Examination of Witnesses (Questions 80
- 99)
WEDNESDAY 20 MAY 2009
MR COLIN
NICHOLLS QC, PROFESSOR
CELIA WELLS
AND PROFESSOR
BOB SULLIVAN
Q80 Lord Thomas: In America it says
it gives a rebuttable presumption that acting in accordance with
the attorney's advice will mean that no criminal offence has been
committed. I have listened recently, in an ICAC seminar to the
lady from Hong Kong who was in charge of that department and who
has something like 60,000 people around the United States who
are charged with giving advice along the lines of what is said
in this Bill. I do not know if Professor Wells has any comment
to make.
Professor Wells: My view is that
it probably is unnecessary in the climate that we have in terms
of prosecution. We have a number of regulatory bodies and my view
is that the Bill is clear in what is prohibited. We do not pretend
to provide an advice service for potential criminals in other
areas; that is not part of our tradition. That is a different
question, I agree, from whether there is some code of conduct,
perhaps, to which reference could be made, but it seems to me
that, given that the serious issues being addressed here are generally
taking place within a corporate context, most corporations—and
certainly the larger corporations—where this is going to
be a serious issue will be developing their own compliance guides.
I think, actually, it would be an unnecessary public expense,
apart from anything else, to have that filter. That would be my
view. I think that the United States context is both different,
in terms of the way that the Act works and prosecutorial discretion
works, but it is also different in that it was the first of those
pieces of legislation that informed the OECD, so historically
we have actually moved on in terms of corporate awareness of the
importance of avoiding this kind of behaviour.
Mr Nicholls: One of the great
problems is that all these issues are case specific and so there
is a problem when you take, shall we say, a particular case, to
call it an advisory body, that you may get a certain amount of
advice but all factors cannot be taken account of. The other thing
we have to consider is this, at the moment: if I, as a barrister,
have a problem as to whether what I am about to do is ethical
or not, I ring up the Bar Council and ask them. That applies in
almost all industries now. One of the effects of, particularly,
the anticipation of the corporate provisions of this Bill is that
there is now a massive industry amongst lawyers in corruption
compliance, and they are outside the lawyers who are advising;
there are all the various bodies—the Chamber of Commerce,
the Ethical Corporation, the Builders' this and the Construction
that, and so on. All of them are providing advice, saying what
is appropriate and what is not appropriate, and I think we should
be able to rely upon our own professional bodies to not only give
us advice but, also, help set the standards.
Q81 Lord Thomas: Do you see anything
in the Bill which would make the receiving of advice from your
own solicitors or your own counsel or your professional body a
defence?
Mr Nicholls: No, I do not, and
I do not think it would be a defence. I was trying to think of
a situation where you do have someone who has got advice and then
finds him or herself, or company finds itself, prosecuted. It
has arisen in some of the tax evasion/tax avoidance cases.
Q82 Martin Linton: The Fees Office?
Mr Nicholls: The great thing is
that even if it might lead to a conviction it could certainly
serve and would always serve as mitigation and insurance. It is
not a complete insurance. The great thing is that the part that
the various industry bodies can play in raising the standards
is very significant.
Q83 Lord Sheikh: In certain overseas
countries, of course, corruption is very rife. Would you like
to comment on somebody putting up the defence: "Look, it
is the done thing in that country, and I was just observing what
the procedures are"? Would you like to comment on that? How
do you see that defence being successful?
Mr Nicholls: We have to consider
it from two points of view. Firstly, there is the point of view
of the general offences. With the general offence, what really
is the test is: what would be the expectation of a reasonable
man? There is nothing to say whether the reasonable man would
take account of the customs or tolerances, or so on, of whatever
part of life you were involved in. When you come to the foreign
public officials offence, what you have there is a test—if
a person does something then it is improper—and you have
got this provision of what is legitimately due. The question is,
with the foreign, what would be legitimately due in the foreign
public official offence? There is no provision there relating
to the customs and tolerances of the foreign country. I have been
looking in the last few days at the Australian Criminal Code 1995
as amended in 1995, and they have dealt very specifically with
the foreign public officials offence; they had to change their
law to deal with the food scandal. They seem to me to be the only
other country that has adopted this test of whether a payment
is legitimately due in the foreign public official's country.
However, they do have a provision there to the effect that no
account must be taken of the customs or tolerances in the trade
or profession or country—whatever it may be. I think it
may be worth consideration as to whether there should be a similar
provision, one, as to our general offences and, two, as to our
foreign public official offence.
Q84 Chairman: We are coming back
to public officials, but, for the moment, perhaps, the reasonable
test as applied to non-public officials overseas.
Mr Nicholls: Yes.
Q85 Chairman: Is that the gap?
Mr Nicholls: There may be a gap
there, yes. There is a risk.
Chairman: We are coming back to it.
Q86 Lord Mayhew of Twysden: Just
going back, the American provision in 1977 made the point that
it was the historic precursor of the OECD, I think. It does strike
one as being refreshingly direct, practical and pragmatic, and
I wondered whether there has been any evidence of dissatisfaction
as time has gone on in America, leading to a desire to enlarge
it or change it in any way, or are they content still to operate
it, notwithstanding its long history?
Professor Sullivan: I believe
the terms of that legislation, as you say, are far more straightforward
than this current Bill. Indeed, there has been a degree of prosecutorial
activity in the span of time since the Bill became an act—the
1977 Act. So I think it is fit for purpose in that sense; it is
obviously used as an active tool by the American prosecuting authorities.
Professor Wells: It has been used
increasingly with increasing penalties. In a sense, to go back
and rewrite this so that it was in the same form as the Foreign
Corrupt Practices Act would be quite a major shift. There is much
more inbuilt institutional negotiation between the prosecution
authorities and mitigation, in terms of sentencing as part of
the process. It is, of course, familiar to us as a common law
derivative jurisdiction, but much of it is very different.
Q87 Mr Djanogly: In the case of an
English person bribing a foreign person, would the reasonable
person expectation be what was reasonable in England or in the
foreign country where the bribe happened?
Professor Sullivan: I think that
is a very pertinent question and would be quite difficult to answer,
I think.
Q88 Mr Djanogly: That is the key
issue—
Professor Sullivan: If you are
looking at the general offence, even if it involves a foreign
person who was accepting the bribe, it is the test of reasonable
expectations for that person's office; whether a reasonable test
would consider it in defiance of reasonable expectation.
Q89 Mr Djanogly: A reasonable person
in the country where the bribe happens?
Professor Sullivan: One of the
major problems of enforcement in corruption is cultural variables.
It is very difficult to reconcile but I think it is at the heart
of the matter. What the Bill does, and we touched on it, that,
is as far as foreign officials are concerned, it says: if the
law allows the payment or indeed requires it, then there is no
offence, but that strikes at the heart of one of the major difficulties.
If one can mention cases, in the Saudi arms contract, with huge
commission payments, arguably, those payments were perfectly legitimate
in terms of Saudi Arabian law, whereas, of course, the perception
of that contract, with its vast commission payments was, by our
standards, I would have to say, a corrupt transaction.
Q90 Mr Djanogly: The position is
more straightforward if public officials are involved, because
then you would go under a separate section, presumably?
Professor Sullivan: Yes, but even
so I think many of the transactions that have caused some problems
in this jurisdiction, in particular, for companies, do involve
payments which, on the face of it, may be quite legitimate but
in a different culture strike one, in certain terms, as outlandish
payments, given the sheer scope of them.
Q91 Lord Goodhart: You did say that
the reasonable expectation test applies to what would be the reasonable
expectation in, say, the Democratic Republic of the Congo. Are
you not, basically, undermining the whole purpose of the anti-corruption
movement of the OECD, and so on?
Professor Sullivan: I would say
yes. Quite.
Mr Nicholls: I think the reasonable
expectation is meant to be the reasonable expectation of the juror
who is a person of honesty and integrity. If one takes that test,
then that should not be somebody in another country; it should
be the juror—a person of honesty and integrity—and
the juror will be judging what he thinks of the culture in another
country. That is the idea. Whether that is sufficiently written
into the Bill or not, I do not know. Maybe it is in the report.
It is suggested that a lot of these issues arising out the Bill,
particularly the reasonable person test, may have to be worked
out by the case law, and may not be a proper way to approach drafting
legislation, but it may be part of it.
Q92 Lord Thomas: Can I just put this,
very briefly? One of the thrusts of the Bill is, obviously, to
punish dishonest bribery in the domestic context, but when we
get to the overseas aspects of it there is a policy of providing
a level trading field. That is what the OECD is all about. Is
there a conflict? Should these two things be in the same Bill?
Mr Nicholls: I have not quite
followed the question, for a moment.
Q93 Lord Thomas: One of the aspects
of this Bill is to conform with the OECD directive. That, really,
is not about dishonesty; it is more about having a level trading
field so that companies, from whatever country, whether it is
the US or this country, in bidding for foreign contracts are not
achieving an advantage by paying bribes. That is one policy aspect
of it. That is rather different from the domestic bribery that
we are familiar with, which involves that sort of domestic corruption,
and so on. Are these in conflict? Should they be in the same Bill?
Mr Nicholls: I would not have
thought that they are in conflict because an essential part of
the general bribery offence is, in fact, to create a level playing
field; it is to stop your competitor from getting an advantage
over you by paying a bribe. So, basically, whether it is a general
offence or whether it is a foreign public officials offence it
is all about a level playing field.
Professor Wells: If I might say,
it is a levelling up rather than a levelling down, so I do not
see that as being in conflict. Just on that previous point, I
did not read the Bill in that way, but if there is a query about
whose reasonable expectation it is, perhaps there is a possibility,
for the avoidance of doubt, for a clarification provision there
rather than just leaving it at large.
Professor Sullivan: I think it
is clear that the OECD wants an international standard of doing
business and that of course will cut across the cultural variances,
so the OECD would not be sympathetic to the "when in Rome"
approach to the question.
Chairman: I think we can have further
discussion on this on question five which is the foreign officials
point.
Q94 Earl of Onslow: I have one small
point to raise on this. In 1804 when the Louisiana purchase was
voted for by Congress, a third of the purchase money went into
Tallyrand's pocket, which I think is bribery on a scale which
you can do nothing but admire. There must be times surely, must
there not, when in the national interest, as it was for the United
States to buy the Louisiana purchase from France—and I am
purposely using an extreme example—one has got to overlook
the fact that Tallyrand trousered however much it was, even though
he was one of the best French foreign secretaries there has ever
been? How do you get round that problem?
Professor Sullivan: I think it
is a problem which you can cannot get round. You have to face
or confront it one way or another. We had it replayed recently
in the Saudi arms contract with the figures almost as large, and
of course the view was taken, and it is not an unreasonable view,
that it was against the public interest for there to be any active
prosecution by the Serious Fraud Office.
Q95 Earl of Onslow: And that defence
is still allowed for?
Professor Sullivan: It is not
a defence.
Q96 Earl of Onslow: Sorry, that decision
not to prosecute is allowed for in this Bill is it?
Professor Sullivan: Not as such.
Mr Nicholls: Well, the position
under the Bill is that the directors of the various prosecuting
bodies decide or give their consent as to whether it would be
a prosecution for bribery. There is some dispute as to whether
the Attorney General should have a part in the consent or not.
This is all really being worked out in the Constitutional Renewal
Bill. The idea behind the Constitutional Renewal Bill is that
the Attorney General in any case will be able to stop an investigation
or a prosecution on national security grounds, so I think ultimately
the issue is going to be decided in the Constitutional Renewal
Bill. The question that arises under that Bill is how exactly
the Attorney General exercises his or her consent, and how it
is able to be tested as to whether it is a genuine ground for
stopping an investigation or prosecution, namely national security,
and if one takes the decision in the House of Lords in the BAE
case there has to be a balancing process as to when it is national
security and when national security demands a particular result.
It is very difficult to resolve this at the moment. If there is
a national security issue, and there are massive national security
issues nowadays, somebody has got to make a decision about it.
There have got to be proper protocols in place and there has got
to be a proper oversight procedure that Parliament can operate.
As I say, this ultimately is not going to be decided, I do not
think, in this Bill; this is going to be decided in the Constitutional
Renewal Bill.
Q97 Earl of Onslow: But the likelihood
of the Constitutional Renewal Bill, considering there is only
a year left of this Parliament to go, and it is not without the
bounds of possibility there may be a change of Government next
year and I put it no higher than that, getting on to the statute
book is zilch, is it not?
Mr Nicholls: But let us suppose
for example that the Bribery Bill is in place before the Constitutional
Renewal Bill, it is difficult to believe at the moment that a
director of, shall we say, the Serious Fraud Office or of Customs
& Excise will not also be considering issues of national security,
and there is no reason why there should not be protocols in place.
Chairman: We are going to come back to
national security to some extent in question nine. I wonder if
we could move on now to corporate hospitality, which I know is
dealt with in the American legislation but here I think is going
to be a matter for the prosecution authorities. Lady Whitaker,
you wanted to ask this question.
Q98 Baroness Whitaker: The Bill is
not explicit on corporate hospitality facilitation payments and
so on, unlike the American Act which exempts facilitation payments,
I fear regrettably, and provides a defence for reasonable corporate
hospitality. Our Bill, I think, thinks that prosecutorial discretion
can cope with offences which are arguably of a much lesser import.
Do you think that is right and also, whoever chooses to pick this
up, do you think it would be reasonable to use a halfway instrument
such as an Approved Code of Practice to deal with something like
corporate hospitality, and I would add the commission system,
which is sometimes legitimate if it is open and clear, but sometimes
amounts to bribery, and this kind of authoritative guidance could
even deal with where a reasonable person lives? Clearly in the
Bill they do not live everywhere. The reasonable person seems
to inhabit only where a British juror lives, which I do not think
is tenable as a proposition. Should all these aspects be dealt
with in some way in the Bill, either within the guidance or more
explicitly?
Mr Nicholls: I think once again
it comes down to the question of what is proper and what is not
proper and issues of good faith, impartiality and trust all arise,
as they may be appropriate in a situation. I notice that Professor
Horder found this a difficult question and if one takes the Bill
as it is, it is just left for the jury to decide on this basis
of impropriety. When do you go over the top? If you take somebody
out for two weeks on the Northern Lakes of Italy or somewhere,
is that too much? Personally, I do not see how it can be dealt
with in any other way. One of the great tests is—and this
really applies in all the industries and in government—take,
say, the Ministry of Defence, if you are working in the Ministry
of Defence there are rules about what hospitality you can give
and what hospitality you can receive. All of these things are
there and so really the standards are going to be in the various
codes of practice of the various bodies to which you belong. If
you are prosecuted then you can point to the codes of practice.
If you have broken the code of practice then that is one against
you in the prosecution. If you have kept to the code of practice
maybe it is one in your favour, but I do not see a way of making
specific provision.
Q99 Lord Anderson of Swansea: It
is not just a question of scale but presumably the nature of the
person who is receiving the hospitality. I recall a case where
a boxing promoter alleged that in his promotion every ringside
seat was occupied by a commander of police in the London area.
I would have thought that Lord's Cricket or English Rugby Union
would go bankrupt if there were not hospitality areas. You would
say that in some cases it is so dangerous for the individual that
whatever the scale that they should avoid any form of hospitality?
Mr Nicholls: Not every form of
hospitality but I think a jury might come to certain very strong
conclusions about the front row being occupied by the relevant
police authority.
Lord Thomas of Gresford: If I may give
a further example.
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