Bribery Act 2010: Post-legislative Scrutiny (Select Committee Report)

Lord Stewart of Dirleton Excerpts

Wednesday 3rd February 2021 Grand Committee

[The Advocate-General for Scotland (Lord Stewart of Dirleton) (Con)]

My Lords, I thank the noble and learned Lord, Lord Saville of Newdigate, for calling the debate today in his capacity as former chairman of the committee for post-legislative scrutiny of the Bribery Act 2010. I also wish to thank him and all other former members of the Bribery Act Committee for the important and comprehensive post-legislative review process, which they carried out between May 2018 and March 2019, before the publication of the official report. The breadth of issues covered in the committee’s report has led to the very interesting and lively debate we have heard today. Finally, I thank all noble Lords who took part in this discussion.

We will all agree that bribery is a very serious crime, and the importance of having a law for bribery which is clear, effective and robustly enforced is not in doubt either. This Government remain committed to tackling economic crime and see the Bribery Act as an important and effective tool in that endeavour. As the committee makes clear in the report, however, the task of the legislature is not just to make the law but to see whether major legislation enacted is having the effect it was designed to achieve; that is why scrutiny is so important.

As we have discussed this afternoon, the main focus of the committee’s scrutiny centred on three areas. The first is whether the Act has indeed led to stricter prosecution of corrupt conduct, a higher conviction rate and a reduction in that behaviour. The second is whether UK businesses have been put at a competitive disadvantage in obtaining foreign contracts under the stricter provisions of the Bribery Act and whether small and medium enterprises were sufficiently aware of the provisions of the Act. A further area is how far deferred prosecution agreements have affected the conduct of companies, both in preventing corrupt conduct and investigating it once it has been discovered.

It is worth reminding ourselves why we needed the Bribery Act in the first place—a number of speakers today touched on this. Bribery was not reported as a high-volume crime in the days before the Bribery Act came into being, so it could be said that it was not born of a need to address an urgent domestic problem of the day. However, in the face of growing criticism by both domestic and international stakeholders, it was apparent that reform of the previous law on bribery was increasingly necessary to deal effectively with ever more sophisticated, cross-border use of bribery in the modern world. The main objective in the development of the Act was therefore to provide modern legislation which reformed the existing common law and statutory offences of bribery by introducing a new consolidated scheme of bribery offences designed to give the police, prosecutors and the courts an effective way of tackling bribery, whether committed at home or abroad. I will return to the extraterritorial aspect of the 2010 Act in due course.

At the same time, the Government also sought to provide the private sector and affected companies with greater certainty and consistency around bribery and the obligations on companies and businesses. It was hoped that this would ensure justice for those involved in or affected by bribery, and a reinforcing of proper ethical conduct in commercial business and society in general—a matter of culture to which many speakers today adverted.

A further main policy objective of the Act was to address issues raised in relation to our international anti-corruption obligations by putting in place an effective mechanism for prosecuting bribery involving foreign public officials, and to establish effective corporate liability for bribery where it takes place. Perhaps most importantly of all, however, it was envisaged that the Act would support the Government’s wider strategy for tackling international corruption by not only deterring and penalising bribery offences but encouraging and supporting business to apply appropriate standards of ethical business conduct.

In this regard, the Government had a specific objective of combating the use of bribery in high-value transactions in international markets and, in particular, in large-scale public procurement or tendering exercises where the largest businesses operate and predominate. Although the legislation would ultimately apply to all companies falling within scope of the definition of the offence, it was recognised that small and medium enterprises would not usually engage in the business environment described above, so it was never envisaged that they would be the main focus of any enforcement activity.

As the committee itself observed, however eagerly anticipated or well received a Bill may be, it is by no means guaranteed that the resulting Act will live up to those expectations. Fortunately—again, I endorse noble Lords’ observations on the topic—the Bribery Act is now recognised internationally as being the leading model, alongside the United States Foreign Corrupt Practices Act, for effective criminal anti-bribery legislation. Moreover, the United Kingdom is recognised as one of the top four enforcers of the Organisation for Economic Co-operation and Development’s convention against bribery. Following the OECD’s review in 2017, the UK received a very positive assessment of its legislative framework. I hope that I will not be thought complacent in that I cite these figures without specific reference, at this stage, to the observations about dropping down the international league table, moving from the gold standard to the bronze.

Alongside the praise received for being a successful anti-corruption tool internationally, the Government’s own initial assessment was that the Act was performing as Parliament had intended. Much of the evidence submitted to the committee supported this, and the Government are very grateful that no major criticisms were made, reflecting the quality of the Act in its drafting. While there is always a case for listening to suggestions about where there might be further improvement, the Government were again grateful for the committee’s positive assessment that the overall structure of the Act, the offences it created, its deterrent effect, and interaction with deferred prosecution agreements are some of the main aspects which have received almost universal praise.

The committee’s final report—which we have covered in detail this afternoon—made 35 conclusions and recommendations around the implementation and enforcement of the Act. Although the Government’s position on each recommendation was made clear in the response document, we will continue to consider and, where possible, explore opportunities for increasing awareness of the associated guidance. However, I think it is clear that the Act is indeed working well and doing what it was intended to do. To illustrate this, I highlight a few of the successes of the Act as an effective enforcement tool since its coming into force in 2011.

Since that time, the Serious Fraud Office has secured its first conviction after trial for corporate offences involving bribery of foreign officials and its first guilty plea by a corporate body for an offence under Section 7—the provision that we have discussed. Nine deferred prosecution agreements have been put in place with United Kingdom companies since their introduction in 2014, six of which are for overseas corruption offences. This is in addition to the imponderable, impossible to quantify, deterrent effect that the Act continues to have on those who would seek to commit bribery offences. The Act has had a positive impact in helping businesses and corporations to reshape their culture.

The Government are not complacent over issues relating to economic crime, which remains a key priority for the Government. We are committed to exploring ways to continue to improve our response to this type of offending. We should not forget that we have achieved some other important milestones following the introduction of the Bribery Act itself. The Government’s anti-corruption strategy, launched in 2017, provides the framework for their domestic and international priorities on corruption and details each of the policies and actions being taken forward to combat that evil up to 2022. Despite the challenges that last year brought to every aspect of life, the year 2 update on that strategy was published, as expected, in July.

Speakers this afternoon have made reference to the provisions for training. The multi-agency National Economic Crime Centre, based in the National Crime Agency, has been established to co-ordinate and task the United Kingdom’s response to economic crime, including high-level fraud and money laundering. For the first time, the centre encourages and facilitates closer ties between its partner organisations in law enforcement and the regulated sector, including the Financial Conduct Authority, Her Majesty’s Revenue and Customs, the City of London Police, the Home Office, the Serious Fraud Office and the Crown Prosecution Service, all of which played an important part in the committee’s review. The Crown Office and Procurator Fiscal Service in Scotland also contributed.

Another issue that was highlighted by the committee was the lack of progress on next steps following the corporate criminal liability call for evidence in 2017. I am conscious of the criticism made by a number of noble Lords about the delay that has occurred since that date. This is an extremely complex area of law, and the Government received a number of diverse and often conflicting views to the call for evidence. This resulted in a considerable delay to an announcement on the way ahead. Although the results of the original process proved inconclusive, it is extremely positive that we have had progress on the issue since the committee’s report—and indeed the Government’s response—was published. As I am sure many noble Lords are aware, the Law Commission has agreed to carry out an in-depth review of the current law on economic crime. Work has already started on this, and I know that there is a good deal of support for the work of the commission in this House. The delay arises not out of any attempt to kick the matter into the long grass, as one speaker said earlier—or at least referred to the possibility of it being interpreted as such. It is a reflection rather of the polarisation of views with which we were presented.

The terms of reference for the project have been published on the Law Commission’s website but, in summary, it is envisaged that the first part of the process will be to draft an options paper, in which the commission will analyse how effective the law is and where it could be improved. The commission will then present various options for reform of the law, so that we can continue to ensure that corporate entities can be held appropriately to account. Initial findings are expected later this year, and it is hoped that this will lead eventually to the end of the long-running and often contentious debate on whether further changes to economic crime law are necessary. This will include consideration of a potential extension of the “failure to prevent” offence set out in the Bribery Act, so I am sure that it will be of great interest to all former committee members and to those who have contributed to our debate today.

The chairman of the committee sought specifically to learn about developments since the conclusion of our departure from the European Union. The safety and security of our citizens is the Government’s top priority. We have reached an agreement with the European Union, which delivers a comprehensive package of capabilities that will ensure that we can work with counterparts across Europe to tackle serious crime, terrorism and other offences, protecting the public and bringing criminals to justice. This includes fast-track extradition arrangements similar to those in place between the EU and Norway and Iceland. These arrangements are intended to be as fast and effective as those under the European arrest warrant, while providing greater safeguards for those who are arrested.

The agreement also puts in place arrangements that will simplify and speed up co-operation with EU member states on mutual legal assistance and asset freezing and confiscation, building and improving on the relevant Council of Europe conventions. This is the first time that the EU has agreed such a comprehensive agreement with a third country in this area. I recognise that, in the case of economic crimes, effective extradition arrangements will be important to ensure that we prosecute individuals effectively. We have these streamlined arrangements based on the EU’s surrender agreement with Norway and Iceland.

We are no longer part of the EAW. These new arrangements provide stronger protections for individuals, including provisions that make it clear that a person cannot be surrendered if their fundamental rights are at risk, or extradition would be disproportionate, or they are likely to face long periods of pre-trial detention— all evils identified under the EAW scheme. They also allow the UK courts to refuse a warrant if they believe that it has been issued to prosecute someone because of their political views, and to guarantee rights of access to translation, legal advice and consular assistance for British citizens arrested abroad.

The deal that the Government have reached in relation to our departure from the European Union enables arrangements with Europol and Eurojust that reflect the scale of our contribution to these agencies and facilitate effective operational co-operation. It enables the fast and effective exchange of national DNA, fingerprint and vehicle registration data via the Prüm system to aid law enforcement agencies in investigating crime and terrorism. We have agreed fast and effective arrangements for exchanging criminal records data through shared infrastructure and have ensured that information can be exchanged for crime prevention and safeguarding purposes. We have secured the continued transfer of passenger name records from the EU to protect the public from terrorists and criminals. As I said, we have also put in place arrangements that will simplify and speed up co-operation with EU member states on mutual legal assistance and asset freezing and confiscation, building and improving on the relevant Council of Europe conventions.

Perhaps I may turn to some of the thoughtful submissions made by speakers in the debate. The noble Lord, Lord Hain, referred to specific examples and endorsed the essay of the noble Lord, Lord Gold, on corporate culture. The noble Lord spoke about the importance of adequate resourcing and questioned the Government’s commitment to the operation of the Act abroad and the enforcement of anti-bribery measures abroad. I draw to his attention Section 12 and emphasise that the Bribery Act is an extraterritorial matter. Persons can be prosecuted where they have a close connection with the United Kingdom, and it does not matter if acts are committed abroad.

The noble Lord’s observations about London as a centre for money laundering are matters of urgent concern, but I sense that they also reflect something of London’s particular pre-eminence and status as a financial centre.

I agree with the observations of the noble Baroness, Lady Bowles, as to the importance of deferred prosecution agreements. I advise her that guidance and indeed practice emphasise that the existence of a deferred prosecution agreement does not bar prosecution of individual persons who were themselves responsible for acts of bribery. We encourage the prosecution of individuals. That has taken place already and is taking place in the context of DPAs.

As well as contributing an article which attracted positive views from members of the committee, my noble friend Lord Gold also spoke. I am happy to endorse his question and say that we will keep under review the possibility of extension of Section 7 of the 2010 Act into other areas.

I hope that I have already reassured noble Lords who mentioned the risk of complacency. It was the noble Lord, Lord Stunell, who spoke of our decline from the gold medal position to the bronze medal position on the podium. I suspect that this will be a matter which is somewhat fluid and dynamic in terms of measures coming into force. As we will discuss later, the types of offence with which the Act is concerned and the investigations put forth under it have a very long lead time.

The noble and learned Lord, Lord Morris of Aberavon, called for figures on the operation of the bodies charged with investigation of crimes of this sort. I can advise him and others that the gross budget for the Serious Fraud Office went up from £44.6 million in the financial year 2009-10 to £60.6 million in 2018-19, that being the last year for which figures are available. I regret that I do not have figures for the Crown Prosecution Service or other agencies. I shall endeavour to discover those and to write to the noble and learned Lord. I can tell him that the Government are committed both to the Serious Fraud Office and to the maintenance of the Crown Prosecution Service. We will always ensure that those bodies are fully supported to deliver their objectives, and they make their financial details available year on year.

My attention is drawn to the clock. I agree with the submission by the noble Lord, Lord German, that artificial intelligence will be an important and developing tool.

On advice given to small and medium-sized enterprises, the Government have sought to group matters together on a specific landing-site website. That means that inquiries on this matter will come to a central site and there will be easy links to places where information and advice can be discovered.

The role of the anti-corruption champion was raised by a number of noble Lords. Mr Penrose MP holds that office; he is a prime ministerial appointment and reports to the Prime Minister. The anti-corruption champion is committed to his role, which can be seen by the fact that he has weekly meetings with the joint anti-corruption unit and regular meetings with Ministers and businesses. That matter was raised by the noble Lord, Lord Bradshaw, as well as by my noble friend Lord Hodgson of Astley Abbotts.

My noble friend Lord Hodgson also made reference to the committee’s scrutiny of the Skansen case. I share his concern about aspects of the prosecution in that matter, and I am sure that the practice will have developed and will continue to develop so that what might be seen as errors in the prosecution’s approach will not be made in future.

The noble Lord, Lord McNally, referred to his gift from the outgoing Labour Government of the 2010 Act. I am happy to say that the noble and learned Lord, Lord Davidson of Glen Clova, my predecessor in this role, was responsible for that, and I thank him for his kind words. I am happy that the gift to the noble Lord, Lord McNally, on coming into post was merely the 2010 Act and not a case of whisky—a reference to the sensible observations from the noble and learned Lord, Lord Morris of Aberavon, about the nature of facilitation payments and the obviousness of bribery.

I have made reference to funding concerns and cited figures for the Serious Fraud Office and its increase in budget.

I am grateful to the noble Lords, Lord Rogan and Lord Empey, and my noble friend Lord Naseby, who spoke from experience of business abroad. The noble Lord, Lord Rogan, referred to the existence of a pilot project operating in Kenya, Mexico and Pakistan. It is important that consular, high commission and other embassy advice is available to businesses practising in foreign countries. The Government are aware of that. Time may not permit me to refer noble Lords to the range of training in place but, again, I can write to noble Lords who raised the question. I can say in relation to the specific point raised by the noble Baroness, Lady Fookes, that we will respond in writing to the question of how many people are involved in training in the embassies—and that also goes to consular and high commission facilities.

In answer to questions raised by the noble and learned Lord, Lord Davidson of Glen Clova, my predecessor in office, the self-report system that operates in Scotland is, as he and the noble and learned Lord, Lord Hope of Craighead, observed, distinct from the system of deferred prosecution agreements that operates in England, Wales and Northern Ireland. The initiative must be reviewed and approved each year by the Lord Advocate, and was most recently extended until June 2021. The fact that business is required to put in place measures to prevent unlawful conduct is viewed as an effective means of preventing corruption in future.

In 2018, the committee asked the Lord Advocate about a perceived lack of transparency with the self-report scheme, because the matter does not go before a judge in open court. The Lord Advocate does not accept that there is a lack of transparency in the Scottish system. Following the conclusion of any settlement under the self-reporting scheme, as part of a proactive strategy, the Crown Office invites publicity and provides information for media releases which are published on a dedicated bribery page on the Crown Office and Procurator Fiscal Service website.

In response to a further point raised by the noble and learned Lord, there are no current plans to amend the Act, but we will await with interest the findings of the Law Commission review of corporate criminal liability. In relation to the concern raised by a number of noble Lords about the guidance on offer in relation to corporate hospitality, we believe strongly that professional organisations and trade associations are better placed to provide both sector-specific and bespoke guidance on corporate hospitality. In relation to the broader point raised by the noble and learned Lord, we can readily see that there may be a difficulty if, further down the line to the provision of specific tailored advice in specific circumstances, one side might plead that it was being prosecuted having followed advice, and the other might declare that material facts that would have influenced any advice given had not been disclosed. It is that sort of matter that the Government’s approach seeks to avoid.

I thank the noble Lord, Lord Thomas of Gresford, for his characteristically thoughtful analysis of the matter and his endorsement of the operation of Section 7. My observations in relation to the last point follow his remarks that the Government are not a trade body in relation to the provision of advice to members.

I suspect that I have gone over time and I apologise for trespassing on your Lordships’ patience and that of the clerk and others here. I thank noble Lords for their thoughtful contributions and am particularly grateful to the committee for its work in scrutinising this piece of legislation. I am happy that the legislation and its operation, broadly speaking, enjoy such support across the Benches in your Lordships’ House. I apologise to noble Lords if I have not responded, owing to the times constraints, to specific points that they have raised, but I will go over my notes and those taken for me in relation to points raised by noble Lords, and will correspond in due course.