Examination of Witnesses (Questions 600
- 618)
WEDNESDAY 17 JUNE 2009
RT HON
JACK STRAW,
MR MICHAEL
DES TOMBE
AND MR
RODERICK MACAULEY
Q600 Earl of Onslow: Because it covers
bribery.
Mr Macauley: That is right. If
it is not dealt with as a horizontal matter, it will be dealt
with in this Bill as a bribery matter.
Chairman: There is a rather general
question in relation to offsets.
Q601 Linda Gilroy: Offsets are a
common feature of large procurement contracts and that is especially
the case in defence. As the Woolf Committee says, "Defence
companies will often employ third party advisers to assist them
in both the development of the offset package as part of the procurement
process and in subsequent delivery of individual projects. This
can expose the company to similar ethical and reputational risks
regarding bribery and corruption ... " Are you confident
that the main offences will be able to draw the dividing line
appropriately? Will specific guidance be needed to create certainty
for companies on the use of offsets?
Mr Straw: I think so. We have
tried to draw it properly. Would you like to say a word about
this, Mr des Tombe?
Mr des Tombe: Yes. The issue will
be whether the offset is improper or not. If it amounts to improper
performance, then it will be caught by the offence. If it does
not amount to improper performance as set out in the Act, then
the offset will not be caught by the offence.
Q602 Linda Gilroy: Are there not
particular special difficulties, as the Woolf Committee points
out? When we took evidence from BAE Systems they said that it
remains one of the key reputational risks that there are. It has
particular features to it and I wonder whether enough thought
has been given to whether the main offences capture this or whether
there will be a very explicit need for guidance on it.
Mr des Tombe: We will take the
concern away and consider it.
Chairman: Mr Borrow on the British Overseas
Territories and Crown Dependencies incorporated companies.
Q603 Mr Borrow: The OECD is recommending
that the jurisdiction of the legislation should be extended to
cover companies incorporated in Overseas Territories and Crown
Dependencies. I would be interested in your reaction to that and
whether that is something that you would consider bringing in
as an amendment to the draft Bill.
Mr Straw: Whilst we are responsible
for the overseas relations of the Crown Dependencies and also
for those of the British Overseas Territories, neither the British
Overseas Territories nor the Crown Dependencies are part of the
United Kingdom. For example, I have a very specific role in respect
of the Crown Dependencies which are the Channel Islands and the
Isle of Man because I, in practice, have to decide whether their
legislation should be recommended for Royal Assent, and I have
certain other functions. We would only legislate in respect of
the Crown Dependencies where their government systems had broken
down. I am perfectly clear that the Crown Dependencies, when and
if we have legislation on the statute book, will go ahead and
implement equivalent legislation. That normally happens and I
will be very strongly encouraging them to do so. There is a similar
but not exactly the same situation with the British Overseas Territories.
Again it is a matter for them, although if governance is breaking
down—and there is a case in point at the moment—we
can seek to impose direct rule. That seems to me to be an inappropriate
way of handling matters.
Q604 Earl of Onslow: Is not Scotland
an even bigger hole? Are the Scots going to introduce a Bill on
this?
Mr Straw: The Scots are always
a bigger problem!
Mr Macauley: My Lord Chairman,
this Bill, as you know, applies to England, Wales and Northern
Ireland. The criminal law is a matter that is devolved to Scotland
under the Scotland Act. We are liaising with the Scottish Executive.
The Scottish Executive is aware of the UK's international obligations
and they have the choice of either legislating themselves or proceeding
by way of a legislative consent motion, so that Westminster can
legislate on its behalf. We have not yet got to the point where
Scotland has to make up its mind on that, but today they are well
aware of the situation north of the border and our understanding
is that they plan to consult on reform there in the near future.
Q605 Chairman: To go back to the
Overseas Territories and the Crown Dependencies, there is a certain
amount of persuasion that could be placed on them to legislate
in accordance with whatever we have done here.
Mr Straw: I used to be responsible
for these as Foreign Secretary, and I am not now. We have just
imposed direct rule in the Turks and Caicos. We are not slow in
coming forward in those respects and we will be putting a lot
more pressure on these Overseas Territories to legislate or to
face takeover. The pressure comes not only from membership of
the OECD but, for example, our agreement in the G20 in early April,
at that G20 meeting in London, to ensure that we move towards
almost universal standards of probity in financial business systems.
Chairman: Does that cover the
point?
Q606 Mr Borrow: I was just going
to emphasise the importance that the banking problems have demonstrated
within some of the overseas territories and the need to ensure
that in this area, as in others, we ensure that those overseas
territories for which we have residual responsibility should be
brought up to the highest standards. The second area I wanted
to raise with you is the concern raised by Professor Horder that
taking within the jurisdiction of this draft Bill companies who
will carry out business in the UK, risks British companies operating
overseas being targeted by their governments in a tit-for-tat
way. Do you have any response as to whether that is a legitimate
concern that Professor Holder is raising with the Committee?
Mr Straw: This is, not least,
because of the universal jurisdiction which the United States
seems to assert. It is a problem, but I think it has to be dealt
with on a case-by-case basis. We are not seeking a situation where
companies are prosecuted in two different jurisdictions in respect
of the same set of facts, because that would obviously be unfair.
We cannot do anything about the way in which the US asserts universal
jurisdiction. We just have to live with it. I am handling a case
at the moment, not in the area of bribery but a different criminal
prosecution, where there is a criminal investigation and potentially
prosecution in respect of the same set of facts, against the same
set of individuals, taking place in both Cyprus and Greece. It
is very unfair on the individuals, but that is how it is and we
are trying to sort it out.
Chairman: I would like to invite Mr George
to raise the question of parliamentary privilege. Is it really
a good idea to include this point in the Bill?
Q607 Mr George: The Chairman has
asked the question. We know that parliamentary privilege is described
as "delicate and complex." Do you agree, as successive
committees have said, that this is best addressed by a Parliamentary
Privileges Bill? Is that an option?
Mr Straw: It may be an option,
Mr George. We do not have a plan for a Parliamentary Privileges
Bill. As you know, this Bill does not make any provision to exempt
Members of Parliament from the provision on criminal offences.
There has already, as it were, been the equivalent of statutory
provision on Parliamentary Privileges which is in the Bill of
Rights. I do not see the point particularly of a Parliamentary
Privileges Bill. This issue of parliamentary privilege has to
be handled in certain circumstances. It is taking up a significant
amount of time in preparing the Bill on the Parliamentary Standards
Authority so as to ensure that the courts do not get dragged into
decisions on the way that Authority works and, indeed, the way
Parliament works. The general view is that that is regarded as
inappropriate. There are many areas of activity by Members of
Parliament which, however, are the subject of action by the courts.
To take a highly contemporary example: the Freedom of Information
Act Parliament decided should apply to Parliament and the reason
the expenses are going to be published tomorrow is as a result
of decisions by a judicial tribunal, a Freedom of Information
Tribunal, and then by the Court of Appeal. That is how it is.
That is a change in the last 30 years, but that is what Parliament
has decided.
Mr George: Should the draft Bill
include a definition of "manager" to make it clear who
is negligent.
Q608 Chairman: Before we go on to
that, the Clerks of both Houses came last week and they gave us
a copy of the FOI case which came up in front of Mr Justice Stanley
Burnton (as he then was). It is very plain that it is an extremely
complex subject. Is it sensible to include a clause in this Bill
about that—a stand alone clause—as opposed to dealing
with it in another way?
Mr Straw: Our current view is
that it is sensible. Obviously, My Lord Chairman, if you have
a different view, I will think about it. These issues are not
black and white: they are matters of judgment. I am open to argument
on it.
Q609 Earl of Onslow: Can you tell
us of a situation where this privilege clause would come into
effect and under what circumstances?
Mr des Tombe: We do not have any
specific examples that we are trying to remedy, but that does
not mean to say that in future a Member of Parliament might not
be—
Q610 Earl of Onslow: With respect,
that is not a very good reason for legislation: "We can't
think of any possible circumstance in which this law should apply,
therefore we will pass it all the same."
Mr des Tombe: No, I did not—
Q611 Earl of Onslow: That is what
you said.
Mr Straw: With respect, no he
did not, Lord Onslow. He did not say he could not think of any
circumstances.
Q612 Earl of Onslow: He did.
Mr Straw: No, he said he did not
have any particular circumstances in mind now. You were gilding
the lily, and so I am going to protect a good official. Go on,
please.
Mr des Tombe: It is quite possible
that there might be circumstances in future where the prosecution
does need to look at what was said or what conduct occurred in
Parliament. The view that has been taken is that it is right that
Members of Parliament should be subject to the same law as other
people are subject to the law. Having said that, we think it is
going to be the very rare circumstance in which we will actually
need to lift parliamentary privilege. On that basis we think the
very narrow lifting is justified, because it is unlikely to happen,
but if it does happen, we think that courts and prosecutors should
be able to look at that information.
Mr Straw: I agree.
Q613 Chairman: Mr Straw, will you
stay long enough just to deal with the last question on our list
which has been allocated to Mr George?
Mr Straw: About the definition
of "manager".
Chairman: Yes.
Q614 Mr George: Should the draft
Bill include a definition of "manager" to make it clear
whose negligence would prevent the adequate procedures defence
being available (and to exclude junior employees)?
Mr Straw: We are going to think
about this. This phrase was lifted from the Fraud Act 2006, so
I am advised. The Corporate Manslaughter and Corporate Homicide
Act has used a different approach. We need to think about it.
Q615 Lord Anderson of Swansea: To
avoid any ambiguity, presumably "secretary" should be
"company secretary" in clause 5(7)?
Mr Straw: Yes.
Mr des Tombe: The intention is
that it is the people at the top of the company whom we are seeking
to catch.
Q616 Lord Anderson of Swansea: Yes.
Hence it should be "company secretary" rather than "secretary".
Mr des Tombe: We will look at
ensuring that intention is brought forward.
Mr Straw: It is not intended to
be the "personal assistant".
Q617 Chairman: I think it would be
a good idea if you looked at that point again.
Mr Straw: We shall.
Q618 Chairman: Mr Straw, this is
the only set of witnesses which has got through all the questions
in the session.
Mr Straw: I am sure that is a
reflection of the expertise of the Committee, not the witnesses.
Chairman: Thank you very much.
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