House of COMMONS









Wednesday 10 June 2009






Evidence heard in Public Questions 368 - 473




This is an uncorrected and unpublished transcript of evidence taken in public and reported to the House



The transcript is not yet an approved formal record of these proceedings. Any public use of, or reference to the contents should make clear that neither Members nor witnesses have had the opportunity to correct the record. If in doubt as to the propriety of using the transcript, please contact the Clerk to the Committee.



Members who receive this for the purpose of correcting questions addressed by them to witnesses are asked to send corrections to the Committee Assistant.



Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.


Transcribed by the Official Shorthand Writers to the Houses of Parliament:

W B Gurney & Sons LLP, Hope House, 45 Great Peter Street, London, SW1P 3LT

Telephone Number: 020 7233 1935

Oral Evidence

Taken before the Joint Committee on the Draft Bribery Bill

on Wednesday 10 June 2009

Members present:

Viscount Colville of Culross, in the Chair


Anderson of Swansea, L.

Goodhart, L.

Lyell of Markyate, L.

Mayhew of Twysden, L.

Onslow, E.

Sheikh, L.

Thomas of Gresford, L.

Whitaker, B.

Williamson of Horton, L.



Mr David S Borrow

Mr Geoffrey Cox

Mr Jonathan Djanogly

Mr Bruce George

Dr Brian Iddon


Witnesses: Mr Keir Starmer, Director of Public Prosecutions, Mr Richard Alderman, Director, Serious Fraud Office, and Detective Chief Superintendent Steve Head, ACPO Portfolio Holder for Overseas Corruption and Bribery, examined.

Q368 Chairman: Good afternoon to you all. Thank you for coming. There has been a great deal of discussion about the prosecution of these cases and you are the perfect people to ask questions about it. We look forward to your answers. Did you have a list of the questions?

Detective Chief Superintendent Head: Yes, thank you.

Q369 Chairman: The first one is the way in which the Law Commission has suggested the drafting of this: improper performance, expectation of good faith, impartiality and trust. Do you see that those are manageable in terms of prosecution presentation?

Mr Starmer: We do think that they are perfectly manageable. They are terms that ought to be clear enough with directions from a judge to juries to be able to approach the cases in a sensible way. Obviously there is an element such as dishonesty, but we do not foresee major problems with the wording.

Mr Alderman: I agree with that. There is a precedent in the recent Fraud Act for instance where there was some debate about whether or not the context of abuse of position was sufficiently clear for the jury. The fact is that juries have not had particular difficulty with it and I think it is the same here. Jurors can be trusted to use their experience and their common sense in assessing the tests here.

Detective Chief Superintendent Head: From a police perspective, we completely concur with that. Experience has shown that juries will not have a problem with it and certainly from our perspective we do not anticipate any difficulty.

Chairman: That is very helpful. Otherwise, it would pull the rug out from under the basis of the whole legislation. I am very glad to hear those answers.

Q370 Lord Lyell of Markyate: Might I just explore the word "improper"? If you look at the Oxford English Dictionary, there are about ten different meanings given, of which only one rather tangentially suggests that it really includes criminality. Is this not likely to lead to some confusion? The Director of Public Prosecutions in his helpful statement touches on this. What is wrong with the word "corruptly"? The Law Commission noted that bribery is generally understood by 95 per cent of the population, with which I agree. During my ten years of experience I do not think we had any great difficulty in obtaining successful prosecutions for fraud or corruption. They are both really often one branch or another. There are two forms of fraud, in my view. There is hand in the till and there are back hands. That pretty well sums it up and the jury understand that sort of thing extremely well. Now we are introducing a Bill and, while I can well understand the reasons for it and I have read all the academic material, including the Law Commission's, what is wrong with the word "corruptly"? After all, we are talking about some of the most serious offences in the statute book.

Mr Starmer: I do not think I would be saying there is anything wrong with the word "corruptly". We do not come to this on the basis that there are problems with the law as it is that cannot be overcome. As to the new approach where you identify the functions, the conditions and then the breach, whilst that introduces a stepped approach, I do not see that it will make it unworkable or more difficult for a jury. I do not come to it on the basis that "corruptly" was not a perfectly good approach in the past but equally I cannot see that, properly directed, a jury would have too much difficulty with the stepped approach that this proposed legislation has set out.

Q371 Lord Lyell of Markyate: You say in your helpful statement that we talk about modernisation but these three statutes have on the whole worked very well. Reading again the Law Commission's statement, there is reference to the fact that some of these words have had to be judicially interpreted and, in one case, the word "dishonesty" was said to be relevant and in another it was said not to be relevant, but would it be possible for the two Directors to let the Committee have a brief note of which cases have caused any trouble over the last 100 years?

Mr Starmer: That is not a problem at all.

Q372 Lord Thomas of Gresford: Under clause one, case one introduces the concept of P intending the advantage to induce a person to perform improperly a function or activity to which section three applies. "Improperly" is central to the concept. If we look at clause three and at sub-clause (6) a function or activity is performed improperly if it is performed in breach of a relevant expectation. The word "improperly" is cut down to being in breach of a relevant expectation and those expectations are set out in sub-clauses (3), (4) and (5), an expectation that someone is going to perform a function in good faith or impartially or is in a position of trust by virtue of performing it. Another approach would be to say that it catches someone who has a duty to act in good faith and to act impartially and not in breach of trust. Does this question of performing something in breach of a relevant expectation mean something rather different than a duty to act in good faith or impartially? Does it introduce some sort of an objective approach to what is expected of a person rather than what is proved to be his duty? Does that cause any problems?

Mr Starmer: I had understood this to be intended to introduce an objective test when read with sub-clause (8). Therefore, the expectation is to be judged as set out in sub-clause (8), "... what a reasonable person would expect." Our approach to clause three is on the basis that that means the expectation is not tied to the locality in which the function is carried out. It is not an expectation in country X, Y or Z. It is an expectation that is objective and not tied to local conditions. On that reading, I think it is an important part of clause three.

Q373 Lord Thomas of Gresford: If there is no duty to act fairly or impartially in country X but a jury thinks that it would be reasonable to expect a person in the position of the person in country X to act impartially and in good faith, whoever is concerned in paying the advantage is guilty. Is that how you see it?

Mr Starmer: I think that is right. The intention, as I understand it, was to ensure that somebody could not argue in their defence that in country X you would not expect anything other than the behaviour that resulted and therefore there was no wrongdoing. That is an attempt to introduce that degree of objectivity, but I accept it would have that result.

Q374 Lord Thomas of Gresford: It widens the offence as opposed to the prosecution having to prove a duty in the particular country for a person to act in that way. Does that make prosecution easier for people who are paying foreign officials or something like that?

Detective Chief Superintendent Head: In terms of the investigation, we have liaised with the Director and that is our interpretation of what we believe the Act is trying to say, as has just been laid out. We believe that there will be no difficulty for us in taking that interpretation. It may be that you are exactly right and it will make it, for us, slightly easier in terms of where people have previously said, "This is how business is done in X, Y or Z." We frequently hear that phrase in the course of our investigations. I think this is an attempt to deal with that issue and for ourselves we do not see any difficulty with the wording as it is.

Q375 Lord Thomas of Gresford: In other words, you are asking people to be answerable by British standards for their conduct in the paying of advantages?

Detective Chief Superintendent Head: That is correct.

Q376 Mr Djanogly: The Law Commission seems to have a slightly different bent on this. For instance, as regards hospitality the Commission states that to the extent that one country traditionally entertains more lavishly than is customary in other countries, this would be evidence tending to show that it did not mean that the executives departed from the standard of good faith or impartiality that would be observed by a person of moral integrity.

Detective Chief Superintendent Head: I think that is right. From our own perspective, this is an issue of context around each individual case. If you have legislation, that will support us in putting something into context. The question is reasonableness. It is there and it is clear. That might be an issue for the Directors in terms of how a jury might interpret that but it is for us to take it before a jury and ask them that question.

Mr Alderman: I am not sure juries would have particular difficulties with that. In connection with hospitality, I think there is a quite clear distinction that I am sure juries will be able to make between inexpensive, modest hospitality offered to many and lavish hospitality that might be offered to a very small number of people in the hope of getting a contract.

Mr Starmer: I am slightly uncomfortable with it being an English or British test as such. I think probably I would approach it on the basis that it is a test which is not tied to the local conditions where the function is exercised. It is objective in the sense that it is outside those local conditions. That allows some regard to be had to the sorts of approaches there are around the world. It does not make it English as such but it draws the right line between that approach and an approach which simply says, "If you are in country X, the 'reasonable expectation' would be no more than this sort of conduct in any event."

Q377 Lord Thomas of Gresford: You say you are not applying English standards but of course you are taking it before a British jury and asking them to apply their standards, are you not? You cannot ask them to apply the standards in another country. In addressing the jury, you would say, "You can take into account the fact that in the foreign country this does not raise an eyebrow".

Mr Starmer: You would address the jury on the basis that it is an objective test of what a reasonable person would expect. There might be some factors which would be relevant to that evaluation, but it is not intended because it is objective to be a test which is simply grounded in the particular country where the function was performed. It is difficult but I think it is an important aspect of clause three from our perspective.

Q378 Lord Sheikh: I have a slight difficulty. I was brought up in an overseas country where it was the norm for you to entertain your prospective customers because hospitality and inviting people is the done thing. I am a chairman of a public company. I always say to my staff, "Do not buy in business. Go and present yourself." I have a difficulty with this because conditions are different and hospitality procedures are different. Juries may not quite appreciate how things are done in Africa, Asia or China or wherever it is. That could perhaps present a problem, as I see it. Have you any comments on this?

Mr Starmer: I think it depends which clause an investigation or prosecution was brought under. So far as clauses one and two are concerned, they are conditioned obviously by clause three so the prosecution would still be having to show that there was the expectation of good faith, impartiality and trust, so it is limited to those three things, and that the conduct was in breach of that expectation. It is quite tight in that respect. So far as clause four is concerned, bribery of foreign, public officials, there is the requirement to show that whatever advantage there was was not legitimately due under the law of the country in question. If one bears in mind the two sets of constraints, I think it is perfectly workable.

Mr Alderman: We are concerned to make sure that the argument that this is the way it is done in such and such a country is not one that we ought to permit. The focus of this is on eradicating bribery. It relates to big payments and small payments and the focus is on how we can make sure that corporates and individuals within the jurisdiction of our courts live up to the expectations that society and others have of them in order to eradicate bribery. That is why I think it is right that we have some objective tests here about what is acceptable.

Q379 Lord Anderson of Swansea: I think it was Voltaire who said that morality changes with every degree of longitude. You cannot have surely a totally objective test of what the average Englishman or Welshman would say because we need a contextual analysis of the position in any other country. How do you set about forming that contextual analysis? Would you have experts saying, "Yes, this is the norm" or the prosecution calling their own experts to say that it is not the norm? Once you accept that there is scope for cultural differences, you surely get into a very difficult context?

Mr Alderman: I would certainly anticipate that defendants will call evidence about local conditions. There will also be a need to have expert evidence on local laws. It may be that the defence will call local lawyers about that issue and the prosecution also call lawyers on that in order to be able to understand what the system is in the other country. It is up to the jury to form their own view on that.

Detective Chief Superintendent Head: In the course of an investigation, I would anticipate that persons who are spoken to in relation to this would come forward with their defence of the fact that it is reasonable in X or in Y. In terms of the investigation, a large number of those questions will be asked as part of whether we go forward from here and how we go forward from here. Local context will be put into each investigation.

Q380 Lord Anderson of Swansea: By the prosecuting authority?

Detective Chief Superintendent Head: By ourselves, the investigating authority, yes, and by the prosecuting authority. I would anticipate that along the way the defendant or the person under investigation would have the opportunity to put exactly those arguments. I do not doubt that there will be some early difficulties in the sense of the interpretation of this, but I do not personally believe that this would be something that is not going to be workable in terms of taking this before people and asking them to say, with all of the information in front of you, is this reasonable.

Q381 Lord Anderson of Swansea: That does give an enormous discretion to the prosecuting authority, does it not?

Mr Starmer: I am not sure. Under clause three the defence would be trying to show there was no reasonable expectation or a reasonable person would not expect good faith, impartiality and a person would not reasonably expect ----

Q382 Lord Anderson of Swansea: A person being the English juror.

Mr Starmer: It is still quite difficult. If this is conduct in an environment where someone is seriously arguing, "I passed this advantage in circumstances where nobody would reasonably expect good faith" or, "Nobody would reasonably expect the official to act impartially", that is a tricky defence to set up under clause three and that is the intention behind clause three. If you pass from that clause to clause four, there is the question whether it is legitimately due under the law. If the law in the particular country provides for an advantage to be passed in certain circumstances, the offence simply is not made out.

Q383 Lord Anderson of Swansea: If the practice in a country is such, are you saying that there is no relevance for the context?

Mr Starmer: My understanding is that the drafters were intending to knock out a defence which is essentially that there is no expectation of good faith in this country and therefore you cannot do anything about it. If that is harsh on those in the locality, I think it is intended to be so.

Q384 Lord Lyell of Markyate: How many cases over the last five years have the CPS and the SFO prosecuted for bribery or corruption?

Mr Starmer: Can I give a cautious answer to that? We have tried to retrieve this information. We have come up for the CPS with about five to seven cases. This comes with a health warning because we do not input the information on our system with a view to putting it out for committees such as this. We input it for the purposes of charging. A number of cases of bribery would be charged under different heads - misconduct in public office etc., - so pulling it back out to give an accurate picture is fraught with difficulties. The best I can do is to say it is definitely more than five or seven. It is a small-ish number of that order and these are only cases that are charged. I am not able to give you the number of cases where we have considered something for prosecution and not proceeded, I am afraid, but you get a sense of the sort of numbers, I hope.

Mr Alderman: In terms of the Serious Fraud Office, we have had one prosecution for overseas corruption that led to a conviction last year, an English lawyer who tried to bribe the American authorities to unblock some accounts. He was sentenced to six months in prison. That is the only conviction that the SFO has obtained during the course of the last few years. We have 17 ongoing investigations at the moment and we are expecting to make some more announcements during the course of this year about progress in ongoing cases.

Q385 Lord Lyell of Markyate: Mostly my recollection from 1987 to 1997 is that most of the cases were big, in so far as they were brought. You were mentioning big and small. There may have been one or two small. I imagine you could get some sustained acceptance in giving of bribes for small favours which might lead to a prosecution, but it is pretty rare. Mostly, this is a big, serious offence. I remember approving a planning one where some thousands of pounds had changed hands to get planning permission. That is the kind of thing we are faced with in this country, amongst others. The Law Commission talks about a drink may be okay but a round of golf may not. I thought that was a bit unrealistic.

Mr Alderman: When we look at the amounts involved in dealing with cases and considering whether to take them on, whether to prosecute, we look not just at the amount of the bribe but the amount of the benefit that has been paid by the alleged bribe, which could be the value of the contract. In terms of the asset forfeiture legislation, which we would want to be able to apply following a conviction, we would be interested in the value of the contract. That could be very much more than the amount of the bribe, so I entirely agree. We are looking potentially at very large sums.

Q386 Lord Lyell of Markyate: You would be unlikely to be going for it on the basis of a drink or a round of golf. Usually, the bribes are at least what ordinary people would think of as pretty substantial.

Mr Alderman: Yes.

Q387 Baroness Whitaker: To revert to the relativity of conduct in different countries, although there are of course huge differences in how people go about things, surely almost all jurisdictions have laws against bribery, so even if you think the law does not matter very much or is not going to catch you or people only pay lip service to it most people know that bribery is wrong. That is what a jury should surely bear in mind?

Mr Starmer: I think that is undoubtedly right. The countries do have those laws and there is an international law that has developed as to what acceptable behaviour is. That is why I do not see any difficulty in operating these clauses from a prosecution point of view.

Mr Alderman: We would certainly want to encourage those countries that have not signed up to the international laws to do so.

Q388 Lord Williamson of Horton: Can I ask whether our witnesses would see practical difficulties about the operation of the brand new clause about the bribery of foreign officials? To take an example, the American legislation refers also to party political persons. In some countries there may be no foreign officials but there may be party political officers who nonetheless carry out such business. I just wondered whether you foresee any practical difficulty about operating it.

Mr Alderman: There are indeed practical difficulties in trying to apply clause four. They do not relate to the clause itself, but they relate to the reality of investigations. First of all, investigators and prosecutors have to prove the trail of money. The money may not simply pass from one person to another. It will pass through a succession possibly of different bank accounts and different jurisdictions and different legal entities. We would hope through mutual legal assistance to be able to obtain assistance from those other jurisdictions but that cannot always be guaranteed. Those involved in this area may be seeking to choose locations that do not assist us. Another area is, the more the ultimate beneficiary is involved at the higher levels in the receiving state, the more difficult it could become in practice for us to obtain mutual legal assistance from the particular country, because we would need to show various elements and we would need the assistance of that country in order to be able to show it. These are issues not relating to the clause itself, but how we go about the investigation. I think it is important that a realistic view is taken of this. The clause will help us in all sorts of ways but the task for investigators in being able to establish what happened and bring people to justice is still very difficult.

Q389 Lord Sheikh: We have referred to prosecutions regarding anything committed overseas. Are there any lessons we can learn where the prosecutions were not successful? Is there something we can learn from what has happened in the past?

Mr Alderman: There are lots of lessons that we can learn and I think there is a lot that we can learn from what has happened in the United States as well. There is quite a contrast between the provisions in our law relating to corruption and the provisions in the United States law and also the tools available to investigators and prosecutors. That is where the Bill makes quite a significant step forward, particularly in relation to the clause dealing with corporate negligence. In the United States - I am not sure it is fully appreciated here - the law of corporate criminal liability is indeed very different. A member of a corporate in the United States, even at a comparatively low level, can bind the corporate and make the corporate criminally liable if they act in such a way that they believe will benefit the corporate. Our test is very different because it involves us trying to find the controlling mind of the corporate, a big global corporation, showing that the necessary mens rea was at that level. That is why I think particularly clause five strikes a very good balance here and certainly enables us to learn from the American experience but to translate it into something which we think will be workable here.

Q390 Lord Anderson of Swansea: There is the difficulty of a member of a jury putting himself or herself in the shoes of someone in a different context. I think you conceded that possibly, if there was to be an other than objective test, evidence would have to be called for the prosecution and the defence as to what are the local conditions.

Mr Alderman: Even on the objective test evidence will still need to be called about local conditions and local law.

Q391 Lord Anderson of Swansea: It sounds very complex. There would have to be a register of so-called experts in the context and they would differ, one from the prosecution, one from the defence. How is the ordinary juror to find their way between competing interpretations of local practice?

Mr Starmer: This is where the emerging international law is important. There is an international law of accepted behaviour no and the jury would be entitled to look at that.

Q392 Chairman: I wanted to ask about the mens rea in relation to the payer and the recipient because they are not the same. I wonder whether you have any comment to make about that.

Mr Starmer: They are obviously not the same. Clause one is reasonably straightforward and the mens rea is spelt out. Clause two has a different situation depending on whether you are in cases three through to six. Sub-clause (7) in respect of cases four to six states that it does not matter whether R knows or believes that the performance of the function or activity is improper. As I understand it, the thinking behind this is that, if you are the payer of the bribe, you have to have a more specific mens rea. If you are the recipient, you are expected to know what the rules about receiving financial and other advantages are. Thus the mens rea is that much narrower and you only have to have mens rea as to the act itself.

Q393 Chairman: Can you see difficulties in prosecuting a recipient?

Mr Starmer: No. Clause two makes it rather easier to prosecute than it might otherwise be.

Q394 Lord Mayhew of Twysden: Mr Starmer, in your very helpful note you say of clause four, bribery of foreign, public officials, that the requirement that the prosecution must prove that a payment to a foreign, public official is not legitimately due places a heavy evidential burden on the prosecutor. He will in effect have to lead evidence that the advantage is not legitimately due or be able to rebut the defendant's assertion that it is. We have touched on this already, but I wonder whether you can tell us whether you are unhappy with the way that clause four is drafted, the introduction of a discrete offence of bribery of foreign, public officials, or whether you think that it may contribute to what you say in paragraph 14 of your note: "I believe that it is unlikely that there will be a significant increase in the number of cases prosecuted by the CPS." What would you say about requiring that evidence should be written evidence if it is to be relied upon as being legitimately due because the law applicable permits or requires acceptance?

Mr Starmer: Clause four does cause one or two difficulties, one of which as you have identified is that the prosecution would have to show that the financial or other advantage is legitimately due. In order to do that, the definition following on, you would have to show that it was not legitimate under the law of the country or territory in question. That would require some evidence of what the law was to be led. In some jurisdictions that might be quite easy. In other jurisdictions it might be more difficult. What would be helpful would be for this clause to spell out in more express terms what constitutes law for the purpose of this clause and what does not, bearing in mind in particular the different jurisdictions and the difference between the codified jurisdictions and the common law jurisdictions. I do have an anxiety about that and I think some further attention to that would be a good thing. Certainly that would then have to be proven. That is the first difficulty. The second issue in relation to clause four is the reasonable belief defence which was there on the Law Commission version and is not there now. There are, as I understand it, two ways of dealing with this. You either have a reasonable belief defence on the face of the statute in clause four or somewhere else, or you leave it to the discretion of the prosecutor to look at all the circumstances that have been investigated and take a view on whether there ought to be a prosecution in the public interest or not. Either of those is workable. I have some anxieties about whether it is better that that is done by the prosecutor exercising a discretion or not, because I think these days a prosecutor, if exercising a discretion not to prosecute, ought to say in clear terms why not and spell it out.

Q395 Chairman: You would like an amendment, would you?

Mr Starmer: An amendment to clarify the law and what constitutes and counts for law would be helpful if this clause remains in this form, yes.

Q396 Chairman: That might not be too difficult to draft.

Mr Starmer: No, I would not have thought so.

Q397 Lord Lyell of Markyate: I quite agree that this is a very difficult area. If one takes the highest profile cases of recent times, the British Aerospace one and the one that relates to the King and Prince Bandar, if I have the name right, this would have focused pretty much on the question of what was legitimately due, as I understand it. Of course in this country and in common law countries if something is not prohibited then it is permitted. In an entirely different jurisdiction, such as Saudi Arabia, it was the view of Lord Goldsmith when Attorney General - I think he expressed this in the House - that he was far from satisfied that it would be established that there had been in fact a payment that was - he did not use the words "legitimately due", but that is what in substance he would have been referring to in the context of this drafting. It seems to me that, in relation to some foreign jurisdictions and the way that they conduct their affairs, there will be very genuine questions of fact as to when particular methods of doing business are legitimate and when they are corrupt.

Mr Starmer: I think that may be the case although the number of countries that do have a law is every increasing, so it will be a diminishing problem. There are problems in the way the law is articulated, whether it is a permissible or a more codified approach. I think I ought to pass this to Mr Alderman who has in particular the experience of Saudi Arabia.

Mr Alderman: There are a number of issues there. Lord Goldsmith expressed certain views about whether or not there was a defence available on the basis of alleged consent. That was his particular view. My understanding is that that is not an argument that is accepted by the OECD and others. They do not regard as consent as being a defence. I do take the point there may be certain jurisdictions where there could be issues about what the law is in relation to particular structures. In that type of case, it is also relevant to look not just at clause four but also at clause five and at what could be expected on the part of the corporate, because we have been talking about corporates here, in carrying out their due diligence and what is expected from that.

Q398 Lord Lyell of Markyate: I am sure that is right. It makes it highly relevant as to the American practices. I think you would be rather surprised if you were asked to give clearance in advance, whereas the Justice Department in America seems to do that. We are dealing with very different climates.

Mr Alderman: We are. I talk to a lot of corporates. I talk to their professional advisers about all sorts of issues, particularly about corruption but about other issues as well. They have been talking to me about a system of advance appearances, rather like the Department of Justice offers. We are thinking about that but only in connection with a certain limited type of case. What we are not prepared to do - it would be quite inappropriate for investigators and prosecutors - would be for a company to come to us and say they are about to do business in such and such a country with such and such people. Is that all right by the SFO? Clearly, it would not be appropriate for us to get into that. There may be other circumstances in which we might be able to offer them some assistance along the lines that the Department of Justice has.

Q399 Lord Lyell of Markyate: That is very interesting but my mind instantly goes to the DPP's problems with people who seek to commit suicidal fraud.

Mr Starmer: We are awaiting the House of Lords judgment in that.

Q400 Dr Iddon: The Law Commission have recommended a defence of reasonable belief. The government have dropped that defence from the present Bill. A number of witnesses believe that that defence is important to protect businesses who might receive poor legal advice, so there is a bit of conflict over the defence of reasonable belief. We would welcome your views. Perhaps you can tell us whether prosecutorial discretion can be relied upon in place of a defence?

Mr Starmer: There are, as I said earlier, two ways of approaching this. You can have the express defence of reasonable belief put in which would allow a defendant to say, "I exercised due diligence. I tried to get all the advice I could. It just turns out that the advice was wrong and therefore under the law the payment or advantage that I advanced was not legitimately due." That is one model. That is not the model now of clause four. The consequence is either that unfortunately therefore those individuals must be prosecuted or it is passed over to the prosecutor to take that into account in deciding whether or not it is in the public interest to prosecute. Certainly the code for Crown prosecutors in the current edition allows genuine mistake or misunderstanding to be taken into account as a relevant factor in exercising the discretion whether to prosecute. Therefore, it is a workable model. Therefore, there is a choice between the two models. I am not as comfortable with the second model as the first because I do not think that matters which might otherwise be a defence are the sorts of factors that ought to be taken into account when exercising the public interest. There are two models. If it is workable as drafted, it would be workable with an express defence clause in it, but if it is a factor that is relevant to the public interest and a prosecution is not to proceed for that reason I think it would be incumbent on me as DPP to explain that that was the reason why a prosecution was not proceeding in a particular case.

Q401 Dr Iddon: To a non-lawyer like me, it sounds as if you are lying in the middle of the two arguments and not coming down on one side or the other. We are looking for your recommendation and we are not getting it, are we?

Mr Starmer: Both models are workable. In the interests of transparency and accountability, my preference is that there ought to be a defence on the face of the statute. We could work with it as it is using the discretion.

Q402 Chairman: If the clause was struck out, it runs into the opposition of the OECD, does it not?

Mr Starmer: It does. That is why it has been constructed in this way. I am not going so far as to say this is unworkable by any stretch of the imagination.

Q403 Lord Thomas of Gresford: Would Mr Starmer agree with me that, where you create a defence, it is for the company or the individual to produce the documentation and so on from his records and it is very difficult for the prosecutor to come to a conclusion as to whether there is a basis of mistake and so on without access to those documents. Therefore, it is preferable to have a defence to put an onus on the defence to at least raise on documentation, records and evidence and so on why they say they have a reasonable belief.

Mr Starmer: I would agree with that.

Q404 Lord Goodhart: Professor Celia Wells, who was one of the witnesses, suggested to us that corporate liability under clause five should be vicarious liability with a defence of adequate procedures but no need to identify a responsible person who is at fault. Could I ask for the views of the witnesses on that?

Mr Alderman: My preference is that the offence is one committed by the company itself because clause five is a very significant change. I think it is a very important one because it will make sure that corporates take every care in ensuring that they have processes in place to make sure that bribery does not take place. That is something that should be fixed at board levels. The boards of the corporates must be allied to their responsibilities there and ready to carry them out. I would prefer to see the company itself liable directly rather than vicariously for particular actions. It is possible the vicarious principle is one that could be adopted. To some extent, there are parallels for that in other areas but my preference would be with the clause as it is at the moment because I think it is a very helpful clause and moves us forward very considerably.

Q405 Lord Goodhart: Is there not a problem here, which is that failure to act by a corporation is very difficult often to tie to a particular identified individual in that business, particularly if it is a matter of inertia rather than positive inaction, if one can call it that? Does that not mean that the need to find a responsible person who is guilty of negligence makes it extremely difficult to convict the corporation itself, as clause five now stands?

Mr Alderman: I would have thought the individual in the corporation whose responsibility it was to stop the person who paid the bribe from doing that, or in the absence of a person of that nature, we working looking higher up the corporate where necessary at the board. I think that is exactly as it should be, because if there is not somebody in the middle part of the company who is responsible for ensuring that bribes do not take place, that is very much a board level responsibility at the highest levels. Society is entitled to expect of the corporates these days that they have adequate anti-bribery processes and that those processes are carried out throughout the corporation. If there is a significant failure, then it is a board level failure.

Q406 Lord Goodhart: If the company has built up proper procedures, they will be eligible to put forward the defence. In that case, why is it necessary also to go looking for the individual? Is that not going to make it a lot more difficult to get convictions where a company has failed to prevent bribery?

Mr Alderman: I have talked to corporates about this. When we talk to them about their procedures, it is not just a particular account that they might give us of all the processes they have in the corporate. It is what actually happens in practice. Are there processes about protecting the corporate from bribery being carried out? In the type of case we are just discussing, those processes are not being carried out. We would be looking to see whether or not there are failures to carry out the processes anywhere.

Q407 Lord Goodhart: Could I ask the other witnesses for their views on this point?

Detective Chief Superintendent Head: From a police perspective, this is helpful legislation in terms of identifying a corporate responsibility. We would see no problem with the current legislation in seeking evidence. We would aim it in exactly the same way that the Director has spoken about. A lot of companies set up a middle layer which is responsible for their due diligence in these matters.

Earl of Onslow: We have had a lot of discussion about facilitation fees and in the last question we were talking about how you identify what is and is not bribery, from doing business in Nigeria, which we know is practically impossible to do honestly at all as far as one can gather, to very big commissions paid to the cousins of defence ministers of certain Arab states that we would regard as bent beyond measure. It seems to me that it would be very helpful to have what the Americans have which is a proper guidance system, a checklist which can be government approved. It reinforces what you were saying about how important it is that the board is responsible. That could be part of the government checklist as to what they should do. Would it not be an extremely good idea if the government were to issue obviously in consultation with you, the industry and so on a proper checklist which should be gone through, which could be used both by the prosecutorial authorities if they had not done it and by the defence, so that it can be shown that they have gone through these hoops? The Americans have it and the arms people are saying this is a good idea. Do you not think that it would be a good idea from our point of view to have it? Can I not convert you to that view?

Q408 Chairman: Just before you answer that, if we are going to go on to guidance in general - and I believe we definitely ought to because we have had a great deal of evidence about this - I would like to make sure that we concentrate our minds on that. The American system is very different from what happens in this country and I wonder if you can give us any advice about how it might work here if it was introduced and how we get it into the draft Bill. We will come back to the question of joint ventures in a moment but could you deal with this question of guidance, because it has been a subject that a number of our witnesses have raised.

Detective Chief Superintendent Head: Can I give an indication of an initiative going on at the moment which might be able to assist here? I know the Directors would be the people better suited to give advice on guidance. In partnership with the United States and the Canadians at the moment, we are looking at having an intelligence picture around the world. We have heard some comments about countries and generally they are extremely accurate, but we do not have a repository of information about what is really going on in those countries. What advice should we be giving to people in terms of where they are going and the business that they can expect to do in those countries? Nothing like that exists in the world in terms of policing at the moment. Working with our allies around the world and also in terms of not just policing but the other agencies, with industry itself and the third party sector, we are trying to build a picture of what exists around the world in terms of corruption. If you are going to a port in country X, this is the situation. This is what you can expect to find. In that way, we will be able to work with the government in two ways. We will be able to give advice. We will be able to work with the SFO and the Director in terms of being able to give some accurate advice as to what you can expect and what you should be doing. We will also be working with the government who are also involved in this project about putting pressure on some of those countries, because we will have some actual evidence as to what is going on and what the expectations are. Then we can address the question: is it what they think is reasonable in that country, because this is what is happening, and confront those countries with that evidence and hear what they have to say. That is in a fledgling situation at the moment but I think that will be a giant step forward in terms of giving advice on a whole series of levels as to what we are talking about here today.

Q409 Chairman: Nothing like that appears at the moment in the draft Bill. There is no way in which it can be brought into account in a trial because the draft Bill does not make any provision for it.

Detective Chief Superintendent Head: It does not but, in terms of reasonableness and what we have been talking about previously in terms of how people behave, that will be able to give us some indication on two fronts. In terms of the reasonableness test, which we ascertained was a difficulty because it is subjective, it needs to be put in context. I think that is important. Also, in terms of any advice that we give, it is important to separate out what the Americans do from what we do. Things are very different over there than they are here in terms of the legislation. Even the Americans recognise that this is a big step forward, taking this to new levels of identifying what we can realistically do in terms of world corruption.

Q410 Earl of Onslow: We have been told though that the Americans have a detailed set of instructions. I would hope that we could write to the Americans to say, "Please can we have a look at what you are doing." I have no difficulty at all in copying somebody else who is doing something very well. If they are doing it very well, I would hope that we could fit it into our legislation. If those rules are known and published in legislation, they themselves apply pressure to clean up in a way that would add pressure as you were saying just now.

Detective Chief Superintendent Head: I wholeheartedly agree with that. I think it is important to learn the lessons of others. I have no problem with taking others' ideas.

Q411 Earl of Onslow: Do you know a lot about the American system?

Detective Chief Superintendent Head: Myself and the SFO have obviously been across to America and I would imagine, Richard, that probably you are in the best position to answer questions on the specific advice they give.

Q412 Earl of Onslow: It is only because we were told that it was such a good idea. What do you know about it?

Mr Alderman: I certainly would not pretend to be an expert in all aspects of the US system. I suspect the Committee might want to get help from the US Department of Justice and I would be nervous about trying to give you any assistance here. I think you really need to hear from a proper representative of the US Government on that.

Q413 Chairman: We are going to get a memorandum from the Department of Justice in America. My problem is how do we translate this in the way that they do in America into something which acts as a sort of defence, because there is no provision whatever in this draft legislation for anything of the kind.

Mr Starmer: It seems to me that there is no inhibition in the draft legislation to the issuing of general guidance and that must be a helpful thing to do. It is done in relation to a number of difficult areas in the law by all the prosecuting authorities. Whilst there is a reluctance to indicate whether a particular course of conduct or action is going to be prosecuted or not, that is on the one hand; on the other hand, legal guidance and the approaches to be taken is commonplace, is sensible, and I cannot see any good reason why it should not be introduced even when this legislation is passed. I do not think you need anything on the face of the legislation to require that to be done.

Earl of Onslow: Why can we not put into the legislation a clause which says, "The Minister will produce guidance"? In other words, it will be on the face of the law that the Minister will produce the appropriate guidance which can be used as a pillar upon which people can lean or they can prosecute for omitting to lean upon said pillar.

Chairman: There are plenty examples of codes of practice for instance.

Q414 Lord Lyell of Markyate: Can I suggest a note of caution? It is not in our tradition for the prosecuting authorities to give much guidance, if any. It is quite a dangerous path. We do not know as yet - and it will be very interesting to learn - what the Americans do. It will be very helpful of the Department of Justice to let us know. Our objective - I am sure it is the common objective of this Committee and of both Houses - is to get a pure, effective Bill that stamps down on corruption but does not lead to unintended consequences. This is a highly competitive world. Lord Onslow was saying, quite rightly because we have heard it in a sense, that defence industries rather like the American system. That may or may not be something which is better. They may prefer to have a system like that but it has never been our system and I think we need to be very cautious. You have all been quite right in looking at this draft for its practicalities, for effective prosecution according to English law. I think we should try to concentrate on that as our principal task. Is there any comment?

Mr Alderman: Could I add to that cautionary note? It is helpful to be realistic about what any guidance could give, because we are talking about an incredibly complicated area. We are talking about corporates, some of which aspire to a gold standard in respect of corruption. Others are not quite there on that journey. We are talking about very large corporates, medium sized corporates and small corporates. Giving guidance other than in general terms in relation to different sizes of corporates, different industries, is quite a complex task. I would certainly not want the implementation of the Bill to be delayed for a very considerable time while very detailed guidance was being developed. I would suggest that the important thing for investigators and prosecutors is to have the new offences which we can then implement, but I am sure there is a lot we can discuss with corporates and others about how we would do so.

Q415 Chairman: There has been a great deal of discussion in other evidence about the guidance that is available in America. It is not readily transferable to this country, to our system. On the other hand, there has been a request from a number of quite important sources that there should be thought given to whether we could do something similar. I do not expect you to be able to answer this today. It would have to be something that you would be able to introduce at trial and that juries could take into account. I wonder whether it is something that you would like to take away and think about, because we would greatly appreciate some help on this subject.

Mr Alderman: Perhaps we can take that away and let you have a note.

Q416 Lord Thomas of Gresford: Could it not be introduced into the trial situation if there were a defence of reasonable belief? In other words, if advice had been sought from one or other of you or from an independent commission against corruption, as in Hong Kong, and that advice had been followed, that would go to a defence of reasonable belief.

Mr Starmer: I think that is a really important point because that is where the guidance would be most valuable, but the guidance on the current draft would be pretty short: make sure you get it right, because there is no reasonable belief defence. Any list of checks or guidance about the sort of checks taken would not actually assist very much for anybody who really wanted some guidance on what to do in a particular situation. The guidance would have to be focused on the structure of the clauses as they now are. Of the two models I was discussing earlier, that is the difficulty in leaving it to prosecuting discretion.

Q417 Lord Goodhart: Could I also ask whether, under the money laundering legislation where guidance is given, that would be a useful precedent? I am not asking for an answer now but I wonder whether that is something that could be considered.

Mr Starmer: Certainly.

Q418 Lord Anderson of Swansea: I was going to ask Mr Head to expand a little on what he said, when he said that we are at a fledgling stage in the accumulation of data, which suggests that perhaps if one is still at the foothills it is really quite a long time before one is able to draft adequate and comprehensive guidance which could lead to the delays which I think Mr Alderman has mentioned. What did you mean by "the fledgling stage"?

Detective Chief Superintendent Head: The creation of a world map in terms of corruption is a major piece of work. There is no denying it. The difficulties that we have talked about previously would all come into play. There is relevance around delay in terms of the legislation we have here and I am not seeking to make it part of anything that we discuss in relation to this. The reason I raise it is because of where we are on the question of reasonableness. I think we will grow with our understanding of what is reasonable around the world and that is an important element. In terms of where we have advice and advice is sought, can I reiterate the thought that, without a reasonable belief defence ----

Chairman: We know that the OECD does not like the reasonable belief defence. We know that they like the American system. It might be better if we concentrate on trying to get something similar to the American system into the British law and that would be different I think from the reasonable belief defence. If you are prepared to do a little work on this, it would help us very much indeed.

Earl of Onslow: I accept it goes against our tradition of asking prosecutorial authorities, but surely it should be possible for the Department of Trade to produce those guidelines or even the Ministry of Justice. It does not have to be done by the prosecutorial authorities.

Chairman: Before we get on to who drafts it, let us see how we can insert it into the system, because it may or may not be possible to do it. That is what I really want to know from our three experts. If we can find a way of inserting it into the system, then we can see who might do it. Could I go back for a moment to the question about syndicates, joint ventures and subsidiaries?

Q419 Baroness Whitaker: One of the most significant areas of bribery is other companies doing it for the main company, whether as a held company, a joint venture or a syndicate. The chairman of the OECD Working Group thought that his own instrument, the OECD Convention, was deficient in that it did not cover foreign subsidiaries. I see from Mr Starmer's submission that he too might have some concerns about this. Can I ask all three of you whether you think the Bill captures the area of foreign subsidiaries, syndicates and joint ventures enough to be able to capture all the bribery that is committed undoubtedly by them?

Mr Starmer: I have some concerns as set out in our written note about whether it captures as much as it could.

Q420 Baroness Whitaker: How could it better do it?

Mr Starmer: It would mean a broadening of some of the definitions in clause five to capture a wider range of organisations.

Q421 Baroness Whitaker: Perhaps we could ask for a memorandum with some more thoughts about that.

Mr Starmer: I can certainly provide some more on that.

Q422 Baroness Whitaker: Do the other two witnesses have any further points?

Mr Alderman: I certainly agree with what Mr Starmer has said. We want to make sure that all the entities that could be used by corporates to facilitate bribery are captured in this way.

Q423 Baroness Whitaker: You think that they are not in the current text?

Mr Alderman: There are some issues which Mr Starmer has raised. We are very happy to work with him on a memorandum for the Committee.

Q424 Lord Anderson of Swansea: In so extending the bodies covered for the purpose of clause 5(1) and therefore responding to the plea of Professor Mark Pieth, the chairman of the OECD Working Group, are we in danger of being on our own beyond other countries, in going beyond the strict letter of the OECD Convention and therefore putting our own companies at a competitive disadvantage?

Mr Starmer: If we are going to produce anything further in writing, I think the sensible thing would be to take that on board and give our best explanation on that question, if that is acceptable.

Chairman: Let us consider for a moment the position of the Attorney, of whom we have two former ones here. There is of course the possibility of legislation on this subject.

Q425 Lord Goodhart: Can I ask whether you think the arrangements made under this Bill are satisfactory?

Mr Starmer: The arrangements under this Bill are satisfactory in that consent rests, broadly speaking, with myself and Mr Alderman. That is acceptable and we are content with that. There is an anomaly in relation to assisting or encouraging which just needs to be tidied up in a convenient way because the combination of this Act and the Serious Crime Act of 2007 is that the Attorney retains consent in respect of assisting or encouraging if the acts are abroad, and that is something which you may want to raise with the Attorney General's Office. It is not a practical difficulty, it is not something which presents a great hurdle; it is just something that needs to be tidied up in this Bill.

Q426 Lord Goodhart: Would it be more appropriate that the Attorney General's responsibilities under section 53 of the Serious Crime Act should be limited to cases of national interest?

Mr Starmer: That would certainly tidy up that difficulty.

Chairman: Lord Lyell, have we stolen this point from you?

Lord Lyell of Markyate: In my view, we are not in a tidying up area at all here; we are in an area of absolutely fundamental constitutional decision. The law officers of the Crown are not ordinary ministers. They appointed by the Prime Minister and they can be sacked by the Prime Minister, but they cannot be told what to do by the Prime Minister. They are appointed like a High Court judge under the Great Seal, and Lord Mayhew and I both have two copies of that and, by tradition, and it is a very deep tradition as you will know, they guard that independence very, very carefully. Lord Goldsmith has come under a lot of attack and it is suggested - I do not think fairly but we have not seen the hottest ground of attack which deals with the Iraq War, that has been kept from us by Government - as though he had not acted as pro-Chevalier with perfect independence and integrity, and I am certainly not accusing him of that, but the fundamental question here is parliamentary accountability. Prosecuting, like almost every aspect of this life, is something in which the Government of the day has responsibility. We have had a system going back into history, but certainly since the Law Officers Acts in the 19th century where the system of superintending which exists at the moment comes in, whereby the law officers can give directions to the DPP. Personally I know of no occasion when they have done so, but equally I know that that creative tension with two people both of whom apply the highest standards but have to deal very different prosecuting decisions has led to very careful and constructive discussions. In five years as Attorney (and this is where it comes from most hotly but to a limited extent from five years as Solicitor) I always reached agreement, and I think every law officer in modern times has always reached agreement with the Attorney of the day, but that does not mean that the system is a dead letter; it is not in any way. The problem with handing it over to the DPP is that he or she is not directly responsible to Parliament and that accountability with such a key part of our system of democratic government would go. Is that understood or what is your answer to that?

Chairman: Lord Lyell, I think that really is something that is comment rather than a question. Is there a specific question that you would like our witnesses to answer?

Q427 Lord Lyell of Markyate: I will put the question in this way: yes, there is a good deal of comment in it but what the directors are saying they are happy with in this Bill is that that should be dismantled, and if it were going to be dismantled at all "director" at the moment - and perhaps you could confirm this - means the CPS and it means the SFO. If something is assigned to the Director of Public Prosecutions it can actually, subject of course to the will of the director of the day, be carried out by any member of the Crown Prosecution Service, any crown prosecutor. I personally would stick with the present system but would you agree that if it is to move at all it should be the DPP personally?

Mr Starmer: No, I am afraid I would not agree with that. I think the question I was asked was whether I was content with clause 10 and the answer to that is yes, I am, I think that is an appropriate way of dealing with these offences and puts in place the essential safeguards, so I am afraid I would not agree.

Chairman: I think there are going to be other matters that concern the position of the Attorney and I am not sure how far we can pursue it in relation to this Bill.

Lord Lyell of Markyate: Fair enough, I thought it was useful to put that.

Chairman: I want very quickly to go on to Mr Borrow and indeed Mr Djanogly with an introduction to the parliamentary aspects of this because our next witnesses are going to be the Clerks and I wonder whether you would like to deal with that first of all, Mr Borrow, and question 11?

Q428 Mr Borrow: Clause 15 removes parliamentary privilege in relation to the words or conduct of an MP or Peer who is a defendant or co-defendant in bribery proceedings, but privilege is not removed in relation to the words or conduct of other Members or witnesses. I would be grateful perhaps initially from Mr Head if he could explain whether parliamentary privilege poses a genuine challenge to the police, and then if the prosecutors could come in afterwards, and the prosecutors in their attempt to charge and bring to book those who are corrupt?

Detective Chief Superintendent Head: I can tell you from my own experience that it has never posed a problem for me in my investigations. However, I can check that out and get back to you in terms of policing in general and see if any of my colleagues have ever had an example specifically if you like, and I can get back to you. In terms of my own experience I cannot recall any occasion.

Q429 Mr Djanogly: Just to go to a slightly more complex level, because it seems as though the application of this is not going to be quite so straightforward as may seem at first instance, there are two examples that we have been given: firstly, that a prosecutor could rely on the words spoken by an accused Member in select committee (or other) proceedings, but the accused Member could not rely on words spoken by a witness or non-accused Member during the same proceedings, even if they were exculpatory; or a witness before a select committee (against whom privilege could not in any circumstances be removed) would benefit from a greater level of protection than Members against whom privilege could be removed if they are accused or co-accused. Is this an issue that you have given any thought to? Is this relevant? Could I also say that of course we are only talking about the law of bribery here. This will not apply to any other criminal offences and do you think, if we are going to have it apply to bribery, it should apply to other things as well, fraud comes to mind?

Detective Chief Superintendent Head: I rather fall back on my previous answer in the sense that I have no actual experience myself of where parliamentary privilege has caused a problem with investigations, and that relates to the issue of bribery. If we want to take that further and look at whether it should apply across the board, that is a whole different question that I had not really prepared for in terms of this forum. I can come back in the sense of whether you feel there would be some use to it in particular in relation to fraud, which is away from this Bill and may be a whole different debate that we do not necessarily want to get into today. I am very happy to come back to you with some thoughts on that.

Q430 Mr Djanogly: By extension should this clause be taken out and looked at in a different context? Is it right for this Bill?

Detective Chief Superintendent Head: It is in the Bill. It does not cause me any problems within the Bill. My point is that in actual fact whether it is in or it is not in does not necessarily cause me as an investigator from my experience any problems one way or another. What I will do, if it is okay with you Chairman, is take the liberty of checking with a couple of the other units who deal with this very specifically. Bearing in mind it relates to bribery, I will just take the liberty of doing that. It should be very quick because it is very specific and I think you will find that the answer will be the same.

Q431 Chairman: Have either of the Directors got anything to say on question 12, human rights or other legal concerns associated with this change in the law?

Mr Alderman: On the part of the Serious Fraud Office, Lord Chairman, it is not an issue that we have ever had to address.

Mr Starmer: Nor on behalf of the CPS, although I think in relation to both questions 11 and 12 greater clarity about parliamentary privilege, what precisely it covers and what the limits are, would be of the greatest benefit to all concerned and in particular the prosecutors and investigators; I can see difficulties there.

Earl of Onslow: On this particular question can I ask our Clerk to drop a line to the Clerk of the Joint Select Committee on Human Rights upon which I sit drawing their attention to this point or have you already done it?

Chairman: We have already done so.

Earl of Onslow: Well done!

Q432 Chairman: Is there anything else that any of the three of you would like to say to us before I bring this part of the session to a close? It has been very helpful and there is more information to come which I am perfectly certain will be extremely interesting for us but for the moment?

Mr Starmer: No thank you.

Lord Goodhart: Could I just raise one small correction. When we were discussing question 10 about the role of the Attorney General I referred to the Attorney General taking decisions on the ground of national interest. That should of course have been national security.

Chairman: Thank you very much indeed. That has really been extremely helpful and we are very grateful to all three of you for what you have had to say to us. I will now give everybody perhaps two minutes' break while we bring in our next witnesses. Thank you so much.

Memoranda submitted by the Clerk of the House of Commons

and the Clerk of the Parliaments


Examination of Witnesses

Witnesses: Dr Malcolm Jack, Clerk of the House of Commons, Ms Jacqy Sharpe, Principal Clerk of the Table Office, Mr Michael Pownall, Clerk of the Parliaments, and Dr Christopher Johnson, Clerk of the Journals, examined.

Q433 Chairman: Thank you for coming. You are very familiar to most of us but not all of us. I wonder whether we can now go on. You have a list of the questions, have you not?

Dr Jack: Yes we have, thank you very much.

Chairman: I know Mr George would like to ask question 14.

Q434 Mr George: We are tight in terms of our quorum so please look at question 14 and it will save me reading it out.

Dr Jack: Thank you very much for inviting us here this afternoon. I think in question 14 there are two concepts in an "act of corruption" and "proceedings in connection with that act". I thought it might be useful to the Committee if I just said something about proceedings as we understand them in Parliament first because I think that affects the whole context of the discussion that we are about to have.

Q435 Chairman: Yes, what are proceedings?

Dr Jack: What are proceedings, yes, and, if I may, it is always very useful to be reminded of Article IX of the Bill of Rights which says: "The freedom of speech in debate or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament," so Article IX makes a distinction between speech, debates and proceedings. We understand proceedings to be the res acta, the things that are done, rather than the res dicta, the things that are said, and that is decisions that the House or a committee collectively makes on proceedings, on bills, on amendments, on resolutions, whatever it is, or committees on reports and so on, so those are the things that the House does and those, strictly speaking, are the proceedings. Members take part in those proceedings by voting, by promoting bills, by moving amendments, whatever it is, but of course I quoted Article IX because clearly the ingenious authors of Article IX realised that freedom of speech in debates had to be brought into the equation and if they are not strictly proceedings they had to be there because that is the way that Members primarily take part in proceedings, they debate, they speak, and so Article IX brings in the speaking. Others of course like officers of the House carry out instructions which proceedings give rise to and witnesses of course give evidence to select committees. I just thought it might also be useful, Lord Chairman, I have in my hands the Parliamentary Privileges Act 1987 from Australia and there is quite a useful, fairly succinct summary as well, of proceedings in that Act and it says that: "...'proceedings in Parliament' means all words spoken and acts done in the course of, or for purposes of or incidental to, the transacting of the business of the House or of a committee ..." Then it goes on to define some of these things, documents to committees and so on.

Q436 Chairman: Does it include pre-legislative scrutiny?

Dr Jack: Yes I think it does Chairman, yes certainly. So that is a round-up of what proceedings are. I think the other part of your question which talks about the act of corruption, I take this to be a reference to the Brewster case in the US and that is what the contract (if I can call it that) is, the actual act of corruption, the promise, the passing of money, and so on. I think what emerges from the American cases, and I think the Committee will be aware that a predecessor of mine Sir William McKay gave evidence to the last Joint Committee at that time on the Corruption Bill, is that the American Supreme Court came to the conclusion that it was possible to deal in evidence with matters of corruption affecting members of Congress (of course, I think it is taken for granted that the law must apply to Members) without necessarily going into the proceedings. It was not necessary, in the words of Chief Justice Burger, to go into the completion of the bargain in Congress, and so he summed up the issue by saying, and I think this is the reference that has been made here to the act of corruption: "The guilty act is the acceptance of the bribe, that is complete, without performance of a legislative act" - what I have just defined as 'proceedings' - "which the bribe is intended to procure or influence." Those are the two concepts as I understand them to be in your question.

Q437 Chairman: Any addition from their Lordships' end?

Mr Pownall: As you well know, the principles of parliamentary privilege apply to both Houses but if I could just make the general comment that at least in recent years issues relating to those principles have arisen far less frequently in the House of Lords, so on the whole I would simply endorse the remarks of my colleague from the House of Commons. We have discussed the evidence together that we were going to give. I would perhaps add one point which is that, speaking for the House of Lords, the Code of Conduct, which is adopted by resolution of the House, is therefore a proceeding.

Q438 Chairman: It is not a proceeding?

Mr Pownall: It is a proceeding.

Dr Jack: And that applies also in the Commons of course. The Code of Conduct follows a resolution of the House.

Q439 Lord Lyell of Markyate: Just very quickly, Lord Chairman, a Member of either House can say what they like, subject to other rules of the House, in the House and the words cannot be used against them in court?

Dr Jack: That is absolutely correct, my Lord.

Q440 Lord Lyell of Markyate: That is key to the freedom of speech?

Dr Jack: That is key, yes, absolutely correct.

Chairman: Subject to this Bill of course.

Lord Lyell of Markyate: Yes subject to this Bill. Enough said.

Chairman: Do you want to go on to the next question, Mr George?

Q441 Mr George: Have there been any cases involving Members of Parliament saying defamatory things in all-party groups or party meetings? I presume that would be totally excluded from the definition?

Dr Jack: Yes those words would not be covered by privilege because they would not be in connection with a proceeding of the House. I think if you are asking about the evidence on whether there has been a hampering of prosecution, is that the question you are asking?

Q442 Mr George: We will come on to that later on.

Dr Jack: Okay but that is the case, yes, that would not be covered by privilege.

Q443 Earl of Onslow: For my own information if a Member of either House is given seven and six pence to say something, would a court be allowed to use in evidence the words that he said, perhaps: "I would urge the minister to buy sweeties from the corner shop in Scunthorpe", or whatever the bribe is for? Would the corner shop in Scunthorpe speech be allowed to be used in evidence or is that privilege?

Dr Jack: That is privileged and it would not be allowed to be used as matters stand now.

Q444 Earl of Onslow: When you get statutes being interpreted by what is said in Parliament, is that included or am I going off at a tangent?

Dr Jack: In my quotation of Article IX the last part about impeaching or questioning, there has been some, how shall I put it, watering down of questioning in the case of Pepper V Hart which I think was in the early 1990s, 1992, and in that case the courts took the view that it was proper for the court to look into the minister's speech or the promoter of a bill's speech to ascertain what the meaning of the law was when it was obscure or ambiguous, and it was limited to that, but nevertheless it is regarded as an intrusion.

Q445 Chairman: That is a matter of statutory interpretation rather than anything else?

Dr Jack: That is right but it was nevertheless an entry into the privilege area.

Chairman: Lord Anderson, I think you wanted to look at the possibility of prosecutions.

Q446 Lord Anderson of Swansea: Yes, it was just the problem which is relevant to clause 15 of just how relevant is the mischief? Is it something which has occurred in the past or in the real world is likely to occur in the future? I notice that Sir William McKay, who has already been quoted, suggested in the 2003 proceedings that waiving privilege in corruption cases could be compared to using "a mighty sledgehammer to crack an almost invisible nut". Is that something with which our witnesses would concur? Is there any evidence that the protection of privilege has indeed hampered prosecutions from bribery or corruption in the past? What in the real world is your assessment that clause 15 of the draft Bill would in fact pave the way for any increase in prosecutions in the future?

Dr Jack: It is difficult to answer this in an accurate way and I think a lot of this is anecdotal stuff. I do not mean to disagree at all with Sir William's evidence, but he made that clear in his evidence to the Joint Committee then. I think in 2003 Sir William said that he could not recollect any case in the previous ten years of his experience that would come into this category. He thought that there had been one or two cases where in a very preliminary way an approach might have been made to Parliament and Parliament said, "Go away and find your evidence somewhere else because you are entering into the privilege."

Q447 Lord Anderson of Swansea: But he knew of no particular cases?

Dr Jack: He knew of no particular cases. I think if I can just quote the Joint Committee on Parliamentary Privilege which of course said, "We are confident there are very few instances of corruption involving Members of Parliament." Since Sir William's evidence - and of course I have been the Clerk since 2006 - I know of no cases at all.

Q448 Lord Anderson of Swansea: So in short it is not a real problem, is it?

Dr Jack: It is not a real problem, no.

Q449 Dr Iddon: How would you balance the competing interests of convicting the corrupt and protecting freedom of speech in Parliament? Indeed, does clause 15 of the draft Bill strike the correct balance in your opinion?

Dr Jack: I think that does come to the essence of the discussion about the public interest test. I think the first thing that we must say of course is that corruption is obviously a serious matter, and no-one is suggesting that it is not, and indeed it is a contempt of the House, and it is a serious contempt, it is a high crime and misdemeanour. There is no question about the seriousness of it. I think what one has to weigh up, and respectfully if I may say that is what your Committee must do Lord Chairman, is whether it is worth interfering with the complete and absolute protection of Article IX in respect first of all of just one instance of a case and also the general effect that it might have on debate in the House. Going back to 2003 again, I think the purport of Sir William's evidence - and he used the phrase that it would have a "chilling effect on debate" - was that he felt that any thought in a Member's mind that entering a certain debate in the House would possibly end up as evidence in a court would have a chilling effect, and he thought that it was not necessarily a matter of numbers but just the general feeling that something that someone said in Parliament might end up as evidence in court would have that effect. That was supported very much by Harry Evans, who was then the Clerk to the Australian Senate, and he reckoned that it was a serious attack on Parliamentary immunity. I rather agree with those witnesses of 2003; I think it would be quite a serious attack. However, I respectfully say I think that is what your Committee has to decide, Lord Chairman.

Q450 Lord Lyell of Markyate: I just happen to be steeped in Macaulay's History of England at the moment and it is worth remembering James II leading up to the Bill of Rights, and that high crimes and misdemeanours is not an American phrase, although we tend to think of it as such, it comes straight from the English Parliament and, secondly, the chilling effect that Sir William referred to was very real in those days when if you were a thorn in the flesh of the Government ie, principally the King and his ministers, then witnesses could be found to bring charges against you, and in an imperfect world that could happen again, indeed it does happen from time to time. If you were banging on endlessly about something to the annoyance of the Government, it could perhaps be linked with some alleged corruption, and you would then be in trouble.

Dr Jack: I am very happy to follow you in the history lesson, my Lord. I think there is a problem about vexatious prosecutions of Members which could occur in the modern context, yes, I agree with that.

Mr Pownall: Lord Chairman, if I could just add to the answer to the main question. I would simply point out that this is the third time in a decade that a Joint Committee of both Houses has addressed this issue and I for one would have some hesitation in going against the conclusion of certainly the 2003 Joint Committee, which more or less recommended the provision in clause 15 as it currently stands, so it is an issue which is now being addressed for the third time.

Chairman: It is quite important in that case that we should get it right this time.

Q451 Lord Lyell of Markyate: Chairman, could I just follow up, perhaps through you, why should we follow it? What is it that it identified that will make us a freer country or a better governed or a better judged country?

Mr Pownall: It is just a question of the balance between public interests. I would hesitate to say this but I would think that the balance comes down in favour of allowing proceedings to take place in accordance with clause 15. It is a question of balance.

Q452 Lord Lyell of Markyate: Although nobody can identify a case?

Mr Pownall: That is right, I cannot identify a case, that is true.

Q453 Lord Anderson of Swansea: In that case, do you see any real purpose in clause 15?

Dr Jack: I think your witnesses may have a slight difference of view on this. I do not know whether it is the angels or the devils but I rather veer towards thinking that the conclusions of the previous Committee were not correct and that Sir William was correct, and I think that is what I would ---

Q454 Earl of Onslow: Is this a private fight or can anyone join in?

Dr Jack: These are complex matters and I think the balance is a fine one and in the end one just has to decide one way or the other.

Chairman: Should we go on with our list because the next question points to the difference in the protection as between Members and witnesses and Baroness Whitaker wanted to ask this.

Q455 Baroness Whitaker: We could also say that the Clerk of Parliaments has struck a balance in the previous discussion on clause 15. He does have a point, but of course the position of witnesses is slightly different. Our crib says that a witness has a more privileged position because an accused Member, if clause 15 goes ahead, could not rely on the words said by a witness even if they were exculpatory. A contrary view is that the witness is in fact in a more vulnerable position because surely there are proceedings in select committees where witnesses say things which they would only say so long as they were protected by privilege. If they wanted to say that a big company committed a bribe they might well be able to do that in a select committee and would not risk it outside. Do you have a view as to whether this greater protection which witnesses have is right or should they be on the same level as Members?

Dr Jack: If I am following my argument through of course they will be on the same level because they will be protected as Members will be protected, but I think the particular worry about witnesses which came out in the Joint Committee, and then subsequently the Liaison Committee of the House of Commons I think became very concerned with this issue, was simply because it was felt, the reason that you just said, that if witnesses were not given complete protection in giving evidence to select committees this would be hampering the work of select committees. I think that was really the essence of it. I do not know whether my colleague Jacqy Sharpe, who has more experience of select committees than I do, might throw some light on that?

Ms Sharpe: I think the one thing that one might consider in relation to protection for witnesses is that witnesses are coming from outside Parliament, they are not part of Parliament, and if there was actually any need to investigate anything that they had done you would not need in any sense usually to rely on what they had said as part of proceedings because they would have another existence beyond Parliament which could be looked at. I would say that in what witnesses say before Parliament they do deserve protection so that they can feel they can say freely what they believe and know that they will not have any legal consequences of that.

Chairman: Thank you for that. Question 18 is quite an important point about fairness of trials.

Mr George: I belong to the newly formed Society for the Protection of MPs Against Cruelty, and members are increasing by the hour!

Mr Borrow: It was formed a bit late!

Q456 Mr George: Under the draft Bill the words of an accused Member spoken before a select committee would be admissible in court but the words of other Members and witnesses would not. Is this not unfair on the accused Member if he or she could not rely on the other words spoken during the proceedings, particularly if they were exculpatory? Could this breach Article 6 of the European Convention on Human Rights relating to the right to a fair trial?

Dr Jack: I think the answer is, yes, if the exculpatory material could not be used then that could be a disadvantage to that Member. I am not sure that we are the right people perhaps to comment on Article 6 of the European Convention, but I think that it would certainly be the case, yes, a Member could be disadvantaged.

Mr Pownall: I would just add that it is difficult to envisage circumstances in which words spoken by another Member or witnesses could be both exculpatory and admissible in court. I cannot really think of circumstances in which words spoken by some other Member could be relevant in a trial.

Mr George: With the contemporary experience of which we are all aware, is it wise to say that it has not happened before therefore it might not happen in the future? This is part of the British disease. We do not seem to be prepared to think about the future, relying too much upon the past. Is your argument a reasonable one: it has not happened yet - because it could?

Earl of Onslow: May I suggest that I can think of a case. We will go back to the teashop in Scunthorpe where a Member suggests that the teashop in Scunthorpe should do something, it is alleged that he has taken a bribe so to do. If another Member says, "I heard the Member advocating this before the date of the bribery," that would be witness in the man's defence. His speech would be unprivileged if this clause goes through but the defence saying, "I heard him saying he was going to do this before the bribe was proposed," would be exculpatory and that would not be admissible in evidence; is that right, Lord Lyell?

Lord Lyell of Markyate: It is possible.

Q457 Earl of Onslow: Have I got it right?

Dr Jack: I think that is possible. The only light that I feel I can shed on all this is in the 2003 inquiry the then Director of Public Prosecutions actually cast doubts on the whole matter of the admissibility of what was said in criminal evidence anyway and he summed this up by saying, and I am quoting him: "Saying things about people is not evidence; facts are evidence".

Q458 Lord Goodhart: Can I suggest another possible case where it would be exculpatory and that is if Member A is being charged with bribery and Member B in the course of proceedings in the House admits that it was not Member A but himself who was guilty of bribery.

Dr Jack: Yes, that is undoubtedly a very interesting case.

Q459 Lord Lyell of Markyate: Could I ask quickly do you remember the Neil Hamilton case which changed the law in a minor degree? Does that have some relevance to this?

Dr Jack: I think it does in an indirect way in the sense that this is the Defamation Act where the House agreed that a Member could waive privilege if he was a defendant in a defamation case. I think where it touches upon this is this very business of various parties being involved and how you actually sorted this out. I think it was one of the reasons why it has been concluded that that reform of it, if it was a reform, does not really work at all, and the Joint Committee recommended that it should be repealed, so I think it raises similar sorts of issues about more than one person being involved.

Chairman: Dr Iddon, you have asked to raise the points in 19 and 20. Certainly 20 would be a comprehensive provision which would allow us to discuss all this again.

Q460 Dr Iddon: Do you think there is a need, as recommended by the Joint Committees of 1999 and 2003, for a separate Parliamentary Privileges Bill to make further reform, bringing into account perhaps the fraud offences, or would this risk bringing the courts more into conflict with Members and their work? I gather that the Clerk of the House of Commons, Dr Jack, has recommended a Privileges Bill.

Dr Jack: Yes I think I have, not after a great deal of thought, and with some trepidation. I think perhaps, without being too discursive, this probably needs a bit of context, historical and otherwise. If we think back to the provenance of privilege in the first place it is, as has been mentioned already, a struggle between Parliament, particularly the House of Commons, and the Crown and the Executive. Subsequent to the Bill of Rights, which of course codified existing privilege which had existed in the House of Commons for very long periods, the focus of the conflict, if I can call it that, became between Parliament and the courts, and I think that throughout the 19th century there is this to-ing and fro-ing between the courts and Parliament trying to establish what are the correct boundaries, what should be left to Parliament and what should be left to the courts. As early as 1839 in the case of Stockdale v Hansard Lord Denman said that the House controlled its internal proceedings but the court could determine whether privilege was exclusive. It was the court that could hold an inquiry into whether privilege was properly asserted. I think originally the courts took the view that there was no such thing as parliamentary privilege anywhere and they simply ignored it, and then gradually, and I am sure with the Bill of Rights they became more convinced that there was such a thing as the law of Parliament, the lex parliamenti, and they started to look at the borders around it. I think the story in the 19th century was that the courts were generally reluctant to get into the area of exclusive cognisance, the area really that the Houses determine for themselves, setting their own rules and so on and so forth, but on the boundaries of privilege they were willing to begin to question more. This went on into the 20th century. I have got a quotation here from Lord Denning who said in the Pickin case in 1973: "The courts must ensure that the procedure of Parliament is not abused. In this matter the courts are acting in aid of Parliament". I think that in Australia the background to the 1987 Act was just this sort of gradual questioning by the courts of where the boundaries of privilege lay and that led to the 1987 Act. I am sorry to be so long-winded in coming to this point, but I think that is one of the reasons why we have also reached this position. Jacqy Sharpe might be able to help with some recent instances of the courts questioning proceedings.

Ms Sharpe: Yes, we have had in 2007 and 2008 four cases in which Mr Speaker has intervened not on the substance of the cases but in connection with protection of the privileges of the House. One of the most recent was a case of the Office of Government Commerce v The Information Commissioner, and the Committee may be interested in the judgment of Mr Justice Burnton, as he then was, who gave a very interesting description of parliamentary privilege and the relationship to the courts, and he emphasised that obviously conflicts between Parliament and the courts should be avoided and that one needed to adhere to the principles as to the risk of any interference with free speech in Parliament and the principle of the separation of powers between the judiciary and Parliament. This one concerned the use of select committee reports which were being used by the Information Tribunal and whether you could draw inferences from them. There was no argument that you could not actually refer to the fact that there had been a report but that inferences should not then be drawn from them. I can certainly give the Clerk a copy of the judgment if that would be of any help.

Q461 Chairman: I suppose the justification for clause 15 is that nowadays, whatever may be the history, the public simply would not stand for it, in the context of bribery, that parliamentary privilege should stand in the way of prosecution.

Dr Jack: Yes, I take the weight of your comment, Chairman. I think the question really is whether it is necessary, to obtain conviction, to go to those proceedings.

Q462 Dr Iddon: My Lord Chairman, I dare to ask whether the Clerk of the House of Lords agrees with the Clerk of the House of Commons on this issue?

Mr Pownall: I have to say that on the basis of experience alone in the House of Lords, if it was a single chamber government by the House of Lords alone, there is so little learning on parliamentary privilege in the House of Lords that I would not recommend a dedicated Act because we have had very little experience or learning in the House of Lords in recent years, but I do see the force of the argument that the uncertainty of the scope for Article IX can now be counter-productive. Thus, as I said in my memorandum, I do support the Clerk in his suggestion that if there is to be any modification we should think of it in terms of a wholesale comprehensive Act.

Dr Jack: If I may add, Chairman, there are other aspects to this. As well as the questioning in the courts there is the fact that there is now quite a bit of legislation which in one way or another deals or impinges on privilege which I think could be brought together in a Privileges Act. There are Employment Acts, Planning Acts, FoI and these various other things and these are dispersed in various Acts. Very recently in the case of the Parliament Act the vires of a bill has been questioned by the courts, the actual validity of an Act. This has gone much further than has previously been the case. On perhaps the more modern side, if I dare say so, an Act could also perhaps examine matters which have been raised in the past, although discounted by the Joint Committee, of some sort of system of redress or hearing for people who feel that privilege has worked against them. This is something which I think would find quite a lot of favour in the European Court where in the case of A v UK, although the case was largely one in which parliamentary privilege was upheld in the sense that it was recognised as necessary, the judges made quite strong remarks about the need for national parliaments to look at their systems in a modern context of perhaps having systems of redress and so on, which they do in some of the Commonwealth countries.

Q463 Baroness Whitaker: Just so I can get it clear because there is a lot of history, now it is Dr Jack's contention, is it, that Members of Parliament should not be like other people and have what they say used in court proceedings against them? I do not know whether they would be unique in that but it would be pretty unusual. I can only think of perhaps confession to a priest or a doctor's surgery, but is that your view, that Members of Parliament should not be able to be tried using as evidence the words they use in Parliament?

Dr Jack: Yes that is my view and not only Members of Parliament but witnesses and anyone else who is involved.

Q464 Baroness Whitaker: For criminal offences?

Dr Jack: For criminal offences or for any offences.

Q465 Baroness Whitaker: Any criminal offence, bribery, murder?

Dr Jack: Yes, that is my view.

Chairman: Very well. Mr George, I think you wanted to ask the last two questions.

Q466 Mr George: I will be brief. Dr Jack, in written evidence you suggest that the proposal contained in clause 15 be put to each House in the form of a substantive motion. Could you explain your reasoning on that. What would be the advantage of this approach and why is legislative scrutiny alone insufficient to determine the merits of the proposition?

Dr Jack: I think perhaps it seems a fairly narrow point but it really relates to the procedures in the House of Commons, which are different of course from the House of Lords. If the Bill came forward in the House of Commons - and of course I understand that it has been already examined - this matter could be decided in a public bill committee of 16 Members of the House in a room somewhere in the Palace of Westminster. I do not think that is the proper way to deal with a matter of this substance. I think the matter should be brought forward to the House in a substantive motion so that all Members of the House could express a view about it. I do not think that necessarily negates the proceeding on the bill. The bill can go ahead, a substantive motion can be taken at any time, but I think leaving such a matter to the possibility of 16 members in a standing committee does not seem to me to be proportionate.

Q467 Lord Lyell of Markyate: I agree with Dr Jack that it could be very undesirable. I may have forgotten my procedure but it would normally, although now things have got more truncated, come up on report on stand part, would it not?

Dr Jack: No, stand part would only be at committee stage which would be in a public bill committee of Members.

Q468 Lord Lyell of Markyate: And it would not come back on report?

Dr Jack: It would not come back on report. Amendments could be put down on report to the lines of the clauses in the bill but you could not return to the principle of the clause.

Lord Lyell of Markyate: I quite agree with your point then.

Chairman: Very well then, the final question.

Q469 Mr George: We have heard a lot recently about Codes of Conduct for Members of Parliament and this might be speculative, Dr Jack or any of the witnesses, but what role should the proposed Code of Conduct for Members be given perhaps in determining whether or not a Member is guilty of a bribery offence? Can you kick that into touch or do you think there is something worth saying at this stage?

Mr Pownall: If I could just speak a little bit to my memorandum, Lord Chairman. We are fresh from the experience in the House of Lords of the recent case of the four Members and although of course that is now water under the bridge I have drawn to the Committee's attention the comment by the police when they announced their decision not to launch a full investigation on 11 February, and the police indicated that there are "very clear difficulties in gathering and adducing evidence in these circumstances in the context of parliamentary privilege". I do not think in fact that was correct. I do not think any issue of privilege did in fact arise in this case because the events which were discussed and the cross-examination and so on took place well away from the chamber so there was no question of any proceedings being involved. I just wanted to make that point. The recent case has made me wonder what is the relationship between the Code of Conduct and any proceedings under clause 15 because the Codes of Conduct of both Houses, as I indicated earlier, are privileged and therefore covered by Article IX, but they are not mentioned in the draft Bill so they would not be admissible as evidence in any criminal trial. It seems to me that the Codes would be a key element of the background to any trial in accordance with clause 15.

Q470 Chairman: I thought we established a moment ago that the Codes of Conduct are proceedings.

Mr Pownall: They are proceedings and they would not therefore be admissible as evidence in a criminal trial. That is my contention.

Q471 Chairman: Would not be admissible as such?

Mr Pownall: No, that is right.

Q472 Mr Cox: Because they are not specifically provided for in the Bill.

Mr Pownall: That is right. They are not provided for in the Bill and therefore they would not be admissible as evidence, and yet it is difficult to see how actions in accordance with clauses 1 to 2 of the Bill could be judged other than by some reference at least to the Code of Conduct.

Q473 Chairman: I think this is a new point, is it not?

Mr Pownall: I hope it is one that I made in my memorandum, Lord Chairman. I suggested that the Joint Committee might wish to seek guidance from the Government as to how they would bring it in and what relevance the Code would have.

Chairman: Has anybody else got any questions for our witnesses? In that case, may I thank you all very much for coming. We will read carefully what you say when the transcript comes round. In the meantime, thank you very much indeed and I shall adjourn the Committee until we resume our labours tomorrow morning at 10.30.