Draft Bribery Bill - Joint Committee on the Draft Bribery Bill Contents


4  BRIBERY OF FOREIGN PUBLIC OFFICIALS

51. Clause 4 introduces a specific offence of bribing foreign public officials. This is absent from the current law, which subsumes this form of bribery within the general criminal offences. There has been universal support for the inclusion of a specific offence, particularly in view of the UK's obligations under the OECD Convention.[98] The text of Article 1 of the Convention reads as follows:

    The Offence of Bribery of Foreign Public Officials

    1. Each Party shall take such measures as may be necessary to establish that it is a criminal offence under its law for any person intentionally to offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries, to a foreign public official, for that official or for a third party, in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of international business.

    2. Each Party shall take any measures necessary to establish that complicity in, including incitement, aiding and abetting, or authorisation of an act of bribery of a foreign public official shall be a criminal offence. Attempt and conspiracy to bribe a foreign public official shall be criminal offences to the same extent as attempt and conspiracy to bribe a public official of that Party.

In broad terms, clause 4 would make it an offence to provide any advantage to a foreign official with the intention of influencing them in order to obtain or retain business, except where the advantage was "legitimately due".

"Legitimately due"

52. An advantage is legitimately due under clause 4(3): "if, and only if, the law applicable to F [i.e. the official] permits or requires F to accept it". In other words, it would be an offence unless the local law applying to the foreign official permitted the advantage to be received by him or her.

53. Several concerns were expressed about this test. They included the practical difficulties arising from juries being asked to reach decisions in accordance with a foreign law. For instance, the Director of Public Prosecutions stated that it would introduce a "heavy evidential burden". The International Chamber of Commerce (UK) added:

    There must be considerable doubt whether an English jury - or indeed an English court - is a suitable instrument for deciding in a criminal case what a foreign law [provides].[99]

54. The unqualified reference to the "law" was also viewed by many as unhelpfully vague. The Director of Public Prosecutions called for the Bill to "spell out" its meaning, while the OECD and a number of lawyers questioned whether it risked leaving loopholes that were open to abuse, including:

  • Bribes that are authorised as part of an enforceable contract;[100]
  • Occasions when the law is silent about whether a particular practice is prohibited or permitted, particularly under the tradition of common law countries where legal permission is generally assumed unless expressly withdrawn;[101] and
  • Scope for defendants being able to rely on cultural norms and practices, which the legitimately due test had been intended to prevent.[102]

55. A solution that was suggested by many witnesses was to amend clause 4 by introducing a "written law" test in line with the commentary on the OECD Convention. This defines the written law as including statutes, regulations and case law, while excluding local custom or tolerance.[103] It is plain that the Law Commission intended the "law" to be given this meaning and the Attorney General believed that the courts would interpret it in that way.[104] Jeremy Cole of Lovells stated:

    A 'written law' test not only excludes such arguments [as the risk of cultural norms being admissible] but provides businesses with far greater certainty.[105]

56. A small number of witnesses favoured removing the legitimately due test altogether. For instance, the OECD's Legal Director, Nicola Bonucci, stated that he knew of no law that permitted public officials to accept an advantage above their salary; that only five out of 38 states which are parties to the OECD Convention had included a specific written law exemption; and never to his knowledge had the exception been raised during proceedings. His personal view was that the test was "useless" and best removed.[106] Jeremy Carver of Transparency International UK agreed, particularly given concerns that "special laws" can be passed and hidden including directions in a centralised state, although we note that the OECD's Working Group discourages recognition of laws that have not been "publicly endorsed".[107]

57. A larger number of witnesses opposed abandoning the legitimately due test. For instance, Professor Horder stated that it represented a narrow but important qualification, broadly in line with the approach of most OECD states. On this point he cited a leading commentator, Professor Zerbes, in support.[108] While accepting that the exception might have limited use in practice, Professor Horder considered it necessary to respect states' "legislative freedom of action" and to avoid "gold-plating" the law.[109]

58. Professor Horder also maintained that dropping "legitimately due" would remove the fault element from the offence and would therefore risk non-compliance with the presumption of innocence under Article 6(2) of the European Convention on Human Rights.[110] In a similar vein, the Attorney General called for its retention as a clear test that distinguishes bribes from legitimate advantages.[111] Louise Delahunty was concerned that dropping this test might turn the offence in clause 4 into a "strict liability offence".[112]

59. A small number of examples were provided of the kind of situations in which a written law exception might apply. For instance, the Secretary of State for Justice referred to "offset" or "planning gain" scenarios under which a company pays for infrastructure projects (such as building schools or hospitals) as part of a wider commercial agreement.[113] Professor Horder noted that this is "the kind of practice which, if permitted by law, we would think absolutely appropriate and the right way to match up doing business and actually doing good".[114]

60. The US Department of Justice drew our attention to one case that it had been asked to advise upon in relation to the equivalent "written law" test under the Foreign Corrupt Practices Act. It concerned a company that had been required to provide technical and management training to officials under a Pakistani law as part of a joint venture with the Pakistan government.[115] The Department of Justice authorised training to be given to officials up to the value of ?250,000 per year. Nicola Bonucci stated that public officials may not benefit personally under a legitimate "offset" and therefore no issue would arise.[116] The OECD Secretariat acknowledged, however, that any offset which incidentally benefitted an official alongside other members of the public was likely to meet the Working Group's approval if permitted by a written law.[117]

61. Professor Horder also drew attention to the possibility of foreign laws permitting "standard fees or tariffs" to be paid directly to public officials, rather than into a general fund, including to officials such as notaries.[118] The Confederation of British Industry offered additional examples of conduct that risked, in its view, being wrongfully criminalised if the legitimately due test were removed.[119] Monty Raphael of Peters and Peters also favoured retaining the test for the "very few cases" where it could be made out.[120]

62. Another alternative was proposed by The Corner House. It recommended that "legitimately due" should be replaced with a more flexible approach that took into account the legitimacy of the advantage that is conferred rather than focusing on its strict legality under a local law. For this purpose The Corner House recommended using the term "improper", which would build on clauses 1 to 3 and fall in line with the use of this term under the UN and OECD Conventions.[121] The aim was to ensure that giving an official a justifiable advantage (such as modest and proportionate corporate hospitality, as addressed in chapter 7 below) would not be criminalised. For similar reasons the International Chamber of Commerce (UK) called for the terms "undue" (as used in the OECD Convention) or "corruptly" (as used in the US Foreign Corrupt Practices Act) to be included in the draft Bill, but in addition to the "legitimately due" test.[122]

63. These proposals were opposed by Professor Horder and the Attorney General. In particular, these broad terms were viewed as risking the effectiveness of clause 4 and as increasing the scope for taking cultural norms into account.[123] Jeremy Cole of Lovells also opposed the use of broad terms to exempt "all permutations of payments that are made in international commerce" on the grounds that their use risked causing more harm than good by broadening the narrow gateway established by a written law test.[124]

64. The proposed offence of bribing foreign public officials (clause 4) represents an important step in putting the United Kingdom's compliance with its international obligations beyond doubt. To ensure that this goal is achieved, we recommend that the reference in clause 4 to the "law" be replaced with a reference to the "written law", meaning statutes, regulations and case law. This amendment should remove the potential for loopholes to emerge, while providing greater certainty to prosecutors, jurors and businesses alike. It should also provide an appropriately narrow gateway restricting the circumstances in which advantages can legitimately be provided to foreign public officials.

A "reasonable belief" defence

65. The Law Commission originally proposed a defence for any person who mistakenly, but reasonably, believed that a foreign public official was required or permitted to accept an advantage under the official's local law.[125] The Government decided not to include this defence in the draft bill.

66. Professor Horder stressed that he understood the Government's decision, but noted rare examples under the legal system of England and Wales in which mistake of the law can operate as a defence. He also stated that mistake of a foreign law may legitimately be treated in a different way to a mistake of domestic law, before adding:

    [I]n practice this defence would not be run very often, but when it was run it [would be] perfectly reasonable for a firm to say, 'Well, look, the biggest law firm in the world has given us this advice that it is perfectly lawful to make this payment, what can we do? We can only rely on that'. That is important because we are talking about convicting someone of a pretty serious offence. The taint of corruption is pretty significant.[126]

67. Many business and legal representatives agreed. For instance, the law firm Herbert Smith stated that a dearth of legal authorities in some countries can lead to advice being heavily qualified, leaving quick decisions to be made on a "best guess" basis:

    We fail to see why public policy should require that individual's actions be criminalised and for the individual to then to rely on a prosecutor's discretion, on whether with hindsight, the public interest requires a prosecution.[127]

68. Although the Director of Public Prosecutions accepted that prosecutorial discretion offered a "workable" solution given that genuine mistakes and misunderstandings are factors under the Code for Crown Prosecutors, he preferred the option of adding a statutory defence in the interests of "transparency and accountability".[128] Clifford Chance also stated that prosecutorial discretion offered little comfort to firms which faced a legal duty to file reports under money laundering legislation.[129] The International Chamber of Commerce (UK) suggested that the defence might be a helpful addition to the "written law" test, since juries are "much more suited to find whether a reasonable attempt to ascertain foreign law had been made rather than to decide upon the law itself".[130]

69. The Government's decision to drop the defence followed objections from the OECD. Its Working Group considered that such a defence would be open to abuse and would contradict the general stance of the UK legal system, under which mistake of the law is no excuse.[131] The OECD's Legal Director, Nicola Bonucci, highlighted the danger of abuse by stating "it is not difficult […] to get bad legal advice if you want it.".[132]

70. The Secretary of State for Justice stated that removing the defence represented the "correct balance" between being fair to defendants and providing "so many rabbit holes" that they could unduly escape conviction.[133] He emphasised that prosecutorial discretion and the good sense of jurors could be trusted to ensure that genuine mistakes were not punished by conviction. Several witnesses agreed, including Transparency International UK, The Corner House and Monty Raphael, who stated:

    [A] responsible corporation doing business overseas will always if it is in any doubt, and there will be very few occasions when it can be left in any doubt as to whether what is being asked for is a bribe, will seek local legal advice. Where they have sought local advice and the instructions have been good, the advice has been unambiguous and they have followed the advice to the letter, it is inconceivable that they will be prosecuted.[134]

71. The Law Commission's proposal for a "reasonable belief" defence raises a range of difficult and competing interests. We are, in particular, sensitive to the challenges faced by those who conduct business under unfamiliar laws abroad. But we also appreciate the concerns of those who view the defence as inconsistent with the United Kingdom's international obligations and the policy aims of the draft Bill. On balance, we support the Government's decision to reject the defence.   


98   We note that clause 1 and clause 4 overlap in any situation where a bribe is paid to a foreign public official. We also note that encouraging, assisting or attempting to commit an offence under the draft Bill would also be a secondary offence under the Serious Crime Act 2007, among other provisions.  Back

99   BB03 Back

100   Qq484, 487; BB03; BB56 , para A6 and 2.15 Back

101   Qq 478, 487, 20; BB31, para 31 Back

102   BB39, para 4.4 Back

103   BB31; Q478 Back

104   Qq 30, 675 Back

105   BB39, para 4.4 Back

106   Q478; Q487 Back

107   Q530; BB31, para 32 Back

108   BB21: "Most of the signatory states have indeed implemented the [OECD] Convention to the effect that payments or other benefits which are made in conformity with a strict legal basis are not criminalised" citing Professor Zerbes in The OECD Convention on Bribery: A Commentary, 2007 Ed. M.Pieth, L.Low and P.Cullen, pp104-5. Back

109   BB21 Back

110   BB21 Back

111   Q677 (Baroness Scotland of Asthal) Back

112   BB40, para 5.1 Back

113   Qq 568, 569 (Jack Straw MP) Back

114   Q26 Back

115   BB57, para 11 Back

116   Q493; see also Q490 Back

117   BB31, para 55 Back

118   BB21 Back

119   BB46, para 17 Back

120   BB51 Back

121   The OECD considered the use of the term "improper" or "undue" to be acceptable but cautioned against any further qualification using terms such as "good faith", "impartiality" etc, due to concerns that this may render it narrower than its Convention: BB31, para 46 Back

122   BB36 Back

123   BB21  Back

124   BB39, para 4.18 Back

125   Law Commission, Reforming Bribery, No. 313, November 2008, paras 7.22-7.49 Back

126   Q56 Back

127   BB49, para 13 Back

128   Q394; Q400; Q401 (Keir Starmer QC) Back

129   BB05, para 25 Back

130   BB03, para 13 Back

131   OECD Phase 2 bis report, above, para 62  Back

132   Q501 Back

133   Q576 Back

134   Q353 Back


 
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Prepared 28 July 2009