Examination of Witnesses (Questions 400
- 419)
WEDNESDAY 10 JUNE 2009
MR KEIR
STARMER, MR
RICHARD ALDERMAN
AND DETECTIVE
CHIEF SUPERINTENDENT
STEVE HEAD
Q400 Dr Iddon: The Law Commission
have recommended a defence of reasonable belief. The government
have dropped that defence from the present Bill. A number of witnesses
believe that that defence is important to protect businesses who
might receive poor legal advice, so there is a bit of conflict
over the defence of reasonable belief. We would welcome your views.
Perhaps you can tell us whether prosecutorial discretion can be
relied upon in place of a defence?
Mr Starmer: There are, as I said
earlier, two ways of approaching this. You can have the express
defence of reasonable belief put in which would allow a defendant
to say, "I exercised due diligence. I tried to get all the
advice I could. It just turns out that the advice was wrong and
therefore under the law the payment or advantage that I advanced
was not legitimately due." That is one model. That is not
the model now of clause four. The consequence is either that unfortunately
therefore those individuals must be prosecuted or it is passed
over to the prosecutor to take that into account in deciding whether
or not it is in the public interest to prosecute. Certainly the
code for Crown prosecutors in the current edition allows genuine
mistake or misunderstanding to be taken into account as a relevant
factor in exercising the discretion whether to prosecute. Therefore,
it is a workable model. Therefore, there is a choice between the
two models. I am not as comfortable with the second model as the
first because I do not think that matters which might otherwise
be a defence are the sorts of factors that ought to be taken into
account when exercising the public interest. There are two models.
If it is workable as drafted, it would be workable with an express
defence clause in it, but if it is a factor that is relevant to
the public interest and a prosecution is not to proceed for that
reason I think it would be incumbent on me as DPP to explain that
that was the reason why a prosecution was not proceeding in a
particular case.
Q401 Dr Iddon: To a non-lawyer like
me, it sounds as if you are lying in the middle of the two arguments
and not coming down on one side or the other. We are looking for
your recommendation and we are not getting it, are we?
Mr Starmer: Both models are workable.
In the interests of transparency and accountability, my preference
is that there ought to be a defence on the face of the statute.
We could work with it as it is using the discretion.
Q402 Chairman: If the clause was
struck out, it runs into the opposition of the OECD, does it not?
Mr Starmer: It does. That is why
it has been constructed in this way. I am not going so far as
to say this is unworkable by any stretch of the imagination.
Q403 Lord Thomas of Gresford: Would
Mr Starmer agree with me that, where you create a defence, it
is for the company or the individual to produce the documentation
and so on from his records and it is very difficult for the prosecutor
to come to a conclusion as to whether there is a basis of mistake
and so on without access to those documents. Therefore, it is
preferable to have a defence to put an onus on the defence to
at least raise on documentation, records and evidence and so on
why they say they have a reasonable belief.
Mr Starmer: I would agree with
that.
Q404 Lord Goodhart: Professor Celia
Wells, who was one of the witnesses, suggested to us that corporate
liability under clause five should be vicarious liability with
a defence of adequate procedures but no need to identify a responsible
person who is at fault. Could I ask for the views of the witnesses
on that?
Mr Alderman: My preference is
that the offence is one committed by the company itself because
clause five is a very significant change. I think it is a very
important one because it will make sure that corporates take every
care in ensuring that they have processes in place to make sure
that bribery does not take place. That is something that should
be fixed at board level. The boards of the corporates must be
alive to their responsibilities there and ready to carry them
out. I would prefer to see the company itself liable directly
rather than vicariously for particular actions. It is possible
the vicarious principle is one that could be adopted. To some
extent, there are parallels for that in other areas but my preference
would be with the clause as it is at the moment because I think
it is a very helpful clause and moves us forward very considerably.
Q405 Lord Goodhart: Is there not
a problem here, which is that failure to act by a corporation
is very difficult often to tie to a particular identified individual
in that business, particularly if it is a matter of inertia rather
than positive inaction, if one can call it that? Does that not
mean that the need to find a responsible person who is guilty
of negligence makes it extremely difficult to convict the corporation
itself, as clause five now stands?
Mr Alderman: We would be looking
at the individual in the corporation whose responsibility it was
to stop the person who paid the bribe from doing that, or in the
absence of a person of that nature, we would be looking higher
up the corporate where necessary at the board. I think that is
exactly as it should be, because if there is not somebody in the
middle part of the company who is responsible for ensuring that
bribes do not take place, that is very much a board level responsibility
at the highest levels. Society is entitled to expect of the corporates
these days that they have adequate anti-bribery processes and
that those processes are carried out throughout the corporation.
If there is a significant failure, then it is a board level failure.
Q406 Lord Goodhart: If the company
has built up proper procedures, they will be eligible to put forward
the defence. In that case, why is it necessary also to go looking
for the individual? Is that not going to make it a lot more difficult
to get convictions where a company has failed to prevent bribery?
Mr Alderman: I have talked to
corporates about this. When we talk to them about their procedures,
it is not just a particular account that they might give us of
all the processes they have in the corporate. It is what actually
happens in practice. Are there processes about protecting the
corporate from bribery being carried out? In the type of case
we are just discussing, those processes are not being carried
out. We would be looking to see whether or not there are failures
to carry out the processes anywhere.
Q407 Lord Goodhart: Could I ask the
other witnesses for their views on this point?
Detective Chief Superintendent Head:
From a police perspective, this is helpful legislation in terms
of identifying a corporate responsibility. We would see no problem
with the current legislation in seeking evidence. We would aim
it in exactly the same way that the Director has spoken about.
A lot of companies set up a middle layer which is responsible
for their due diligence in these matters.
Earl of Onslow: We have had a
lot of discussion about facilitation fees and in the last question
we were talking about how you identify what is and is not bribery,
from doing business in Nigeria, which we know is practically impossible
to do honestly at all as far as one can gather, to very big commissions
paid to the cousins of defence ministers of certain Arab states
that we would regard as bent beyond measure. It seems to me that
it would be very helpful to have what the Americans have which
is a proper guidance system, a checklist which can be government
approved. It reinforces what you were saying about how important
it is that the board is responsible. That could be part of the
government checklist as to what they should do. Would it not be
an extremely good idea if the government were to issue, obviously
in consultation with you, the industry and so on, a proper checklist
which should be gone through, which could be used both by the
prosecutorial authorities if they had not done it and by the defence,
so that it can be shown that they have gone through these hoops?
The Americans have it and the arms people are saying this is a
good idea. Do you not think that it would be a good idea from
our point of view to have it? Can I not convert you to that view?
Q408 Chairman: Just before you answer
that, if we are going to go on to guidance in general—and
I believe we definitely ought to because we have had a great deal
of evidence about this—I would like to make sure that we
concentrate our minds on that. The American system is very different
from what happens in this country and I wonder if you can give
us any advice about how it might work here if it was introduced
and how we get it into the draft Bill. We will come back to the
question of joint ventures in a moment but could you deal with
this question of guidance, because it has been a subject that
a number of our witnesses have raised.
Detective Chief Superintendent Head:
Can I give an indication of an initiative going on at the moment
which might be able to assist here? I know the Directors would
be the people better suited to give advice on guidance. In partnership
with the United States and the Canadians at the moment, we are
looking at having an intelligence picture around the world. We
have heard some comments about countries and generally they are
extremely accurate, but we do not have a repository of information
about what is really going on in those countries. What advice
should we be giving to people in terms of where they are going
and the business that they can expect to do in those countries?
Nothing like that exists in the world in terms of policing at
the moment. Working with our allies around the world and also
in terms of not just policing but the other agencies, with industry
itself and the third party sector, we are trying to build a picture
of what exists around the world in terms of corruption. If you
are going to a port in country X, this is the situation. This
is what you can expect to find. In that way, we will be able to
work with the government in two ways. We will be able to give
advice. We will be able to work with the SFO and the Director
in terms of being able to give some accurate advice as to what
you can expect and what you should be doing. We will also be working
with the government who are also involved in this project about
putting pressure on some of those countries, because we will have
some actual evidence as to what is going on and what the expectations
are. Then we can address the question: is it what they think is
reasonable in that country, because this is what is happening,
and confront those countries with that evidence and hear what
they have to say. That is in a fledgling situation at the moment
but I think that will be a giant step forward in terms of giving
advice on a whole series of levels as to what we are talking about
here today.
Q409 Chairman: Nothing like that
appears at the moment in the draft Bill. There is no way in which
it can be brought into account in a trial because the draft Bill
does not make any provision for it.
Detective Chief Superintendent Head:
It does not but, in terms of reasonableness and what we have been
talking about previously in terms of how people behave, that will
be able to give us some indication on two fronts. In terms of
the reasonableness test, which we ascertained was a difficulty
because it is subjective, it needs to be put in context. I think
that is important. Also, in terms of any advice that we give,
it is important to separate out what the Americans do from what
we do. Things are very different over there than they are here
in terms of the legislation. Even the Americans recognise that
this is a big step forward, taking this to new levels of identifying
what we can realistically do in terms of world corruption.
Q410 Earl of Onslow: We have been
told though that the Americans have a detailed set of instructions.
I would hope that we could write to the Americans to say, "Please
can we have a look at what you are doing." I have no difficulty
at all in copying somebody else who is doing something very well.
If they are doing it very well, I would hope that we could fit
it into our legislation. If those rules are known and published
in legislation, they themselves apply pressure to clean up in
a way that would add pressure as you were saying just now.
Detective Chief Superintendent Head:
I wholeheartedly agree with that. I think it is important to learn
the lessons of others. I have no problem with taking others' ideas.
Q411 Earl of Onslow: Do you know
a lot about the American system?
Detective Chief Superintendent Head:
Myself and the SFO have obviously been across to America and I
would imagine, Richard, that probably you are in the best position
to answer questions on the specific advice they give.
Q412 Earl of Onslow: It is only because
we were told that it was such a good idea. What do you know about
it?
Mr Alderman: I certainly would
not pretend to be an expert in all aspects of the US system. I
suspect the Committee might want to get help from the US Department
of Justice and I would be nervous about trying to give you any
assistance here. I think you really need to hear from a proper
representative of the US Government on that.
Q413 Chairman: We are going to get
a memorandum from the Department of Justice in America. My problem
is how do we translate this in the way that they do in America
into something which acts as a sort of defence, because there
is no provision whatever in this draft legislation for anything
of the kind.
Mr Starmer: It seems to me that
there is no inhibition in the draft legislation to the issuing
of general guidance and that must be a helpful thing to do. It
is done in relation to a number of difficult areas in the law
by all the prosecuting authorities. Whilst there is a reluctance
to indicate whether a particular course of conduct or action is
going to be prosecuted or not, that is on the one hand; on the
other hand, legal guidance and the approaches to be taken is commonplace,
is sensible, and I cannot see any good reason why it should not
be introduced even when this legislation is passed. I do not think
you need anything on the face of the legislation to require that
to be done.
Earl of Onslow: Why can we not
put into the legislation a clause which says, "The Minister
will produce guidance"? In other words, it will be on the
face of the law that the Minister will produce the appropriate
guidance which can be used as a pillar upon which people can lean
or they can prosecute for omitting to lean upon said pillar.
Chairman: There are plenty examples
of codes of practice for instance.
Q414 Lord Lyell of Markyate: Can
I suggest a note of caution? It is not in our tradition for the
prosecuting authorities to give much guidance, if any. It is quite
a dangerous path. We do not know as yet—and it will be very
interesting to learn—what the Americans do. It will be very
helpful of the Department of Justice to let us know. Our objective—I
am sure it is the common objective of this Committee and of both
Houses—is to get a pure, effective Bill that stamps down
on corruption but does not lead to unintended consequences. This
is a highly competitive world. Lord Onslow was saying, quite rightly
because we have heard it in a sense, that defence industries rather
like the American system. That may or may not be something which
is better. They may prefer to have a system like that but it has
never been our system and I think we need to be very cautious.
You have all been quite right in looking at this draft for its
practicalities, for effective prosecution according to English
law. I think we should try to concentrate on that as our principal
task. Is there any comment?
Mr Alderman: Could I add to that
cautionary note? It is helpful to be realistic about what any
guidance could give, because we are talking about an incredibly
complicated area. We are talking about corporates, some of which
aspire to a gold standard in respect of corruption. Others are
not quite there on that journey. We are talking about very large
corporates, medium sized corporates and small corporates. Giving
guidance other than in general terms in relation to different
sizes of corporates, different industries, is quite a complex
task. I would certainly not want the implementation of the Bill
to be delayed for a very considerable time, while very detailed
guidance was being developed. I would suggest that the important
thing for investigators and prosecutors is to have the new offences
which we can then implement, but I am sure there is a lot we can
discuss with corporates and others about how we would do so.
Q415 Chairman: There has been a great
deal of discussion in other evidence about the guidance that is
available in America. It is not readily transferable to this country,
to our system. On the other hand, there has been a request from
a number of quite important sources that there should be thought
given to whether we could do something similar. I do not expect
you to be able to answer this today. It would have to be something
that you would be able to introduce at trial and that juries could
take into account. I wonder whether it is something that you would
like to take away and think about, because we would greatly appreciate
some help on this subject.
Mr Alderman: Perhaps we can take
that away and let you have a note.
Q416 Lord Thomas of Gresford: Could
it not be introduced into the trial situation, if there were a
defence of reasonable belief? In other words, if advice had been
sought from one or other of you or from an independent commission
against corruption, as in Hong Kong, and that advice had been
followed, that would go to a defence of reasonable belief.
Mr Starmer: I think that is a
really important point because that is where the guidance would
be most valuable, but the guidance on the current draft would
be pretty short: make sure you get it right, because there is
no reasonable belief defence. Any list of checks or guidance about
the sort of checks taken would not actually assist very much for
anybody who really wanted some guidance on what to do in a particular
situation. The guidance would have to be focused on the structure
of the clauses as they now are. Of the two models I was discussing
earlier, that is the difficulty in leaving it to prosecuting discretion.
Q417 Lord Goodhart: Could I also
ask whether, under the money laundering legislation where guidance
is given, that would be a useful precedent? I am not asking for
an answer now but I wonder whether that is something that could
be considered.
Mr Starmer: Certainly.
Q418 Lord Anderson of Swansea: I
was going to ask Mr Head to expand a little on what he said, when
he said that we are at a fledgling stage in the accumulation of
data, which suggests that perhaps if one is still at the foothills
it is really quite a long time before one is able to draft adequate
and comprehensive guidance which could lead to the delays which
I think Mr Alderman has mentioned. What did you mean by "the
fledgling stage"?
Detective Chief Superintendent Head:
The creation of a world map in terms of corruption is a major
piece of work. There is no denying it. The difficulties that we
have talked about previously would all come into play. There is
relevance around delay in terms of the legislation we have here
and I am not seeking to make it part of anything that we discuss
in relation to this. The reason I raise it is because of where
we are on the question of reasonableness. I think we will grow
with our understanding of what is reasonable around the world
and that is an important element. In terms of where we have advice
and advice is sought, can I reiterate the thought that, without
a reasonable belief defence—
Chairman: We know that the OECD
does not like the reasonable belief defence. We know that they
like the American system. It might be better if we concentrate
on trying to get something similar to the American system into
the British law and that would be different I think from the reasonable
belief defence. If you are prepared to do a little work on this,
it would help us very much indeed.
Earl of Onslow: I accept it goes
against our tradition of asking prosecutorial authorities, but
surely it should be possible for the Department of Trade to produce
those guidelines or even the Ministry of Justice. It does not
have to be done by the prosecutorial authorities.
Chairman: Before we get on to
who drafts it, let us see how we can insert it into the system,
because it may or may not be possible to do it. That is what I
really want to know from our three experts. If we can find a way
of inserting it into the system, then we can see who might do
it. Could I go back for a moment to the question about syndicates,
joint ventures and subsidiaries?
Q419 Baroness Whitaker: One of the
most significant areas of bribery is other companies doing it
for the main company, whether as a held company, a joint venture
or a syndicate. The chairman of the OECD Working Group thought
that his own instrument, the OECD Convention, was deficient in
that it did not cover foreign subsidiaries. I see from Mr Starmer's
submission that he too might have some concerns about this. Can
I ask all three of you whether you think the Bill captures the
area of foreign subsidiaries, syndicates and joint ventures enough
to be able to capture all the bribery that is committed undoubtedly
by them?
Mr Starmer: I have some concerns
as set out in our written note about whether it captures as much
as it could.
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