Memorandum submitted by Reynolds Porter
Chamberlain LLP (BB 34)
With reference to the Committee's call for written
evidence, please find below our submissions to the Committee regarding
the draft Bribery Bill:
1. We have concerns about the way in which the
Law Commission proposes to treat facilitation payments. As is
explained in the Law Commission's report, a facilitation payment
is a payment made with the purpose of expediting or facilitating
the provision of services or routine government actions which
an official is normally obliged to perform and which he intends
to perform. Thus the purpose of the facilitation payment may perhaps
be to encourage the official to perform the service more carefully
or more quickly than he otherwise would or simply because, in
the particular country concerned, the payment is expected and
is entirely lawful.
2. We have grave concerns with the proposal set
out at 5.108 of the Law Commission's paper, that facilitation
payments are best handled through sensible use of the discretion
not to prosecute. Such an approach would have the effect of criminalising
conduct which the Law Commission says it would very rarely be
in the public interest to prosecute. The creation of unnecessary
and rarely invoked criminal laws is a clear example of bad regulation.
Individuals and organisations that seek to operate on an ethical
and entirely lawful basis would be put at an unfair disadvantage
to those who took comfort from the fact that, despite committing
offences, they would not be prosecuted for them. The Law Commission's
reluctance to suggest a defence seems to be based on the difficulty
in drafting one, rather than on the principled belief that the
behaviour is egregious enough to attract criminal prosecution.
3. Organisations would also have difficulty in
complying with their Proceeds of Crime Act 2002 (POCA) obligations.
POCA, and the associated reporting obligations attached to it,
comes into play when an organisation is in receipt of, or is otherwise
dealing in, the proceeds crime. It does not matter that the crime
that is connected with the person's receipt or dealing is not
one which, ordinarily, the authorities will seek to prosecute.
4. It is also unclear how such a formulation
would operate in the context of a firm which is, for example,
authorised by the Financial Services Authority (FSA). In such
a case, it is difficult to see how any internal arrangements that
such a firm would adopt could conceivably allow it to make facilitation
payments of any nature. The FSA's approach to financial crime
is that firms should seek to ensure that they have systems and
controls in place that prevent them being used as a vehicle by
which financial crime is perpetrated. The FSA in no way distinguishes
between crimes that are likely to be prosecuted and those which
are very unlikely to be.
5. The paper ignores the possibility of private
prosecutions and, even if those private prosecutions are taken
over by the DPP and, subsequently, no evidence offered, the individual
or organisation would incur costs and potential reputational damage
for doing something which, quite clearly, the Law Commission does
not believe justifies it being the subject of criminal proceedings.
6. We therefore suggest that it is necessary
to make special provision or exception for facilitation payments
and that there should be a defence formulated for what the Law
Commission regards as innocent facilitation payment. In our view,
a defence should operate for payments which are small in nature,
which are made to secure the performance of routine tasks and
where the individual or organisation making the payment believes,
in good faith and on reasonable grounds, that the payment is lawful
under the law of the particular country in which the payment is
made. We take the view that it is not appropriate for individuals
or organisations to be exposed to the criticism that they are
breaching the criminal law with respect to activities which the
Law Commission clearly believes should not be criminal in nature.
7. The new offence of failing to prevent bribery
(clause 7) will focus the attention of large corporate businesses,
especially those authorised and regulated by the FSA. The FSA's
enforcement action against Aon Limited in January 2009 (Aon
were fined £5.25 million by the FSA) highlighted the
liability of regulated firms to receive substantial regulatory
fines for having inadequate anti-corruption systems and controls,
regardless of any evidence of actual corrupt payments.
8. To meet the requirement imposed by the new
offence, companies and limited liability partnerships will require
robust anti-corruption systems and controls and regular training
for its managers and employees. Whilst this is achievable for
large organisations, smaller corporate entities will struggle
to meet this new regulatory burden.
9. A similarity could be drawn with the regulatory
burden imposed on all businesses under the Health & Safety
at Work etc Act 1974, but there is an inherent degree of awareness
within the UK businesses of the requirement to ensure the health,
safety and welfare of their employees. To ensure that all UK businesses
are aware of the need to prevent bribery and meet this regulatory
burden requires wide publicity of the Act. Again, parallels can
be drawn from health and safety regulation and the publicity that
surrounded the Corporate Manslaughter Act.
10. We consider it essential that the UK strengthens
its current anti-corruption legislation to repair the damage to
our international reputation in the field of anti-corruption,
but the regulatory burden must be proportionate.
We trust that these submissions are of assistance
to the Committee.
The team who have prepared these submissions, Steven
Francis, partner and Richard Burger, senior associate, are experienced
regulatory lawyers. If we can be of any further assistance, for
example, by giving oral evidence, we would be delighted to do
so.
June 2009
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