Examination of Witnesses (Questions 500
- 517)
THURSDAY 11 JUNE 2009
MR DIMITRI
VLASSIS, MR
NICOLA BONUCCI,
MS CHRISTINE
URIARTE AND
MR WILLIAM
YIU WAH
LOO
Q500 Lord Lyell of Markyate: Would
you be able to provide us with the written laws of these four
countries to which you are referring because there would be common
ground that bribes of individual officials, for example, would
be completely unacceptable? Do they make provision, for example,
for commissions which in some senses are of a more public nature?
Does that happen? You are quite good on practical cases. What
actually happens? Are there things that happen which you do regard
as legitimate, and obviously there are other things which are
illegitimate? Can you give a little explanation?
Mr Bonucci: Certainly we will
provide you with the relevant pieces of legislation. Turning to
commissions, again, commissions are of two sorts—bona
fide or not bona fide. If you are paying an agent to
perform his or her work as an agent and you are paying a commission,
that is perfectly legitimate; there is nothing against that and
no violation, no bribe. If, on the other hand, you are using the
disguise of an agent to effectively pay what you qualify as a
commission but is effectively a bribe, which is one of the main
vehicles which is used, then there is an issue. No country as
far as I know would say that any payment for anything which is
called a commission is ipso facto legitimate because it
depends on the facts and circumstances of the case. You might
have very well presented this as a commission but in fact it is
a bribe, or you might have indicators, which we have had in past
cases, of contracts in which the amount of commission was 25 per
cent of the value of the contract. It is difficult to imagine
that there would be legitimate business reasons to pay 25 per
cent of the value of the contract in so-called commission. The
answer is that I do not think any country allows payment of commission
to be legitimately due in abstract.
Ms Uriarte: Can I add to that,
please? I think part of the discussion here is a result of this
very UK-specific wording of "legitimately due", and
I think it needs to be clarified right from the beginning that
the OECD Anti-Bribery Convention, in Article 1, where it defines
the elements of the offence, does not use the terminology "undue
advantage". It is "improper advantage", and so
it is very difficult, I think, to compare the UK situation to
other countries' legislation where, as far as I know, none of
them has ever used the terminology "legitimately due".
It is either "undue advantage" or something close to
that. I think that the discussion here and the use of the exception
that you are talking about flows from the use of the term "legitimately
due", which then raises the possibility that perhaps a contract
could have been obtained and as a result of the contract the payment
is due and is that legitimate or illegitimate.
Chairman: We would like to look at the
texts of these other laws you have mentioned because we need to
be satisfied that this is transferable into British legal parlance,
but I would now like to go on, if I may, to the next point, which
is the defence that the Law Commission suggested, which has now
been taken out, I think partly because you objected to it.
Q501 Earl of Onslow: The Government
has dropped the "reasonable belief" defence which was
originally proposed by the Law Commission. Would it be acceptable
to the OECD and the UN if this defence was reintroduced in order
to protect businesses that take efforts to comply with the foreign
official's law but who, for example, get bad legal advice and
they have no way of checking that that legal advice is bad?
Mr Bonucci: This is indeed one
area in which the draft legislation which was submitted to the
Joint Committee is an improvement in the eyes of the Working Group
and vis-a"-vis the Law Commission. I cannot really
speak on behalf of the Working Group but we are pleased that it
is changed and thanks the Government for taking this into account.
The reasons why the Working Group on Bribery is not in favour
of such a defence are indicated in the Phase 2bis report in paragraphs
60-62 and they are two-fold. The first one is that this defence
is not contemplated in the OECD Anti-Bribery Convention. In fact,
defences not exactly of that sort but of a similar sort which
have been introduced into other countries' legislation have always
been criticised by the Working Group on Bribery, which systematically
asked the countries to remove those possibilities. The second
reason why the Working Group on Bribery was not in favour of this
defence is the fact that this would appear to be a defence which
is not a general defence under UK law but only in this particular
case, so it is not a defence of general application; it would
be used only in this particular case. The third reason is the
very unclear boundaries of this defence. If I may take your example,
my initial reaction would be to say that it is quite convenient
to get bad legal advice if you want. It is not very difficult.
I am a lawyer. I know what it takes to find or to have legal advice
which gives you the flexibility that you would like to retain.
The question is indeed the due diligence, that you would then
be required to check that this legal advice is bona fide
or not. Any reasonable employer in an issue like that would not
rely exclusively on legal advice but also on external analysis
of the legislation and on other indicators. The question of the
reasonable belief is exactly in the terms that you are putting
it—the reasonable belief by whom, under which standard,
and then you enter into a very difficult grey area, which, as
I said, no other country has entered into, and that is why the
Working Group—
Earl of Onslow: May I interrupt
you here? You said just now that you as a lawyer know how to give
advice which would suit your clients; that is in effect what you
said. Surely you should not go to a lawyer who takes that cavalier
view of his duties to the law. It is as simple as that. If you
go to a reputable lawyer who is not going to advise you in effect
how you want to be advised rather than what the law is, then you
must indicate reasonable belief and that surely should be a proper
defence. If you go to proper people who give proper and honest
advice then that should be a proper legal defence because you
have every good reason to believe that.
Q502 Chairman: Could I ask the team
to address this slightly more generally? We have had a lot of
requests from commercial witnesses. They want a defence. This
one apparently will not do. What can be available to a commercial
company so that although they are doing their very best to comply
with the law they nevertheless receive advice or guidance or something?
Is there any way of getting round this which is legitimate?
Mr Bonucci: What you are saying
is that a company will take a specific course of action based
only external legal advice that they would have sought?
Q503 Chairman: No, I am not saying
that. I am saying that is one of the methods that might be used,
but there might be others.
Mr Bonucci: Absolutely, and that
is why I think clause 5 is exactly what the draft tries to provide
to companies. What is clause 5 at the end of the day? The company
would be liable except if it proves that physically it acted diligently
and it had a system in place which would be effective. This is
the real defence. If a company has done all it has to do to verify,
to counter-check, to have a system in place, and you have a case
of a rogue employee, which happens, even though in ten years I
have never met one but let us assume, then yes, this would be
the defence. I do not think this draft has introduced the vicarious
liability concept; this draft is saying the company should be
liable, either because the bribe was made by a senior official
and therefore the senior official engaged a company, or, if it
was a lower level official, because the company did not have a
system in place which prevented this from happening. If, on the
other hand, you have done all your duty, and I would say your
duty might be more than relying simply on external legal advice,
this would amount to exonerating the liability of the company.
Q504 Earl of Onslow: I am sorry;
I still am unhappy with the concept that it is the advice that
you get from your lawyer, you have no possible reason to believe
that it is not anything other than clean and above board, that
you cannot say that you reasonably believe that advice was right,
and that in my view should be a defence.
Mr Bonucci: One of the difficulties
in this area is that we tend to go into hypotheticals but we are
dealing with real issues. You would have a company that has no
compliance system at all, no control system—
Q505 Earl of Onslow: I am not saying
that. I am saying exactly the opposite of that. You have gone
through all the hoops, you have done everything.
Mr Bonucci: Then you do not need
the reasonable belief. Then you have, as I said, the defence which
is provided in clause 5.
Chairman: Mr Bonucci, I think
we are going to have to pursue this on another occasion because
we must get on with the other questions on which your evidence
is going to be very important. Could we turn to the question of
corporate liability?
Q506 Lord Goodhart: We have dealt
with the cases just now where the company itself was plainly liable
for committing bribery and we have moved on to clause 5 which
deals with the failure of the company to prevent bribery. What
you have said about this in the OECD report of October 2008 at
page 25 was, "The examiners are seriously concerned about
the lack of reform of corporate criminal liability for foreign
bribery and they consider UK law to be deficient with respect
to Articles 2 and 3 of the Convention". What is your view
of clause 5 of the Bill in relation to that concern?
Mr Bonucci: As I indicated in
my introductory statement, this is one of the clauses which I
think is untouched between the Law Commission report and the draft
which has been submitted to your Committee, and the Working Group
per se has not taken a final view because, as you know,
the Working Group expresses itself on pieces of legislation, not
on actual drafts, but the team which visited the UK in January,
to take its language, "was largely of the view that the Law
Commission recommendation relevant to foreign bribery"—and
this would include clause 5—"taken as a package would
address a number of the Working Group concerns". We consider
that this clause 5 would meet the minimum standards that the Working
Group has set. Let me record again what those minimum standards
are. "The offence shall cover the bribery of a foreign public
official committed personally by a senior company officer. The
offence shall cover the bribery by a lower level person at the
direction or with the authorisation of a senior officer, and the
offence shall cover 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 it." On paper clause 5 appears
to address all those points. One of the difficulties again in
assessing a piece of legislation is that a lot will depend on
the implementation of this legislation and on the interpretation
that the courts will make of this legislation, but certainly on
paper and based only on what we have now in place in the UK and
what clause 5 seeks to introduce, it will be a vast improvement
in terms of the liability of legal persons.
Q507 Chairman: Would it be an even
greater improvement if we required gross negligence?
Mr Bonucci: What is important
for us is a system. As you know, the Convention is pretty flexible
on that because we have countries with civil law, countries with
common law; it does not need to be a criminal liability. What
is important for us is to meet the three categories of cases that
I indicated. I do not know if by introducing gross negligence
you would put a threshold which is higher than what the draft
is, and so personally I would stick to the draft as it is.
Q508 Lord Goodhart: Can I ask you
whether clause 5 could be strengthened in this way? At the moment
there are three steps. The prosecution has to prove that there
is bribery; that I think is obvious. Secondly, it has to prove
that the responsible person was negligent and failing to prevent
the bribery, and thirdly, there is a defence for the company to
prove that it had adequate procedures in place. Two and three
seem to really be dealing with very much the same point. Might
it not be an improvement to remove one of them?
Mr Bonucci: You are stretching
my ability to respond. Would you like to receive my personal opinion
or would you like to receive the opinion of the OECD?
Q509 Lord Goodhart: The OECD I think
has not addressed it.
Mr Bonucci: To be very frank with
you, this is a very interesting proposal and the OECD as such
has not addressed it, so I would refrain from—
Q510 Chairman: If you would like
to give a personal opinion please do.
Mr Bonucci: My personal opinion
is that there are countries which have basically insisted on three
more than two. In Italy, for example, the company has to prove
that it has something in place without needing step two.
Mr Loo: But Italy does not require
proof of negligence. It is almost a vicarious liability with a
due diligence defence. I think what is a bit unusual is the three-step
procedure. You already have to prove bribery followed by negligence
and then due diligence. We have seen the version with the last
two steps.
Mr Bonucci: But if the question
was would we think as professionals that the Italian model would
be better, my personal opinion would be yes.
Chairman: Now we must go on, please,
to the Attorney General.
Q511 Lord Lyell of Markyate: The
question which you have got in front of you, and I think it is
helpful just to put it in exactly that form to start with and
then perhaps to probe a little, is to explore whether the draft
Bill goes far enough to reform the role of the Attorney General,
including powers of consent and direction. What is the OECD's
and the UN's view on that?
Mr Bonucci: As you know, this
is one issue which has been tackled at length by the OECD Working
Group on Bribery. In the Phase 2bis report I would like to refer
you to paragraphs 119-128 of the report. I think we are very happy—I
can say that—that the AG consent has been removed in the
draft that we have now. Your question is, does this go far enough?
Q512 Lord Lyell of Markyate: Yes.
The question is whether it goes far enough to satisfy the OECD.
Mr Bonucci: Certainly the fact
that the AG consent is removed in this draft is a major step in
the right direction. There are, however, a couple of points which
have been raised in the Phase 2bis report which are not addressed
in this draft. One is the power of superintendence of the Attorney
General over the Director of SFO. The boundaries of this power
are still a bit unclear, in particular on issues like termination
or suspension of investigations. Those are in paragraphs 109-112
of the Phase 2bis report. The second point which has not been
explicitly addressed in the draft Bill is the role of the Attorney
General in the appointment of the Director of SFO, paragraphs
116-118. Then there is the fact that there would still be, at
least this is what we understand, a consent of the Attorney General
for extraterritorial cases under the Serious Crimes Act of 2007,
which is referred to in paragraph 129. There is also another point,
but I say it only for the sake of completeness. I understand it
is outside your remit so I will not ask you to address it. We
know that there is another Bill, the Constitutional Renewal Bill,
which maintains, and one could possibly say expands, the power
of the Attorney General in relation to a specific field, which
is the national security consideration. So the Attorney General
would have the power to stop or terminate any kind of investigation
if it were to deal with national security. As you know, this would
open wounds in the Working Group on Bribery.
Chairman: We really must move on. We
have got a lot of important questions and we have got the other
panel waiting. I wonder if I could ask Mr George to deal with
Article 5 of the Convention.
Q513 Mr George: We are hopelessly
behind and the only chance we have of treating the following group
with deference and respect is if we ask just the main question
and no supplementaries. I am not usurping the Chairman's role,
but we will go on until Christmas if everybody joins in with every
question. Question seven, Sirs, Madam, you have the question,
would you please answer it. I am not asking any supplementaries
and I hope my colleagues follow suit.
Mr Bonucci: I will try to be as
quick as possible. The views of the Working Group are fully set
out in the Phase 2 report, paragraphs 94-108. Certainly anything
which goes in the direction of giving formal status under domestic
law would be applauded. This is a request which has been made
by the Working Group on Bribery in the code for criminal prosecutors.
As far as introducing this into law itself, you will see that
the Working Group on Bribery does not explicitly request the UK
to do it, however anything which would give formal status under
domestic law would be greatly appreciated, in particular in the
light of an unfortunate case which took place in the UK recently.
The direction is very clear on that.
Chairman: Thank you, Mr George. I do
not know whether you want to pursue question eight or not?
Mr George: No, I withdraw that
question, my Lord Chairman.
Chairman: I do not know whether nine
is important, but I do think that ten is. Lord Mayhew is going
to ask about the security services.
Q514 Lord Mayhew of Twysden: Could
you help us with this, if you please. Is the power to authorise
bribery by the security services compliant with the UK's international
obligations, particularly as it does not apply to the foreign
official offence? Subsequent to that, you might like to deal with—could
the power be extended to apply to the police or other investigators
involved in fighting serious crime and terrorism?
Mr Vlassis: Obviously this is
an area, particularly the security services, which is not specifically
covered in the Convention. I find myself at a loss to respond
as to whether any authorisation for bribery would comply. On its
face I would say not. I do not see why security services ought
to be treated different from any other public service. The only
exception that you might read into the Convention, you would have
to read it by reading several Articles of the Convention together.
Let me give you an example if I may. The Convention against Corruption
defines in Article 2 the concept of "controlled delivery"
which is a concept that you will find in other Conventions more
recently than this: the Convention against Transnational Organised
Crime, which the United Kingdom has also ratified, and before
that the Convention on Drug Trafficking. There are other Articles
about special investigative techniques and so on. One must look
at these issues in context. What I am saying is you might find
yourself in situations in which, in order to pursue effectively
an investigation, the police or other forces would have to use
methods like going undercover or appearing to be complicit in
the commission of certain offences. It would only be in that context
that I would see an exception being made in that regard.
Q515 Chairman: I think that must
be a matter then for our own jurisdiction to decide.
Mr Vlassis: Precisely.
Q516 Chairman: I am afraid that we
must move on to the next panel because there is a great deal to
ask them. May I say, Mr Bonucci, we will look at the passages
in the report to which you have specifically drawn attention and
that will be very helpful for us. In the meantime, may I thank
all of you very much indeed for coming and assisting us. We are
trying to comply with the Convention, as you see, but there are
problems.
Mr Bonucci: Thank you very much.
Thank you for asking us to come.
Mr George: Thank you very much.
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