Examination of Witnesses (Questions 480
- 499)
THURSDAY 11 JUNE 2009
MR DIMITRI
VLASSIS, MR
NICOLA BONUCCI,
MS CHRISTINE
URIARTE AND
MR WILLIAM
YIU WAH
LOO
Q480 Baroness Whitaker: We do have
two concerns in this matter. First of all, there is, as you referred
to, the system that in the common law countries what is not expressly
forbidden is permitted, which might give a British company the
feeling that they could go ahead, but my own feeling is, what
would happen if we were to do away with the exception "legitimately
due" entirely? Could you give us examples of what is legitimately
due, and have any of the other common law countries run into difficulty
with this concept?
Mr Bonucci: Of all the 38 parties
to the Convention the ones that in their legislation have made
reference to the concept in commentary 8 are Australia, Canada,
Korea, New Zealand and the United States. All the others have
no exception whatsoever. In the case of Australia, I indicated
what were the findings of the Working Group, and in the other
cases that I mentioned all the legislations refer to the fact
that the exception only applies if the law expressly provides
that the specific advantage in question is permitted or required.
Q481 Chairman: Are there countries
where that is provided? Do some jurisdictions allow payments of
this sort as well as written law?
Mr Bonucci: If I may say so, you
might be the one in the future because you have a clause which
authorises the Secret Service to pay bribes. This would be one
case in which a foreign country would say, "I am relying
on the UK legislation which allows the Secret Service to pay bribes".
In that case this would probably not be a defence for the person
who was seeking the bribe but, apart from this particular example,
I am not aware of any case in which the law expressly allows or
permits.
Ms Uriarte: Good morning. My name
is Christine Uriarte and I am the Legal Counsel for the Anti-Corruption
Division at the OECD. If I could just complement what Mr Bonucci
said, I think the problem is that perhaps there is a bit of a
misunderstanding about what the exception in commentary 8 is supposed
to capture. What we are talking about here is a law expressly
in writing permitting the specific payment that was made in a
specific case by a company or an individual to a foreign public
official. It has to be extremely individualised and I think the
reason why so few countries have decided to put this exception
in their law is what is the chance that the law of a foreign country
is going to say that in this specific case this public official
is permitted or required to ask for the payment in question?
Q482 Baroness Whitaker: So why is
it in the Convention, may I ask?
Mr Bonucci: You may, and I will
be very frank. This was a provision which existed in the US legislation
at the time when the Convention was negotiated. The US negotiator
did not want to go back to Congress and modify the legislation,
but the boundaries were so thin that if you ask my personal view
this is a useless exception because, indeed, as my Lord Chairman
indicated, we can hardly see any case for it. One can hypothetically
imagine a case in which, for example, you would be forced to put
some money in the custody of some public authorities for a certain
type of contract, but I think it is very hypothetical, and, as
I said, we have never encountered a case in which the law explicitly
provided the possibility for a public official to receive what
would be equivalent to a bribe.
Q483 Chairman: I think the way in
which it is being put is, "If you are going to get this contract
you will provide us with a school and some other public facility".
Mr Bonucci: Again, we are not
aware (and I am not saying that this does not exist) of any such
requirement existing in any written law. It might be part of the
deal but this is where we enter a grey area.
Q484 Lord Thomas of Gresford: Supposing
there is a contract between a supplier in this country and someone
in a foreign country in which it is a term of the contract that
a payment be made or the building of a school be provided or something
of that sort, and that contract is not void for illegality in
the particular country. There you would have a term in writing
which would permit the payment of a sum of money or the provision
of a facilitation of some sort or another. Would you say that
that would be captured by the exception in clause 5?
Mr Bonucci: As I indicated, it
is the written law or regulation of the foreign public official
and not the contract. The validity of the contract is another
issue. In fact, you have had cases, for example, in the Arbitration
Tribunal of the ICSID, the International Centre for Settlement
of Investment Disputes, in which even a contract tainted by bribe
was deemed to be a valid contract in terms of contract, but still
it was a contract tainted by bribe, and you have at least one
counter example in ICSID, which is a very interesting case. It
is World Duty Free v Kenya (4 October 2006), in which the
arbitral tribunal considered that the specific contract which
had been obtained by bribing a foreign public official was legally
voidable.
Q485 Lord Thomas of Gresford: So
are you telling us there are decisions both ways, that there are
contracts which have been upheld although—
Mr Bonucci: In the past, yes.
Q486 Lord Thomas of Gresford:—
although they have a bribe, but that a recent case involving Kenya
has been declared to be void?
Mr Bonucci: Yes.
Q487 Lord Thomas of Gresford: If
the contract is valid is not the sum of money legitimately due?
I am using the expression that is contained in the proposed Act.
Mr Bonucci: But that is exactly
what we want to avoid. That is why we would prefer the legislation
to refer, as in commentary 8, to the notion of written law or
regulation rather than to a not very clear notion of what is legitimately
due or not.
Q488 Lord Thomas of Gresford: So
as to exclude any written term which might amount to a bribe or
facilitation payment? You do not want to see that at all? Is that
right?
Mr Bonucci: The strong preference
would be to stick with the written law. If there were to be an
exception, which, as I said, is a minority view in the Working
Group on Bribery; only a few countries have that,—actually,
you might want to ask Mr Vlassis if there is such an exception
in UNCAC, which is not clear—clearly it should be in conformity
with commentary 8. Let me record that commentary 8 is preceded
by commentary 7 which says clearly that it is an offence irrespective
of the value of the advantage, its resolved perception of local
custom, the tolerance of such payments by local authorities or
the alleged necessity of the payment in order to obtain or retain
business or other improper advantage, so the boundaries were very
clear.
Q489 Lord Thomas of Gresford: Mr
Bonucci, does it not follow from what you say that the use of
the expression "legitimately due" in this Bill is ambiguous
because it could be legitimately due under the contract but, because
it is not validated by a written law, it would fall foul of the
provision? It is ambiguous as it is currently written in this
Bill, is it not?
Mr Bonucci: I would concur with
you that we would prefer the notion of "legitimately due"
to disappear and to have a simpler reference to the written law.
Q490 Baroness Whitaker: That is very
helpful. Perhaps we could also ask Mr Vlassis what is the UNCAC
position.
Mr Vlassis: Thank you and good
morning. Let me start by expressing my sincere gratitude for the
honour that you have done me by having me here today. I have been
very excited to be able to come and be with you, especially since
it seems that in the drafting of the Bill the provisions of the
United Nations Convention against Corruption, it does not appear
from the documentation, were looked at and I think that a number
of answers might have become more evident had this not been the
case. I understand that the Bill is intended to answer some quite
significant criticisms levied against the United Kingdom by the
Working Group on Bribery of the OECD, but I also see that there
is a very strong desire, which I believe is shared by the Government
and Parliament, to make sure that the United Kingdom is in full
compliance with its international obligations in general. In fact,
I also detect the desire for the United Kingdom not only to be
compliant but to be in a leadership position when it comes to
this, and that is not only through reading the material that was
provided to me in preparation for my presence here but also in
my experience with the United Kingdom in terms of support to the
Convention and support of the development of an effective monitoring
mechanism for the Convention. Having said this, many of the issues
that have been raised here this morning are dealt with perhaps
in a more straightforward manner in the Convention. One example
is that the United Nations Convention does not include anywhere
even the notion of facilitation payments. They do not exist for
the Convention. The Convention only recognises a bribe. A bribe
is a bribe and that is it. The Convention has, which I think is
pertinent to the discussion up to now, a definition of "foreign
public official". I believe the Bill comes very close to
the definition of the Convention, but the Convention also includes,
for example, a definition for the first time of an official of
a public international organisation, so there are a number of
differences, as it were, which might simplify the work of this
Committee and the passage of the Bill. Coming to your specific
question about "legitimately due" or not, this is not
an expression that the Convention uses. The Convention uses the
expression "undue advantage" and I must confess the
example that was used just now about the building of the school
I found a bit difficult to understand as to how this can qualify
in the discussion of the provision of an undue advantage to a
foreign public official to do or to omit doing something. My understanding
of this is that we are speaking about an advantage that is intended
in some way to benefit that official himself or another, so it
is a bit more personal, but, of course, I will defer to your views
on the matter so that we can perhaps clarify this a bit further.
Q491 Earl of Onslow: I was going
to come back exactly to this school argument. Let us take an example,
say, of a large contract which is going to involve a lot of workers
in a less developed country. It would seem to me completely legitimate
for the government of that country which is giving a contract
to say that construction company A will provide schools for the
workers' children or hospitals which they will leave behind after
the completion of the contract. In English law that is perfectly
acceptable. In planning law local authorities are always getting
what is called planning gain, in other words, making you, the
developer, provide services for the community. What on earth is
wrong with that?
Mr Bonucci: Nothing, and this
will never be captured—
Q492 Earl of Onslow: I am sorry,
Mr Bonucci; that is exactly what I thought you said.
Mr Bonucci: No, no.
Q493 Earl of Onslow: You mentioned
the word "school".
Mr Bonucci: No, no, I did not
mention the word "school". It was your Committee. We
are talking hypothetically but let us be very concrete. There
was a case a few years ago in Poland of a minister who said, "You
will get this contract but why do you not make a gift to this
charitable foundation?" This is a public case on record,
it is Schering-Plough (SEC Litigation number 18740), if
you want to look at the case. The company in question made this
gift to the charitable foundation which was run by the wife of
the minister. When you say a school, first, I would say this does
not necessarily benefit any public official; it is of benefit
to the community, to the state. On the other hand, if the country
then says, "And you have to hire company X and company Y",
which happen to be the uncle, the cousin, the brother-in-law of
the minister, then we have a case which is maybe not so clearcut
even under English law.
Q494 Earl of Onslow: That is totally
understood. That is obviously bent, is it not, "You will
employ my cousin"?
Mr Bonucci: Unfortunately, these
kinds of things happen.
Q495 Chairman: I want to get this
absolutely clear. It has got to be a generalised written law,
is that right, not specific to the individual case?
Mr Bonucci: That is correct.
Q496 Chairman: You see, in this country
Lord Onslow was talking about planning gain. That is in general
law. It is a power that a local planning authority has to ask
for extra things in return for benefit, but it is only in that
sort of situation that you envisage it as being legitimate, is
that right?
Mr Bonucci: That is absolutely
correct.
Q497 Lord Mayhew of Twysden: Mr Vlassis,
I confess I have not given the attention that I know it deserves
to the UN Convention, but you have made the point that "legitimately
due" is not an expression found in the UN document, which
uses the words "undue advantage". Do you really see
any significant difference or any difference at all because a
due advantage is one which is owed or is legitimately due? "Undue"
is the opposite. Is there really any distinction between those
two concepts?
Mr Vlassis: There is supposed
to be a distinction and that is the reason that the expression
was used consistently in all of the criminalisation provisions
in both offences that the Convention foresees, that is, the bribery
of a national public official and the bribery of a foreign public
official and so on. That is the expression you will find there.
It was felt during the negotiations that there had to be some
qualification of the advantage. Much to the objection of a number
of negotiators (who also happened to be practitioners) who were
advocating the view that every time you use a term which has some
form of value judgment in it you run into difficulties of interpretation,
"undue" was left at that without a reference to any
specific legislation because it was felt that it was sufficiently
clear, even if it was a term that implied some sort of value judgment,
to stand and to be guidance enough for countries when they wished
to legislate. The negotiators did not wish to go any further and
qualify this, or, for that matter, define it again because they
felt that it was sufficiently clear. I believe, from what I have
seen in the documentation that was provided to me, that the approach
that the new draft Bill is taking in qualifying what is an undue
advantage is probably going to become guidance for other legislators
in the future.
Chairman: This is an important point
but we must make some progress. Nevertheless, Lord Sheikh and
Lord Lyell want to pursue this matter.
Q498 Lord Sheikh: Under sub-paragraph
4, the exception we have, as we all know, is permission or requirement
to accept this. There are things which happen in overseas countries
with regard to customs and with regard to things being done. Do
you come across in your international work an overseas country
where things are written, where they do admit that it is permissible,
or otherwise it may cause a problem with regard to these exceptions?
Mr Vlassis: I have never come
across any country that has any legislation or any other regulation
that allows public officials of any sort to receive payments above
their normal salaries.
Q499 Lord Sheikh: We may have problem
in saying it is an exception and use that to say, "Yes, a
man was allowed to do this".
Mr Vlassis: How would you provide
the certainty that is required for any court or any jury that
this was indeed being allowed? The moment you introduce the exception
you provide the possibility for large companies to find ways to
escape the law, and this is why it needs to be unqualified.
Mr Bonucci: If I may complement
what Mr Vlassis said, based on our experience, as I indicated
before, out of the 38 countries only Australia, Canada, Korea,
New Zealand and the United States have such a provision. In none
of these countries has this exception ever been raised in a case.
It is really hypothetical but the limit of that expression should
be the one that my Lord Chairman indicated.
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