ATTACHMENT 2
RAISING STANDARDS AND UPHOLDING INTEGRITY:
THE PREVENTION OF CORRUPTION
The Government's Proposals for the Reform
of the Criminal Law of Corruption in England and Wales
COMMENTS OF TRANSPARENCY INTERNATIONAL (UK)
SUMMARY
The following are the principal points to emerge
from the comments of TI-UK
— Proposals for amendment of the domestic
law of corruption and those relating to Members of both Houses
of Parliament are broadly supported.
— The proposed legislation needs to
be clear and effective, especially to give effect to the UK's
obligations under the OECD Convention.
— The equivalent laws in Scotland,
Northern Ireland and the Crown Dependencies need to be brought
swiftly into line.
— Legislation to implement the OECD
Convention must be in place by the end of 2000.
— There remains a need to distinguish
between public officials and others for the offences of trading
in influence and bribery of foreign public officials.
— The reverse onus provision in the
1916 Act should be included in new legislation.
— There should be a separate section
in the legislation for the offence of bribing foreign public officials.
— The requirement for the consent of
the Law Officers for prosecution should be abolished.
— There should be an urgent and thorough
high-level consultation to identify weaknesses in current investigation
and prosecution procedures.
— The jurisdiction of the Serious Fraud
Office should be extended to include corruption.
— Inland Revenue confidentiality rules
should be relaxed to facilitate prosecution of corruption.
TRANSPARENCY INTERNATIONAL
(UK)
1.1 Transparency International is a non-governmental
organisation dedicated to curbing both international and national
corruption and, in this connection, to increasing government accountability.
It is the only global non-profit and politically non-partisan
movement with an exclusive focus on corruption. It was founded
in 1993. It has an international secretariat in Berlin and national
chapters in about 80 countries. Transparency International (UK)
(TI-UK) is the UK national chapter.
1.2 TI-UK's primary concern has been with
fighting corruption in international trade and investment. However,
it is also concerned with the domestic law of corruption, both
because of the need to curb corruption within the UK and because
it is the foundation of any attempt to deal with the "supply"
side of international corruption.
GENERAL VIEWS
OF TI-UK
2.1 TI-UK welcomes the publication of the
Government's policy paper (the Paper) and is broadly supportive
of the proposals made. However, it does have a number of concerns,
which are referred to in the remainder of these submissions. TI-UK
thinks it is right that evidence in relation to alleged corruption
by Members of Parliament and members of the House of Lords should
be admissible notwithstanding the Bill of Rights of 1689 and offers
no comments on this part of the Paper.
2.2 TI-UK made submissions to the Law Commission
in respect of the original consultation paper (No 145). It was
apparently due to TI-UK's intervention that the final report contained
some proposals for dealing with the international dimension. Unlike
the Law Commission's report (No 248) "Legislating the Criminal
Code: Corruption" (LCR), the Government's Paper does not
include a draft Bill. The Paper indicates that it accepts in principle
the proposals made by the Law Commission. Some of the points addressed
in these submissions can only be fully developed when the text
of proposed legislation is available. TI-UK is willing to co-operate
in the process of briefing parliamentary counsel or to work with
Government in whatever way may be thought most helpful in securing
the common objectives expressed by the Home Secretary, the Rt.
Hon Jack Straw MP, in his foreword to the Paper.
2.3 TI-UK's criteria in commenting on the
proposals in the Paper, are consistent, whether considering domestic
or international corruption. Will they be clear? Will they
be effective? Unless the legislation is clear, it certainly
cannot be effective. Effectiveness however embraces other factors,
especially the will, mechanisms and resources to detect and prosecute
offences covered by the new legislation.
2.4 Clarity and effectiveness may call for
statutory measures not yet included in the Paper or the LCR (see
the proposals below regarding the jurisdiction of the Serious
Fraud Office (SFO) and the limited lifting of confidentiality
restrictions on information supplied to the Inland Revenue).
2.5 In examining how the Paper's proposals
may fulfil the UK's international obligations, TI-UK looks especially
at the OECD Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions (the OECD Convention),
the OECD 1997 Recommendation and the Country Report for the UK
issued by the OECD on 27 June 2000 (OECD Review).
2.6 For that purpose, as for other commitments
made on behalf of the UK in this field, it is imperative that
substantially similar legislation to that proposed for England
and Wales is enacted for Scotland and Northern Ireland and that
the Crown Dependencies and the UK Overseas Territories can be
brought within the scope of satisfactory anti-corruption laws
to tackle international corruption without delay. The UK must
not, by default, embrace its own "haven jurisdictions"
for corrupt dealings.
2.7 As a starting point, the enactment of
proposed legislation for England and Wales is VERY URGENT. The
OECD Working Group on Bribery in International Business Transactions
(the Working Group) found that the UK laws were not in compliance
with the standards of the OECD Convention and urged the UK to
enact appropriate legislation as a matter of priority, taking
into account the observations of the Working Group, who will review
the situation by the end of 2000. TI-UK urges the Government to
follow-up a "fast-track" consultation on the Paper,
with a commitment to legislate in the Queen's Speech at the opening
of the 2000-01 session and to construct a "fast-track"
for the legislation to be in place by December 2000. This is a
measure that should command all-party support and Government should
contrive to demonstrate that the UK is capable of using its parliamentary
machinery to meet the well-founded concerns of the Working Group
within the generous time allowed.
2.8 Failing this, there remains a strong
case for enacting a short and uncontroversial Bill, to create
the offence required by the OECD Convention, together with the
proposals for extra-territorial jurisdiction in the Paper. This
offence, the bribery of foreign public officials (FPOs), is a
serious international economic crime which can logically either
stand apart from, or be part of, the UK's domestic anti-corruption
law. To delay enacting this offence could severely damage the
future success of the Convention, which relies on the basic assumption
that the same rules will apply to all major exporters. It is particularly
damaging that the UK as a G7 nation is still seen as one of the
few laggards in curbing a practice that has devastated economies
and resulted in appalling poverty.
2.9 The Home Secretary has rightly recognised
corruption as a "deadly virus", that left unchecked,
"weakens economies, creates huge inequalities and undermines
the very foundations of democratic government". It is
normal practice to treat deadly viruses urgently and not "when
parliamentary time allows"!
PROPOSALS FOR
REFORM OF
DOMESTIC LAW
OF CORRUPTION
3.1 In broad terms, the Paper's proposals
to abandon the present distinction between private and public
sector corruption, to introduce the "agency" concept
and to have a definition of acting corruptly are logical and welcome.
In theory, they should simplify our domestic law. This, combined
with the repeal of the current statutory offences and the abolition
of the common law offence of bribery, should certainly remove
present uncertainties as to their scope and overlap.
3.2 However, there are aspects of "agency"
in the draft Bill published in the LCR that are untested, notably
the concept of a person being "an agent performing functions
for the public if the functions he performs are of a public nature".
One recognises the factors that have resulted in the concentration
on functions rather than bodies, with the increasing number of
public sector functions that have been privatised or contracted
out in recent years. The legal concept of "the public"
being a principal in an agency relationship, separate and apart
from relevant public bodies, is quite difficult and will depend
on judicial interpretation. The impossibility of "the public"
giving consent to an agent is already noted in the Paper (para
2.7). A review of clauses 10 and 11 of the LCR Bill suffice to
show the complexity and difficulties that may be encountered in
applying this novel concept in the law of corruption. Moreover,
with the passage of time, and less recent memory and recognition
of services now in the private sector as having once been in the
public sector, it will become more difficult to determine whether
functions are "of a public nature".
3.3 For reasons stated in the Paper (para
2.15) and in these submissions (paras 5.1 and 6.4) there will
remain a need to distinguish between public officials and others.
3.4 As the Government recognises (para 2.6
of the Paper), it is important not to criminalise legitimate business
activity. In the LCR Bill this depends on the definition of acting
corruptly and the exception of remuneration or reimbursement.
In dealing with "tips and gratuities", it might be helpful
to introduce into the Bill the concept of remuneration or gratuities
which are fair and reasonable and openly and fully accounted for
in appropriate business records. Transactions that are open and
transparent are unlikely to amount to corrupt activity.
CORRUPTION IN
THE PUBLIC
SECTOR
4.1 On grounds of effectiveness, it is regrettable
that the Paper proposes to abolish the presumption (at present
in the 1916 Act) that money or gifts or other consideration paid
to public servants from those having or seeking contracts in the
public sector are given or received corruptly. Whenever a reward
is received in these circumstances, it is reasonable that the
recipient should have to demonstrate that it was received innocently.
This is because the briber and the agent will be the only people
who know the real purpose of the reward. Under the proposals,
the prosecution will have to prove beyond reasonable doubt that
the briber believed the agent would act primarily in return for
the reward, which may prove very difficult without the existing
presumption. This reverse onus provision does not amount to a
presumption of guilt and, notwithstanding the provisions of the
European Convention on Human Rights, is thought to be reasonable.
Its removal could present an additional hurdle to successful prosecution.
To preserve the presumption would require the distinction between
public and private officials to be maintained.
TRADING IN
INFLUENCE
5.1 TI-UK endorses the proposal in the Paper
to criminalise "trading in influence" in a manner required
to comply with the Council of Europe Criminal Law Convention on
Corruption. The Government recognises the need for this purpose
for the Bill to deal separately with public officials (para 2.15).
BRIBERY OF
FOREIGN PUBLIC
OFFICIALS
6.1 The OECD Convention affords governments
and business the best opportunity so far to make a real difference
in achieving competition in international trade and investment
based on quality, efficiency and price, rather than the ability
to bribe. The more widely this is promoted, the greater the progress
that can be made in isolating the extortioners, driving down the
level of corruption and theft of national resources and improving
integrity in national governance programmes.
6.2 The Paper's proposals, when finally
implemented, will substantially comply with the OECD Convention,
but TI-UK has reservations as to the legal solutions proposed.
However tidy and comprehensive the drafting of the legislation
envisaged by the Paper, if this is to be modelled on the LCR Bill,
it will present problems to those charged with ensuring compliance
with the Convention and to those detecting and prosecuting an
offence of bribing a FPO. The LCR Bill may work well in the context
of the law and practice within England and Wales, with the common
law tradition of Courts interpreting statutes and building over
time a system of precedents. However, in the international context,
for our laws to be effective in combating the bribery of
FPOs, they need to be instantly recognisable from their language
as addressing this offence.
6.3 Working on the basis of the LCR Bill,
in order to establish the single offence of a bribe having been
paid by or on behalf of a British national to an FPO in another
country, it will be necessary to refer to and interpret clauses
1, 3, 4, 6, 8, 9 and possibly 10. The concept of an agent performing
functions for "the public" (based on function rather
than on some agency for a government or public body with a constitutional
or legal persona) will have to be related to the OECD Convention
wording. Reliance will need to be placed on the rather indirect
approach adopted in the Bill (clause 9(4)) that "Subsection
(3) has effect even if the person has no connection with the United
Kingdom, and "public" is not confined to the public
of the United Kingdom or of any part of it." This approach
seems to endure in the Paper's Summary (para 6) which says that
"the corruption of, or by, a public official is not confined
to the public of the United Kingdom." Rather than an indirect
approach, it would surely be clearer and more effective to declare
the offence more positively, as will be needed for the offence
of trading in influence (para 5.1 of these submissions).
6.4 TI-UK advocates that the legislation
to implement the Paper's proposals should contain a separate section
worded along the lines of Article 1 para 1 of the OECD Convention,
so that a person commits an offence under the Act if he intentionally
offers, promises or gives any undue pecuniary or other advantage,
whether directly or through intermediaries, to a foreign public
official, for that official or for a third party, in order that
the official act or refrain from acting in relation to the performance
of official duties, in order to obtain or retain business or other
improper advantage in the conduct of international business. This
section would contain its own definition of "foreign public
official", "foreign country" and "act or refrain
from acting in relation to the performance of official duties",
substantially along the lines of Article 1 para 4 of the Convention.
It would not be necessary to follow the Convention's words slavishly
and parliamentary counsel will know best how to incorporate this
offence into the draft legislation. It would leave no doubt at
all that the OECD Convention had been incorporated into the laws
of England and Wales. It would not rely on future interpretation.
It would not replace but merely supplement the other new offences
to be created by the legislation.
6.5 A section as suggested in the preceding
paragraph would create a clear "Convention offence".
This would strengthen the laws on related issues of money laundering
offences, mutual legal assistance in the form of search and seizure,
extradition and disallowance of tax deductibility, which are linked
to the existence of a criminal offence under our law. Such an
offence might exist from the interpretation of a combination of
sections in the LCR Bill, but to enact the "Convention offence"
would place this manifestly beyond doubt. The definition subsection
would ensure that the offence applies to foreign members of parliament
and foreign judges, which is by no means certain under the LCR
Bill. In this way, all the valid objections of the Working Group
expressed in paras 1.1, 1.2 and 2 of the Evaluation in the OECD
Review would be met.
6.6 The Section discussed in paras 6.4 and
6.5 of these submissions would be the core of the separate Bill
referred to in para 2.9, supplemented by the widening of powers
referred to below in paras 8.4 and 8.5.
CONSENT TO
PROSECUTION
7.1 The Law Commission recommended that
the requirement under corruption statutes for the consent of a
Law Officer for prosecution should not apply to the offences to
be created by the new legislation (para 7.26 of the LCR). This
followed careful consideration of most of the relevant issues
and the views of respondents following the earlier consultation
paper. The Paper, following discussion with the Law Officers,
proposes not to adopt this recommendation. It claims that a consent
provision remains necessary because corruption is an offence which
creates a high risk that the right of private prosecutions will
be abused and the institution of proceedings will cause the defendant
irreparable harm (paras 5.2 and 5.3 of the Paper). The same could
be said of fraud offences, but no consent of the Law Officers
is required for those offences. The LCR had already dealt with
the extensive remedies that already exist for dealing with this
circumstance (see para 7.25 of the LCR). In the area of private/private
corruption, the parties may be expected to be sufficiently resourceful
to prevent abuse of the judicial system.
7.2 All prosecutors are obliged to view
matters dispassionately and to take account of questions of public
interest. To preserve the Law Officers' consent therefore amounts
to needless duplication.
7.3 The one very important factor that the
Law Commission did not consider in this context was the need to
comply with Article 5 of the OECD Convention. Investigation and
prosecution of the bribery of a FPO is not to be influenced by
considerations of national economic interest, the potential effect
upon relations with another state or the identity of the natural
or legal persons involved. TI-UK would not suggest that any particular
Law Officer would exercise his or her powers improperly. However,
the Law Officers are members of the Government and in considering
a case objectively, could give different weight to different aspects
than might prosecutors outside government. Thus in theory, consent
to prosecute could be withheld to protect people or transactions
for considerations fully within the ambit of Article 5 of the
OECD Convention. It is for this reason that the Working Group
recommended the UK to reconsider this requirement (para 5 of the
Evaluation in the OECD Review)
7.4 The Government proposes to disregard
the considered recommendation of the Law Commission, the views
of respondents and the recommendation of the Working Group for
an insufficient reason. TI-UK would reinforce the recommendations
and urge the Government to abandon this proposal.
EFFECTIVENESS OF
ENFORCEMENT
8.1 Para 2.8 of these submissions referred
to the finding of the Working Group under Phase I of the review
of performance of the UK under the OECD Convention. Phase I deals
only with legal implementation. The proposals in the Paper with
the modifications suggested in these submissions would enable
the UK (or at least England and Wales) to fulfil its Convention
obligations. Phase II of the monitoring process will evaluate
enforcement programmes in each country. It will be thorough and
involve country visits. Unless there are radical changes in the
UK's enforcement agencies, procedures and priorities, the outcome
of the Phase II evaluation is likely to be as negative as that
for Phase I. Some of the necessary changes may require amendment
of our laws and these should be included in the legislation to
follow the Paper's proposals.
8.2 Preliminary enquiries undertaken by
TI-UK reveal a disturbing uncertainty as to which agency or agencies
would investigate and prosecute the offence of international corruption,
particularly one where all significant components of the offence
take place outside the country. There has of course been no directly
relevant experience. The OECD Convention came into force for the
UK on 15 February 1999. So far as is known, no additional financial
or human resources have been applied to the investigation of cases
giving rise to the new offence, although there have been reports
in the public domain of cases that would merit investigation.
For example, the majority of companies and individuals debarred,
for fraud and corruption, by the World Bank are British.
8.3 The difficulties of detecting the offence
and gathering evidence cannot be over-estimated. TI-UK recommends
that senior officials from within the various law enforcement
agencies, with experienced criminal law practitioners, should
consult with the Home Office as a matter of urgency to consider
current procedures and their likely effectiveness right from first
report, through investigation and evidence gathering to trial,
to highlight weaknesses, especially those that could be corrected
or minimised by the proposed legislation. This consultation would
also prepare the UK for Phase II of the OECD Convention monitoring
process.
8.4 Many cases of bribery of FPOs are likely
to fulfil the current criteria of the SFO for the acceptance of
cases as set out in the SFO Annual Report for 1999/2000. The investigation
should be in the hands of those who would be responsible for the
prosecution. The sum involved would frequently be at least £1
million. The case would be likely to give rise to national publicity
and public concern. The investigation would require highly specialist
knowledge and would obviously have a significant international
dimension. There would be a need for legal, accountancy and investigative
skills to be brought together as a combined operation. The suspected
bribe would frequently be complex and one in which the use of
the powers in Section 2 of the Criminal Justice Act 1987 (CJA)
might be appropriate. TI-UK recommends that the jurisdiction of
the SFO should be expressly widened to include the new offences
of corruption. Many cases of corruption could include fraud and
so would already fall within the SFO's jurisdiction. Many cases
could equally not amount technically to fraud and therefore a
very small amendment should be made to the CJA to confer jurisdiction.
8.5 There should be no barrier to the Inland
Revenue's passing information to those prosecuting the new offences
of corruption; rather there should be an obligation to pass to
the relevant agency any information tending to show that the crime
of corruption has been committed.. The proposed legislation, or
the first available Finance Bill (if considered more appropriate
by those responsible), should include whatever is necessary to
achieve this. Prosecution of bribery, particularly with an international
dimension, will be difficult enough without artificial barriers
such as exist in the current rules of confidentiality that apply
to the tax authorities. This would also meet the recommendation
of the Working Group in Part II of the Evaluation in the OECD
Review.
July 2000
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