Enterprise Bill

[back to previous text]

Miss Johnson: The hon. Gentleman is misrepresenting what I said, and I shall repeat my remarks later. I asked the hon. Member for Eastbourne to substantiate his allegation that, in relation to leniency in the UK, there had been a failure to pick up the provisions that made those in the US work.

Mr. Djanogly: I thank the Under-Secretary for her clarification but it does not affect my point, which is that it is a cultural issue as much as anything else. The US has had these provisions for a long time. But, more importantly, it has a different legal culture which encourages deals being done with prosecuting agencies and permeates the whole criminal system from federal agencies right through to bog-standard criminal courts. Plea-bargaining is part of the culture of the USA; it is certainly not part of ours. Criminal barristers say that there is enormous confusion and inconsistency here. The policy of the Crown Prosecution Service is that deals are not done here.

11.45 am

Miss Johnson: Among other things the hon. Gentleman is leaving out of the mix are the leniency arrangements in the case of the Leeds bus companies, which also led to a significant reduction of fines. A leniency regime was operated in that case, and it operates in other circumstances. The hon. Gentleman seems to be taking no account of that.

Mr. Djanogly: I certainly shall. Indeed, it also would be fair, from the Under-Secretary's point of view, to mention that there are proposals in clause 181(4) to put in place a plea-bargaining type of system in this country. We will come on to that.

Mr. Waterson: Does my hon. Friend agree that the essential difference is that in America, where they have had similar legislation since the late 19th century, a substantial body of practice has grown up, so that lawyers advising potential defendants are well able to advise on the likelihood of plea-bargaining and how they are likely to be treated, particularly if they are whistleblowers? There is no such set of precedents in this country.

Mr. Djanogly: Exactly. I thank my hon. Friend for that comment. In America, someone acting for a defendant knows that he can approach the prosecution and talk about a deal. He may not come to a deal, but he knows that that is how the system works. In this country, criminal barristers worry as much about whether it would be suitable for them to approach the prosecution to talk about a deal as about whether there would be a deal. It is commonly felt in this country that if a barrister approaches the prosecution, it will automatically be thought that the plea should be switched to guilty. If we are moving to a system of whistleblowing, how can the Under-Secretary assure us, and the wider legal profession in general, that we

Column Number: 162

will also move to a totally different culture that will be similar to that in the USA?

Mr. McWalter: Is the hon. Gentleman arguing that the measure is complex and a bit of an import so we ought not to do it, or that it is complex and a bit of an import so we should revamp it to make it more effective?

Mr. Djanogly: Neither of the above. I am explaining why criminalisation is not right. I am attempting to show how there are many more issues involved in going down the route of criminalisation than simply saying, ''The Americans do it, so let us do what they do.'' It is not quite so straightforward, not only in terms of what is in the various bits of legislation, but in terms of the culture of the system.

Mr. Field: On the differences in American culture, I wonder if my hon. Friend has thought about not only the differences in their legal system and approach to whistleblowing but the fact that the economy as a whole is much more lightly regulated. Obviously, that has an impact on the nature and the type of cases that go through their anti-trust or monopolistic legislation.

Mr. Djanogly: My hon. Friend makes a fair point. Whistleblowing is encouraged in the American culture. If one approaches the prosecution with information, one is not made to feel that one will be prosecuted oneself, as would happen in this country.

Another important concern is that there is something of a presumption that criminal sanctions are necessarily a more effective way of remedying the problem of cartels than civil penalties because people would be more frightened of the implications of criminal penalties. I am not sure that that is the case. We are talking about cases involving cartel offences in which juries in criminal courts will have to decide beyond reasonable doubt what could be enormously complex areas of competition law.

The current movement is away from criminal towards civil penalties; for example, there have been a relatively tiny number of prosecutions under the insider dealing legislation. The main reasons cited for that are because the evidence is so hard to get and the burden of proof means that the Crown has lost most of those few prosecutions. Criminal prosecution in such cases simply does not work, not least because juries must discuss and consider what are often commercial rather than criminal issues in the traditional interpretation of criminality.

The general move is towards getting rid of criminal sanctions on insider trading and making it a civil offence with a lower burden of proof, with the objective of creating a faster court process and an increased ability to come to settlements. That applies in other areas of law. The Companies Act 1989 is under review; the Government propose to abolish section 151 of that Act, which deals with the legal financial assistance given by companies.

Mr. Field: Does my hon. Friend agree that, in regard to the high-profile trials that have taken place in related areas such as financial assistance and insider dealing—and which will take place on cartels if they are criminalised—one of the difficulties is in

Column Number: 163

persuading the juries in such cases that someone should go to prison if convicted? Juries regard such offences as serious commercial matters for which a fine is appropriate, and criminalising individuals results all too often in cases collapsing; cases that seemed strong when they went to court result in acquittal.

Mr. Djanogly: Without derogating the more humorous aspects of ''Club Fed'', as referred to by my hon. Friend the Member for Eastbourne, a jury should take a serious attitude towards conviction when an individual's liberty is at stake. One of the implications of criminalisation is that trials become longer. The Guinness or Maxwell trials are examples that, it was subsequently argued, should have been conducted on a civil basis to facilitate the process. I wish I had statistics on the number of failed insider dealing cases, as these would show how criminalisation often does not work in practice.

Mr. Field: On a related point, my hon. Friend the Member for Eastbourne mentioned an acid test earlier. With a two-twinned approach, it would make sense logically to start with the criminal route first, followed by the civil route. Uncertainty would surround the alleged cartel in the commercial sector for a period. Would it not be better to avoid the criminal trial and go straight to a fully-fledged civil investigation? The civil investigation could take place with great gusto, with a view to establishing whether the charges should be upheld, and criminal proceedings could take place subsequently.

Mr. Djanogly: I certainly agree with my hon. Friend about moving straight into the civil proceedings.

In many aspects of law, we are moving away from criminalisation, but the Bill is reversing that, for unsubstantiated reasons. I look forward to hearing what the Under-Secretary has to say in that regard. I provided examples, such as section 151 of the Companies Act 1989, which the Government are proposing to abolish as a criminal offence. Another example appears in the Bill. Clause 246 deals with the new civil bankruptcy restriction orders, which are aimed at protecting the public from dishonesty. Here, the Government are moving away from criminalisation. I quote from the White Paper:

    ''The high evidential requirements of the current criminal sanctions means that very few bankrupts have action taken against them. The civil BRO regime''—

the proposed new bankruptcy restriction orders regime—

    ''with its lower standard of proof will allow for greater protection of the public and business.''

That says it all. The Government are absolutely right. If that is conceptually right for bankruptcy restriction orders and that is the way in which other legislation is moving, why are we embracing criminalisation in this clause? I support my hon. Friends. These measures are not well thought out and are being introduced too early. They might even work in favour of cartels rather than against them.

Mr. Purchase: We have entered deep philosophical waters and we have seen a clear divide between one

Column Number: 164

side and the other. Far from letting the cat out of the bag, we have heard all the cats that we would ever want to hear. If we are going to drift from criminal to civil law, something must be said about that. Personally, I do not support that drift. Civil law has played an honourable part in the development of civilised relationships in this country, but it is erroneous to believe that civil law alone can regulate the activities of cartels, trusts and monopolies, and deal with anti-competitive practices. At some point, there must be consensus in society that such practices are wrong and that criminal proceedings must deal with them. My hon. Friend the Member for Hemel Hempstead was speaking almost of grand theft when he talked about what multinational corporations can do.

12 noon

Theft is theft. The hon. Member for Huntingdon (Mr. Djanogly) said that the difference between the United States and Britain was largely cultural as to whether civil or criminal proceedings were brought or plea-bargaining was made. He may be right. I would go some way to support the idea that in the United States there is cultural acceptance of behaviour that, frankly, I find abominable. When Woody Guthrie was called to give evidence—or, more accurately, was pilloried—by the House Un-American Activities Committee, he was asked what he understood by ''a capitalist society''. One must remember that it was the 1940s. He replied that, in his experience, it was a society in which a banker could rob a farmer, but a farmer could not rob a banker. We will go down that route if we take note of, and act on, the sentiments expressed by the hon. Member for Huntingdon. He says that the differences are cultural, and that the activity that we are discussing should not be considered criminal. He also says that plea-bargaining is used in the United States. We do not do that here; thank goodness we do not, or not on the scale to which he referred in the United States.

Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2002
Prepared 23 April 2002