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The House will be aware that all prosecutions in the UK are subject to review by independent prosecutors under the principles set out in the Code for Crown Prosecutors. Should a case involving a payment of this kind come to the attention of prosecutors, it will be subject to a review by a Crown prosecutor, who will apply both the evidential and the public interest tests. It will be typically the Crown Prosecution Service rather than the Serious Fraud Office that will review such a case, because the Serious Fraud Office operates a £1 million case threshold.
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If in a review of a case the evidential test is satisfied, the prosecutor is duty bound to consider the public interest in prosecuting. As with all serious crimes, the general public interest in ensuring that bribery is effectively dealt with is a relevant factor, but prosecutors will also take into consideration countervailing factors. These might include the small nature of the bribe, the options facing the payer, whether it was a single or repeated incident, whether the bribe was solicited in circumstances that were tantamount to extortion and whether the court is likely to impose a nominal penalty. There may be good reasons why it may not be in the public interest to prosecute in particular circumstances, although I stress that this is a matter for the independent prosecutors and I cannot give any assurances in this regard. The point is that it is far better to keep the message of illegality clear and allow individual cases to be determined on the basis of a broad prosecutorial discretion than to put in place exemptions that at best create additional ambiguity and complexity and at worst undermine the general policy objectives of the Bill.
The new clause amply illustrates the difficulties that one faces when attempting to craft an exemption of this kind. Each of paragraphs (a) to (e) would introduce an element of doubt and uncertainty. What, for example, would "an important commercial interest" cover? A relatively large payment may be "modest" in the context of a commercial interest of high value. How would the importance of the interest be assessed? Would it be a snapshot of the importance at the time of the bribe or could long-term implications be taken into account? As regards "customary in the situation", our policy, as enshrined in Clause 5(2), is to exclude local custom from the assessment of impropriety for the purposes of Clauses 1 and 2. The extent to which a practice is customary should have no place in a Bill seeking to change the culture away from bribery. Finally, the extent to which a payment may be "reasonable" would, without further definition, be open to entirely subjective interpretation. The overall effect of the proposed defence could be to create a potentially wide exemption that would be vulnerable to unmeritorious exploitation.
I was asked the extent to which a tip may be looked on as a bribe. A gratuity is not a bribe; it is usually paid as thanks for the proper performance of functions. Conversely, a bribe is paid in anticipation of, or in reward for, improper performance of functions. The foreign public official offence requires that a payment is made with the intention to influence an official and to obtain business or a business advantage. Therefore, payment made to an official after the fact, intended to express thanks for the performance of his functions, may not give rise to liability under this clause if the required intent is not present.
I turn to the factors that would influence the decision. I do not propose to rehearse the whole of the guidance in the Code for Crown Prosecutors but the commission of a serious offence that would, on conviction, attract a long term of imprisonment would, all things being equal, suggest very clearly that the public interest lay in prosecuting. On the other hand, factors such as the likelihood of a minor penalty would weigh in favour of discontinuance. Another relevant factor might be the cost to the public purse of prosecution.
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By way of illustration, a case of bribery overseas involving a small facilitation payment might involve considerable investigation and co-operation with the authorities of a foreign state in order to secure a conviction that would attract a minor financial penalty or conditional discharge. In such circumstances, one could understand that the making of a small "facilitation payment", extorted in return for the performance of an administrative function by an official in a foreign country, might not give rise to sufficient public interest in a prosecution. Another relevant factor might be where facilitation payments had been paid in response to a physical threat to the health and safety of a company's employees. While a threat of commercial damage does not provide a defence in cases of bribery, the prosecuting authorities are likely to take into account any element of extortion when considering where the public interest lies.
With those statements, I hope that the noble Lord will feel able to withdraw his amendment.
4.30 pm
Lord Henley: My Lords, after the almost universal support that I have received for my amendment in a charge led by the noble Lord, Lord Borrie, and followed by others, I am almost tempted to press it to a Division. However, given that I said that it was merely a probing amendment, a probing amendment it shall remain, not the improper amendment that the noble Lord, Lord Clinton-Davis, described it as.
Having said that, I think that this has been a very useful debate. It has been worth while getting on the record the Government's views about the Bill and its purpose. Although most speakers attacked my amendment, I could sense among them a number of realists who recognise that there is a genuine problem for the driver of the lorry containing the bananas-namely, that the bananas are likely to go off and there is not much that you can do with them when they do go off. No doubt there are other fruits that can be made into jam, but I am not sure that you can do much with bananas. After saying what a useful debate we have had, the Minister said that we must face the problem head on. I accept that. However, again I make the point that in facing the problem head on we will have to accept that there are problems for the driver of the lorry containing bananas.
I am grateful for the help that the Minister gave regarding the guidance on the prosecutorial discretion that the CPS-it will be the CPS that deals with these lower-grade offences-will have to exercise. I am particularly grateful that he was so keen to put across the factors that it should take into account that he took us through them twice. No doubt we now have on the record the matters that the CPS will take into account. I hope that that has been useful to those outside who will have to make use of the Bill in giving advice to their employees in due course. I also hope that these matters will again be considered by the Government when they ultimately offer guidance on the proper practice of the Bill. I think I can say that I, too, am a realist in terms of the amount of support that I have received for the amendment. As
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Clause 7 : Failure of commercial organisations to prevent bribery
6: Clause 7, page 5, line 4, leave out subsection (1) and insert-
"(1) A relevant commercial organisation ("C") is guilty of an offence under this section if-
(a) a person ("A") associated with C bribes another person,
(b) the bribe was in connection with C's business, and
(c) a responsible person, or a number of such persons taken together, was negligent in failing to prevent a bribe."
Lord Henley: My Lords, I shall speak also to Amendments 7, 8, 9 and 11. We have now reached Clause 7, which requires that businesses must have procedures in place so that their employees and agents do not commit bribery. We welcome that, as do most if not all businesses. It is right that businesses should play an active role in combating bribery and that companies should not turn a blind eye to corrupt practices.
We seek a further explanation of the way in which companies will be held to account. Amendment 6 would remove the strict liability of the offence in Clause 7 and instead return to the test of negligence, which appeared in the draft legislation some time ago, if noble Lords can remember as far back as that. Amendment 6 is similar to Clause 5(1) of the draft Bill. I am aware that the opinion of the Joint Committee was in favour of the strict liability test, and I have returned to it as one of the options that may address the concerns that many in the business world have about Clause 7. Other options are contained in Amendments 7, 8, 9 and 11, to which I will also speak.
Amendment 6 would penalise companies if they have been negligent. Such an approach would require active monitoring of the companies' dealings, but would not necessarily lead to corporate conviction in the event that an employee or agent committed the offence of bribery. Under the Bill, as presently drafted, the company would automatically be guilty of an offence unless it could raise a defence. I shall deal more with that defence in a moment, but I shall concentrate first on the mechanism of using the defence. Currently, the burden of proof lies with the company: it must raise its defence and prove it. In most circumstances, the defendant need merely raise the defence and it is the prosecution's job to disprove it. Amendment 8 is intended to reverse the burden of proof on to the prosecution. I should be grateful for an explanation why the Government feel that a reverse burden of proof is suitable in this case.
Amendment 9 returns to a previous debate on the meaning in subsection (2) of "adequate procedures". It would replace that phrase with "reasonable procedures".
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The Minister will know that businesses are uneasy with Clause 7, and it is largely for that reason that he conceded that guidance must be necessary, which we shall debate shortly. However, even if detailed guidance is produced, the structure of Clause 7 still merits debate. I still have concerns that I expressed in Committee that "adequate" is not perhaps the best word to use in subsection (2), which provides for the corporate defence of having adequate procedures in place. The word "prevent" is used in that subsection. It may be possible, on a narrow reading of the Bill, that if bribery had been proven to have occurred, the procedure could not have been adequate and therefore the defence must fail. I am sure that a narrow reading of that subsection is not what the Government intended and an explanation of why "reasonable"-a word well understood by the courts-is not employed would be welcome. Courts understand the concept of reasonableness, as do companies.
The addition of the phrase "in all the circumstances" in Amendment 7 allows for account to be taken of the different dynamics that relate to sector, size of company and risks associated with markets. That may help to address the concerns over the offence being fair and proportionate both for large companies and small and medium-sized enterprises. It would also see that due regard is paid to the facts and circumstances surrounding the relevant bribery offence referred to in subsection (1).
In addition, I suggest that Amendments 7 and 11 may go some way towards addressing the fact that the Bill does not take due account of, nor can it properly cope with, the reality of the variety of corporate structures-something that the Minister will understand. That is particularly the case with joint ventures in all their forms-project work, construction, the extractive industry and the financial sector-where control and influence in those arrangements may vary considerably. It cannot be right that a business finds itself criminally liable where it has little, limited or no ability to influence or control its partners.
That is not to say that United Kingdom businesses fail to exercise the influence that they can within the constructs of their contractual or business relations. I am aware that the CBI, among others, is extremely concerned that failure to realise and act on those concerns will have a serious detrimental effect on United Kingdom competitiveness, not just in terms of existing arrangements but of potential future business.
I accept that the Government's concession that guidance is necessary will do much to allay our concerns about Clause 7. However, we have yet to see the guidance. It is unlikely that we will see it before the Bill leaves your Lordships' House-only next Tuesday, as I remember. Until we know what the Government are thinking of for that guidance, we need to ask them to consider the points that I have raised about the drafting of Clause 7 and how it is intended to operate, and to
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Lord Goodhart: My Lords, it is about time that we on these Benches came into the battle.
The noble Lord, Lord Henley, started by dealing with Amendment 6. In my view, it would be a wrecking amendment if it were ever adopted. As the noble Lord said, it takes us back to Clause 5 in the draft Bill as presented for pre-legislative scrutiny. The Joint Committee unanimously rejected that clause. The principal reason for that was that if any prosecution has to identify a single individual or a number of specific individuals who were negligent in failing to prevent bribery, it would make it almost impossible to obtain a conviction.
The failure to prevent bribery is much more likely to be due to the failure of the management or board of directors as a body to take proper steps to prevent bribery. Bribery, or the absence of any objection to bribery, is more often due to the slackness of the company as a whole rather than to any negligence that can be tied to specific directors or managers. In many cases, it may be clear that the company has failed to take proper steps to stop bribery and deserves punishment for that failure, but the evidence of negligence by any one individual director or manager cannot be proved beyond reasonable doubt, so there will be no conviction. Therefore, if the amendment is passed, one of the central purposes of the Bill will be destroyed and the Bill will become unacceptable as meeting the duties of the United Kingdom to try to reduce the dangers of bribery across the world.
4.45 pm
Amendment 8 is not quite a wrecking amendment, but it is not far off it. Without Amendment 8, a company has to prove that it has adopted adequate procedures. Since all the relevant information will be in the hands of the company, and it only has to prove that on the balance of probabilities, requiring the company to prove that is fair enough. However, if this amendment is accepted, the prosecution will have to prove beyond reasonable doubt that the company has failed to adopt reasonable procedures. That will again make it extremely difficult to get effective convictions. Perhaps there would be a few more than if Amendment 6 were adopted, but not many more.
Amendments 7, 9 and 11 are less seriously damaging to the Bill, but I nevertheless oppose them. Amendment 7 states that,
- "it is a defence for C to prove that C had in place reasonable procedures in all the circumstances, including taking into account the extent of C's influence over A".
That is unsatisfactory because one of the jobs that C-the company-must carry out is to make sure that it exercises influence over its agent and does not employ or hire agents it cannot control. Those words, and the similar words in Amendment 11, are unacceptable. On the question of whether "adequate procedures" should be replaced by "reasonable procedures", I have very little to say. This is an important group of amendments and, by and large, they are a considerable threat to the effectiveness of the Bill.
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Lord Thomas of Gresford: My Lords, as no other noble Lord wants to say anything, perhaps a second speech from these Benches will not be inappropriate. I shall focus on Amendment 8, which deals with the transfer of the burden of proof. Noble Lords should consider the practicalities. The prosecution would have to prove that a bribe had taken place by someone associated with the company, but would then have to carry out an extensive investigation into that company, its management structure and its procedures in order to prove that they were inadequate. It would be an enormous burden to place upon the investigating authorities. On the other hand, the company faced with a charge of failing to prevent bribery has the procedures at its fingertips and can bring them forward and establish that they are adequate. As I shall say at a later stage tonight, if a company had the advice of an advisory service about whether its procedures were adequate, it would assist it in putting forward that defence.
Lord Tunnicliffe: My Lords, I thank noble Lords who have spoken. It is clear from the Bill, and it will be clear from my speech, that we have set our face against the concept of negligence and that we are talking about an offence of strict liability with a defence. I shall come on to the level of proof for that defence.
The amendments deal with the elements of the Clause 7 offence and the associated defence. Under Clause 7, a commercial organisation will be guilty of the offence if a person associated with the organisation bribes another person with the intention of obtaining or retaining business or an advantage in the conduct of business for the organisation. It will be a defence for the organisation to prove that it had "adequate procedures" in place that are designed to prevent persons who are associated with it from undertaking such conduct. The amendments which the noble Lord, Lord Henley, tabled to Clause 7 would delete this offence and replace it with the offence in the draft Bill that we published for pre-legislative scrutiny. That offence required the prosecution to prove that a responsible person or a number of such persons in the organisation were negligent in failing to prevent the bribe.
I note that Amendment 7 would also revise the defence so that, instead of referring to "adequate procedures" for preventing bribery, it would refer to procedures that were,
taking into account the extent of the organisation's influence over the person who was paying the bribe. The amendments would also mean that the organisation would no longer need to prove that it had reasonable procedures in place.
While I understand the motivation behind these amendments, the noble Lord will recall that the Joint Committee that scrutinised the draft Bill specifically recommended that we should remove the requirement to prove negligence. Witnesses to the Joint Committee described the relationship between the negligence element of the offence and the adequate procedures defence as uncomfortable. The Joint Committee was concerned that focusing on whether a responsible person was negligent, rather than on the collective failure of the company to ensure that adequate anti-bribery procedures
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We also accepted the Joint Committee's view that a commercial organisation is well placed to demonstrate on the balance of probabilities that it had adequate procedures in place to prevent bribery. I understand that, when a defence is specified, it does not have to be proved beyond reasonable doubt; it merely has to be proved on the balance of probabilities. The burden of proof is therefore not completely reversed as the noble Lord, Lord Henley, suggested. It is a strict liability.
Our view on these matters has not changed. The reality is that the commercial organisation is best placed to establish the adequacy of its procedures. Placing the burden on the prosecution to prove a negative could render this important offence ineffective in practice. I stress, however, that while the prosecution will need to prove the offence beyond reasonable doubt, the defendant will have only to establish on the balance of probability that the defence has been made out.
We cannot accept the noble Lord's amendment to replace "adequate procedures" with,
One must ask whether the noble Lord is saying that it is acceptable for commercial organisations to have inadequate procedures in place to prevent bribery. We say that it surely is not. Changing the test in this way is unnecessary and sends out the wrong message. It would allow an organisation to argue that although the procedures were wholly inadequate, they were none the less reasonable, given-for example-the resources available to the organisation to devote to preventing bribery. Commercial organisations should have adequate bribery prevention procedures. It is perfectly "reasonable", to use the language of the amendment, to expect that.
Nor do we agree that it is necessary to replace "prevent bribery" with "combat bribery". Our ultimate aim is of course to prevent bribery, but the defence recognises that a well run organisation will avoid liability, despite an isolated incident of bribery, if its procedures are otherwise adequate. If the noble Lord's concern is that organisations will find it difficult to understand the concept of adequate procedures, they would surely face similar difficulties in understanding the concept of reasonable procedures.
The noble Lord has also proposed Amendment 11 relating to Clause 8, which deals with the commercial organisation's relationship with the person who pays a bribe. Clause 8 states that the question of whether a person is performing services on behalf of an organisation is to be determined by reference to all the relevant circumstances. We do not think that it is necessary to explain this further in the Bill. It goes without saying that "all the relevant circumstances" is likely to cover the extent of the organisation's influence over the person paying the bribes.
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