Enterprise Bill

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Miss Johnson: I can only be advised on the matter, but that advice is that the Crown Office was consulted and was content.

Mr. Carmichael: Would the Under-Secretary be prepared to make that information available?

Miss Johnson: We do not normally make such information available, but I can take further advice on the details of the matter, and I assure the hon. Gentleman that that is the advice that I received.

Mr. Field: Is that advice in writing, and could it be made available for Thursday's sitting, so that we could all be satisfied on the matter?

Miss Johnson: I do not see any reason why hon. Members are taking this line. I have said that I am grateful for the comments that have been made and will consider whether we should revise the clause. We can make a mountain out of a molehill, if Opposition Members wish, but it is not normal to share policy advice.

Mr. Carmichael: I merely want to make clear my concern, which I have already expressed on several occasions, that the Bill takes insufficient account of Scots law and procedure. That is my sole reason for wanting that information to be put in the public domain.

Miss Johnson: I am listening to the hon. Gentleman, and I am aware of his concerns, which have been noted. For that reason, I am saying that we will consider whether any revision of the clause is necessary. This debate is getting us no further, because we are all reporting what has been said to us about how the arrangements work. I want to turn to the point raised about information collected under the criminal powers. If information is so collected, it can be used for civil investigations, if it has been properly obtained. So, the answer to that question is yes.

Question put and agreed to.

Clause 185 ordered to stand part of the Bill.

Clause 186

Exercise of powers by authorised person

Question proposed, That the clause stand part of the Bill.

Mr. Djanogly: This clause ties in with clause 185(4), which deals with people who are authorised in a warrant to accompany the named officer who is executing the warrant. I would be interested to hear a little more about how the clause will work in practice and what its purpose is. I know that, under clause 194, the same type of power will be provided in respect of warrants issued under the Competition Act 1998. However, I would be interested to know whether there are any previous examples of such a provision in legislation, and whether any common-law cases have led to the need for the provision. More specifically, could the authorised persons be contracted-out specialists, and if so, will they come from the private or public sectors?

Miss Johnson: We do not envisage that the power that the clause gives the OFT will be used regularly, but it is important because it allows the OFT to

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involve experts from other agencies and institutions who might be involved in a cartel investigation or aspects of that investigation. Experts might be needed if the offence is committed in a specialised market or involves specialised knowledge on behalf of the investigator, such as specialised financial accountancy or information technology expertise.

Mr. Djanogly: I would be appreciative if the Under-Secretary defined the use of the word ''institutions''. Would they be purely public sector institutions, or could they be private?

Miss Johnson: They would be any institution that can provide expertise under an arrangement with the OFT under the powers. However, I expect that it would often be public sector organisations that would have that expertise.

The clause also allows the OFT to involve officers from the Serious Fraud Office who could aid an investigation. An important safeguard in the clause is that no person is bound to comply unless the authorised person, whoever he or she may be, can produce evidence of his or her authority. In fact, the OFT has said that it would always expect such persons to be from public bodies.

Mr. Field: I am slightly concerned about the practical reality. In the early days of the legislation coming into play, it is likely, given the climate of cartel-busting in Europe, that the OFT will be stretched and will have an enormous number of tasks ahead of it. It is possible that as a result it may wish to hive off some of its work to private-practice law firms, for example, which would do some of the basic investigation. Would such an employee be a ''competent person'' for the purposes of the clause, even if he or she were not a public sector official? I should be interested in some guidance on how that will work, given the difficulties that the OFT may face.

Miss Johnson: My understanding is that such an employee could be a ''competent person'' under certain circumstances, but people's exact backgrounds will not make any difference, because they will all work under OFT control and will be subject to all the safeguards associated with the powers of investigation. As is often the case, someone working for the OFT under such conditions will, to all intents and purposes and in terms of the requirements placed on them, be part of the OFT. That safeguard is in place.

Mr. Djanogly: With respect, there is a big difference between the public and private sectors, not least in conflicts of interest or previous knowledge. For instance, if a private investigator or institution were used, we would have to ask who they worked for previously as there might be conflicts of interest.

Miss Johnson: Clearly, it would be unsatisfactory for a conflict of interests to arise. The competition authorities always have to consider who is involved in a matter and whether there are conflicts of interests, as is the case in other fields of life.

Question put and agreed to.

Clause 186 ordered to stand part of the Bill.

<<208>>Clause 187

Privileged information etc.

Mr. Field: I beg to move amendment No. 107, in page 134, leave out line 43.

I should like to say a few words on the clause and proposed amendment. Several hon. Members have a legal background and take legal professional privilege for granted. Outsiders are often cynical about the whole idea of professional privilege. I am looking with an eagle eye at the hon. Member for Wolverhampton, North-East, who is chuntering away at the prospects that legal professional privilege brings with it.

6.15 pm

However, we should remember that professional privilege is not primarily about protecting the lawyer or relevant professional—in subsection (2), the banker—but the interests of the client. Subsection (2) states:

    ''A person may not under section 184 or 185 be required to disclose any information or produce any document in respect of which he owes a an obligation of confidence by virtue of carrying on any banking business unless'',

under paragraph (a)

    ''the person to whom the obligation of confidence is owed consents to the disclosure or production'';

in other words, unless privileged information protection is waived by the person in whose interests the privilege exists. Or, under paragraph (b)—to which we object, so we want the second tenet deleted—

    ''the OFT has authorised the making of the requirement.''

In respect of fairness and due process, it is unjust that the OFT has this power of override. An item of information is privileged and the person whose privilege is protected may be keen for it to remain in confidence, but without the amendment the OFT has full discretion to override it. Will the Under-Secretary explain why, given the draconian powers in other clauses, an OFT override is necessary?

Mr. Carmichael: I share some the concerns of the hon. Member for Cities of London and Westminster. I am pleased that the Bill deals with privilege and it is sensible to extend its compass to include bankers. It is rendered somewhat meaningless, however, by granting the power in the first place and then allowing it to be waived by the person conducting the investigation. Sometimes it might be appropriate to waive banking privilege, but why cannot that be done after some level of prior and conditional scrutiny, perhaps through an application to a judge in chambers explaining why the information should be put into the hands of the investigating authorities? Did the Under-Secretary reflect on that in her preparation for the Bill? Is that not a more suitable avenue to explore?

Miss Johnson: Can I go back to the origins of banking professional privilege, which lie in the Criminal Justice Act 1987? We used that as a model for the investigatory powers in cartel offences. Section 2 of the 1987 Act confers powers of investigation on the SFO with respect to serious fraud investigations. Since the OFT and SFO will work closely together on cartel investigations, the Government want to ensure that the investigatory powers of the two bodies are

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aligned as closely as possible. Section 2(10) provides for banking professional privilege and section 2(10)(b) provides a director of the SFO with the power to override that privilege. The provision here exactly parallels the 1987 Act.

Clause 187(2) seeks to replicate the arrangement. The amendment would deny an equivalent power to the OFT, which could seriously hamper investigations. No one would deny that the ability to follow money trails is an important power for a cartel investigator. Corrupt payments can be made to seal cartel deals, and individuals involved in bid-rigging and market-sharing can receive sweeteners and pay-offs. The banking trail is important in all those respects. Evidence of such activity is often crucial to securing a conviction, so the OFT needs access to bank records if they are relevant to an investigation.

The Government considered leaving out the banking privilege and the override. In contrast with legal professional privilege, there is no legal requirement to respect banking privilege, but we decided that the OFT board should consider in each case whether banking privilege should be respected. That will provide an additional procedural check before bank records can be accessed, and precisely mirrors the tried and tested process followed by the SFO.

I hope that, in the light of my explanations, the hon. Gentleman will withdraw the amendment. If he does not, I shall ask the Committee to oppose it.

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