My Lords, I am pleased that the amendments in this group have allowed us to have an extended debate on the tax evasion offences in Part 3 of the Bill. I am pleased to say that the Government are supportive of the intentions of these amendments, although that is not to say that further legislation is necessarily required.
Amendment 164 seeks to require the Secretary of State to publish an annual report on the number of companies that have, under the Public Contracts Regulations 2015, been excluded from tendering for
public contracts, or had existing contracts terminated after being charged under the new offences. I fully agree that contracting authorities should be able to exclude bidders that have been convicted under the new offence. The Public Contracts Regulations allow for this in appropriate cases. They grant contracting authorities discretion to refuse to award a public contract to an entity that has been involved in grave professional misconduct. Such misconduct may include committing the new offences of corporate failure to prevent the criminal facilitation of tax evasion. However, government does not collect information centrally on the number of organisations that have been excluded from public contracts under the 2015 regulations. This is because these decisions to exclude are taken by individual contracting authorities on a case-by-case basis, and this may include the new corporate offences.
Introducing a reporting requirement would create a burden on contracting authorities. Each contracting authority would have to make a return to central government, detailing the occasions that exclusion from a bidding process has occurred, and central government would then have to collate all these reports in order to compile national statistics to be published in the report. Such a reporting requirement would go against the Government’s drive to simplify the public procurement process and to cut red tape.
Current efforts are focused on ensuring that contracting authorities have the necessary information to know whether those bidding for contracts have relevant convictions so that contracting authorities can make more informed decisions on whether to exclude them. This includes the introduction of a robust conviction-checking process to prevent bidders with convictions for relevant offences—including the new offences—winning public contracts. This was announced at last year’s anti-corruption summit and is about to be piloted by the Crown Commercial Service.
Amendment 165 seeks to introduce a system of corporate probation orders. This would allow a court to require relevant bodies found guilty of the new corporate offences to amend their prevention procedures. I welcome the noble Lords’ amendment. It is absolutely right that relevant bodies convicted of the new offences, and thus found to have inadequate prevention procedures, should be required to implement changes to those procedures. In response, I draw noble Lords’ attention to Clause 48(2) of the Bill, which adds the corporate offences to the list of offences for which a serious crime prevention order can be imposed under the Serious Crime Act 2007. This enables a court passing sentence on a person, including a legal person such as a corporate body, to impose a serious crime prevention order to prevent, restrict or disrupt their involvement in serious crime by imposing prohibitions, restrictions or requirements on them. The terms of these orders may require the relevant body to allow a law enforcement agency to monitor how it provides services in the future.
Relevant bodies convicted of the new offences are criminals. They do not require special or different sentencing powers. They can be adequately sentenced under the existing criminal law, using a serious crime prevention order to enforce change to prevention procedures. Such an order can do anything that a
corporate probation order would. Alternatively, similar provision can be included within the terms of a deferred prosecution agreement. I trust therefore that noble Lords will see that their commendable objective can already be achieved within existing law.
I thank the noble Baroness, Lady Bowles, for Amendment 170. I share concerns about ensuring that those who are unfit to be directors are identified and disqualified from holding such posts. The amendment seeks to amend the Company Directors Disqualification Act 1986 in order to allow a company director to be disqualified by the court when a relevant body is found to have committed one of the new corporate offences, or a similar failure to prevent an offence under the Bribery Act 2010.
At present, under the Company Directors Disqualification Act 1986, a company director can be disqualified on conviction by the sentencing court. Alternatively, the Secretary of State for Business, Energy and Industrial Strategy can apply to the High Court for an order that a company director be disqualified. In either case, the company director would be a party to the proceedings, and thus given the opportunity to present their defence.
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However, under the amendment, a company director could be disqualified simply because the relevant body was found liable for failing to prevent the facilitation of tax evasion or bribery. This would be the case even where the company director was not a party to the proceedings. This could see a director disqualified without the opportunity to present their case or defend themselves. There may be cases where, despite the relevant body committing the offence, an individual director is not sufficiently culpable to warrant disqualification. That is why it is so important that the director can make representations in their own defence.
The orders have draconian consequences, and they must be made fairly—the noble Baroness mentioned fairness. The right to a fair hearing is protected by human rights legislation.
I can nevertheless assure noble Lords that, where a director has been personally complicit in tax evasion, it will be possible for the director to be prosecuted for tax evasion and tried alongside the relevant body charged with the new offences. Where the director is convicted, disqualification can be considered by the sentencing court under existing law.
I shall answer some other questions that the noble Baroness, Lady Bowles, asked. Who reports on bribery or tax evasion? A sentencing judge can invite the prosecuting agency—for example, the CPS—to refer the matter to BEIS on its own volition. On Amendment 170, she also asked: why not allow for a director to be disqualified? Conviction for the new offence does not necessarily mean that an individual director is at fault or necessarily involve director wrongdoing. The sentencing judge can recommend referral by the prosecutor in such cases.
Finally, I reassure noble Lords that, where a director has been personally complicit in tax evasion, it will be possible for the director to be prosecuted for tax evasion and tried alongside the relevant body. We
therefore take the view that the existing powers are sufficient and that the approach taken under the amendment would be disproportionate and at risk of successful legal challenge.
I hope that, with those words, noble Lords are satisfied with my responses and feel able not to press their amendments.