Footing the bill

A new Bribery Bill was announced in the Queen's speech, part of the state opening of Parliament, on 18 November 2009. It merited one line, stating simply: 'A Bill will be introduced to strengthen the law against bribery' (https://www.number10.gov.uk/Page21361). The justice secretary, Jack Straw (the government's 'anti-corruption champion' (https://www.number10.gov.uk/Page21344)) is determined to enact the Bill before the general election (Q555, page 11 of the report). Time is running out, however. The legislative agenda is packed with legislation to tackle bribery '“ once a priority with the announcement of (another) investigation by the SFO into BAE Systems '“ which now competes with new legislation on the economy, family, climate change and financial services.

The joint committee on the new draft Bribery Bill published its report on 28 July 2009. In general, it strongly supports the Bill. However, it also begins its report by expressing its disappointment that it had so little time to carry out its task (page 5, 'Summary'). To complicate matters, the joint committee did not entirely agree with the draft Bill in its current form. In particular, the government, despite the rush, has been advised by the joint committee to reconsider three areas relevant to corporate liability. The recommendations are concerned with the fine detail of a new offence introduced in the Bill which makes commercial organisations liable for failure to prevent bribery.

This new offence is considered necessary by the Director of Public Prosecutions, who told the committee that it was 'almost impossible' to prosecute companies under the current law (page 31, committee report, BB16 paragraph 9 of DPP evidence). Notably, during Labour's 12 years in power, only one company has been prosecuted for foreign bribery ('Bribery Bill finally reaches Parliament', Nick Mathiason, the guardian.co.uk, 25 March 2009).

The relevant clause of the Bill (clause 5: 'Failure of commercial organisations to prevent bribery') states:

(1) A relevant commercial organisation ('C') is guilty of an offence under this section if:

(a) a person ('A') performing services for or on behalf of C bribes another person;

(b) the bribe was in connection with C's business; and

(c) a responsible person, or a number of such persons taken together, was negligent in failing to prevent the bribe.

Negligence or strict liability?

Citing the United States, Australia and Italy, among others, the joint committee recommended the removal of the need to prove negligence under clause 5(1)(c). It was 'concerned by the focus on whether a 'responsible person' was negligent, rather than on the collective failure of the company to ensure that adequate anti-bribery procedures were in place' (page 35).

The joint committee did not consider it unfair to hold commercial organisations strictly liable. It should be noted that there is an 'adequate procedures' defence in the draft Bill which no one suggested should be removed:

'It is a defence to a charge under section 5(4) to prove that C had in place adequate procedures designed to prevent persons performing services for or on behalf of C from committing offences under section 1 or 4 in connection with C's business.'

The switch to strict liability suggested by the joint committee is attractive for two reasons. First, it does not impose a greater burden upon businesses because they will inevitably review their procedures to protect themselves '“ as BAE Systems sought to do by commissioning a report by Lord Woolf in 2008.

Second, it addresses the main problem with the present law (it can't be enforced) by making prosecutions easier. Professor Celia Wells highlighted to the joint committee that the Bill as it is currently drafted would require a prosecutor to meet a series of challenges: proving bribery, identifying a responsible individual, proving that they were negligent, and then countering an adequate procedures defence (page 32). Removing the negligence test corrects this problem.

Adequate procedures

The joint committee recommended that official guidance be given on the meaning of 'adequate procedures' in the defence at clause 5(4). The term is not defined in the draft Bill, nor is there guidance in the draft Bill's explanatory notes. The joint committee stated that a clause should be added giving the government power to approve guidance prepared by appropriate bodies (page 5).

Professor Wells has also raised the practical challenges of prosecuting with regard to the 'adequate procedures' element of the offence ('Bribery: Corporate Liability under the Draft Bill 2009', 2009 Criminal Law Review 479 Issue 7 at 485). The court must identify the responsible officer, decide if that officer has been negligent in preventing the bribe, decide if there were procedures in place, and finally determine if those procedures were 'adequate'.

The joint committee's limited guidance on the defence emphasised that it must be interpreted in a 'flexible and proportionate way depending on the size and resources of the company' (page 36). It endorsed a 'light touch' approach where the burden would be lower for small firms in low-risk sectors.

We must wait to see if the government follows the joint committee's simple suggestion. At present, companies looking for guidance can begin by considering the 23 recommendations of Lord Woolf in his £1.7m report to BAE Systems.

Penalties

A company found guilty of this offence is liable on conviction on indictment to an unlimited fine (clause 11). The conviction would trigger the court's power to impose a confiscation or civil recovery order under the Proceeds of Crime Act 2002. These are the only reasons why the financial stakes are high.

Under the Public Contracts Regulations 2006 a company is automatically and perpetually barred from competing for public contracts when it is convicted of a corruption offence. This cannot be mitigated and cannot be revoked if a company later takes steps to clean up its act.

Jeremy Cole of Lovells explained to the committee: 'If they get a criminal conviction, their business could collapse overnight.' For a company that relies on public contracts, the disbarment would be far more significant than any fine.

The joint committee recommended that action was taken at a European level to prevent automatic disbarment (page 65). This would take both time and political will. Since the regulations give effect to EU law, companies will find scant consolation in the committee's recommendation in this area, but there was little else the committee could suggest.

The balance of interests

As the Attorney General pointed out, the clause has to 'balance the concerns of business, who are facing potential criminal liability where none had existed before, against the wider public policy imperative of tackling bribery' (BB60, page 33). The recommendations of the joint committee are the most practical, non-partisan solutions available to an urgent problem. Will the government ignore them, agree with them, or will the task of reforming our bribery laws fall to the next government?