6 Challenging bribery and corruption
Introduction
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, www.dfid.gov.uk/news Back
137
HC (2007-08) 254, Q 104 Back
138
See the annual perceptions of corruption index published by Transparency
International, available at www.transparency.org 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, www.lawgazette.co.uk Back
141
HC (2007-08) 254, paras 112-117 Back
142
Department for Business, Enterprise and Regulatory Reform, Corporate
Responsibility Report, February 2009, www.berr.gov.uk, "Anti
corruption champion", Ministry of Justice press release,
15 October 2008, www.justice.gov.uk 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, www.justice.gov.uk/publications/draft-bribery-bill 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
|
