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Clause 12 provides a defence for law enforcement agencies, the security services and the Armed Forces. This is a significant departure from the draft Bill which included an authorisation scheme in respect of the security services. That scheme did not find favour with the Joint Committee. We accept that an authorisation

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scheme, which was capable of conferring a broad exemption for the security services, was arguably cast too widely. I welcome the fact that in its briefing, Transparency International,

to the Joint Committee's recommendation on this issue.

While we have removed the authorisation procedure, we remain firmly of the view that some provision is required to address those circumstances in which the security services, law enforcement agencies and the military may have to use financial or other inducements to enable them effectively to discharge their functions.

We note of course that the much-respected Constitution Committee of this House has expressed some concerns about this clause in the report it published last Friday. We thank the committee and its chairman for the report. Your Lordships may be assured that we will study it and its conclusions with care. We will respond to the committee in due course, having also heard the views of other noble Lords on this issue today and later on in Committee.

There is one point that is not in the Bill but which the House would expect me to mention. The general offences in the Bill apply to all those performing functions of a public nature. As such, we intend that the Bill would apply to Members of this House and of the other place. The Joint Committee did not demur from this. It is, I believe, axiomatic that no Peer or Member of Parliament should be above the law. The draft Bill sought to deal with the consequences of this by providing for Article 9 of the Bill of Rights 1689 to be waived so that the words or conduct of a Member of Parliament or Peer charged with an offence under the Bill may be admissible as evidence.

We recognise that the issue of parliamentary privilege is an emotive one, as we saw during the passage of the Parliamentary Standards Act. Members of both Houses rightly do not want to see an erosion of hard-won freedoms. The Joint Committee took the view that there were dangers in adopting a seemingly piecemeal and inconsistent approach to parliamentary privilege and suggested that the matter should more appropriately be dealt with in a parliamentary privilege Act. Given the Joint Committee's conclusion on this matter and the complexities and sensitivities surrounding this issue, we have not included provision in respect of parliamentary privilege in the Bill as introduced into your Lordships' House. None the less, we recognise that the House will wish to consider this issue carefully during the course of our debates, both today and during the subsequent amending stages of the Bill. We look forward to those debates and will reflect carefully on what is said on both sides of the argument.

This is an important Bill which will deliver a modern and comprehensive body of criminal law to support the work of law enforcement agencies and prosecutors in rigorously combating bribery, both in the United Kingdom and abroad. It is an outcome to which everyone can subscribe and I hope the Bill will enjoy support from all sides of the House. We look forward to working with noble Lords to ensure its speedy progress. I commend the Bill to the House.

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3.51 pm

Lord Mackay of Clashfern: My Lords, I warmly welcome the Bill and thank the Minister for the clear way in which he has introduced it. I also thank the Government for the required preparation. Your Lordships will recollect that a previous draft Bill was rejected by a Joint Committee of both Houses presided over by the late Lord Slynn of Hadley, to whom I pay tribute for the work he did while a Member of the House in both its judicial and legislative capacity.

The principles set out in the Bill, and the manner in which it has been put together, are very clear and acceptable. I hope that the Bill will be given a Second Reading with acclamation. I am glad that it is proposed that it will then be referred to a Grand Committee because the Minister has hinted that there a number of detailed points of a committee nature that need to be addressed. I shall mention one or two-I shall not attempt to be exhaustive-which have occurred to me on studying the background and the Bill itself.

My first point relates to what have been called "facilitation payments". The noble Lord, Lord Robertson of Port Ellen, gave a good example of these to the Joint Committee. He referred to the captain of a ship who, when seeking to have its cargo unloaded, was told by the stevedores at the port that it would be unloaded only on the condition that a payment was made to someone nominated by the stevedores, not necessarily to the stevedores themselves. That is a very difficult position for the captain of a ship to be in, and yet, if he paid, the Bill would criminalise his payment. Another example I have come across-there are quite a number in this general area-is that of someone on a business trip who, in order to board the aeroplane at the airport, has to get a boarding pass. He is asked by the official issuing the boarding pass for money, not to pay airport taxes but as a payment to the man himself-or the woman herself, of course; it is equally dangerous when it comes from that quarter. It is a difficult issue and I wonder whether the ordinary defence of duress could be adapted and available in this situation.

The Minister mentioned the provisions about companies and one of the questions that arises is about the relationship between a holding company and, let us say, an overseas subsidiary company in regard to these responsibilities. We will want to examine these matters.

There is also a question, as the noble Lord mentioned, about the defence of adequate procedures. There have been many requests, as the noble Lord also said, for authoritative guidance in this area. Having wondered about this, I think that the department of the noble Lord, Lord Mandelson, could be responsible for giving guidance, just as the Department for Transport is responsible for the Highway Code. The provisions which give effect to the Highway Code in law would be quite adequate for dealing with this matter. It would not be conclusive one way or the other, but it would be guidance that could be referred to as authoritative with the tendency either to implicate or to exculpate according to the situation. A great deal of the difficulty would be resolved by authoritative guidance of that kind, developed by the Department for Business,

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Innovation and Skills after consultation with the business community. There are many different types of businesses operating overseas, where the question of what is adequate will depend very much on the nature of the business and on the knowledge it has of the situation overseas.

There are many other questions that might be raised in Committee. I am concerned about the nature of the consent required for prosecutions. These offences under the older law generally required the consent of the Attorney-General. In the Bill, that has been replaced by the consent requirement of the three relevant directors, depending on the situation. The OECD had something to say about this. I think it is highly undesirable to reduce the responsibility of the Attorney-General, who is accountable to Parliament, in this area. It is true that some people suggest that because a person is a member of the Government, his or her discretionary judgments cannot be justified or treated as trustworthy. Some people may think that, but I think that the last thing that politicians, those with a responsibility in politics, should do is to accede to that. It is very important that the person taking decisions in this area should be accountable to Parliament. A great deal has been done and I have no doubt will be done in the development of protocols between the Attorney-General and the directors and that is a good and useful development, but I find it difficult to agree that the Attorney-General's consent should be taken out of the Bill without the full discussion that will ultimately be required under the provisions of the constitutional Bill now before Parliament.

The last point that I want to make is in relation to Clause 12 and concerns the empowerment of the law enforcement agencies, the Secret Service, including GCHQ, and the Armed Forces on active service to do what the Bill would make unlawful, but to do it lawfully because they have authority to do so. The Constitution Committee has dealt with this in great detail and in a way that I find very convincing. This is a point that requires to be considered in Committee and I have no doubt that in due course it will be.

In conclusion, we are greatly indebted to the Joint Committee for its consideration of the Bill-and very full and detailed consideration it was. Those thanks go to its chairman and to all its members. I also thank especially the Law Commission, and I venture to suggest that if its talents were used more freely in connection with the development of criminal justice legislation in this country, the system might be a good deal simpler, and a good deal better. I hope that the Government, having regard to how the procedure has developed into a Bill that is, I hope, very acceptable around the House, might find that attractive for further developments in the criminal justice system as a whole. Whatever can be said about the Bill, both in its substantive provisions and its procedures-particularly in relation to sentencing and the recovery of the proceeds of crime-it cannot be described as simple.

Lord Waddington: Will my noble and learned friend allow me to raise one matter? Having served on the Joint Committee on the Corruption Bill, will he allow me to associate myself with his remarks about Lord Slynn? Will he accept that this Bill is as clear and easy

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to understand as that Corruption Bill was obscure? Lord Slynn had a very hard task chairing our committee because of the difficulties with which he was presented.

Lord Mackay of Clashfern: I am grateful to my noble friend for his intervention, and to some extent I understand how difficult it is for a Joint Committee set up to look at a draft to come to the conclusion that it is so bad that it should not go ahead at all. However, no doubt, it has to be done sometimes, and with Lord Slynn in the chair it was done on that occasion.

4.02 pm

Lord Goodhart: My Lords, I start by declaring an interest as a member of Transparency International UK, which is the United Kingdom's branch of Transparency International. I was also a member of the Joint Committee that considered this Bill in pre-legislative scrutiny.

As I said while speaking in the Queen's Speech debate, this Bill is long overdue. Our current law is based on Acts of 1889, 1906 and 1916. The previous attempt to reform our legislation on corruption was abandoned in 2003, when the pre-legislative scrutiny committee was very critical of the draft Bill-here, I support the tribute from the noble and learned Lord, Lord Mackay of Clashfern, to my old friend the late Lord Slynn. However, it is virtually a unanimous view that the current Bill is a great improvement on its 2003 predecessor and I entirely agree with what the noble Lord, Lord Waddington, said on that.

So far as the work of the Joint Committee was concerned, after its first meeting I thought that we would never come to an agreement about the changes to the law that were needed, but I was wrong. The committee's report was ultimately unanimous. I think that I speak for all its members in being very grateful to the noble Viscount, Lord Colville of Culross, for his chairmanship. Many of the recommendations of the committee were, as the noble Lord, Lord Bach, said, accepted by the Government. In particular, the Government have introduced Clause 7 of the Bill as a replacement for Clause 5 of the draft Bill, which would have made it difficult-and, I believe, virtually impossible-to obtain the conviction of a company, even if it had failed to take reasonable steps to prevent bribery. That is an extremely important change, which greatly improves the Bill.

Another issue on which the Government moved some way-although in my view not far enough-towards the recommendations made by the committee was in relation to guidance. The committee decided that guidance needs to be given on what amount to adequate procedures as a defence for a company to prosecution under Clause 7. In paragraph 16 of their response to the committee's report, the Government propose non-statutory guidance. What the Government propose to put into that guidance seems, so far as I am aware of it, reasonable. However, non-statutory guidance presumably means that nothing in the Bill will require this Government or any future Government to produce guidance. The provision of guidance is sufficiently important to require the insertion into this Bill of a duty for the Government to provide it. In the Bill's present form, there is no such duty.

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The committee did not suggest-nor does the Bill require-that there should be any system of clearances for individual projects, as is provided for in the USA. The view taken by this Bill on that subject is quite correct. Clause 9 transfers the need for consent to prosecution from the Attorney-General to the directors of the prosecuting authorities. The Attorney-General, however, retains the power of direction. I disagree fundamentally with the noble and learned Lord, Lord Mackay of Clashfern, on this. I believe that the Attorney-General should not have a power of direction so long as she remains a member of the Government. I should add that it is perfectly possible, although it would be somewhat unusual, for somebody to be accountable to Parliament for a decision that was not that of a Minister. However, although I disagree with this provision, I do not think that that is a cause for any change in the Bill, because it is not a matter for the Bill; if the position of the Attorney-General is to be changed in this respect, that needs to be dealt with in a separate Bill.

Lord Lyell of Markyate: My Lords, during the 10 years that I was a law officer-and I watched my noble and learned friend Lord Mayhew and Lord Havers before that-when acting as Attorney-General one was not acting as a member of the Government; one was acting as an independent law officer of the Crown. One would rather have been swallowed up by the earth than have allowed anything in the nature of an ordinary ministerial duty to affect one's judgment. That was the tradition with which I came into the department.

Lord Goodhart: My Lords, I have the greatest respect for the views of the noble and learned Lord, Lord Lyell of Markyate, on this. He, too, was a member of the Joint Committee. But however high the standards-and I think that they were of the highest for both him and the noble and learned Lord, Lord Mayhew-it increases the risk if somebody both holds the job of being the legal adviser to the Government and is a member of that Government. I would prefer that that did not happen. However, as I said, it is not a matter for this Bill.

I have never understood why at the time of the abandonment of the investigation of BAE's dealings with Saudi Arabia the then Attorney-General, the noble and learned Lord, Lord Goldsmith, pushed the decision to discontinue the investigation on to the director of the Serious Fraud Office rather than taking that decision himself. It does seem that he would have been the appropriate person to take that decision.

Now I come to what I see as the most serious problem in the Bill. Clause 13 of the draft Bill gave exemption from bribery offences for acts authorised by the Secretary of State so far as necessary for the functions of-to use their nicknames-MI5, MI6 or GCHQ. The committee was highly critical of this on the grounds that, first, it was not satisfied that domestic intelligence agencies-that is, MI5 and GHCQ-in fact needed the power to bribe; secondly, the Bill was not the right vehicle for extending the powers of the intelligence agencies; and, thirdly, it was doubtful in the eyes of the committee whether Clause 13 met the United Kingdom's international obligations, especially in so far as exemption could be extended to activities that were intended to protect the UK's economic interests, not just to national security or serious crime.

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The Government's reaction to that recommendation was quite startling. They replaced Clauses 13 and 14 from the draft Bill, as the noble and learned Lord, Lord Mackay of Clashfern, has already pointed out, with Clause 12 of the present Bill. Not only do they fail to accept any of the points put forward by the committee, but they are substantially extending the exemptions. The security services are exempt, but so are law enforcement organisations engaged in the prevention, detection or investigation of serious crime and the Armed Forces on active service. The exemptions do not require any action by the Secretary of State in advance. Furthermore, the SFO and a senior representative of the police both said in written evidence to the Joint Committee that exemptions should not apply to them. I refer to pages 191 and 321 of Volume II, the evidence volume, of the committee's report.

The question of giving exemption to the Armed Forces was never put to the committee for consideration. In their response to the committee, the Government have given no explanation of the circumstances in which the Armed Forces might require the use of those exemptions. It is arguable that there are some circumstances in which obtaining information could be regarded as falling within the scope of the Bribery Bill and that they therefore need some form of exemption-for instance, if MI6 were to pay a person employed in a uranium enrichment plant somewhere in the Middle East to tell it what was happening there. However, if an employee in a company that is conducting a major fraud gives information to the SFO or the police that will assist them in arresting those responsible, I cannot see that giving that information, whether paid for or not, can possibly be regarded as an improper performance of an employee's functions. If that is right, the action of the SFO or the police in paying informers or deciding not to prosecute them is plainly not bribery. If there is any doubt about that, a simple amendment would put it beyond doubt and would make a large part of Clause 12 unnecessary. Whatever the position may be for MI6, I do not believe that the exemption is needed for law enforcement agencies and no justification has yet been put forward for extending exemptions to the Armed Forces.

There is one other matter of concern. The Bill does not deal adequately with the possible liability of a company for acts of bribery committed by a subsidiary or a joint venture company in which it holds an interest. The committee was unable to come up with proposals for how to deal with this because of shortage of time; we were allowed only a very busy 10 weeks in which to consider the Bill. As a result, the Bill does not include any recommendations for how this problem is to be dealt with. Plainly, there is a gap. Apparently, this will be left to be considered by the Law Commission when it is reviewing the law on corporate liability for crime. That may be some time off and meanwhile the absence of rules in the Bill could lead to serious loopholes in criminal prosecutions. I would have preferred to have had this matter covered by the Bill, but I am afraid, given the approach of the end of the present Parliament, it is not practical to include any amendments for this purpose during the time available. The gap will have to be closed at a later date, but that date needs to be as soon as possible.

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Notwithstanding these criticisms, I believe that this is a good Bill; indeed, it is basically an excellent Bill. It is certainly important, particularly because the United Kingdom's legislation is plainly inadequate and needs updating. There are issues that need to be debated-

The Earl of Onslow: I thank the noble Lord for giving way. I know that I am speaking later, but he has raised a very important question in my mind about subsidiary companies, and I agree with him. Would it be possible to put an order-making power into the Bill that would enable that point to be covered later, without having to go back to primary legislation?

Lord Goodhart: I have to say, perhaps putting on my hat as the chair of the Delegated Powers Committee, that such a power might have some difficulty in getting through that committee.

There are issues that need to be debated in Committee, but I do not believe that they are fundamentally controversial and I hope that this Bill will be enacted soon.

4.16 pm

Lord Pannick: My Lords, I join other noble Lords in warmly welcoming the Bill and commending the work of the Joint Committee. I hope that the Bill will be enacted speedily and push this country up the league table of the least corrupt countries, from a disappointing 17th place, if I understood the Minister correctly, to a Champions League position.

I will focus my comments on Clause 12. Like the noble Lord, Lord Goodhart, I regard Clause 12 as the most controversial provision of the Bill, providing as it does a defence for certain bribery offences for persons engaged in law enforcement functions, the work of the security and intelligence services, and the conduct of the Armed Forces. Such exemptions inevitably raise difficult and sensitive questions about the rule of law. As the Minister has already mentioned, your Lordships' Constitution Committee, of which I am a member, has published a report critical of Clause 12, which I commend to the House. I should like to mention briefly my three main concerns about Clause 12.

My first concern is to understand why the Government think that it is appropriate to create an exemption for the domestic intelligence services from the criminal offence of bribery. The Joint Committee, at paragraph 203 of its report published in July, said that it had heard,

Why then have the Government not accepted the recommendation of the Joint Committee to remove the clause creating this defence? In any event, surely the Joint Committee was correct when it said, at paragraphs 202 and 203 of its report, that if the intelligence services believe that they can justify exemptions from the criminal law, the case should be put before this House and the other place by means of an appropriate amendment to the Intelligence Services Act 1994.

My second concern is that the Government's response to the report of the Joint Committee on these defences was not to narrow the exemptions from those in the draft Bill, but to increase them. The exemption in the draft Bill was confined to the security and intelligence services. The Government now seek to include in

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Clause 12 an exemption for law enforcement agencies-a category which is broadly defined to cover bodies such as HM Revenue and Customs, local authority trading standards officers and environmental health officers. That is a very broad description indeed.

The Joint Committee noted at paragraph 195 of its report that the evidence it received from the police and the Serious Fraud Office on the defence for the intelligence services did not suggest that the police and SFO believed that they needed any such defence for their own activities. Why then has an exemption for law enforcement agencies now been added to the Bill? In what circumstances is it envisaged that the police, Revenue and Customs, and local authority trading standards officers should be permitted to bribe people? Is there any evidence at all that the absence to date of such a power has hindered the effective performance of law enforcement functions?

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