Examination of Witness (Questions 400-419)|
2 JUNE 2003
Q400 Mr Stinchcombe: It must be widespread
in private commerce that people get huge introduction fees under
perfectly lawful contracts and yet it is a disproportionate amount
Professor Pieth: I have my vision
slightly restrained to the international public bribery concept
where I think a Pakistani General has a need to explain why he
has entered all sorts of business contracts.
Chairman: There are a number of rather
more specific areas, we can come back to the General if you want
to. You have mentioned clauses 15 and 16. Mr Stinchcombe, do you
want to come in on this?
Q401 Mr Stinchcombe: Yes. You have
already mentioned clauses 15 and 16 whereby effectively the Secretary
of State could authorise the intelligence agencies to commit corrupt
offences. Are those provisions a flunk of the OECD Convention?
Professor Pieth: There is no such
permission by the OECD Convention to do so. Of course, there could
be an argument that in all international conventions there is
a safeguard of interests of public security.
Q402 Mr Stinchcombe: National security.
Professor Pieth: National security.
In a way, the advantage of what you are doing here is you are
spelling out exactly what that means, whereas other countries,
take France, take the US, are less explicit, at least not in this
type of legislation. They might have secondary legislation somewhere
else which is not easily accessible. The positive side is that
you are actually saying what it means but you are also raising
a big issue and this will certainly be a recipe for trouble because
it will be discussed in the international arena whether this is
allowed or not permitted. It is a taboo so far.
Q403 Mr Stinchcombe: Do you believe
that it does conform or does not conform with the Convention?
Secondly, as a supplementary question to that, if it is of benefit
to raise it publicly, would it be preferable for us to raise it
publicly but then narrow down the apparent exemption it confers?
Professor Pieth: I think if you
have to do it it is probably preferable that you say what you
are doing and where the limit is. My only problem is that in most
circumstances, even if it goes beyond what you have in writing
here, there is still usually national security privilege for more
severe cases. The question is, are you really able to limit it
or are we in the same situation as other countries?
Q404 Mr Garnier: Would you suggest
that clauses 15 and 16 should be completely redrafted or deleted
in order to meet your concern?
Professor Pieth: I wonder whether
they really fit into this context here or whether they fit into
a different kind of legislation covering the national security
interests as a whole.
Q405 Mr Garnier: Is it your view
that intelligence services should never be exempt from criminal
law, either in the way that it is currently drafted, where they
may be given advance permission, or, to come back to our interesting
law officer point, because the law officer in this country is
a different creature from the Minister of Justice that you might
recognise in another country, that the Attorney General should
have a discretion not to prosecute?
Professor Pieth: Let me put it
this way: my uneasiness is not defence; my uneasiness is we are
here talking in an economic context and we all know that secret
services have been heavily involved in economic espionage. It
would certainly be against the Convention to allow a secret service
agency, for the purpose of furthering business, to use such an
exemption. That is where we would really be very concerned.
Q406 Mr Garnier: Just as a matter
of interest, what are the sanctions for failure to comply with
the OECD Convention?
Professor Pieth: It is a so-called
"soft" law. That means first of all one is publicly
exposed and there is a report, as you have already, Phase 1. It
has the media sanctions first of all, the media pick this up and
you will have your counterparts, your major trading partners,
registering it. You will be in trouble in negotiations. There
is a risk of being exposed and for a G7 country this would be
very, very awkward. There is the potential of a more formalised
sanctioning instrument, but that has not been spelled out in that
context. You might be aware of our sister organisation, the Financial
Action Task Force, on money laundering. They have gone quite a
bit further in spelling out sanctions against countries by actually
asking for changes in a certain time frame otherwise they would
make business more expensive for that country. First of all, very
unattractive things and I do not want to confront you with them
because they are not a real possibility. I think what you have
to take seriously is your good image worldwide. We have started
off on the wrong footing altogether, basically the UK and OECD
Working Group on Bribery, on this issue because originally your
Government felt that the old laws were sufficient, the three laws
around 1900 plus the common law offences, and we said, "Sorry,
we are not convinced" on the basis that there was only one
case that went half way in that direction and we felt there were
a lot of reasons why there should have been cases in the last
20 years of large corporations in all countries. I am not singling
out the UK here but I know of quite a few cases involving UK companies.
The problem would have been that you were working under the territoriality
principle at the time. It is possible that there would have been
no case to answer but there would have been a lot of questions
to discuss and raise. My point is we had to say in the first instance,
in Phase 1, "We are not satisfied. We will evaluate you again
in 1 bis" and you came up with a law that is not permanent,
it is transitory. It is very broad sweeping and inherits some
of the deficiencies of the old law because basically it leaves
the old law in place and builds on it. It is more explicit in
some ways. Now you have a third chance and we are hopeful that
this is going to be the ultimate and secure law.
Q407 Mr Garnier: There is a perception
in this country, it may be a wholly wrong perception, that some
countries sign up to treaties almost as a matter of pro forma
obligation and then ignore them and just get on with their usual
activities. I am just thinking when one comes to 15 and 16, the
activities of the intelligence services, whether I am being unduly
cynical in thinking that some countries may have signed up to
an OECD compliant law in relation to their intelligence services
but then turn a blind eye when they actually do what their states
require them to do.
Professor Pieth: What I can promise
you, to pick up this point, is we have this monitoring process
which goes even further. We are not only looking at laws, we now
have something called Phase 2 monitoring which sees whether the
laws are actually applied. These are very, very heavy, four months
of work in a country. We are sending teams of experts from other
countries to go on site. We have just done that and you can look
at the results that are on the Internet, looking at German legislation,
US laws have been tested so far, French legislation is under review
at the moment and Canada has just been done. It is a very, very
serious peer process. We want to see the cases, case law application,
and we are going into companies to see what they have done in-house.
We are doing that also with countries that you are referring to
that generally have got a reputation of signing up to things but
Chairman: We get this in all sorts of
areas. I think Lord Campbell-Savours would like to pursue one
of the points you have raised.
Q408 Lord Campbell-Savours: You are
surely not saying that this organisation you have referred to
should have the right to approach governments of different countries
and demand access to information from within their security services
about acts that they may have uncovered which could be claimed
to have been corrupt because they would not tell an outside body,
Professor Pieth: It is worse than
that. Excuse me for interrupting.
Q409 Lord Campbell-Savours: They
would not tell you.
Professor Pieth: No, we do not
need that. It is enough for us that there is a possibility and
that would be enough to shame them.
Q410 Lord Campbell-Savours: The possibility
Professor Pieth: Of undercutting
our rules by economically oriented secret service action.
Q411 Lord Campbell-Savours: They
would not tell you. There is no way that you could establish with
any machinery what was going on behind the walls of secrecy of
secret services of any country in the world that I know of.
Professor Pieth: No, but what
I am saying is that if the law permits it then that is enough
to start sanctioning a country.
Q412 Lord Campbell-Savours: All that
was being suggested before was a country might simply sign up
to the Convention and not comply and we would.
Professor Pieth: It is more complicated
than that in the sense that if we come across cases, and we are
increasingly coming across cases, take, for instance, the case
of Accres in Lesotho or the case of Exxon Mobile in Kazakhstan,
there are lots of cases around the world, and probably in all
of our countries we have cases, we investigate and if it appeared
there had been an excuse why a country would not pick up a case
for some reason and we felt it was for a secret service privilege
there would be very, very adverse comments on it in the world
Lord Campbell-Savours: I think what you
are saying is we would be better off not having 15 and 16 in the
Bill, just leave them out and do not comment.
Q413 Chairman: Is the only alternative
to strike this out? Is the only real option to strike this out
altogether and not have this exemption which Mr Kos describes
in very strong terms as being not only not compliant but also
really quite an unreasonable section to include? Is that the only
real option or is it possible to define something more narrowly
which would not provoke his rage in the way that it has done so
Professor Pieth: I must admit
that I have not tried my hand on that. My point is can it be limited
to defence and public security in a very narrow sense and to exclude
economic considerations? That would be my question. Frankly, talking
of exemptions, clauses 6 and 7 are of more concern to me than
clauses 15 and 16.
Q414 Chairman: If we cannot draft
something that would be acceptable generally we should leave it
out, is that what you are saying?
Professor Pieth: Yes. I am accepting
that is not a very elegant way because we are shoving something
under the carpet. Other countries have a similar problem. Here
I am just saying you are raising an issue which might cause a
lot of trouble because then it will have that
Q415 Mr Garnier: That is what we
call being naively candid.
Professor Pieth: You said it!
Q416 Chairman: Is there any difference
on this aspect between the OECD Convention and the Council of
Europe's Convention or do they take the same line, the same view?
Professor Pieth: As far as I am
awareI am not an absolute expert on the Council of Europe's
newest developmenthere we are pretty much in the same situation.
Chairman: Unless there is anything else
on that, shall we move on. The suggestion has been made a number
of times that perhaps we can deal with this problem in other ways
or perhaps deal with it by adding in other offences. Lady Whitaker,
you want to pursue this.
Q417 Baroness Whitaker: One of the
offences not in our Bill is trading in influence, which of course
is provided for in the Council of Europe's Criminal Law Convention
in Article 12. Are you concerned at this omission?
Professor Pieth: First of all,
I have to say this is an issue that leaves the area that the OECD
covers, we are not looking at trading in influence. As a Professor
of Criminal Law I accept that there is an interesting north/south
divide on this issue. The countries in the north so far do not
have trading in influence concepts and the south do.
Q418 Baroness Whitaker: Several have
Professor Pieth: Yes, and the
north will not pick it up whereas Italy, Spain, France and so
on will pick it up because they know what it means. Obviously
we have difficulties in understanding the concept or we think
it is less reprehensible. It is a very open concept, I must say.
I do not see a clear distinction between lobbying and trading
in influence, it gets very uneasy. That was one of the reasons
why the OECD said "Let us stick to very, very straightforward
grand corruption". That is why we have this very, very basic
concept when we talk about bribing other foreign heads of state,
for instance, whereas trading in influence is a fringe issue,
something in the grey zone.
Q419 Chairman: We have been told
a number of times that it would be variable to have as an ancillary
offence trading in influence and other people seem to think it
is not a good idea. The fact that a number of member states of
the Council of Europe have entered reservations about trading
in influence as an offence, should that make us hesitate to recommend
that it should be adopted or are those seven not representative
of the majority opinion in the Council of Europe?
Professor Pieth: I think it is
a cultural question. You have to ask yourself what are the situations
you are thinking of and are those situations you have a way of
dealing with in your own country, are they a threat to you. This
is a domestic issue basically. In Switzerland we have found a
solution that we are probably not going to include trading in
influence. It exists but people are not so alarmed about it. Maybe
this is wrong because, and this is reflecting on it as a Professor
of Criminal Law, the situation in Italy is that in the evening
you calculate the situation you are in in money and then you hand
over the money and the next day you are free for new alliances,
whereas the situation in Switzerland would be you might be bound
for 30 years into an alliance, an old boys network, if you want.
With trading in influence we are basically aiming at old boys
networks. The problem we have is that it is such an open notion
that we are covering a lot of ground and things that we do not
think are really criminal are also covered, so it is very difficult
to make a clear distinction. Domestically we have chosen not to
translate it. Again, from an OECD perspective we are very, very
far away from this kind of grey area. We are really concerned
by the $50 million or £50 million being paid somewhere allowing
a head of state to distort democracy.