensee sent us both a crate of whisky, which was far in excess of the actual subject matter of the charge. My pupil master, who happens to be the brother of the noble Lord, Lord Roberts of Conwy, said, “One bottle I might accept, but a crate?”. He sent the whole lot back and I learnt a very good lesson. However, I did not follow it entirely because once, in Hong Kong, I was provided at the end of a successful case with a silver plate. It was silver-plated actually, but it had on it an inscription in Chinese which said something about silver tongue or something. It was actually the name of a “Perry Mason”-type television programme, but they put it on this plate. I took it home and hung it on the wall very proudly until a Chinese visitor said, That is very, very nice and commendable Martin, but you have hung it upside down.
It is difficult to define bribery exactly. The noble and learned Lord, Lord Lyell of Markyate, said that this Bill is too complicated; that “improper” means a large number of things. Well so it does. However, it is only in the court that the facts and the context can be investigated and it is only then that one can determine what label one should apply to what has happened.
What should always be remembered by your Lordships is that the prosecution rarely has to prove every ingredient in an offence. There is an issue in a case. Sometimes there are two issues, but generally speaking there is only one. Under current procedures a defence statement requires the defence to define the issue and then an agreed set of admissions will cover many of the facts which the prosecution would otherwise have to prove. That is modern criminal procedure.
Clauses 1 to 5 can be reduced to a couple of simple propositions. First, was an advantage given or received—that might be the issue in the case. Was it to induce a reward or reward a person for the improper performance of a function? Secondly, is that function caught by the act? Is it a function that should be performed in good faith, impartially or in performance of a trust? That is really Clauses 1 to 5. One can pick out the particular ingredient a case is about, define it and simplify it for the jury. Although the wording of these clauses is quite complicated, in fact the case as presented in court will undoubtedly be refined to a very large degree.
A number of issues have been discussed. I refer, first, to the question of guidance. On pages 46 and 47 of volume one of its report, the committee refers to the Foreign Corrupt Practices Act 1977 in the United States which provides that a rebuttable presumption will arise that acting in accordance with advice will mean that no offence has been committed. The Attorney General of the United States is required to provide an advisory service so that a company that is wondering whether a set of proposals could amount to bribery can go along to the Attorney General’s office and get advice.
In Hong Kong, the Independent Commission Against Corruption has brought Hong Kong to the standing of third of the least corrupt countries in the world by its rigorous stamping out of corruption. It has a Corruption Prevention Department which created an Advisory Services Group in 1986 which has advised more than 3,000 private companies. The committee points out, as the noble and learned Lord, Lord Mayhew, mentioned, that there was not time to carry out a further inquiry to explore the ICAC in any detail. It is a body that I have personal connection with over a number of years. Something like an advisory service would be a very good thing for British industry. Indeed, the noble and learned Lord, Lord Mackay of Clashfern, pointed out:
“The Department of Trade and Industry could give guidance. It would not be conclusive but it would be authoritative”.
It so happens that this morning I decided to look at what sort of advisory service is provided by the trade and industry department. It does indeed have one, so I filled in a query form asking how to avoid bribery in a particular overseas country, and sent it off. I understand that it takes around seven days for a reply, and I shall inform your Lordships in due course if a response ever comes.
The tax advisory teams of Her Majesty’s Revenue and Customs provide advice to companies and individuals on whether what they are doing is legal so that they can act accordingly. I was heartened, as was the noble Viscount, Lord Colville, by the reference of the noble Lord, Lord Patten, to strong ethical corporate structures as being the real key to preventing corruption, but I cannot quite go along with him when he says that no guidance will help in the long term and that you cannot rest on something written on a scrap of paper that can be cast aside and forgotten. There is some truth in that, but a proper advisory service might be a good thing.
I turn now to Clause 12. The noble Lord, Lord Pannick, said that exemptions such as those outlined in the clause raise difficult and sensitive questions about the rule of law. That took me back to the statement made by the noble and learned Lord, Lord Goldsmith, in December 2006 where, in talking about the stop put on the BAe investigation, he said:
“It has been necessary to balance the need to maintain the rule of law against the wider public interest”.—[Official Report, 14/12/06; col. 1712.]
That is an interesting balance because I would have thought that the rule of law was the overriding public interest. However, what the noble and learned Lord, Lord Mackay of Clashfern, has said about that is:
“If it is necessary in the public interest, a prosecution should not occur and agencies can inform the director accordingly”.
To my mind, that is the way to go about it. If the security services have sensitive information and need to make a submission to, say, the director of the Serious Fraud Office, surely it is better that it is made at an early stage so that the relevant person, the Director of Public Prosecutions of whoever it may be can consider what is put before him and decide whether it is in the public interest that the prosecution should go forward. There is nothing unusual in that because the two-pronged test of the Director of Public Prosecutions is always this: is there evidence that makes it more likely than not that a prosecution will succeed, and is it in every case in the public interest that this prosecution should continue? How much better to leave it to prosecutorial discretion than to set out a provision that none of the other 35 countries which are signatories to the convention has. I am sure that it highlights the fact that our security services may go around bribing people, which is perhaps not a good thing. So surely it should not be in the Bill that defences of this sort can arise. We say that Clause 12 is quite unnecessary.
It is right that the prosecutorial discretion will now rest with the directors of the various agencies such as the Serious Fraud Office, HMRC and the DPP. We do not agree that the Attorney-General should play any further part in an individual case. I know that the OECD does not control this country, but it has recommended in specific terms that we should ensure, in any amendment to our legislation, that the Attorney-General cannot give instructions to the director of the Serious Fraud Office about individual bribery cases. That is in no way binding upon us, but we should try to remove prosecutions from any political connection. I regard it as unhappy and unhelpful that the redefining of the role of the Attorney-General has been removed from the Constitutional Reform and Governance Bill now in another place, but that is an argument for another time.
I have made some criticisms of the Bill. However, I repeat that it is a good Bill and we on these Benches will do our utmost to ensure that it goes through expeditiously before this Parliament comes to an end.
My Lords, I suspect that the Minister will be relieved to introduce a Bill from the Ministry of Justice at last that has not been met with dismay and criticism from all around the House. It is not, for once, one of those Christmas-tree Bills that we expect to come from that department, when this issue and that issue—all unrelated—are added together, leading to some rather confused debates on Second Reading and rather bad legislation at the end. It is not part of what the noble and learned Lord, Lord Woolf, described in the Queen’s Speech debate as a “torrent” of legislation. It is a single-issue Bill that deals with one discrete subject. The Ministry of Justice should perhaps make more use of Bills referred to by the noble Lord, Lord Williamson, as clean-sweep Bills. That is a good description of a Bill that deals with just one issue and removes other Acts from the statute book, possibly making the statute book better. The noble Lord and his department will find it easier to get their legislation, which will be better legislation, should they follow that line in future.
However, no one could accuse the Government of having produced this legislation in haste. My noble and learned friend Lord Mayhew complained that 10 weeks was perhaps too short a time for the committee to have considered the Bill and that a little more time might have been necessary. It has taken more than a decade for the Government to come up with this Bill since it was first promised. It was the Minister’s boss, now the Lord Chancellor and Secretary of State, Jack Straw, who published a paper on consolidation and amendment of the Prevention of Corruption Acts in June 1998 only weeks after becoming Home Secretary. Although the Law Commission published a draft Bill in March 1998, it was not until March 2003 that Ministers laid their draft Corruption Bill before Parliament.
We then had the Joint Committee, which was chaired, as many noble Lords, including my noble and learned friend Lord Mackay of Clashfern, have said, by the late Lord Slynn. The committee, which was commissioned to examine the Bill, found that its approach to corruption was fundamentally flawed. The Bill was then withdrawn and the Law Commission was asked to draft a new Bill. It was not until March 2009—nearly 12 years after the Government first promised a unified corruption Act—that the draft Bribery Bill was published. That was then considered by the committee chaired by my noble friend Lord Colville of Culross. I join all Members who have spoken today in congratulating my noble friend on chairing that committee. I should say “the noble Lord”, but I say “my noble friend” because many years ago I sat at his feet as his pupil, although I am not sure that much of his talent rubbed off on me.
I congratulate the noble Lord on his committee’s report and those other Members of the House, including the noble Lords, Lord Goodhart and Lord Thomas of Gresford, my noble and learned friends Lord Lyell and Lord Mayhew, my noble friend Lord Onslow and the noble Baroness, Lady Whitaker, on their sterling work on that committee.
And Lord Williamson.
And the noble Lord, Lord Williamson. I apologise for leaving his name out; I will not do so again.
As the Minister pointed out in his introduction, bribery has been illegal under United Kingdom domestic law for centuries and a process of ad hoc reform has led to a patchwork of offences under the common law, the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and the Prevention of Corruption Act 1916. There have been few developments in the law for more than 90 years, aside from the jurisdictions of these offences being extended in 2001 to include acts committed abroad by United Kingdom citizens and companies.
I am grateful to the Minister for confirming that we are nevertheless compliant with our international obligations. I note that the noble Lord, Lord Thomas of Gresford, disagreed on that point. No doubt that is something that we can explore at a later stage.
The Minister quoted the Law Commission, which recently described the law of bribery as,
“riddled with uncertainty and in need of rationalisation”.
We all recognise that, when the Joint Committee was taking evidence in its scrutiny of the draft Bill, all witnesses supported the case for reform, reflecting calls that were first made by the Royal Commission on Standards in Public Life some 30 years ago. Particular criticisms of current law include the use of inconsistent terminology, the artificial divide between public and private sectors and the focus on whether or not an individual is acting as an agent on behalf of a principal, a concept which is both complex and leaves gaps in the law.
I understand that few individuals have been prosecuted under the existing bribery legislation in recent years, as I am sure the Minister will be able to confirm in due course, although a number of allegations have been pursued as part of a fraud charge. No company has ever been convicted under the current law aside from Mabey and Johnson, which recently pleaded guilty to making corrupt payments after self-reporting them to the Serious Fraud Office. The fact that this does not reflect the scale of the problem represented by bribery may in part be attributed to the difficulties in gathering evidence in support of a prosecution, as my noble and learned friend Lord Lyell made clear.
Briefly, although we are broadly satisfied with this Bill and feel that it is worthy of our support, we will look at the fine detail in Grand Committee, as the Minister and the House would no doubt expect us to do.
We have concerns about how the Bill is framed and we will probe, for example how Clause 7 will work in practice. An offence of omission is being created for companies that do not prevent bribery. The defence is vague. We will probe what is meant by “adequate procedures”. One of the core aims of this legislation must be that it is clear and unambiguous. We have heard representations from businesses that seek assurances that they are not going to be left in difficulties because of the change in the law. A great deal may hinge on what sort of guidance is put in place, rather than on the wording of the Bill, and we will certainly be looking at putting down amendments to elicit more information from the Government on this. I was therefore interested that so many noble Lords mentioned the need for guidance; the noble Lord, Lord Williamson, and others particularly stressed its importance. The noble Viscount, Lord Colville of Culross, stressed the importance of the timing of that guidance and of ensuring that it is in place before the Bill comes into force. That it is certainly something that we would want to look at in detail.
We will also examine carefully, as my noble and learned friend Lord Mackay of Clashfern put it, the safeguards that are in place before a prosecution can be made. There are very differing views on what the role of the Attorney-General, as opposed to the three directors, should be; the view of the noble Lords, Lord Goodhart and Lord Thomas of Gresford, was different from that of my noble and learned friends who are sitting behind me. No doubt, again, we can debate the matter in Grand Committee, where we shall want to look at it carefully.
The Minister, my noble and learned friend Lord Mackay of Clashfern and others referred to the report of your Lordships’ Constitution Committee, chaired by my noble friend Lord Goodlad, which is highly critical of Clause 12. Virtually every noble Lord has mentioned Clause 12; I shall not repeat their names. The issues of whether there should be defences for the security services and law enforcement agencies, how wide they should be and whether they will need the consent of a Minister will take up a good deal of our time when we come to deal with them in Committee.
A great many other issues will arise. The Minister referred to parliamentary privilege, although others said that that issue might be for another day and another Bill. A question arose about the facilitation of payments. The noble Lord, Lord Goodhart, referred to the problem relating to subsidiary companies and so on and my noble and learned friend Lord Lyell of Markyate referred to the complexity of Clauses 1 to 5 and whether we need to simplify them. We will explore all these matters carefully.
Having said that, I think that this is a rare example of a Bill that is destined not to change much during its passage through the House. We will wish to examine its provisions thoroughly and we may have to make changes in that process, but, I repeat, we support the Bill and will do our utmost to ensure that it gets on to the statute book before the general election, whenever that might take place.
My Lords, it is a rare—even unique—pleasure for a Minister on the Front Bench to hear such unanimous support for a government Bill. I am not sure that I know enough to say whether I agree with the noble Lord, Lord Williamson, that this is a love fest—or to disagree with him in the way that my noble friend Lord Borrie chose to do—but it must come fairly close to it. I thank all noble Lords who have participated in the debate with a special emphasis and a special conviction. It is clear that the Bill attracts broad cross-party support and that all who have spoken believe that it will provide the robust law that our prosecuting authorities and courts require and will considerably enhance this country’s standing in the international arena.
The noble and learned Lord, Lord Mayhew, almost apologised not only for his cough—which I have, too—but for his grouse at the beginning of his speech; he said it was a minor grouse. However, it was a well-made point about the challenging, as we described it—he had another word for it—timetable that the Joint Committee had to face. Two points can be made about that: first, that it makes the conclusions of the Joint Committee even more impressive; and, secondly, that without the timetable it might not have proved possible to bring the Bill before the House and, it is to be hoped, into law during this truncated Session. The Joint Committee’s work on the Bill is as good an advertisement for pre-legislative scrutiny as there has been so far. Once again, the Government thank the noble Viscount and his team for what they did.
We have listened this afternoon to the many substantial points that have been made and I assure the House that we will consider them with care and do our best in Committee to answer them where we feel it right and to concede to them where we feel it right as well. Let me answer one or two of them this afternoon.
The noble Viscount talked about Scotland. I agree that it is very good news that the Bill will extend to Scotland and I am pleased to say that we have reached agreement on this with the Scottish Government, subject, of course, to the Scottish Parliament publishing the necessary legislative consent Motion, usually named after my noble friend Lord Sewel. As with the Crown dependencies, it will be for them to update the law in the normal way. We are in regular discussions with them; I am the Minister at the Ministry of Justice with that portfolio and I will advise the House in due course on the progress being made with those discussions.
Turning to the complexity of definitions, the noble and learned Lord, Lord Lyell, argued that the general bribery offences in Clauses 1 to 5 were too complex. It is true that, superficially, bribery may be regarded as a straightforward concept, but for the purposes of the criminal law, drafting an offence which is wide in scope at the same time as being readily understood and legally certain is a challenge. There has been other support, from the noble Lord, Lord Williamson, and other noble Lords including the noble Viscount himself, who argued for abandoning the inherently difficult and vague concepts of agent/principal and acting corruptly, found in the existing legislation, and adopting the offence as recommended by the Law Commission. The Law Commission consulted widely on this and possible alternatives and concluded that the improper conduct test was the best possible option and the Joint Committee endorsed that approach. We hope that we have adopted a careful balance between simplicity, certainty and effectiveness.
On facilitation payments, the noble and learned Lord, Lord Mackay, and the noble Lord, Lord Williamson, questioned whether such facilitation payments would be caught by the offences in the Bill. It has also been suggested that criminalising facilitation payments could put UK businesses at a disadvantage compared to their US counterparts, given the Foreign Corrupt Practices Act in the US. Facilitation payments are already caught by the offences contained in the current law and the Bill does not seek to change that position. We are adamant that our objective must be to address bribery in all its forms. We are not unaware of how the real world works, but we believe that tackling petty bribery in itself is a key element in changing the culture of corruption. In the UK, as at present, prosecution will depend on whether the evidential and public interest tests in the code for Crown prosecutors have been satisfied. That code does reflect the principle of proportionality—it may not be in the public interest to prosecute where payments are small; much will depend on the particular circumstances. However, those who continue the practice of making such payments have to be aware of the continuing risk of prosecution. Providing exemptions for facilitation payments, as the US does, is not a universally accepted practice. Such exemptions do create artificial distinctions that are difficult to enforce and have the potential to be abused. Indeed, the OECD, much mentioned in the debate, is today launching a recommendation on this very issue. It highlights the corrosive effect of small facilitation payments and recommends member countries undertake periodically to review their policies on small facilitation payments to combat the phenomenon and to encourage companies to prohibit their use. We do not apologise, then, for the tough stance that we are taking in the Bill, but we very much take the points that have been made in the debate.
There is of course an issue around the position of the Attorney-General and her role in bribery prosecutions, and different views on that issue are seriously held around the House. I would point out that the prior consent of the appropriate authority before proceedings can commence is only required where it is essential to enable a consistent approach to be taken to decisions to prosecute. I remind the House that, in 2003, the Joint Committee found the consent of the Attorney-General was not required for these purposes. We think that a requirement of the consent of the director of the relevant prosecuting authority achieves the right balance on bribery, but I emphasise that that does not affect the superintending role of the Attorney-General over the main prosecuting authorities.
I turn to Clause 7, and the issues around adequate procedures and guidance. A number of noble Lords discussed that issue, including the noble Lords, Lord Goodhart and Lord Williamson, the noble and learned Lord, Lord Woolf, and the noble Viscount, Lord Colville. That adequate procedures defence is designed to be flexible. It is not defined in the Bill, as specific procedures will depend on the size of the organisation, the relevant business sector and the degree to which the organisation is engaged in high-risk markets. The House will appreciate that what is appropriate in a large organisation to prevent bribery may not be appropriate in a smaller organisation, so the procedures should, we think, therefore be proportionate to the circumstances of the particular organisation.
We intend to publish guidance that draws on the knowledge and expertise of stakeholders. We intend it to cover the Clause 7 offence, particularly the adequate procedures defence. However, the guidance will not set out detailed prescriptive standards; rather, we intend it to be indicative by setting out broad principles and illustrative good practice examples of adequate procedures. We also intend the guidance to be available well in advance—there, I have used that phrase again—of the implementation of new offences. The CBI, in its briefing to noble Lords, said that it welcomed the defence of having adequate procedures in place to prevent bribery, and broadly supported that approach. On what constitutes adequate procedures, it welcomed the fact that the Government have agreed that official or non-statutory guidance must be provided, containing broad principles and illustrative best practices. It said that it was also welcome that there appears to be recognition that different sectors operate in different contexts, and that such non-statutory guidance will be produced after the Bill has received Royal Assent but before the offences come into force. The Government are pleased that the Confederation of British Industry has that view of that issue.
There has been a suggestion—the noble Lord, Lord Thomas of Gresford, spoke on this—that a central advice facility, similar to that provided by the United States and Hong Kong, might be beneficial here. The Joint Committee obviously thought about that a lot, and heard evidence on it. It recognised that such an advisory service could be beneficial, but in the end noted that there might be difficulties in establishing such a service in this country, and was concerned about the impact on the independence of prosecutors in particular. We agree with it on that issue and do not think it appropriate for our criminal justice system.
Having said all that, the director of the Serious Fraud Office has indicated that there would be occasions when his office would discuss points of general principle with companies, under what is described as its policy of engagement, including those on proposed mergers. However, he drew a clear line at providing a formal advisory service.
The noble and learned Lord, Lord Lyell, mentioned Article 45 of the EU procurement directive. He asked whether conviction for the Clause 7 offence would trigger mandatory exclusion from participation in a public contract under that article. The article provides that any candidate or tenderer who has been convicted of certain offences, including fraud and corruption,
“shall be excluded from participation in a public contract”,
and a discretionary approach shall apply for all other offences. We believe that being convicted of a Clause 1 or a Clause 6 offence will trigger the mandatory exclusion, as those offences will fall within the ambit of the directive. It would be appropriate for mandatory exclusion to follow, given the complicity on the part of those who manage the organisation and company.
I tell the House, and the noble and learned Lord in particular, that we are presently considering whether a conviction for the Clause 7 offence would fall within the ambit of the directive. In such cases, the culpable conduct on the part of the organisation is not bribery in itself but rather a failure to prevent bribery. I hope and expect to have a definitive answer to the noble and learned Lord’s excellent question on this issue by the time we have reached Clause 7 in Committee.
Will the Minister help me? If a company is badly convicted of one of these offences, is it no cause for redemption if everybody, including the officers concerned, are cleansed and the company shows that it has reformed and made itself clean and upright?
I hope that the noble Earl will not press me on that tonight. It is one of the matters that we will have to consider in deciding what our attitude is towards an offence under Clause 7. However, it is an important point.
I turn to the failure on the part of a commercial organisation to prevent bribery, joint ventures and syndication. The noble Lord, Lord Goodhart, referred to this. He asked about the operation of the corporate offence in relation to the activities of a joint venture over which a company might not have real control. The noble and learned Lord, Lord Mackay, mentioned this point too.
Clause 8(4) of the Bill makes clear that, whether a person or body was performing services on behalf of another,
“is to be determined by reference to all the relevant circumstances”.
It is indeed possible for one person, or a number of people, to be deemed to be performing services on behalf of more than one company. That is sensible if the Bill is to be effective. It depends on the circumstances 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.
Our purpose is clear: we want to encourage organisations which are involved in joint ventures to ensure that they are satisfied that adequate procedures are built into the arrangements for their joint venture. I need to point out that, before an organisation can be held culpable under Clause 7, the prosecution has to prove that the bribe was paid with the intention that business, or an advantage in the conduct of business, be obtained or retained for that organisation. Where this connection cannot be made the organisation will not be guilty.
I will say comparatively little about Clause 12 tonight. I am delighted to see the noble Lord, Lord Goodlad, in his place. I thank him and his committee again for their report. A number of issues arise around Clause 12. I was extremely grateful for the speech of the noble Lord, Lord Patten, at least as far as it concerned this particular clause. He is not absolutely alone. He has me for company at the present time, in defending Clause 12.
The first issue is whether Clause 12 is drafted too widely. My noble friend Lady Whitaker believes it is and many other noble Lords think it is too. She was kind enough to acknowledge that we had already come a long way in meeting the reservations of the Joint Committee.
A similar point has been made by Transparency International. I remind the House that the defence would not cover conduct that would amount to bribery of a foreign public official. Our objective is to ensure that law enforcement agencies, the intelligence services and the Armed Forces can continue to undertake their important functions effectively. There will be occasions when conduct would amount to an offence under the Bill in order to secure intelligence critical to our national security or to ensure the safety of military, intelligence service or law enforcement personnel. It would not be appropriate to criminalise that conduct. However, any person wishing to rely on the defence would have to demonstrate that his or her conduct was necessary in any given case.
I shall quote from what Transparency International said in its briefing to noble Lords on Clause 12; the noble Lord, Lord Patten, referred to part of this in making his point:
“The Government’s earlier draft Bribery Bill provided for authorisation by the Secretary of State for bribery by UK security services. The JSC heard that the OECD Working Group on Bribery had never encountered any law anywhere that expressly authorised bribery. The JSC opposed the proposal on the ground that the Bribery Bill was not the appropriate vehicle to extend the security services’ powers to contravene the criminal law. The Government has responded to the JSC’s recommendations in two ways: (a) instead of giving a wide authorisation to the security services to pay bribes, there is now a more limited defence to prosecution; and (b) Section 12 identifies specific areas where benefit-giving might be considered to be for the public good: e.g. police transactions with informers, military actions in the course of armed conflict and security services. TI-UK would on balance prefer the Clause 12 to be omitted; but accepts that the Government has responded positively to the JSC’s recommendations”.
With regard to the accusation that the blanket defence is much broader than the authorisation scheme of the draft Bill, it is right that the authorisation scheme did not cover the Armed Forces or law enforcement agencies, but the authorisation scheme of the draft Bill allowed a much wider exemption to the provisions of the Bill because that scheme allowed for class authorisations that could provide cover for a range of conduct by a range of people associated, for example, with one or a number of operations conducted by the security services, which could subsist for six months and could be renewed for another six months. In contrast to the authorisation scheme, anyone who bribes will be guilty of the offence unless that person can prove that the defence applies. The defence is case-specific and ensures that the necessity or otherwise of the conduct is tested by reference to the roles of individual people and the particular circumstances of individual cases.
The noble and learned Lord, Lord Woolf, and the noble Lord, Lord Thomas of Gresford, among others, questioned more broadly whether the clause was needed at all; the noble Lord, Lord Pannick, certainly did so in his powerful speech. It is questioned whether the Clause 12 defence of the legitimate purposes of the state is necessary, and it has been suggested that it would be better simply to rely on prosecutorial discretion. Leaving aside broader issues of whether Clause 12 is too broadly set at the moment and includes too many people and too many groups, and dealing with the question of whether we need a Clause 12 at all, I begin to put the case now for the clause. Those who are afforded defence under the clause exercise significant functions on behalf of the public. It is indeed a sensitive area, as the noble Lord, Lord Pannick, reminded us. It is right that the law should afford those people who undertake important functions the reassurances of a defence at the outset if the effective discharge of their functions necessitates conduct that would otherwise amount to an offence.
In conjunction with the Code for Crown Prosecutors, the provision, which gives a clear and transparent statement of the circumstances in which a person otherwise liable for bribery has a defence, would assist prosecutors in deciding whether a case should proceed. Transparent is an important word here. In the specific context at issue, we think our clearer and more transparent approach is more appropriate than allowing such decisions to be made with broad discretion alone. In other words, if the senior prosecutor on such a case decides to prosecute, the defendant should be able to run this defence in front of a jury.
I note the well made criticism that no examples of where this might be material have been given to the Joint Committee or by me to the House today. It is an important point which I will take away to see whether it is possible to bring those examples to the notice of those in this House interested in the Bill.
Clearly, we will return to Clause 12 and other matters in the Bill. My noble friend Lord Borrie asked whether the civil law will still have a role in the fight against bribery. The answer is yes, it certainly will—the Bill does not affect the civil law.
I hope I have dealt with some of the points that noble Lords have raised. Those points will come up in Committee. I thank the House again for its sympathetic reception of the Bill and look forward to debating further matters in Grand Committee after our Christmas break.
Bill read a second time and committed to a Grand Committee.