Bribery Bill [HL]

My Lords, in declaring all my business interests, as the Bill relates to commercial organisations in particular, I should also declare—I hope that this does not shock your Lordships too much—that I am not a lawyer either. Those are the two declarations that I should make at the beginning of my speech. I have four points to make: on the terrible and terribly corrosive effects that bribery has; on the need for strong corporate cultures, above all else, in civil and commercial society, as the bedrock of any defence against bribery; on the beneficial effects of the new duties laid on companies and, therefore, on their directors—in particular, on non-executive directors; and on the need to ensure that our security, intelligence, police and military are not impeded in any way in their sometimes covert but often life and/or property-saving activities. From what I have heard so far, I may be a sole voice arguing that in your Lordships’ Chamber this afternoon. First, although I must say to the noble Lord, Lord Bach, that I deplore the length of time that it has taken for the Government to table the Bill after what has been said about the issue since 1997, I am glad that they have done it. I also note that they are doing something that Ministers are usually rightly restrained in claiming, which is introducing legislation with a strong moral component. It would be risky for the Minister to say that in his own praise, but I recognise that. Bribery at home and, in particular, abroad, undermines the rule of law, attacks the excellent principles of fair competition, as the Minister said, but, worst of all, is a morally destructive crime that has devastating effects on the poor and on the human rights of those in our less well off countries. This happens because bribery often diverts scarce resources in poor countries towards the purchase of inferior products. I have observed that in a business context. It certainly corrupts financial regulators, where there are such persons present in third-world countries, and police forces alike with devastating abandon, and sometimes leads to attendant violence. All those economic and human costs are usually felt most directly by the poor, just as development and democracy are undermined, as the noble Lord, Lord Bach, said in his introductory remarks. Secondly, although I welcome both the economic and moral purpose of the Bill, all the new sanctions and penalties that it introduces will be of naught to companies where that sort of behaviour has been almost institutionalised unless it is paralleled by deep, lasting and profound corporate cultural change. See a company—I have observed this—where bribery has been used and, generally speaking, you are looking at a company with a weak and devious corporate culture, with scant regard for proper ethical behaviour, little or no ethical training for staff, weak or dismissive board practices and, worst of all, an absolute determination to win contracts at all costs. That characterises companies where bribery has been used—here I speak about western European and, alas, UK companies. An example of this that has been used before is when such a company comes into receipt of proprietary information concerning products or intellectual property alike that belongs to a competitor who is chasing the self-same enticing contract. Rather than sending that information straight back unread, it uses the information to try to win the contract. That sort of company provides a positive incubating nursery for bribery. The board of that company is to blame, straight and simple. Corporate adherence to the law must always be prefigured by the construction of a strong ethical corporate culture that starts at the very top with the chairman, the chief executive, the chief operating officer and the non-executive directors, as it does in the best of the world's great companies, with ethical training being the norm. This is certainly not the place for a quick or slow seminar on how all that can be done but, in essence, every employee, great or small, should in such companies have a lively sense of, put simply, whether they would mind what they are about to do in private being writ large in public. That is a very simple test. In other words, would you mind your family or friends knowing what you are about to do, and the media then studiously reporting it? That is the key question. It has the great benefit of also being a very simple question. I have observed good practice in international companies where that is drawn again and again to the attention of individuals. Thirdly, directors of UK companies are moving into a new world of duties to prevent bribery, which I hope will be no mere box-ticking exercise. Indeed, it cannot be because it will demand a demonstrable set of adequate procedures being put in place to prevent bribes being paid. Only if this is demonstrable will they be able to seek mitigation and to avoid corporate liability. This is the world of strict liability as I, no lawyer, understand it. I say with respect—which I understand is the correct term to use—to my noble and learned friend Lord Mackay of Clashfern that no amount of guidance from the business ministry will help in this context. It is the companies themselves which, if challenged, must be able to demonstrate that they have those procedures in place; appealing to some bit of ministerial guidance will not help. It is not for the provisions of Clause 7 to spell out how this defence could be erected—that is not for an Act of Parliament to do. However, it is clear that to do so, companies would be taking a great risk merely to rest on some once-written but then quickly forgotten code of practice, which is dished out to employees on the first day that they come into service but not refreshed on an annual basis. I believe that ethics training on an annual basis is critical. It should start at the top, with the chairman, chief executive and board. They should be trained and refreshed just as much annually as those lower down the corporate structure. In other words, we need to show a continuum of corporate behaviour that illustrates that the culture of ethical behaviour is underpinned in this way. Doubtless there will be a huge growth in the consultants industry, with people advising boards, for considerable fees, on how to do this. That is not something for consultants; it is for the boards to take on board themselves. Fourthly and lastly, I am very glad—and thus far I am a lonely voice—that there seems to be reasonable cover in Clause 12, subject to all the forthcoming probing in Committee, for our intelligence services, police forces and Armed Forces, in that financial and related advantages may be in the interests of security. I was saddened to see the inability of lobbying organisations such as Transparency International, which has done useful work, to recognise the need to protect life and limb in this way in extremis. Notwithstanding what the Minister said in his emollient introductory remarks to Transparency International’s suggestions, in its view, recently circulated to your Lordships, it would have preferred Clause 12 to be omitted completely. That is what Transparency International said. This is a grudging acceptance, which I imagine will be played out during the debates on Clause 12; I do not envy the Minister in having to handle those particular debates. I was equally surprised to see the conclusion of the Joint Committee on the draft Bribery Bill. It says at paragraph 30 on page 88 of volume 1 of its report, published on 16 July 2009, that there was no, ""need for the domestic intelligence agencies to be granted an authorisation to bribe"." Tell that to those involved with the police or the domestic intelligence agencies which, domestically—not abroad in some conveniently distant uranium enrichment plant in Iran—may, using public money for the covert end of gaining intelligence via an informer, be in a position to prevent public carnage in some terrorist outrage. I fully accept that I have not read things in great enough detail; I should have consulted the noble Lord, Lord Pannick, for a quick tutorial, because I recognise that having trading standards officers et cetera embraced in this provision is probably a little bit daft, even for someone as robust on these issues as myself. But that said, I believe that it would be entirely wrong to deny domestic intelligence, and indeed police officials, the opportunity to use public money covertly to prevent terrorist outrages. Can you imagine if they did not and there was a terrorist outrage? The whole public inquiry industry would explode around us and many people would make a lot of money from attending to it.