Scrutiny of Arms Export Controls (2009): UK Strategic Export Controls Annual Report 2007, Quarterly Reports for 2008, licensing policy and review of export control legislation - Business and Enterprise Committee Contents

6 Challenging bribery and corruption


93.  In our previous Report we looked at allegations of corruption in defence contracts in the 1970s, and the challenges of bribery and corruption in the present day. Bribery remains a major problem globally. According to the World Bank approximately US$1 trillion (£5,000 million) is paid in bribes each year, representing 10% extra on the cost of doing business and up to 25% on procurement contracts in developing countries.[136] Transparency International gave evidence to us in 2008 and told us that the arms sector was one of the top three in which bribes are paid.[137]

94.  The United Kingdom routinely ranks as one of the least corrupt countries in the world according to Transparency International's annual corruption perceptions index. Until recently, the UK has not been vigorous at investigating corruption, enforcing existing bribery legislation, and prosecuting offenders so it is difficult to gauge from this ranking how effective the UK's anti-corruption drive is. Even so, the UK's ranking recently slipped several places to 16th following the Serious Fraud Office's halted investigation into the Al Yamamah defence contracts with Saudi Arabia. [138]

95.  The current law of bribery has yielded few convictions (with 30 individuals found guilty of statutory bribery offences between 2004 and 2007).[139] The UK secured its first conviction for bribery of an overseas foreign official as recently as 2008, in contrast to the US where substantial numbers of convictions are secured each year under the Foreign Corrupt Practices Act 1977.[140]

Tackling bribery through the licensing process

96.  In our last Report we acknowledged that the Export Control Organisation (ECO) did not have the expertise to investigate bribery corruption at present without distorting its focus on the potential risk presented by the export. However, we made a series of recommendations relating to: the application of the Criterion 8 methodology to test whether the contract behind a licence application is free from bribery and corruption; the creation of a requirement for those seeking export licences to produce a declaration that the export contract has not been obtained through bribery or corruption; the revocation of licences where an exporter who had been convicted to corruption; and the amendment of the National Export Licensing Criteria to make conviction for corruption by an exporter grounds for refusing an export licence.[141]

97.  The responsibility for anti-corruption has moved in recent years from the FCO, to BERR and DfID respectively and, since October 2008, to the Ministry of Justice, where the Secretary of State for Justice was appointed the Government's Anti-Corruption Champion.[142]We conclude that the shifting of responsibility for anti-corruption from one Department to another raises questions over whether the Government has the necessary vigorous anti-corruption culture across all Departments to tackle the risk of bribery and corruption engaged in by UK-based companies and individuals.

98.  The Government Response to our last Report stated that it would not consider our recommendations further until the defence sector's Common Industry Standards Initiative had been introduced and the report of the Export Credits Guarantee Department on its anti-bribery and corruption procedures had been published.[143] We will follow this up with Government in due course.

Draft Bribery Bill

99.  At the time of publication of this Report, the Joint Committee on the Draft Bribery Bill was in the process of preparing its own Report for publication after conducting pre-legislative scrutiny of the Draft Bribery Bill.[144]

100.  The draft Bribery Bill was presented to Parliament on 25 March 2009 by the Secretary of State for Justice, Rt Hon Jack Straw MP, who is also the Government's Anti-Corruption Champion. Its primary aim is to modernise and simplify the existing law of bribery, which has been criticised both domestically and internationally since at least 1976 when the Royal Commission, chaired by Lord Salmon, recommended changes to the law relating to bribery.[145]

101.  The Law Commission developed proposals for reform during the late 1990s that led to a draft Corruption Bill being published by the Government in 2003. It was heavily criticised during pre-legislative scrutiny by the Joint Committee on the draft Corruption Bill, particularly over its focus on an agent/principal relationship.[146] The Home Office subsequently invited the Law Commission to look at the issue afresh. Consultation began in 2007. The draft bill builds on the proposals in the Law Commission report "Reforming Bribery", published on 20 November 2008.

102.  The Draft Bribery Bill aims to reform the criminal law to provide a new, modern and comprehensive scheme of bribery offences that will enable courts and prosecutors to respond more effectively to bribery at home or abroad. The Ministry of Justice states that the draft Bill aims to:

  • provide a more effective legal framework to combat bribery in the public or private sectors;
  • provide clearer compliance with international obligations;
  • replace the fragmented and complex offences under common law and the Prevention of Corruption Acts 1889-1916;
  • simplify legislation covering two general offences: offering, promising or giving of an advantage, and requesting, agreeing to receive or accepting an advantage;
  • create a discrete offence of bribery of a foreign public official;
  • create an offence of negligent failure by commercial organisations to prevent bribery;
  • support high ethical standards in UK businesses, and
  • tackle the threat that bribery poses to economic progress and development around the world.[147]

103.  Key features of draft Bill, as considered by the Joint Committee, are:

  • Two general offences of making a bribe (clause 1) and receiving a bribe (clause 2), commonly described as "active" and "passive" bribery respectively. These offences would replace the common law offence of bribery and a range of statutory offences under the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and the Prevention of Corruption Act 1916;
  • A specific offence of bribing a foreign public official (clause 4), which is intended to put beyond doubt the UK's compliance with its international obligations, particularly the OECD Convention on Bribery;
  • A new offence for companies and partnerships that negligently fail to prevent bribery by persons working on their behalf, subject to a defence that may be available where "adequate procedures" were in place (clause 5);
  • The territorial reach of the criminal law would be extended beyond acts abroad by UK citizens and companies to include non-citizens who are "ordinarily" resident in the UK or who are citizens of a British overseas territory (clause 7). The new corporate offence would also apply to non-UK companies and partnerships provided the company or partnership carries on business (or part of a business) in the UK (clause 5);
  • Penalties for the new offences would be increased to a maximum of 10 years imprisonment or a fine in line with the scale for fraud under the Fraud Act 2006; currently the maximum sentence is seven years imprisonment. Companies and partnerships would face an unlimited fine if convicted of the new corporate offence (clause 11);
  • The current requirement for the Attorney General to consent to proceedings for a bribery offence would be replaced by the requirement for consent of the Director of Public Prosecutions, the Director of the Serious Fraud Office, or the Director of Revenue and Customs in line with proposals under the draft Constitutional Renewal Bill (clause 10);

104.  Evidence given to the Joint Committee by the Society of British Aerospace Companies and the Defence Manufacturers' Association suggested the defence industry was in favour of the legislation.[148] BAE Systems, Thales UK and Lockheed Martin UK also gave evidence and whilst generally in favour of the draft Bill, raised some concerns, shared with the CBI, over the drafting of the Bill as it related to negligence.[149] We look forward to reading the conclusions of the Report of the Joint Committee on the Draft Bribery Bill.

136   Ministry of Justice, Impact Assessment of draft bill on reform of the law on bribery, February 2009, p 3; "New draft Bribery Bill to support international fair trade", Department for International Development press release, 26 March 2009,  Back

137   HC (2007-08) 254, Q 104 Back

138   See the annual perceptions of corruption index published by Transparency International, available at  Back

139   Ministry of Justice, Impact Assessment of draft bill on reform of the law on bribery, February 2009, p 7 Back

140   "Bribery Bill and Corruption Clampdown", Law Gazette, 15 January 2009, Back

141   HC (2007-08) 254, paras 112-117 Back

142   Department for Business, Enterprise and Regulatory Reform, Corporate Responsibility Report, February 2009,, "Anti corruption champion", Ministry of Justice press release, 15 October 2008, Back

143   Cm 7485, p 18 Back

144   Ministry of Justice, Bribery, Draft Legislation, Cm 7570, March 2009 Back

145   Royal Commission on Standards in Public Life, Cmnd 6524, 1976 Back

146   Joint Committee on the Draft Corruption Bill, Draft Corruption Bill, Session 2002-03, HC 705, HL Paper 157, para 81 Back

147   Draft Bribery Bill, Ministry of Justice, Back

148   Oral evidence taken before the Joint Committee on the draft Bribery Bill, HC (2008-09) 430-iii, Qq 224, 225 Back

149   Oral evidence taken before the Joint Committee on the draft Bribery Bill, HC (2008-09) 430-iii, Q 297 Back

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