Bribery Bill [HL] - continued          House of Lords

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Clause 12: Defence for certain bribery offences: legitimate purposes

60.      Clause 12 deals with the legitimate functions of law enforcement agencies, the intelligence services or the armed forces which may require the use of a financial or other advantage to accomplish the relevant function. The clause provides a defence where a person charged with a relevant bribery offence can prove that it was necessary for:

  • the prevention, detection or investigation by, or on behalf of, a law enforcement agency of serious crime;

  • the proper exercise of any function of one of the intelligence services; or

  • the proper exercise of any function of the armed forces when engaged on active service.

Although not explicit on the face of the Bill, in accordance with established case law, the standard of proof the defendant would need to discharge is the balance of probabilities.

61.      As well as providing definitions for other terms used in the clause, subsection (2) makes it clear that a “relevant bribery offence” means an offence under clause 1 or 2 and related inchoate offences. Applying ordinary principles of criminal law, the reference in the definition of “relevant bribery offence” to offences under clause 1 and 2 include being liable for such offences by way of aiding, abetting, counselling or procuring (secondary liability). “Relevant bribery offence” does not include a clause 1 offence which would also amount to an offence of bribing a foreign public official under clause 6. This addresses concerns raised by the Joint Committee on the 2003 draft Corruption Bill in relation to, in particular, compliance with the UK’s obligations under the OECD Convention (see HL 157 and HC 705, 31st July 2003).

Clause 13: Offences under sections 1, 2 and 6 by bodies corporate

62.      Clause 13 is aimed at individuals who consent or connive at bribery, contrary to clause 1, 2 or 6, committed by a body corporate (of any kind) or Scottish partnership. It does not apply to the offence in clause 7.

63.      The first step is to ascertain that the body corporate or Scottish partnership has indeed been guilty of an offence under clause 1, 2 or 6. That established, the clause provides that a director, partner or similar senior manager of the body is guilty of the same offence if he or she has consented to or connived in the commission of the offence. In a body corporate managed by its members, the same applies to members. In relation to a Scottish partnership, the provision applies to partners.

64.      It should be noted that in this situation, the body corporate and the senior manager are both guilty of the main bribery offence. This clause does not create a separate offence of “consent or connivance”.

65.     Subsection (3) makes clear that for a “senior officer” or similar person to be guilty he or she must have a close connection to the UK as defined in clause 11(4).

Clause 14: Offences under section 7 by partnerships

66.      Clause 14 deals with proceedings for an offence under clause 7 against partnerships. Such proceedings must be brought in the name of the partnership (and not the partners) (subsection (1)); certain rules of court and statutory provisions which apply to bodies corporate are deemed to apply to partnerships (subsection (2)); and any fine imposed on the partnership on conviction must be paid out of the partnership assets (subsection (3)).

Clause 15: Application to the Crown

67.      Clause 15 applies the Bill to individuals in the public service of the Crown. Such individuals will therefore be liable to prosecution if their conduct in the discharge of their duties constitutes an offence under the Bill.

Clause 16: Consequential provision

68.     This clause abolishes the common law offences of bribery and embracery (bribery etc of jurors), and gives effect to Schedules 1 and 2, which contain consequential amendments and repeals.

69.     Subsections (4) to (10) of this clause create a power for the Secretary of State (or, as the case may be, Scottish Ministers) to make supplementary, incidental or consequential provision by order. The order making power is subject to the affirmative resolution procedure where it amends primary legislation, otherwise the negative resolution procedure applies.

Clause 17: Extent

70.     This clause provides that the Bill extends to the whole of the UK and that any amendments or repeals of a provision of an enactment have the same extent as that provision. However the amendment of and repeals in the Armed Forces Act 2006 do not extend to the Channel Islands and the amendments of the International Criminal Court Act 2001 and the repeal in the Civil Aviation Act 1982 do not extend to the Channel Islands, Isle of Man or the British overseas territories.

Clause 18: Commencement and transitional provision etc.

71.     This clause covers commencement. Clauses 15, 16(4) to (10), 17, 18(1) to (4) and 19 come into force on the day the Bill is passed. The remainder of the Bill comes into force by order of the Secretary of State. A commencement order may appoint different days for different purposes and may contain transitory, transitional or saving provisions. The clause also contains express saving provisions so that any offence committed or partly committed before the operative provisions of the Bill come into force must be dealt with under the old law.

Clause 19: Short title

72.      This clause deals with citation.

Schedule 1

73.      This Schedule contains consequential amendments to other legislation. These are as follows.

74.

Ministry of Defence Police Act 1987

75.     Section 2 of that Act gives the Ministry of Defence Police the same powers as normal police, in relation to services property or personnel, including with regard to offences involving the bribery of such persons. At present these offences are those under the Prevention of Corruption Acts 1889 to 1916 but the amendment will change that so that they are offences under this Bill instead.

Criminal Justice Act 1987

76.     Section 2A of that Act gives the Director of the Serious Fraud Office power to investigate corruption offences. The amendment replaces the references to the Prevention of Corruption Acts with references to offences under this Bill. The offences in question are the bribery of foreign officials (clause 6), and the general bribery offence (clauses 1 and 2) where the functions in question are performed outside or unconnected with the UK.

International Criminal Court Act 2001

77.     Section 54 and 61 of that Act set out the relevant domestic offences in relation to the International Criminal Court in the law of England and Wales, and Northern Ireland respectively. The amendments make clear that offences under the Bill are also relevant domestic offences.

International Criminal Court (Scotland) Act 2001

78.     Section 4 of that Act sets out the relevant domestic offences under Scots law in relation to the International Criminal Court. The amendment updates the references to the Prevention of Corruption Act 1906 and to the common law by substituting a reference to the offences under the Bill.

Serious Organised Crime and Police Act 2005

79.     Chapter 1 of Part 2 of that Act gives investigatory powers to the Director of Public Prosecutions and other prosecuting authorities in relation to offences listed in section 61. This list was amended by SI 2006/1629 to include common law bribery and offences under the Prevention of Corruption Acts. These offences are now being replaced by the offences under the Bill.

80.     A similar amendment applies to section 76 (and section 77 in respect of Scotland), which gives the court power to make a financial reporting order in dealing with a person convicted of (among other offences) corruption offences.

Armed Forces Act 2006

81.     Schedule 2 of the Armed Forces Act 2006 lists serious civilian offences the possible commission of which, if suspected, must be referred to a service police force. The list of civilian offences is amended to include the offences under the Bill.

82.

Serious Crime Act 2007

83.      Section 53 of this Act requires the Attorney General’s consent prior to commencing proceedings where there is an international element to an offence of encouraging or assisting crime under the 2007 Act. This amendment ensures that the requirement for the Attorney General’s consent will not apply in the case of encouraging or assisting bribery by excluding from section 53 any offence to which clause 9 (consent to prosecution) of this Bill applies.

84.      The Serious Crime Act creates a power to make a “serious crime prevention order” in relation to offences listed in Schedule 1 of the Act. Part 1 of that Schedule, relating to offences in England and Wales, includes offences under the Prevention of Corruption Acts. The present amendment replaces this reference with offences under clauses 1, 2 and 6 of the Bill. A corresponding amendment is made in Part 2 of the same Schedule in relation to Northern Ireland.

Schedule 2

85.      This Schedule contains repeals.

86.      The three Prevention of Corruption Acts are repealed in their entirety. These offences are wholly replaced by the offences under the Bill.

87.      Criminal Justice Act (Northern Ireland) 1945 (c. 15 (N.I)) - section 22 amends section 4 of the Public Bodies Corrupt Practices Act 1889 and section 2(1) of the Prevention of Corruption Act 1906 to provide for proceedings to be taken in Northern Ireland only with the consent of the Attorney General for Northern Ireland. Given the 1889 and 1906 Acts will be repealed the section will become redundant.

88.     Section 112(3) of the Electoral Law Act (Northern Ireland) 1962 (c.14 (N.I.) amended paragraphs (c) and (d) of section 2 of the 1889 Act and will be redundant following the repeal of the 1889 Act.

89.     Increase of Fines Act (Northern Ireland) 1967 (c. 29)(N.I.) - section 1(8)(a) and (b) provide that a court may impose a fine whether greater or less than the amount limited by section 2 of the Public Bodies Corrupt Practices Act 1889 or section 1(1) of the Prevention of Corruption Act 1906 respectively. These references will become redundant once those two Acts are repealed.

90.     Criminal Justice (Miscellaneous Provisions) Act (Northern Ireland) 1968 (c. 28 (N.I)); the entry in the table in Schedule 2 relating to the Prevention of Corruption Act 1906 increased the penalty in Northern Ireland for the offence under section 1(1) of the 1906 Act from 4 months imprisonment to 6 months imprisonment. That entry will become redundant upon repeal of the 1906 Act.

91.     Schedule 8 paragraph 1 of Local Government Act (Northern Ireland) 1972 (c.9 (N.I.)) amended the 1889 Act and will be redundant following the repeal of the 1889 Act.

92.     Civil Aviation Act 1982 (c. 16) - section 19(1) designates the Civil Aviation Authority as a public authority for the purposes of the Prevention of Corruption Acts 1889-1916 and will be redundant once they are repealed.

93.     The Representation of the People Act 1983 - section 165(1) makes certain provision where a candidate at a Parliamentary or local election engages as agent or canvasser an individual who has been convicted and disenfranchised, including under the Public Bodies Corrupt Practices Act 1889. That entry becomes redundant upon repeal of the 1889 Act.

94.     Paragraph 1(2) of Schedule 6 to the Housing Associations Act 1985 (c. 69) provides that the Housing Corporation is a public body for the purposes of the Prevention of Corruption Acts 1889 to 1916. That paragraph becomes redundant upon repeal of those Acts.

95.     Section 47 of the Criminal Justice Act 1988, which inserts provisions about penalties into the three Prevention of Corruption Acts, is also repealed.

96.     Article 14(1) of the Criminal Justice (Evidence etc.) (Northern Ireland) Order 1988 (S.I. 1988/1847 (N.I.17) amended paragraph (a) of section 2 of the 1889 Act and will be redundant following the repeal of the 1889 Act.

97.     Paragraph 2 of Schedule 1 to the Enterprise and New Towns (Scotland) Act 1990 (c. 35) provides that Scottish Enterprise and Highlands and Islands Enterprise are public bodies for the purposes of the Prevention of Corruption Acts 1889 to 1916. That paragraph becomes redundant upon repeal of those Acts.

98.     Scotland Act 1998 (c. 46) - section 43 provides that the Scottish Parliament shall be a public body for the purposes of the Prevention of Corruption Acts 1889 to 1916. This section will be redundant once those Acts are repealed.

99.     Sections 108 to 110 of the Anti-terrorism, Crime and Security Act 2001 (c. 24), which extend the geographical scope of the offences under the Prevention of Corruption Acts 1889 to 1916, are also repealed.

100.     Sections 68 and 69 of the Criminal Justice (Scotland) Act 2003 (asp7) - which extend the geographical scope of the offences under the Prevention of Corruption Acts 1889 - 1916, will be redundant once those Acts are repealed.

101.     Section 44 of the Government of Wales Act 2006 (c. 32) provides that the Welsh Assembly and the Assembly Commission shall be public bodies for the purposes of the Prevention of Corruption Acts 1889-1916. This section will be redundant once those Acts are repealed.

102.     In the Armed Forces Act 2006, those paragraphs in the list in Schedule 2 which refer to offences under the Prevention of Corruption Acts are repealed. This repeal is a corollary of the amendment to that list in Schedule 1 to this Bill.

103.     Section 217(1)(a) of the Local Government and Public Involvement in Health Act 2007 gives the Secretary of State power to define an “entity under the control of a local authority” and an “entity jointly controlled by bodies that include a local authority” for the purposes of section 4(2) of the Prevention of Corruption Act 1916. The 1916 Act would be repealed by the Bill, making section 217(1)(a) redundant. Paragraph 1 of Schedule 14 to the 2007 Act, which contains amendments to the 1916 Act and section 244(4) which makes provision as to the extent of a repeal contained in that paragraph, are also repealed.

104.     Housing and Regeneration Act 2008 (c.17) - Schedule 1, paragraph 16 provides that the Home and Communities Agency shall be a public body for the purposes of the Prevention of Corruption Acts 1889 to 1916. This section will be redundant once those Acts are repealed.

FINANCIAL EFFECTS OF THE BILL

105.     The Bill’s provisions would result in a net annual increase in costs for the criminal justice system of £2.18m. This is based on an estimate of a small number of additional prosecutions a year arising from the introduction of the new offence relating to commercial organisations.

PUBLIC SERVICE MANPOWER EFFECTS OF THE BILL

106.     There are no significant implications for public service manpower.

SUMMARY OF IMPACT ASSESSMENT

107.      An impact assessment for the Bill has been published separately (www.justice.gov.uk/publications/bribery-bill.htm). The new offence relating to commercial organisations which fail to prevent bribery is likely to involve a small additional cost to the criminal justice system (as outlined above) but will not give rise to a significant number of new prosecutions. This is because bribery is not a volume crime and there is increasing emphasis in prosecution policy on encouraging organisations that become aware of bribery in their operations to self-refer to the relevant authorities with a view to resolving the matter with a non-criminal disposal. There are no implications for prison places or the legal aid budget from this new offence. For the most part, the other provisions in the Bill represent a reformulation of existing bribery offences. The increase in the maximum sentence of imprisonment for these offences should have a negligible impact in terms of prison places based on the current low levels of offending.

108.      The Bill will not impose any significant additional administrative burden on business. The offence relating to commercial organisations is not regulatory in nature although there is recognition for good practice in the adequate procedures defence. The intention here is that the offence will have a beneficial effect for corporate governance by encouraging those businesses which have not already done so to adopt adequate procedures to prevent bribery. But this is not a one size fits all approach. The Government does not intend to prescribe the anti-bribery measures to be taken and there will be no monitoring of compliance. The Government would also expect the courts, in determining whether the defence applies, to take into account the size and needs of the particular business being prosecuted.

109.      The impact assessment incorporates the results of the small firms’ impact test. The adequate procedures defence to the offence relating to commercial organisations is formulated such that it would allow a small company to adopt a proportionate approach, with small firms in low risk sectors able to argue adequate procedures on ‘light touch’ grounds, for example demonstrating that anti-bribery principles have been fully communicated to its workforce.

110.     The new offence will also assist in a number of ways. Clarity of the law should assist businesses in assessing the suitability of their systems and bring efficiency savings through, for example, reducing the cost of risk assessment. An enhanced ethical reputation should allow UK businesses to compete more successfully in international markets. It should also help in the task of persuading other countries to improve their standards and tackling the culture of toleration of bribery that still persists in some parts of the world. Improving the implementation of anti-bribery standards internationally reduces the likelihood of UK businesses being disadvantaged as a result of overseas competitors offering bribes.

111.     An equality impact assessment initial screening has been completed and concluded that a full equality impact assessment was not required as the provisions in the Bill would not impact differently on any particular sections of society.

EUROPEAN CONVENTION ON HUMAN RIGHTS

112.     Section 19 of the Human Rights Act 1998 requires the Minister in charge of a Bill in either House of Parliament to make a statement about the compatibility of the provisions of the Bill with the Convention rights (as defined by section 1 of that Act). The statement has to be made before Second Reading. Lord Bach, Parliamentary Under Secretary of State for Justice, has made the following statement:

“In my view, the provisions of the Bribery Bill [HL] are compatible with the Convention rights”.

Failing to prevent bribery - defence of adequate procedures

113.      Clause 7 would make it an offence for a commercial organisation to fail to prevent a person performing services for or on its behalf from committing certain bribery offences. That person must intend to obtain or retain business, or an advantage in the conduct of business, for the organisation. It would be a defence to a charge under this provision for the organisation to prove that it had in place adequate procedures designed to prevent such persons committing bribery offences.

114.      Under the defence in clause 7(2), the defendant organisation would have to prove that the defence applies. The legal burden in respect of the defence will therefore fall on the defendant, to be satisfied on the balance of probabilities.

115.      Article 6(2) of the Convention requires that every person charged with a criminal offence shall be presumed innocent until proved guilty according to law. Case law has established that, while placing a legal burden in relation to a defence on the defendant may call into question that general proposition, it will be compatible with the Convention where the overall burden of establishing guilt remains with the prosecution and the burden is otherwise reasonable and proportionate.

116.     The Government considers that placing such a burden on the defendant in this case is reasonable and proportionate in the circumstances and is compatible with Article 6(2).

117.     The aim of the offence is to encourage commercial organisations to take responsibility for the actions of persons performing services for them or on their behalf where those actions are undertaken for the benefit of that organisation. Where the prosecution can show that an offence has in fact been committed by a person for the benefit of the organisation then the organisation will be liable unless it can show that despite the instant case of bribery it generally had adequate procedures in place which, on the whole, were successful in preventing bribery.

118.     Placing the legal burden on the defendant is both reasonable and proportionate. The procedures an organisation has in place to prevent bribery being employed on its behalf are a matter that is peculiarly within its own knowledge and control. The organisation will have ready access to the information needed to establish the existence of the defence. In any event, there would be no absolute requirement to prevent bribery. In the light of this, it would be very difficult to place the legal burden on the prosecution to establish the contrary.

119.     The Government notes that a substantial burden remains on the prosecution in establishing the offence. It must first prove to the criminal standard that a bribe was paid for the benefit of the organisation. Only once that direct link to the organisation has been made would the burden (on the civil standard) transfer to the defendant. Given that the adequate procedures defence is not prescriptive, it is open to a defendant organisation to adduce evidence which shows that (for example) given the size of the organisation, the particular sector or country in which it operated and the foreseeable risks, its procedures employed to prevent bribery being committed on its behalf were adequate despite the fact of the bribe.

120.     The defence was proposed by the Law Commission, which also concluded that the legal burden ought properly to be placed on the defendant organisation.

121.     In the circumstances therefore the Government considers the reverse burden is compatible with Article 6.

Defence for certain bribery offences: legitimate purposes

122.     Clause 12 of the Bill provides for a defence to certain bribery offences where it can be shown that the conduct which would amount to an offence was necessary for:

  • the prevention, detection or investigation by, or on behalf of, a law enforcement agency of serious crime,

  • the proper exercise of any function of the Security Service, the Secret Intelligence Service or GCHQ, or

  • the proper exercise of any function of the armed forces when engaged on active service.

123.     As with the defence relating to commercial organisations (clause 7) the legal burden to prove the conduct was necessary shifts to the defence once it is established that an offence has been committed. The Government considers that placing the legal burden on the defendant to establish the defence, in the particular circumstances, is compatible with Article 6(2) of the Convention.

124.     The overall burden of establishing guilt remains with the prosecution. The standard of proof which the defence will need to discharge will be on the balance of probabilities. The aim of the defence is to absolve those who perform functions for or on behalf of State bodies from committing offences where it is necessary for them to perform conduct in the course of their functions which may amount to bribery. Those circumstances are expressly limited to cases where there is a compelling need. In addition, showing necessity in the circumstances is something that would be peculiarly within the knowledge of the individual pleading the defence. In any event, it would be very difficult to place the legal burden on the prosecution to establish the contrary, particularly in the circumstances in which it is possible that the circumstances of the defence may be satisfied.

 
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Prepared: 20 November 2009