Chapter 5: Bribery of foreign public officials, and facilitation payments (section 6)
The offence
132.The scourge of corruption is not confined to Britain’s shores, and for decades countries across the world have struggled to tackle bribery across borders. In 1989 the Organisation for Economic Co-operation and Development (OECD) established a working group to consider national legislation across member countries regarding the bribery of foreign public officials. This culminated in the signing of the OECD Anti-Bribery Convention170 in 1997, which aimed to encourage countries to adopt legislation prohibiting the bribery of foreign public officials following a common framework, and monitor enforcement activities in this area. As at May 2017, 43 countries had ratified or acceded to the convention.171
133.The Convention was ratified by the UK on 14 December 1998, and entered into force on 15 February 1999. Provisions on foreign bribery were first integrated into UK law on 14 February 2002 when sections 108–110 of the Anti-terrorism, Crime and Security Act 2001 came into force.172 Section 108 explicitly made bribing a foreign official an offence, primarily as a means of ensuring the UK was clearly compliant with the Convention.
134.Sections 108–110 were repealed and replaced by the Bribery Act. Under section 6, a person will be guilty of an offence if, with the intention of obtaining business or an advantage in the conduct of business, they offer, promise or give a financial or other advantage to a foreign public official, either directly or through a third party, where such an advantage is not legitimately due. Unlike section 1 and 2 bribery offences, there is no requirement to show that the public official acted improperly as a result. The offence under section 6 only applies to the briber, and not to the official who receives or agrees to receive such a bribe. Section 1, 2 and 6 offences carry the same maximum penalties.173
135.At the time of writing, no prosecutions have been brought under section 6, and, as far as the MoJ were aware, no investigations either.174 This is not necessarily as surprising as it might initially seem—due to the extra-territorial scope of section 1 of the Act, a prosecution may be brought under section 1 for the same conduct as section 6, although the burden of proof would be higher, as noted earlier. Corruption Watch argued this point, and stated that:
“the absence of prosecutions under Section 6 up to now does not necessarily reflect an absence of prosecutorial action being taken for this type of offending but rather the fact that other sections of the Bribery Act are already sufficient to criminalise the offending.”175
136.Regardless of the section it is prosecuted under, any bribery case with an international dimension is likely to be handled by the SFO in the case of a large, complex case, or otherwise by the International Corruption Unit (ICU) of the NCA. These used to be handled primarily by the City of London Police’s Overseas Anti-Corruption Unit (OACU). Set up in 2006 with funding from the Department for International Development, its remit was passed to the National Crime Agency’s International Corruption Unit (ICU) in 2015. With relatively modest funding (£10 million since 2006), the OACU secured eight convictions during its existence, accounting for more than a third of the individual foreign bribery convictions in the UK since 1999.176 None of the City of London Police’s investigators transferred across to the new unit at the NCA, although they did help to establish an NCA training course for the investigation of foreign bribery cases, which every ICU officer is required to attend.177
137.When we asked NCA representatives why they had not yet secured any convictions, James Mitra noted that, to his knowledge, in the first four years of operation, the OACU only secured one conviction. Due to the complexities of foreign bribery cases, most of the OACU’s convictions were secured after this point:
“By comparison, the international corruption unit is three years in, and we are now at a point of having some cases considered by the CPS for charge. I feel like we are working to a similar arc.”178
Facilitation payments
138.Facilitation payments are small payments, usually paid to minor officials to induce them to perform their public duties where otherwise they might not be inclined to do so, or would do so only very slowly. They are often expected in certain countries in relation to various routine administrative tasks, such as applying for visas, clearing customs or obtaining import licences, or unloading ships. In many such situations, it can seem that there are few practical alternatives to acceding to these demands. UK corruption law, both before and after the 2010 Act, has never distinguished facilitation payments from other forms of corrupt payments.
139.We received little in the way of clear evidence regarding the prevalence of facilitation payments. To take just one sector—shipping, in which facilitation payments might be assumed to be relatively commonplace—several industry representatives told the Committee that while large-scale bribes to secure business have been significantly reduced in recent years, facilitation payments remain an issue in various parts of the world. Mark Jackson, CEO of Baltic Exchange, told us that “smaller, low-level payments of less than $1,000, along with cartons of cigarettes and alcohol, have been harder to deal with”, while Tim Springett, Policy Director for Employment and Legal at the UK Chamber of Shipping, suggested that shipping companies which operate in “particular corruption hotspots, will face [demands] on a routine basis”.179 He highlighted the Suez Canal as one of these hotspots:
“It is nicknamed the Marlboro Canal, because the pilots routinely expect to be provided with cartons of Marlboro—200 cigarettes—which they normally sell. We have heard reports of ships either being negligently piloted through the Suez Canal or perhaps even being deliberately damaged by pilots if they have not received these things.”180
140.However, Cecilia Müller Torbrand, Program Director of the Maritime Anti-Corruption Network, argued that her network had taken “significant steps” in the canal, and companies which participated in their “Say no” campaign “are now going through the canal without being harassed for payments”.181
141.The matter of whether specific exemptions should be made for facilitation payments was considered in the lead up to the Act, but both the Joint Committee and the Government declined to take this approach, arguing that tackling petty bribery was also an important objective for the legislation, and that prosecutorial discretion would ensure that prosecutions were in the public interest.182
142.MoJ guidance makes clear that anyone making facilitation payments could be liable for prosecution under sections 1 or 6 of the Act, but also acknowledges “the problems that commercial organisations face in some parts of the world and in certain sectors”.183 The Joint Prosecution Guidance of the DPP and DSFO also lists a number of factors which will help determine whether a prosecution is in the public interest–for example, if payments are made regularly and are pre-planned, a prosecution is more likely than if an occasional payment is made based on the immediate situation.184
143.Many of our witnesses mentioned that in some jurisdictions, notably the US, Canada, Australia and New Zealand, allowances have been made for types of facilitation payment.185 However, it was also noted that many of these countries are themselves abandoning this position—Canada, for example, recently removed its facilitation payments exception, while Australia has considered doing so in its recent reforms of corruption law.186 Indeed, in March 2018 an Australian Senate report on foreign bribery legislation reform observed that in the context of the “many comparator countries, including the UK and Canada, that do not permit facilitation payments … Australia’s position on this issue is increasingly isolated”, and recommended abolishing the facilitation payment defence.187 It was also pointed out that while the US Foreign Corrupt Practices Act does allow for facilitation payments, the circumstances in which these are permitted are tightly circumscribed, and many US companies prohibit facilitation payments regardless of their legal permissibility.188
144.A minority of witnesses suggested that the fear that companies could be held responsible for even the smallest infractions “may discourage British companies from working abroad”, and that some companies felt that “business was lost” as a result of the Act’s strict provisions against bribery.189 However, Control Risks gave evidence which pointed in the opposite direction.190
145.Most witnesses were very clear that any attempt to relax or amend the UK’s approach to facilitation would be a backward step, with Transparency International speaking for many when they stated that “the UK has led the way, and the rest of the world has followed, and it is now too late to attempt to lower standards in a bid to lessen compliance requirements on companies”.191 Even witnesses who highlighted concerns amongst UK businesses were generally more in favour of providing additional assistance for companies, in particular exporters, who find themselves in difficulties abroad, rather than any change to the law.192
146.We agree with all our witnesses that it would be a retrograde step to legalise facilitation payments. All trends in the law in other jurisdictions are towards abolishing a facilitation defence. We do not recommend any change in the law.
Assisting SMEs
147.Much of the evidence we received did however convince us that exporters, especially SMEs exporting for the first time to new markets, need more assistance in formulating their anti-bribery and corruption policies. Several witnesses thought that current guidance and advice was lacking;193 for example, Sean Curran noted that guidance was often blind to the needs of SMEs, which might require “a more fact-specific policy relevant to their business” which takes into account foreign elements of their business and the cultural sensitives of the markets in which they operate.194
148.There was much discussion regarding the level of assistance provided to exporters by UK embassies in foreign markets. Some witnesses were very happy with the help they received, with Joanna Talbot, Chief Counsel, Compliance and Regulation for BAE, explaining that they routinely sought their guidance on local markets, and found them to be a “very good source of help and assistance”.195 She believed these opportunities are “open to anyone who wants to take them”, regardless of their size.196
149.However, Dominic Le Moignan, Director of Government Projects at GovRisk, which has worked with the Government on improving assistance for businesses in this regard, observed that their consultations with businesses highlighted a great variation in the advice provided by embassies, many of which are chronically short-staffed.197 Similarly, IBLF Global stated they did “not believe that the UK Embassies, DIT representatives or British Chambers of Commerce are currently equipped to provide a service advising on corruption risk”, and noted the lack of information concerning FCO commitments on training outlined in the Government’s Anti-Corruption Strategy.198 A variety of witnesses shared the view that advice and guidance on the ground should be provided by embassies on a more consistent basis.199
150.We were told of a range of current Government initiatives in this area. Phil Mason, Senior Anti-corruption Adviser at the Department for International Development (DfID), provided us with an outline of the Government’s Business Integrity Initiative, which aims to convince businesses that anti-bribery measures are integral to sustainable commercial activity, provide businesses with better advice on where to turn if they are confronted with demands for facilitation payments, and shape the behaviour of SMEs more generally in relation to corrupt conduct.200 It now encompasses six projects:
- Improving online guidance, as set out on the great.gov.uk website, by, for example, indicating potential red flags which businesses should look out for when exporting abroad and dealing with agents;
- Contracting with guidance services in order to provide businesses with bespoke face-to-face guidance on particular issues they might be encountering;
- Improving in-country support through missions and embassies;
- Improving mechanisms for informing and influencing the behaviour of SMEs, through, for example, the creation of an NGO called ‘Business Fights Poverty’;
- Analysis of what works with respect to successful collective action in tackling corruption, and using this to improve Government advice and guidance services;
- Convening an expert panel, under the Joint Anti-corruption Unit (JACU), to sustain collaboration between Government and business, and provide feedback on the work of the Business Integrity Initiative.
151.Baroness Fairhead, Minister of State for Trade and Export Promotion at the Department for International Trade (DIT), acknowledged that practical help to date had been “very siloed”, and explained that DfID, the Foreign and Commonwealth Office and DIT have all produced their own guidance in an un-coordinated way.201 She highlighted an 18-month pilot project, covering Kenya, Mexico and Pakistan, which began in October 2018, which will see in-country personnel tasked with improving guidance on risk mitigation, compliance and prevention, and encouraging collective support.
152.The Government must ensure that UK companies are provided with support on corruption issues in the countries to which they export, by properly trained and instructed officials. Even the smaller UK embassies must have at least one official who is expert in the local customs and cultures, or who can rapidly contact officials of foreign government departments on behalf of companies facing problems in this field.
153.There are specific issues with the DIT Exporting is Great website which we consider in Chapter 8.202
Brexit issues
154.The United Kingdom currently participates in around 40 EU measures that support and enhance security, law enforcement and judicial co-operation in criminal matters. Some of these, including the European Arrest Warrant (EAW)203 and the European Investigation Order (EIO),204 are of particular importance in the investigation and prosecution of bribery offences, which often cross national borders.
155.The Political Declaration of 25 November 2018 on the future relationship of the EU and the UK205 states that “effective arrangements based on streamlined procedures and time limits” should be established to allow the “surrender [of] suspected and convicted persons efficiently and expeditiously”.206 It also emphasises the need for “effective and swift data sharing and analysis”, and states that “reciprocal arrangements for timely, effective and efficient” exchanges of criminal justice data should be established.
156.Nothing is said there about the problems which will arise if there are no EU measures in force and no multilateral agreements to replace them. However the Government has laid before Parliament draft Regulations—the draft Law Enforcement and Security (Amendment) (EU Exit) Regulations 2019—which, in the event of “no deal”, would bring into force on exit day alternative measures for the investigation of offences and enforcement of penalties.207 The Explanatory Memorandum states that:
“in a ‘no deal’ scenario there would not be an implementation period, and the UK would no longer be able to co-operate with the EU using EU law enforcement and criminal justice mechanisms such as the European Arrest Warrant (EAW) or the Schengen Information System (SIS II), a Europe-wide IT system which enables the sharing of alerts on wanted/missing persons and objects for law enforcement purposes. The UK would rely instead on alternative, non-EU mechanisms, where they exist. The assessment concludes that these mechanisms, which include Interpol and Council of Europe Conventions, would not provide the same level of capability as those envisaged in a deal scenario, and would risk increasing pressure on UK security, law enforcement and judicial authorities.”208
157.The EAW was implemented in the UK by Parts 1 and 3 of the Extradition Act 2003 which came into force on 1 January 2004. It allows a Member State to issue a single warrant which is valid across all EU Member States, and requires Member States to arrest and transfer a criminal suspect to the issuing state.
158.The EIO was implemented in the UK by the Criminal Justice (European Investigation Order) Regulations 2017 which came into force on 31 July 2017 (the EIO Regulations).209 It replaced previous mechanisms for requesting and sharing evidence through Mutual Legal Assistance between EU Member States, and requires that Member States recognise a request within 30 days and execute a request within 90 days, although extensions can be sought. The possible requests covered include:
- temporary transfer of persons in custody in order to gather evidence;
- checks on the bank accounts and financial operations of suspected or accused persons;
- covert investigations and intercepting telecommunications; and
- measures to preserve evidence.
159.If the UK ceases to be a Member State, it can continue to respond to requests under the EIO from the other 25 participating states,210 and indeed must respond as long as Part 3 of the EIO Regulations remains in force;211 but those 25 states will not be obliged to respond to requests from the UK unless there is an agreement that they should do so.
160.Several witnesses highlighted the importance of the EAW and the EIO when conducting international bribery investigations, and were concerned at the uncertainty surrounding them post-Brexit. Peters and Peters said: “considering complex bribery investigations are almost invariably international in nature, a return to using Mutual Legal Assistance for all requests will act as a brake on investigations.”212 The Law Society of England and Wales, the City of London Law Society and the Fraud Lawyers Association argued that “if the security arrangement that the UK comes to does not include the retention of the ability to use the EIO, that will amount to a step backwards for law-enforcement generally and the enforcement of bribery and corruption laws in particular”, with the same applying for the EAW.213 Gillian Mawdsley highlighted membership of European organisations such as Eurojust and the European Judicial Network as significant issues worthy of consideration in any eventual deal.214
161.In supplementary written evidence Louise Hodges pointed out that the Framework for the EU-UK Security Partnership proposed by the Government in May 2018215 sought to incorporate and replicate existing arrangements such as the European Arrest Warrant, and to provide the UK with access to the Second Generation Schengen Information System database (SIS II), as well as some form of continued participation in Europol and Eurojust. The Government had also suggested that it hoped to maintain some form of access to the European Criminal Records Information System (ECRIS) database, the Passenger Name Record (PNR) database and the Prüm databases containing fingerprint, DNA and vehicle registration information.216 No progress has however been made with the proposed Security Partnership.
162.When asked during an oral evidence session about the possible impact of Brexit on bribery investigations, Max Hill QC, the Director of Public Prosecutions, said:
“There would be an impact, because we would need to fall back on the mutual co-operation instruments that were in place prior to the EIO, which has been in force for only a year, and the EAW … it is important to say, from the point of view of the Crown Prosecution Service, that there could very well be resource implications depending on where we end up with Brexit. As a prosecuting authority for all crime nationwide, we are preparing for every outcome, whether that is deal or no deal. We understand that the demise of the EIO and the EAW would require 27 bilateral arrangements as opposed to a single multilateral one. We have procedures in place. We are managing our resources as best we can to prepare and protect the organisation in that event. This summer we created three new fraud centres to prepare for the future in general, and Brexit is part of the future.”217
163.Lisa Osofsky agreed with this assessment, although she also stressed that the SFO had a close working relationship with European counterparts, which she hoped would persist after Brexit.218 Donald Toon, Director of Prosperity at the NCA, emphasised that many investigations rely on police-to-police contact, which occurs with countries all over the world, and should therefore be relatively unaffected by Brexit. However, he emphasised that “we would want to preserve [existing] capabilities as much as we could” in the form of the EAW, EIO and the Schengen Information System under any deal that is reached.219
164.When the Protocol 36 negotiations were taking place in 2013–14220 the Government acknowledged the importance of opting back in to the EAW, pointing out that the only alternative multilateral agreement, the Council of Europe 1957 European Convention on Extradition (ECE), did not allow for extradition for political offences, and allowed states to refuse to extradite their own nationals. Keir Starmer QC (then DPP, and now Sir Keir Starmer QC MP) in evidence to the European Union Committee, stressed that the time and cost of extradition would significantly increase, and emphasised the problems caused by the fact that many Member States had repealed their legislation implementing the ECE in their countries, so that it would not be possible to use it for extradition to or from those countries.221 This is not a matter addressed in the draft Regulations, which simply add the 27 Member States to the list of territories designated for the purposes of the Extradition Act 2003.222
165.Ministers acknowledged in evidence to us the importance of the EAW and EIO, and highlighted efforts to negotiate similar arrangements with the European Commission.223 Ben Wallace MP emphasised that more resources were being allocated to a variety of law enforcement-related activities to prepare for Brexit (see Table 3). However, he was clear that “if there is a no deal, I think we will be in a very much worse position”, noting:
“Some people do not realise that we will be shut out of these arrangements; it is not a case of whether the European Union member states wish us to belong to them. Certainly in the short term we will become a third country overnight, and as such we will not have access to the European Arrest Warrant. That is a fact, whether people wish it to be so or not, and it would have a degrading effect on our ability, as would being without ECRIS on criminal records and passenger name records, and all the other things that we would be shut out of pretty much overnight.”224
Table 3: As of 19 December 2018, the Treasury had allocated the following additional funds to help departments prepare for Brexit
Department |
2018/19 (£m) |
2019/20 (£m) |
|
Attorney General’s Office |
- |
3 |
|
Department for Business, Energy and Industrial Strategy |
185 |
190 |
|
Department for International Trade |
74 |
128 |
|
Foreign and Commonwealth Office |
30 |
45 |
|
Home Office |
395 |
480 |
|
Ministry of Justice |
17 |
30 |
Source: Supplementary written evidence from HM Government (BRI0059)
166.It is clear that the fight against international bribery will be significantly impeded if there are not in force between the United Kingdom and the participating Member States of the EU, even for a short time, measures with equivalent effect to the European Arrest Warrant, the European Investigation Order and other EU mechanisms for investigation and enforcement. We hope that all those involved in the Brexit negotiations, for the EU as well as the UK, will bear this in mind.
170 OECD, Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, 2011: http://www.oecd.org/daf/anti-bribery/ConvCombatBribery_ENG.pdf [accessed 5 February 2019]; Organisation for Economic Co-operation and Development Working Group on Bribery, Phase 3 Report on Implementing the OECD Anti-Bribery Convention in the United Kingdom (March 2012) p 13: http://www.oecd.org/daf/anti-bribery/UnitedKingdomphase3reportEN.pdf [accessed 8 January 2019]
171 OECD, ‘Ratification Status as of May 2017’: http://www.oecd.org/daf/anti-bribery/WGBRatificationStatus.pdf [accessed 4 March 2019]
172 The judgment of the Court of Appeal in R v AIL, GH and RH ([2016] EWCA Crim 2) indicates that bribery of a foreign official has always been covered by the UK’s anti-bribery and corruption legislation, and ss. 108-110 of the Anti-terrorism, Crime and Security Act 2001 simply confirmed the position: http://www.bailii.org/ew/cases/EWCA/Crim/2016/2.html [accessed 23 January 2019]
173 See para 40.
176 Corruption Watch, ‘Who will catch the medium fish in foreign bribery cases?’ (20 November 2017): www.cw-uk.org/single-post/2017/11/20/Who-will-catch-the-medium-fish-in-foreign-bribery-cases [accessed 4 March 2019]
182 Colin Nicholls et al, Corruption and Misuse of Public Office, 2nd edition (Oxford: Oxford University Press, 2011), p 99
183 Ministry of Justice, The Bribery Act 2010: Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing (March 2011) p 18: https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf [accessed 16 January 2019]
184 Crown Prosecution Service, Legal Guidance, Bribery Act 2010: Joint Prosecution Guidance of The Director of the Serious Fraud Office and The Director of Public Prosecutions, 30 March 2011: https://www.cps.gov.uk/legal-guidance/bribery-act-2010-joint-prosecution-guidance-director-serious-fraud-office-and#a05 [accessed 5 February 2019]
185 Written evidence from Eversheds Sutherland Intl LLP (BRI0024), Fraud Advisory Panel (BRI0020), Greenberg Traurig (BRI0026), IBLF Global (BRI0023)
187 Australian Senate Economic References Committee,: Foreign bribery (March 2018), Chapter 7, paras 7.97 and 7.104: https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Foreignbribery45th/Report [accessed 7 February 2019]
191 Written evidence from Control Risks (BRI0014), Eversheds Sutherlands (BRI0024), Greenberg Traurig (BRI0026), IBLF Global (BRI0023), Serious Fraud Office (BRI0018), Transparency International UK (BRI0003), UK Anti-Corruption Forum (BRI0009), Corruption Watch (BRI0039)
193 Written evidence from Baker McKenzie LLP (BRI0030), British Exporters Association (BRI0034), Fieldfisher LLP (BRI0005), the Law Society of England and Wales the City of London Law Society and the Fraud Lawyers Association (BRI0025)
199 Q 122 (Cecilia Müller Torbrand), Q 130 (Brook Horowitz), Q 57 (Lesley Batchelor), Q 41 (Susan Hawley)
202 Paras 346–351
203 Council Framework Decision of 13 June 2002 on the European arrest warrant and the surrender procedure between Member States (2002/584/JHA), OJ L 190 (18 July 2002)
204 Directive 2014/41/EU of the European Parliament and of the Council of 3 April 2014 regarding the European Investigation Order in criminal matters, OJ L 130/1 (1 May 2014)
205 Political Declaration setting out the framework for the future relationship between the European Union and the United Kingdom, (25 November 2018): https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/759021/25_November_Political_Declaration_setting_out_the_framework_for_the_future_relationship_between_the_European_Union_and_the_United_Kingdom__.pdf [accessed 21 January 2019]
206 Political Declaration (25 November), para 89
207 Draft Law Enforcement and Security (Amendment) (EU Exit) Regulations 2019. The Secondary Legislation Scrutiny Committee (Sub-Committee A) drew this instrument to the special attention of the House on the ground that “Effective scrutiny is further inhibited by the failure of the Home Office to provide any contextual explanation, with estimated numbers or an indication of the degree of usage, to illustrate the impact of the changes that this instrument addresses.” Secondary Legislation Scrutiny Committee (Sub-Committee A), Draft Law Enforcement and Security (Amendment) (EU Exit) Regulations 2019 (17th Report, Session 2017–19, HL Paper 292)
208 Explanatory Memorandum to the Law Enforcement and Security (Amendment) (EU Exit) Regulations 2019, para 7.
209 The Criminal Justice (European Investigation Order) Regulations 2017 (SI 2017/730)
210 The 27 less Ireland and Denmark which did not opt in. They are listed in Schedule 2 to the EIO Regulations.
211 In the event of “no deal” the EIO Regulations would be revoked from exit day by Regulations 73–74 of the Law Enforcement and Security (Amendment) (EU Exit) Regulations 2019.
213 Written evidence from the Law Society of England and Wales, the City of London Law Society and the Fraud Lawyers Association (BRI0025)
214 Q 84 (Gillian Mawdsley). James Mitra of the NCA also highlighted at least one case in which a joint investigation team—an instrument made possible by membership of Eurojust—was used to facilitate a recent UK investigation into bribery in a third, non-EU member country. Q 185 (James Mitra).
215 HM Government, Framework for the UK-EU Security Partnership (May 2018): https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/705687/2018–05-0_security_partnership_slides__SI__FINAL.pdf [accessed 6 February 2019]
220 Protocol 36 to the EU Treaties, inserted by the Treaty of Lisbon, required the UK within 5 years of the entry into force of the Treaty of Lisbon either to adopt all the pre-Lisbon EU legislation in the field of police and criminal justice, or to opt out of all those measures and to negotiate to opt back in to those it wished to continue to be party to.
221 Oral evidence taken before the Justice and Home Affairs Sub-Committees of the European Union, 6 February 2013 (Session 2012–2013), QQ 209–228
222 Regulation 56 of the Draft Law Enforcement and Security (Amendment) (EU Exit) Regulations 2019
224 Ibid.