Memorandum submitted by Norton Rose LLP
(BB 26)
We have three comments on the draft Bribery
Bill ("the Bill").
Clause 3(8)
1. Clause 3(8) makes the expectation of
a reasonable person the test for deciding: (a) whether a particular
function or activity is one to which the offences in clauses 1
and 2 apply; and (b) what is "improper" for the purposes
of deciding whether the offences are committed.
2. When the facts occur in England and Wales
that test will probably create few problems.
3. However, the offences in clauses 1 and
2 apply, in some circumstances, even where the function or activity
has no connection to the UK (clause 3(2)) and no act or omission
occurred in England, Wales or Northern Ireland (clause 3(2) and
clause 7).
4. In these circumstances it is necessary
to decide what policy the legislation is seeking to achieve. Is
it seeking to apply solely English standards to public and private
conduct overseas? (c.f. the oral evidence given to the committee
by the Director of Public Prosecutions and the Director of the
Serious Fraud Office). Is it seeking to apply the standards and
expectations of the place where the conduct occurred? In addition,
what role does local law play in this test? Is it reasonable to
conform to what is permitted in local law, even if that does not
conform to the expectations of the English reasonable person?
5. These questions are important because
clauses 1 and 2 apply to private transactions wherever occurring
and can also apply to "any function of a public nature"
(clause 3(1)(a)). Professor Horder says that clause 4 should be
used to prosecute bribery of foreign public officials, but one
wonders whether a prosecutor in the right case could by-pass clause
4 (with its "legitimately due" provision).
6. Parliament should clarify this aspect
of the Bill.
Clause 5(1)(c)
7. Workable legislation will need to define
"negligence" in a bribery context. An analogy could
be drawn with the law on manslaughter. In its Guide to the
Corporate Manslaughter and Corporate Homicide Act 2007, the
Ministry of Justice makes it clear that the offence under the
2007 Act is concerned with the way an organisation's activities
were managed or organised, with a significant part of the failing
happening at senior management level. The test there is gross
negligence. We believe a similar threshold should be required
in the Bill.
Clause 5(4)[168]
8. The defence of adequate procedures is
going to be crucial to the operation of the new corporate `negligence'
offence in clause 5.
9. The Committee is reminded of the following
extract from the evidence given by Professor Horder:
The OECD were understandably anxious that
there should be greater clarity over what would count as an `adequate
system', something important not just from their point of view,
but from the perspective of firms seeking guidance. It was simply
not possible for the Law Commission to address this issue in the
time available.
There is a case for saying that, even if
it reaches the statute book, this clause should not be brought
into force until some work has been done with the CBI, other business
representatives, anti-corruption experts, and others, to hammer
out some basic standards and procedures.
There are some serious issues to be addressed.[169]
10. We agree. It is fundamentally important
that the defence can work in practice in the wide variety of circumstances
in which it may arise.
11. There are a number of sources that could
provide guidance (for example, a legislative model such as the
systems requirements in the field of money laundering).
12. Guidance could also be taken from Aon
Limited, which was fined by the FSA despite having control systems
in place. Aon's systems were, in the view of the FSA, `inadequate';
they did not ensure sufficient attention was paid to the risks
associated with overseas third parties.
13. Aon's payment procedures did not require
adequate levels of due diligence, it failed to monitor its relationships
with overseas third parties, it did not provide its staff with
sufficient guidance or training, and it did not ensure the committees
it appointed to oversee risks received relevant management information.
14. Lord Woolf's recommendations in his
report on BAE Systems in May 2008, which set a high ethical standard
for companies, should also be considered as a source of ideas
when formulating a standard. It contains guidance on key risk
areas that could usefully assist any company that has to defend
itself against corruption allegations.
15. It should be noted however that the
Woolf standard is higher than most companies can realistically
achieve and should not be the actual standard that is expected
of all companies.
16. The standard for "adequate procedures"
should, in our view, be placed at a level between the Woolf standard
and a baseline minimum standard. The challenge for the government
is to create a standard that is compliant with international expectations
and that also stands a realistic chance of being achieved by companies
of all sizes.
17. One option could be to develop a standard
that applies to all companies equally. This might however be limited
to the extent that it would have to be at a low level so small
less resourced companies could afford to comply with it.
18. Conversely, if that level was too low
to meet the UK's international obligations, the standard would
have to be higher and this could make the "adequate procedures"
defence unattainable to smaller companies that do not have the
resources to set such high standards.
19. A more satisfactory option might be
for the government to adopt a scaled approach, comprising one
overall set of values and principles to which all companies must
adhere, and then specific proportionate policy, procedure and
implementation guidance to each of small, medium and large companies,
determined by size of company revenue.
20. Companies would have to do all that
could be reasonably expected of them, given their resources, to
manage corruption risk in their everyday practices. To be able
to rely on the `adequate procedures' defence under this approach,
large multinational companies would have to comply with higher
standards than smaller less well resourced companies. Standards
would be set as high as they could be for all companies and in
a way that could be realistically achieved.
21. This approach would in our view reflect
current thinking from the Ministry of Justice which, in its recent
impact assessment on the Bill, explained the defence:
would allow a company to adopt a proportionate
approach, with small firms in low risk sectors able to argue adequate
systems on "light touch" grounds, for example demonstrating
that anti-bribery principles have been fully communicated to its
workforce | Guidance on broad principles and best practice models,
while not statutory guidance, is likely to be of particular value
in minimising the additional costs to SMEs and companies operating
in low-risk sectors and markets.[170]
22. We would welcome the opportunity to
contribute to developing this part of the legislative scheme further.
June 2009
168 We are grateful to the Institute of Business Ethics
for commenting on our views on adequate procedures. Back
169
J. Horder, Joint Committee On The Draft Bribery Renewal -
Additional Memoranda HC340 (BB01), para. 3. Back
170
Impact Assessment of draft Bill on reform of the law on bribery
(Ministry of Justice, 2009), 9. Back
| 
