Joint Committee on The Draft Corruption Bill Written Evidence


Memorandum from George Staple, Consultant, Clifford Chance (DCB 19)

  1.  I am submitting this Memorandum in response to the invitation of the Joint Committee. As Director of the Serious Fraud Office from 1992 to 1997 I have been responsible for the investigation and prosecution of corruption offences.


  2.  The draft Bill appears to present serious problems in relation to payments to agents performing public functions. To use a simple example: a motorist makes a payment in respect of a motorway toll to a private sector operator who has been given the right to collect the toll under a PFI/PPP contract with the government. The operator is acting as an agent, and is performing a public function. The motorist confers an advantage (the payment) on the operator who, primarily in return for the advantage, does an act in performing his functions, ie allows the motorist to use the motorway. The Clause 6 exception does not apply because the motorist is not acting on behalf of the agent's principal (the government). The Clause 7 exception does not apply at all where the agent is performing functions for the public. The payment is therefore corrupt.

  3.  Analogous examples can be complied ad infinitum: payments to Companies House, the Land Registry or Ordnance Survey for information provided as a public function; payments to bodies such as English Heritage for access to sites of historical interest, payments for travel on buses or trains where the operating company has "an agreement or understanding" with the government to provide such services (which are clearly public functions). In none of these cases can the payer be said to be conferring the advantage "on behalf of the public" as required by the exception in Clause 6(3)(b).

  4.  Equally, it appears that in every case where the person conferring the advantage is doing so "corruptly" as in the above cases, the person receiving the money, eg English Heritage or Companies House, is also guilty of corruption under Clause 9.

  5.  I note that in the draft Bill produced by the Law Commission the equivalent exception was that the advantage had to be conferred "on behalf of the public as remuneration or reimbursement in respect of the performance of the functions". The extra wording might have dealt with some of the examples of corruption outlined above, but it still begs the question as to whether it is appropriate to define offences of corruption in such a way as to require no element of lack of integrity, or breach of duty.


  6.  Concern has been expressed in the financial services industry that the proposed legislation, as currently drafted, could apply to forms of commission which are standard practice for remuneration in the industry. One example is the practice whereby an insurance broker is remunerated by commission from the insurance company with whom the policy is ultimately arranged, rather than by the policyholder on whose behalf the broker has acted.

  7.  The offences are concerned with whether advantages have been conferred or obtained. They do not require any element of lack of integrity, or breach of the agent's duties to his principal. To be sure that an offence was not being committed the parties would have to be satisfied that the agent's conduct was not determined primarily in return for the commission, and, if this were uncertain it would be necessary to rely on the consent exception in Clause 7. However, in order to use this exception, the person remunerating the agent would have to establish either that the principal knew all the material circumstances and consented, or that he would have consented had he known those facts. There is concern that this may be difficult to establish.

  8.  The view has been expressed that the draft legislation could not be intended to apply to commission arrangements in the financial services industry because that outcome would make the criminal law stricter than the regulatory requirements to which financial services firms are subject.

  9.  The draft Bill also appears to create unreasonable difficulties for partnerships. By virtue of Clause 11(1)(c), a partner is an agent of the other partners in the same partnership. In order to ensure that there is no corruption, under Clause 7(1)(b) the consent of all the partners is required.

  10.  The difficulties to which this could give rise can be illustrated by the following example. A client asks a partner in a large international law partnership for advice in relation to a contract for the sale of goods, which, though legal, are considered dangerous and unethical. The partner nevertheless gives the advice, and receives a fee. The client is not by paying the fee "acting on behalf of" the partnership. So there is no exception under Clause 6(2). Therefore, if the other partners do not consent, which might be the case where the subject matter of the contract is dangerous and unethical, or if the partner acting does not believe that, if they knew all the material circumstances, they would consent, the payment of the fee is corrupt.

  11.  There is a real problem here for a firm such as Clifford Chance which has around 700 partners worldwide. It is not possible for each partner taking on work to make sure that all the rest are aware of "all the material circumstances" and consent. Nor is it possible for that partner to form an opinion as to whether all the others would consent, if aware of all the material circumstances. There is no workable mechanism that could achieve this result, and, in any event, to place a burden of this kind on a partnership in order to enable it to receive an entirely legal payment is inappropriate.


  12.  The proposed legislation requires the Attorney-General's consent for any corruption proceedings in England and Wales. That is contrary to the recommendation of the Law Commission, whose conclusion I agree with.

  13.  In addition to the reasons given by the Law Commission for the Attorney-General's consent not being required, I would add that I can see no particular reason for the new offences to require the Attorney-General's consent while other serious crimes do not.

  14.  The Magistrates' Association apparently expressed the view to the Law Commission that due to the potential significance and sensitivity of corruption it seemed sensible to require the consent of the Director of Public Prosecutions to ensure that the matter was considered at a sufficiently high level. If by sensitivity the Association meant that the offence could involve senior public officials or politicians, it seems preferable that a Minister should not be put in the position of giving consent to a prosecution. Considerable care has been taken to distance the Attorney-General from the day-to-day decisions of the prosecuting authorities, setting up the Crown Prosecution Service and Serious Fraud Office as independent government departments under their own Directors. I can see no reason why the principles which led to the setting up of independent prosecuting authorities should not be equally valid in respect of prosecutions for corruption.

  15.  It would not be appropriate for the DPP, however, to sanction a prosecution to be brought by the SFO. Compliance with the Code for Crown Prosecutors by the CPS and SFO should be sufficient safeguard against abusive or inconsistent prosecutions and ensure that important considerations of public policy, or of a political or international nature, are taken fully into account.

  16.  If all else fails, as the Law Commission points out, the Attorney has the power to issue a nolle prosequi.


  17.  I have considered whether the proposed definitions will be readily understood by Police prosecutors, jurors and the public, and have concluded that the way in which the proposed legislation is drafted will not, without considerable study, be readily understood by any of those groups. In particular, I think that extending the concept of principal and agent to so many different relationships, particularly that between a public official and the public at large, is likely to cause confusion and uncertainty and may result in a reluctance to prosecute cases where, under the existing law, prosecution would be seen to be justified. I think it would have been preferable for specific offences to have been proposed for specific situations.

  18.  New criminal offences should not, as a matter of principle, be made retrospective. So in repealing the old law, it will be necessary to ensure that until the new offences become law it will be possible to prosecute under the existing law.

  19.  For the reasons given by the Law Commission, I consider that it is desirable that the presumption of corruption now be removed. The Commission cites the European Convention on Human Rights and the difficulty of determining in current circumstances what are, and are not, public bodies for the purpose of the law of corruption. Many organisations which used to be publicly owned have now been privatised. However, they still provide a public service, although they now do so for the profit of their shareholders (who may include the government). The question arises as to whether they are still public bodies performing public functions. The Law Commission also received a body of evidence from a number of respondents with great experience of criminal trials in support of the view that corruption is no harder to prove than some other offences, particularly fraud, which take place in secret.

May 2003

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