New Clause 7
Bribery Bill [Lords]
11:00 am

Jonathan Djanogly (Shadow Minister (Corporate Governance) (Also Shadow Solicitor General), Business; Huntingdon, Conservative)

  I beg to move, That the clause be read a Second time. 

The new clause follows on from our earlier debates on the Proceeds of Crime Act 2002 and its interplay with the penalties under the Bill. As well as being subject to an unlimited fine if successfully convicted, corporations are concerned about how the confiscation regime under POCA might relate to the offence. I touched on this issue on Second Reading when I asked the Secretary of State whether the Government appreciated that the sentencing guidelines conflict in some ways with other sentencing powers, particularly POCA. Businesses say that people might not come forward, because once they have been convicted under the Bill, they might be liable to prosecution and penalties under other legislation. The Secretary of State said that he would look at the issue, so I ask the Under-Secretary whether the Government have indeed looked at it. I look forward to hearing her response. 

Although we accept that there is a morally defensible position that those convicted of a criminal offence and who have received proceeds in a criminal way should pay those proceeds back, we are not entirely convinced that the interplay between the statutes is stated clearly enough. POCA was designed to deprive individual defendants, particularly drug dealers and organised criminals, of the benefits of their criminal conduct. However, there has been no acknowledgement or recognition that there could be serious implications for  companies caught by the legislation, which in some cases could see them being put out of business if the full weight of the law were applied. The fact that businesses wish to draw POCA to the attention of Parliament during our debates on the Bill highlights how unsettled they are by the introduction of a strict liability offence to which the defence is vaguely worded. 

In the other place, Lord Tunnicliffe responded to Lord Henley’s queries on the matter by stating: 

“Under the Proceeds of Crime Act 2002, the exercise of confiscation powers is directed towards the recovery of the proceeds of crime. It is not intended to be punitive in effect. We are satisfied that the courts will take into account all relevant information”.—[Official Report, House of Lords, 7 January 2010; Vol. 716, c. GC52.] 

Neil Gerrard, head of the litigation and regulatory group for DLA Piper, published an article at the end of last year addressing the issue and the potential deterrent effect on companies considering self-reporting to the Serious Fraud Office. The SFO is trying to encourage companies to engage with it to report wrongdoing, in return for which it will use civil penalties wherever possible instead of criminal sanctions, but will not give guarantees or further guidance. 

The Committee may wish to consider as a model the recent corruption case involving Mabey and Johnson, in which the company engaged constructively with the SFO in return for a plea agreement in both quantum and terms. The penalties on the company totalled £6.6 million, £1.1 million of which was confiscated. However, because the date of the earliest offence charged against Mabey and Johnson was 1993, the confiscation was determined under the Criminal Justice Act 1988. For offences committed after November 1995, the confiscation regime is more draconian, as determined under POCA. Those rules include a mandatory obligation on the court to conduct a confiscation inquiry if the prosecutor asks for a confiscation order. However, even if the prosecutor decides not to ask for one, the court has discretion to conduct an inquiry in any event. However, it has no discretion in determining the amount to be confiscated, with the calculation of benefit from criminal conduct determined by statute. 

Given those restrictions, according to Mr. Gerrard’s article, I understand that a judge cannot simply ratify the plea agreement and the agreed sums as was done in the Mabey and Johnson case. Therefore, while under the CJA regime, Mabey and Johnson paid £1.1 million in confiscation, the sum at risk of confiscation under POCA would have been as high as £60 million. That  sum represents the strict statutory application of the benefit or value of the contracts, rather than any profit obtained from the offences committed. 

Will the effect of the overlap between POCA and the Bill be to drive companies out of business altogether? If that is not the intention, will the Under-Secretary explain how such a drastic scenario can be avoided? Clearly, if such a powerful disincentive were to prevent self-reporting by companies—as it no doubt would—the efficacy of the SFO’s hoped-for new regime of corporate responsibility could be brought into doubt, which is not in anyone’s interests. 

David Howarth (Cambridge, Liberal Democrat)

  Again, the new clause concerns a matter that we have discussed before, so I will only add one point to what I have said. I oppose the idea of separating the POCA powers and making them inapplicable in such cases, for the simple reason that what lies behind the Proceeds of Crime Act and its predecessors is the notion that stripping a criminal of all the benefits of crime is a deterrent. It is a way of ensuring that people think twice before going into such activity in the first place, as they would obtain no gain from it. 

The hon. Gentleman is right about rigidity of calculations under POCA compared with previous regimes, and he described the procedure in which that would happen. Normally, a prosecutor would threaten to use POCA to secure a settlement. That puts the prosecutor in a better position than would be the case under the new clause, and I do not want to undermine the powers of the prosecutor in any way at all. 

The hon. Gentleman’s only point is that a judge has the discretion to start the whole process on their own motion. That is the only risk here—a judge might upset the whole arrangement agreed between the defendant and the prosecution authorities. I honestly think that the risk is very low. The hon. Gentleman shows no faith in the judiciary, which is not, if thinks about it, something he would wish to repeat. There is a technical point in his favour, but it is not strong enough to support his new clause. 

Claire Ward (Parliamentary Under-Secretary, Ministry of Justice; Watford, Labour)

  As the hon. Member for Huntingdon has explained, the new clause would confer protection on individuals or other persons prosecuted for an offence under the Bill from any other proceedings, whether under POCA or any other statute, in respect of the facts that gave rise to the proceedings under the Bill. 

The hon. Gentleman is particularly concerned about the application of the confiscation provisions under POCA. He mentioned on Second Reading that many businesses to which he had spoken have expressed concern that further action may be taken against companies convicted under the proceeds of crime legislation, and that the financial penalties that would be imposed could threaten their businesses. 

First, I wish to clarify the fact that the matter is not about companies convicted of an offence under the Bill being exposed to double jeopardy. The confiscation regime under POCA is designed to deprive the offender of their benefit from crime, which is an entirely correct approach. The confiscation powers under POCA are not solely directed at drug dealers and armed robbers—useful though they are in those respects. The powers exist in respect of any offence if offenders secure a  financial advantage from their crimes. The Act does not just apply to individuals; it also applies to companies and other legal persons convicted of any such offence. 

To provide immunity of the sort proposed by the new clause would be unprecedented. I do not see why individuals or commercial organisations convicted of offences under the Bill should be singled out for immunity from legislation that Parliament has determined should apply following conviction. Bribery is a serious offence and should be treated as such. I am sure that the hon. Member for Huntingdon is not really saying that people convicted of a bribery offence should be able to retain the benefits from their crime—I hope that is not what he thinks should happen. 

So far as the Proceeds of Crime Act is concerned, it is for the court to determine the benefit derived from an offence in any individual case. The court’s decision will be informed by a statement of information, prepared by the prosecutor, identifying the defendant’s benefit from their criminal conduct. The defendant has an opportunity to respond to and contest any assertions in the statement of information. Section 13 of POCA requires the court to have regard to the confiscation order before imposing a fine or other order involving payment on the defendant, except for a compensation order. Otherwise the confiscation order is left out of account in sentencing the defendant. I have every confidence that the courts will exercise their powers of confiscation on the basis of accurate information and in a just and appropriate manner. 

The hon. Gentleman was concerned on Second Reading that the existence of confiscation powers would make it less likely that companies would self-report allegations of bribery. I do not accept that that would be the case, although the prospect of the proceeds of a crime being confiscated should act as a deterrent against committing the offence in the first place. If that is not seen to be the purpose of the Bill, we have not got the policy objectives across in all the time we have spent in Committee and in the previous work. 

Furthermore, the Serious Fraud Office has indicated in guidance on self-reporting bribery that, in appropriate cases in which the commercial organisation demonstrates that it is prepared to act responsibly, there is the prospect of a negotiated settlement with a civil outcome rather than a criminal prosecution. Such examples ensure it is the right way to deal with the facts of the case. 

The proposition of total immunity, however, goes wider than POCA, to cover proceedings under any other statute arising from the same facts. That would potentially encompass many other types of proceedings, such as those relating to compensation orders, serious crime prevention orders under the Serious Crime Act 2007 or the disqualification of directors under the Company Directors Disqualification Act 1986. Again, I am not sure whether the hon. Gentleman intended his new clause to have such consequences, but we see no justification for creating an immunity to such proceedings for someone convicted of a serious offence—bribery. That is contrary to what Parliament intended. 

Bribery is a serious crime that needs to be addressed accordingly. The inclusion of the new clause would seriously impair the effectiveness of the Bill, as I have said of previous new clauses. The Joint Committee on the draft Bribery Bill, on which the hon. Gentleman served, stated in its report that 

“the Bill must have teeth”. 

Jonathan Djanogly (Shadow Minister (Corporate Governance) (Also Shadow Solicitor General), Business; Huntingdon, Conservative)

  Let me first say in reply to the hon. Member for Cambridge that I have every confidence in our judiciary. 

I was pleased to move the new clause, which gave us an opportunity to probe the interaction of different legislation. Of course financial advantage should be repaid—I totally agree with the Under-Secretary about that. The question is whether the new interaction of laws will reduce the chance of companies coming forward and self-cleaning—as I think my hon. Friend the Member for North-East Hertfordshire described it. The Under-Secretary’s view is that that will not be the case, and I am certainly happy to hear that. 

Oliver Heald (North East Hertfordshire, Conservative)

  I am in favour of self-cleaning as well, but self-cleansing was what I said. 

Jonathan Djanogly (Shadow Minister (Corporate Governance) (Also Shadow Solicitor General), Business; Huntingdon, Conservative)

  The approach to the matter taken by prosecutors—and indeed judges—in the initial cases will be vital, as businesses will be looking on as decisions are made. 

On that basis, I beg to ask leave to withdraw the motion. 

Nicholas Winterton (Macclesfield, Conservative)

  Before I put the last Question to the Committee, may I say that this is the last Bill I shall chair during my parliamentary career in the House of Commons? I have served on the Chairmen’s Panel for just under 25 years. It has been a tremendous pleasure—often a challenge, but very enjoyable. I say to Back Benchers—there are also Ministers to come, and shadow Ministers, on the Back Benches—that there is an alternative career in the House of Commons, which is serving the House on the Chairmen’s Panel or in other ways. I hope that that career structure will be used increasingly, because it is good for the House to have Members who are committed to the service of this magnificent Parliament. 

I congratulate the hon. Member for Watford on the job she has done as the Government Minister on the Bill, and the hon. Member for Huntingdon on the way in which he has represented Her Majesty’s Opposition. It is always a pleasure to listen to the hon. Member for Cambridge; I know that Parliament will miss him when he steps down and returns to law at the university. We wish him well. All those who have contributed to our proceedings have added to the Bill. I thank the congregation of Clerks whom we have had during these short proceedings. It is always very helpful to any Chairman to have someone sitting by their side who can, if we forget what we are supposed to be doing, quickly bring us back to reality and give us the advice we need. 

Hansard is always impeccable. The police and the doorkeepers who ensure that we run an effective and efficient Committee are to be thanked for their service. The agreeable Whips on this Bill should also be congratulated. Looking round the Committee, I see three hon. Members who will not be standing for Parliament again. I thank them personally for the service they have  given not only to the House, but to their constituents and to the country, in the role they have fulfilled. It has been a pleasure to get to know many such Members well. 

Claire Ward (Parliamentary Under-Secretary, Ministry of Justice; Watford, Labour)

  I thank you, Sir Nicholas, for your chairmanship of the Committee, and your co-Chair, Ms Walley. I know that you are off to new pastures—wherever that may be—and to a new life outside Parliament. We wish you well in what you choose to do. It is incredibly important that we have people throughout the parties who believe wholeheartedly in the role of Parliament and the work we all have to do as Members. Whatever happens after the general election, there will be, by the very nature of so many people deciding not to seek re-election, a very different Parliament in the summer. We have much to learn from those who have gone before, particularly regarding chairing a Committee such as this, which you have done very agreeably. You have ensured that, even in moments of difficulty and disagreement, we have got through this important legislation. 

I join you, Sir Nicholas, in thanking those who have enabled us to get through the Bill. I thank the hon. Members for Huntingdon and for Rugby and Kenilworth for their, at times, constructive and interesting debate; the Clerks; Hansard; the doorkeepers; the police officers; all members of the Committee, of course; and the Bill team and my officials, without whom life would be not just difficult, but frankly impossible. I thank them for all their hard work. I spent many years sitting where my hon. Friend the Member for Warrington, North is sitting now—in the Whip’s chair. This is the first full Public Bill that I have taken through, and everybody here has ensured that it has been both an enjoyable and relatively easy task. I thank you, Sir Nicholas, and take this opportunity to wish you well in the future. 

Jonathan Djanogly (Shadow Minister (Corporate Governance) (Also Shadow Solicitor General), Business; Huntingdon, Conservative)

  May I join the Under-Secretary in congratulating to you, Sir Nicholas, on the way in which, with your normal fairness and good humour, you have guided us through the Bill, and in wishing you well in your retirement? I am certainly very sorry that this is the last of the many Bill Committees that you have chaired on which I have had the privilege to serve. I also congratulate Ms Walley on what was her first Bill Committee; may she chair many more. I thank those who have contributed to making the Committee happen: the Clerks, the doormen and the police. I wish the hon. Member for Cambridge well in his return to academia, and I thank all members of the Committee for giving up their time to consider this important legislation. 

David Howarth (Cambridge, Liberal Democrat)

  May I add my thanks to you, Sir Nicholas, and my appreciation for the way in which you have chaired Bill Committees in the few years that I have been here? In every case, you have enabled the debate to flow and ensured that important points were made, but that in the end, the work was done. Your principle, that that should be possible without recourse to procedural interruptions such as knives, is a model of  how such things should be done. I, too, wish you well in your future outside the House. I also thank the Clerks and the Bill team, who seemed very much engaged with the Bill—it is a tribute to them that it has got through this stage with such dispatch—and all the other members of staff who helped the Committee to get its work done in time. 

As hon. Members have mentioned, this is not just your final Bill Committee, Sir Nicholas: it is also mine, unless something very odd happens that we do not expect in the next few days and weeks. The way you chair Committees means that we get the work done and we examine the Bill clause by clause. The way government is set up means that rarely can Governments say, “That was a good idea and we will accept it”, so Committees can be frustrating exercises. I am sure there is a better way of doing it. I shall go away and think about what that might be in my academic career, but given that this is the way we do things now, Sir Nicholas, you do it better than anybody else. Thank you very much. 

Tom Levitt (High Peak, Labour)

  Unusually, I rise from the Parliamentary Private Secretary Bench, but then I am not a PPS—I just happen to be sitting here. I want to add my thanks to all those who have already been mentioned: to members of the Committee; and to all who have helped make this Committee effective, especially you, Sir Nicholas. We share a boundary and a love of the Peak district; the second will continue, if not the first. 

If I may, I want to sound one note of reminiscence and nostalgia. In 2002, I represented the House at a conference in Canada—I was then a member of the Standards and Privileges Committee—at the inaugural meeting of the Global Organisation of Parliamentarians Against Corruption, which in some parts of the world has become a very effective organisation, helping particularly in emerging democracies. At that conference, the OECD documentation was applauded and commitments were made, and I am touched, having had four years in the Department for International Development as a PPS, that my final Bill should be bringing that commitment to the OECD principles into effect. It is therefore a slightly nostalgic moment—a nice nuance. 

Nicholas Winterton (Macclesfield, Conservative)

  Indeed it is—a nostalgic moment for a number of us. I thank members of the Committee for their generous remarks. I have allowed Members’ comments to range widely; we had time, and I felt it appropriate to allow that at the end of a Parliament. 

I have left it to the very end to say thank you to my co-chair, Joan Walley. It was her first Bill and she did a magnificent job; I wish her well and I shall personally thank her when I see her later. It has been a very pleasant Bill Committee to chair, and I thank again all members of it for their very generous remarks. 

Thirty-nine years, almost, in this place is quite a lifetime, but I do not regret a single minute of it, and if I had the opportunity to live my life again, I would do things in no different way. Perhaps that, in a way, is what somebody should say at the end of their House of Commons career.