Joint Committee on The Draft Corruption Bill Minutes of Evidence

Examination of Witness (Questions 200-219)


20 MAY 2003

  Q200  Dr Turner: I have difficulty here. It seems to me that if this Bill were to be effective, if it were to eliminate the sort of corruption that you are talking about and basically buying foreign contracts with commissions, if it were to be effective, it would stop British companies, but it would not stop anyone else's companies, so that would then put British companies at an unfair disadvantage, so how do you get around that one?

  Mr McKittrick: This is why I say it has to be wider. We are actually involved in something called Europe.

  Q201  Chairman: So it has got to be a pan-world thing.

  Mr McKittrick: As I said earlier, I think if it were pan-Europe, it would probably take out 90 per cent of it. It would then have to go a further step and become pan-world, but without it being pan-Europe, forget it.

  Chairman: But we can only pass legislation here which is going to affect the criminal law in the United Kingdom at the moment. What you are asking may well come with the new area of justice being developed. We have got your point on pan-Europe and we have got your point on what you see as the essence of it and we will have to consider that.

  Q202  Lord Campbell-Savours: You have just said that if we cannot have it pan-Europe, we should forget it. Forget what—the whole legislation? Is that your case?

  Mr McKittrick: Yes, I just do not see what it is going to do.

  Lord Campbell-Savours: And you are speaking on behalf of your industry.

  Q203  Richard Shepherd: You do not mean that entirely. British national law will still prevail in respect of British transactions within the United Kingdom.

  Mr McKittrick: Yes, indeed.

  Q204  Chairman: We have got to consider this Bill in relation to things which happen here and things which happen to British companies and subsidiaries abroad. Are you saying that there should be different provisions, as it were, tighter provisions dealing with British companies operating abroad than there would be in this country or would you accept that the definition has to be the same?

  Mr McKittrick: I think it has to be the same and I think all that will happen if this Bill goes through is that corruption will be driven even further underground.

  Q205  Lord Carlisle of Bucklow: It seems to me that you cannot achieve what you want unless one has an agreement which goes wider than the borders of this country and it is not unique. There is the Bill we have just taken through recently, I am trying to think of the name, you, Chairman, were on the committee as well, the one dealing with terrorism where there was a European agreement that each country would implement a Bill in their own country. You would have to go back, would you not, to get some European agreement that a Bill on these terms on corruption would be taken through the individual national parliaments of the individual countries?

  Mr McKittrick: And there are many new ones coming in from the old Eastern bloc and there are big, big issues there, huge issues.

  Q206  Baroness Scott of Needham Market: Clauses 6 and 7, on their definitions of exemptions, rely on being able to make a clear distinction between the principal and the public. In practical terms, given that the distinction is more blurred than it used to be, is this a useful one in terms of defence or can you see problems?

  Mr McKittrick: I think again there has to be a definition which can be adhered to for the principal, for the agent, for the public and so forth, and I do not think that comes through adequately. I think it leaves it a little bit, well, not a little bit, it leaves it confusing.

  Q207  Baroness Scott of Needham Market: So there could be two problems. One is with drafting the Bill and that goes back to the earlier point about whether it is understandable, and second is whether or not there are practical issues on the ground, that the demarcation lines between public and private are not as clear as they used to be.

  Mr McKittrick: Maybe you could help me. What happens to the guidance notes within the Bill? Do the guidance notes get published with the Bill?

  Q208  Baroness Whitaker: No, they are just notes to help Parliament as it goes through.

  Mr McKittrick: If the guidance notes tried to define "principal", so on and so on, but if you come to this as Joe Citizen reading it, I do not think it is going to do anything.

  Q209  Baroness Scott of Needham Market: So presumably then, and I should not put words into your mouth, but smaller companies particularly who are operating in this field could find it very difficult if they were not able to afford banks of lawyers to know whether or not they were in breach?

  Mr McKittrick: Probably.

  Q210  Chairman: You were asked earlier about the offset contracts, and Mr Garnier asked you about that. The CBI suggested that offset contracts could be excluded altogether.

  Mr McKittrick: When you say "offset contracts", what do you mean?

  Q211  Chairman: Something done by a third party in addition to the actual provisions in the contract between the two main contracting parties. Do you think that there should be a specific defence here, that what somebody is doing is really providing a hospital or a school or whatever, and that should not count as a corrupt act?

  Mr McKittrick: I do not have an opinion on that, to be honest. It is a very difficult area. There are so many facets to it as to how the whole business of these sort of contracts, PPPs, PFIs, everything else, how they operate. I get involved in a lot of them myself and I had not really thought that through before tonight and I would be giving an off-the-cuff answer.

  Q212  Chairman: It is a very specialised situation.

  Mr McKittrick: I really could not give a proper opinion on that.

  Q213  Mr MacDougall: You said that the principle of this has already been well established, but one of the things you said is that the facilitation payments must be outlawed and yet we have talked about foreign practices in major economic climates throughout the world where they are indeed accepted. Do you not feel, therefore, that the practicality of actually allowing them to happen would give companies a better opportunity rather than trying to prevent facilitation payments where it might disadvantage competition.

  Mr McKittrick: I think we have tried to talk about that this afternoon and I think that the debate convinces me that possibly the way ahead is to have some threshold of some sort for facilitation. It is always a slippery slope and I would not like to suggest at what level it should be. As I said in the paper, it certainly should not be a percentage because a percentage of a very large sum is a very large sum and, therefore, it would have to be an absolute figure if you were going to go down that line.

  Q214  Dr Turner: Corporate hospitality and promotional expenditure: the CBI say they think that should be an acceptable business cost and should not be caught by this Bill. Does your Institution have any view on any limits that should be placed on corporate hospitality or promotional expenditure?

  Mr McKittrick: It is not an area that we have discussed but, as I said earlier, again a threshold limit on that I think would be welcome.

  Q215  Dr Turner: So you feel corporate hospitality, if it got out of hand, could turn into a level of corruption itself?

  Mr McKittrick: Yes, look at Doncaster. There are plenty of examples around where corporate hospitality has been just simmering under there and used as an excuse. I would say at a pretty low level, it would be probably per event as opposed to per year or whatever, but it has to be an absolute figure.

  Q216  Chairman: A threshold again?

  Mr McKittrick: A threshold, it has to be.

  Chairman: It would perhaps have to be different for every overseas company depending on—

  Q217  Dr Turner: Oil sheiks might want a bit more.

  Mr McKittrick: Who knows?

  Q218  Mr Shepherd: We are reading in the public press, etc., that Hollywood promotes its films, for instance, by these huge staged events which cost $10 million, $20 million. The inducement to the writers and the people that attend that is that they meet the stars and the return is that they are expected to flatter, only refer to and help promote the company. That seems to me termed a corrupt event in one sense because although no money changes hands, the scale of hospitality that is extended is intended to affect judgment or actually the way in which they perform.

  Mr McKittrick: Without a doubt.

  Q219  Mr Shepherd: Are we looking, therefore, that industry by industry there should be different rules?

  Mr McKittrick: No, I do not think so. We are all Jock Thamson's bairns, as we say in Scotland. I think everybody should be equal.

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