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Lord Tunnicliffe: My Lords, my understanding is that the Bill does not at any point define undue hospitality, but the very fact that I have read into the
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The Earl of Onslow: My Lords, this hospitality business is extraordinarily difficult. I think that we all realise that. Company A and company B are both attempting to sell a product to a foreign buyer, who says to company B, "I had lunch with company A two days ago and they took me to a Happy Eater". Company B says, "Ah, I think that we can do a bit better than that-we've booked a private room in Claridges". I have obviously exaggerated in that case, but where do we go and how do we get round the problem and where do we draw the line? We do not want the Claridges syndrome to work but, equally, it must be reasonable to take them to the Onslow Arms as opposed to the Happy Eater.
The Minister described my amendments as undesirable, which was not what I particularly wanted to hear because I knew they were undesirable. They were there purely as probing amendments. I wanted answers to a number of questions that I put to him. I counted eight questions that I posed, to which I had a certain number of answers, which I shall need to examine with some care between now and a later stage.
The principal point that I was trying to make, which has been underlined by my noble friend Lord Onslow and others, is that we seek clarity in the operation of this clause. It is important to know where the borderlines are between the Happy Eater and Claridges, to put it in simple terms, as my noble friend always does. No doubt the noble Lord will want to reflect on that. We will want to reflect on his answers so far and come back to this on Report, to explore a little further what the Government intend and what the Bill intends, which is far more important, so that those who have to make use of the Bill when it becomes an Act know what to do and how this will affect them.
Clause 7 creates the offence of failure of commercial organisations to prevent bribery. It is a strict liability offence, and a successful conviction could lead to an unlimited fine. It creates an offence, although some of us remember an occasion last year of a strict liability offence that led to a fine of some £5,000 which the Attorney-General described as merely being an administrative error. On this occasion, we are told that it is an offence.
There is a defence set out in subsection (2) which would allow the organisation, here referred to as "C", to prove that it had in place adequate procedures designed to prevent a person associated with it engaging in bribery. A number of noble Lords raised this point on Second Reading, and I and, I am sure, noble Lords speaking from the Liberal Democrat Benches seek with these amendments to find out what is meant by "adequate".
Amendment 8, which is a probing amendment-I do not need to be told that it is undesirable-would delete "adequate" from the defence in subsection (2). Who is to judge what is adequate and what is not? If a company has stringent rules in place, checks on its employees, has transparent accounting and so on, but a determined associate of that company still manages to bribe another, were those procedures adequate? They did not, after all, prevent the offence of bribery taking place. What about a company with weak procedures in place which nevertheless managed, perhaps more by chance than anything else, to stop an embryonic plan to commit bribery? Which of those cases should be prosecuted? I am sure that the Minister will say that such matters could be left to the discretion of the prosecuting authorities; it would be quite reasonable for him to do so.
What about the commercial organisations themselves? How will they know if they have put in place adequate procedures? Clearly, this is a place for guidance from the Government. The Joint Committee noted that there was near unanimity among those from whom it had heard evidence that the meaning of "adequate" procedures will require amplification through guidance. The Joint Committee noted too that there was a widely held concern among commercial organisations regarding the lack of certainty about what would be considered adequate procedures. It acknowledged that this Bill would affect a large range of organisations, making it difficult for the Government to produce comprehensive guidance. It thus recommended that appropriate bodies should be able to draft guidance tailored to their membership that could be approved by the Government to provide it with official status; in other words, sector-specific guidance.
This approach has been re-emphasised by the Law Society and the Bar Council. The law firm DLA Piper noted that companies that dealt with it were eager to comply with the law. I am sure that that will be the case for most, if not all, companies. However, unless
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There could be severe consequences should the position remain uncertain. As well as being subject to an unlimited fine if successfully convicted, corporations are concerned about how the confiscation regime under the Proceeds of Crime Act 2002 might relate to this offence. The present legislation was designed to deprive individual defendants, particularly drug dealers and organised criminals, of the benefits of their criminal conduct. However, there has been no acknowledgement or recognition that there could be serious implications for companies caught by the legislation, which in some cases could see them being put out of business if the full weight of the law were applied. This might not be the time or place to address the operation of the Proceeds of Crime Act 2002, but the fact that businesses wish to draw it to the attention of Parliament during our debates on the Bill highlights how unsettled they are by the introduction of a strict liability offence to which the defence is worded so vaguely. It is for these reasons that I have tabled Amendment 10. While I will leave it to noble Lords on the Liberal Democrat Benches to introduce their own amendment, I suspect that this is the reason for it.
Amendment 10 simply commits the Secretary of State to publish guidance before the clause comes into effect. I do not think that the Minister disagrees on the need for guidance. He may argue that it need not be statutory. Again, I will listen with interest to the Government's views, but I am uneasy about allowing the Bill to pass without an idea of how its provisions will work. I beg to move.
Lord Goodhart: I start by apologising to the Committee for having become so overheated that I seemed to set forth a problem with the microphones. I continue with the debate on the group that includes Amendments 8 and 10, which have already been spoken to by the noble Lord, Lord Henley, and Amendments 11 and 16 in my name and that of my noble friend Lord Thomas of Gresford.
Clause 7 is a very important clause-perhaps the most important in the Bill. This is because it is extremely difficult under the present law to prosecute a company for a failure to prevent bribery carried out on its behalf. Clause 7 will require all corporations conducting business to treat bribery as a serious issue and compel them to set up proper systems to prevent bribery on their behalf. Clause 7 replaced Clause 5 in the draft Bill, which was presented to the Joint Committee for pre-legislative scrutiny. That clause would have made it far more difficult to convict corporations that tolerate
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Under Clause 7, where bribery is committed on behalf of the corporation, the corporation has to prove, if it is to escape from prosecution, that it has put adequate procedures into place to prevent bribery. The word "adequate" is, as matters now stand, an essential part of Clause 7. Plainly, it will not be sufficient for a defendant corporation simply to say, "Oh, we set up procedures to prevent bribery". That corporation must provide procedures that are, to use a cliché, fit for purpose. Amendment 8, by seeking simply to remove the word "adequate", is in effect a wrecking amendment, but I will take it no further because, as I understand it, the noble Lord, Lord Henley, tabled it as part of a probing issue.
Amendment 10 relates to guidance and takes us on to Amendments 11 and 16. Penalties under Clause 7 could be very serious, so we believe that it is necessary to provide guidance so that corporations are not at risk of straying unintentionally into a field in which they may become liable for serious consequences. The guidance could be made available from business associations such as the CBI, but several organisations could offer advice that may vary between them. Some-I am not suggesting that the CBI is one of them-might give advice which the clients would like to hear rather than advice that is meaningful and effective. We therefore believe-I think we share common ground here with the noble Lord, Lord Henley-that guidance should come through the Government. As matters now stand, the Government have promised to introduce guidance, but nothing in the Bill requires this, and there is no obligation on any Government to continue to provide guidance after the Bill is enacted.
Amendment 10 takes one step by requiring the Secretary of State to lay guidance before Parliament before the commencement of the Bill. That is okay as far as it goes, but we need to take one step further by making guidance a continuing obligation in the law against bribery. This is what Amendment 11 seeks to do. It requires a continuing obligation to publish, and from time to time to amend, guidance to inform people what will happen and where the boundary is between bribery and fair play.
Amendment 16 would give guidance to the guides, if I may put it that way. It makes no attempt to define what the contents of any guidance should be; it merely sets out a couple of general principles. That is right, because guidance given through the Government may vary from country to country, from time to time, and from product to product. We want the Government to explain why it is not necessary or desirable to put into the Bill a continuing duty to provide guidance that will be of necessary assistance to companies, particularly those that operate in parts of the world in which there is a great deal of bribery and where they need to be very carefully advised on what will and will not be permissible in general terms.
Lord Williamson of Horton: We are dealing with a point which was recognised as very important at Second Reading; namely, the provision of guidance to companies
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the laying before Parliament, which seems reasonable to me. If we can do that, I see no problem. Secondly, Amendment 11, as indicated by the noble Lord, is substantially more important because it puts in a continuing commitment. It is also more specific. I do not think that the noble Lord quite made that point, but it is more specific because it relates guidance to subsection (2), which is the substance of any defence. That, too, seems sensible. Amendment 16 has at least one element which is not in the other amendments; that is, the taking into account of the size and resources of such organisations.
Woolworths is no longer with us but the Minister will see what is known as "pick and mix" in these amendments. I remain sympathetic to them all. But, most importantly, we should have a continuing commitment in the Bill and a direct relationship with the size and resources of organisations. Those elements are important. Obviously, the Government are relatively sympathetic to this point, but they will have to decide how far they can go. That is an expression of my view on these amendments.
The Earl of Onslow: I remember when we heard that the United States Government had provided guidance for their companies on exactly this premise and how impressed we were by the comfort that they gave to United States companies. I know that there are differences in the structure of our governmental organisations which would make it impossible to copy exactly. But it is important. A combination of adequate and proper procedures and decent guidance will make it very difficult to step beyond the line of appropriate and decent behaviour. Furthermore, it is essential to put that in the Bill and it should be perpetually kept up to date. They are protections for companies, which make sure exactly where our ideas lie and where the borders are. That would be a great improvement.
Lord Mackay of Clashfern: I support the probing of the word "adequate" in this clause, which is the purpose of the amendment proposed by my noble friend Lord Henley. It is important that we should have, during the proceedings of the Bill, a statement of the Government's view on that. I also very much agree with the proposals for guidance. At Second Reading, I indicated that that issue is important. It is absolutely essential that the guidance should be available in authorised form before the statute comes into operation.
I also entirely agree with the view put forward in Amendment 11 that the guidance should be continuous. The circumstances of individual countries can change
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My former understanding was that "the Secretary of State" meant any Secretary of State. I think that that has been somewhat modified, if I understood it correctly, by the Constitutional Reform Act, which made a number of other changes-not all of which I personally regard as reforms, but that is what Parliament has called them, so I must accept that. I should have thought that the responsibility for the guidance should come from the department of state, which is not exactly a small department, which deals with relationships with companies and businesses, rather than with the Ministry of Justice. The Secretary of State for Justice, in evidence before the Select Committee, expressed doubt about whether he could give guidance. On the whole, it might be better that the guidance came from another department, because the prosecution responsibilities, such as they are in government at all, are to some extent in the Ministry of Justice-although I am glad to say that the Attorney-General is still in position, and I hope that that will continue. We will come to a later amendment about that.
It would be appropriate for the department responsible for relationships with business to deal with the matter, because it will have the necessary expertise in business methods and organisation to judge what would be adequate, rather than the Ministry of Justice, which is expert in the area of justice, but this is not of that type. I venture to make that additional comment.
I hope that the draft guidance will be produced as soon as possible, but I can see that the parliamentary timetable and the timetable for producing draft guidance may not make that possible. It is essential, before companies are charged under or bound by a statute that requires adequate provision, that they should know what the Government believe adequate provision in principle would be in their particular case.
Lord Henley: Before my noble and learned friend sits down, I assure him that on the small question of the nomenclature of the Secretary of State, the noble Lord, Lord Tunnicliffe, is a great expert on these matters. We dealt with this twice on the Coroners Bill, which, if I remember rightly, for some odd reason
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Lord Thomas of Gresford: My Lords, sometimes I wonder if the Secretary of State for Business et cetera is seeking to have the longest title, rather like Llanfairpwllgwyngyllgogerychwyrndrobwllllantysilio- gogogoch has the longest name of a Welsh village, or any village.
I draw the Committee's attention to paragraph 109 of the Joint Committee's report, which quotes the evidence of Louise Delahunty, a solicitor of Simmonds and Simmonds, who noted the "plethora" of international sources of advice and stated that the Government were best placed to bring clarity to the situation. Then Mr James Maton of the UK Anti-Corruption Forum added that it was costing companies large amounts of money to develop policies and seek advice on a fragmented basis. During the Committee proceedings, I think I made the point that although it is all very well for a large company to go to a specialist lawyer and obtain advice, it is not so easy for the smaller company to obtain the necessary advice that would be desirable.
The Director of Public Prosecutions, as paragraph 110 points out, said that centrally issued guidance on prosecution policy could be prepared by prosecutors, but he was prepared to draw a clear distinction between prosecutorial practice and compliance issues, such as the meaning of "adequate procedures". He considered that the latter type of issue would be best addressed by informal industry-led guidance, which prosecutors and juries would then take into account when deciding whether to charge or convict. Your Lordships will note that the prosecutors and juries could take into account such industry-led guidance.
Lord Borrie: My Lords, I support the substantive point made by the noble and learned Lord, Lord Mackay of Clashfern, that the Department for Business-I forget the full title-should take the ultimate lead in determining the substance of the guidance that will be produced. I hope the Minister will understand that this is not in any way to knock the Ministry of Justice but to tie in the other department to the whole matter of bribery and corruption and our concerns that lay behind the Bill and our support for the Law
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Lord Lyell of Markyate: I support the objective of these amendments. Will the Minister clarify, if it is not already clear, that this guidance will be the subject of a statutory instrument, that it will be laid before the House and that Parliament will continue to have a say? It will have a significant effect on the law of the land as it applies to businesses and citizens. My understanding is that that is what is intended, but if that is not the case we ought to be told now. I hope that it will be implemented by statutory instrument.
On the question of adequate procedures, words are always difficult. I threw out the possibility of "reasonable procedures" because "adequacy" suggests that it can be adequate only if it succeeds, whereas "reasonable" would certainly require a decent standard, which we certainly demand, but would not necessarily give the impression that, if it did not succeed, you had no defence.
Lord Tunnicliffe: My Lords, I have received guidance from the noble Lord, Lord Henley, on probing amendments and not responding to them too literally. However, I think that the noble and learned Lord, Lord Mackay, did invite me to respond to it literally. I understand that the noble Lord, Lord Henley, does not intend to press the amendment. If "adequate" were taken out, that would drive a loophole through the offence. I see that he nods, so I will move on to the substantive debate concerning guidance.
The Government are committed to publishing guidance on the meaning of adequate procedures well before this offence is brought into force. As the noble and learned Lord, Lord Woolf, put it at Second Reading:
As the noble Lord, Lord Bach, said in his letter of 16 December to the noble Lord, Lord Henley, Ministry of Justice officials have already made a good start on the development of guidance. Officials have already met with a number of experts from organisations such as Transparency International, the Institute of Business Ethics and the Anti-Corruption Forum about what should be included in the guidance and they will be meeting other stakeholders with an interest in this subject over the coming weeks.
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