Examination of Witnesses (Questions 40
- 59)
THURSDAY 14 MAY 2009
PROFESSOR JEREMY
HORDER
Q40 Dr Turner: On scope again, can
you tell us how you feel the Bill approaches the question of where
corporate hospitality or facilitation payments stop and bribery
begins because, clearly, there is a distinct possibility that
excessive and repeated corporate hospitality can be an effective
mechanism of bribery of, particularly, public officials, and in
fact concerns have historically been raised in quite recent times.
How do you think this Bill deals with that issue?
Professor Horder: Clearly, we
had long discussions about this with business organisations and
what I said to them, and this was a change from what we had originally
proposed in our consultation paper, was that, yes, in some circumstances,
the provision of hospitality of a very extravagant kind can amount
to bribery, there is no doubt about that, it can do, but what
we will be saying in our Bill is that there will be a clear line
in the sand which, if you cross, is bribery and which, if you
stay behind, is not. That clear line is drawn in clause 1 when
it says that a person, P, that is the payer, is guilty of an offence,
et cetera, where he offers promises or gives a financial
or other advantage and so on and intends the advantage to induce
a person to perform a function improperly, so, when you lay on
your corporate hospitality, it actually has to be your intention
to produce an improper influence on the people there and it is
not enough that you realise that it might have that effect in
some speculative way. We were persuaded, and I genuinely think
this is right, that that would cast the net way too wide because
it would mean that even quite modest hospitality, if, for example,
officials are not used to receiving any hospitality at all, might
raise the possibility in your mind that they could conceivably
be influenced by that. Well, that is putting too much of a restriction,
I think, on what can be done and it is making liability too speculative,
I think, so I am actually quite bullish about this, about the
certainty that it provides for businesses and the provision of
entertainment because, as I say, it is only in the case where
you intended to have that corrupting effect, to use the broad
term.
Q41 Dr Turner: But corporate hospitality
is not done out of altruism, it is public relations, as far as
the givers of corporate hospitality are concerned, and it is designed
to oil the wheels of business relationships. If those relationships
are with public officials and may, at some stage down the line,
result in government contracts, then it is very much on the borderline
of bribery, is it not? Would it not be preferable to set certain
limits on corporate hospitality acceptance thereof, particularly
by public officials, and the requirement for declaration and so
on?
Professor Horder: Well, to take
the first case first, I think that imposing a limit on corporate
hospitality would be a very, very difficult, and probably unworkable,
thing to do, if I may make so bold, because I just think that
it all depends on the nature of what you are offering, what other
people are doing, what you can afford. They are a very, very broad
range of considerations that go into that and I think that to
set arbitrary limits, because it is not just about financial hospitality,
there may be other kinds of thing that go on that do not just
involve finance, so you would have to be very careful about how
you set out that definition, I do not regard that as a very promising
route to go down, I have to say, and that is why we focused purely
on what your intention was in giving it. I think that a jury is
perfectly capable of making up its mind in a commonsense way that,
if you lay on some extraordinary hospitality, to call it loosely
that, in which you buy the relevant people a small flat in London
as a pied-a"-terre or something of that kind, well, the inference
must be that you intended to influence them improperly by doing
that, in other words, getting them to give you the contract purely
because of the hospitality, but there is a big difference between
that and what you might call "getting to know you",
which is perfectly legitimate, I think, and a very important part
of business activity. I do not need to lecture you on this, I
am sure, but it is much easier for you to secure contracts if
you are doing it on the basis of which people know who you are
and you are not just a set of proposals on a piece of paper, and
that seems to me perfectly normal and acceptable actually because
it will still be the case that what matters to the contractor
is the merits of putting the contract your way, but it is just
that now they know more about you, the nature of your business,
what you do, they have talked to your partners, your employees
and so on and they are in a better position to assess those matters.
Now, I know one could take a cynical line about that, but the
point is, I think, that insisting on, as clause 1 does, that there
be the intention to influence does give companies a very large
margin of appreciation within which to operate, and I regard that
as reasonable, I have to say, but nonetheless says, "Be careful.
Don't use this in such a way where it goes over the top and you
know that actually the jury is going to think—"
Q42 Dr Turner: Obviously, if "improperly"
means that it is intended to influence the choice of a contractor,
for instance, clearly the hospitality has been given in the hope
that it will have that effect, so you could say that it was, by
definition, improper if you pursue that to its logical conclusion.
Professor Horder: I see that,
but I think that the element of impropriety there is in awarding
the contract other than on the merits, it is awarding the contract
because you so much enjoyed being taken to Monte Carlo or wherever
it may be. That is the improper element and it would be for the
jury, I think, to determine whether that actually was really the
point of the whole thing or whether actually this was, as I have
just indicated, and this is the general purpose of corporate hospitality
generally, a `getting to know you' session, which of course yes,
does, or may have, an influence further down the line, but only
in terms of persuading you of the merits of that company, its
plausibility, its integrity and the way it does things. It is
perfectly possible that a corporate hospitality session would
be a disaster and they will end up thinking, "They're just
a bunch of flashy people whom we don't want to do business with";
that is always possible.
Q43 Dr Turner: That is entirely possible,
but you would not really want to see this legislation being tested
by lots of cases in the courts. Again, I am not a lawyer, but
it seems to me that the best laws do not produce too many cases
because they are clear.
Professor Horder: I think that
will, to be honest, be the reality. I do not see in my crystal
ball hospitality cases being taken through the courts purely as
hospitality cases. What I do see is cases being taken where individuals
perhaps, the most influential ones, whoever it may be, are provided
with benefits of one kind or another, whatever they may be, either
as part of, or ancillary to, the general hospitality. I can see
it as being quite likely that the prosecution will seek to home
in on those because it is going to be very, very difficult, once
you get up to a certain level of high hospitality, to avoid actually
providing specific benefits for specific people from which, the
jury will infer, actually you just straightforwardly intended
to do a swap, contract for bribe. That is going to be the reality,
I think, in a lot of these instances, that actually, when you
took the doctors to Val d'Ise"re for an extraordinary two-week
holiday skiing, what you really were saying by that is, "Well,
we want you to sell our drugs and that's what you're going to
do", and they accepted that, in effect.
Q44 Dr Turner: This is precisely
what happens.
Professor Horder: Well, you may
be in a better position to say than I, but I think that it would
not then be the hospitality, as such, which is the focus, but
the actual individuals who accepted particular benefits, whatever
they may be. What I am talking about is just the general run of
lavish parties, meetings in hotels, flying people to expensive
conferences and so on, those kinds of things which go on all the
time, and I just do not really see the prosecution as having any
prospect of establishing that there was an intention to influence
people improperly; I do not see that.
Q45 Lord Goodhart: Is there not a
problem equally with offences under clause 2, and indeed I think
it could be more difficult there, where you are looking at the
recipient of these benefits? The recipient is required to have
an intention of performing something improperly. It is perfectly
possible for somebody to say, "Well, they invited me out
to Glyndebourne and Wimbledon Centre Court and skiing and so on,
and I knew perfectly well what they were up to, but I wouldn't
have given this contract to them, unless I was satisfied that
they were the best ones to do it", and that may be totally
untrue.
Professor Horder: I can see someone
trying to run that argument, but the reality is that someone running
that argument, mostly a public servant, is likely to be in a position
whereby they fall within clause 2(3). I am sorry to be very specific.
This is the one where it is actually improper to accept any advantage,
or whatever it may be, so you will not be heard to say, "Oh
well, I accepted the advantage but of course I was only going
to deliver the thing on the merits. Far be it from me to be influenced"
and so on. That is not going to happen. That clause which is mainly,
but not solely, to cater for public servants has to go beyond
that. We found it totally unworkable to have a public/private
sector divide because there are too many people in the middle,
for example chairman of trustee bodies and so on, who are not
public officials but nonetheless are in pretty much the same position,
private arbitrators. There is any number of a list of people.
I have got half an eye on Peter over there who I know will want
to disagree on that point. We found this very difficult. I think
they are going to fall foul of that provision. It is exactly that
kind of case, if I may say so, for which that clause was provided.
Chairman: I want to see what my colleagues
think. We have spent a great deal of time on this, and very profitably
so too, but, on the other hand, there are questions which need
to be canvassed. Since we probably will not go on after half past
twelve, I wondered whether we ought to turn to some of the questions
in the paper that has been circulated. For instance, we have not
said anything so far about clause 5, issues about negligent failure
to provide a proper mechanism to prevent bribery.
Lord Goodhart: Could I come in on this
because it is something I have got a particular interest in?
Chairman: Could we look quickly at the
questions because some of them have been covered? I do not think
the question of the comparison with the present Bill and what
happened in 2003 is anything we want to cover further, unless
anybody wishes to ask about that.
Lord Goodhart: Questions six, seven and
eight.
Q46 Chairman: We have had a very
considerable discussion about question two, impartiality, good
faith and so on. I suppose, Professor Horder, that in this, as
in anything else, the prosecutor is going to have to be satisfied
that there is sufficient evidence to satisfy the prosecutorial
tests.
Professor Horder: Yes.
Q47 Chairman: The same applies to
question three.
Professor Horder: I have not got
these questions in front of me. They were not in my bundle of
papers. Do not worry; if you just ask me the question I will try
to answer it.
Q48 Chairman: This was the hospitality
facilitation and that sort of thing which you have been discussing.
You said ultimately it is for the jury to decide what the intention
was, but equally it is for the prosecution to decide whether there
is enough material to go ahead on in the first place.
Professor Horder: Yes.
Q49 Chairman: It is not a matter
for getting it past the judge, it is a matter of getting it into
court at all, is it not?
Professor Horder: Yes, that is
right. This is always an issue with private prosecutions. It is
difficult to gather evidence, there is no doubt about that. We
just wanted to make sure that we got the substantive law straight,
if you like. There is work to be done on trying to make sure that
there are procedures in place that do not make evidence gathering
too difficult but, as you know, this is treacherous territory
where one encounters problems with Article 6 and so on.
Q50 Baroness Whitaker: I just wondered
if Professor Horder could give his very brief opinion on that
halfway house of a legal instrument between cut and dried law
and prosecutorial discretion, the approved code of practice—I
know legal officers do not always like approved codes of practice—weighty
authoritative guidance on what is appropriate for corporate hospitality
or, indeed, commissions, but not facilitation payments because
to pay somebody for doing their job properly, and they will not
do their job properly if you do not pay them, I think that one
should be off limits.
Professor Horder: I very much
laid emphasis in my written material in relation to the adequate
systems defence on the development of guidance which is absolutely
essential. You could make that self-same point about guidance
on hospitality and facilitation payments generally. There is such
guidance, certainly on facilitation payments anyway, in other
jurisdictions, in America and so on, and one could seek to follow
that. Whether one leaves that to business organisations or whether
one tries to turn it into a soft law, that would be difficult.
That depends how determinate you can make it and how broadly it
is agreed on by those affected by it.
Q51 Linda Gilroy: Is it your view
that bungs in sporting activities will be caught by this legislation?
If so, what are the relative evidence gathering issues relating
to that and the gambling industry?
Professor Horder: That is a difficult
one. I understand a "bung" to be where a manager or
someone who is in charge of arranging for new players and so on
effectively takes a payment under the table to secure a contract
for that particular player or whatever it may be.
Q52 Linda Gilroy: I think it is wider
than that in terms of there has been a lot of recent concern and,
in fact, an adjournment debate at Westminster Hall yesterday about
bribery relating to fixing matches.
Professor Horder: I see.
Q53 Linda Gilroy: And particularly
in relation to the gambling industry where in essence it probably
ought to be easier to prove that there have been movements in
the odds at bookmakers.
Professor Horder: Yes, particularly
when it comes to gambling on the twists and turns of an individual
match, so whether someone will fail in their first serve or something.
The straightforward answer to that is yes, it is capable of falling
within this scheme because a manager is clearly under a duty and
an expectation that they will purchase players only on the basis
of merit and on the other relevant considerations about how much
they want to be paid and how long a contract they are supposed
to sign up for, how old they are and those sorts of things, there
is a clear expectation about what those are and an equally clear
one that you do not take a personal payment to have that particular
player in your squad. That is completely unacceptable. I would
actually regard that as a pretty straightforward case. The gambling
case is more difficult because expectations in that industry will
change as to what is and is not legitimate. I think that is a
trickier case. In general terms I think the expectation is very
clear, is it not, which is that when you place a bet what you
expect, and certainly from the point of view of the person with
whom the bet is placed, is that there is the appropriate element
of chance in whether you win or not. If that element of chance
had been removed, or in effect removed, by some other person making
a payment then you have behaved improperly and, again, I would
have thought it is a straightforward application of the provisions
in the Bill.
Q54 Linda Gilroy: And their performance
would have been affected in order perhaps to lose a particular
match?
Professor Horder: Yes, certainly.
Q55 Chairman: We must go on with
our list. We had a question about the OECD. You have already said
a good deal about that and we will be hearing them anyway because
they are coming. There is a question about what happened to your
defence clause, which in your draft Bill was clause 5, the reasonable
belief, which has been dropped.
Professor Horder: Yes.
Q56 Chairman: I wonder if you would
like to comment on that.
Professor Horder: I addressed
it in the written note. It almost sounds a bit like sour grapes
when Government drops one of your favourite clauses and then you
go around to whoever is willing to listen saying, "Really
I think this ought to be reintroduced, isn't it terrible"
and so on. The intention was to make it clear in my written note
that I regard this as quite a difficult issue. I completely understand
the Government's decision to drop this as going a bit too far.
Perhaps I could start with what I do not say in the note which
is that it would be right to say that the OECD was quite troubled
by this, and I do mention that, but I did not say the reason why
they were troubled by it. The reason why they were troubled by
its inclusion was that they have a general rule that if there
is a defence to bribery of a foreign public official or indeed
anybody, or a corporate offence, whatever it may be, that defence
must in a broad sense cohere with other defences that you allow
in your legal system to other crimes. In other words, you will
not be allowed to permit by law special pleading of some kind
in relation to bribery that you would not allow in other offences
because that looks as if you are trying to, putting it crudely,
weasel out of your obligations under the OECD by providing special
defences. They said they thought that this was such a defence
basically, which was their objection to it. In response, I said
it is true that in general ignorance of the law is not an excuse
but this is not a straightforward case of ignorance of the law,
there are examples of common law when in reliance on advice given
by an official you will be allowed to run that excuse. It is perfectly
possible in English law for that to happen, albeit rarely. As
I say in the note, we thought that ignorance of foreign law is
really a very different matter from ignorance of domestic law
and that in practice this defence would not be run very often,
but when it was run it was perfectly reasonable for a firm to
say, "Well, look, the biggest law firm in the world has given
us this advice that it is perfectly lawful to make this payment,
what can we do? We can only rely on that". That is important
because we are talking about convicting someone of a pretty serious
offence. The taint of corruption is pretty significant. I think
we felt, therefore, that it added, if you like, an element of
balance to the fact that we were introducing an offence into a
wholly new area on a new basis. The new offence was in a sense
breaking new ground and we wanted to provide some kind of balance
for that and it seemed reasonable that this defence was a part
of that. At the same time, for the reasons I have given, I understand
why the Government has dropped it. I would not want to spend time
now repeating the case for having it. I accept what the Government
says and that will be very pleasing to the OECD, and there you
have it really.
Q57 Chairman: Do you think we ought
to take it up with the OECD?
Professor Horder: They will probably
be emboldened by the Government's decision in saying much more
clearly that they would regard its reintroduction as unwelcome
and as weakening the protections that are otherwise given that
companies will not engage in bribery. They will say it encourages
wilful blindness to legal provisions and so on. I would say that
is not right because you have to actually show that you had a
reasonable belief and so on that it was lawful. Getting into these
arguments now would not be helpful. You will find your passage
much easier, I think, with the OECD under the current proposals
whereby the defence is not in there. We had our reasons for putting
it in and they are as stated.
Q58 Chairman: Very well. I think
a number of my colleagues are very interested in the provisions
in clause 5. As to that, you have got the new offence of companies
and partnerships negligently failing to prevent bribery.
Professor Horder: Yes.
Q59 Chairman: It would be interesting
to know how you think this is going to work.
Professor Horder: The answer to
that, just to give a brief bit of background, is that we believe
it is not enough simply to introduce, for example, a new offence
of bribing a foreign public official because under the well-understood
basis for corporate liability in English law that would mean that
offence can only be committed by a director, or equivalent officer,
making the bribery either him or herself or through an agent knowingly,
and that would be far too narrow, it would not deal with the basic
problem that companies operating overseas almost invariably will
be operating through agents, through regionally based companies
and so on. It will not be the directors out there themselves doing
the business in very many instances. For that reason it would
very, very substantially weaken the protection that is being provided
by clause 4, the foreign public official offence, if effectively
you were saying it is not capable of being committed by any sort
of corporate organisation unless the directors themselves intentionally
committed it, which almost invariably they will not do, it will
be an area sales manager or someone of equivalent standing who
actually authorises and commits the offence, or there will be
an agent in that country who knows the system who has been paid
to secure the contracts on behalf of the company, so far so good,
but then, of course, they have very wide-ranging discretion and
engage in bribery in order to get ahead of other agents representing
other companies. That would be a pretty standard way in which
bribery occurs in these circumstances and we felt it would be
wrong in principle to allow a company to escape completely in
those circumstances but, on the other hand, we did not want to
make them, as lawyers say, strictly liable when that happened.
In other words, you should not be liable as a company effectively
for bribery each and every time one of your employees or agents,
and there may be thousands of those across the globe, themselves
commit bribery. It is wrong to attribute that simply directly
to the company, we believe, when you are not talking about an
earwig getting into a tin can or something where the offence is
attributed directly to the company. Bribery is a lot more serious
than that and there ought to be some kind of fault at the highest
level of the company. In the end, what we came up with was the
idea you failed to prevent it in the sense that your systems break
down or are not adequate to prevent your agent or employee making
the bribe overseas, and the system breakdown was basically through
your negligence, you failed to allude, to attend to that possibility
when you should have done because you knew you were doing business
in country X, country Y, where there was a problem. You failed
to do anything about it, your systems were not up to dealing with
it and bribery occurred. I think that is pretty standardly how
bribery is likely to occur one way or another, assuming it is
not being done deliberately right from the top. We wanted to,
at least in principle, catch that kind of case. Potentially that
is quite a big expansion of the law. The way that we defended
and explained that to business organisations was to say the prosecution
has got to get over four hurdles here. First of all they have
got to show that bribery took place, committed by an agent or
employee of yours, and that may not be easy but they have got
to do that, that is the whole foundation of the thing. Secondly,
they have got to show that a person responsible for preventing
it failed to do so. That may not be so hard but that is nonetheless
a hurdle. They have then got to show that there was negligence
in that happening. Well, very often juries infer from the fact
that something went wrong that it went wrong through negligence,
they very often do that, but nonetheless that is a hurdle, negligence
has to be shown and shown beyond reasonable doubt. Finally, the
prosecution if need be will have to rebut a defence of due diligence
that is asserted by the company. I am calling it "due diligence"
for short but it is about the adequacy of systems and procedures
for dealing with bribery. It would be for the company to show
that it had adequate systems to prevent the bribery occurring
and the prosecution, therefore, would have to disprove that in
whatever circumstances. It would have to go some way at least
to presenting evidence that that was not the case.
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