Bribery Bill [Lords]

I add my respects to those of previous speakers on the death of Michael Foot, who was the dominant Labour personality when I first became involved in politics. The quality of contributions to the debate has been high, and I congratulate the hon. Members for City of York (Hugh Bayley) and for Cambridge (David Howarth), and my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), on theirs. We are also thankful for the very productive format of allowing interventions that was offered by the Lord Chancellor in his initial remarks. As my hon. and learned Friend the Member for Beaconsfield (Mr. Grieve) said, the Conservatives welcome this Bill and have been urging its introduction for many years. It was good to hear that all parties welcome it. It makes a refreshing change to speak on legislation that will not only reduce the number of the laws on the statute book, but update statute and case law, much of which is based on 19th century practice and in need of urgent upgrade. International corruption is not acceptable in the modern age. We acknowledge, as the hon. Members for City of York and for Cambridge did, that it is now generally held that the UK has fallen behind the curve in dealing with bribery, and that our Transparency International corruption perception index is at all-time low. Conservatives believe that that needs urgently to be addressed. Without doubt, the outstanding feature of the Bill has been the delay in its arrival. I believe that as far back as June 1998, the Government first published a paper on the consolidation and amendment of the Prevention of Corruption Acts. Although a draft Bill was first published by the Law Commission in March 1998, only now, more than a decade later—in the last throes of this Labour Government—are we finally seeing some action. Let us face it: things have been touch and go, as they will remain until the Bill is enacted. The Law Commission submitted a reworked version of the draft Bill in March 2009, which has more or less been adopted. The commission deserves much praise for its work. The Bill was then scrutinised by the Joint Committee on Consolidation Bills, on which I was happy to serve under Lord Colville. The Committee was most unhappy that it was as time-constrained as it was. With adequate time, I have no doubt that we would have been better able to investigate the wider applications of the Bill as well as the law. However, as I said, the Conservatives welcome the Bill. In particular, we are pleased that its implementation will finally make the UK compliant with the 1997 OECD anti-bribery convention. Accordingly, notwith- standing our unhappiness with the process, we shall support it on Second Reading. I like to think that reaching Second Reading has had something to do with the fact that we have called for the Bill for years. However, I suspect, as the hon. Member for Cambridge did, that the Bill's progress has more to do with the US Department of Justice and the OECD putting significant pressure on the Government for Britain to comply with its international obligations. The debates in the other place were thorough and informed. I am indebted to Lord Henley, and other noble Friends and Lords, whose experience has made an invaluable contribution. However, we will wish to raise in Committee a number of important issues that have arisen in today's debate and debates in the other place. One issue is that in a wide range of circumstances, the application and enforcement of the Bill will depend on the discretion of prosecutors. That was raised again and again in the other place and today. It needs to be recognised that that is a key concern of those looking for certainty, especially those in business. The position of business, and support for our exporters, was admirably advocated by my hon. Friend the Member for Shrewsbury and Atcham. In many cases, we are not yet satisfied that the Government have fully tied down this issue and we will wish to discuss that more fully in Committee. The International Chamber of Commerce has provided the example of hospitality payments. On the one hand, the Government have recognised the importance to business of bona fide promotional expenditure, but on the other, the question of where a line should be drawn on this issue is still unclear. Indeed, there is continued uncertainty as to whether a line should be drawn at all. We were pleased to see that the requirement for guidance was made statutory in the other place. Guidance will doubtless be crucial to allow companies to understand what will be acceptable under the new laws. However, the problem is—the Government admitted as much in the other place—that there will always be borderline cases that may inadvertently fall within the definition of "bribery". The difficulty for business is obvious. It is not correct to expect that businesses should instruct employees that a certain course of action, while theoretically falling foul of the legislation, may nevertheless proceed because prosecution is unlikely. The risk is that, in striving for a clear message in combating bribery, the effect of the Bill—if the guidance does not work—could actually be to confuse the situation yet further. I was pleased to hear from the Lord Chancellor that consultation on the guidance is now well advanced. It will be important, when the Government produce the guidance, that business is consulted closely and allowed to contribute to its content. As my hon. and learned Friend the Member for Beaconsfield said, the guidance must clearly be in place prior to the offences becoming available. I was also pleased to hear the Lord Chancellor's confirmation that that will be the case. The Government will also need to explain the position to business to help all concerned, and I would be grateful if the Minister, in her concluding remarks, could identify how the Government intend to do that. A serious outcome of this possible ambiguity is a danger that UK companies could be disadvantaged compared to foreign competitors, as my hon. Friend the Member for Shrewsbury and Atcham said. For example, in the United States, a company can seek a public ruling from the Department of Justice in case of doubt regarding a payment. However, such a system has been rejected by the Government as being "inconsistent" with traditional practice. This argument was used by the Government several times in the other place, but I found it somewhat counter-productive and counter-intuitive. Indeed, the same argument could be used to say that the concept of "corruption" should be retained as the Bill's use of "improper" conduct is also inconsistent with traditional practice. The fact is that this Bill is creating new law which will inevitably be tested in the courts, and we should just accept that and look to deal with the consequences of it—both intended and unintended. It is also important that the issue of how the Bill will overlap with related legislation be considered in greater detail. Under the Bill, a company found to have engaged in bribery under clause 11(2) may be liable, if convicted on indictment, to an unlimited fine. Many businesses we have spoken to are worried that this will not be the end of the matter. Indeed, there are concerns that further action may be taken against companies under the proceeds of crime legislation. That legislation was designed to deprive individual defendants, particularly drug dealers and organised criminals, of the benefits of their criminal conduct. However, if companies convicted of bribery are fined were and then also caught by the proceeds of crime legislation, they will face serious financial penalties that could in some cases see them put out of business entirely. We will seek clarification in Committee on policy on this issue and on the use of the measures under this Bill and other existing legislation. To what extent will civil remedies be used? Does the existing legal framework support the desired use of plea bargaining? Will other laws hold up deals being made? Those are important issues—my hon. and learned Friend also raised many of them—and they should have been addressed much earlier in this Parliament. Some prosecution issues will be of political importance, and we will wish to investigate whether the authority to prosecute should lie with the various directors specified in the Bill or, as colleagues in the other place maintained, remain with the Attorney-General. That point was addressed by the hon. Members for City of York and for Cambridge, who were keen to put the OECD's position forward. But as others have noted, especially in the other place, that does not cater for the traditions of our own constitution. I am sure that further interesting debates will be had on this point. However, the Bill also raises various practical issues, such as which prosecutor should take the lead and in what circumstances. That remains unclear. If the Bill is passed, the UK will have among the strictest bribery laws in the world. Consequently, we have been told that there is a real danger that UK businesses could be put at a competitive disadvantage when compared with international businesses whose domestic bribery laws will be less strict than our own. I have seen the rather flimsy anti-bribery strategy rushed out by the Lord Chancellor a few weeks ago, and I remain to be convinced that the Government understand how important this issue is. In that regard, the Minister needs to address the concerns of CAFOD, Transparency International, Tearfund and others, such as the hon. Members for City of York and for Cambridge, who are concerned to ensure that the Government intend to provide sufficient funds for the effective investigation and prosecution of bribery offences. As my hon. and learned Friend said, it is very important to ensure that the UK, in modernising its bribery laws, does not end up shooting itself in the foot in the way explained very clearly by my hon. Friend the Member for Shrewsbury and Atcham. That danger is that contracts will be lost because others bribe when we do not. To do this, serious pressure will need to be exerted on other countries to follow our lead and introduce tougher bribery laws of their own—and to enforce them. We will wish therefore, in Committee, to review how the Government will make it a priority to put pressure on other countries to follow suit and strengthen their own bribery legislation. There are other international aspects to this, such as the EU procurement directive. The directive appears to be very rigid in that any company found to have been involved in instances of bribery must be permanently disqualified from the procurement process. Hon. Members will be able to see the problem with that. On the one hand, UK companies will be subject to the strictest bribery laws to be found anywhere in the world, but on the other, any company caught by these laws could be prevented from applying for procurement contracts. Companies are understandably very nervous about the huge impact of falling foul of the regulations, concerns that are compounded by the fact that many of the Bill's provisions remain unclear and are reliant on guidance that has yet to appear. By contrast, the position in the United States seems to be more flexible. Although disqualification provisions do apply, different degrees of sanctions for fault are recognised and, importantly, it is possible for such a debarment to be lifted after a period of time. Will the Minister explain the Government's discussions with EU officials to determine what effect, if any, an offence under clause 7 of the Bill will have under the directive? On a separate point, there is continued ambiguity on the issue of consortiums and businesses' potential responsibility for the acts of their agents and "associated persons". The issue was raised by the International Chamber of Commerce. It is often the nature of international businesses to operate in joint ventures. The point was raised in the other place that a company, even though it may have no control over a joint venture partner, may none the less be caught by the provisions of this Bill due to that partner's conduct. Although the Government have attempted to explain away the problem by stating that the degree of control would be one of the circumstances to be taken into account when deciding whether an offence had been committed, it is not clear that that comfort would be effective in law. The ICC has pointed out to us that the current wording in the Bill makes it clear that the circumstances that may be taken into account are those that are decisive for the question of whether services are being performed. Indeed, the relationship between the company and the associated entity is expressly excluded. This conflict gives rise to further uncertainty for business, and it is therefore evident that this question of businesses' responsibility for the actions of such partners and agents needs to be resolved. It is clear also from the contributions of the Lord Chancellor, the hon. Members for City of York and for Cambridge and my hon. and learned Friend that there are ongoing concerns about defences for intelligence services and our armed forces. As my hon. and learned Friend said, we were generally satisfied with the narrower definition agreed in the other place, but we will have to return to the matter in Committee. There are evidently a number of outstanding issues that the House needs to address over the coming weeks. We certainly believe that it is a good Bill, but as I have indicated, there are areas of continued concern that will need to be reviewed. The tiny number of prosecutions to date for overseas bribery shows that our law in this area requires updating and enforcing, but in strengthening the UK's bribery laws to combat corruption, it will be vital that the ability of UK companies fairly and legally to compete commercially and on the international stage is not impaired. That is the balance that we look to achieve over the coming weeks.