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I note, too, that we are looking for a further report from the Law Commission, which is likely to be produced some time in the summer, as that might also address these matters. Obviously, that will not make any difference to the Bill but I note what the noble Lord had to say on that subject. Therefore, at this stage I think that the best thing to do is to withdraw Amendment 9 and to say that I look forward to seeing whatever the Government produce between now and Report, and I shall then consider what to do. I beg leave to withdraw Amendment 9.

Amendment 9 withdrawn.

Amendments 10 and 11 not moved.



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Amendment 12

Moved by Lord Henley

12: Clause 7, page 5, line 26, leave out from "Kingdom" to end of line 27

Lord Henley: My Lords, I shall speak also to Amendment 13. Again, these are probing amendments which I hope are simple in the extreme. They are designed simply to elicit a fuller meaning of the language used in Clause 7(5)(a) and (b), which give the meaning of a relevant commercial business. In paragraph (a) there are apparently two limbs to the definition. A commercial organisation must be incorporated under UK law and carry on a business, although the second limb is contained in parentheses. I am sure that there is a very straightforward explanation for this drafting which will not detain the noble Lord for long, but I confess that I am a little puzzled. If the body is not carrying on a business, how can it be relevant to a business-related act of bribery, and so why is the provision there? Is there likely to be any confusion over whether an organisation is conducting a business or not-and, if so, how is that to be determined, and what for that matter is "part of a business", as raised by Amendment 13 to paragraph (b)?

These might be trifling points but, on first reading through this section, I did not feel that the drafting was quite as clear as it might be. I ask the noble Lord to enlighten me. I beg to move.

Lord Tunnicliffe: My Lords, I shall do my best. These amendments relate to the definition of a relevant commercial organisation for the purposes of the Clause 7 offence of the failure of commercial organisations. Clause 7(5) states that a relevant commercial organisation means a body which is incorporated under the law of any part of the United Kingdom and which carries on a business, whether there or elsewhere. It also covers any other body corporate, wherever incorporated, which carries on a business, or part of a business, in any part of the United Kingdom.

Amendment 12 would have the effect of widening the scope of the clause so that any body incorporated in the UK would be covered by the offence, whether or not it was carrying on a business. Widening the scope of the offence in this way is not justified in our view because the offence is specifically targeted at commercial organisations that use bribery in the course of their transactions. This is why subsection (1) requires that the person concerned intended to obtain or retain business or an advantage in the conduct of business. It would also be inconsistent with the approach to bodies incorporated outside the UK, where, under subsection (5)(b), the requirement that the body concerned carries on a business remains unchanged by these amendments. The noble Lord asked how it could reasonably apply if it were not carrying on a business. We agree, but for the avoidance of doubt we are leaving it as it is in the wording.

We also consider it important to make clear that the offence applies whether a body incorporated in the UK carries on a business in the UK or elsewhere. It is

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a crucial part of our foreign bribery strategy, and our desire to create a level playing field internationally, that the offence covers UK corporations that carry on business overseas. This fact has been welcomed by the OECD, which has stated that,

With regard to foreign companies operating in the UK, I recognise that the Joint Committee voiced some concerns that the phrase "part of a business" might be difficult for the courts to interpret, but we believe the courts will interpret the term in a common-sense manner. Clearly, if a foreign corporation has part of its business in the UK, and that part is guilty of paying bribes, we would want the jurisdiction to prosecute the organisation concerned.

We believe the amendments tabled by the noble Lord, Lord Henley, would weaken the offence unnecessarily by casting doubt on its jurisdictional extent. I therefore invite the noble Lord to withdraw the amendment.

Lord Henley: My Lords, I am not sure whether I am much the wiser for that, but I shall read it most carefully in Hansard in due course and no doubt fully understand what the draftsman was getting at when he drafted the clause in that manner. I beg leave to withdraw the amendment.

Amendment 12 withdrawn.

Amendments 13 and 14 not moved.

Clause 7 agreed.

Clause 8 : Section 7: supplementary provision

Amendment 15 not moved.

Clause 8 agreed.

Amendment 16 not moved.

Amendment 17

Moved by Lord Thomas of Gresford

17: After Clause 8, insert the following new Clause-

"Advisory service

(1) The relevant department may respond to specific enquiries from any commercial organisation concerning the adequacy of its procedures for the purposes of section 7(2) of this Act.

(2) A response under subsection (1) shall not prevent the Director of Public Prosecutions, the Director of the Serious Fraud Office or the Director of Revenue and Customs from consenting to proceedings for an offence under this Act."

Lord Thomas of Gresford: This is a proposal to add an additional clause to this part of the Bill, which is headed, "Failure of commercial organisations to prevent bribery".

I have referred on a number of occasions to the Independent Commission Against Corruption in Hong Kong. It has a corruption prevention department with

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an advisory services group annexed to it. The group provides a management consultancy service free of charge and tailor-made to the company's needs. It handles information in strict confidence with a pledge to respond to any request within two working days-which is probably beyond the competence of the Government in this country. Clients are free to accept the recommendations and to implement them at their own pace.

5.15 pm

The group provides tailor-made corruption prevention advice on system/internal controls. It also assists companies to draw up staff codes of conduct and, in particular, a policy on solicitation and acceptance of advantages, a policy on acceptance of entertainment, guidelines on declaration of conflict of interest and guidelines on handling confidential information. Any company can go along to the advisory services group and seek its free advice on the adequacy of the systems and procedures that it has drawn up. It will be assisted in the areas which I have outlined. The advisory services group also formulates and distributes codes of industry best practice, and organises talks and seminars to promote them.

So there is an advisory group under the shelter of the ICAC which assists companies to set out adequate procedures. It goes about it by discussing with the management of the companies their operational procedures and practice, identifying potential risks and malpractice, and formulating recommendations for the client's consideration.

I shall give your Lordships some idea of the feedback that it has had. The chairman of the Hong Kong Institute of Directors, Mr Herbert Hui, said:

"Directors are entrusted with the execution of corporate governance standards within each corporation, listed company, SME or NGO. The Advisory Services Group of the Corruption Prevention Department assists corporations to enhance corporate governance standards from a corruption prevention point of view. We highly recommend directors of corporations to make use of the Group's free and professional consultancy services".

The director and chief executive of Cathay Pacific Airways Limited, Mr Philip Chen, said:

"Since its establishment in 1985, the Advisory Services Group of the Corruption Prevention Department has been conscientiously assisting private sector companies in enhancing system controls and promoting to staff the importance of corruption prevention. In the past, we had sought advice from the Group on various parts of our operation. I highly value the Group's work and contributions to the community".

Since 1985, the advisory group has advised a total of 3,000 companies-that is a rate of about three a week-covering manufacturing, financial services, property management, hotel and catering, welfare and education associations and so on. It discusses such things as common malpractices and vulnerabilities in procurement, sales and marketing, administration, store management, information systems, security and so on.

So there is an essentially government-sponsored body providing a service, which does not require great expense, at a rate of three companies a week to companies in Hong Kong. That has contributed very significantly to making Hong Kong the third least corrupt territory, if I can put it that way, in the whole world. It is not something to be set aside lightly. I have already quoted

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the Secretary of State for Justice saying that we have to be quite imaginative about how we tackle advice. It is in that sort of area that I am sure imagination is required.

Under my amendment,

"The relevant department may respond to specific enquiries from any commercial organisation concerning the adequacy of its procedures for the purposes of section 7(2)"-

that is, for the purpose of getting advice on what are adequate procedures. It continues:

"A response under subsection (1) shall not prevent the Director of Public Prosecutions, the Director of the Serious Fraud Office or the Director of Revenue and Customs from consenting to proceedings for an offence under this Act".

I appreciate the point that the Government and others made to the Joint Committee that one cannot confuse the prosecutorial system with the giving of advice. It would be wrong to ask the Director of Public Prosecutions to hand out chits to companies saying that they could go and do this or that. My amendment suggests not the giving of immunity from prosecution to a particular company but that authoritative advice and expertise should be built up over a period of time, as has happened in Hong Kong, whereby companies from all sorts of sectors, whether large or small, whether they have been in business for a long time or are just entering into the market, can go to such an advisory body and ask it to look at their procedures, help with them and make sure that they do not have procedures in place that would in any way encourage bribery. If the purpose of the Bill is to prevent bribery, this is a very small price to pay.

I have used the expression "the relevant department" deliberately, because that could cover the Secretary of State for LlanfairPG, to use a shorthand term, or it could be another department of state that could give out advice of this sort. It would be hugely advantageous to the commercial companies in this country and would at the same time make sure that the purposes of this Bill were addressed and that bribery was prevented. I beg to move.

Lord Mackay of Clashfern: My Lords, I must say that I think this is a very good idea. I think I am right in saying that on Second Reading the noble Lord, Lord Thomas of Gresford, said that he had tried out the system of advice that the present business department offers. I think he made a request. He had not received an answer by the time of the Second Reading but I assume he has received it now. If we have a department of that kind in operation already, it seems very good to build on it, as the Hong Kong experience has proved so valuable.

The Earl of Onslow: My Lords, it is, after all, a British idea, because when it was introduced, Hong Kong was a British colony. We surely cannot say that it is novel to our arrangements. It strikes me as a totally excellent idea.

Lord Tunnicliffe: My Lords, Amendment 17 brings us back to the issue of adequate procedures for the purpose of Clause 7. The noble Lord, Lord Thomas of Gresford, has proposed that an advisory service be established that would enable companies to seek advice on the adequacy of their procedures for the purpose of

7 Jan 2010 : Column GC64

Clause 7. As the noble Lord will be aware, the Joint Committee rejected the proposals to provide an advisory service with a wider remit, particularly given that such a service would call into question the independence of prosecutors. The Joint Committee recognised the significant differences between our criminal justice system and those where such a service is provided, that those prevent direct analogies being drawn, and that it would in practice be difficult to establish such a service here. We agree.

The amendment would not prevent prosecutors instituting proceedings where advice has been given. However, the principle of government providing advice to individual organisations about their particular procedures is highly inappropriate. It would amount to the Government advising individual organisations on whether, if a person acting on their behalf committed bribery, they would be guilty of the corporate offence.

Even if the advice were given by an independent official body-no such body exists-our concern remains. The Joint Committee drew attention to the evidence given by the Director of Public Prosecutions and the Attorney-General, who both expressed concern at such a body giving advice on prosecutorial issues as it would risk undermining the independence of prosecutors.

While the amendment would preserve the ability of prosecutors to bring charges where advice was given, the reality is that the body would be directly advising on what are ultimately prosecution decisions. In addition, the process gives rise to significant practical concerns. In the event of a prosecution being brought despite advice, it is not difficult to envisage the criminal proceedings being entirely distracted by an examination of the adequacy of the advice from the department or official body rather than the key question as to whether the proceedings that the defendant organisation took were adequate in the circumstances.

We are not lightly setting the idea aside; we have considered it carefully. We note that the Joint Committee considered it carefully, but also note the concern of the DPP and the Attorney-General. For those reasons, we cannot commend the amendment to the Committee.

Lord Thomas of Gresford: My Lords, I draw the Government's attention to the Joint Committee report. I would like them to take a step back, start again and rethink the issue. At paragraph 124, the committee quoted Mr Philip Bramwell of BAE Systems plc. He said that a formal advisory service would be,

I emphasise,

He continued:

"It is especially useful around mergers and acquisitions and new businesses that may have an uncertain history".

The director of the Serious Fraud Office again did not wish to mix up prosecutorial discretion with the granting of permits to people to go and commit criminal offences, quite rightly. The Attorney-General and the Director

7 Jan 2010 : Column GC65

of Public Prosecutions agreed to that. However, at paragraph 126, Professor Horder said:

"[I]f I could start from a slightly different view, were we to have in this country an anti-bribery body, a commission, a semi-official body of some sort, charged with giving this kind of advice"-

he was talking about an advisory service-

About the ICAC and its advisory services group, the committee said:

"The lack of time available to carry out our inquiry has prevented us from exploring this body in any detail, although we understand that its services are focused on compliance procedures aimed at minimising the risk of corruption rather than the risk of a prosecution arising from prospective action".

The committee drew the distinction between advising on minimising the risk of corruption and advising on the risk of prosecution-the latter is a separate matter altogether, and my amendment is not about it. My amendment is entirely about minimising the risk of corruption.

5.30 pm

In paragraph 129, the committee stated:

"We acknowledge that a formal advisory service similar to that provided in the United States and Hong Kong could have great benefit",

and then went on to note the differences in the criminal justice system. That is fine as far as the risk of prosecution is concerned, but giving advice to companies is a different matter. That is what the advisory group does in Hong Kong. As I indicated to your Lordships, the corruption prevention department is under the section of the ICAC and not the prosecution department. Even within that organisation, which has powers of prosecution, there is a separate body concerned with prevention. That is what we should seriously consider.

The response given by the Minister was along the lines of what the DPP and the director of the SFO were thinking about. I want the Government to take a different view, and to step back and look again at the benefits that the Joint Committee did not have time to investigate. I want them to consider whether this is an idea that they should take up and provide the sort of advice to companies that they clearly want. For the moment, I ask the Government to look at that. I will return to this issue on Report and I hope that they will have had a full reconsideration. I am happy to talk to the Government at any time about this. For the moment, I beg leave to withdraw the amendment.

Amendment 17 withdrawn.

Clause 9 : Consent to prosecution

Amendment 18

Moved by Lord Henley

18: Clause 9, page 6, line 11, leave out paragraphs (a) to (c) and insert "the Attorney General"



7 Jan 2010 : Column GC66

Lord Henley: In moving this amendment, I will also speak to Amendments 19 and 20. Amendment 18 refers to who must give consent before a prosecution for an offence under the Bill can be instituted. The Bill as drafted gives that power to the DPP, the director of the Serious Fraud Office or the director of Revenue and Customs Prosecutions in England and Wales. My amendment scraps that and reinstitutes the Attorney-General. Amendment 19 does that for Northern Ireland and Amendment 20 is consequential.

I had been hoping to have the debate in the presence of at least two former Attorneys-General who were here earlier, but the time and circumstances today meant that they were unable to stay. I am afraid that my noble and learned friends Lord Lyell of Markyate and Lord Mayhew are not here, so this is something that we will probably have to come back to at a later stage.

The Minister will not have been surprised to see these amendments, as considerable strength of feeling was expressed at Second Reading that the Government had erred in removing the Attorney-General from a decision-making role in such prosecutions. Certainly, my noble and learned friends Lord Mackay of Clashfern and Lord Lyell of Markyate made succinct and powerful points that deserve careful consideration. Why has the role of the Attorney-General been so reduced? Is it because of criticism that a member of the Government cannot be trusted to exercise untainted discretion? It may be that the arrangement has attracted some question from partners in the OECD. However, that is simply the way our constitution is, and the Government should be legislating within our constitution and not running scared of it.

The criticism that a member of the Government cannot act impartially should be proved incorrect and not acceded to. There are enough former holders of this office in the House for us to know that the very idea is anathema to them. As my noble and learned friend Lord Mackay said, it is important that a person making decisions in this area should be accountable to Parliament as that is where the proper scrutiny, independence and accountability for such decisions lie.

My noble and learned friend Lord Lyell made the very good point, which must also be borne in mind, that it is not the Government who prosecute an offence; it is the independent prosecuting authorities. However, it is important that someone who is answerable in this House or in another place should have the ultimate responsibility for that. We do not believe that the role of the Attorney-General should be downgraded in this way. I accept that this is not a universal opinion-I am sure that the noble Lord, Lord Goodhart, who is scribbling away hard, will not agree-but I accept that these are points of high principle that, as the noble Lord himself said at Second Reading, are not really a matter for the Bill. In my view, even the changes which the Bill makes to the Attorney-General's role are not appropriate. The Government have a vehicle for full debate on these and many other matters in the Constitutional Reform and Governance Bill, which is currently on the horizon, and the role of the Attorney-General should be left as it is. If the Government want to tinker further with our constitution, they should do it in a Bill on the constitution.



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I could say more. I will certainly come back to this at a later stage because I am sure that others, such as my noble and learned friends and former Attorneys-General of whom I have spoken, will want to address this matter; but, for the moment, I beg to move.

Lord Mackay of Clashfern: My Lords, noble Lords will not be surprised to learn that I feel rather strongly about this matter. Indeed, the OECD's observation on this point just shows what is behind this idea: that someone who is intimately concerned with government cannot be trusted to decide independently matters of criminal prosecution. Our constitution has preserved that role for the Attorney-General-and in Scotland for the law officers-for longer than any of us have been familiar with it.

The idea behind the amendment is that a person in government cannot properly decide a really important matter, but we are talking about a general principle that applies to all government. Politicians may wonder why people do not have more confidence in them. If politicians themselves subscribe to the idea that people in government cannot be trusted to take independent decisions, it is not surprising that the public find it possible to take that view too. It is extremely important that we preserve the role of the independent law officers who are accountable to Parliament. This has been an important part of our constitution for generations.


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