Memorandum submitted by BAE Systems (BB
24)
SUPPLEMENTARY QUESTIONS
TO BAE SYSTEMS
Introduction
BAE Systems welcomes the draft Bribery Bill
and supports the objectives of the draft legislation. We believe
that it provides further evidence of the UK's commitment to combat
bribery, and that it will help enable British companies to compete
for business based on commercial factors alone. The draft Bill
provides the opportunity to clarify English law on this important
subject, and would provide the sort of environment in which a
company such as ours can operate with a degree of certainty and
comfort that it has the right level of compliance. So we think
the Bill represents an important step forward. As foreshadowed
in the written evidence submitted to the Committee by the CBI,
which we support, there is a need for some further clarification
and guidance, which should be addressed before the Bill is finalised,
but we consider it important that this new legislation should
be on the statute book as soon as practicable.
Q1. Please could you summarise the impact
that the US Foreign Corrupt Practices Act has had on your business
As a company which has operated in the US for
many years, BAE Systems has ensured that its policies, processes
and behaviours are designed fully to comply with the FCPA. As
we made clear in oral evidence, the company's approach is to maintain
the highest global standard across all of our operations worldwide,
which in practical terms means that our global internal standards
exceed what is required by the FCPA.
Q2. What impact, if any, would the draft Bribery
Bill have on your organisation's systems and business practices
were it to be made law?
As we explained in the oral evidence session
on 3 June, BAE Systems has put in place, over the past 2.5 years,
a number of major changes and improvements to the company's policies
and processes, with the aim, not only of ensuring that we operate
in full compliance with the existing law, but also of ensuring
that we meet the benchmark for ethical business conduct, which
was set out in the Woolf Committee's report. Against that background,
we do not believe that the Bill would cause us to make any particular
changes to our systems or practices. We believe that we have a
high level of comfort that our existing policies and processes
will be adequate to comply with the new law.
Q3. How workable, from your company's perspective,
is the "legitimately due" test under clause 4(3)(b)
of the draft Bill?
BAE Systems has some sympathy for the views
of the CBI on the legitimately due test set out in clause 4(3)(b)
of the draft bill.
Q4. What is your view on where the burden
of proof should lie for the new corporate offence provided for
in clauses 5 and 6 of the draft Bill: should it be a matter for
the prosecution to prove negligence, or for the defence to prove
adequate procedures or due diligence?
We have concerns about creating criminal offences
which are only established in accordance with civil standards.
In this context, BAE Systems supports the CBI position regarding
the imposition of criminal liability on the basis of negligence.
This raises the possibility that a company which has taken reasonable
precautions to prevent bribery may be criminally liable where
bribery has, in spite of those precautions, occurred. This is
particularly an issue for small and medium size exporters with
less ability to fund extensive compliance programmes than large
global corporations. Against that background, we consider that
the CBI's recommendation that gross negligence or recklessness
should be the standard for criminal conviction has some merit.
We believe that the burden of proof for criminal offences should
remain with the prosecution.
Q5. Are there any specific changes that should
be made to the draft Bill that you have not had an opportunity
to identify before now?
We share a number of concerns that have been
expressed to you by the CBI recently, most particularly in their
written submission. The existence of a reasonable person test,
in terms of concluding how certain behaviour or expectations may
be set, we think, is subject to wide interpretation, and therefore
could be associated with uncertainty. This seems to us to be somewhat
unsafe in terms of risk of perverse outcomes and prosecutions.
Our preference would therefore be that the conventional approach
to offences is taken in terms of appropriate criminal intent being
established. That said, if the standard remains, we have a degree
of comfort that the measures we have taken are such that we are
satisfied, for example, where the adequacy test applies, that
our internal policies and processes will be deemed to be adequate
in the event of any prosecution.
Q6. Is there any further information that
you wish to supply in connection with your appearance on 3 June?
We consider that some form of prosecutorial
guidance will be essential if companies are to have the clarity,
both as to law, and to enforcement policy to be applied by prosecutors.
We are open as to the means by which such guidance might be provided
but, as an example, we provided evidence to the Committee on 3
June in relation to the Foreign Corrupt Practice Act opinion procedure,
which operates in the Untied States and which enables any company
that is an issuer or is listed in the United States, to write
to the Department of Justice, describe a factual circumstance,
and how the company proposes to deal with it. Upon filing, which
can be done over the internet, the company will receive the US
Attorney General's opinion within 30 days as to the Department
of Justice's interpretation of the extent to which that conduct
does or does not comply with the FCPA.
June 2009
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