Standing Committee A
Tuesday 23 January 2001(Morning)
[Mr. Bill O'Brien in the Chair]
Mr. Bob Russell (Colchester): On a point of order, Mr. O'Brien. As you will be aware, anxiety has been expressed about the amount of time allocated to the Bill. Those arguments have now been shot out of the water by the disgraceful behaviour of the hon. Member for Buckingham (Mr. Bercow), aided and abetted by the hon. Member for Lichfield (Mr. Fabricant), to the extent that I was entirely frozen out of the previous sitting. I should like to place that on the record, and I hope that compensation will be given in time on Report.
The Chairman: I have read the Hansard report, and I note your point.
Mr. John Bercow (Buckingham): Further to that point of order, Mr. O'Brien. Generally the Committee has been conducted in a good and convivial spirit. It was very much to be regretted that that spirit broke down at the end of last Thursday's proceedings. As I explained, there was no intention of closing off opportunities for Liberal Democrat Members to contribute to the debate. In a rather unguided and ham-fisted way, the hon. Member for Colchester (Mr. Russell) referred to our conduct. It is only fair to emphasise that on the last matter for debate last Thursday, I made a speech of only seven minutes. His rather misguided and random attack was ill advised. I have enjoyed listening to his contributions, and on many occasions in the Committee my colleagues and I have agreed with him. It was a matter of regret to us that he blew his top and lost his temper and behaved so aggressively. I tried to appease him after the conclusion of the Committee, but
The Chairman: Order. We are now getting into speeches, rather than points of order. I note the points that have been made.
Offences by bodies corporate
Mr. Bercow: I beg to move amendment No. 89, in page 22, line 16, after `managed', insert `or controlled'.
Thank you, Mr. O'Brien. I welcome you back to the Chair. A point of absolute consensus would be that you have been an excellent Chairman, superbly supported by Mr. Sayeed and Mr. Wells. I hope that on that amicable note we may start our proceedings.
It is with misty eye, leaden foot and a heavy heart that I rise to speak this morning, not because I have any doubts about the merits or importance of amendment No. 89, but simply because this is the last day of our consideration of the Bill in Committee. I have much enjoyed our proceedings, and I regret that they are now drawing to a close. I was almost desolate last night to be told by the Under-Secretary that, although he would be attending our proceedings, he did not intend to contribute further. That is regrettable, but we are delighted to have him here until a quarter to one, and I look forward to further jousting with him on Report.
The amendment is designed as a mechanism to engender debate. We are unlikely to press the matter to a Division, but the issues involved are important. The clause deals with offences by bodies corporate. It specifically provides for prosecutions not only against bodies corporate but against individuals in such bodies corporate who are thought to be responsible for breaches of the Bill. The purpose of the amendment is to require the Government to clarify their thinking and, if necessary, the clause.
The clause seems to imply that the managers of salvage or licence plate businesses could be responsible for the actions of one individual in that business. That might or might not be fair. It could depend on the seniority, and therefore, the level of assumed responsibility of the individual in question. I am keen to establish the precedents of this type of clause. Is the Minister aware of precedents in any Bills, now Acts, to justify the inclusion of the unamended clause? I should be grateful if he, not abstractly but by example, would develop the argument and explain the circumstances in which it could have a beneficial effect and in which its absence would have a deleterious impact.
The explanatory notes state that any offence that is committed under the Bill that is
committed with the consent of, or is
to, a director, manager, secretary or other relevant officer,
may result in the prosecution of that person ``as well as'' of ``the body corporate''. That is unobjectionable in principle. The particulars of an individual instance or the meat of the case is what really matters. I am not clear how the clause will apply in practice, or whether a junior person could, as a result of the inadvertent neglect of duty, end up being prosecuted. My intention is in no way to protect senior and powerful individuals within a business who should exercise responsibility for the consequences of their actions. I am concerned that a relatively junior person within the business might end up copping itif I can, inelegantly but bluntly, put it that wayunder the Bill. Will the Minister either reassure us that that will not happen or provide justification as to why it should?
The Government should clarify why the actions of one individual, even a junior one, should result in the prosecution of an entire business. Is it not arguable that one prosecution would be enough? If the Minister disagrees, will he explain why two or even several prosecutions would be justified? We have proposed the addition of ``or controlled'' in order to stimulate debate. It might give clarity to a clause that is slightly unclear, at least on first inspection to my colleagues and me.
No one disputes that a person in control of a body corporate who commits a breach of the Act, should be held responsible. However, if an individual is employed on a junior level within the body corporate and acts with good intent, although inappropriately, as it turns out, will such a person be liable to prosecution? Clarification is required.
I rest the case. I am not looking to press the matter to a vote at this stage, but I should be grateful if the Minister could provide better particulars on the Government's thinking on the subject.
Mr. Michael Fabricant (Lichfield): My hon. Friend the Member for Buckingham knows that I support him on the matter. Members of the Committee will know that I share a concern about shell companies, which I have mentioned on previous occasions. Those are companies of which the directors are registered with Companies House, but which are managed by people who are not registered as its directors. As I have said in the past, I am aware that in the Companies Acts, a director is stated to be somebody registered as such, or who acts as a director. However, there is a danger that a company acting unlawfully and the individuals running it may not be prosecuted if we retain the term ``managed'' without adding ``or controlled''.
We have heard recent reports in the newspapers and on the broadcast media that Railtrack personnel may be prosecuted as a result of the recent derailment. I do not expect the Minister to comment on that specific instance, but we have also heard reports that, ever since the incident involving the Herald of Free Enterprise, there has not been a single successful prosecution of directors or people working for a body corporate when such a body has committed an offence. Although I welcome the clause, I wonder whether the Minister believes that there will ever be a successful prosecution of that kind, given the performance of the prosecuting authorities under both Labour and Conservative Governments.
Does the Minister agree that adding the words ``or controlled'' would provide assistance to those organisations that feel that such a prosecution should be made under the clause? Those words would tear away the curtains that may conceal those who secretly control a company, a partnership limited by guarantee or the other forms of partnership described earlier in the Bill.
Mr. Bercow: Does my hon. Friend agree that subsection (1) is potentially disturbing? We know that one of the responsibilities of a motor salvage operator or a registration plate supplier is to furnish details of changes of their circumstances to the central authority. If a secretary inadvertently failed to dispatch those details, he or she would, on the face of it, be subject to prosecution because of an error committed negligently, but not in bad faith.
Mr. Fabricant: My hon. Friend raises a valid concern. Not only the secretary but the manager or managers above him or her, as well as the directors, might be prosecuted in such a case. We may assume that the prosecuting authorities would apply some common sense, but should an Act of Parliament be dependent on common sense? Are the Government missing something here, which my hon. Friend has highlighted?
The term ``Offences by bodies corporate'' does not adequately specify those offences that might result in a fine on the body or the imprisonment of those individuals. There appears to be nothing in the clausealthough the Minister may reassure methat puts any restriction on the sort of offence that might be applied to the individuals involved. The final words of subsection (1) state that the individual will be ``punished accordingly'', but no reference is made to the degree or level of that punishment.
I find it extraordinary, in the context of the English legal system, that we might consider sending someone to prison in the circumstances described by my hon. Friend the Member for Buckingham. Is there anything in the Bill to prevent a hanging judge from, if not hanging the secretary or her boss, sending them to prison for any length of time? The Minister needs to answer such questions. I have expressed at some length our concerns about the imprecision of clause 38, although we welcome its general principle.
The Minister of State, Home Office (Mr. Charles Clarke): Perhaps I may make an appeal to members of the Committee at this juncture. At the beginning of the proceedings, the hon. Member for Colchester raised a point of order about time. I am not asking him to intervene, but he was less preoccupied with the speech to which the hon. Member for Buckingham referred than with the lengthy exchanges at our previous sitting about relatively marginal issues. With respect, the points made by the hon. Member for Buckingham and one third of those made by the hon. Member for Lichfield were to the point and worthy of debate, but two thirds of those made by the hon. Member for Lichfield about hanging judges were just going round the course. No one is suggesting that secretaries could be hanged as a result of the Bill. I appeal to hon. Members to focus on the issues in hand.
Corporate manslaughter is a serious matter, as we saw in the Herald of Free Enterprise and Hatfield disasters. The Government are consulting on changing the law. I have been involved in many discussions with company directors about such matters and it is fair to say that most companies recognise that the law needs to be changed, but it is difficult to formulate it to make it possible to bring prosecutions. The matter is not germane to our discussions, but I address it because the hon. Member for Lichfield did so.
The precedents point raised by the hon. Member for Buckingham is fair. I am advised that there are many precedents, but, as always when we wish to list them, we do not have them to hand as we speak. The Registered Homes Act 1984 is probably one such precedent, but I will write to the hon. Gentleman, if that is acceptable, before Report, setting out the precedents that may help him.
The clause addresses individual and corporate liability for offences under the Bill. It provides that company office holders and members exercising management functions shall also be held liable if they are culpably negligent or consent to or connive at the company's offence. That is a reasonable and appropriate approach. The effect of the hon. Gentleman's amendment would be to ensure that offences under the Bill applied also to people who controlled a companya controlling shareholder, for example, as cited by the hon. Member for Lichfieldbut were not directors.
We discussed the point previously and understand the sentiments behind the amendment, but we have no reason to believe that motor salvage operators are controlled by large shareholders, nor have we had representations from the police to suggest that that is the case. That is why we believe that the liability should stop at director and manager level, and not extend to controlling shareholders. It is important to focus on those who bear responsibility, as directors do, even in a shell company, as we have already discussed. To impose a criminal offence is a serious matter and we do not wish to cast it wider.
On the question of what constitutes an officer of the company, clause 38(1) refers to
a director, manager, secretary or other similar officer of the body corporate.
We are focusing on directors and managers. If it were a matter of a secretary forgetting changes, they would have a defence, but an officer of the company has a clearly defined responsibility, as has a manager. It is possible to make it clear that we are talking about people who are running the company, and I hope that I can give the assurance that the hon. Gentleman seeks.