Examination of Witnesses (Questions 474
- 479)
THURSDAY 11 JUNE 2009
MR DIMITRI
VLASSIS, MR
NICOLA BONUCCI,
MS CHRISTINE
URIARTE AND
MR WILLIAM
YIU WAH
LOO
Q474 Chairman: Good morning. Thank
you all for coming. It is quite an important contribution that
you have got to make to our considerations, so you are very welcome
indeed. Could I start by asking for a general overview? You have
already provided us with something of the kind and there is a
piece of paper which I think says very much the same that you
have supplied us with today. Would anybody like to do a general
introduction to your views about this legislation?
Mr Bonucci:
Thank you, my Lord Chairman. With your indulgence I will make
a general introduction but I will try at the same to answer questions
1 and 11 of your suggested questions on our general reaction vis-a"-vis
this Bill. Let me first say that I am Nicola Bonucci and I am
the Director of Legal Affairs at OECD. On my left I have two colleagues
from the OECD. I woke up at 5.30, I took a train, I walked one
hour to get here, so I think this is already an indication of
the importance that the OECD attaches to this particular issue.
The importance is reflected in all our written reports, which
I am sure you have seen, about the necessity for the United Kingdom
to have a modern and efficient legislation. While I represent
the Secretariat and not the OECD member countries, you have seen
in the letter of January 2009, followed by letters on 3 February
2009 and 27 April 2009 from the Secretary-General, that the OECD
supports, if I may quote the Secretary-General, "the Government's
effort and wishes this draft legislation be adopted as early as
possible and certainly before the next general election".
This draft, if enacted, would significantly improve the UK foreign
bribery framework—I must specify that I am addressing merely
the foreign bribery issue because this is where our remit is—and
would address a number of concerns expressed on various occasions
by the Working Group, which is the body which encapsulates all
the OECD members, all the parties to the Convention. Let me be
very clear that when I say that this draft would significantly
improve the UK foreign bribery framework I mean this draft. If
the main elements of this Bill on the foreign bribery offence
or on the corporate liability for failure to prevent foreign bribery
were to be missing in the legislation to be adopted by the Parliament,
naturally it would not be this draft; it would be a different
piece of legislation that the Working Group would be assessing
in the future. I will try to respond to question 11, which is
to ascertain whether there are any remaining issues that were
raised in correspondence by the Chair which would prevent the
OECD offering its unqualified support for the draft Bill. I do
not think the OECD has ever offered unqualified support to anybody
and I would certainly not be in a position to do that.
Q475 Chairman: Do you not think that
there will be points arising in the course of the other questions?
Mr Bonucci: Yes, naturally, but
this is on the general aspect. As I said, this will be an important
improvement and will enhance the credibility of the UK legal framework.
One often has alternatives, and the alternatives you have here
are to adopt it or not adopt it, and we respect that, but let
me quote what the Working Group said in the Phase 2bis Report,
page 71, "The Working Group stresses"—and this
is the Working Group, not me—"that failing to enact
effective and comprehensive legislation undermines the credibility
of the UK legal framework and potentially triggers the need for
increased due diligence over UK companies by their commercial
partners on multilateral development banks". This is the
context in which we would like you to address this important issue
and naturally we will discuss more technical details throughout
the evidence. Thank you.
Chairman: I think we are trying
to address it and with your help we will address it further. Shall
we go on then to this question of clause 4, "foreign public
officials"?
Q476 Baroness Whitaker: We hope that
this clause satisfies the UK's obligations under the OECD Convention
but perhaps you could give us the OECD's view on that matter.
Mr Bonucci: I think clause 4 is
a major improvement over the current law for the following reasons.
It abolishes the reference to the concept of agent and principal
and therefore eliminates the risk of having to prove that the
official who receives the bribe violated the trust between an
agent and principal. It expressly states that bribes that are
paid directly to third parties with the approval of the foreign
public official are captured by the offence. In terms of the definition
of the offence, it uses a lot of the terminology and the concepts
that are used in the Convention, so we are quite happy with that.
There is one caveat and I can address it now or I can address
it later on at the request of the members of the Committee, which
is something which is also touched upon in question 3, which is
on the concept of "legitimately due".
Baroness Whitaker: Please do raise it
now.
Q477 Chairman: Bring them together.
Mr Bonucci: Okay. Let me first
finish my conclusion. On Article 2, we are overall quite satisfied
except for this caveat. On clause 4 and vis-a"-vis
Article 2 of the OECD Anti-Bribery Convention, again this is a
major improvement over the current state of the law. For the moment
the only theory which can work in order to trigger the liability
of the legal person is identification. By adding the failure of
a commercial organisation to prevent bribery under clause 5 you
will be meeting what are the standards of the Working Group, as
they have defined them in an exercise, which we call the mid-term
study. Let me recall what the standards are. The bribery of a
foreign public official committed personally by a senior company
officer should be covered, but also the bribery by a lower level
person at the direction or with the authorisation of a senior
officer, and the bribery by a lower level person where he or she
was not adequately supervised by a senior officer or a senior
officer knew the lower level person was going to bribe but failed
to try to stop him. We believe that with the new clause 5 you
will be capturing all those figures. May I say a word on "legitimately
due" and the Convention?
Q478 Chairman: Please would you because
this is quite an important point from our own legal point of view?
Mr Bonucci: And we understand
that. The draft as it is goes a long way to replicating the language
of the Convention and the concept of the Convention. However,
one simple word which is missing but which I must say we would
strongly prefer to see is "written". If you look at
commentary 7 and commentary 8 to Article 1 of the OECD Anti-Bribery
Convention, in particular commentary 8, it says, "It is not
an offence, however, if the advantage was permitted or required
by the written law or regulation of the foreign public official's
country, including case law", case law in the sense of written
case law, that is. This express reference to written law does
not appear in the draft as it is. Paragraph 36 of the explanatory
note to the Bill refers to "custom or tolerance". While
it says that "custom or tolerance" is only there in
order to demonstrate that it is the law, we believe that there
might be some confusion and I would like to make it very clear
that the Working Group has been very clear on a number of occasions
that this was a very restrictive exception. In 2006 the Working
Group on Bribery recommended to Australia that they amend the
defence in this regard because it was not in compliance with commentary
8 of the Convention. At the time Australia provided a defence
where the conduct of the foreign public official that was sought
by the briber was lawful in the foreign public official's country.
They used the concept of "lawful" without really defining
what was lawful or not lawful. If you remember, this was something
which was used in a case which was important in Australia, dealing
with the Australian Wheat Board. The Australian Wheat Board was
involved in what we called the oil for food case and the report
which an independent commission published relied on the fact that
the Iraqi law was silent on the matter to say that because it
was silent this was permitted, which certainly was not the reading
of the Working Group.
Q479 Chairman: Yes, but that is the
common law position, is it not?
Mr Bonucci: But, as I say, this
was not the reading of the Working Group. Australia then modified
its legislation which now says that this shall be expressly permitted
or required by written law.
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