Examination of Witnesses (Questions 580
- 599)
WEDNESDAY 17 JUNE 2009
RT HON
JACK STRAW,
MR MICHAEL
DES TOMBE
AND MR
RODERICK MACAULEY
Q580 Martin Linton: You mentioned,
as an aside, that you would not go there, but certainly the CBI
did argue the opposite to Professor Wells, that the thresholds
should be lowered from negligence to gross negligence.
Mr Straw: There is always a difficulty
with concepts like gross negligence. If someone is negligent,
are you now accepting that there is an area where people can be
quite negligent, or significantly negligent but it does not carry
a level of culpability?
Q581 Martin Linton: As in "slightly
pregnant"!
Mr Straw: Yes. We have got concepts
like recklessness, which has a rather separate meaning, and certainly
one could say—I do not—that you would have to show
recklessness, but I think the addition of the word "gross"
would tend to confuse as much as anything else.
Chairman: Thank you for that. Let us
go on to question eight, Lady Whittaker, subsidiaries, joint ventures
and organisations which are not wholly owned.
Q582 Baroness Whitaker: Some of our
evidence, Secretary of State, is not clear as to what extent clause
5 applies to foreign subsidiaries, joint ventures, syndicates,
because in the phrase in 5(1)(b) the bribe was "in connection
with" C's business. The OECD thinks it is a weakness in their
Convention that foreign subsidiaries are not completely covered.
We would like to know, first of all, do you intend that foreign
subsidiaries, wholly owned, partly owned, joint ventures and syndicates
should be covered by 5(1)(b) and can you explain how?
Mr Straw: Mr des Tombe will explain.
Mr des Tombe: We recognise that
the OECD has itself identified problems with foreign subsidiaries.
What clause 5 and 6 together do is say that clause 6(4) makes
clear that whether a person or body was performing services on
behalf of another person is to be determined by reference to all
the circumstances. So you have to look at whether, first, A was
performing services for or on behalf of C. You then also have
to look at whether the bribe was in connection with C's business.
So, obviously, the jury and the court will be looking at those
elements and, if it can be established that there was this connection,
then it is fair that C shall be prima facie liable, but
if the foreign subsidiary has no connection with the UK other
than its parent company being located there, then we do not think
it should be caught by the offence. We do not think that the question
of ownership is sufficient justification for taking jurisdiction
over foreign subsidiaries.
Chairman: Does that cover your point,
Lady Whittaker?
Q583 Baroness Whitaker: Do you think
that these distinctions should be spelled out in a code of practice
or guidance, or something like that: because, on the face of it,
the business is not going to know if its foreign holding is caught
or not?
Mr des Tombe: Obviously the court
will have to look at all the circumstances, and if guidance would
make this clearer, then this is something that we might consider.
Baroness Whitaker: Thank you very
much.
Chairman: Let us go on to the major question
of guidance procedures. The Americans have got a system; we have
not. I am still waiting see how it could be incorporated so that
it is admissible in English law. Maybe it should not be. What
views have you got about that? Lord Thomas?
Q584 Lord Thomas of Gresford: The
business interests that we have heard have said that when it comes
to looking at the framework of the Bill, they will have to turn
to their lawyers to get advice as to whether their procedures
will comply, but in particular instances, of course, what is going
to happen is very fact-specific. The business interests may want
to enter into a particular contract; they may need guidance as
to whether they are acting properly. As the Lord Chairman has
said, there is a procedure in the United States, under the Attorney
General, for advising companies on whether proposed action would
be lawful, pursuant to their 1997 Act, with a rebuttable presumption
that acting in accordance with that advice would mean that no
offence will be committed. The Director of Public Prosecutions
and the Director of the Serious Fraud Office were naturally loath
to give that advice from their point of view, to give advice in
advance of what they might do in a particular case they are prosecuting,
for obvious reasons. Do you have in mind some sort of department
within the Ministry of Justice that could offer guidance to companies
or the establishment of an independent commission, as in Hong
Kong, to whom companies can turn to say, "We are about to
enter into this contract, or that contract. Can you advise us
as to whether we are on safe ground?" Do you have any proposals
like that?
Mr Straw: I recognise that the
business community have a point here. I do not have a direct answer,
but I think they raise a serious issue here and, one way or another,
we have got to try and find a solution to this. I am clear that
simply lifting what goes on in the United States and trying to
plonk it down here would not work, because, as you are aware,
my Lord, this arrangement is run in the United States by the Department
of Justice and the Department of Justice combines, roughly speaking,
the functions of the Ministry of Justice here and the functions
of the Attorney General's Office as well, combined in one individual,
and therefore, as it were, the MoJ bit of the Department of Justice
which deals with criminal law can produce guidance to which the
Attorney General has attached his or her endorsement, and since
the Attorney General decides on prosecutions, that feeds its way
through into prosecutorial decisions. We have a separation between
the Ministry of Justice functions and law officers' functions
in this country and there is a much stronger wish to protect the
independence and discretion of prosecutors than there is in the
United States. It is a different system. So I am very far from
clear whether we as a department would publish guidance. There
will be guidance published generally and people will write text
books about this, guide books, and so on, but in terms of authoritative
guidance, particularly giving specific advice to company X which
is to do a deal with country Z, does this or does this not come
within the ambit of the law, I think, would be impossible for
the Ministry of Justice. What I am willing to do (and I say this
in recognition of my briefing session for this and now here) is
to talk to the Attorney as well as to business organisations about
how we try and find a solution here. We have to be quite imaginative
about this, and we have got to take in our traditions, but that
is what I undertake to do.
Q585 Chairman: Will you be able to
produce an answer fairly soon?
Mr Straw: I cannot promise that.
I promise to produce an answer, but because I am also having to
work at some pace and with great assiduity to produce a Bill that
will work on parliamentary standards as well as other minor matters
of running a big department, I cannot promise you are going to
have that before the recess, my Lord Chairman—I would be
deceiving you—but what I do promise is that I will pursue
it.
Q586 Lord Thomas of Gresford: The
most significant difference between our system and the American
is the plea bargaining system.
Mr Straw: Indeed.
Q587 Lord Thomas of Gresford: That
is what makes the difference, but you would consider, would you,
some of sort of independent body to whom business can turn and
say, "Are our procedures good? Are they effective? Do you
approve of them?", and also go to them with the particular
contract in mind and say, "What do you think about this?
Do you think that we can enter into it in those terms?" It
would have to be independent of the Department of Justice, maybe,
and the Ministry of Justice or the Attorney General.
Mr Straw: I am thinking aloud
here, but just as companies have to have their accounts audited,
also sensible companies are having their management systems audited
by reference to international standards and bodies like Investors
in People, and so on, or, for example, insurers insist that if
companies are running a potentially unsafe system of work, one
that is intrinsically unsafe, then they will have to have that
audited by a test organisation. I could certainly envisage a situation
where independent bodies—maybe they would be, say, a subset
of Lloyd's Register or people like this, these testing organisations—would
set themselves up to say that, looking at the totality of practices
in well-run companies in countries which observe high standards
of ethics and have the OECD Convention, this is what you need
to do. I think that would be very sensible, you would give the
encouragement, but, as you say, that would need to be done independently
of government. On whether it is going to be possible within our
system to give a company a ticket which says, "We have taken
account of every conceivable circumstance of the way this deal
would operate and, on the information available, we think that
this is consistent with the law and would not transgress the law",
I think that is something which may be very difficult to achieve.
Q588 Lord Thomas of Gresford: It
is a rebuttable presumption.
Mr Straw: Yes, and that is what
is needed. As I say, what I want to do is to be imaginative about
this and see whether we can get there. I am thinking aloud, but
it would also have the advantage of giving companies really no
excuse but to raise their standards, and I think it would make
quite a difference. As I say, what I promise to do is to go in
to bat with the Attorney and the business organisations and the
NGOs as well, because people like Transparency International,
people who play such an important part in raising standards, need
to know that what we are not seeking to do is to water them down,
and, obviously, I also look forward to any observations your Committee
may have, my Lord Chairman.
Q589 Earl of Onslow: Secretary of
State, there are lots of precedents for this. The Health and Safety
people you can go and get answers from. What would be wrong with
the Department of Trade doing it? After all, Lord Mandelson's
department is so large now he would not notice the extra burden!
Mr Straw: I will ignore that below
the belt comment. I am sure he will be deeply offended, and I
am on his behalf! I do not profess to have great expertise in
the field of health and safety, but it is certainly the case that
there are plenty of bodies external to government which provide
certification about safe procedures at work, and it is the insurers
often who insist on that.
Chairman: Mr Djanogly, you wanted to
explore the question of incorporating Article 5 of the OECD Convention.
Q590 Mr Djanogly: Do you accept that
Article 5 of the OECD Convention should be incorporated into domestic
law, as has been recommended to us by certain parties that have
come before the committee, or perhaps added to the code for Crown
prosecutors.
Mr Straw: I think probably the
latter, Mr Djanogly, rather than the former, but I will take that
up with the Attorney and the DPP.
Chairman: Bribery by the security services.
Lord Onslow.
Q591 Earl of Onslow: The OECD has
criticised this clause. It appears that in some ways it increases
the power of government and in some ways it decreases the power
of government. Should the clause be removed or limited to cases
involving national security and serious crime and, as a matter
of interest, are the powers of authorisation of real significance
to the draft Bill? For instance, how often has MI6 been authorised
to bribe individuals under the Intelligence Act 1994?
Mr Straw: Lord Onslow, I am afraid
I cannot give you the information. It is not because I do not
know, but because it has never been the practice to give such
information, just so we are clear about this. The maximum information
that is given on authorisations of this kind is contained in the
various published reports of the Intelligence Service Commissioners
and the Intercept Commissioners.
Q592 Earl of Onslow: For those of
us who have not read all the reports from cover to cover, could
you tell us roughly? Do you have any idea?
Mr Straw: I do have an idea, because
for four years I was responsible for the Security Service and
then for five years for the Secret Intelligence Service and GCHQ,
but I am afraid what I do not have are the copies of those reports
in front of me. What I will seek to do is to ensure that the Committee
is given what information is available, such as it is. Please
do not hold your breath for a great deal of information. Can I
make a wider point, my Lord Chairman and Lord Onslow, which is
this: the intelligence and security agencies now are the subject
of a very high degree of statutory control, they are statutory
bodies and their work is then subject to detailed invigilation
by the various commissioners who are all retired members of the
senior judiciary, and they have staff as well. So you have got
the Surveillance Commissioner, the Intelligence Service Commissioner
and the Intercept Commissioner looking at various aspects of their
work and, for example, in terms of the Intercept Commissioner,
crawling over warrants and checking whether they were authorised
properly, and so on, and going back to the Secretary of State
if the Commissioner feels that they have not been, and also being
available for advice; but in terms of the coverage of this clause,
the coverage of this clause matches the functions of the Intelligence
and Security Agencies and I think it would be very curious if,
through this Bill, we sought to restrict the activities of the
agencies more narrowly than that which has been provided in the
primary legislation by Parliament.
Q593 Chairman: Secretary of State,
I think that if you can provide us with a bit more information
on this, it would be very valuable, because, plainly, if this
Bill gets onto the floor of either House, this is a topic which
is liable to be discussed on an amendment and the more that we
can publish by way of what is and is not available in terms of
information, I think, the better.
Mr Straw: I will ask the people
who put these reports together to provide this information.
Chairman: Right. Lord Mayhew, the delegation
of powers by the various prosecutors.
Q594 Lord Mayhew of Twysden: It is
about clause 10, Secretary of State, consent to a prosecution.
Why do you consider it necessary to keep a provision for consent
at all?
Mr Straw: The consents are delegated
because under the Prosecution of Offences Act every Area Crown
Prosecutor has delegated authority over prosecutions. I have got
no particularly strong views about this.
Q595 Lord Mayhew of Twysden: I am
just wondering if I can come to the delegated part in a moment.
You are keeping in clause 10 a requirement that there shall be
no prosecution save with the consent of one or other of the directors.
I am wondering why you are keeping that. Might your answer also
tell us how important you consider it, if at all, that the exercise
of that consent, discretion, should be accountable to Parliament?
Mr Straw: One could argue that
since prosecutors have anyway, as it were, got to give consent
to a prosecution because they have got to not only measure the
evidence against the evidential test but also against the public
interest test, they are making a judgment about, effectively,
giving consent. I think the purpose of this is simply to ensure
that the consent levels are slightly higher up the system, and
I think that can be a way of dealing with new sets of offences.
There is some understandable anxiety, for example, by the business
community. I think that having these consent provisions is probably
sensible, and it will not act, I am advised, as a bureaucratic
bar on the CPS or the SFO because where, say, the DPP or the Director
of the SFO has to give consent, these consent powers are, in practice,
delegated to Area Crown Prosecutors. It is not like the AG's consent,
but in serious cases they would, in any event, go up the food
chain and they would make a judgment. I know that from your experience,
Lord Mayhew, you saw the way this operated. It is not something
I have any really strong views about one way or the other, but
I think it is probably sensible.
Q596 Lord Mayhew of Twysden: Thank
you for that. Can I suggest that whatever it is that makes it
desirable that there should be a prior consent also makes it desirable
that it should be accountable to Parliament, the exercise of that
consent, or the refusal of it should be accountable to Parliament,
and you cannot have that unless the Attorney General intends to
give consent, I suggest.
Mr Straw: I agree with that. Plainly,
if you want there to be accountability to Parliament directly
for these prosecutorial decisions, you have got to have the Attorney
General as the person giving the consent. Where this Parliament
is, certainly where the House of Commons is, is trying to move
away from the Attorney General's consent and having decisions
on prosecution dealt with much more by the DPP and by his or her
staff. That is, I think, quite a significant change in the past
25 years, but that is just where it is; but, my Lord Chairman,
if you come to the view that this ought to be the Attorney General's
consent or there should be no need for consent at all, then obviously
we will consider it. One of the reasons why the consent is required,
of course, is to try to eliminate the prospect of private prosecutions,
which could often be pretty vexatious.
Q597 Lord Mayhew of Twysden: We have
been told that there are very few prosecutions and there are likely
to be not many more prosecutions. Is it not, therefore, desirable
to keep this with the Director of Public Prosecutions at least
and not allow him to delegate?
Mr Straw: I am certainly told
in my briefing in practice there is normal delegation of DPP's
consent within the CPS. I guess it would be for the DPP to say
that for these offences the matter would have to come to him or
her.
Q598 Chairman: Section 53 of the
Serious Crime Act still gives a role to the Attorney. In advance
of the Constitutional Reform Bill, and goodness knows when that
is going to come, is this something that ought to be addressed
in this legislation?
Mr Macauley: My Lord Chairman,
you are quite right in referring to section 53 of the Serious
Crime Act. Those provisions are still in place and do require
the consent of the Attorney General for extraterritorial cases
involving assisting and encouraging all crimes. This will be dealt
with in the Constitutional Renewal Bill, should that go forward,
but should that for some reason not go forward, then this matter
will be dealt with in this Bill.
Q599 Earl of Onslow: It should be
dealt with in this Bill anyway, should it not?
Mr Macauley: Yes.
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