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He was in the vanguard, as many people in the business community at that time did not share his view that something had to be done about the problem. However, attitudes have changed, because in countries with endemic corruption, the Mr. Five Per Cent. became the Mr. Ten Per Cent., and then the Mr. Twenty Per Cent. and the Mr. Twenty-five Per Cent. It became quite impossible to do business in such circumstances.

I agreed with the hon. Gentleman's important point that if we in the UK sign up to high standards in this area, our main competitors need to do the same. However, as the hon. and learned Member for Beaconsfield (Mr. Grieve) said, compared with many countries, we appear to be behind the pack rather than in the lead. The United States introduced the Foreign Corrupt Practices Act some 30 years ago under the Carter Administration. An American business man is prosecuted once or twice a year-it is not a vendetta in any sense-which keeps the issue in the mind of the American public. International bribery is just not acceptable in US business. France introduced legislation to make itself fully compliant with the OECD convention some years ago, and it has a longer track record of successfully prosecuting such offences than the United Kingdom. It is important that we ensure that all major western economies and OECD countries comply, but we would be in a stronger position to achieve that if we were a country with the best kind of such legislation and a strong record of applying it and enforcing it through the courts, when necessary.

When I introduced my ten-minute Bill, I said that there was a comfortable but completely fictitious belief that bribery was not a serious problem in the United Kingdom but was something that affected developing countries such as Nigeria, Pakistan or Zaire, as the Democratic Republic of the Congo used to be called-I know that the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) has worked in such countries as a businessman. However, the problem is that it takes two to tango, and if a corrupt public official in a developing country is demanding a bribe before signing a contract, there must be a bribe-giver, and that person often acts on behalf of a western corporation seeking to sell in that foreign market.


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When I introduced my Bill 12 years ago, the hon. Member for Lichfield (Michael Fabricant) spoke against it, as he was entitled to do under the ten-minute rule. He called it "fundamentally naive" and made the point, which has been echoed in today's debate, that if tough legislation is adopted in the United Kingdom but not in other countries, UK businesses will be put at a competitive disadvantage. However, we have discussed that issue, and it is now time for the UK to catch up while continuing to be vigilant so that we ensure that other countries also comply.

Daniel Kawczynski: The hon. Gentleman, like me, is a member of the International Development Committee. He talks about OECD countries, but what about China and some of its conduct in Africa when huge sums are poured in for infrastructure projects in return for oil? Does he think that we can encourage the Chinese to regulate that practice, because their conduct distorts the market in itself?

Hugh Bayley: It would not be a sensible national business strategy if we tried to create markets for our companies by out-bribing the Chinese. We need to bring China into more of the international organisations. For example, it recently joined the World Trade Organisation, since when Chinese business practices have changed significantly. I look forward to the day when China joins the OECD. Perhaps that is not so far away, because it is beginning to work with the organisation, including on this issue. We must make progress towards a better world, rather than falling back into a dog-eat-dog, 18(th)-century mercantilism through which we all try to obtain a trade advantage by cheating better than other countries.

Mr. David Heath (Somerton and Frome) (LD): May I say to the hon. Gentleman how much I agree with everything he is saying? I pay tribute to his role in bringing about such legislation. He might recall that I had a go when I promoted a Bill that had been passed by another place, yet made no progress.

Given that other countries have been ahead of ours on putting in place such legislation, I cannot understand why there was such delay on the part of the Government. Can the hon. Gentleman throw any light on why the Government have dragged their feet for so long when it is transparently necessary that we bring the UK into line with its treaty obligations and other civilised countries throughout the world?

Hugh Bayley: I pay tribute to the hon. Gentleman for his interest in the issue and the importance of the Bill that he brought from the other place. Of course, I cannot answer on behalf of the Government. I have carried out a large part of my activity in the area since I left government. I have held many meetings with Government Ministers, however, sometimes on a one-to-one basis and other times on a cross-party basis. I have also met officials from the Home Office, the Department for Business, Innovation and Skills and the former Department of Trade and Industry, and the Law Officers. I think that they have, quite genuinely, been trying to craft legislation that will build a broad consensus among the voluntary bodies that take an interest in the issue, such as Transparency International and Corner House, and across the business community, who are the people at the front line who will have to deal with any legislation.
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Of course, there has also been consultation with the judiciary, the Serious Fraud Office and other parties. The process has been difficult.

In 2001, fairly soon after the OECD and the EU adopted their conventions, the Government introduced provisions as part of the Anti-terrorism, Crime and Security Act 2001which, for the first time in UK law, made trans-national bribery an offence. It had hitherto been seen as not just a legal but an acceptable and, in some cases, a tax-deductible business practice. So the Government acted relatively quickly-more quickly than those of some other OECD countries-to make trans-national bribery an offence in UK law, in pursuance of the requirements of the OECD convention.

In 2003 the Government consulted more widely on a draft anti-corruption Bill, which was considered by a Joint Committee of both Houses and roundly criticised by the Committee, principally because it retained the existing agent/principal relationship to define bribery. As a result of that criticism, the Government went back to the drawing board and asked the Law Commission to study the issue not once, but twice, and consulted widely on the findings.

The process has been a long one, as the hon. Member for Somerton and Frome (Mr. Heath) observed and as the hon. and learned Member for Beaconsfield said from the Dispatch Box, but the conclusion is a Bill that is fundamentally sound and fit for purpose. We may argue about clause 13 and the exemption of the security services and the armed forces from some of the provisions-I shall say more about that-but I agree with what the Lord Chancellor and the hon. and learned Member for Beaconsfield said: if, in the relatively short time available, we find that we are unable to dot all the i's and cross all the t's, we must not allow that to be a reason why legislation that is extremely necessary and has been very long in coming should not receive Royal Assent before a general election.

Such legislation is not at the top of the list of any Cabinet when it debates what legislation to introduce. Year after year it has been pushed back because other legislation was deemed more politically necessary and more pressing by the Government of the day. Whoever the Government are after the next election-I believe it will be a Government of the same flavour as we have now-there will be the same temptations in a first Session not to bring forward such a Bill. Let us seize the opportunity that we have now. The Bill has been through the other House. Let us get it through this House, after due scrutiny in Committee, and on to the statute book.

I thank Ministers from many different Departments who have met me over the years to discuss the issue. I thank colleagues from all parties who helped to produce "The Other Side of the Coin: The UK and Corruption in Africa", a report that was produced four years ago by the Africa all-party parliamentary group. It made a series of recommendations, to which the Government responded favourably. The Prime Minister considered the report and responded at great length-15 or 20 pages. He responded positively to the group's second recommendation, which was:


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Well, the Government have got there and I congratulate them. The Prime Minister responded by saying:

and now the Bill is here.

The all-party group made some other recommendations which were more speedily implemented. One was to create an anti-corruption champion in the Government, which they did. It was initially the Secretary of State for International Development, then the post moved to the then Department of Trade and Industry. It is now where it probably should be, within the Ministry of Justice. I hope the post is retained to make sure that we get legislation on the statute book and that it is fully implemented.

We also made the point that similar legislation is needed in Crown dependencies and overseas territories. We cannot legislate for that as part of the Bill, because those jurisdictions have their own legislative powers, but it is important that once we can prove that we have achieved what the OECD requires and have a new Bill on the statute book, we have further discussions with dependent territories to ensure that they, too, follow best practice. The good reputation of the United Kingdom is at stake, because they are rightly seen as dependent territories of this country.

Daniel Kawczynski: The hon. Gentleman says that at some stage in the future the Government should have discussions with the overseas and dependent territories so that they have a broadly similar approach to ours, but surely that should be done at the same time. Companies that are concerned about the legislation and wish to continue their former practices could simply leave the United Kingdom and base themselves in one of the overseas territories.

Hugh Bayley: Some companies remain in the United Kingdom and conduct business offshore. The hon. Gentleman raises an important issue. He should join our Committee and champion the cause, but let us not fail to do the right thing ourselves because others are moving more slowly. We need to get the Bill on the statute book. Then we will be in a much stronger position to talk to other jurisdictions and persuade them of the necessity for them to introduce similar legislation.

I should like to make one or two comments on the Bill. In clause 10, the Government propose that the Attorney-General should give up his powers to consent to a prosecution. That is a fundamentally good thing for the Government to do. In the other place Lord Henley queried why the role of the Attorney-General was being so reduced. I do not think that is the case, but it is a good thing that he or she should give up the power. Bribery is an area in which there should not be political influence or even the appearance of political influence. There was great controversy when the Attorney-General advised the director of the Serious Fraud Office that it would not be in the public interest to proceed with a prosecution of British Aerospace. That attracted a great deal of criticism at home and abroad, and there was the suspicion that that was a political decision and that the issues of national security were not as compelling as the Attorney-General had suggested.


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I do not know what those issues of national security were, nor I suspect does any other Member here, given that the Secretary of State for Justice and Lord Chancellor is not present at the moment. Of course, I may be wrong and the Under-Secretary of State for Justice, my hon. Friend the hon. Member for Watford (Claire Ward), may be fully apprised of the issues in the BAE Systems case. Perhaps there were good reasons why it would not have been in the national interest to prosecute, but the determination was made by a political appointee who attends Cabinet meetings when legal advice is sought, and that allowed people to make the accusation of political interference with the justice system. It is much better to have a paid professional, with tenure and an appointment, making those decisions, and I hope that there is no change to clause 10.

On clause 13, there are circumstances in which our intelligence services, security services and, indeed, military personnel on active service have to provide financial or other inducements, ugly though that may be, to safeguard the security of citizens in this country and, possibly, their own security. The Bill rightly includes an exemption to remove from those who are fighting for our security the threat of prosecution. However, I should not like to see any mission creep, through the defence that will be available to an intelligence officer who seeks important information being used by somebody who procures equipment for our armed forces but resorts to bribery claiming, "This is necessary to provide the best equipment, or a delivery date at the appropriate time, for our forces in the field."

If we allow bribery to play a part in procurement for our armed and security forces, we will undermine our security, because a bribe increases the cost of one's purchases. Some years ago in Pakistan, an admiral was put on trial for spending $540 million on submarines that were worth less than half that figure. The difference of course was the bribe, which he required to sign the contract. If we allow bribery into our procurement system, we increase the costs of the things that we procure and thus reduce the equipment that is available to, and undermine the effectiveness of, our defence or security forces. Importantly, therefore, we must ensure that there is no creep in the scope of the defence in clause 13.

In response to my intervention, my right hon. Friend the Lord Chancellor said that there was no intention to broaden the scope of the clause, and I accept that. He said that the exemption from prosecution of defence equipment procurement under the clause was not just unlikely but wholly improbable, which is a pretty strong reassurance that the Government have no intention of using the clause in that way. I hope that the issue will be discussed further in Committee or, possibly, on Report in order to put more flesh on the bones, because we must send a clear signal to the public and public officials involved in procurement for the armed or security services that the defence that is necessarily in the Bill for certain purposes will not cover defence procurement by any such public official.

I want the Bill to go through. It clearly has all-party support, and with a fair wind it will be on the statute book before the general election. However, looking beyond that, I say to the Government Front-Bench
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team that once the legislation is on the statute book, good use must be made of it. I am concerned that the Serious Fraud Office, the main investigating and prosecuting agency, does not have sufficient resources to investigate the cases that are reported to it, because of a reporting procedure that was set up in response to the Africa all-party parliamentary group's report. Budgets are tight, but the enforcement of this law is important, and I hope that the Government will ensure that the SFO has sufficient resources to implement it once it has been passed.

It is important to maintain the post of anti-corruption champion within the Government, and I hope that in the Opposition's winding-up speech we receive an assurance of that-in the unlikely circumstances of a change of Government. I should like the champion to report to Parliament, perhaps through a written ministerial statement from time to time, on the performance of the legal process in ensuring compliance with the OECD and EU conventions.

I should like also to see some work with the business community-the CBI and others-to ensure that British business men fully understand the change in the law. I do not want to see dozens of them being taken to court, fined or made to pay a compensatory payment in place of a prosecution. I just want business practice changed, and that is why the Government should work with business to ensure compliance with the law.

The legislation is necessary because bribes add to procurement costs. In private businesses that procure goods, it hits the profit line, and in government it adds to costs without improving public services. It is a problem at home and abroad. Despite the long gestation period, I am delighted that the Government have brought forward this legislation. I shall support it, and I hope that it proceeds swiftly through Committee, back to the Floor of the House and on to the statute book.

2.18 pm

David Howarth (Cambridge) (LD): I, too, welcome the Bill. I pay tribute to the hon. Member for City of York (Hugh Bayley) for his work over the years in bringing us to this point, and to my hon. Friend the Member for Somerton and Frome (Mr. Heath) for his sterling efforts.

In light of what the Secretary of State and the hon. and learned Member for Beaconsfield (Mr. Grieve) said about the late Mr. Michael Foot at the start of their speeches, I should like to share their tributes. He was a very distinguished member of a very great west country radical family, even though his most famous political insult was aimed at the leader of the party that many other members of his family had served for many years. He said of David Steel, in that 1979 debate to which the hon. and learned Gentleman referred, that he had

He will be sadly missed.

As the Secretary of State said, the Bill reforms and clarifies the law on bribery in several important ways. I shall not go through them all, but it is important to realise that the Bill removes many uncertainties in the present complicated mixture of statute and common law. It removes the complications about the relevance or
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non-relevance of "principal" and "agent", and those created by the legislation's use of the vague word "corruptly". Importantly, we now have clear definitions; we have a concentration on business and the state and a clear definition of when companies will be held responsible for bribery undertaken by people who are associated with them, including their employees. I understand that the Conservatives have some difficulty with clause 7, but I do not; I think that it is well done, and I hope that it continues its passage unaffected.

Importantly, we now have a separate and clear offence of bribing a foreign official. That is a development of immense significance.

Mr. Djanogly: The hon. Gentleman said that we have a problem with clause 7. Our problem is not with the clause but with businesses not knowing how it is going to work before it is applied to them.

David Howarth: I am glad to have that clarification. That is a significant step forward by the Conservatives from the position put forward at least by their Back Benchers in the other place. If the issue is now only about the content of the guidance, we have made considerable progress, and I welcome that.

The specific offence of bribing a foreign official is of immense importance in the fight against corruption, especially in developing countries. As hon. Members on both sides of the House have implied, there is a clear link between corruption and poverty. To see that link, one need only go to the examples of cases under the existing law. The Mabey and Johnson case, which was settled last year, involved millions of pounds in bribes paid by an infrastructure company in third world countries such as Jamaica and Ghana, with accusations relating to a country as poor as Papua New Guinea. It ended up with those countries spending tens of millions of pounds on projects that they could ill afford as a result of bribery. Countries that could not afford to waste a penny ended up wasting millions.

It is clear from the BAE cases that there is a similar problem. Obviously, I cannot go into the detail of the cases that are subject to the injunction that was successfully applied for overnight, so I cannot talk about the South African or eastern European cases. The hon. Member for City of York has already mentioned the Saudi Arabian case. However, we can mention the Tanzanian case, where there is no dispute about what the problem was. In that case, there was a £28 million contract for a military air traffic control system, and a third of that money disappeared into offshore accounts. The problem was not only that the system was out of date and did not work very well, but that it was a military system for a country that did not even have an air force and could have bought a far cheaper and better civilian system. What happened as a result was not only a matter of concern for the public authorities here but of immense concern as regards the waste of resources in a very poor country.


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