Memorandum submitted by the Director of
Public Prosecutions (BB 16)
I am grateful for the opportunity of setting
out my views on the provisions of the draft Bill.
In so doing I have taken account of aspects of the
oral evidence already presented to the Committee on 14th May from
Professor Jeremy Horder and on 20th May from Professors Celia
Wells and Bob Sullivan and from Colin Nicholls QC.
My statement also addresses the three specific
questions on which I have been asked by the Committee to comment
in writing.
In relation to our general evidence I submit:
THE ADVANTAGES
OF THE
DRAFT BILL
1. The proposals provide for long overdue
modernisation and consolidation of the law on bribery and corruption,
although they do not include the sale of honours or election offences.
2. I welcome the removal of the distinction between
private and public functions in the Public Bodies (Corrupt Practices)
Act 1889 and the Prevention of Corruption Act 1906. I also welcome
the replacement of the need to show a relationship of "agency"
in respect of bribery in a private context.
3. The definition of "functions of a public
nature" is consistent with the meaning of a public body in
the Human Rights Act 1998. Removal of the presumption of corruption
in the Prevention of Corruption Act 1916 in respect of payments
to a person in a public body or by a person seeking to obtain
a contract from a public body also deals with a potential problem
of ECHR compatibility.
4. The new offences in Clause 4 (bribery
of a foreign public official) and Clause 5 (corporate liability
for failing to prevent bribery) would help meet the UK's international
obligations under the OECD and UN Conventions;
5. I welcome the removal of the need for
AG consent for the proposed new offences, although I note that
under current proposals for constitutional reform the Attorney
General would retain a general power to halt proceedings in the
interests of national security.
6. The scope of the revised "general
offences" in Clauses 1 and 2 is very broad. These offences
will capture all the offending that could be prosecuted under
the existing law. In fact they are likely to capture behaviour
that could not be successfully prosecuted now because of the need
to show that an advantage was given or received "corruptly'.
This may require a greater use of prosecutorial discretion not
to prosecute in the public interest.
THE DISADVANTAGES
OF THE
DRAFT BILL
7. The drafting is much more complex than
the current law, despite the somewhat archaic language of the
Prevention of Corruption Acts. This is in contrast to the simplicity
and effectiveness of the Fraud Act 2006 as a prosecutorial tool.
However, the removal of the "prime motivator" concept
and the emphasis on breaches of legal and equitable duties in
the earlier draft bill provide a less complex basis for the offences
than would otherwise have been the case.
8. The requirement that the prosecutor must prove
that a payment to a foreign public official was not "legitimately
due" places a heavy evidential burden on the prosecutor.
The prosecutor will, in effect, need to lead evidence that the
advantage is not legitimately due, or be able to rebut the defendant's
assertion that it is.
9. The provision for vicarious liability
for corporations, hinged as it is on prosecution of an individual,
points out the weaknesses in the current law of corporate liability.
The bribe will have been made on behalf of the corporation, yet
the "identification" doctrine makes successful direct
prosecutions of corporations almost impossible. In order successfully
to prosecute a corporation under these proposals there must be
a successful prosecution of an individual to prove that a bribe
has occurred.
10. The offence of "consent or connivance"
to the general offences or of bribing a foreign public official
will be unused until there is a likelihood of prosecutions of
corporations for the underlying offences. There would appear to
have been no prosecutions by the CPS under the equivalent provisions
in section 18 Theft Act 1968 and section 12 Fraud Act 2006.
11. Actions which would not currently be
proved to have been done "corruptly" may well pass the
evidential test for the proposed general offences. Examples would
be where money was effectively extorted from individuals under
duress (short of a threat to life) or where a person `bribes'
in order to expose corrupt practices.
12. It is also possible that an individual
may not be aware that a demand for payment is not legitimate.
Nevertheless the relevant expectation on which improper performance
is based is not that of the individual concerned (a subjective
test) but that of the "reasonable person" (an objective
test). The individual may not therefore know that the performance
of the function is improper, but is still guilty of the offence.
13. Removal of the defence of reasonable belief
(contained within the Law Commission draft Bill at Clause 5) in
relation to bribery of a foreign public official increases the
reliance on prosecutorial discretion in such cases.
WILL THERE
BE MORE
SUCCESSFUL PROSECUTIONS?
14. I believe that it is unlikely that there
will be a significant increase in the number of cases prosecuted
by the CPS. It is rather less because of shortcomings in the law
that cases may not be prosecuted, than because of the difficulty
in obtaining evidence in the first place.
15. The offences prosecuted under the general
offences may prove easier to prove because of the shift in focus
from the impropriety of the payment to the impropriety of the
behaviour itself.
16. I consider the corporate offence is
more likely to operate as a spur to good practice and as a form
of regulation of corporate behaviour.
In response to the three questions raised by the
Committee I make the following submission:
Q1. Is the extra-territorial reach of the draft
Bill satisfactory? In practice, would you investigate and prosecute
companies that have a limited connection to the UK?
Extra-territorial jurisdiction is already provided
for in respect of bribery by the Anti-Terrorism Crime and Security
Act 2001 for nationals of the United Kingdom (UK).
The draft Bill provides directly for extra-territorial
provision for the offences it creates, principally through the
provisions of Clause 7, but there are problems with bribery by
foreign nationals and foreign incorporated subsidiaries of UK
companies.
GENERAL OFFENCES
AND FOREIGN
BRIBERY
For the general offences and the offence of
bribing a foreign public official, the draft bill requires a "close
connection" with the UK.
The definition of a "close connection"
with the UK includes British citizens, individuals ordinarily
resident in the UK and bodies incorporated under the law of any
part of the UK.
Individuals
An individual who is not a British citizen or
ordinarily resident in the UK and who commits acts of bribery
wholly outside the jurisdiction does not have a "close connection".
by Clauses 7(2) and (4).
This is so even if he/she were an employee of a UK
company and acting entirely on its behalf. The Law Commission
considered whether the legislation should apply to foreign nationals
resident in Crown Dependencies or Overseas Territories, but left
the decision to the Government. It did not seem right that a foreign
national ordinarily resident in Southampton could face prosecution
in England and Wales or Northern Ireland (EWNI) for bribery overseas,
but not if ordinarily resident in Guernsey.
Companies
Bribery carried out wholly abroad by a foreign
subsidiary or associate acting entirely on behalf of the UK company
and even on its instructions would not be directly criminally
liable for behaviour that would be an offence under Clauses 1,
2 and 4.
Such a company, would not have a "close connection"
with the UK under Clause 7(4)(h) even if incorporated in one of
the Crown Dependencies or Overseas Territories and could not be
prosecuted using Clause 7.
FAILING TO
PREVENT BRIBERY
Foreign companies and partnerships
The offence of failure to prevent bribery can
be committed only by a "relevant commercial organisation"
[Clause 5(7)].
This includes only corporate bodies or partnerships
formed under the law of EWNI, or which carry on business there.
(We are unsure whether a partnership in Scotland falls within
this definition).
A foreign company could therefore not be prosecuted
for failure to prevent bribery.
UK companies
Before a UK company can be liable for failing
to prevent bribery, there must have been a bribe by a person "performing
services for or on behalf of" the company. That person must
also be capable of being guilty of bribing [Clause 5(2)].
An individual working for a foreign company, who
commits an act of bribery wholly outside EWNI, and who is not
a British citizen or ordinarily resident in the UK, does not have
a "close connection" with the UK. He/she cannot therefore
be guilty of bribing, even if performing services for or on behalf
of the UK company.
Equally, a foreign company cannot be guilty
of bribery. It too cannot be a "person" for the purposes
of the triggering bribery offence.
The UK company cannot therefore be prosecuted
for failing to prevent bribery either by such an individual or
foreign company acting entirely outside EWNI, however close in
fact the relationship between the UK company.
The Law Commission concluded (8.44-8.46) that
whether the law should extend to companies incorporated outside
the UK (including a Crown Dependency or Overseas Territory) was
best suited to a more general review of corporate liability. It
raised an issue of relevance to many crimes committed by legal
persons, not just bribery. They did, however, conclude (8.52)
that where the body was incorporated in a Crown Dependency or
Overseas Territory, this would fill a "significant gap"
in the current law.
In its current form, foreign companies, including
foreign subsidiaries that may be wholly-owned by a British company,
are outside the scope of the Bill. This may encourage companies
intent on evading criminal liability. Whether this would actually
occur in practice is not something that we would be qualified
to comment on as prosecutors. It may, of course, be the case that
the foreign corporation or any individuals acting on its behalf
would be subject to similar sanctions in the country of incorporation.
As prosecutors we prosecute according to the
laws passed by Parliament. The decision as to whether they should
be included within the Bill is a policy matter for the Government
to decide upon. Should the position be reconsidered, we would
be in a position to comment on any practical and legal issues
raised.
INVESTIGATION AND
PROSECUTION OF
COMPANIES WITH
A LIMITED
CONNECTION WITH
THE UK
We would apply the Code for Crown Prosecutors
in such a case in the same way as we would with any other case
referred to us—if there were sufficient evidence to prosecute
and it was in the public interest to do so, a prosecution would
ensue, subject to resolution of any jurisdictional issues that
might arise. Where there was jurisdiction to prosecute in England
and Wales we would need to consider whether the company had committed
offences that could also be prosecuted in another jurisdiction.
If so, we would liaise with the law enforcement and prosecuting
authorities in that jurisdiction with a view to reaching decisions
about which jurisdiction should take primacy, if appropriate,
in the investigation and prosecution.
Q2. Does the draft Bill make it clear when facilitation
payments and corporate hospitality will be unlawful? Can we rely
on prosecutorial discretion or guidance to ensure that enforcement
is well targeted?
In this context we understand "facilitation
payments" to mean the payment of monies, or the provision
of some other advantage, to another person, with the intention
of inducing the other person to perform a function improperly
or to perform a function at all. This latter category includes
the situation where an official demands payment without which
he will not carry out an act which he is required to do as part
of his normal duties; such a payment would fall foul of clause
1(3). However, if the law of any country permitted an official
to require "facilitation payments" (perhaps using the
term "commission") such activity would not be an offence
because it was lawful in the country in question and not therefore
improper.
We understand and agree with the policy rationale
for not providing an exemption for such payments and we consider
that the Bill is clear in this regard—facilitation payments
will be unlawful, however small and irrespective of the degree
to which such payments were "extorted" from the payer.
The lack of any exemption or defence in the Bill (unlike, say,
the US provisions) means that it will fall to the investigators
and prosecutors to make a judgement as to whether activity that
is unlawful should be prosecuted The Bill does not provide any
guidance for prosecutors as to what to take into account when
reaching this decision—and it would be unusual for legislation
to do so. It will normally be in the public interest to prosecute
cases involving corruption, including the making of facilitation
payments. Where payments are small we would argue that prosecutors
can use their discretion and reach decisions applying the public
interest factors set out in the Code for Crown Prosecutors.
Corporate hospitality raises other issues from
the types of facilitation payments described above. The primary
one for prosecutors will be deciding whether there is evidence
in any particular case that the hospitality provided contravenes
clauses 1 and 2 of the Bill. The Bill does not provide guidance
as to when corporate hospitality would be unlawful, that is to
say improper, but it is not reasonable to expect that primary
legislation could cover every situation.
Corporate hospitality may not be, and in many
cases probably is not, provided with a view to inducing someone
to perform a relevant function improperly. Culturally, corporate
hospitality is generally accepted, though different standards
may be expected and required of public officials or others working
within or for the public sector. In many, if not most, cases it
will simply be regarded as legitimate relationship-building and
networking, with a view to obtaining a contract or maintaining
a client relationship and would not be indicative of improper
conduct. In some cases it may go beyond that; while it is dependent
on the circumstances of the case, the greater the advantage conferred,
the more likely it is that this is evidence that the advantage
was promised or given to induce the recipient to perform his function
improperly.
However, this is a matter of degree and there
will inevitably be a grey area around the boundary of what is
considered acceptable. To an extent, it may be possible to resolve
some of the issues as to what is acceptable, legitimate, hospitality,
and what is not, through the adoption and implementation of codes
of practice in industries, professions and the public sector (though
with self-regulation, there is obviously a risk of inconsistency
of practice between industries). Codes of practice do provide
clarity and assist in prevention and enforcement; when considering
whether hospitality was improper, investigators and prosecutors
would consider codes of practice as part of the investigation
and review process.
Q3. Do you have adequate resources to tackle bribery
at home and abroad?
The CPS is dependent upon investigations carried
out by the police. There would be an additional need for resources
if there were significantly more investigations undertaken by
the police as a result of these proposals
It is unlikely, however, that there will be
a significant number of additional prosecutions by the CPS as
a result of the proposals. Although the general offences in Clauses
1 and 2 have a broader scope than the current law, their effect
is likely to be to make the offences currently prosecuted easier
to prove by virtue of that broader scope and the removal of the
need to prove actions were done `corruptly'.
The CPS considers that offences of bribing a
foreign public official are no more likely to be prosecuted than
as at present because of the evidential difficulties implicit
in proving the offence under Clause 4. If they were, then they
would be high cost cases and likely to have a significant impact
on resources in a time of constraint.
Prosecution of offences of corporate liability
under Clause 5 would take place only in the context of a prosecution
of an individual for domestic or foreign bribery. There would
be some additional cost because of the evidential requirements
of the corporate offence. In the context of the underlying case,
however, it is likely that the increase would be marginal.
June 2009
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