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Grand Committee

Volume 716: debated on Thursday 7 January 2010

Grand Committee

Thursday, 7 January 2010

Bribery Bill [HL]

Committee (1st Day)

Clause 1 : Offences of bribing another person

Amendment 1

Moved by

1: Clause 1, page 1, line 3, after “if” insert “acting with corrupt intent”

I will speak to Amendments 1 to 4, which are happily grouped together. Indeed, I suggested that they should be grouped together when I tabled them. The amendments seek to add to the Bill the overall comment that bribery should be an offence that should carry, as an essential ingredient, the requirement that it be exercised or committed with corrupt intent. I put down as an alternative that it should be committed dishonestly, but I put forward my “dishonestly” aspect more as a probing amendment. I put it down because I spoke at Second Reading on the relevance of dishonesty and its closeness to corruption. I thought it would be helpful, rather than just to leave it out, to let us explore that so that I can better explain the value to the Bill of adding the words “corruptly” or “with corrupt intent”. The exact words can be better dealt with by the parliamentary draftsmen, but it is the objective of adding “corrupt intent” that I hope to persuade the Committee to adopt.

Transparency International has absolutely nothing to fear from the addition of these words. I am very glad to see both the noble Lord, Lord Thomas of Gresford, and the noble Baroness, Lady Whitaker, in their places.

Yes, indeed. I know and deeply respect the noble Lord’s work for Transparency International. It is not the membership of Transparency International of the noble Lord, Lord Thomas, which I was referring to, but a very pertinent comment that he made at Second Reading. He said that this could all be sorted out in court. He said that by the time we get to court, what might seem complex on paper will all seem clear. I will come to that in a moment.

I say to Transparency International: do not worry. I am not putting this in to make it more difficult to convict guilty people. I am putting it in to make clear what the Bill is about. It is the Bribery Bill and, for more than 100 years what the courts have been dealing with is bribery and corruption. Those words have always been an essential part of the legislation. Yes, there has been some discussion as to whether corruption involved dishonesty. I have looked at all the cases and, with the greatest respect to, I think, Professor Lanham, it is unfair to the courts to say that the understanding of the word “corruption” is in “impressive disarray”. There have been times when learned judges have said that it imports the concept of dishonesty. There have been other times when it has been said that it was unnecessary to bring in the concept of dishonesty.

I am much indebted—as, I think, the Committee would acknowledge that it is indebted—to the work of Colin Nicholls QC. He has written probably the standard work on this subject and has made amendments and prospective amendments to it. He has kindly provided these to the Committee; I am sure the Government and those assisting the Minister will have them. I know Colin Nicholls well, and I respect him very deeply. We have worked on cases together on subjects that bring in his expertise. He is extremely thoughtful. One of the things that he has done for the Government—I have not put this down as an amendment because I want to concentrate on the key point—is to redraft the opening clauses of the Bill in a way that makes them easier to read. I say that with all respect to parliamentary draftsmen, who have done a skilful job. At this stage in our consideration of the Bill, however, I am disinclined to try to redraft the first four clauses. I am not saying that it could not be usefully done, but I ask the Minister to get his team to reflect on it, because in many ways Mr Nicholls’ redraft has much to recommend it.

I return to the advantages that will be gained by making it clear that corruption and bribery still mean very substantially what they have always meant. Without that, the use of the word “improper” may cause considerable difficulty. I am sad to see that the noble Viscount, Lord Colville of Culross, cannot be with us on this occasion; no doubt he will play a part at other times.

The primary source of statutory interpretation in every case is the natural and ordinary meaning of the words that Parliament has chosen to put into a Bill. The words that we are considering here are principally “corruption” and “improper” or “impropriety”. In the most recent version of the Shorter Oxford English Dictionary, the word “corruption” has other meanings, such as bodies corrupting after death, which are obviously completely irrelevant, but as soon as you get to the area of criminality, you find under “corrupt” as a verb:

“to induce to act dishonestly or unfaithfully … to bribe”.

That is the meaning of the word which the Law Commission, as I pointed out in my earlier speeches, said is understood by 95 per cent of the population. I was quite impressed to see that it put the figure so high, but people understand bribery and corruption. Hansard will not be able to write down what I am about to do, but jurymen will well understand the gesture of the backhander. They know that it means bribery and that that is corrupt. They are swift to see it, and they are quite rightly ready to convict for it. It has not caused trouble in the past. I specifically asked the new Director of Public Prosecutions, Mr Keir Starmer QC, to let us know of any instances in the past 15 years when it had caused any problem. He has written to the committee—I have the letter here; the Minister will certainly have it—saying that he knows of no case in which it has caused any difficulty in the past 15 years.

I was quite closely involved in this whole area when I became Parliamentary Private Secretary to Sir Michael Havers in 1979, when we were looking at this whole business of prosecuting the broader areas of fraud. I personally know of no cases in the past 30 years where the legislation, for all its faults and overlapping, which could be tidied up and tightened up quite usefully, actually caused difficulties in prosecution. If the Minister can bring forward examples, it will illuminate the work of the Committee, but I do not know of any such cases. I have looked at all the cases that deal with the question of conflict between the words “bribery” and “dishonesty”.

Those cases are wonderful lawyers’ stuff, in which great names that I remember from my earlier days, such as Lord Hutchinson of Lullington, who was a very famous defender, were putting forward all kinds of wonderful arguments about why the learned trial judge, learned recorder or whoever should or should not have mentioned the word “dishonesty”. I learnt from that, and revised what I said at Second Reading. In the end, what the courts came down to was not to mess about by adding unnecessary concepts. Corruption probably does incorporate dishonesty, as it does in the dictionary definition that I just read out, which says,

“to induce to act dishonestly or unfaithfully”.

The ordinary dictionary meaning incorporates it, but the courts said, “Don’t muddy the waters. Corrupt means tendency to corrupt”, and that is a straightforward meaning.

That has a lot to recommend it over complete reliance on the word “improper”. If we look at the natural and ordinary meaning of that word from the same volume of the most recent Shorter Oxford English Dictionary, there are three different meanings. It can mean,

“incorrect, inaccurate, irregular, wrong”,

or,

“unsuitable, inappropriate”,

or,

“unbecoming, unseemly, indecorous”.

Then there is a wonderful quote from the famous writer Santayana, who said:

“This deportment, undignified on weekdays, was positively improper on Sundays”.

I say that only to give the Committee a little pleasure, but it is obviously a very long way from the criminal context, which is being built around the word now.

I am not seeking to dismantle that context or take away what parliamentary draftsmen and the Law Commission have skilfully and with great effort constructed. I am simply seeking to group them together with one other important concept, which has stood the test of time, which is the concept of “corruption”.

If I am successful, or if the Minister finds favour and we go away and look at this, we shall not be alone in the common-law world. Again, I am indebted to Colin Nicholls QC for this. In the United States federal code, the essence of the offence of bribery is that it should be done corruptly. The object must be to induce the recipient to misuse his official position, and inclusion of the word “corruptly” denotes an “evil motive or purpose”. That idea of evil motive or evil mind was picked up by Lord Chief Justice Parker when one of these cases came before him.

Canada, New Zealand and South Africa all include the word “corruptly” without further statutory definition. In Australia, the offence requires mens rea or a criminal mind, although interestingly at the federal level they choose to use the word “dishonestly” rather than “corruptly”. However, Australian states variously use the words “dishonestly”, “corruptly” or “improper”.

As I said, I looked at the cases right up to the level of Lord Chief Justice and the one most often referred to is the very one to which the Minister referred when he wrote to us after Second Reading—I have his letter here. It is the case of Cooper v Slade of 1858, in which it was said that to do something corruptly is to do an act that the law forbids as tending to corrupt. So, again, there is a concentration on straightforward language which is well understood.

I shall deal with the practical problems and will then sit down. The practical problems were raised partly by the noble Lord, Lord Thomas of Gresford, to whom I have referred. I agree with the noble Lord that, particularly in a great many of the more serious cases, when a case gets to court it will be possible to slot the facts into the fairly complex structure of the present first five clauses of the Bill. They have to be slotted into a structure which basically falls back on five or four other concepts. One is “good faith”. I do not think that that is too difficult; it is pretty clear whether someone has operated in bad faith. The second is “impartially”, which is quite difficult, and I shall come to a planning example in a moment. The next is “breach of trust”. That may be clear because there may be very obvious cases where people are paid money to break trust, but breach of trust is a slightly more complex idea. When we look at what is regarded as “improper performance”, the Bill tells us that it is performance in breach of—and I am about to produce the clearest words in the English language—a “relevant expectation”. That may be regarded as irony, and it is always dangerous to use irony in Parliament, but what is a relevant expectation? In Clause5, we find that a relevant expectation is what a reasonable person would expect.

I come to the interesting exchange at Second Reading between my noble friend Lord Waddington and the noble Baroness, Lady Whitaker. My noble friend personalised it to himself but I shall not personalise it in any way. He said that if someone arriving at the baggage-claim area of an airport wanted to get away and paid a tenner to one of the baggage-handling staff to go round the back and find his bags, that surely would not be intended to be caught by the Bill. In a moment, I shall ask the Minister what he has to say about that.

The noble and learned Lord referred to my presence. I do not know whether he was going to refer to my rejoinder. If not, perhaps I might add for the sake of completeness that I said that if I were behind the noble Lord, Lord Waddington, in the queue and was too poor to have £10, I would regard it as corrupt on his part to have made that facilitation payment.

I am very grateful to the noble Baroness. I must apologise for a serious frailty, which is that I wear two hearing aids; they went dead on me, partly because I was trying to make them clearer, when she was making her point. I now have the loop. Will the noble Baroness be kind enough to make her point again?

Of course. I just said for the sake of completeness that my comment after the noble Lord, Lord Waddington, made that point was that if I were behind him in the queue to get my luggage off the carousel and was too poor to have an extra £10, I would resent his action and consider it bribery.

I am extremely grateful, because the noble Baroness, Lady Whitaker, has pointed up the dilemma. If the person behind in the queue had known that the person giving the tenner was doing it because the baggage included that of his companion who needed to get swiftly to hospital, they would probably take a very different view of it. The difficulty arises from deciding whether we are intending by this Bill to make what in the circumstances could either be well justified, or at least well understandable, but what might also be a selfish act by a rich man for his own advantage, a criminal offence. Is that the criminal offence of bribery which, among other much more major offences, the Bill is intended to capture?

The use of the word “improper”, which I know the noble and learned Lord wishes to expand on in his amendment, suggests to me that those cases are all improper. Whether those with power to consent or not to prosecution would wish to proceed is another matter. If it went to court, again it would go to mitigation. Surely we are talking here not about whether something is a bribe, but whether prosecution is justified.

The noble Lord brings me on to the next part of my probing. In his reply at Second Reading, the Minister made a number of points about both guidance and proportionality. It is important to remember that there are two tests for the prosecution of any offence. The first is whether there is a sufficiency of evidence to give rise to a realistic prospect of conviction before a jury. The second is whether it is in the public interest, which will be much affected by a large number of matters. One may be that it is too trivial to prosecute; another relates to the person committing the offence. Those of us who are older well remember the unfortunate Isobel Barnett, who became a kleptomaniac and was, I think, eventually prosecuted—I have a horrible feeling that she killed herself. Those sorts of things raise very difficult public-interest questions.

Before you give a tip to someone to do something slightly out of the ordinary, should you say to yourself, “I am committing bribery if I give this tip”? Perhaps you are in a hurry for a good or a bad reason and want help from a servant of the airport. If you want to give them a tip in circumstances where the noble Baroness, Lady Whitaker, says it should be the offence of bribery, are you to say to yourself, “It is only the fact that I might be prosecuted which prevents me. I am actually committing a criminal offence”? That is my problem.

I do not believe that we would commit a criminal offence if the word “corrupt” is inserted. If you look at it like that, will a jury say that that kind of behaviour is an offence, although it may be justifiable or despicable in some cases? The behaviour of a cigar-smoking fat cat who gives a tenner just to get personal advantage is not attractive. It is rather improper: I would not like to be seen doing it. But is it the offence of corruption? Is that what we are dealing with here? That needs to be clear in the Bill and not simply left to prosecutorial discretion. That deeply worries me.

The noble Lord, Lord Borrie, may be able to throw light on a planning example: a large store wants to build a superstore on the edge of a medium-sized town, which will have a substantial effect on the high street. Outside Hemel Hempstead, one of the towns that I represented and my first constituency, there are a number of superstores. To a great extent, the main part of the town now consists of estate agents and charity shops. Much business has moved away. Small businesses cannot possibly match the planning gain that a big firm can operate. What is a planning department expected to do? I think that it would be expected to act impartially, but perhaps it is not. That raises one of the difficulties as to the intent of this Bill. I do not think that people would say that a planning department is being corrupt in accepting planning gain on behalf of a community, even though it is heavily influenced by it. It raises a grey area.

If the word “corrupt” is added, people would say, “No, it is perfectly clear that this is not corrupt”. But if you break down impropriety into its factors, it probably matches up with all the factors and you are left with relevant expectation. How do you decide what is relevant expectation? In civil law, that is fine. It is well understood that a council will take that sort of decision, and people accept it. However, we now introduce a criminal aspect to this and say that the same conduct matches the evidential requirements for criminality and that it is only the prosecutor’s individual judgment that stands in the way.

Although I was not able to take part in the debate, the same problem came before this House in relation to the Equality Bill. In the other place, my right honourable friend Michael Howard made the point that it is Parliament and not guidance from government that must lay down the law. I shall come to a close shortly but I look forward to seeing the guidance, about which there are amendments, and it would be of very great help to our debates if at least the first draft of the guidance were available to this House before Report. We would then be able to understand better what is being dealt with in black letter law in the Bill and what is being dealt with in guidance.

My final point concerns facilitation payments. We should remember the United States’ Foreign Corrupt Practices Act. The Americans have in many ways rightly been pushing bodies such as Transparency International to broaden international standards of conduct. That is a very good thing and I strongly support it; I am not trying to put a spanner in the works. However, 11 years after the FCPA of 1977, a major amendment was introduced in 1988 allowing facilitation payments, and questions such as the one raised by the noble Baroness, Lady Whitaker, in relation to a tip or bribe would be dealt with by the facilitation payments aspect of American law. I myself am not very keen on the idea of facilitation payments but, although I am not going to table any amendments to suggest that we have them, they do leave a lacuna.

I hope I have said enough to show that this is a serious issue. I am not trying to put a spanner in the works; I am trying to improve the Bill by making it clearer and using language which is much better tried and tested than some of the comment on it suggests. It has caused no practical problems in the past and would, in my opinion, stand us in good stead in the future.

My Lords, I believe that Amendments 1 to 4 introduced by the noble and learned Lord, Lord Lyell of Markyate, are unnecessary and, indeed, potentially damaging. The requirement under Clause 1 is that the accused person must either have encouraged or be aware of the improper actions by the recipient in relation to the advantage that the accused will be giving or has given the recipient. I believe that that in itself involves and defines corruption on the part of the accused, and I think that it is clearer than just using the word “corrupt”.

Therefore, including in Clause 1(1) a specific reference to “acting with corrupt intent” or “acting dishonestly” is, in my view, unnecessary. Worse, it provides an opportunity for arguing that the new words provide an additional condition that must be satisfied before there can be a conviction. For example, it could be argued that if the accused person did not wish to pay a bribe but was aware that he or she would not get a contract or other benefit which they were seeking without an improper bribe, they are not acting with corrupt intent or dishonesty. However, I believe that coming to the conclusion that paying a bribe with reluctance is not in itself dishonest will undermine the Bill. The Bill intends that it should be a crime not only to offer a bribe, but to pay a bribe however reluctantly.

The same arguments apply to Clause 2, which makes the request or receipt of a bribe a crime by the recipient. I should also point out that the amendment proposed by the noble and learned Lord to Clause 2 is completely inconsistent with subsection (7) of Clause 2. For those reasons, I hope that the noble and learned Lord will consider withdrawing his amendment.

I take the noble Lord's point in relation to the word “dishonesty”. Although I would not give it much credence myself, I could see that the defendant might seek to say that he was not acting dishonestly. But to say that you are not acting corruptly because you are going into a den of corruption and taking part in it does not seem to carry any weight at all. Although I respect the points that the noble Lord has made, I do not believe they are an answer.

With respect to the noble and learned Lord, that simply strengthens the argument that the new wording he proposes is unnecessary. It is potentially either unnecessary or possibly damaging to the purposes of the Bill and for that reason I hope that he will withdraw his amendment. If it goes further, I hope that it will not reappear at Report.

My Lords, it is important to have in mind the situation of facilitation payments that my noble and learned friend mentioned. The question of whether you put in something about dishonesty or corruption in relation to the conduct of the potential briber raises the very issue of whether you wish the Bill to include facilitation payments. If you include facilitation payments, they are not offered corruptly. If you want to exclude facilitation payments, you put in “corruption” and the Bill has that effect, but the two are very closely linked. At the moment anyway, I do not see much possibility of distinguishing them.

As my noble and learned friend reminded us, the United States of America, with experience of its legislation, decided expressly to exclude facilitation payments. That is an important matter of policy. It is more than just a question of the drafting of this Bill: it is a fundamental question of policy about whether we go along with the United States or go in the way that I think the Bill, as presently drafted, suggests.

Facilitation payments are a difficult class of payment. I mentioned some examples at Second Reading and other noble Lords mentioned examples too. The noble Lord, Lord Robertson of Port Ellen mentioned them to the committee and they are referred to in the committee’s report. They include no element of corruption. The easiest example to take is that of the man who turns up with a ticket, payment having been made for flights at an airport. There is an official handing out boarding passes. The man says, “I am absolutely entitled to a boarding pass and there is no question of anything being wrong in giving it to me because I am entitled to it”. But the official responsible for handing them out says, “You’ll get your boarding pass in return for a payment”. “Is that an airport tax?”, the man asks. The official replies, “No. You have paid the airport tax. This payment is for me”. The option is that you either pay it and get on to the aeroplane, or you do not pay it and he declines to give you the boarding pass and you can get no further.

The question is whether we want that to be a criminal offence. It is an important decision. At Second Reading, the Minister explained that we want it to be a criminal offence. That is the essence of these amendments because, as I read them, they do not deal with impropriety on the part of the person concerned. Let us take Clause 1, dealing with the situation affecting P, the person who is supposed to be committing the offence. The impropriety referred to in case 1 is that on the part of the person receiving the money. The improper performance appears in subsection (2)(b)(ii). Therefore, the corrupt intent is being added as a condition of the conviction of the person who, in this case, is giving the money and not the person who is taking it.

The problem is that, in the case I have given as an example, it is very difficult to see that the person entitled to get the favour is in any way corrupt, dishonest or anything of the sort. The person giving the money is doing so in order to obtain that to which he is entitled. Therefore, there is no dishonesty on his part in relation to this matter.

The Government intend, as the Minister made clear at Second Reading—he will tell me whether I am wrong—that the facilitation payments should be covered. If they are, the idea of corruption is therefore out of place. On the other hand, I can see the arguments, persuasively put by my noble friend, trying to get at a crime which involves dishonesty, but there is a question of whether this case does involve dishonesty. That is the substantial and important issue, and it goes much more deeply than mere drafting.

Before the noble and learned Lord sits down, perhaps I may ask for his views on what was said by the Joint Committee on the Bill. It said:

“We agree with the Government that facilitation payments should continue to be criminalised. A specific defence risks legitimising corruption at the thin end of the wedge. At the same time we recognise that business needs clarity about the circumstances in which facilitation payments could be prosecuted, particularly given the difficult situations that can arise. Therefore the basis principles of prosecution policy, which we would expect to adhere firmly to the concept of proportionality, must be made clear”.

Does the noble and learned Lord disagree with that?

I think that there is a question about where proportionality comes in. We are trying to define an offence, and as my noble friend explained, and as the noble Lord, Lord Goodhart, knows well without explanation from anyone else, prosecution requires demonstration that there is evidence that there has been a breach of the statute. Public policy questions then arise about whether it should be prosecuted. I can see that proportionality may come in at the stage of applying the public policy. However, we are here considering whether it is a crime, and that is anterior to, and more basic than, any question of proportionality. It is a question of what, as a matter of policy, this country decides.

As I am not completely sat down—the noble Lord has reactivated me, as it were—I want to give another example that occurs to me. I have seen something of this kind in the past. If you are waiting in a queue to get through a canal, and if you are willing to be—what should I say?—generous to the people who are operating it, you are likely to be through sooner. Indeed, if you do not achieve some degree of co-operation with them in handing out some easement—or back-hander, to use my noble friend’s expression—you will be waiting a long time to get through. It is a question of priorities, and the priority of getting through the canal may not be particularly efficiently or fully explained. But as a matter of fact, that is what happens; unless and until the pourboire appears, you will be waiting in the port anterior to the canal for some time.

Does the noble and learned Lord agree that all those sitting in their barges, waiting to go through the canal, would be dissuaded from giving any pourboire to an official if they knew that they were committing a criminal offence? Is that not the thrust of the legislation?

Yes, of course. The only trouble is that some of the barge people will be from the United States. They will give the pourboire and get through, while the people from the other countries are left behind. We are not living in a perfect world. After hearing the then Attorney-General the noble and learned Lord, Lord Goldsmith, explain what had happened and the decision to stop the inquiry into the business about Saudi Arabia, one of my colleagues said that he realised that we were not living in a perfect world. Sadly, we are not, although it may be that when the Liberal Democrats get going we will be—but that, I fear, is a long way off. We have to take the world as it is.

At the moment, I do not seek to go one way or the other on this point. I want to understand and ensure that we understand that this policy is fundamental to these amendments. We really have to decide this one way or the other in considering the relevance of the amendments to this issue.

Unfortunately, the Minister cannot escape from facilitation payments, even on Amendment 1. I am afraid that they will be around for a bit. In the earlier discussion on the Bill, we decided that we would draw this as widely as possible. That is what we have done. We have included facilitation payments in the Bill as bribes, which is a bold approach and has the advantages of a bold approach. It is fully defensible vis-à-vis international opinion, and so on. However, it has the disadvantage to which the noble Lord referred; that is, that others are not covered by this broad approach, such as traders from the United States.

We have a straight choice between sticking with the broad approach, with its advantages—and let us remember that there are advantages—or go back in the other direction and make some distinct exception for facilitation payments. There is no amendment down to do that, although it is affected by the amendment that we are now discussing. I make the point now, so that I will not have to do so later on, that if we stay with the current approach, in giving advice or making information available to companies, particularly small companies, it is extremely important to emphasise that, although these types of payments are covered by the Bill, there is an existing discretion for the prosecutorial authority. That is a second best in one sense, but it is extremely important that they should understand that because, unlike noble Lords in this Committee, they will not have it all in their heads. Some companies and organisations will be quite worried that what we might call a minute payment of some kind might bring them into serious difficulty. It is very important to keep that in mind when we come to the later stages of the Bill.

I should say, following, the noble and learned Lord, Lord Mackay of Clashfern, that it is pretty clear that the amendments in the name of the noble and learned Lord, Lord Lyell of Markyate, would make the act less easy to prove. As the noble and learned Lord, Lord Lyell, said, the existing law has been there for more than 100 years. That 100 years did not result in a realistic number of prosecutions. I take the view, which I think was implied by the noble Lord, Lord Thomas of Gresford, that the standpoint that one should adopt with regard to the Bill is that it is intended to change culture. The culture has meant that there have been very few prosecutions. It is a culture in which bribery has not been castigated. This is not really the culture in which our best companies live any more. They need the support of this legislation. It is quite important that we resist these amendments, because they would return the law to the vague and inadequate states which the Law Commission decided, quite rightly in the view of the committee, to end.

I am most grateful to the noble Baroness. It is very difficult to say whether there has been an adequate number of prosecutions. My experience as a Member of Parliament is that you learn a lot of things via a side wind; people come and talk to you about all sorts of things. The point that I have been making is that the problem with prosecuting bribery and corruption has been not the law but the evidence. It would be one thing if the noble Baroness knew of lots of cases of bribery—I do not believe that she could—so that she could, if she wished, as I am sure she would, ask the prosecuting authorities why they were not doing something about it; but that is not, unfortunately, the case.

My recollection of the bribery cases that came up is that they were planning cases in which a corrupt person in the planning department was known to be taking bribes from someone else and a sting was set up. Either they were caught in the act of handing over the money or some recording was made. The evidence was there, the case was prosecuted and a conviction was achieved. It is a matter of evidence rather than the law. If the noble Baroness can put her finger on the vague state of the law, as she puts it, I would be happy to know of the cases.

I largely support my noble and learned friend for many reasons which he knows very well, but I am troubled by the example he gave of the baggage handler case, in which someone in the queue says, “I need to get on very quickly. Here’s a tenner. Please go and get my bag out quicker than you might otherwise do”. My noble and learned friend asked whether we really want that to be criminalised and caught by the Bill. What worries me about this relates not only to the point made by the noble Baroness, Lady Whitaker, but to the fact that the baggage handler is paid to do his job without favour.

In my noble and learned friend’s example, the person is asking the baggage handler, “Please breach that requirement of your job as a favour to me”. It would not have been impractical to suggest to the baggage handler, “Look, I’ve got this terrible problem. I’ve got to get to hospital quickly, so can you please have a look”. That would not have involved a tenner. The tenner is there to induce the baggage handler to act corruptly, which is caught by the notion of corruption. If my noble and learned friend could help me with that, I shall be extremely relieved.

I must apologise, first, for being slightly late and, secondly, for letting my telephone off not once but twice, so I grovel before your Lordships.

I find it very difficult to see where a facilitation fee ends and a bribe begins. The difference between the jumping of a queue by a baggage handler and the jumping of a queue via a civil servant to see a Minister in a contract is surely a question of degree rather than fact. The problem of corruption is such that we ought to be as tough as we possibly can on it—it enters into the canker of humanity. On a holiday in India, I watched our driver hand over a dozen or so rupees to a policeman who failed to give him a minor traffic infringement ticket. Had he asked us to reimburse him that, would we have been acting corruptly or would it have been a facilitation fee? The problem is that it is an area which slides. You know it when it is there, but it is very difficult to define a boundary. Even though I sympathise with and can understand the argument of my noble and learned friend Lord Lyell, I go along with my noble and learned friend Lord Mayhew.

Lord Lyell of Markyate: I have every sympathy with what my noble and learned friend said, and with half of the argument of the noble Baroness, Lady Whitaker. I do not like people handing over bribes to get advantage, but I am worried that all this is being handed over to prosecutorial discretion. The good sense of juries may well restore common sense to the way in which the Act is implemented, and it may not have the effect of catching a lot of possibly unpleasant minnows. I quite agree with my noble and learned friend Lord Mayhew that it is much better just to ask the baggage handler to do it and that handing over the tenner is not attractive. If you thought it appropriate to hand over the tenner afterwards—or the fiver; I am terribly Scottish on these matters—there would be no question of your having induced the person, although it might have been a justifiable thank-you. Again, we are in grey areas. We want clarity for the jury, which is why I am proposing the amendment. I do not believe that existing use of the word “corruption” has stood in the way of any significant prosecutions; rather, it has always been the lack of evidence. I do not wish to detain the Committee, but I can think of other difficult examples, such as lorry drivers who are held up at Calais by the French police. They say, “This is intolerable. We are having to put it into our costings”. I write on their behalf to the Minister and get a sensible but, understandably, rather vague reply. I would like bribery to be stamped out just as much as anybody else on the Committee, but I just want a well balanced Bill with language that people understand. That is the difficulty.

My Lords, thinking back to my noble and learned friend Lord Lyell of Markyate’s earlier definitions of impropriety, I hope it is not now improper for me to intervene at this stage on a Thursday afternoon. In doing so, I hesitate after so many interventions from distinguished members of the Select Committee that examined the draft Bill under the noble Viscount, Lord Colville of Culross. The Opposition are very grateful for all the Select Committee’s work in looking into the Bill and for the report that it produced. I am sure the Government will echo this.

Briefly, I have considerable sympathy for what my noble and learned friend has said in arguing that the offences in Clauses 1 and 2 would benefit from redrafting to include elements of dishonesty or corrupt intent in the Bill. I think he was particularly arguing for corrupt intent and less for dishonesty. My noble and learned friend is not alone in that assessment. I think it was the Bar Council that suggested that the proposed offences are technical and exhibit complex features which are likely to inhibit efficient investigation and prosecution.

Having said that—again, I refer to the work of the Select Committee—I am aware that other members of it were not fully in agreement with my noble and learned friend’s arguments, if I can put it as simply as that. They were supportive of the Government’s drafting. On balance, therefore, they may be right. I will listen to the defence that the Minister puts forward for his Bill and we will then weigh that against the arguments that my noble and learned friend has put forward. No doubt he will, if necessary, come back to this at a later stage. At this stage we want to hear the Government’s arguments.

My Lords, the noble and learned Lord’s amendments seek to amend the general bribery offences by introducing the requirement that the person must either be acting with corrupt intent, or acting dishonestly to commit the offence. We are bound, of course, to take seriously any suggestions put forward by a lawyer as distinguished as the noble and learned Lord, who has served as Attorney-General.

The noble and learned Lord has expressed concern about the complexity of the definition of bribery used in the Bill. We have common ground with him in believing that there should be as much clarity and certainty as possible in the formulation of these offences, but we would argue that his amendments will not achieve that effect. Indeed, the effect of adding just those few words—whichever variant one took—would be to alter fundamentally the basis on which the Law Commission, the Joint Committee and now the Government have decided to approach the offence of bribery.

In a sense, that is part of the point made by the noble and learned Lord, Lord Mackay of Clashfern. He argues that, as far as the law is concerned, it is important that the word “corruptly” would, if added, make the position on facilitation payments much clearer than it is under the proposed law. I will come back to that. The noble and learned Lord has, with a true advocate’s skill, tried to persuade us that adding these words would have little effect on the strategy employed or the basis on which the Bill is arranged, whereas it would fundamentally change it.

The concept of acting corruptly is found in the existing Public Bodies Corrupt Practices Act 1889 and the Prevention of Corruption Act 1906, but is not defined in either statute. We would argue that it has proved to be a vague and inherently difficult concept. Courts have expressed differing opinions on whether it involves dishonesty or “doing an act which the law forbids as tending to corrupt”. The Law Commission concluded that the lack of clarity surrounding this concept weakened the effective application of the law.

One of the main planks of the noble and learned Lord’s argument is that his concept of acting corruptly has withstood the test of time. But the analysis of the case law by the Law Commission suggests otherwise. The Law Commission also considered suggestions that the impropriety of the conduct constituting the offence should be linked to whether it was done dishonestly, but decided against such a link in its final report.

As I understood the Minister, he said that the analysis by the Law Commission showed that it had not worked very well. But the cases—I can be corrected from those behind the Minister if he receives the information—of which there do not seem to be more than a dozen, are cases where people have tried to get out of their convictions in the Court of Appeal. I cannot bring to mind one case where a conviction was quashed on the basis of the argument about whether dishonesty ought to have been included. Even the definition of “corruption” which I read out today includes the word “dishonesty”. That is the English dictionary direction. It has not been a practical problem. The Law Commission’s paper does not give any evidence that it was a practical problem, but if the Minister knows otherwise he will tell us.

I can only quote from the Law Commission’s report. Paragraph 2.33 states:

“Both the 1889 and the 1906 Acts require the defendant to have acted ‘corruptly’, but neither provides a definition. The majority of the House of Lords in Cooper v Slade (1885)”—

the case that the noble and learned Lord mentioned—

“took the view that ‘corruptly’ did not mean “dishonestly” but rather ‘doing an act which the law forbids as tending to corrupt’. This was thrown into doubt by Lindley (1957) … which suggested that dishonesty must be proved. Yet Smith (1960) … and most recent appellate authority Wellburn (1979); Harvey (1999); Godden-Wood (2001) have favoured the earlier view, requiring proof of intent to corrupt without needing dishonesty. The lack of clarity surrounding this critical adverb weakens the effective application of the law of bribery”.

I am most grateful to the Minister. Of course, I have read all that and I have looked at the cases. Yes, that is what the Law Commission has written in its report and I have great respect for the Law Commission. But when one looks at the cases, one sees that it has not caused people to be let off. A thoroughly sensible reason, which is why I have withdrawn from my liking for the word “dishonesty” in the Bill, although I have put it down simply to probe today, is that it is unnecessary. As many of my noble and learned friends present in Committee know perfectly well, if you have got an established formula, the Court of Appeal is very sensibly not minded to shift it. That is why use of the words “tending to corrupt” would be a wise decision. The word “corrupt” is clear in its dictionary meaning. Unfortunately, that is not true of almost any other words in the Bill. That is why it would be beneficial.

Does the noble and learned Lord accept that the problem is not cases that were quashed, it is cases which were never brought in the first place because the law did not permit proper evidence?

It is true that the DPP claims to have looked back only 15 years, but 15 years is pretty significant given that this has—quite rightly—been a high profile matter for the past 10 years. He says that it has not caused a problem.

There may even be cases that were brought before the court but which the jury for some reason or other acquitted because of the state of the law. Those are matters that would not be in the law reports in the same way as the cases quoted in the Law Commission's report. I must move on.

The Law Commission also considered suggestions that the impropriety of the conduct constituting the offence should be linked to whether it was done “dishonestly”, but it decided against such a link in its final report. The Law Commission was particularly concerned that it would effectively create a defence that conduct that would elsewhere have been a corrupt action was undertaken only because the business environment was known to be steeped in corruption. For example, expert evidence might be provided as to the typical nature of the payments made in different business environments overseas. That would also weaken the effective application of the law.

The Law Commission considered the alternative approaches to the formulation of the general bribery offences in great detail and consulted widely on them. Its report, however, recommended that a model based on improper performance was the best possible option. Under that model, an offence is committed where a financial or other advantage is given to induce or reward impropriety in relation to what is described as a relevant function or activity. There must be an expectation that the relevant function or activity is to be carried out in good faith, impartially, or the person performing it is in a position of trust.

Following that model, Clauses 1 and 2 set out two active and four passive bribery cases that describe the conduct of the payer or the recipient that will constitute a bribery offence. Those cases can be readily understood and provide the required legal certainty. I recognise that the terms “good faith”, “impropriety” and “position of trust” are not defined in the Bill, but they are readily capable of being understood by juries in the relevant context of the case without further elaboration.

I now come to the Joint Committee, on which many noble Lords present and others served with distinction. The Joint Committee on the Draft Bribery Bill endorsed the “improper performance” test proposed by the Law Commission. It commented that,

“the reliance on a reasonable person's expectation of “good faith”, “impartiality” and “trust” represents a careful balance between simplicity, certainty and effectiveness”.

As a consequence of the Joint Committee’s report on the draft Bill and the Law Commission's view, when publishing the Bill the Government came to the view that this is the right approach.

The noble and learned Lord, Lord Lyell, asked some questions about planning gain in particular, which I must attempt to answer. As he knows, Section 106 of the Town and Country Planning Act 1990 allows planning gain in the UK. It obviously follows that compliance with the statute will not amount to improper performance.

The noble and learned Lord asks very pertinently what are our intentions regarding guidance. I hope that we will shortly come to a debate on guidance. My noble friend Lord Tunnicliffe will outline our approach in more detail and some of the matters that we intend to cover in our guidance. We hope to expand on this in time for Report but we also live in hope that we will reach that stage of the Bill by the end of this month of January. Everyone knows the constraints to getting this Bill on the statute book. I cannot, therefore, undertake to have a draft of the guidance available by the time the Bill leaves this House.

On the baggage-handler example, we find the answer put forward by another noble and learned Lord and previous Attorney-General—the noble and learned Lord, Lord Mayhew—fairly convincing. I am left with the arguments referred to by the noble and learned Lord, Lord Mackay of Clashfern, in relation to facilitation payments, and the speech he made on Second Reading also covering that issue. He is right that we do not live in a perfect world—we are unlikely ever to do so. However, without sounding too corny, trying to make it a little better in this regard is not a bad motive. That is what the Bill does, and it is intentionally an attempt to strengthen the law in this field so that it catches people who are guilty of improper conduct. I do not believe that anyone will disagree that that is a good thing.

The noble and learned Lord points out that we have to make up our minds about facilitation payments. That is his main point, and he says that we cannot have it both ways—we cannot say that facilitation payments are fine and at the same time want to strengthen the law. The point I want to make is that the official handing out the boarding passes, in one of his examples, will undertake improper conduct by accepting the facilitation payment. Therefore, the receiver of the bribe will have acted improperly. If the person paying the bribe believes this to be the case, he or she will also be committing bribery under Clause 1(3) of our Bill. That is what we intend. We do not believe that under this law the question of whether a person is liable will be different from that under the current law.

With respect, that is the doubtful issue. I do not believe that the person paying in that situation is necessarily corrupt in any sense. He wants to get what he is entitled to and there is a force majeure, as far as he is concerned, in the way of his getting that, so he pays. If one tried to prosecute such a case under the corruption arrangements which presently exist, the prosecution would have a pretty good chance of failing. That is why I believe that the corruption point made by my noble and learned friend Lord Lyell is fundamental to the policy of whether you include facilitation payments. The point about the previous law and so forth is aside from this issue. Whatever we are doing, we are adding to the existing law by introducing facilitation payments whose previous existence is at least doubtful.

I am sure that some of the people who have handed out money to get a boarding pass would regard themselves as utterly law-abiding, never thinking for a minute that there was anything corrupt about it. However, I can see the force of introducing the provision because it tries to get at the corruption that demands the money. When you make it a crime to give money in that situation, it may tend to discourage people from asking for the money. In order for it to be universal, everyone would have to do it. However, I can see that there is an advantage in being first to do it, although certain practical disadvantages might arise, as I illustrated in my answer to the noble Lord, Lord Thomas of Gresford.

I accept what the noble and learned Lord said in the sense that it is not worth us debating whether the current law would deal with the situation. What we are concerned about is what is in the Bill. However, it is worth mentioning that the prosecutorial discretion is the important point. If we intend to cover facilitation payments in this Bribery Bill, it is important that prosecutions are brought proportionately and not unnecessarily. We can rely on the code and the way in which prosecutors carry it out in being fairly confident that on the whole sensible decisions will be made.

I am about to sit down. I have already prayed in aid the Law Commission and the Joint Committee and I finally pray in aid the speech that the chairman of the Joint Committee made at Second Reading, when he powerfully but gently made the point that what we were proposing in these early clauses was the proper way to go. In spite of the advocacy of the noble and learned Lord, Lord Lyell, the Government are not persuaded. We think that we have got it right here, and I ask him to withdraw his amendment.

Since we are in Committee, I may be permitted to speak in support of the Government’s approach. Bribery and corruption in this country has been underprosecuted in the past. One reason for that is that it has not been clear. Let me take the noble and learned Lord, Lord Mackay, a step further and refer to a case that I have referred to before. It is clear in my own mind what happened on this occasion. A property developer paid money to the local authority official. When arrested by the police, he was most indignant, asking why they were arresting him for paying over £1,000 to the official. He said that it cost him £10,000 a year to do his job. He did not think that he was acting dishonestly; he thought that it was the price to pay and that he was in a force majeure situation. However, he was prosecuted for bribery. The great issue in the case—which is why it is in Archbold—was whether the words, “It costs me £10,000 a year to do my job” were admissible in that case. In fact, they were excluded, although I shall not bore your Lordships with that, and he was acquitted in due course. But that just shows that you can start by paying a facilitation payment for your boarding ticket and end up paying an official to grant you planning permission.

In certain areas that culture has spread widely. There have been very famous cases, such as the Newcastle case—without naming names—of that culture, supported by the nature of the law at that time, which was not clear enough. It was not simply a question of evidence; there was more to it than that. In my experience, over many years at the Bar and as a solicitor, bribery cases have been very few and far between. I do not think that we live in a corrupt society, but there have been areas of corruption that have not been properly tackled. That is my first reason for saying that bribery has been insufficiently prosecuted in this country.

My second reason is the amusement and disdain shown by the officials of the Independent Commission Against Corruption in Hong Kong, with which I have had a lot of dealings—on the opposite side, I must say—about the way in which bribery is not stepped on in this country. Hong Kong is third in the Transparency International tables for non-corruption, while we are 17th and China is 45th. That gives some idea how an organisation like that clamps down on bribery and corruption; it brings many cases and has altered the climate within a community of some 7 million or 8 million people. This Bill is designed to prevent corruption, and not simply to assist in prosecution but to make it obvious to everybody that the simple act of becoming a party to an official corruptly receiving a sum of money or advantage of some sort is in itself a criminal offence, even though force majeure operates in that situation. We are changing the climate with this Bill, which is why I support the Government’s position.

I am most grateful to all noble Lords who have taken part in this debate. I am glad that I initiated it because I think it has thrown quite a lot of light on the real issues here. I am most grateful to my noble and learned friend Lord Mackay for tying it in so firmly with the very difficult question of facilitation payments. I suspect that that will come back to haunt us.

As I said, I entirely agree with my noble and learned friend Lord Mayhew, and with the noble Baroness. I do not want a world of corruption. I agree with the noble Lord, Lord Thomas: I want us to bear down on this. My first job before I came to the Bar was in Newcastle. I have forgotten the name of the fraudster, beginning with P, who gave a name for corruption to that whole area in the north-east.

It was absolutely and completely scandalous and should have been clamped down on much, much harder and much sooner; I suspect that with the will there would have been the evidence to do so. He was eventually convicted and rightly sentenced to a very long term of imprisonment.

At the end, my noble and learned friend Lord Mackay brought out the links with extortion and demanding with menaces. That is probably a legitimate defence to some aspects of this kind of so-called facilitation payment and might provide a genuine example. The noble Lord, Lord Williamson, has told us privately of some really terrible examples of the kind of demands that can be made in utterly corrupt circumstances where ship owners and stevedores and so on are completely placed over a barrel. I, as much as anyone else, want to see that stamped out.

I intend to withdraw the amendment at this stage but I remain anxious because we are not in a world where this matter is treated in the same way. As I said, the Americans put in the elaborate facilitation payment scheme, which one would like to know more about, and I hope that before we get to Report the Minister will be able to be even better informed than he is at the moment. We are in a world where other common law jurisdictions are using precisely, or very nearly, the language that I am suggesting we should stick with. However, we have had a valuable debate and for the time being I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Amendment 2 not moved.

Clause 1 agreed.

Clause 2 : Offences relating to being bribed

Amendments 3 and 4 not moved.

Clause 2 agreed.

Clauses 3 to 5 agreed.

Clause 6 : Bribery of foreign public officials

Amendment 5

Moved by

5: Clause 6, page 3, line 42, after “is” insert “corruptly”

My Lords, the previous debate having made it clear that we are broadly content with the approach taken in the drafting of Clauses 1 and 2, I wish to explore the operation of the third offence in the Bill—that is, bribing foreign public officials. I propose three simple amendments. In moving this amendment, I shall also speak to Amendments 6 and 7. As I think the Committee will recognise, they are merely probing amendments to allow your Lordships to consider the offence, under Clause 6, of bribing foreign officials.

Much of the way in which Clause 6 is designed to operate depends on what is allowed by the written laws of the foreign country in question. I am aware of the recommendation by the Joint Committee that the Bill should refer to “written law” to avoid any loopholes. There is much merit in that approach and I do not seek to overturn or undermine it.

The three amendments which I have tabled refer more to the behaviour of the person who might be said to be offering the bribe, called P in the Bill; namely, that they would be acting with a corrupt intention to gain an undue advantage in business by offering an improper financial advantage. That may be overloading somewhat on the nefarious adjectives, but will the Minister explain clearly where the distinction will be drawn in deciding what bribery is?

The explicit reference to the written laws means that established custom and practice would not be taken into account. For example, if it is established practice for a ship’s captain to pay a harbourmaster in a foreign country what we might euphemistically call an “unofficial” fee to dock and unload, I am sure that the Minister would agree that that would amount to a facilitation payment. Noble Lords will know that the United States, for example, has a defence where small facilitation payments are involved. I, however, share the view of the Joint Committee that facilitation payments should remain criminalised, but by focusing on the intention of P and the nature of the payment, it may be easier to retain the concept of proportionality in prosecutions. My amendments would direct prosecutors to the nature of the bribery to determine whether a prosecution is proportionate, rather than to the study of foreign laws, where a written provision may simply not exist to cover a practice or custom.

While I raise that point as a matter of general debate and look forward to hearing the views of the Committee, I have a specific question for the Minister. Have the Government made an assessment of any impact that Clause 6 might have on British companies operating abroad? Will it, for example, disadvantage them in cases where other OECD nations operate according to local custom while their UK counterparts must strictly observe the local written laws?

I wish to develop a further point. The Government have said that they do not seek to outlaw legitimate expenditure, such as reasonable corporate hospitality. Will the Minister expand on where that line might be drawn? I take a possible example: that of a British company that wishes to demonstrate its product to officials from a foreign state and then flies them to its headquarters in the United Kingdom for a demonstration. If the company were to put up the officials in a hotel, it might seem reasonable. We could then argue—I think of noble Lords’ expenses—whether a three-star or a five-star hotel might be reasonable, but that is better left to prosecutors. But we might consider a scenario involving officials from two countries who are put up in a hotel, but the laws of one of those countries are silent as to whether that is permitted. What about that scenario? Would the United Kingdom company be committing bribery of one set of officials but not the other, even though it is behaving in the same way towards both? Would it matter if one set of officials ended up purchasing the product, and the others did not? We could speculate on possible, if implausible, scenarios all day, but clarity on the operation of Clause 6 is necessary. How will legitimate expenditure be made distinct? Would the Government be prepared to consider a specific defence for reasonable hospitality? Will advice be available from the Government on potentially confusing cases where the fact of bribery depends not on the intention of P, but on an understanding of foreign written laws?

As I said, I merely wish to debate the measures, not signal any particular disagreement with them. I shall listen carefully to what the Minister has to say in response and, for that matter, what other Members of the Committee have to say in relation to the question I posed about Clause 6. I beg to move.

My Lords, Amendments 5, 6 and 7 in the name of the noble Lord, Lord Henley, seek to qualify the Clause 6 offence of bribery of a foreign public official. They seek to do so by limiting the offence to cases where a bribe is intended to corruptly influence a foreign public official in order to obtain an undue advantage in business by offering to give the official an improper financial or other advantage. We believe that these amendments are undesirable and I am grateful for the opportunity to explain why.

As the Committee will be aware, the current clause makes it an offence to bribe a foreign public official. Unlike the general offence, this clause only covers the offering, promising or giving of bribes and not the acceptance of them. Also, unlike the general offence of bribing another, culpability is not premised on any intention to elicit improper contact, although this will often be the case. The Clause 6 offence is formulated so as to avoid the need to identify precisely the nature of the functions of and duty owed by foreign public officials. Such matters have proved to be one of the difficulties experienced by prosecutors in this kind of case under the current law.

Because of its special focus, the Clause 6 offence describes bribery in a different way to the general offences but, equally accurately, describes conduct that would be characterised as corrupt by all right thinking people. We submit that the clause achieves its purpose without the need for the additional language proposed by the noble Lord, Lord Henley.

Let me explain why. First, the person giving the bribe must intend to influence the recipient in the performance of their function as a public official. Secondly, the bribe must be intended to obtain or retain business or a business advantage. Lastly, the advantage finally or otherwise offered, promised or given to the foreign public official is defined as a bribe when the foreign official is neither permitted nor required to be influenced by the offer, promise or goods as determined by the application of written law.

I appreciate that the noble Lord may be seeking to reflect in the offence normal business practice. Of course, it is the very nature of a business in a free market that one company will seek a business advantage over another, but such an advantage must be secured through honest and legitimate means. Contracts should be won by presenting a tender that represents for the client the best value for money and not by offering additional payments or advantage to secure the contract. Qualifying Clause 6(2) by referring to an undue advantage in the conduct of business could provide a let out to a person charged with a Clause 6 offence. I can foresee endless legal arguments over whether the advantage the defendant sought to secure was or was not an undue advantage.

The same can be said of the proposed qualification in subsection (3). In the absence of a clear definition, where is the line to be drawn between, on the one hand, a financial or other advantage and, on the other, an improper financial or other advantage? If the noble Lord’s intention is that the concept of impropriety in Clauses 1 and 2 should equally apply here, there would be a need to identify precisely the nature of the functions of and the duties owed by foreign public officials. This is precisely what the model in Clause 6 seeks to avoid. Experience shows that such a requirement places significant difficulties in the way of effective prosecutions in cases of this kind.

In both cases, the additional words introduce an unnecessary and added complication. They represent additional matters for the prosecution to prove which could undermine the value of the bespoke offence. In using the words “undue” and “improper” the noble Lord may be probing whether the wording should more closely follow the wording of the OECD convention, which is the source of this bespoke offence. However, we believe that the offence in Clause 6 fully achieves the purpose and effect of the offence in the convention as drafted. It has the backing of the Law Commission, the Joint Committee and the OECD itself.

Amendment 5 seeks to insert the term “corruptly” into the clause. As my noble friend Lord Bach indicated in response to the first group of amendments, we are having considerable difficulty with the use of this term. It is an inherently difficult and vague concept found in the existing statutory offences. We have made a conscious decision to abandon its use in the Bill. The use of the word “corruptly” here will inevitably require the courts, in searching for the meaning of the word, to revert back to old, inconsistent case law and thereby introduce another level of unnecessary complexity and uncertainty. It would allow the old and failing current law, which we intend completely to reform, to haunt the application of the new law from beyond the grave.

The noble Lord, Lord Henley, raised a number of points which I shall now do my best to deal with, with the caveat that if I say anything that needs correction I will write to him and other Members of the Committee.

On the issue of whether custom and practice will be a defence, it is quite clear that it will not be. That is why there is a specific reference to the written law. Ignorance of the local law will not be a defence in relation to the offence in the Bill. Those involved in international business activities should have ready access to legal advice on the legitimacy of payments to foreign officials and should think twice before offering, promising or giving advantage to foreign officials. The Joint Committee fully considered the impact of the Clause 6 offence on bona fide commercial activities such as corporate hospitality. In its report at paragraph 147 the Joint Committee noted that the prosecutorial discretion would be able to differentiate the good from the bad in respect of corporate hospitality and was content with this approach. The evidence of Professor Horder of the Law Commission was highlighted in the report, which stated:

“Might it not be said, then, that ‘improperly’ should be tacked on as an adverb after ‘influence’ so as to distinguish legitimate from illegitimate hospitality? … The answer is ‘no’ because that would inevitably re-introduce questions about whether cultural norms and expectations can make a payment ‘proper’, and that is exactly the result that this offence is designed to prevent”.

Should there be a defence for reasonable corporate hospitality? We do not believe one is needed. The offence applies only to advantages given to foreign public officials which are intended to influence officials and to obtain or retain business. This will not necessarily be the case in respect of hospitality. To the extent that any corporate hospitality might be caught by this division—which will certainly not generally be the case—it is appropriate for prosecutors to take a view on where the public interest lies. It is unlikely that reasonable hospitality to foreign officials will attract the interest or action of enforcement authorities.

I hope that answers, at least in part, most of the questions posed by the noble Lord, Lord Henley. We shall of course examine his remarks with great care and consider whether there is any further information that we might sensibly provide in writing and, if so, we shall write to him. On that basis, I ask him to withdraw the amendment.

My Lords, perhaps I may draw the noble Lord’s attention to a small point on subsection (3)(a) which refers to P bribing F,

“if, and only if … directly or through a third party, P offers, promises or gives any financial or other advantage”,

and so on.

Paragraph (b) says:

“F is neither permitted nor required by the written law applicable to F to be influenced in F’s capacity as a foreign public official by the offer, promise or gift”.

Would it be better if it said “other advantage”, because it is really referring back to paragraph (a)? Changing the wording to “gift” suggests a possible difficulty with corporate hospitality, although it is hardly a gift. I raise that as a matter that might have a slight bearing on the amendments.

My Lords, I spent a lot of time going through this clause, trying to find the places where questions would be asked, but I did not notice “gift”. It is a well made point and we will reflect on it.

The Minister referred to the OECD requirements and laid proper emphasis on the question of undue hospitality. I may have missed it, but is the concept of undue hospitality reflected in the Bill? If it is, that will at least narrow the degree to which one has to rely on prosecutorial discretion. My only concern, as it was in my previous interventions, is that the extent of the law should be clear and that every instance of giving hospitality should not constitute a crime, which is only not prosecuted because of prosecutorial discretion. I do not think that that is the Government’s intention; I think that it is that there should be some threshold that you would have to reach before a prosecution would even begin to think that there was a crime. If any clarification can be given on this, I would be most grateful.

My Lords, my understanding is that the Bill does not at any point define undue hospitality, but the very fact that I have read into the record the evidence from Professor Horder and the Law Commission about how that should be considered meets the idea without using the word “undue”. The essence of it is to influence the official, and the issue is about whether it is allowed in local or written law. I do not think that I can go further today on corporate hospitality. We will see if we can come back with more detail at a later stage.

My Lords, this hospitality business is extraordinarily difficult. I think that we all realise that. Company A and company B are both attempting to sell a product to a foreign buyer, who says to company B, “I had lunch with company A two days ago and they took me to a Happy Eater”. Company B says, “Ah, I think that we can do a bit better than that—we’ve booked a private room in Claridges”. I have obviously exaggerated in that case, but where do we go and how do we get round the problem and where do we draw the line? We do not want the Claridges syndrome to work but, equally, it must be reasonable to take them to the Onslow Arms as opposed to the Happy Eater.

I have not been to the Onslow Arms, but I am sure that it is a very reputable place.

The Minister described my amendments as undesirable, which was not what I particularly wanted to hear because I knew they were undesirable. They were there purely as probing amendments. I wanted answers to a number of questions that I put to him. I counted eight questions that I posed, to which I had a certain number of answers, which I shall need to examine with some care between now and a later stage.

The principal point that I was trying to make, which has been underlined by my noble friend Lord Onslow and others, is that we seek clarity in the operation of this clause. It is important to know where the borderlines are between the Happy Eater and Claridges, to put it in simple terms, as my noble friend always does. No doubt the noble Lord will want to reflect on that. We will want to reflect on his answers so far and come back to this on Report, to explore a little further what the Government intend and what the Bill intends, which is far more important, so that those who have to make use of the Bill when it becomes an Act know what to do and how this will affect them.

At this stage, the best thing for me to do is to beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Amendments 6 and 7 not moved.

Clause 6 agreed.

Clause 7 : Failure of commercial organisations to prevent bribery

Amendment 8

Moved by

8: Clause 7, page 5, line 8, leave out “adequate”

I shall speak also to Amendment 10. I understand that this is also grouped with Amendments 11 and 16 in the names of the noble Lords, Lord Goodhart and Lord Thomas of Gresford.

Clause 7 creates the offence of failure of commercial organisations to prevent bribery. It is a strict liability offence, and a successful conviction could lead to an unlimited fine. It creates an offence, although some of us remember an occasion last year of a strict liability offence that led to a fine of some £5,000 which the Attorney-General described as merely being an administrative error. On this occasion, we are told that it is an offence.

There is a defence set out in subsection (2) which would allow the organisation, here referred to as “C”, to prove that it had in place adequate procedures designed to prevent a person associated with it engaging in bribery. A number of noble Lords raised this point on Second Reading, and I and, I am sure, noble Lords speaking from the Liberal Democrat Benches seek with these amendments to find out what is meant by “adequate”.

Amendment 8, which is a probing amendment—I do not need to be told that it is undesirable—would delete “adequate” from the defence in subsection (2). Who is to judge what is adequate and what is not? If a company has stringent rules in place, checks on its employees, has transparent accounting and so on, but a determined associate of that company still manages to bribe another, were those procedures adequate? They did not, after all, prevent the offence of bribery taking place. What about a company with weak procedures in place which nevertheless managed, perhaps more by chance than anything else, to stop an embryonic plan to commit bribery? Which of those cases should be prosecuted? I am sure that the Minister will say that such matters could be left to the discretion of the prosecuting authorities; it would be quite reasonable for him to do so.

What about the commercial organisations themselves? How will they know if they have put in place adequate procedures? Clearly, this is a place for guidance from the Government. The Joint Committee noted that there was near unanimity among those from whom it had heard evidence that the meaning of “adequate” procedures will require amplification through guidance. The Joint Committee noted too that there was a widely held concern among commercial organisations regarding the lack of certainty about what would be considered adequate procedures. It acknowledged that this Bill would affect a large range of organisations, making it difficult for the Government to produce comprehensive guidance. It thus recommended that appropriate bodies should be able to draft guidance tailored to their membership that could be approved by the Government to provide it with official status; in other words, sector-specific guidance.

This approach has been re-emphasised by the Law Society and the Bar Council. The law firm DLA Piper noted that companies that dealt with it were eager to comply with the law. I am sure that that will be the case for most, if not all, companies. However, unless they know what the law is, compliance will be difficult. It should not be left to years of court cases for the law to be clarified.

There could be severe consequences should the position remain uncertain. As well as being subject to an unlimited fine if successfully convicted, corporations are concerned about how the confiscation regime under the Proceeds of Crime Act 2002 might relate to this offence. The present legislation was designed to deprive individual defendants, particularly drug dealers and organised criminals, of the benefits of their criminal conduct. However, there has been no acknowledgement or recognition that there could be serious implications for companies caught by the legislation, which in some cases could see them being put out of business if the full weight of the law were applied. This might not be the time or place to address the operation of the Proceeds of Crime Act 2002, but the fact that businesses wish to draw it to the attention of Parliament during our debates on the Bill highlights how unsettled they are by the introduction of a strict liability offence to which the defence is worded so vaguely. It is for these reasons that I have tabled Amendment 10. While I will leave it to noble Lords on the Liberal Democrat Benches to introduce their own amendment, I suspect that this is the reason for it.

Amendment 10 simply commits the Secretary of State to publish guidance before the clause comes into effect. I do not think that the Minister disagrees on the need for guidance. He may argue that it need not be statutory. Again, I will listen with interest to the Government’s views, but I am uneasy about allowing the Bill to pass without an idea of how its provisions will work. I beg to move.

Sitting suspended.

I start by apologising to the Committee for having become so overheated that I seemed to set forth a problem with the microphones. I continue with the debate on the group that includes Amendments 8 and 10, which have already been spoken to by the noble Lord, Lord Henley, and Amendments 11 and 16 in my name and that of my noble friend Lord Thomas of Gresford.

Clause 7 is a very important clause—perhaps the most important in the Bill. This is because it is extremely difficult under the present law to prosecute a company for a failure to prevent bribery carried out on its behalf. Clause 7 will require all corporations conducting business to treat bribery as a serious issue and compel them to set up proper systems to prevent bribery on their behalf. Clause 7 replaced Clause 5 in the draft Bill, which was presented to the Joint Committee for pre-legislative scrutiny. That clause would have made it far more difficult to convict corporations that tolerate bribery. Its replacement—Clause 7—was unanimously supported by the Joint Committee, and the principle behind it has been accepted by the Government.

Under Clause 7, where bribery is committed on behalf of the corporation, the corporation has to prove, if it is to escape from prosecution, that it has put adequate procedures into place to prevent bribery. The word “adequate” is, as matters now stand, an essential part of Clause 7. Plainly, it will not be sufficient for a defendant corporation simply to say, “Oh, we set up procedures to prevent bribery”. That corporation must provide procedures that are, to use a cliché, fit for purpose. Amendment 8, by seeking simply to remove the word “adequate”, is in effect a wrecking amendment, but I will take it no further because, as I understand it, the noble Lord, Lord Henley, tabled it as part of a probing issue.

Amendment 10 relates to guidance and takes us on to Amendments 11 and 16. Penalties under Clause 7 could be very serious, so we believe that it is necessary to provide guidance so that corporations are not at risk of straying unintentionally into a field in which they may become liable for serious consequences. The guidance could be made available from business associations such as the CBI, but several organisations could offer advice that may vary between them. Some—I am not suggesting that the CBI is one of them—might give advice which the clients would like to hear rather than advice that is meaningful and effective. We therefore believe—I think we share common ground here with the noble Lord, Lord Henley—that guidance should come through the Government. As matters now stand, the Government have promised to introduce guidance, but nothing in the Bill requires this, and there is no obligation on any Government to continue to provide guidance after the Bill is enacted.

Amendment 10 takes one step by requiring the Secretary of State to lay guidance before Parliament before the commencement of the Bill. That is okay as far as it goes, but we need to take one step further by making guidance a continuing obligation in the law against bribery. This is what Amendment 11 seeks to do. It requires a continuing obligation to publish, and from time to time to amend, guidance to inform people what will happen and where the boundary is between bribery and fair play.

Amendment 16 would give guidance to the guides, if I may put it that way. It makes no attempt to define what the contents of any guidance should be; it merely sets out a couple of general principles. That is right, because guidance given through the Government may vary from country to country, from time to time, and from product to product. We want the Government to explain why it is not necessary or desirable to put into the Bill a continuing duty to provide guidance that will be of necessary assistance to companies, particularly those that operate in parts of the world in which there is a great deal of bribery and where they need to be very carefully advised on what will and will not be permissible in general terms.

We are dealing with a point which was recognised as very important at Second Reading; namely, the provision of guidance to companies and other organisations. It is important and I hope that the Government will be able to respond to some of the points covered by the three amendments which specifically relate to guidance in this group. They all relate to Clause 7 entitled “Failure of commercial organisations to prevent bribery” and the “adequate procedures”—to use the good text that is there—put in place to provide defence. This is the part of the Bill where we definitely need guidance.

Of the three proposals on guidance covered by this group, there is, first, the question of timing. Amendment 10 would require:

“Before the commencement of the section”,

the laying before Parliament, which seems reasonable to me. If we can do that, I see no problem. Secondly, Amendment 11, as indicated by the noble Lord, is substantially more important because it puts in a continuing commitment. It is also more specific. I do not think that the noble Lord quite made that point, but it is more specific because it relates guidance to subsection (2), which is the substance of any defence. That, too, seems sensible. Amendment 16 has at least one element which is not in the other amendments; that is, the taking into account of the size and resources of such organisations.

Woolworths is no longer with us but the Minister will see what is known as “pick and mix” in these amendments. I remain sympathetic to them all. But, most importantly, we should have a continuing commitment in the Bill and a direct relationship with the size and resources of organisations. Those elements are important. Obviously, the Government are relatively sympathetic to this point, but they will have to decide how far they can go. That is an expression of my view on these amendments.

I remember when we heard that the United States Government had provided guidance for their companies on exactly this premise and how impressed we were by the comfort that they gave to United States companies. I know that there are differences in the structure of our governmental organisations which would make it impossible to copy exactly. But it is important. A combination of adequate and proper procedures and decent guidance will make it very difficult to step beyond the line of appropriate and decent behaviour. Furthermore, it is essential to put that in the Bill and it should be perpetually kept up to date. They are protections for companies, which make sure exactly where our ideas lie and where the borders are. That would be a great improvement.

I support the probing of the word “adequate” in this clause, which is the purpose of the amendment proposed by my noble friend Lord Henley. It is important that we should have, during the proceedings of the Bill, a statement of the Government’s view on that. I also very much agree with the proposals for guidance. At Second Reading, I indicated that that issue is important. It is absolutely essential that the guidance should be available in authorised form before the statute comes into operation.

I also entirely agree with the view put forward in Amendment 11 that the guidance should be continuous. The circumstances of individual countries can change and it is important that the guidance should take account of that. I do not believe that the guidance can be as simple as the noble Lord, Lord Patten, suggested at Second Reading when we take account of the facilitation payment included, for example. I might have no hesitation about having publicity about the fact that I had to pay to get what I was entitled to—because I could not get on the plane otherwise. That must be dealt with especially. I also agree in principle with Amendment 16. I am especially pleased to see that subsection (3) allows the guidance to be taken into account in deciding whether there is a defence. In other words, people who rely on the guidance are entitled to have that taken into account in the case if they are prosecuted. I know that that is proposed in principle here. I think that it would need to state some mechanism by which the Secretary of State issues the guidance—for example, by statutory instrument, so that some parliamentary procedure would have taken place before commencement.

My former understanding was that “the Secretary of State” meant any Secretary of State. I think that that has been somewhat modified, if I understood it correctly, by the Constitutional Reform Act, which made a number of other changes—not all of which I personally regard as reforms, but that is what Parliament has called them, so I must accept that. I should have thought that the responsibility for the guidance should come from the department of state, which is not exactly a small department, which deals with relationships with companies and businesses, rather than with the Ministry of Justice. The Secretary of State for Justice, in evidence before the Select Committee, expressed doubt about whether he could give guidance. On the whole, it might be better that the guidance came from another department, because the prosecution responsibilities, such as they are in government at all, are to some extent in the Ministry of Justice—although I am glad to say that the Attorney-General is still in position, and I hope that that will continue. We will come to a later amendment about that.

It would be appropriate for the department responsible for relationships with business to deal with the matter, because it will have the necessary expertise in business methods and organisation to judge what would be adequate, rather than the Ministry of Justice, which is expert in the area of justice, but this is not of that type. I venture to make that additional comment.

I hope that the draft guidance will be produced as soon as possible, but I can see that the parliamentary timetable and the timetable for producing draft guidance may not make that possible. It is essential, before companies are charged under or bound by a statute that requires adequate provision, that they should know what the Government believe adequate provision in principle would be in their particular case.

Before my noble and learned friend sits down, I assure him that on the small question of the nomenclature of the Secretary of State, the noble Lord, Lord Tunnicliffe, is a great expert on these matters. We dealt with this twice on the Coroners Bill, which, if I remember rightly, for some odd reason referred to the Secretary of State for Business Innovation. That then had to be amended during the course of the Bill to reflect the new Secretary of State’s further titles that he had acquired as that department had expanded, and no doubt will have to be amended by means of primary legislation at later stages as that job changes yet again. We would have been far better off if we had stuck to the drafting, as in this Bill, of simply “the Secretary of State”. But when the Minister comes to reply, I assure my noble and learned friend that he is the expert on these matters.

My Lords, sometimes I wonder if the Secretary of State for Business et cetera is seeking to have the longest title, rather like Llanfairpwllgwyngyllgogerychwyrndrobwllllantysilio- gogogoch has the longest name of a Welsh village, or any village.

I draw the Committee’s attention to paragraph 109 of the Joint Committee’s report, which quotes the evidence of Louise Delahunty, a solicitor of Simmonds and Simmonds, who noted the “plethora” of international sources of advice and stated that the Government were best placed to bring clarity to the situation. Then Mr James Maton of the UK Anti-Corruption Forum added that it was costing companies large amounts of money to develop policies and seek advice on a fragmented basis. During the Committee proceedings, I think I made the point that although it is all very well for a large company to go to a specialist lawyer and obtain advice, it is not so easy for the smaller company to obtain the necessary advice that would be desirable.

The Director of Public Prosecutions, as paragraph 110 points out, said that centrally issued guidance on prosecution policy could be prepared by prosecutors, but he was prepared to draw a clear distinction between prosecutorial practice and compliance issues, such as the meaning of “adequate procedures”. He considered that the latter type of issue would be best addressed by informal industry-led guidance, which prosecutors and juries would then take into account when deciding whether to charge or convict. Your Lordships will note that the prosecutors and juries could take into account such industry-led guidance.

As paragraph 113 points out, the Secretary of State for Justice said that he was,

“very far from clear whether we as a department would publish guidance … We have to be quite imaginative about this, and we have got to take in our traditions, but that is what I undertake to do”.

So he gave an undertaking to be quite imaginative. I say that because that will introduce my Amendment 17 in due course.

My Lords, I support the substantive point made by the noble and learned Lord, Lord Mackay of Clashfern, that the Department for Business—I forget the full title—should take the ultimate lead in determining the substance of the guidance that will be produced. I hope the Minister will understand that this is not in any way to knock the Ministry of Justice but to tie in the other department to the whole matter of bribery and corruption and our concerns that lay behind the Bill and our support for the Law Commission’s proposals. I agree with the noble Lord, Lord Henley, that one would like to stick with the broad phrase “Secretary of State” in order to avoid the need for constant change when departmental nomenclature changes, but I fully support the substance of what the noble and learned Lord, Lord Mackay, said.

I support the objective of these amendments. Will the Minister clarify, if it is not already clear, that this guidance will be the subject of a statutory instrument, that it will be laid before the House and that Parliament will continue to have a say? It will have a significant effect on the law of the land as it applies to businesses and citizens. My understanding is that that is what is intended, but if that is not the case we ought to be told now. I hope that it will be implemented by statutory instrument.

On the question of adequate procedures, words are always difficult. I threw out the possibility of “reasonable procedures” because “adequacy” suggests that it can be adequate only if it succeeds, whereas “reasonable” would certainly require a decent standard, which we certainly demand, but would not necessarily give the impression that, if it did not succeed, you had no defence.

My Lords, I have received guidance from the noble Lord, Lord Henley, on probing amendments and not responding to them too literally. However, I think that the noble and learned Lord, Lord Mackay, did invite me to respond to it literally. I understand that the noble Lord, Lord Henley, does not intend to press the amendment. If “adequate” were taken out, that would drive a loophole through the offence. I see that he nods, so I will move on to the substantive debate concerning guidance.

The Government are committed to publishing guidance on the meaning of adequate procedures well before this offence is brought into force. As the noble and learned Lord, Lord Woolf, put it at Second Reading:

“Normally, it is not desirable for guidance to enter into areas of criminal law”.—[Official Report, 9/12/09; col. 1100.]

We agree, but we recognise that the offences in this Bill are a special case and that guidance is necessary to assist those who might be directly affected by the offences in this Bill.

As the noble Lord, Lord Bach, said in his letter of 16 December to the noble Lord, Lord Henley, Ministry of Justice officials have already made a good start on the development of guidance. Officials have already met with a number of experts from organisations such as Transparency International, the Institute of Business Ethics and the Anti-Corruption Forum about what should be included in the guidance and they will be meeting other stakeholders with an interest in this subject over the coming weeks.

In addition, my ministerial colleague, Claire Ward, met a wider group of stakeholders, including the Confederation of British Industry and the Federation of Small Businesses on 15 December to discuss the Bill in general. Naturally, that discussion turned to the Clause 7 offence and the need for government guidance on adequate procedures. What is clear from these discussions is that there is a wealth of information published by reputable organisations on which we can and should draw when developing our own guidance. The OECD is working on good practice guidance on internal ethics and controls, due to be published later this year, which we will undoubtedly wish to reflect in our own guidance. Organisations such as Transparency International and the Global Infrastructure Anti-Corruption Centre have published impressive anti-bribery strategies on their websites, which, if adopted by commercial organisations, would go a long way to eradicating bribery.

We would expect our guidance to cover much the same ground as the examples to which I have referred. Among the issues that I anticipate will be addressed are: the responsibilities of an organisation’s board of directors; the identification of a named senior officer with particular responsibility for combating bribery; risk management procedures; gifts and hospitality policy; facilitation payments; staff training; financial controls; and reporting and investigation procedures. This is not a comprehensive list, but it will provide the Committee with a flavour of the issues we would expect to cover. We aim in advance of Report to let noble Lords have a more detailed list of the content of our guidance. Having given an absolute commitment to publish guidance, we remain unpersuaded of the case for enshrining that undertaking in statute. I again pray in aid the noble and learned Lord, Lord Woolf, who said at Second Reading that,

“it is of no great significance whether it is statutory or non-statutory guidance”.—[Official Report, 9/12/09; col. 1100.]

The Government are often criticised, I might add unfairly, for legislating needlessly. Our submission is that Amendments 10 and 11 fall into that same trap. They are unnecessary and would create an unwelcome precedent.

I turn now to Amendment 16, which would require the guidance to address certain specified matters. The guidance will undoubtedly cover the points suggested by the noble Lord, Lord Goodhart; that is, that it will be indicative guidance setting out the broad principles and supported by a list of examples of good practice. The guidance will also be designed with businesses of all sizes in mind. What constitutes adequate procedures for one organisation will be over the top for another. The procedures put in place by any organisation must reflect the circumstances of that organisation. Indeed, the flexibility of non-statutory guidance should help to achieve that objective.

I shall address some of the specific points made by noble Lords. Again, I may not answer all of them in the detail required, but I shall write if that is useful. Under the Proceeds of Crime Act 2002, the exercise of confiscation powers is directed towards the recovery of the proceeds of crime. It is not intended to be punitive in effect. We are satisfied that the courts will take into account all relevant information—

Will the noble Lord give way on that? The Proceeds of Crime Act was used recently in relation to a chemist who fiddled £350-worth of prescriptions and had £212,000-worth of stuff taken away from him. That was overtaken on appeal, but the Proceeds of Crime Act can be used as an extra punishment and we should be very wary of those provisions. I hope that the noble Lord will take that into account when he takes further advice.

The fact that it was overturned on appeal reinforces the assurance that I am giving in the sense that we are satisfied that the courts will take into account all relevant information to ensure that the powers of confiscation operate in a reasonable and proportionate manner. It is a matter for the courts to determine the benefit derived from an offence in any individual case.

As with everything else involved in this issue, we all agree on the sentiments; it is the detail that is the problem. Clause 7 is an important provision that concerns strict liability and is, we think, the only way to get at this type of crime that we all want to stamp out as far as practically we can. We agree that it is necessary to provide guidance and that it should come through the Government. I have given an indication of when the initial guidance will be ready, but we accept the ongoing need to look at it. To that end, we would expect that to take the form of a review at some point. The exact words I am supposed to use are these: we would certainly expect to keep the guidance under review as appropriate.

I am most grateful to the Minister for giving way. Could he explain what seems to be the rather difficult point here? He has produced an impressive list of matters for guidance and has accepted that there will be an ongoing need to look at it. What is the objection to putting a simple provision into the Bill that would require the guidance to be made on the face of the Bill for as long as it lasts, but without imposing any duties as regards the subject matter of that guidance?

My Lords, we have made the point that if it is that simple, it is exactly the same as the assurance we have given and it is not necessary. That is the view we take on the guidance. We do not see the value of putting it on the face of the Bill.

I come now to a more important point. It seems to me that some of the probings of noble Lords have suggested that we are proposing case-by-case guidance. We are not proposing that, and I want to make it quite clear that this guidance will be about the procedures that businesses adopt in order to show in a particular case that they had those procedures in place and therefore they can pray them in aid with the defence that is contained in Clause 7.

I hope that I have covered the point about size and resources. Later in our discussions, we will come to the alternative approach put forward by the noble Lord, Lord Henley. We believe that the crime as set out in Clause 7 means that businesses will be able to take a proportionate response, judging by their own exposure to bribery the extent to which they will need to commit resources. Highly exposed companies will sensibly commit significant resources to these proposals and companies with low risk will not have to commit such large resources. It will be about the risk, frankly. If you are trading in a business that has this risk, whether you are big or small you have to take appropriate procedures to protect yourself. The law is framed to allow for that proportionality and allows individual firms to make their own judgments on proportionality.

A number of noble Lords took the view that the guidance would be something that courts could take account of—I will not be more precise than that. We accept that the guidance will have that role. My noble friend Lord Borrie wanted me to tie it into BIS. It is not currently our intention to do that: it is our intention that the Ministry of Justice will create the guidance initially. However, we see the Ministry of Justice working together with the Department for Business, Innovation and Skills to produce the guidance.

At that point, there was an intervention from the noble Lord, Lord Henley, who said that I am a world expert on secretaries of state. I remind him that that had nothing to do with changing laws. In that particular case, the Secretary of State would personally take responsibility for significant powers, which was unusual and unprecedented. I am still smarting from the number of occasions that he ridiculed our excellent drafting on that matter.

Finally we were asked whether it would be a statutory instrument. No, it will not and it will not come before Parliament. I hope that I have at least answered many the questions raised.

Why will the guidance not come before Parliament? This is an extremely important document. For something like this not to come before Parliament is, with respect, a disgrace.

The noble Earl touches on the difference between our two approaches. We are not proposing to put the requirement for this guidance in the Act. Therefore, there is no legal basis on which a statutory instrument would come before Parliament. If it were part of the Act, we would obviously have to reassess that. Presently, however, it is our intention that it should be a result of our undertaking, not because it is on the face of the Bill. We will seek to persuade the House of that position.

My experience is that powers of guidance, as opposed to the creation of something that is binding as a matter of law, are not necessarily matters that require parliamentary approval. My experience in the Delegated Powers and Regulatory Reform Committee makes it clear that that is the case. While I would not object to this being done by parliamentary procedure, I would not seek to press for that necessarily to happen.

I must inquire why this guidance should not be statutory if it is clear that it will be taken into account by the courts. The passage that we read from the Joint Committee shows that there is a lot of guidance about. All sorts of people are offering guidance and the important thing is to have authoritative guidance. The mere fact that it has come from the ministry, among many international authorities putting out guidance, does not make it authoritative. If it is done under the authority of Parliament, with that authority telling the court that it must take the guidance into account, it is a much more effective remedy for the people who are extremely anxious about this serious offence. It is being introduced for the first time and it is very difficult to say what the ultimate consequences might be, as the noble Lord, Lord Henley, has pointed out. I cannot see why that should not be done by putting in place the necessary provisions in the Act of Parliament, as well as the consequences for companies if they should be found to have failed in some way to take account of what the guidance told them.

I support what the noble and learned Lord, Lord Mackay of Clashfern, has just said. Would the Minister like to think about it? If there is a case against a company that is charged with an offence of strict liability—very unusual in criminal law—and it puts forward as part of its defence that it was relying on procedures that it had read about in some book or other, written by somebody with some authority and experience in the area, the judge can easily tell the jury to ignore all that. There is no force behind what an individual has written in a book or set of procedures. There is no force behind anything like that. It is very different if the guidance is under a statutory power and the judge must tell the jury that it must take into account the fact that procedures which have statutory backing were relied on—or that is the defence—by the company that stands before it, charged with a strict liability offence.

My Lords, we are coming to an area where we do not share common ground. We do not believe that there should be a reference in the Bill. We will of course reflect on everything that has been said in Committee and the force with which it was said. As I quoted, the noble and learned Lord, Lord Woolf, whom we look on as a considerable authority in this area, took the view that,

“it is not of great significance whether it is statutory or non-statutory guidance”.—[Official Report, 9/12/09; col. 1100.]

It is unnecessary to have something in the Bill to require the courts to take account of official guidance. We expect the courts to take account of all relevant information, including any official or industry-produced guidance, when determining whether a particular company’s procedures were adequate. With that, I again invite the noble Lord, Lord Henley, to withdraw his amendment.

My Lords, we will want to consider these matters very carefully. I will deal with the four amendments in the right order. I come first to Amendment 8, which would leave out “adequate” and is a purely probing amendment. Since I tabled it there have been further suggestions. My noble and learned friend, Lord Lyell, suggested that a word such as “reasonable” might be better than “adequate”. I was much more interested to hear the noble and learned Lord himself use “appropriate”, rather than “adequate” at one stage. I do not know whether that was intentional. Again, it might be worth looking at what the right word is. Although I will withdraw the amendment, because it is obviously ludicrous to take out “adequate” without putting something in its place, it might be something that we want to come back to in due course.

More importantly, I move on to my Amendment 10 and Amendments 11 and 16 in the names of the noble Lords, Lord Goodhart and Lord Thomas of Gresford. These are about guidance and seek to get that guidance—or at least an instruction that there should be guidance—in the Bill, as well as the idea that Parliament should look at the guidance one way or another in due course. Two points were made in interventions in the noble Lord’s speech that he ought to think hard about. One was from my noble and learned friend Lord Mackay, who stressed that this will be taken into account by the courts in any prosecution and therefore should be looked at by Parliament. For that reason, the amendments or some variation on them should be put in the Bill. The other point was made by the noble Lord, Lord Thomas of Gresford, who pointed out—I mentioned this in my opening remarks—that this was an offence of strict liability, which is very unusual, particularly for a company. For that reason, he felt that it was important for Parliament to take a good look at it and incorporate amendments in the Bill.

Although I will not press the amendments, as is customary at this stage and in this Room—where we can still smell smoke, although it is not billowing out—we will certainly want to have another look at them. Possibly we will want to discuss them with colleagues on the Liberal Democrat Benches. I note the assurance from the Government, which I think I have got right, that in advance of Report we will see a draft of the guidance.

My Lords, I am afraid that we have not given that assurance, much as it might satisfy people. We will produce a revised statement of the things that will be going into that statutory guidance. We are not saying that we cannot do it by then, but we are not giving an assurance that a draft will be available by Report.

My Lords, it seems that the assurance from the noble Lord is that we will have a draft of what might be going into the draft—or something like that—that we can look at in advance of Report. I suspect that it will not be enough and that we will wish to come back to this in one form or another. Perhaps we might merge the different ideas behind our amendments and those of the Liberal Democrats. I beg leave to withdraw Amendment 8, but I will come back at a later stage to points raised in the debate.

Amendment 8 withdrawn.

Amendment 9

Moved by

9: Clause 7, page 5, line 10, at end insert “and, where A is a contractor to C or a fellow member of a consortium for the joint execution of a project or projects and C does not control A, then it shall be sufficient to establish the defence if C can prove that it diligently investigated A as to A’s abstention from bribery and that C instituted and continued a reasonable audit of A with respect to such abstention during the time when A was associated with C or that C used all practicable influence to prevent bribery by A”

My Lords, I will speak also to Amendment 15. Amendment 9 also deals with Clause 7, which, as we have established, creates an offence of failure by a commercial organisation C to prevent a mischief done by a person A who is associated with that organisation. What I seek to explore with Amendments 9 and 15 is the nature of that association. Amendment 15 is the simpler of the two. It would simply make the determination of whether A was performing services for C subject to reference to all the relevant circumstances. Amendment 9 is more specific in extending the defence in subsection (2) to situations where C did their best to stop A, where A is a contractor or a fellow member of a consortium. I seek to tease out from the Minister how close a relationship there must be between C and A for the offence and defence to apply, and what circumstances may be considered to determine that.

I raise the subject of consortia for good reasons. Much international business in the petroleum, mineral, banking, financial and construction industries is conducted through consortia or contractors who have sole or overall responsibility for a project. The relationship with the other entities is not one of control, but regulated by contract only. In many cases, the partners may be state entities. A UK company, especially in one of the extractive industries, may have no choice but to take a state entity as a partner. It can investigate potential partners and then monitor them for bribery, using contractual provisions or by exercising its maximum influence. The latter is regarded as acceptable in United States practice, and that may be the maximum extent of the control of its fellow consortium member that the UK company would be able to exercise. Would the provisions in the Bill be sensitive enough to deal with such situations? If they are not, there is a risk that the Bill could put UK businesses at a distinct disadvantage.

The United States recognises, especially in the audit provisions, the importance of the degree of control when deciding the responsibility of the company for bribery by associates. The Bill makes no such allowance, the sole criterion being whether services are being performed. There is no doubt that partners in the industries mentioned mutually perform services. Accordingly, in certain regions and in respect of certain resources, a UK company would have no choice but to abstain from participation. The cost to the United Kingdom could be considerable. It would rise to an even greater magnitude if UK companies had to withdraw from existing groups because of the potential impact of the Bill. In any event, the place that might have been available for UK enterprise would quickly be filled by companies from other jurisdictions.

I hope that the Government have foreseen these possible consequences. If they have, I hope that the Minister will be able to point to the flexibility in the Bill that is necessary to avoid them. I beg to move.

My Lords, Amendment 9, tabled by the noble Lord, Lord Henley, seeks to address circumstances in which a bribe was paid by a contractor or a fellow member of a consortium and the bribe payer is not under the control of the defendant. It would allow a defence to the Clause 7 failure to prevent bribery offence where a commercial organisation could prove that it diligently investigated the contractor or consortium partner and conducted a reasonable anti-bribery audit during the time the bribe payer was associated with the commercial organisation, or that it had used all reasonable influence to prevent bribery. The organisation would not be guilty even though the bribe was paid to obtain or to retain business or an advantage in the conduct of business for that organisation. I know that some noble Lords, along with organisations such as the International Chamber of Commerce, have concerns about the application of the Clause 7 offence to corporate structures, such as joint ventures, where there is little or no direct control by the commercial organisation of their operations.

Our purpose is clear; we want to encourage organisations involved in joint ventures to ensure that they are satisfied that adequate procedures are built into the arrangements for the joint venture. The same can be said of any other business model. Given this overarching objective, I am not persuaded that a separate defence is necessary or desirable. The Clause 7 offence applies whenever a person performing services for a commercial organisation bribes another to obtain or to retain business for that organisation. Where that connection cannot be made, the organisation will not be guilty. However, where the organisation can benefit from a bribe that is ostensibly paid on its behalf, liability will be determined by the procedures that the organisation took to prevent such bribes from occurring. It is for the courts to determine whether a person was performing services for the organisation in question based on all the circumstances. Consideration of liability will then rest on whether the commercial organisation had adequate procedures in place to prevent bribery.

The formulation of the defence under Clause 7 is broad enough to cater for different corporate structures: including contractors, consortia and joint ventures. The Government are also committed to publishing guidance on the meaning of adequate procedures well before the offence is brought into force. We are considering what guidance may be appropriate in respect of different corporate structures. This is not a one-size-fits-all approach. The procedures should be appropriate to the circumstances of the enterprise. This issue was considered by the Joint Committee, which examined the draft Bill. The committee considered a number of suggested amendments to the draft Bill that sought to limit the offence to cases in which the commercial organisation controls the subsidiary or joint venture. The committee noted, however, that the same end could be achieved through suitable guidance. Introducing separate conditions in respect of preventing bribery by contractors, members of consortia or joint ventures will, we believe, add little of substance and risk creating confusion and uncertainty in the application of the law.

That said, the Joint Committee also noted that a parent company’s liability for a subsidiary is one of the issues being considered by the Law Commission as part of its general review of corporate criminal liability. The Law Commission is due to publish a consultation as part of its review this coming summer. We will have to see where the commission comes out on this issue. It may or may not address it head on, but we submit that the proper course is to await the Law Commission’s consultation.

Amendment 15 arguably seeks to address broadly the same issue but adopts a different approach. It would generalise the factors that a court would take into account when considering whether person A was performing services for commercial organisation C for the purposes of the offence in Clause 7. A person may be performing services for an organisation for the purposes of Clause 7 even though there is no formal relationship between them. This may be the case, for example, where the person is representing a number of organisations in a joint venture and has a formal relationship with the lead organisation but not with the commercial organisation charged with the Clause 7 offence.

We believe that the words that the amendment seeks to remove are necessary and desirable as they signal to the courts, and indeed to organisations which the offence is intended to cover, that an organisation may be liable in circumstances where there is no formal relationship between A and C.

As the clause makes clear, whether A is performing a service on behalf of C will be determined by taking account of all relevant circumstances. This includes, but is not necessarily limited to, the nature of the relationship. There are of course an infinite variety of ways in which A performs services on behalf of C, so it is right for a jury to take a view on the particular circumstances of the case.

Taking the generality of the concern expressed by the noble Lord, Lord Henley, I think that we will be seeking to help industry in this area not by varying the Bill or making special provision for consortia but by taking account of them in the guidance that we will be producing. Therefore, I invite the noble Lord, Lord Henley, to withdraw his amendment.

My Lords, yet again I look forward to seeing the guidance, or rather the draft of what is to be in the guidance, that we are promised before Report. That might assist me in deciding what to do with these amendments and such matters on Report.

I note, too, that we are looking for a further report from the Law Commission, which is likely to be produced some time in the summer, as that might also address these matters. Obviously, that will not make any difference to the Bill but I note what the noble Lord had to say on that subject. Therefore, at this stage I think that the best thing to do is to withdraw Amendment 9 and to say that I look forward to seeing whatever the Government produce between now and Report, and I shall then consider what to do. I beg leave to withdraw Amendment 9.

Amendment 9 withdrawn.

Amendments 10 and 11 not moved.

Amendment 12

Moved by

12: Clause 7, page 5, line 26, leave out from “Kingdom” to end of line 27

My Lords, I shall speak also to Amendment 13. Again, these are probing amendments which I hope are simple in the extreme. They are designed simply to elicit a fuller meaning of the language used in Clause 7(5)(a) and (b), which give the meaning of a relevant commercial business. In paragraph (a) there are apparently two limbs to the definition. A commercial organisation must be incorporated under UK law and carry on a business, although the second limb is contained in parentheses. I am sure that there is a very straightforward explanation for this drafting which will not detain the noble Lord for long, but I confess that I am a little puzzled. If the body is not carrying on a business, how can it be relevant to a business-related act of bribery, and so why is the provision there? Is there likely to be any confusion over whether an organisation is conducting a business or not—and, if so, how is that to be determined, and what for that matter is “part of a business”, as raised by Amendment 13 to paragraph (b)?

These might be trifling points but, on first reading through this section, I did not feel that the drafting was quite as clear as it might be. I ask the noble Lord to enlighten me. I beg to move.

My Lords, I shall do my best. These amendments relate to the definition of a relevant commercial organisation for the purposes of the Clause 7 offence of the failure of commercial organisations. Clause 7(5) states that a relevant commercial organisation means a body which is incorporated under the law of any part of the United Kingdom and which carries on a business, whether there or elsewhere. It also covers any other body corporate, wherever incorporated, which carries on a business, or part of a business, in any part of the United Kingdom.

Amendment 12 would have the effect of widening the scope of the clause so that any body incorporated in the UK would be covered by the offence, whether or not it was carrying on a business. Widening the scope of the offence in this way is not justified in our view because the offence is specifically targeted at commercial organisations that use bribery in the course of their transactions. This is why subsection (1) requires that the person concerned intended to obtain or retain business or an advantage in the conduct of business. It would also be inconsistent with the approach to bodies incorporated outside the UK, where, under subsection (5)(b), the requirement that the body concerned carries on a business remains unchanged by these amendments. The noble Lord asked how it could reasonably apply if it were not carrying on a business. We agree, but for the avoidance of doubt we are leaving it as it is in the wording.

We also consider it important to make clear that the offence applies whether a body incorporated in the UK carries on a business in the UK or elsewhere. It is a crucial part of our foreign bribery strategy, and our desire to create a level playing field internationally, that the offence covers UK corporations that carry on business overseas. This fact has been welcomed by the OECD, which has stated that,

“such coverage is necessary, since foreign bribery is often committed by multinational enterprises that operate in multiple jurisdictions around the world”.

With regard to foreign companies operating in the UK, I recognise that the Joint Committee voiced some concerns that the phrase “part of a business” might be difficult for the courts to interpret, but we believe the courts will interpret the term in a common-sense manner. Clearly, if a foreign corporation has part of its business in the UK, and that part is guilty of paying bribes, we would want the jurisdiction to prosecute the organisation concerned.

We believe the amendments tabled by the noble Lord, Lord Henley, would weaken the offence unnecessarily by casting doubt on its jurisdictional extent. I therefore invite the noble Lord to withdraw the amendment.

My Lords, I am not sure whether I am much the wiser for that, but I shall read it most carefully in Hansard in due course and no doubt fully understand what the draftsman was getting at when he drafted the clause in that manner. I beg leave to withdraw the amendment.

Amendment 12 withdrawn.

Amendments 13 and 14 not moved.

Clause 7 agreed.

Clause 8 : Section 7: supplementary provision

Amendment 15 not moved.

Clause 8 agreed.

Amendment 16 not moved.

Amendment 17

Moved by

17: After Clause 8, insert the following new Clause—

“Advisory service

(1) The relevant department may respond to specific enquiries from any commercial organisation concerning the adequacy of its procedures for the purposes of section 7(2) of this Act.

(2) A response under subsection (1) shall not prevent the Director of Public Prosecutions, the Director of the Serious Fraud Office or the Director of Revenue and Customs from consenting to proceedings for an offence under this Act.”

This is a proposal to add an additional clause to this part of the Bill, which is headed, “Failure of commercial organisations to prevent bribery”.

I have referred on a number of occasions to the Independent Commission Against Corruption in Hong Kong. It has a corruption prevention department with an advisory services group annexed to it. The group provides a management consultancy service free of charge and tailor-made to the company’s needs. It handles information in strict confidence with a pledge to respond to any request within two working days—which is probably beyond the competence of the Government in this country. Clients are free to accept the recommendations and to implement them at their own pace.

The group provides tailor-made corruption prevention advice on system/internal controls. It also assists companies to draw up staff codes of conduct and, in particular, a policy on solicitation and acceptance of advantages, a policy on acceptance of entertainment, guidelines on declaration of conflict of interest and guidelines on handling confidential information. Any company can go along to the advisory services group and seek its free advice on the adequacy of the systems and procedures that it has drawn up. It will be assisted in the areas which I have outlined. The advisory services group also formulates and distributes codes of industry best practice, and organises talks and seminars to promote them.

So there is an advisory group under the shelter of the ICAC which assists companies to set out adequate procedures. It goes about it by discussing with the management of the companies their operational procedures and practice, identifying potential risks and malpractice, and formulating recommendations for the client’s consideration.

I shall give your Lordships some idea of the feedback that it has had. The chairman of the Hong Kong Institute of Directors, Mr Herbert Hui, said:

“Directors are entrusted with the execution of corporate governance standards within each corporation, listed company, SME or NGO. The Advisory Services Group of the Corruption Prevention Department assists corporations to enhance corporate governance standards from a corruption prevention point of view. We highly recommend directors of corporations to make use of the Group’s free and professional consultancy services”.

The director and chief executive of Cathay Pacific Airways Limited, Mr Philip Chen, said:

“Since its establishment in 1985, the Advisory Services Group of the Corruption Prevention Department has been conscientiously assisting private sector companies in enhancing system controls and promoting to staff the importance of corruption prevention. In the past, we had sought advice from the Group on various parts of our operation. I highly value the Group’s work and contributions to the community”.

Since 1985, the advisory group has advised a total of 3,000 companies—that is a rate of about three a week—covering manufacturing, financial services, property management, hotel and catering, welfare and education associations and so on. It discusses such things as common malpractices and vulnerabilities in procurement, sales and marketing, administration, store management, information systems, security and so on.

So there is an essentially government-sponsored body providing a service, which does not require great expense, at a rate of three companies a week to companies in Hong Kong. That has contributed very significantly to making Hong Kong the third least corrupt territory, if I can put it that way, in the whole world. It is not something to be set aside lightly. I have already quoted the Secretary of State for Justice saying that we have to be quite imaginative about how we tackle advice. It is in that sort of area that I am sure imagination is required.

Under my amendment,

“The relevant department may respond to specific enquiries from any commercial organisation concerning the adequacy of its procedures for the purposes of section 7(2)”—

that is, for the purpose of getting advice on what are adequate procedures. It continues:

“A response under subsection (1) shall not prevent the Director of Public Prosecutions, the Director of the Serious Fraud Office or the Director of Revenue and Customs from consenting to proceedings for an offence under this Act”.

I appreciate the point that the Government and others made to the Joint Committee that one cannot confuse the prosecutorial system with the giving of advice. It would be wrong to ask the Director of Public Prosecutions to hand out chits to companies saying that they could go and do this or that. My amendment suggests not the giving of immunity from prosecution to a particular company but that authoritative advice and expertise should be built up over a period of time, as has happened in Hong Kong, whereby companies from all sorts of sectors, whether large or small, whether they have been in business for a long time or are just entering into the market, can go to such an advisory body and ask it to look at their procedures, help with them and make sure that they do not have procedures in place that would in any way encourage bribery. If the purpose of the Bill is to prevent bribery, this is a very small price to pay.

I have used the expression “the relevant department” deliberately, because that could cover the Secretary of State for LlanfairPG, to use a shorthand term, or it could be another department of state that could give out advice of this sort. It would be hugely advantageous to the commercial companies in this country and would at the same time make sure that the purposes of this Bill were addressed and that bribery was prevented. I beg to move.

My Lords, I must say that I think this is a very good idea. I think I am right in saying that on Second Reading the noble Lord, Lord Thomas of Gresford, said that he had tried out the system of advice that the present business department offers. I think he made a request. He had not received an answer by the time of the Second Reading but I assume he has received it now. If we have a department of that kind in operation already, it seems very good to build on it, as the Hong Kong experience has proved so valuable.

My Lords, it is, after all, a British idea, because when it was introduced, Hong Kong was a British colony. We surely cannot say that it is novel to our arrangements. It strikes me as a totally excellent idea.

My Lords, Amendment 17 brings us back to the issue of adequate procedures for the purpose of Clause 7. The noble Lord, Lord Thomas of Gresford, has proposed that an advisory service be established that would enable companies to seek advice on the adequacy of their procedures for the purpose of Clause 7. As the noble Lord will be aware, the Joint Committee rejected the proposals to provide an advisory service with a wider remit, particularly given that such a service would call into question the independence of prosecutors. The Joint Committee recognised the significant differences between our criminal justice system and those where such a service is provided, that those prevent direct analogies being drawn, and that it would in practice be difficult to establish such a service here. We agree.

The amendment would not prevent prosecutors instituting proceedings where advice has been given. However, the principle of government providing advice to individual organisations about their particular procedures is highly inappropriate. It would amount to the Government advising individual organisations on whether, if a person acting on their behalf committed bribery, they would be guilty of the corporate offence.

Even if the advice were given by an independent official body—no such body exists—our concern remains. The Joint Committee drew attention to the evidence given by the Director of Public Prosecutions and the Attorney-General, who both expressed concern at such a body giving advice on prosecutorial issues as it would risk undermining the independence of prosecutors.

While the amendment would preserve the ability of prosecutors to bring charges where advice was given, the reality is that the body would be directly advising on what are ultimately prosecution decisions. In addition, the process gives rise to significant practical concerns. In the event of a prosecution being brought despite advice, it is not difficult to envisage the criminal proceedings being entirely distracted by an examination of the adequacy of the advice from the department or official body rather than the key question as to whether the proceedings that the defendant organisation took were adequate in the circumstances.

We are not lightly setting the idea aside; we have considered it carefully. We note that the Joint Committee considered it carefully, but also note the concern of the DPP and the Attorney-General. For those reasons, we cannot commend the amendment to the Committee.

My Lords, I draw the Government’s attention to the Joint Committee report. I would like them to take a step back, start again and rethink the issue. At paragraph 124, the committee quoted Mr Philip Bramwell of BAE Systems plc. He said that a formal advisory service would be,

“of immense value to companies looking for certainty about how conduct would be treated and about the efficacy of their proposed approach to compliance”.

I emphasise,

“the efficacy of their proposed approach to compliance”.

He continued:

“It is especially useful around mergers and acquisitions and new businesses that may have an uncertain history”.

The director of the Serious Fraud Office again did not wish to mix up prosecutorial discretion with the granting of permits to people to go and commit criminal offences, quite rightly. The Attorney-General and the Director of Public Prosecutions agreed to that. However, at paragraph 126, Professor Horder said:

“[I]f I could start from a slightly different view, were we to have in this country an anti-bribery body, a commission, a semi-official body of some sort, charged with giving this kind of advice”—

he was talking about an advisory service—

“I could well see as being appropriate … Were we to have somebody charged with giving advice of this kind I think that would be very much of benefit both publicly and to companies and would give them reassurance”.

About the ICAC and its advisory services group, the committee said:

“The lack of time available to carry out our inquiry has prevented us from exploring this body in any detail, although we understand that its services are focused on compliance procedures aimed at minimising the risk of corruption rather than the risk of a prosecution arising from prospective action”.

The committee drew the distinction between advising on minimising the risk of corruption and advising on the risk of prosecution—the latter is a separate matter altogether, and my amendment is not about it. My amendment is entirely about minimising the risk of corruption.

In paragraph 129, the committee stated:

“We acknowledge that a formal advisory service similar to that provided in the United States and Hong Kong could have great benefit”,

and then went on to note the differences in the criminal justice system. That is fine as far as the risk of prosecution is concerned, but giving advice to companies is a different matter. That is what the advisory group does in Hong Kong. As I indicated to your Lordships, the corruption prevention department is under the section of the ICAC and not the prosecution department. Even within that organisation, which has powers of prosecution, there is a separate body concerned with prevention. That is what we should seriously consider.

The response given by the Minister was along the lines of what the DPP and the director of the SFO were thinking about. I want the Government to take a different view, and to step back and look again at the benefits that the Joint Committee did not have time to investigate. I want them to consider whether this is an idea that they should take up and provide the sort of advice to companies that they clearly want. For the moment, I ask the Government to look at that. I will return to this issue on Report and I hope that they will have had a full reconsideration. I am happy to talk to the Government at any time about this. For the moment, I beg leave to withdraw the amendment.

Amendment 17 withdrawn.

Clause 9 : Consent to prosecution

Amendment 18

Moved by

18: Clause 9, page 6, line 11, leave out paragraphs (a) to (c) and insert “the Attorney General”

In moving this amendment, I will also speak to Amendments 19 and 20. Amendment 18 refers to who must give consent before a prosecution for an offence under the Bill can be instituted. The Bill as drafted gives that power to the DPP, the director of the Serious Fraud Office or the director of Revenue and Customs Prosecutions in England and Wales. My amendment scraps that and reinstitutes the Attorney-General. Amendment 19 does that for Northern Ireland and Amendment 20 is consequential.

I had been hoping to have the debate in the presence of at least two former Attorneys-General who were here earlier, but the time and circumstances today meant that they were unable to stay. I am afraid that my noble and learned friends Lord Lyell of Markyate and Lord Mayhew are not here, so this is something that we will probably have to come back to at a later stage.

The Minister will not have been surprised to see these amendments, as considerable strength of feeling was expressed at Second Reading that the Government had erred in removing the Attorney-General from a decision-making role in such prosecutions. Certainly, my noble and learned friends Lord Mackay of Clashfern and Lord Lyell of Markyate made succinct and powerful points that deserve careful consideration. Why has the role of the Attorney-General been so reduced? Is it because of criticism that a member of the Government cannot be trusted to exercise untainted discretion? It may be that the arrangement has attracted some question from partners in the OECD. However, that is simply the way our constitution is, and the Government should be legislating within our constitution and not running scared of it.

The criticism that a member of the Government cannot act impartially should be proved incorrect and not acceded to. There are enough former holders of this office in the House for us to know that the very idea is anathema to them. As my noble and learned friend Lord Mackay said, it is important that a person making decisions in this area should be accountable to Parliament as that is where the proper scrutiny, independence and accountability for such decisions lie.

My noble and learned friend Lord Lyell made the very good point, which must also be borne in mind, that it is not the Government who prosecute an offence; it is the independent prosecuting authorities. However, it is important that someone who is answerable in this House or in another place should have the ultimate responsibility for that. We do not believe that the role of the Attorney-General should be downgraded in this way. I accept that this is not a universal opinion—I am sure that the noble Lord, Lord Goodhart, who is scribbling away hard, will not agree—but I accept that these are points of high principle that, as the noble Lord himself said at Second Reading, are not really a matter for the Bill. In my view, even the changes which the Bill makes to the Attorney-General’s role are not appropriate. The Government have a vehicle for full debate on these and many other matters in the Constitutional Reform and Governance Bill, which is currently on the horizon, and the role of the Attorney-General should be left as it is. If the Government want to tinker further with our constitution, they should do it in a Bill on the constitution.

I could say more. I will certainly come back to this at a later stage because I am sure that others, such as my noble and learned friends and former Attorneys-General of whom I have spoken, will want to address this matter; but, for the moment, I beg to move.

My Lords, noble Lords will not be surprised to learn that I feel rather strongly about this matter. Indeed, the OECD’s observation on this point just shows what is behind this idea: that someone who is intimately concerned with government cannot be trusted to decide independently matters of criminal prosecution. Our constitution has preserved that role for the Attorney-General—and in Scotland for the law officers—for longer than any of us have been familiar with it.

The idea behind the amendment is that a person in government cannot properly decide a really important matter, but we are talking about a general principle that applies to all government. Politicians may wonder why people do not have more confidence in them. If politicians themselves subscribe to the idea that people in government cannot be trusted to take independent decisions, it is not surprising that the public find it possible to take that view too. It is extremely important that we preserve the role of the independent law officers who are accountable to Parliament. This has been an important part of our constitution for generations.

I know that continental countries have an entirely different system, but, as the Minister said in our debate on the previous amendment, the Joint Committee felt that the examples given in support of the noble Lord, Lord Thomas of Gresford, were from a different system and therefore could be set aside. I suggest that we should not, in our constitutional principles, give way to the manner of handling these matters that has prevailed in some other countries. I have no doubt whatever that the Attorney-General is the proper person to account to Parliament in this very important area of the Bill. As we know, the noble and learned Lord the Attorney-General of the day did exactly that in relation to the SFO matter.

One colleague in the Lords said in a debate on the planning system and on whether the decisions in planning should be taken by Ministers or by a panel that you could not trust democratically-elected people to take unpopular decisions within sight of an election. Any Government who give way to that kind of principle in the future will certainly be in a very chaotic position. I believe very strongly that we should maintain the position of the independent law officer who is associated with the Government and a member of the Government for certain matters but who on prosecution policy is completely independent of Cabinet colleagues who have no responsibility assigned to them in that matter.

Perhaps I may say that I have the most profound confidence, if that is the right word, in the present Attorney-General to carry out this role efficiently. I do not believe for a minute that there is any question of her interfering with the decisions of the directors, but, being intimate to them and having responsibility for them, she is in a better position to account to Parliament for the result than she would be if she did not carry that responsibility.

My Lords, there is a most distinguished league of former Attorneys-General sitting nowadays on the Conservative Benches in your Lordships’ House. They are strongly and very persuasively supported by the even more distinguished noble and learned Lord the former Lord Chancellor. But I regret to say that I am not persuaded by them. Clause 10 removes the need for consent to a prosecution to be given by the Attorney-General. However, she retains the powers of direction, which is important. This provision was agreed unanimously by the Joint Committee. Volume 1 of the report on the draft Bribery Bill makes reference to the Attorney-General. Paragraph 171 states:

“The Attorney General's powers of consent and direction raise complex constitutional issues that lie at the heart of ensuring parliamentary accountability for the criminal justice system. We agree with the Government that the power of direction should remain in place without being reformed by the draft Bribery Bill. Since this power will remain in place, we are satisfied that the power of consent should be transferred from the Attorney General to the Directors of the prosecuting authorities ... Any broader reform of the Attorney General's Office, including her power of direction, must await comprehensive proposals being pursued in the future”.

As is true of all decisions of the Joint Committee, that was a unanimous decision.

I see no reason why the Attorney-General should be required to consent to any prosecution for bribery, however minor the case. Bribery is not distinct from other offences. The Attorney-General does not have to give her consent to every trial for murder. It is not a matter of trust. I, too, have the utmost trust in the present Attorney-General and think that she is an outstanding holder of that office, but I do not think that that in itself is a reason for retaining her power to give consent. It is of course arguable that the Attorney-General’s power of direction should be removed as well. That, indeed, is the Attorney-General’s own view, as stated in paragraph 170, which states:

“The Attorney General acknowledged the strength of opinion on both sides over this issue. She stated her view that powers of direction were no longer necessary in view of the proposed protocol”—

that is, the protocol between her and those responsible for prosecutorial decisions. However, I accept that, as the Attorney-General said, this would be a change in the constitutional role of the office of Attorney-General, which it would not be appropriate to include in this Bill.

I would suggest that that reflects in no way on the behaviour of the present Attorney-General or any foreseeable behaviour by future Attorneys-General. But it seems to me that this would remove from the Attorney-General what is, frankly, an anomalous power, which is the requirement that any prosecution for bribery must receive her consent.

My Lords, with some trepidation as a citizen rather than a lawyer, I would like to say why I think this amendment ought to be resisted. First of all, like many other enshrined British traditions, it is worth unpicking how it originated. I think its purpose in 1906 was to prevent irresponsible private prosecutions. Of course, there was no DPP then. It seems to me that the DPP system is hardly likely to allow irresponsible private prosecutions. He has a duty to safeguard the public interest, so I think it is the last thing that he would do.

The second point, which appears to me very important, is the very powerful OECD principle against anyone with a political role having a hand in a prosecution decision and anyone with a political role indeed making a decision about a prosecution and then having to be accountable for that to the legislature. I absolutely understand the respect which very distinguished former legal officers hold for the principle of the consent of the Attorney-General, and this is in no way a personal reflection. The OECD principle is not a personal reflection on the character of any individual law officer; it is a statement of a constitutional principle relating to the separation of powers. That is why I think it is important.

Following the noble Lord, Lord Goodhart, I think it is also important to remember that many decisions under the Bribery Act, as I hope it will become, will be on quite small matters. It will not always be BAe. I see a parallel with other prosecuting authorities. We do not ensure that the Attorney-General has to consent to Inland Revenue prosecutions. We do not ensure that the Attorney-General has to consent to Health and Safety Executive prosecutions. I really think that bribery is on that level.

My final point is, even so, even with all the considerations that I have just outlined, I am perfectly content, and I am sure everybody on the committee was, for the Attorney-General to retain the formal authority that he or she has under the present Bill. The Attorney-General has not been airbrushed out of the picture; simply, the role of the Attorney-General has been put in a proper constitutional context.

My Lords, I think that what we are looking at here is the result recently, or over the past 25 years, of rather disputed decisions by Attorneys-General. The Westland case springs to mind. If my noble and learned friend Lord Mayhew were here he would be able to inform us about that in much greater detail. There have been accusations thrown about about Lord Goodhart—sorry, the other one, the noble and learned Lord, Lord Goldsmith—and the Gulf War, and I think also on the withdrawal to do with BAe Systems. These have produced accusations that I am sure are untrue, because of all the people who I have met who have been involved in those, I have never doubted their personal integrity. I may have disagreed with them on some things, but never have I doubted their personal integrity in that particular role.

The noble Baroness, Lady Whitaker, talks about the separation of powers. This is one of the great myths. Montesquieu got it wrong and misunderstood Locke, which is why the American Constitution is different from ours. He failed to realise that all powers eventually end up in the sovereign, and so they have to come down. They do separate, but they do not have to be so rigidly separated as the Americans do. That gets them in just as many muddles as our one does.

Therefore, we should be careful about bandying around the concept of the separation of powers. We have had honest, upright men and women of great integrity as Attorneys-General, and we should not change things unless there is an obvious reason so to do. If we want to change the role of the Attorney-General, surely it should be done in a constitutional Bill with proper thought and proper pre-inquiry. Therefore, I support my noble friend on this amendment.

My Lords, I have not so far participated in the proceedings on this Bill but I should like to say a few words in support of my noble friend’s amendment. I do so on grounds not of high principle but of practical commercial activity and the fact that this provision envisages at least three routes by which a prosecution can be launched. The danger therefore is of different thresholds of prosecution. Of course, the lawyers will say that the legal grounds are there and that they are statutory, but those in the real commercial world know that interpretations can vary greatly. When we have the additional words “with the consent of”, that means that yet other people may wish to bring prosecutions and obtain the consent of the three bodies listed.

Those of us who have been involved in commercial activity will know of companies that have got across some of the bodies listed—in particular, HMRC. There may be a situation where a firm has done something with which HMRC disagrees and it may even have brought a prosecution and failed in its endeavours, but that means that that firm will then be marked by HMRC as a body whose future activity should be considered carefully. There is a real danger that in these circumstances people will find themselves being lifted up the scale for consideration for prosecution in connection with the activities considered under the Bill.

In the debate on the previous amendment, the noble Lord, Lord Thomas of Gresford, talked about certainty and efficacy. I think that my noble friend is saying—and I certainly support it—that it is a question not of being indifferent to bribery but of practical commercial activities, and the Attorney-General, who is of high principle, should be the person through whom a prosecution is launched without having many alternatives.

My Lords, with these amendments the noble Lord, Lord Henley, seeks to retain the requirement to obtain the prior consent of the Attorney-General before commencing proceedings for the new statutory bribery offences. He is right: there was considerable strength in the arguments put on this side at Second Reading, but I know that he will be the first to agree that there was also considerable strength in the arguments put on the other side. This is one of those issues where there seems to be a genuine difference of opinion and it is rightly debated today.

My ears pricked up and I sat up to listen when the noble Earl, Lord Onslow, started to say that there were accusations against the noble Lord, Lord Goodhart, in this field. It may be that the noble Earl has a crystal ball that the rest of us do not have and that one day—

Perhaps I may just finish the point and then of course I shall give way. Perhaps one day the noble Lord, Lord Goodhart, will be open to these accusations in the same way as others have been. I know not.

I must set the record straight. It was purely an idle lapse of memory, which confused me. I was not in any way assuming it to be the noble Lord, Lord Goodhart. I knew that I meant the noble and learned Lord, Lord Goldsmith.

I think I knew that too.

We all agree, I hope, that there is need for a consent provision for the new bribery offences to ensure, if nothing else, consistency in prosecution decisions. That does not appear to be an issue. What is an issue is the level at which such consent should be given. There are strong arguments on both sides. I say to our distinguished ex-law officers that in providing for consent to be given by the director of the relevant prosecution authority, we are not for one moment suggesting that previous Attorneys have done anything other than their duty in their decisions on whether to grant consent to a particular prosecution.

Having said that, this is clearly a sensitive area, where perceptions matter as much as reality. As the Joint Committee which considered the draft Corruption Bill in 2003 put it:

“Without doubting the independence of the Attorney General and his predecessors, we accept that the appearance of ministerial involvement in the prosecution decision would best be avoided”.

This view is shared by, among others, the OECD itself; the Council of Europe’s monitoring body; Transparency International UK in a particularly strong way; and the Corner House. Importantly, the recent Joint Committee was similarly satisfied, as the noble Lord, Lord Goodhart, reminded us, that the power of consent should be transferred from the Attorney-General to the director of the relevant prosecution authority. The Law Commission was also of this view.

I do not dismiss lightly the arguments around the need for parliamentary accountability for such important decisions. However, such accountability will continue to be provided through the Attorney-General’s fulfilment of her important role in superintending the main prosecuting authorities. The protocol between the Attorney and the prosecuting departments, published last July, sets out how the Attorney-General and the prosecutors will work together to ensure that the Attorney-General can discharge that responsibility. I know—and the Committee will know—that the present Attorney personally attaches considerable importance to parliamentary accountability. The noble and learned Lord, Lord Mayhew, asked my noble and learned friend the Attorney about this point when she gave evidence to the Joint Committee on 25 June. She made it clear to him and the Joint Committee that,

“Accountability will remain because, for so long as the Law Officers, that is the Attorney General and the Solicitor, remain the supervisors and superintendents of the prosecutorial authority, there is a vehicle through which that accountability can take place”.

Of course, a balance must be struck between prosecutorial independence and parliamentary accountability.

This is not the occasion for debate on any wider reform of the powers of the Attorney, but it is right that when legislating for new offences we consider on a case-by-case basis—as we are today—whether there is a need for prior consent to a prosecution and, if so, at what level such consent should be granted or withheld. Our judgment is that for the new bribery offence, prior consent to a prosecution is desirable and that it would be appropriate for such consent to be given by the director of the relevant prosecuting authority. This strikes the right balance and this view is widely shared by external organisations, some of which I have mentioned. Some of those organisations have been pressing us to reform our bribery laws for some years. We should heed their views and I therefore invite the noble Lord to withdraw his amendments.

The passion with which the noble and learned Lord, Lord Mackay of Clashfern, supported the amendment is something that we very much take into consideration. His defence of the status quo is a powerful argument. We do not agree with him on this occasion. I want to put right one factual matter that the noble and learned Lord mentioned, which was also referred to in passing by the noble Earl, Lord Onslow. The decision about the Serious Fraud Office’s discontinuance of what has been described as the BAE Saudi investigation was made by the director of the Serious Fraud Office and not the Attorney-General of the day. I want to put that clearly on the record.

That is the factual position as I have known it, but the accountability of the Attorney-General for that decision was what was important. The accountability is the main issue as far as I am concerned, although consent is part of that.

I repeat that in our view accountability stays with the Attorney-General as I have tried to describe. I invite the noble Lord to withdraw his amendment.

My Lords, in my generous way and in accordance with proceedings of the Committee, I shall in due course withdraw the amendment. However, I assure the Minister that I shall bring it back on Report, because others may take part in this debate and such an important point needs to be debated by a fuller House than is possible in a Committee in the Moses Room at six o’clock on a Thursday evening in January. With that, I beg leave to withdraw the amendment.

Amendment 18 withdrawn.

Amendments 19 and 20 not moved.

Clause 9 agreed.

Committee adjourned at 6.01 pm.