| Background
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| 1. | We welcome the draft Bribery Bill as an important opportunity to modernise the criminal law of bribery; this will assist in fulfilling the United Kingdom's international obligations more effectively. We urge the Government to introduce the Bill as soon as possible in view of its protracted and faltering history and to take full account of our recommendations (Paragraph 16)
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| The offences of bribing and being bribed
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| 2. | We endorse the "improper" performance test that has been developed by the Law Commission to distinguish bribes from legitimate conduct under the two proposed offences of bribing (clause 1) and being bribed (clause 2). In particular, the reliance on a reasonable person's expectation of "good faith", "impartiality" and "trust" represents a careful balance between simplicity, certainty and effectiveness. It also takes into account the approach adopted in other countries and international anti-bribery conventions. (Paragraph 35)
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| 3. | We do not consider that the proposals in the draft Bill, taken together with existing criminal offences, will leave any gaps in the law. We do, however, acknowledge the concern that conduct which ought to be viewed as a civil wrong may, in future, be criminalised. The limited time for completing our inquiry has prevented us from exploring possible solutions to this problem, although we note the potential for developing an effective "avoidance of doubt" provision. The Government must address this issue before introducing the Bill into Parliament in order to minimise the need for reliance on prosecutorial discretion and maximise certainty for all those who will be asked to comply with, and enforce, the new law. (Paragraph 36)
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| 4. | While we accept that it may occasionally be appropriate to consider cultural variations on issues such as hospitality, a careful line needs to be drawn. The draft Bill must in general prevent individuals from relying on local customs to justify corrupt practices, otherwise its effectiveness will be seriously undermined. We see merit in the Law Commission's proposal that jurors should apply the standards of a "person of moral integrity". Nevertheless, the evidence that we received revealed continuing uncertainties over what this would mean in practice. The Government should clarify its intended approach to the important and difficult matter of cultural variations before the Bill is introduced. (Paragraph 41)
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| 5. | On balance we support the provisions in the draft Bill that enable a person to be convicted of being bribed (clause 2) without proof of knowledge or intention, notwithstanding that subjective fault should ordinarily be required by the criminal law. This policy forms an important part of changing the culture in which taking a bribe is viewed as acceptable. In particular, we think that it should encourage anyone who is expected to act in good faith, impartially or under a position of trust, to think twice before accepting an advantage for their personal gain. (Paragraph 46)
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| 6. | Once the operation of a Bribery Act has become established, the Government should ask the Law Commission to review the Honours (Prevention of Abuses) Act 1925 to determine whether it remains necessary in light of the new offences. (Paragraph 50)
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| Bribery of foreign public officials
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| 7. | 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. (Paragraph 64)
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| 8. | 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. (Paragraph 71)
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| Negligent failure by organisations
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| 9. | We support the Government's proposals for a new offence that targets companies and partnerships which fail to prevent bribery by persons acting on their behalf. The current law has proven wholly ineffective and in need of reform. However, we are concerned by the focus on whether a "responsible person" was negligent, rather than on the collective failure of the company to ensure that adequate anti-bribery procedures were in place. In our view, clauses 5 and 6 introduce a narrow and complex solution to a pressing problem. We therefore recommend the removal of the need to prove negligence under clause 5(1)(c). While it would lead to the commercial organisation being strictly liable, subject to an adequate procedures defence, nevertheless we do not believe this would be unfair, particularly given the parallel with the approach taken in other leading countries. A commercial organisation is well placed to demonstrate the adequacy of its procedures, preferably on a probative burden of proof. (Paragraph 89)
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| 10. | We do not accept the merits of increasing the threshold of the offence to "gross negligence" or the introduction of an alternative civil enforcement regime, since neither will satisfy the policy aims of the draft Bill. (Paragraph 90)
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| 11. | We note two important points that emerged on the meaning of the phrase "adequate procedures" in clause 5:
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- First, it must be interpreted in a flexible and proportionate way depending on the size and resources of the company, alongside the ethical risks associated with the industry, geographical area and the types of transaction concerned
- Second, it must depend on what a commercial organisation is doing in practice rather than in theory. (Paragraph 92)
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| 12. | The adequate procedures defence does not apply where a "senior officer" is negligent in performing their role as a responsible person by virtue of clause 5(5). It is hard to imagine any circumstances in which the procedures would be adequate where a senior officer was at fault. In line with our recommendation to remove the requirement to prove negligence, we further recommend that clause 5(5) be removed. This would leave the role that has been played by senior officers to be determined as part of the adequate procedures defence. It would also reflect difficulties identified in relation to the meaning of the term "senior officer". (Paragraph 103)
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| 13. | We note that a parent company's liability for a subsidiary is one of the issues due to be considered as part of the Law Commission's general review of corporate criminal liability and we anticipate that the Law Commission's conclusions will valuably inform future debate on this difficult issue. (Paragraph 105)
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| Guidance |
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| 14. | We support calls for official guidance to be prepared on key aspects of the draft Bill in the interests of promoting certainty. It would, in particular, help commercial organisations to stay within the law and remove the excuse from those who do not. We therefore recommend the introduction of a new clause giving the Government power to approve guidance prepared by appropriate bodies, in line with the model that already exists under the Money Laundering Regulations. We believe that this represents a workable solution that will build on the growing expertise within the private sector, while limiting the burden on Government. (Paragraph 117)
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| 15. | Official guidance on how to comply with the provisions of the draft Bill should, at a minimum, cover the meaning of "adequate procedures". The process of sanctioning guidance should provide an opportunity for professional bodies to work alongside Government in identifying any further areas in which clarification is required. These could include, for instance, questions about the application of the draft Bill to subsidiaries, joint ventures and commercial agents. (Paragraph 121)
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| 16. | There is no reason why the preparation of official guidance should delay the passage of a Bribery Bill. It should, however, be available for use before the offences come into force in order to give businesses time to prepare for its introduction. (Paragraph 123)
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| 17. | We acknowledge that a formal advisory service similar to that provided in the United States and Hong Kong, could have great benefit. We note, however, that differences between our criminal justice systems prevent direct analogies being drawn and mean that it would in practice be difficult to establish such a service. We are therefore not persuaded that the Government should seek to establish an equivalent in the United Kingdom. We are particularly concerned about its potential impact on the independence of prosecutors. (Paragraph 129)
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| Special cases |
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| 18. | We agree with the Government that facilitation payments should continue to be criminalised. A specific defence risks legitimising corruption at the thin end of the wedge. At the same time we recognise that business needs clarity about the circumstances in which facilitation payments will be prosecuted, particularly given the difficult situations that can arise. Therefore the basic principles of prosecution policy, which we would expect to adhere firmly to the concept of proportionality, must be made clear. But we would not welcome guidance that was so detailed that it effectively introduced a defence into the law. (Paragraph 138)
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| 19. | Corporate hospitality is a legitimate part of doing business at home and abroad, provided it remains within appropriate limits. The general offences impose an appropriate limit on this activity under the "improper" performance test. However, the main limit under clause 4 is based on prosecutorial discretion. We are content with this and call on the Government to reassure the business community that it does not risk facing prosecution for providing proportionate levels of hospitality as part of competing fairly in the international arena. (Paragraph 147)
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| Jurisdiction |
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| 20. | The draft Bill would extend the jurisdiction of the new offences to include actions by anyone who is "ordinarily resident" anywhere in the UK (clause 7(4)). We welcome this proposal, which ensures that individuals cannot live within the UK without being subject to the same criminal law as citizens. (Paragraph 152)
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| 21. | There are two matters that the Government must consider clarifying in relation to the jurisdiction of clause 5 prior to the Bill's introduction:
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- The meaning of "carries on a business" and "part of a business".
- The need to prove an offence under clauses 1, 2 or 4 as part of proving an offence under clause 5. (Paragraph 157)
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| 22. | We note that a range of options has been proposed for extending the jurisdiction of clause 5, and anticipate that the Law Commission's review of corporate criminal liability will valuably inform the Government's consideration of them. (Paragraph 159)
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| 23. | We hope that the Government will succeed in its aim of ensuring that Crown Dependencies and British Overseas Territories bring their laws into line with the proposals in the draft Bill, including clause 5. The size and significance of the corporate community in some of those jurisdictions makes this a task that should be pursued vigorously. (Paragraph 162)
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| 24. | We are surprised that the Government has not reached an agreement with the Scottish Executive about the approach to be taken, given the length of time that the draft Bill has been subject to consultation and the importance of meeting the UK's international obligations, and we urge that this be brought to a conclusion without further delay. (Paragraph 164)
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| The Attorney General |
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| 25. | The Attorney General's powers of consent and direction raise complex constitutional issues that lie at the heart of ensuring parliamentary accountability for the criminal justice system. We agree with the Government that the power of direction should remain in place without being reformed by the draft Bribery Bill. Since this power will remain in place, we are satisfied that the power of consent should be transferred from the Attorney General to the Directors of the prosecuting authorities (clause 10). Any broader reform of the Attorney General's Office, including her power of direction, must await comprehensive proposals being pursued in the future. (Paragraph 171)
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| 26. | Any transfer of consent from the Attorney General to the Directors of the prosecuting authorities, or otherwise, should limit the Directors' power to delegate their role in relation to bribery cases to senior postholders who are nominated and identified under the protocol for prosecutors. We call on the Attorney General to implement this recommendation before any of the proposed offences enter into force. (Paragraph 174)
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| 27. | The transfer of consent to the Directors under clause 10 of the draft Bill does not extend to amending section 53 of the Serious Crime Act 2007, leading to an inconsistency in the draft Bill. We recommend that the Government address this anomaly in the forthcoming Bribery Bill (Paragraph 176)
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| Article 5, OECD Convention
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| 28. | Article 5 of the Organisation for Economic Co-operation and Development's Convention must, at a minimum, be enshrined in guidelines applying to all prosecutors. Confidence in the criminal justice system will be undermined unless this important principle is both protected and respected. We recommend that the Attorney General take the earliest opportunity to ensure that this happens. (Paragraph 183)
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| Penalties |
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| 29. | We support the penalties available under the draft Bill, including the power to impose unlimited fines on companies and a maximum ten year sentence of imprisonment for individuals. The draft Bill must have teeth. However, the Government must:
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- Clarify the way in which the unlimited fine will be assessed;
- Ensure that civil powers of confiscation and recovery will operate in a way that is proportionate and reasonable; and
- Take action at a European level to prevent companies being automatically and perpetually debarred following a conviction, while exploring shorter-term measures to prevent disproportionate penalties being imposed in the meantime. The Government must ensure that the UK reaches a position where debarment is discretionary, if self-reporting is to work effectively in practice. (Paragraph 192)
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| The Security Services |
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| 30. | We heard no persuasive evidence of a need for the domestic intelligence agencies to be granted an authorisation to bribe. Neither are we persuaded that this draft Bill is the appropriate vehicle to extend the security services' powers to contravene the criminal law. Finally, we note continuing doubt about whether clause 13 complies with the United Kingdom's international obligations, despite the fact that this issue was raised as long ago as 2003. For all these reasons we recommend that the Government remove clauses 13 and 14. (Paragraph 203)
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| Privilege |
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| 31. | Under the provisions of the draft Bribery Bill, Members of both Houses of Parliament can be convicted of bribery. This is entirely proper: bribery is a very serious offence and Members should be subject to the same criminal laws as everyone else. (Paragraph 206)
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| 32. | In view of the importance of the freedoms parliamentary privilege is designed to protect, we believe that attempts to legislate on this matter should be consistent with each other. Clause 15 of the draft bill is based on the conclusions of the Joint Committee on the Draft Corruption Bill in 2003, which was not the case with the Parliamentary Standards Bill as introduced in the Commons. Inconsistency risks confusion in the operation and application of the law and could bring about the unnecessarily broad erosion of fundamental constitutional principles by means of competing precedents. For this reason we believe it is unacceptable that the draft Bribery Bill should take a different approach to privilege from that taken in the Parliamentary Standards Bill, particularly as the two bills deal with overlapping areas of law. (Paragraph 224)
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| 33. | In order to achieve consistency with the Parliamentary Standards Act 2009, we recommend that the Government leave out clause 15 of the draft Bribery Bill. (Paragraph 225)
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| 34. | The issue of parliamentary privilege has arisen in relation to several pieces of legislation and draft legislation in recent years. Legislating in a piecemeal fashion risks undermining the important constitutional principles of parliamentary privilege without consciousness of the overall impact of doing so. This issue was examined in considerable detail by the 1999 Joint Committee on Parliamentary Privilege, which concluded that a Parliamentary Privileges Act was required. We believe that, should the Government deem it necessary, such an act would be the most appropriate place to address the potential evidential problems in relation to bribery offences. (Paragraph 228)
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| Wider issues |
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| 35. | The Government's partial Impact Assessment suggests that bribery legislation would only result in an additional 1.3 prosecutions for bribery per year. This would be an indicator of success if it reflected vastly increased diligence and compliance on the part of companies. We would be troubled if this low estimate were better explained by a lack of resources available to enforce the legislation. We recommend that the Government prepare a complete Impact Assessment for any legislation that is subsequently introduced, including an assessment of the additional resources required for effective enforcement by way of publicity, monitoring of compliance and investigations. Without committing adequate resources to tackle bribery, the Government's legislation will not have the required deterrent effect.. (Paragraph 237)
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| 36. | The Government's impact assessment should also include a fuller analysis of the damage caused by bribery to economic and social development, to democracy and the rule of law, to individual members of the community and to businesses themselves, particularly through the distortion of competition, the diversion of scarce resources to purchase inferior products, and the harm to personal and national reputations at home and abroad. These underlying economic and human costs, felt most directly and disproportionately by the poor, must not be overlooked. (Paragraph 238)
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| 37. | The Government's partial Impact Assessment of the draft Bill leaves out much of the analysis needed to justify its conclusions and in particular takes only minimal account of the impact of the proposed legislation on the private sector. We recommend that the Government publishes a much more detailed Impact Assessment at the same time that the Bill is introduced into Parliament, taking account of all the points raised in Annex 1 to this report and paying particular attention to the impact of the legislation on business, especially small businesses. (Paragraph 242)
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| 38. | We welcome the commitment of the Government, set out in its partial Impact Assessment for the draft Bill, to review the impact of the legislation after a period of three to five years. We recommend, however, that in its revised Impact Assessment the Government generates a comprehensive set of performance indicators so that the criteria against which the legislation is being assessed are clearly understood. (Paragraph 244)
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| 39. | We regret that we were given a bare ten weeks to conduct pre-legislative scrutiny of this important draft Bill. We recommend that, in order to demonstrate its respect for the process, the Government ensure that future Joint Committees are established sufficiently promptly to allow for a minimum scrutiny period of twelve weeks from the first meeting of the committee appointed to undertake scrutiny. (Paragraph 246)
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