Examination of Witnesses (Questions 520
- 539)
THURSDAY 11 JUNE 2009
MR JEREMY
CARVER, MR
MARK PYMAN,
MS SARAH
SEXTON AND
MR NICHOLAS
HILDYARD
Q520 Chairman: You do. We are trying
to do something similar, but it may not be the same. Now you come
on to the provisions of our Bill.
Mr Carver: I would say this in
a general nature about the Bill. Since December 1997 when we signed
in Paris the OECD Anti-Bribery Convention there was no doubt as
to how much of a change we had to make to our own legal system
in order to implement it. Even within government, one department,
the Department for International Development, took a careful view
of this and took external advice, the advice of one of the best
criminal law silks at the time, as to whether or not there was
compliance, and the opinion was quite clear that there was no
compliance at all. The Government simply ignored that and promised
the House that we were compliant and we could go ahead and ratify,
even though there were Government departments that knew perfectly
well that was not the case. I am not saying that any particular
minister lied at any time, but the fact is that we shovelled over
the difficulty we had in that our law was non-compliant and successive
ministers have had to say, "Oh no, we have always said we
are compliant". We are not compliant and the OECD, in the
most polite way it can, has successfully told us for over a decade
that we are not compliant. In order to evade this problem we have
submitted to a process of consultation and legislation for the
last 12 years from the first Law Commission investigation and
reform, which involved its own elaborate consultation triggered
by the Nolan Committee, through to the last one. If any piece
of legislation has been consulted on, it is this one. The difficulty,
of course, has been that each body that has triggered a consultation,
whether it is the Government, whether it is the Law Commission
or previous parliamentary committees, has of course continued
to receive the two points of view: one that says we must have
legislation, it should be clear, it should be decisive and it
should stop present malpractices, and the other says that, yes,
we have legislation but basically we want to continue to do what
we have always been doing and we do not want to risk losing British
business. That British business is simply not worth keeping. That
is a realisation that many British companies have now made. I
wish that the institutions British businesses have to represent
them were also of such a clear mind because companies are now
accepting that they must have proper compliance because they work
not in the British marketplace, they work in an international
marketplace and that has expectations which they will not be able
to fulfil if they apply the much lower standards of what it is
that the United Kingdom has become familiar with and what they
would like to continue to achieve by this new piece of legislation.
Chairman: Mr Carver, we would like to
come on to some of the nuts and bolts of the new legislation,
and Mr Borrow would like to ask some questions about those.
Q521 Mr Borrow: I am going to cover
questions 13 and 14, which I think you have got, which are basically
looking at the extent to which the legislation is clear and predictable.
One of the issues that we have explored with a number of witnesses
is whether the actual words in clauses 1-4, things like "improper"
performance, reasonable person's "expectation" of "good
faith", "impartiality" and "trust", are
actually predictable enough in ensuring that people know what
is meant to be captured and, if not, whether some sort of guidance
as an addition to those clauses would be a good or bad thing.
Initially we would be interested in your comments on that particular
area.
Mr Carver: We are satisfied with
the predictability of the language in the Bill. Let me just amplify
that to a small extent. This Bill, because it has been through
12 years of consultation, represents a whole series of compromises,
compromises that have been made sincerely and earnestly by successive
subjects of consultation process. The Law Commission in particular
has tried to balance the contending views that I have described
and have arrived at these series of compromises. To our mind,
this is a perfectly acceptable compromise. What I am particularly
keen to convey to the Committee is the paramount urgency of having
legislation. It is far more important to have legislation that
effectively modernises, brings up-to-date and compliant our law
on bribery than the precise detail of the Bill. The Bill has imperfections,
and I am not in any way suggesting that you as a Committee should
abdicate from your responsibility in making sure that the Bill
in your recommendations back to the Government is as good as you
think it can be made, but where I worry is every single one of
the witnesses who have been before you has appeared in every single
consultation that has taken place in anticipation of this legislation.
Every one of them has put their point of view and every one has
been compromised in the process. Of course, Parliament has its
own responsibilities and duties to produce the right answer but
this language, and most of the language of the Bill, does satisfy
us because it satisfies the OECD and what we believe are our international
responsibilities. Even if it does not, we think it would be an
enormous improvement on what it is at present. If we do not have
this window for legislation I fear that we, the United Kingdom,
will be doing enormous damage to the entire fight against corruption
globally by continuing to be the odd man out.
Q522 Chairman: Mr Carver, I do not
think you need to convince us about the urgency of our timetable,
we are sitting day and night some of the time. Also, I take the
point that we do not want to get involved in massive amendments
in the parliamentary process because that is clearly going to
take a lot of time. For the moment you are saying that the various
formulations that appear in the Bill are worth having, are they?
Mr Carver: Yes. I would prefer
some of them missing, but I am content with the Bill as it is
at present because I believe it is much more important to have
a Bill and the only hope, I think, there can be of having a Bill
is if this Committee can produce a simple, clear recommendation,
with some improvements no doubt, that, "This is what we as
a Committee representing both Houses and all parties feel is the
right process for the Government to go ahead with now".
Q523 Chairman: Does Corner House
want to come in on this?
Mr Hildyard: We would, thank you.
Q524 Chairman: We would like you
to do so.
Mr Hildyard: We will be as quick
as we can, but we would also like to make a few introductory remarks
if possible. As you probably know, The Corner House is a human
rights environment and development group and our concerns on bribery
arise from working with those at the sharp end of its impacts.
Those impacts are very real. Bribery is not a victimless crime,
"it kills". Those are not my words, those were the words
of Hilary Benn when he was Secretary of State for International
Development. It kills because money meant for drugs, say for a
small sick child, gets siphoned off to build a luxury hospital.
It kills because it diverts expenditure towards high kickback
areas: defence rather than less lucrative sectors such as health
or education. It kills because it bumps up the price of projects
which the poor then have to pay for because of cutbacks in social
services to pay off debt.
The blame for corruption is often put almost
exclusively out there with greasy foreign palms, their customs,
the way they do business, "we have to pay the bribes",
but it always takes two to tango and very often it is Western
companies who initiate the dance. I have been told many times
working in the developing world that the first question many Western
companies ask when they come in is, "Who do I pay?"
If you approach contracts and business like that there is a dynamic
and that dynamic is that it does not take long before you squeeze
out officials in public institutions who have integrity, you self-select
for those who will take a bribe. From my experience, the vast
majority of people in developing countries actually have great
integrity—to use a local analogy, just as most MPs are not
on the take and most Lords are not paid to lobby, despite the
reputation that may have been garnered over the last few months.
Every country I have worked in from India to Iraq, from Turkey
to Azerbaijan and Sudan, has very strong anti-corruption movements,
which, often at very great personal expense in terms of potentially
being killed, for example, seek to expose those on the take and
to clean up business. Their message to the UK is very, very clear:
put your own house in order, adopt a zero tolerance to bribery
and give the law real teeth.
If that is to happen allegations of bribery
must be investigated "without fear or favour". Those
were the former Attorney General's words. It is vital that there
is a level playing field for prosecutions both internationally
and domestically. That means the law mandating those investigations
can only be halted if the case lacks merit, not because of diplomatic
or economic reasons. In that respect, one omission that we find
in the draft Bill is a failure to give practical effect to Article
5 of the OECD Convention.
Of course, competitiveness of UK industry matters,
but I repeat that bribery is not a victimless crime and those
victims include those workers here in the UK who lose jobs because
a competitor paid a bribe and got the contract. It is in their
interests too that bribery is outlawed and the law is given real
prosecutorial teeth. Does the present Bill have teeth? Broadly,
we welcome it. We are satisfied with it, but there are some areas
where its teeth could be sharpened and I certainly think the gums
are not strong enough to take much pulling of teeth, so to speak,
much weakening of the Bill. One area we particularly draw attention
to is the failure to give practical effect to Article 5.
Q525 Chairman: Thank you for that
background but we want to come on to exactly these detailed points.
Do you want to say anything more about the tests of the pathways
to criminality in the Bill that Mr Borrow has asked about?
Mr Carver: What might be most
helpful to do, my Lord Chairman, would be to give my brief—and
I mean brief—answers, a few words only, and pick up if anyone
wants to explore them. I have been very discourteous to my colleague
here, Mark Pyman, in not introducing him. Mark Pyman is the Director
of TI UK's defence initiative which has worked tirelessly with
the defence industry. You heard from Lord Robertson earlier and
Mark is the person who stands behind all the work that Lord Robertson
described to you. If there is anything on the defence sector that
he can answer, he is very well able to do so. On the questions,
I have no problem with the language addressed in question 13 [to
explore the clarity and predictability of the terms "improper
performance" and "expectation" of "good faith",
"impartiality" and "trust"]. Clause 14 [to
explore the workability of a test based on "good faith",
including a consideration of whether this would catch conduct
that should not be considered to be bribery]—I would not
do it. Clause 15 [to explore alternatives to the "improper
performance" test]—the alternatives are adequately
explored in the Law Commission paper and I would not revisit them.
Q526 Chairman: These are the questions?
Mr Carver: These are the questions,
yes. Question 16 [to ascertain whether there is an inconsistency
between the mens rea of the active and passive bribery
offences; and whether this is problematic]—I do not find
such an inconsistency. 17 [bribery of foreign public officials
(clause 4): to examine how the "legitimately due" test
would operate in common law countries and whether the draft Bill
should refer instead to the "written" foreign law; to
ascertain whether guidance is needed on what is permitted under
the law in countries around the world; and to explore whether
the use of different legal tests under clauses 1 to 3 and clause
4 will cause uncertainty] is important and it was the subject
of the discussion that took place earlier this morning with the
OECD and UN ODC representatives.
Q527 Chairman: It is very clear that
they want a written general prohibition.
Mr Carver: If I can just say one
extra thing which might help the Earl of Onslow. In 40 years'
law practice I have never come across a law anywhere which sanctioned
the payment of bribes. This needs to be understood because when
Mr Bonucci pointed out that in his experience, looking at this
responsibly on behalf of the OECD, the only suggestion of sanctioned
bribery is what is contained in the section of this draft Bill
to sanction it on behalf of the security services, that is a very
impressive point. I am not aware of any sanctioning of bribes.
Indeed, for instance, to take a country that is a very active
customer for British defence materiale, in the Gulf, in
their constitution they have a plain provision which says that
nobody may take a bribe, it is absolutely clear, but a defence
contract was placed and the usual arrangements were made so that
a company was formed and so on so that commissions could be paid
and, of course, it got trapped in Jersey and that produced an
investigation and ultimately the cover-up, as it were, had to
be that the ruler of the particular state had to pass a special
decree authorising the payment. Companies who operate proper compliance
systems know perfectly well what they are supposed to do. There
are two simple tests in the payment of any advantage, any bribe:
"If I write and tell your prime minister, is this all right?",
if it is the prime minister, "If I write and tell your president
or the chief justice, is that all right?", and if he is the
recipient of the bribe, "Is it all right if I put it in the
newspapers?" That will answer most questions about whether
or not this is appropriate.
Chairman: Mr Carver, we have got
as far as question 17 which a number of my colleagues want to
come in on.
Q528 Baroness Whitaker: Following
what the OECD said to us, I just wonder whether you think we could
leave out the "legitimately due" defence. If not, why
not? If so, should we narrow it? I would be very happy for both
organisations to reply.
Mr Carver: I would prefer it omitted.
Q529 Baroness Whitaker: Omitted,
thank you.
Mr Hildyard: I think it is essential
that it is omitted. It is a real Trojan horse. If you have "legitimately
due" and you have an undemocratic government with a dictator
who wants to allow bribes, the law gets passed in that particular
country. It is opening the way to making bribery more feasible.
Q530 Lord Lyell of Markyate: What
you are saying is extremely helpful, but your last point reminded
me that the Soviet constitution was impeccable as far as human
rights were concerned and almost everything else. You will not
find laws saying they permit bribery. Indeed, in a funny way it
may be a credit that this law suggests that there should be some
openness in a narrow area, but that is a different point. Is not
the problem that if you call it a bribe it will never be sanctioned,
but if you call it a commission or something else it may be sanctioned?
The objective of this Committee and the House, and Britain I hope,
is that we have a level playing field and a fair and open system.
When you were saying, "Is it all right to write to the chief
justice or the president, or the king", I thought the way
you were putting the question was that would be okay if the chief
justice or the king said it was okay, whereas I was thinking it
would not be okay.
Mr Carver: I am happy to clarify
that. Lord Lyell, you and I, as it were, had an experience in
the Soviet Union some years ago. One of the things that I learnt
after that particular happy occasion was that the Soviet system,
which has perpetuated through into the system of old former Soviet
states and, indeed, many other centrally controlled states is
that anything from one-third to two-thirds of the laws are submerged,
they are state secrets. The law that you see says,"No bribes,
no payments, no advantages", it is absolutely rigorous, but
special laws are passed and are hidden, not available for the
public, which say, "This particular apparatchik is entitled
to take this benefit from that situation". This is turning
the law on its head and it is not something that we can possibly
sanction. I dislike a situation in which you could because it
became possible in the early 1990s to get access to these laws
and you would find laws popping up when you least expected them
saying, "This official had power to do that". Is that
written law sanctioning, making it legitimately due? No. This
is why I say that I do not think this is a sensible exception
to write into the law.
Q531 Lord Lyell of Markyate: I understand
that, but Mr Bonucci was saying he wanted something saying that
it should be a written law.
Mr Carver: I think what he was
saying, with respect, Lord Lyell, was that the OECD Working Group
would prefer, like the majority of their members, not to see such
an exception written in. If it is written in it should be on the
basis of a very specific and clear written law, not on the basis
of some legal opinion.
Q532 Chairman: I think what they
said was they wanted a general written law, not applying to your
apparatchik.
Mr Carver: Yes.
Q533 Lord Lyell of Markyate: Do you
agree?
Mr Carver: Yes, I do.
Q534 Earl of Onslow: I want to make
absolutely clear your division of the two choices. I come down
totally and absolutely on the side of the angels in what you said,
but I think it is equally and vitally important that it is very,
very clear to anybody who is doing business exactly what is and
is not permitted, so if they do go through all the hoops that
are required, and I hope that we will in due course ask our Government
to do what the American Government does, which is to produce the
list of guidance, one wants it to be as clear as possible so that
the defence which can be run is a clear and proper defence and
there is the minimum amount of uncertainty at the edge of what
is and is not a commission and what is a bribe, et cetera, because
we all know that people try to merge this to make it look legitimate
when it is not. As I say, I am on the side of the angels but I
want as much clarity as it is possible to get in law.
Mr Carver: Professor Horder, in
his supplemental written submission to you, made a comment about
the dangers of additional detail. The more complexity, as it were,
it opens up more gaps. There is a danger here. I appreciate there
is an enormous amount of guidance. One of the great senses of
vitality, particularly in this country, is a very quick response
to problems. There is an enormous service sector ready to jump
in and come up with answers. The US has also had it. International
bodies have come up with a great deal of guidance. There is no
lack of guidance. What I think you are suggesting is there should
be some officially sanctioned guidance as to what falls which
side. I do not think you can do that. Companies have to be treated
as mature entities that have responsibilities to themselves, their
shareholders, their employees, and to the law. They can certainly
choose from a variety of different guidance that is available,
there is no shortage of them, but ultimately they should be guided
by commonsense and the necessity to eliminate the payment of bribes,
or anything that smells of bribes, from their business practice.
Chairman: To some extent what you have
just said deals in part with question 18. Lord Williamson might
wish to pursue that a little further.
Q535 Lord Williamson of Horton: Do
you think the famous "reasonable belief" defence which
exists in the Law Commission's report could be reinstated? A lot
of people do not see any good reason for that, but we have had
evidence from people who think it would be a good idea. I just
want a straightforward opinion from you: scrap it or keep it?
Mr Carver: Scrap it.
Mr Hildyard: Scrap it.
Lord Williamson of Horton: That
makes two of us. Thank you.
Q536 Chairman: Let us go on to the
question of "negligence" and "gross negligence".
Would the addition of "gross negligence" be a help to
the prosecution?
Mr Carver: It would be a move
in the wrong direction. It would impede prosecutions and it would
be the wrong move to take. I would remove "negligence"
altogether.
Chairman: You say guidance is already
dealt with. I do not know whether Lord Goodhart wants to say anything
more about this.
Q537 Lord Goodhart: There are two
kinds of guidance, one is codes of conduct which are available
to any interested party and the other is clearances for particular
projects on application to some public authority. Do you think
either or both of those are needed?
Mr Carver: You are not going to
stop the proliferation of guidance of an informal sort, private
sector guidance.
Q538 Lord Goodhart: Needed in this
Act.
Mr Carver: The trouble with the
provision of guidance is that it becomes a vehicle, a forum for
the attempted erosion of the impact of the Bill.
Lord Goodhart: I am sorry, when
I first spoke I should have declared my interest as a member of
Transparency International.
Chairman: If any of you have got
interests to declare it would be a good thing if you did, please.
Baroness Whitaker: Perhaps I should
have reaffirmed my membership of the Advisory Council of Transparency
International.
Lord Williamson of Horton: I declared
my interests at the beginning.
Chairman: Not "gross negligence"
you say. Guidance, you have answered that. What about the Attorney
General?
Q539 Mr George: I will forego my
half an hour eulogy on Transparency International in the interests
of getting away at the right time. Question 21, there are two
parts, please answer. You are well-prepared, you can read out
your brief.
Mr Carver: The Bill has eliminated
the need for Attorney General's consent and it should remain as
that. I would hate to see it come through the back door via the
Constitutional Renewal Bill, quite unacceptable.
Lord Lyell of Markyate: Can I
just check that?
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