Additional Memorandum by OECD (BB 59)
SUPPLEMENTARY QUESTION:
Following the submissions by the OECD to the
Joint Committee on 17 June 2009, the Joint Committee followed-up
with the following additional question on 18 June 2009:
It has been suggested that clause 5 should
be turned into a civil regulatory regime for imposing fines on
companies, rather than imposing a criminal offence. This would
leave corporate criminal liability for bribery to be addressed
(as with other criminal offences) by the Law Commission's ongoing
review. What are your views, including whether a civil regime
would meet the UK's international commitments?
RESPONSE TO
SUPPLEMENTARY QUESTION:
1. The OECD Secretariat would like to remind
the Joint Committee that the OECD Working Group on Bribery has
not had an opportunity to assess the draft Bribery Bill even though
a large group of its representatives could examine the draft prepared
by the Law Commission and was able to discuss it with Government's
representatives last January. The OECD Secretariat does not therefore
speak on behalf of the Working Group, but hopes that its response
to the above question is useful to the Committee.
Basic principles under the Convention on the liability
of legal persons
2. Articles 2 and 3.2 of the OECD
Anti-Bribery Convention and Commentary 20 on the Convention
provide the main standards relevant to the question posed by the
Joint Committee as follows:
Article 2:
Each Party shall take such measures as may be
necessary, in accordance with its legal principles, to establish
the liability of legal persons for the bribery of a foreign public
official.
Article 3.2:
In the event that, under the legal system of
a Party, criminal responsibility is not applicable to legal persons,
that Party shall ensure that legal persons shall be subject to
effective, proportionate and dissuasive non-criminal sanctions,
including monetary sanctions, for bribery of foreign public officials.
Commentary 20:
In the event that, under the legal system of
a Party, criminal responsibility is not applicable to legal persons,
that Party shall not be required to establish such criminal responsibility.
MONITORING
THE APPLICATION
OF THOSE
PRINCIPLES BY
THE WORKING
GROUP ON
BRIBERY
3. Essentially two schools of thought have
emerged in the Working Group on Bribery on whether the Convention
requires Parties to establish the criminal liability of legal
persons for the bribery of a foreign public official. Some Parties
believe a Party is required to establish criminal liability if
its legal system allows for such liability. Other Parties believe
that there is always a choice between criminal and administrative
liability. Nevertheless, by the time of the 2006 Mid-Term
Study on Phase 2 Reports, the majority of Parties included
in the Study had established the criminal liability of legal persons
for the foreign bribery offence (Australia, Belgium, Canada, Finland,
France, Iceland, Japan, Korea, Norway, Switzerland, United Kingdom
and United States). Those Parties that had established a non-criminal
form of liability for legal persons (Germany, Greece, Hungary,
Italy, Mexico and Sweden) had not established the criminal liability
of legal persons for any offences. In addition, at least two Parties
(Italy and Greece) were precluded from establishing criminal liability
for legal persons due to restrictions on such liability in its
Constitution.
4. Given the split between the two schools
of thought and the underlying principle in the Convention of "functional
equivalence", the Working Group has chosen to focus on the
effectiveness of the form of liability chosen when assessing whether
Parties have adequately implemented the relevant provisions in
the Convention and Commentaries, and does not pre-suppose that
criminal liability is superior to administrative.
5. In the 2006 Mid-Term Study,
the Working Group explains that it assesses the effectiveness
of a Party's liability of legal persons by reviewing factors including
the following:
(a) The types of legal persons covered by the
liability;
(b) The application of territorial and nationality
jurisdiction to legal persons who commit the bribery of foreign
public officials in the Party's territory and abroad;
(c) Whether the natural person(s) who perpetrated
the offence must be identified, prosecuted or convicted in order
to investigate, prosecute or convict the legal person;
(d) The availability of coercive investigative
powers for the investigation of legal persons;
(e) How effectively the Party can obtain and
provide mutual legal assistance regarding legal persons; and
(f) The application of prosecutorial discretion
to the liability of a legal person.
Issues that would arise by changing liability
under Clause 5 to non-criminal
6. It is submitted to the Joint Committee
that turning Clause 5 into a civil regulatory regime for
legal persons would place the United Kingdom in a unique situation,
since it would be the only Party with a combined criminal/non-criminal
liability of legal persons for the bribery of foreign public officials.
We understand that the "identification theory or directing
mind" form of liability, which is criminal in nature, would
continue to operate in addition to the non-criminal form under
Clause 5. Although this is not expressly stated in the Draft Bribery
Bill, it seems implicit in, for instance, sub-clause (1) of Clause
8, which refers to the commission of an offence under Clause 4 by
a body corporate. Due to this dual form of liability of legal
persons, assessing the United Kingdom's compliance with Article
2 might therefore be more complicated for the Working Group
than assessing other Parties' compliance.
7. More importantly, it is unclear whether
the suggested approach would be effective in practice. Even if
it is assumed that Clause 5 would otherwise remain unchanged
and sub-clause (5) of Clause 7 would still provide for jurisdiction
over offences committed under Clause 5 "irrespective
of whether the acts or omissions which form part of the offence
take place in England and Wales, Northern Ireland or elsewhere"—ie
in any foreign jurisdiction—it is not clear that the resulting
procedure for investigating, adjudicating and determining sanctions
would be effective in practice.
8. In particular, a legal person is liable
for the bribery of a foreign public official under Clause 5 "if,
and only if" the natural perpetrator "A" "is
or would be guilty of an offence under" section 4 "(whether
or not A has been prosecuted for such an offence". In the
event of a related criminal prosecution of the natural person
under Clause 4, how would the criminal procedure against the natural
perpetrator "A" be linked to the non-criminal procedure
against the legal person? Would the criminal court that hears
the case against the natural person be competent to hear the case
against the legal person? Would the criminal court be competent
to apply non-criminal sanctions to the legal person? Would confiscation
or monetary sanctions of a comparable effect be available as a
sanction as required by Article 3.3 of the Convention?
9. In addition, the Working Group considers
that compliance with Article 2 of the Convention requires
that proceedings against the legal person may be taken independently
of any procedure against the natural perpetrator, since it is
not always possible or appropriate to prosecute the natural person.
Indeed, the United Kingdom appears to have provided for this situation
under sub-clause (2) of Clause 5. However, if the liability of
legal persons under Clause 5 were to be made non-criminal,
would it still be possible in practice to proceed independently
against the legal person? How would it be determined whether the
natural person "would be guilty of an offence under"
section 4, as required under sub-clause (2) of Clause 5. Would
the case be heard in a criminal court. Or would a special non-criminal
tribunal have to be established for this purpose? Would the procedure
differ from the procedure currently envisaged under Clause 5?
Would it be equally effective?
10. Changing the liability to non-criminal
would also raise issues about the effectiveness of investigations
under Clause 5. As Clause 5 stands now, it is assumed that
the full range of coercive investigative measures applicable to
the offences under Clauses 1, 2 and 4 would be available.
This would not be clear if the liability were non-criminal. It
might be feasible to obtain evidence of a non-criminal offence
committed by the legal person in the course of applying coercive
measures in the investigation of a natural person under Article
4. However, in the absence of a related criminal investigation
would it be possible in practice to search and seize a legal person's
financial and company records to obtain evidence of an offence
under Clause 5? Would it be possible to apply pre-trial confiscation
to ensure the availability of the proceeds of bribing the foreign
public official in the event that the legal person is found liable?
In the event of a related criminal investigation, would evidence
obtained through coercive measures be admissible in relation to
the non-criminal proceedings against the legal person under Clause
5?
11. Moreover, would the same rules of investigative
and prosecutorial discretion apply to cases under Clause 5? In
particular, would rules prohibiting consideration of the factors
under Article 5 of the Convention in investigations and prosecutions
of foreign bribery (ie "considerations of national economic
interest, the potential effect upon relations with another State
or the identity of the natural or legal persons involved")
apply equally to proceedings under Clause 5?
12. Pursuant to Article 9.1 of the
Convention, the Working Group would also consider whether the
United Kingdom would be able to provide prompt and effective mutual
legal assistance to Parties for the purpose of criminal proceedings
concerning offences within the scope of Clause 5.
13. Changing liability under Clause 5 from
criminal to civil in nature could also significantly reduce the
UK's ability to gather foreign evidence. Since liability is civil,
the UK may not be able to seek evidence from foreign countries,
under treaties and arrangements on mutual legal assistance (MLA),
in criminal matters. Treaties and arrangements on MLA in
civil matters would be available, but these generally do
not include the more powerful criminal investigative tools. One
may argue that MLA in criminal matters would still be available
because there may be a concurrent criminal investigation or prosecution
against a natural person in the same case. This argument would
not apply, however, if the UK does not or cannot investigate any
natural person in the case, eg because the natural person
has fled, died, or has been convicted/acquitted, or because the
UK has no jurisdiction to prosecute.
Conclusions
14. To introduce a non criminal liability
in lieu of a criminal one at this late stage and after both the
Law Commission and the Government proposed a different approach
is likely to raise a number of questions within the Working Group.
15. If the United Kingdom were to establish
non-criminal liability for legal persons under Clause 5 of
the Draft Bribery Bill, it would be the only Party to the OECD
Anti-Bribery Convention to use a dual criminal/non-criminal regime
for legal persons. The majority of Parties to the Convention have
established criminal liability for legal persons, with the rest
establishing non-criminal liability. Assessing compliance of a
dual regime for legal persons would therefore be unprecedented
and present certain challenges.
16. In addition, to determine whether a
civil regime for the liability of legal persons under Clause 5 of
the Draft Bribery Bill (in conjunction with the criminal liability
of legal persons under Clause 4) meets the United Kingdom's commitments
under the OECD Anti-Bribery Convention, the Working Group would
assess the effectiveness of this regime in practice. In assessing
such effectiveness, the Working Group routinely reviews several
factors, including the availability of coercive investigative
techniques, effective mutual legal assistance and the application
of prosecutorial discretion.
17. If the United Kingdom were to establish
a civil regime for the liability of legal persons under Clause
5 of the Draft Bribery Bill, it is anticipated that the Working
Group would consider several issues, including the following,
regarding the effectiveness of that regime:
(a) Where the natural perpetrator is prosecuted
under Clause 4, the link between these procedures and those against
the legal person under Clause 5;
(b) Where the natural perpetrator is not prosecuted
under Clause 4, whether it would still be possible in practice
to proceed independently against the legal person under Clause
5, including what would be the nature of these proceedings, and
how it would be determined whether the natural person "would
be guilty of an offence" under Clause 4;
(c) Whether the full range of coercive investigative
measures applicable to criminal offences under Clause 4 would
be applicable to legal persons under Clause 5, and whether evidence
obtained through coercive measures for offences under Clause 4 would
be admissible in non-criminal proceedings under Clause 5;
(d) Whether the rules on prosecutorial discretion
prohibiting consideration of the factors in Article 5 of
the Convention would apply equally to non-criminal proceedings
under Clause 5;
(e) Whether the United Kingdom would be able
to provide prompt and effective mutual legal assistance to Parties
to the Convention for the purpose of criminal proceedings concerning
offences within the scope of Clause 5; and
(f) Whether the United Kingdom could effectively
seek evidence from a foreign jurisdiction when investigating or
prosecuting an offence under Clause 5.
June 2009
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