House of COMMONS






Draft Bribery Bill



Wednesday 17 June 2009



Evidence heard in Public Questions 554 - 618




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Oral Evidence

Taken before the Joint Committee on the Draft Bribery Bill

on Wednesday 17 June 2009

Members present:


Anderson of Swansea, L

Colville of Culross, V (Chairman)

Goodhart, L

Mayhew of Twysden, L

Onslow, E of

Thomas of Gresford, L

Whitaker, B

Williamson of Horton, L



Mr David S Borrow

Mr Geoffrey Cox

Mr Jonathan Djanogly

Mr Bruce George

Linda Gilroy

Dr Brian Iddon

Martin Linton

Dr Desmond Turner


Witnesses: Rt Hon Jack Straw, a Member of the House of Commons, Lord Chancellor and Secretary of State for Justice, Mr Michael Des Tombe and Mr Roderick Macauley, Ministry of Justice, examined.

Q554 Chairman: Can I welcome you and your team, Mr Straw. Would you like to introduce your colleagues?

Mr Straw: Yes, Roderick Macauley, who is the Bribery Bill Manager, and Michael Des Tombe, who is the Legal Adviser on this Bill.

Q555 Chairman: You have the list of questions we have provided for you, and I know you have got to go at half past four. Before we get on to the list, may I ask you a question about the timetable which you envisage for this Bill. There has been a lot of pressure from the international community and others to get a Bill on this subject on to the statute book. We are not going to report until the end of July before the Houses rise. How do you see this legislation getting through? Presumably, you want to get it through before the General Election?

Mr Straw: I am determined to get it through before the General Election and, provided there is a fair wind from all the parties (and so far there are indications that there are), there is no reason why it should not go through by then. There is an issue about whether it could be introduced in the so-called "spill-over" session in middle/late October, as a carry-over Bill, and I have not got clearance from the business managers about that but that would certainly be my intention. That would give perfectly adequate time. It is not a big Bill (especially, if I may say, my Lord Chairman, since you and your Committee will have done your work and better informed the debate about this), and I think that it is possible to generate a fair wind behind this and get it through. I absolutely share your view about the urgency of this.

Q556 Chairman: The trouble is there is going to be a great pressure for amendments of one sort or another, and the Parliamentary timetable is going to be quite important.

Mr Straw: All Bills are amended and, if you are managing the Bill in an active way on the floor of, certainly, the Commons, and upstairs in Committee, you make sensible judgments about which amendments you should accept. I have certainly never sponsored a Bill which has been in perfect form when it began its journey through Parliament, and then those which would just scrub the works. There may well come a moment when I would have to say to colleagues: "Well, don't make the best the enemy of the good". I am sure, my Lord Chairman, you and your Committee may well have received proposals for amendments, and what I would certainly be encouraging both your Committee and, also, outside groups is to come forward with suggestions at this stage if they feel there should be amendments, and so we can consider them now. One of the things I have done is held a round table with business groups and with two of the major NGOs as well to encourage them to come forward if they have particular proposals.

Q557 Chairman: I do not think we want any more consultation; we have got enough material on the record from the witnesses already. No doubt we can incorporate some. I really wanted to get a feel about how much of the discussion about possible amendments you would like to have in the report.

Mr Straw: If there are thoughts about possible amendments, my Lord Chairman, I would much rather have them in your report so we can consider them than they emerge later on.

Q558 Chairman: That is what I wanted to know. Thank you very much.

Mr Straw: I greatly welcome the report. As I say, there is no single truth about how you draft a bribery Bill, as is illustrated by the fact that this Bill is quite different in many respects from the 2003 Bill.

Q559 Chairman: Can I turn to the list of questions. The first one relates to the framework of the Bill and the terminology involved: "expectation", "good faith", "impartiality" and "trust". Is it all sufficiently clear, as some of our witnesses have said it is, particularly prosecution witnesses, or is there going to be a need for any further guidance in respect of what these mean - "pathways", for instance, which we have already got, and terms which may or may not catch conduct which should not be criminal? What about the general concept of corruptness, which of course has gone now?

Mr Straw: It is, first of all, worth bearing in mind that, in the end, it is going to be a jury which will decide on guilt or innocence, and they will come to their view in the round as juries applying their own sense (obviously with guidance from the trial judge) about whether the aggregate of the conduct before them added up to an offence of bribery; they will have a sense in their heads of what bribery will mean. Secondly, in terms of the specific elements, we think it is clear. Will there be a need for guidance? One thing I am pretty categorical about is that it is not for the Secretary of State for Justice, nor for my department, to issue a gloss on the criminal law. There could be a case for the DPP or the Attorney General issuing guidance which is published to prosecutors. That is a matter for them. For certain, my Lord Chairman, over the years, some of the words and phrases which are in the final Bribery Act will be the subject of debate in the higher courts about their exact definition. It was ever thus.

Q560 Chairman: So you say - if there are ever any prosecutions at all.

Mr Straw: I think there will be prosecutions. Obviously, if there are no prosecutions there will be no great debate, but I suspect there will be prosecutions. I do not think one should measure the success of the legislation by whether there are scores and scores of prosecutions because, with a bit of luck, this legislation would have a strong deterrent and chilling effect, so it would change behaviour. If we were to measure the success of, for example, the anti-smoking legislation which came into force in July two years ago, we could say it is a total failure because there has been one prosecution, but if we use our own powers of observation we would say it has changed people's behaviour and been a great success. In some areas when you change the criminal law you measure the success by prosecutions and convictions, in others you measure it by changes in behaviour, but I think, generally, it will have a deterrent effect. However, one way we will get a change of behaviour is by some prosecutions which otherwise would not have taken place.

Chairman: We will come back to guidance a little later on, but in general, I think, that is a round answer. Thank you very much.

Q561 Dr Iddon: Thank you, my Lord Chairman. Dealing with the main offences containing clauses 1 and 2, why does the active bribery offence require knowledge or intention to be proven, whereas the passive bribery offence does not? Is it fair to impose strict liability for a serious crime such as bribery?

Mr Macauley: The clause 1 offence requires mens rea in both cases, in both case 1 and 2. In case 1 it is "intention" and in case 2 it is "knowledge or belief". The clause 2 offences require intention in relation to case 3 but for cases 4 to 6 there is no requirement for intention or any kind of mens rea on the part of the person receiving the bribe.

Q562 Chairman: Yes, we know that but what is the justification for it?

Mr Straw: This is an offence of being bribed, and the assumption in those cases is that it is perfectly obvious to the person who is taking the money that they are acting dishonestly. So you do not have to labour the point. If you take, say, case 5, which is subsection 4 of clause 2, if I agree to receive or accept a financial or other advantage as a reward for the improper performance of a function, then I think I should be guilty if I know it is improper. For these purposes, I am a public official; I have to agree all the time plenty of exercises of discretion, for example, about the liberty of individuals or the partial liberty - whether they go into open conditions in prison or whether they, in certain circumstances, may be released early, and so on. If I were to accept a financial or other advantage for the improper performance of my discretion there, I do not think the prosecution should have to prove anything else but that I exercised my discretion improperly and I took the money. To ask the prosecution, on top of that, to show that I had acted dishonestly, I think the matter would speak for itself. That is really what we are seeking to capture in those later cases in clause 2. Is that the correct answer, Mr Macauley?

Mr Macauley: Yes.

Q563 Chairman: It really is a strict liability?

Mr Straw: I do not regard this as strict liability (if I am not being pedantic) in the strict sense of the term. Strict liability is: you commit an offence if you stray across a double white line or you leave your car parked on a double yellow line, and if you do then that is an offence. I do not accept that the phrase "strict liability" is appropriate here. What I believe is that the mens rea - the guilty mind - is embedded in the circumstances of the offence. It talks about "improper performance"; well, if you are defence counsel you can have a lot of fun about whether their performance was proper or improper, and that begs a moral question about whether it was proper or was not proper. As I say, I do not accept it is a strict liability, in the sense in which you say it. What we are trying to do is get a balance here between having an offence which would be unjust and would lead to the conviction of people who had not acted improperly or dishonestly and, on the other hand, not creating so many hurdles so that the jury are being invited to come to a judgment on which the only evidence could be that of the defendant, which he declined to give, about exactly what was going on in his mind, and try to make a judgment instead about whether he had performed properly or improperly. The other things are matters of fact. In many other crimes it is the facts which speak for themselves, and the dishonesty is implicit in the acts. If I take Mr Macauley's jacket and go and sell it, then the court does not have to enquire exactly into my state of mind; unless I have a really, really good reason for why I did that, I think I am up for theft and one or two other offences.

Q564 Mr Cox: Prosecutors have to prove intention, whereas this section clearly makes it regardless of whether he knows or believes it is improper.

Mr Straw: I am sorry, Mr Cox, I do not accept that; I think in practice ----

Q565 Mr Cox: It is subsection (7) of section 2: "In cases 4 to 6 it does not matter whether R knows or believes that the performance of the function or activity is improper". So you could commit the offence sublimely oblivious to the fact that you are doing anything wrong at all.

Mr Straw: If it is for the improper performance of an act and you have accepted a financial or other advantage. If you accept a financial or other advantage - that is the first thing. If I am working for a company, so I am working as a buyer in a company and working in my current job, and I accept a financial or other advantage, first of all, are not the bells supposed to be ringing in my head as to why I have accepted that when it is not normal? You have to work in the real world here, and I am sure you would have quite a lot of fun with this, Mr Cox, if you were defending such individuals.

Q566 Mr Cox: It would not be fun for the person prosecuted if he did not think he had done anything wrong.

Mr Straw: If he had done nothing wrong there would not necessarily be a prosecution, but I am saying if the individual has accepted a financial or other advantage as a reward, in circumstances where they are not supposed to accept any financial or other advantage, to begin with, then that seems to me a pretty good starting point for a prosecution. Then there is the question of whether he has improperly performed his duties. He is likely to have a fairly shrewd idea of whether his duties are improper or not, but if he does not - and he has been negligent about that - I think he would have to take the consequences. We have to ensure that this bites, and what we have sought to do is make it consistent with the OECD arrangements which, on the whole, work elsewhere and work pretty well. So the protection here, Mr Cox, my Lord Chairman, is that of the jury; they will be able to come to a common-sense view, if it is palpable that the person had entirely proper motives all the way through and acted entirely properly, and the whole thing was a mistake and, indeed, it was routine for buyers in Tesco's to accept commissions which they did not disclose to their employer and other such matters. Wholly improbable, but then that would be taken into account, and there is a high level of prosecutorial discretion as well.

Chairman: I think, Secretary of State, what has been left out here is the material upon the basis of which the prosecution is brought and the witness statements and other investigative proceedings. These themselves would give an indication to the prosecution on what should and should not be pursued.

Q567 Lord Anderson of Swansea: A possible example where mens rea may be relevant is where a developer negotiates with a planning officer of a local authority on planning gain and it so happens that the planning gain is a benefit to a local community but, also, happens to benefit relatives of the planning officer. Is not mens rea relevant in that?

Mr Straw: You are talking about section 106, which I talked about yesterday in a briefing session. My Lord Chairman, I will give you a more detailed answer after the vote.

The Committee suspended from 3.19 pm to 3.32 pm for a division in the House of Commons

Chairman: We have got three questions on some of the technicalities about "legitimately due", and the possibility of removing that, and the question of whether it should be tied up in written law rather than anything else.

Q568 Dr Turner: Can we look at clause 4, which relates to bribery of foreign officials? Could you explain the rationale for including the "not legitimately due" test in clause 4? Can you give specific examples of the types of advantage that it may be legitimate to give to an official?

Mr Straw: One of the behaviours that I can think about was referred to in the last question I was asked before the division, and which I raised yesterday in my briefing session. This is circumstances in which there is a debate and then a decision made under section 106 of the Town and Country Planning Act 1990, which provides that the developer pays over to the benefit of the community, or for individuals within the community, part of the planning gain that they are otherwise achieving. This involves what amounts to offsetting common, unacceptable business practices but, also, common here in that: "I am a developer, I want to put up a shopping centre, I am going to make a lot of money out of it", and the planning authorities say: "Okay, you can provide this amount of social housing or you can provide this community centre." If, say, it is social housing, you could end up in a situation where, incidentally, the official is benefiting himself - not improperly but is benefiting himself - from this social housing. It is exactly that circumstance, using an example in English law, that this excludes, and it is essentially a protection for officials who might otherwise (and, indeed, for P, who is the person of the guilty of the offence) be thought to be bribing a foreign public official. I use that in a domestic example but I assume that there are plenty of cases where the equivalent of section 106 applies in other countries.

Q569 Dr Turner: The example of section 106 is, perhaps, not an especially apposite one because normally an individual official does not personally benefit from a section 106 agreement; it is the community at large which normally benefits from that. Can you give an opinion on the possibility of withdrawing the test of "legitimately due", which has been suggested by several serious players? What are the implications of removing that test? In particular, would the removal of the phrase lead to clause 4 catching conduct which should not be viewed as criminal?

Mr Straw: Obviously, if your Committee, my Lord Chairman, comes to the view that "not legitimately due" should be excluded from the drafting, I will give very careful consideration to that, but I do not want to give a snap answer here. My judgment up to now has been that this is a sensible, as it were, additional condition for a prosecution. I, for the reasons I have suggested, think that it helps to deal with, as it were, the equivalent of section 106 situations. The answer to your point about whether the official would not normally benefit - that may or may not be the case - was provided by Lord Anderson in the question that he asked me before the break. He might be benefiting. If I am an official and I negotiate a section 106 agreement, and I happen then to benefit from, say, the social housing which has resulted, that is not improper, but it could be construed as being improper unless there is protection. That is the sort of thing we are talking about.

Q570 Chairman: Would it, at least, be necessary that there should be a written provision in the law?

Mr Straw: We have also had a debate about this in the briefing session. If you are not dealing within written law then you are down the track of custom and practice, which typically, in certain states which I could quote, differs very markedly from what is written. As far as I know, I cannot think of a single state which says it is entirely legitimate to accept bribes and to act improperly. So if you go through some of the nations whose practices are some of the dodgiest, the black letter text of their law will, on the whole, be pretty impeccable. What is not impeccable is their enforcement of the law and their custom and practice, part of which is to ignore what is in the black letter law. If you admit that part of the law is what they say it is - and literally say it is rather than having it written down and having been properly approved - they might as well, I think, tear up this offence. As I say, I can think of, certainly, one foreign jurisdiction (which I will not quote), to my certain knowledge, where what is written down in black letter law is perfectly good - similar to ours, both in the criminal law and areas of public administration law - but what actually happens is something completely different. What we are trying to do is to ensure that we subscribe to the OECD criteria and standards, and the OECD is trying to raise the standards of behaviour. It will not achieve that if it actually ends up by conniving about the worst kind of practices. So if you do not add that in, as I say, it makes the offence risible.

Q571 Dr Turner: Where do you draw the line, Jack, between a bribe, under these circumstances - because no state is going to have a law which says: "It is perfectly legitimate to bribe our officials" (it just does not happen) - and a perfectly legitimate commission to a law officer or whatever?

Mr Straw: That is straight forward because if it is legitimately due it is fine. That answers your question.

Q572 Dr Turner: It will not necessarily be defined in law.

Mr Straw: What has happened up to now is this: businesses here and in other OECD countries, and business people, have been in the really invidious position of being, really, forced - in fact, have been blackmailed - by foreign officials in the local jurisdiction to pay some kind of "commission" because they say: "That's how we do things, and if you want this business you are going to have to pay us a commission." The moment they do that then they are compromised. What the OECD is trying to do is establish its own norms of behaviour and say: "Sorry, these things are not acceptable. If, state X, you have said in your black letter law, that you say is your law, that something is unlawful, well, that is the standard against which you are going to be judged." What we are trying to get to achieve is a situation where business men and women from all over OECD states say to these public officials in this foreign jurisdiction: "We cannot do business with you on that basis, and we are going to treat you like a pariah".

Q573 Dr Turner: Jack, how would this apply to officials being given hospitality by potential suppliers - if you like, oiling the wheels of a deal - which is pretty normal behaviour in commercial practice? Could this be criminalised here?

Mr Straw: Whether hospitality is legitimate or outrageous is a matter for degree and of judgment. I was thinking, on the way back up here, about the Poulson case. If I may say so, Dr Turner, you may be of the same antiquity as me so will remember the Poulson case. A large part of the advantage that John Poulson lavished on those he was corrupting and bribing was in terms of hospitality. If it is corporate hospitality - if it is one lunch, one party, in a UK context, one ticket to Ladies Day at Ascot, one day at Wimbledon - fine; if it is a corner table at the Connaught whenever you want to use it for whoever you wish to entertain, then that raises very big questions. As I say, it is a matter of degree and it would be a matter for prosecutorial judgment, but if it is something which is an accepted norm - normal hospitality - no prosecutor is going to prosecute and no jury, more importantly, would convict. On the other hand, if it is up at the level of Poulson hospitality - that was his excuse: this was just normal hospitality and the fact that he took people to the races and provided them with money with which to bet and there was a running free table was all fine, he said; that was just normal. In the end, the police, prosecutors and juries did not share that view.

Chairman: Dr Turner, I am terribly sorry, we must move on. Lord Williamson, you wanted to ask about the "reasonable belief" defence.

Q574 Lord Williamson of Horton: Mr Straw, we spend hours in this Committee talking about foreign officials. Can I just ask you one more question? In the Law Commission's version there was a "reasonable belief" defence, that is to say that someone reasonably believed that a foreign official was required or permitted to accept the advantage. The Government struck that out in the draft Bill. Some people think it was a good decision to strike it out and some of our witnesses think that it should still be there. Can you say whether you think there is any risk, without the "reasonable belief" defence, that some businesses would be open to prosecution because they had poor legal advice and also that there would be too much weight on the prosecutor's discretion, which the Director of Public Prosecutions thought when he spoke to us?

Mr Straw: I am sorry, Lord Williamson, too much weight on the prosecutor?

Q575 Lord Williamson of Horton: On the prosecutor's discretion whether to open a prosecution.

Mr Straw: As I say, this goes to some of the earlier questions, particularly in respect of clause 2, about how you achieve the correct balance with these offences, on the one hand to ensure that they are fair to defendants (and that is of fundamental importance), on the other hand that you do not provide so many rabbit holes that you are never able to convict a defendant who the public would regard as guilty of this particular offence. Our judgment, in the end, but I am happy to consider this further, is that the "reasonable belief" test was unnecessary and would simply over burden the offences. I have quite a lot of faith in prosecutors, and I have got even more faith in juries. Juries operate by looking at behaviours in the round, on the whole. They can be eccentric but, taking one jury or another, that is what they do. So that is my view.

Chairman: Can we go on to the corporate offence, negligence or gross negligence.

Q576 Martin Linton: Clause 5 provides the corporate offence, and Professor Wells pointed out that there is something of a belt and braces approach here, in that you have to show that failure is negligent, but there is also the defence of adequate procedure. She suggests that we do not actually need the word "negligent" and we could just rely on the "adequate procedures" defence. What is your view about that?

Mr Straw: I think that would be unfair. Here, in a sense, we are leaning towards defendants, but this is where there would be a prosecution of a commercial organisation, the vicarious liability of the senior people in it. My own belief, Mr Linton, is that it is reasonable to have negligence as well as a failure to operate a proper system as one of the tests and, as to negligence, the courts are very well practised in making judgments about what is negligent and what is not negligent. Ultimately, these are judgments on the facts of the case, but the courts have spent decades and decades assessing what is a standard of care and whether or not it has been breached.

Q577 Martin Linton: Is there not a danger that this would provide too great an onus? Bearing in mind the history of the last Bill, which resulted in, I think, one prosecution, are there not dangers in making the threshold too high, too difficult?

Mr Straw: For a prosecution?

Q578 Martin Linton: Yes.

Mr Straw: I know from the question sheet that one of the suggestions would be to raise the threshold to gross negligence. I certainly would not go there. This is a matter of judgment, but, as I say, I think that where you are dealing with a criminal prosecution - we are not talking about civil liability but a criminal prosecution of senior people in a company in respect of the behaviour of others ---

Q579 Martin Linton: You would not have to prove negligence for the senior people, only the junior managers.

Mr Straw: As I say, in these circumstances you have to be really careful. That is my view.

Martin Linton: I was going to ask about the gross negligence as well, but that has already been covered.

Chairman: I would like you to do so, because there has been such trouble about corporate liability.

Q580 Martin Linton: You mentioned, as an aside, that you would not go there, but certainly the CBI did argue the opposite to Professor Wells, that the thresholds should be lowered from negligence to gross negligence.

Mr Straw: There is always a difficulty with concepts like gross negligence. If someone is negligent, are you now accepting that there is an area where people can be quite negligent, or significantly negligent but it does not carry a level of culpability?

Q581 Martin Linton: As in "slightly pregnant"!

Mr Straw: Yes. We have got concepts like recklessness, which has a rather separate link, and certainly one could say - I do not - that you would have to show recklessness, but I think the addition of the word "gross" would tend to confuse as much as anything else.

Chairman: Thank you for that. Let us go on to question eight, Lady Whittaker, subsidiaries, joint ventures and organisations which are not wholly owned.

Q582 Baroness Whitaker: Some of our evidence, Secretary of State, is not clear as to what extent clause 5 applies to foreign subsidiaries, joint ventures, syndicates, because in the phrase in 5(1)(b) the bribe was "in connection with" C's business. The OECD thinks it is a weakness in their Convention that foreign subsidiaries are not completely covered. We would like to know, first of all, do you intend that foreign subsidiaries, wholly owned, partly owned, joint ventures and syndicates should be covered by 5(1)(b) and can you explain how?

Mr Straw: Mr Des Tombe will explain.

Mr Tombe: We recognise that the OECD has itself identified problems with foreign subsidiaries. What clause 5 and 6 together do is say that clause 6(4) makes clear that whether a person or body was performing services on behalf of another person is to be determined by reference to all the circumstances. So you have to look at whether, first, A was performing services for or on behalf of C. You then also have to look at whether the bribe was in connection with C's business. So, obviously, the jury and the court will be looking at those elements and, if it can be established that there was this connection, then it is fair that C shall be prima facie liable, but if the foreign subsidiary has no connection with the UK other than its parent company being located there, then we do not think it should be caught by the defence. We do not think that the question of ownership is sufficient justification for taking jurisdiction over foreign subsidiaries.

Chairman: Does that cover your point, Lady Whittaker?

Q583 Baroness Whitaker: Do you think that these distinctions should be spelled out in a code of practice or guidance, or something like that: because, on the face of it, the business is not going to know if its foreign holding is caught or not?

Mr Tombe: Obviously the court will have to look at all the circumstances, and if guidance would make this clearer, then this is something that we might consider.

Baroness Whitaker: Thank you very much.

Chairman: Let us go on to the major question of guidance procedures. The Americans have got a system; we have not. I am still waiting see how it could be incorporated so that it is admissible in English law. Maybe it should not be. What views have you got about that? Lord Thomas?

Q584 Lord Thomas of Gresford: The business interests that we have heard have said that when it comes to looking at the framework of the Bill, they will have to turn to their lawyers to get advice as to whether their procedures will comply, but in particular instances, of course, what is going to happen is very fact-specific. The business interests may want to enter into a particular contract; they may need guidance as to whether they are acting properly. As the Lord Chairman has said, there is a procedure in the United States, under the Attorney General, for advising companies on whether proposed action would be lawful, pursuant to their 1997 Act, with a rebuttable presumption that acting in accordance with that advice would mean that no offence will be committed. The Director of Public Prosecutions and the Director of the Serious Fraud Office were naturally loath to give that advice from their point of view, to give advice in advance of what they might do in a particular case they are prosecuting, for obvious reasons. Do you have in mind some sort of department within the Ministry of Justice that could offer guidance to companies or the establishment of an independent commission, as in Hong Kong, to whom companies can turn to say, "We are about to enter into this contract, or that contract. Can you advise us as to whether we are on safe ground?" Do you have any proposals like that?

Mr Straw: I recognise that the business community have a point here. I do not have a direct answer, but I think they raise a serious issue here and, one way or another, we have got to try and find a solution to this. I am clear that simply lifting what goes on in the United States and trying to plonk it down here would not work, because, as you are aware, my Lord, this arrangement is run in the United States by the Department of Justice and the Department of Justice combines, roughly speaking, the functions of the Ministry of Justice here and the functions of the Attorney General's Office as well, combined in one individual, and therefore, as it were, the MoJ bit of the Department of Justice which deals with criminal law can produce guidance to which the Attorney General has attached his or her endorsement, and since the Attorney General decides on prosecutions, that feeds its way through into prosecutorial decisions. We have a separation between the Ministry of Justice functions and law officer's functions in this country and there is a much stronger wish to protect the independence and discretion of prosecutors than there is in the United States. It is a different system. So I am very far from clear whether we as a department would publish guidance. There will be guidance published generally and people will write text books about this, guide books, and so on, but in terms of authoritative guidance, particularly giving specific advice to company X which is to do deal with country Z, does this or does this not come within the ambit of the law, I think, would be impossible for the Ministry of Justice. What I am willing to do (and I say this in recognition of my briefing session for this and now here) is to talk to the Attorney as well as to business organisations about how we try and find a solution here. We have to be quite imaginative about this, and we have got to take in our traditions, but that is what I undertake to do.

Q585 Chairman: Will you be able to produce an answer fairly soon?

Mr Straw: I cannot promise that. I promise to produce an answer, but because I am also having to work at some pace and with great assiduity to produce a bill that will work on parliamentary standards as well as other minor matters of running a big department, I cannot promise you are going to have that before the recess, my Lord Chairman - I would be deceiving you - but what I do promise is that I will pursue it.

Q586 Lord Thomas of Gresford: The most significant difference between our system and the American is the plea bargaining system.

Mr Straw: Indeed.

Q587 Lord Thomas of Gresford: That is what makes the difference, but you would consider, would you, some of sort of independent body to whom business can turn and say, "Are our procedures good? Are they effective? Do you approve of them?", and also go to them with the particular contract in mind and say, "What do you think about this? Do you think that we can enter into it in those terms?" It would have to be independent of the Department of Justice, maybe, and the Ministry of Justice or the Attorney General.

Mr Straw: I am thinking aloud here, but just as companies have to have their accounts audited, also sensible companies are having their management systems audited by reference to International Standards and bodies like Investors in People, and so on, or, for example, insurers insist that if companies are running a potentially unsafe system of work, one that is intrinsically unsafe, then they will have to have that audited by a test organisation. I could certainly envisage a situation where independent bodies - maybe they would be, say, a subset of Lloyd's Register or people like this, these testing organisations - would set themselves up to say that, looking at the totality of practices in well-run companies in countries which observe high standards of ethics and have the OECD Convention, this is what you need to do. I think that would be very sensible, you would give the encouragement, but, as you say, that would need to be done independently of government. On whether it is going to be possible within our system to give a company a ticket which says, "We have taken account of every conceivable circumstance of the way this deal would operate and, on the information available, we think that this is consistent with the law and would not transgress the law", I think that is something which may be very difficult to achieve.

Q588 Lord Thomas of Gresford: It is a rebuttable presumption.

Mr Straw: Yes, and that is what is needed. As I say, what I want to do is to be imaginative about this and see whether we can get there. I am thinking aloud, but it would also have the advantage of giving companies really no excuse but to raise their standards, and I think it would make quite a difference. As I say, what I promise to do is to go in to bat with the Attorney and the business organisations and the NGOs as well, because people like Transparency International, people who play such an important part in raising standards, need to know that what we are not seeking to do is to water them down, and, obviously, I also look forward to any observations your Committee may have, my Lord Chairman.

Q589 Earl of Onslow: Secretary of State, there are lots of precedents for this. The Health and Safety people you can go and get answers from. What would be wrong with the Department of Trade doing it? After all, Lord Mandelson's department is so large now he would not notice the extra burden!

Mr Straw: I will ignore that below the belt comment. I am sure he will be deeply offended, and I am on his behalf! I do not profess to have great expertise in the field of health and safety, but it is certainly the case that there are plenty of bodies external to government which provide certification about safe procedures at work, and it is the insurers often who insist on that.

Chairman: Mr Djanogly, you wanted to explore the question of incorporating Article 5 of the OECD Convention.

Q590 Mr Djanogly: Do you accept that Article 5 of the OECD Convention should be incorporated into domestic law, as has been recommended to us by certain parties that have come before the committee, or perhaps added to the code for Crown prosecutors.

Mr Straw: I think probably the latter, Mr Djanogly, rather than the former, but I will take that up with the Attorney and the DPP.

Chairman: Bribery by the security services. Lord Onslow.

Q591 Earl of Onslow: The OECD has criticised this clause. It appears that in some ways it increases the power of government and in some ways it decreases the power of government. Should the clause be removed or limited to cases involving national security and serious crime and, as a matter of interest, are the powers of authorisation of real significance to the draft Bill? For instance, how often has MI6 been authorised to bribe individuals under the Intelligence Act 1994?

Mr Straw: Lord Onslow, I am afraid I cannot give you the information. It is not because I do not know, but because it has never been the practice to give such information, just so we are clear about this. The maximum information that is given on authorisations of this kind is contained in the various published reports of the Intelligence Service Commissioners and the Intercept Commissioners.

Q592 Earl of Onslow: For those of us who have not read all the reports from cover to cover, could you tell us roughly? Do you have any idea?

Mr Straw: I do have an idea, because for four years I was responsible for the Security Service and then for five years for the Secret Intelligence Service in GCHQ, but I am afraid what I do not have is the copies of those reports in front of me. What I will seek to do is to ensure that the Committee is given what information is available, such as it is. Please do not hold your breath for a great deal of information. Can I make a wider point, my Lord Chairman and Lord Onslow, which is this: the intelligence and security agencies now are the subject of a very high degree of statutory control, they are statutory bodies and their work is then subject to detailed invigilation by the various commissioners who are all retired members of the senior judiciary, and they have staff as well. So you have got the Surveillance Commissioner, the Intelligence Service Commissioner and the Intercept Commissioner looking at various aspects of their work and, for example, in terms of the Intercept Commissioner, crawling over warrants and checking whether they were authorised properly, and so on, and going back to the role of the Secretary of State if the Commissioner feels that they have not been, and also being available for advice; but in terms of the coverage of this clause, the coverage of this clause matches the functions of the Intelligence and Security Agencies and I think it would be very curious if, through this Bill, we sought to restrict the activities of the agencies more narrowly than that which has been provided in the primary legislation by Parliament.

Q593 Chairman: Secretary of State, I think that if you can provide us with a bit more information on this, it would be very valuable, because, plainly, if this Bill gets onto the floor of either House, this is a topic which is liable to be discussed on an amendment and the more that we can publish by way of what is and is not available in terms of information, I think, the better.

Mr Straw: I will ask the people who put these reports together to provide this information.

Chairman: Right. Lord Mayhew, the delegation of powers by the various prosecutors.

Q594 Lord Mayhew of Twysden: It is about clause 10, Secretary of State, consent to a prosecution. Why do you consider it necessary to keep a provision for consent at all?

Mr Straw: The consents are delegated because under the Prosecution of Offences Act every area Crown prosecutor has delegated authority over prosecutions. I have got no particularly strong views about this.

Q595 Lord Mayhew of Twysden: I am just wondering if I can come to the delegated part in a moment. You are keeping in clause 10 a requirement that there shall be no prosecution save with the consent of one or other of the directors. I am wondering why you are keeping that. Might your answer also tell us how important you consider it, if at all, that the exercise of that consent, discretion, should be accountable to Parliament?

Mr Straw: One could argue that since prosecutors have anyway, as it were, got to give consent to a prosecution because they have got to not only measure the evidence against the evidential test but also against the public interest test, they are making it a judgment about, effectively, giving consent. I think the purpose of this is simply to ensure that the consent levels are slightly higher up the system, and I think that can be a way of dealing with new sets of offences. There is some understandable anxiety, for example, by the business community. I think that having these consent provisions is probably sensible, and it will not act, I am advised, as a bureaucratic bar on the CPS or the SFO because where, say, the DPP or the Director of the SFO has to give consent, these consent powers are, in practice, delegated to area Crown prosecutors, it is not like the AG's consent, but in serious cases they would, in any event, go up the food chain and they would make a judgment. I know that from your experience, Lord Mayhew, you saw the way this operated. It is not something I have any really strong views about one way or the other, but I think it is probably sensible.

Q596 Lord Mayhew of Twysden: Thank you for that. Can I suggest that whatever it is that makes it desirable that there should be a prior consent also makes it desirable that it should be accountable to Parliament, the exercise of that consent, or the refusal of it should be accountable to Parliament, and you cannot have that unless the Attorney General intends to give consent, I suggest.

Mr Straw: I agree with that. Plainly, if you want there to be accountability to Parliament directly for these prosecutorial decisions, you have got to have the AG as the person giving the consent. Where this Parliament is, certainly where the House of Commons is, is trying to move away from AG's consent and having decisions on prosecution dealt with much more by the DPP and by his or her staff. That is, I think, quite a significant change in the past 25 years, but that is just where it is; but, my Lord Chairman, if you come to the view that this ought to be the AG's consent or there should be no need for consent at all, then obviously we will consider it. One of the reasons why the consent is required, of course, is to try to eliminate the prospect of private prosecutions, which could often be pretty vexatious.

Q597 Lord Mayhew of Twysden: We have been told that there are very few prosecutions and there are likely to be not many more prosecutions. Is it not, therefore, desirable to keep this with the Director of Public Prosecutions at least and not allow him to delegate?

Mr Straw: I am certainly told in my briefing in practice there is normal delegation of DPP's consent within the CPS. I guess it would be for the DPP to say that for these offences the matter would have to come to him or her.

Q598 Chairman: Section 53 of the Serious Crime Act still gives a role to the Attorney. In advance of the Constitutional Reform Bill, and goodness knows when that is going to come, is this something that ought to be addressed in this legislation?

Mr Macauley: My Lord Chairman, you are quite right in referring to section 53 of the Serious Crime Act. Those provisions are still in place and do require the consent of the Attorney General for extraterritorial cases involving assisting and encouraging all crimes. This will be dealt with in the Constitutional Renewal Bill, should that go forward, but should that for some reason not go forward, then this matter will be dealt with in this Bill.

Q599 Earl of Onslow: It should be dealt with in this Bill anyway, should it not?

Mr Macauley: Yes.

Q600 Earl of Onslow: Because it covers bribery.

Mr Macauley: That is right. If it is not dealt with as a horizontal matter, it will be dealt with in this Bill as a bribery matter.

Chairman: There is a rather general question in relation to offsets.

Q601 Linda Gilroy: Offsets are a common feature of large procurement contracts and that is especially the case in defence. As the Woolf Committee says, "Defence companies will often employ third party advisers to assist them in both the development of the offset package as part of the procurement process and in subsequent delivery of individual projects. This can expose the company to similar ethical and reputational risks regarding bribery and corruption ..." Are you confident that the main offences will be able to draw the dividing line appropriately? Will specific guidance be needed to create certainty for companies on the use of offsets?

Mr Straw: I think so. We have tried to draw it properly. Would you like to say a word about this, Mr Des Tombe?

Mr Tombe: Yes. The issue will be whether the offset is improper or not. If it amounts to improper performance, then it will be caught by the offence. If it does not amount to improper performance as set out in the Act, then the offset will not be caught by the offence.

Q602 Linda Gilroy: Are there not particular special difficulties, as the Woolf Committee points out? When we took evidence from BA Systems they said that it remains one of the key reputational risks that there are. It has particular features to it and I wonder whether enough thought has been given to whether the main offences capture this or whether there will be a very explicit need for guidance on it.

Mr Tombe: We will take the concern away and consider it.

Chairman: Mr Borrow on the British Overseas Territories and Crown Dependencies incorporated companies.

Q603 Mr Borrow: The OECD is recommending that the jurisdiction of the legislation should be extended to cover companies incorporated in Overseas Territories and Crown Dependencies. I would be interested in your reaction to that and whether that is something that you would consider bringing in as an amendment to the draft Bill.

Mr Straw: Whilst we are responsible for the overseas relations of the Crown Dependencies and also for those of the British Overseas Territories, neither the British Overseas Territories nor the Crown Dependencies are part of the United Kingdom. For example, I have a very specific role in respect of the Crown Dependencies which are the Channel Islands and the Isle of Man because I, in practice, have to decide whether their legislation should be recommended for Royal Assent, and I have certain other functions. We would only legislate in respect of the Crown Dependencies where their government systems had broken down. I am perfectly clear that the Crown Dependencies, when and if we have legislation on the statute book, will go ahead and implement equivalent legislation. That normally happens and I will be very strongly encouraging them to do so. There is a similar but not exactly the same situation with the British Overseas Territories. Again it is a matter for them, although if governance is breaking down - and there is a case in point at the moment - we can seek to impose direct rule. That seems to me to be an inappropriate way of handling matters.

Q604 Earl of Onslow: Is not Scotland an even bigger hole? Are the Scots going to introduce a bill on this?

Mr Straw: The Scots are always a bigger problem!

Mr Macauley: My Lord Chairman, this Bill, as you know, applies to England, Wales and Northern Ireland. The criminal law is a matter that is devolved to Scotland under the Scotland Act. We are liaising with the Scottish Executive. The Scottish Executive is aware of the UK's international obligations and they have the choice of either legislating themselves or proceeding by way of a legislative consent motion, so that Westminster can legislate on its behalf. We have not yet got to the point where Scotland has to make up its mind on that, but today they are well aware of the situation north of the border and our understanding is that they plan to consult on reform there in the near future.

Q605 Chairman: To go back to the Overseas Territories and the Crown Dependencies, there is a certain amount of persuasion that could be placed on them to legislate in accordance with whatever we have done here.

Mr Straw: I used to be responsible for these as Foreign Secretary, and I am not now. We have just imposed direct rule in the Turks and Caicos. We are not slow in coming forward in those respects and we will be putting a lot more pressure on these Overseas Territories to legislate or to face takeover. The pressure comes not only from membership of the OECD but, for example, our agreement in the G20 in early April, at that G20 meeting in London, to ensure that we move towards almost universal standards of probity in financial business systems.

Chairman: Does that cover the point?

Q606 Mr Borrow: I was just going to emphasise the importance that the banking problems have demonstrated within some of the overseas territories and the need to ensure that in this area, as in others, we ensure that those overseas territories for which we have residual responsibility should be brought up to the highest standards. The second area I wanted to raise with you is the concern raised by Professor Horder that taking within the jurisdiction of this draft Bill companies who will carry out business in the UK, risks British companies operating overseas being targeted by their governments in a tit-for-tat way. Do you have any response as to whether that is a legitimate concern that Professor Holder is raising with the Committee?

Mr Straw: This is, not least, because of the universal jurisdiction which the United States seems to assert. It is a problem, but I think it has to be dealt with on a case-by-case basis. We are not seeking a situation where companies are prosecuted in two different jurisdictions in respect of the same set of facts, because that would obviously be unfair. We cannot do anything about the way in which the US asserts universal jurisdiction. We just have to live with it. I am handling a case at the moment, not in the area of bribery but a different criminal prosecution, where there is a criminal investigation and potentially prosecution in respect of the same set of facts, against the same set of individuals, taking place in both Cyprus and Greece. It is very unfair on the individuals, but that is how it is and we are trying to sort it out.

Chairman: I would like to invite Mr George to raise the question of parliamentary privilege. Is it really a good idea to include this point in the Bill?

Q607 Mr George: The Chairman has asked the question. We know that parliamentary privilege is described as "delicate and complex." Do you agree, as successive committees have said, that this is best addressed by a Parliamentary Privileges Bill? Is that an option?

Mr Straw: It may be an option, Mr George. We do not have a plan for a Parliamentary Privileges Bill. As you know, this Bill does not make any provision to exempt Members of Parliament from the provision on criminal offences. There has already, as it were, been the equivalent of statutory provision on Parliamentary Privileges which is in the Bill of Rights. I do not see the point particularly of a Parliamentary Privileges Bill. This issue of parliamentary privilege has to be handled in certain circumstances. It is taking up a significant amount of time in preparing the Bill on the Parliamentary Standards Authority so as to ensure that the courts do not get dragged into decisions on the way that Authority works and, indeed, the way Parliament works. The general view is that that is regarded as inappropriate. There are many areas of activity by Members of Parliament which, however, are the subject of action by the courts. To take a highly contemporary example: the Freedom of Information Act Parliament decided should apply to Parliament and the reason the expenses are going to be published tomorrow is as a result of decisions by a judicial tribunal, a Freedom of Information Tribunal, and then by the Court of Appeal. That is how it is. That is a change in the last 30 years, but that is what Parliament has decided.

Mr George: Should the draft Bill include a definition of "manager" to make it clear who is negligent.

Q608 Chairman: Before we go on to that, the Clerks of both Houses came last week and they gave us a copy of the FOI case which came up in front of Mr Justice Stanley Burnton (as he then was). It is very plain that it is an extremely complex subject. Is it sensible to include a clause in this Bill about that - a stand alone clause - as opposed to dealing with it in another way?

Mr Straw: Our current view is that it is sensible. Obviously, My Lord Chairman, if you have a different view, I will think about it. These issues are not black and white: they are matters of judgment. I am open to argument on it.

Q609 Earl of Onslow: Can you tell us of a situation where this privilege clause would come into effect and under what circumstances?

Mr Tombe: We do not have any specific examples that we are trying to remedy, but that does not mean to say that in future a Member of Parliament might not be ----

Q610 Earl of Onslow: With respect, that is not a very good reason for legislation: "We can't think of any possible circumstance in which this law should apply, therefore we will pass it all the same."

Mr Tombe: No, I did not ----

Q611 Earl of Onslow: That is what you said.

Mr Straw: With respect, no he did not, Lord Onslow. He did not say he could not think of any circumstances.

Q612 Earl of Onslow: He did.

Mr Straw: No, he said he did not have any particular circumstances in mind now. You were gilding the lily, and so I am going to protect a good official. Go on, please.

Mr Tombe: It is quite possible that there might be circumstances in future where the prosecution does need to look at what was said or what conduct occurred in Parliament. The view that has been taken is that it is right that Members of Parliament should be subject to the same law as other people are subject to the law. Having said that, we think it is going to be the very rare circumstance in which we will actually need to lift parliamentary privilege. On that basis we think the very narrow lifting is justified, because it is unlikely to happen, but if it does happen, we think that courts and prosecutors should be able to look at that information.

Mr Straw: I agree.

Q613 Chairman: Mr Straw, will you stay long enough just to deal with the last question on our list which has been allocated to Mr George?

Mr Straw: About the definition of "manager".

Chairman: Yes.

Q614 Mr George: Should the draft Bill include a definition of "manager" to make it clear whose negligence would prevent the adequate procedures defence being available (and to exclude junior employees)?

Mr Straw: We are going to think about this. This phrase was lifted from the Fraud Act 2006, so I am advised. The Corporate Manslaughter and Corporate Homicide Act has used a different approach. We need to think about it.

Q615 Lord Anderson of Swansea: To avoid any ambiguity, presumably "secretary" should be "company secretary" in clause 5(7)?

Mr Straw: Yes.

Mr Tombe: The intention is that it is the people at the top of the company whom we are seeking to catch.

Q616 Lord Anderson of Swansea: Yes. Hence it should be "company secretary" rather than "secretary".

Mr Tombe: We will look at ensuring that intention is brought forward.

Mr Straw: It is not intended to be the "personal assistant".

Q617 Chairman: I think it would be a good idea if you looked at that point again.

Mr Straw: We shall.

Q618 Chairman: Mr Straw, this is the only set of witnesses which has got through all the questions in the session.

Mr Straw: I am sure that is a reflection of the expertise of the Committee, not the witnesses.

Chairman: Thank you very much.