Crime and Courts Bill [HL]

Baroness Hamwee Excerpts

Tuesday 13th November 2012 Lords Chamber

Moved by

[Baroness Hamwee]

30: Schedule 17, page 262, line 29, leave out “general principles to be applied” and insert “circumstances prosecutors should consider”

[Baroness Hamwee]

My Lords, in moving Amendment 30, I will also speak to Amendment 32. Amendment 30 deals with the code to be issued and proposes that it should give guidance on the circumstances prosecutors should consider rather than the general principles to be applied. On first reading the paragraph, I thought there should be parliamentary oversight, but then realised that the paragraph is about the application of the general principles not about the principles themselves. However, it seems to be not wholly clear and I invite the Minister to confirm that the words in paragraph 6(1)(a) are intended to be about the circumstances that the prosecutor should consider. The Prosecution of Offences Act 1985 provides for the DPP, in other matters, to issue a code,

“giving guidance on general principles”.

I could not find whether there is any parliamentary oversight of that. I think the answer is probably that it is included in the DPP’s annual report. Something novel and major is being brought into our law and there should be no room for doubt as to the extent of the remit of the DPP and the Director of the Serious Fraud Office in this.

Amendment 32 would substitute the provision that prosecutors must “take account of” the code with “have regard to”. I want to understand whereabouts in the hierarchy—or perhaps on the spectrum—this is intended to be. I could not find in the legislation whether prosecutors are to take account of the current code under the 1985 Act, have regard to it or do something entirely different. The Minister may well be about to tell me that the words used here replicate words used elsewhere on the code. I beg to move.

--- Later in debate ---

[Lord Ahmad of Wimbledon]

My Lords, in providing for a code of practice for prosecutors in relation to deferred prosecution agreements, the Government have sought to ensure consistency with other statutory provisions relating to guidance for prosecutors on operational matters. As I have said before, the scheme for DPAs is a new concept for our criminal justice system and as such does not fall within the scope of any existing guidance for prosecutors.

I will turn to specific amendments and refer first to Amendment 30. The Government consider that there should be a code for DPAs comparable to the code for Crown prosecutors issued by the DPP under Section 10 of the Prosecution of Offences Act 1985. The code for Crown prosecutors sets out the general principles that prosecutors should follow when undertaking their functions. My noble friend Lady Hamwee referred to paragraph 6(1)(a) of Schedule 17, which reflects Section 10 of the Prosecution of Offences Act 1985 as to the general nature of the guidance to be set out in the code of practice for DPAs. However, unlike Section 10 of the Prosecution of Offences Act, paragraph 6 of Schedule 17 sets out in further detail the matters that must be covered in the code of practice for DPAs. Let me be clear: the key elements of DPAs are clearly set out in the Bill. The code of practice will provide guidance to prosecutors on the exercise of their discretion on operational matters. As such, the code is fundamentally an operational document and seeks to preserve prosecutorial discretion in operational matters. This approach will ensure that the code provides guidance in relation to key procedural matters for DPAs and decisions to be made by prosecutors.

Amendment 31 would add to paragraph 6 a further matter on which the code of practice may give guidance by adding to the list, as the noble and learned Lord, Lord Goldsmith, said,

“the choice of expiry date for a DPA”.

The Government’s view is that paragraph 6(2) is already clear that the code may give guidance on any relevant matter. If prosecutors consider it necessary and desirable to have guidance on the duration and expiry of an agreement, they would have the power to issue such guidance under that paragraph. We do not therefore see any particular or specific need to highlight this issue, although, again, the points of the noble and learned Lord, Lord Goldsmith, have been noted on this matter.

Amendments 31A and 31B seek to make the DPA code of practice for prosecutors subject to the affirmative resolution procedure. The noble Lord, Lord Beecham, referred to the letter issued by my noble friend Lord McNally. He is correct that the fundamental principle of prosecutorial independence means that it is appropriate for the code to be issued by the DPP and the director of the Serious Fraud Office. The code is an operational document, as I have already said. As such, we do not consider that it is either necessary or appropriate to make this code subject to parliamentary scrutiny. This approach is consistent with that under Section 10 of the Prosecution of Offences Act 1985 in respect of the code for Crown prosecutors. I should add that a supplementary delegated powers memorandum has been provided to the Delegated Powers and Regulatory Reform Committee, which has not raised any concerns about the approach taken in Schedule 17.

Amendment 32, referred to by my noble friend Lady Hamwee, relates to the duty on prosecutors to take account of the code of practice for DPAs when exercising functions under Schedule 17. It is essential that there is transparency and consistency in the way DPAs operate. The code of practice will play an important part in meeting these requirements. Requiring prosecutors to “take account of” the code throughout the deferred prosecution agreement process will ensure that it is considered and applied in relation to making decisions and exercising functions. Parties to the agreement, the judge and the public can be confident that each agreement will be approached and made in a consistent manner. We do not consider that requiring a prosecutor to “have regard to” rather than “take account of” the code would make any material difference to the extent of its use by the prosecutor.

In conclusion, there is a strong case for ensuring parity between the legislation providing for the deferred prosecution agreement code of practice and the code of practice for Crown prosecutors issued under the Prosecution of Offences Act 1985. I hope that, in light of the explanations I have given, my noble friend Lady Hamwee, the noble and learned Lord, Lord Goldsmith, and the noble Lord, Lord Beecham, will agree not to press their amendments at this time.

[Baroness Hamwee]

My Lords, I thank the Minister for that. In view of the hour, I beg leave to withdraw the amendment.

Amendment 30 withdrawn.

--- Later in debate ---

Moved by

[Baroness Hamwee]

42: Schedule 17, page 267, line 24, at beginning insert “any”

[Baroness Hamwee]

My Lords, paragraph 13 of the schedule provides for the use of material in criminal proceedings. Sub-paragraph (4) states that certain material,

“may only be used in evidence … on a prosecution”,

either for the same offence or for an offence as it says in the paragraph—I will not take up the Committee’s time in reading it. The material in question is,

“material that shows that P entered into negotiations for a DPA, including in particular”.

I was concerned by the phrase “in particular”. The way I have dealt with that in the amendment to probe this is to insert “any” so that it is “any material”,

“that shows that P entered into negotiations for a DPA”.

I hope that the Minister can assure me that the items listed are merely the most obvious examples and that this is not an exhaustive list. It seems to me that it could be interpreted that way. I beg to move.

[Lord Ahmad of Wimbledon]

My Lords, this amendment relates to paragraph 13 of Schedule 17, which deals with the use of material arising from DPAs. In particular, it seeks clarification about what can be relied upon by a prosecutor in future criminal proceedings when a DPA has not been approved by the court and made. The Government’s intention is to provide necessary protections and safeguards as regards organisations voluntarily entering into the process towards the making of a DPA in the event, for whatever reason, that an agreement is not finalised. Without these safeguards, some organisations might not voluntarily engage and co-operate with the prosecution.

On the point raised by my noble friend Lady Hamwee, I can give her the assurance that paragraph 13(6)(a) is a non-exhaustive list of materials that are likely to be produced during the process towards the making of an agreement, which would show that negotiations had been entered into. They are the most obvious documents, and the use of the words “including in particular” makes it clear that they may not be the only materials that might show that negotiations had taken place and would not be capable of being used other than in the limited circumstances referred to in paragraph 13(4). I suggest that inserting “any” at the start of, or removing “in particular” from, paragraph 13(6)(a) would not make the position any clearer.

I trust that with the assurance that I have given to my noble friend she will feel able to withdraw her amendment.

[Baroness Hamwee]

My Lords, I think that that amounted to a yes in response to my request for assurance. I beg leave to withdraw the amendment.

Amendment 42 withdrawn.

Moved by

[Baroness Hamwee]

43: Schedule 17, page 267, line 36, at end insert—
“Treatment of money paid under a DPA14A Money paid to satisfy a requirement under paragraph (a), (b), (c) or (g) of paragraph 5(3) shall not be treated as a deductible expense for the purposes of taxation.”

[Baroness Hamwee]

My Lords, a number of requirements may be made under paragraph 5, including imposing a fine or asking for compensation, a donation of money to a charity and reasonable costs. I was particularly concerned that the donation to a charity should not be treated by P as a deductable expense for tax purposes. In normal circumstances it probably would be, but that seemed to me to be offensive.

The HMRC has confirmed on its website that a fine is not,

“incurred wholly and exclusively for the purposes of the trade”,

but I do not think that it would do any harm to confirm this in the legislation. I have not included disgorging profits because, presumably, tax was paid on them in the first instance, so I can see an argument that they should be deductable. But I am interested in particular in hearing what the Minister has to say about payments to charity. I beg to move.

[Lord Beecham]

We wholeheartedly support this amendment.

[Lord Ahmad of Wimbledon]

My Lords, I thank my noble friend Lady Hamwee for drawing the Committee’s attention to this issue. The Government firmly believe that wrongdoers should not be able to profit or otherwise benefit from their offending behaviour; that is why DPAs will require organisations to comply with tough terms and conditions. These terms may include financial elements such as requirements to pay compensation to victims, a financial penalty, and the reasonable costs of the prosecutor, as well as a requirement on the organisation to disgorge the proceeds of criminal wrongdoing. However, it should also be remembered—as it was in discussions on a previous amendment, as pointed out by the noble and learned Lord, Lord Goldsmith—that DPAs can include other non-financial requirements, such as updating anti-corruption or fraud policies and retraining staff. Those are important attributes.

Deferred prosecution agreements are intended to ensure that organisations recognise and are held to account for their wrongdoing and take steps to mend their ways. Fulfilling the terms of an agreement should not be seen as simple entries in an organisation’s financial book-keeping records. The harm inflicted on the victims of economic crime and innocent third parties should not be seen simply as a cost of doing business.

It will come as no surprise to your Lordships that my noble friend referred to tax. The tax obligations of organisations relating to financial penalties and compensation payments can be, and are, complicated. These obligations have been very carefully developed over many years to ensure the right balance is struck. Although I welcome my noble friend’s efforts to clarify taxation arrangements under a DPA, the question of whether and which financial elements might be tax deductible is, and should continue to be, determined by finance legislation so that all relevant matters and consequences can be taken into consideration. That also avoids a piecemeal and haphazard approach to tax matters which might set an unhelpful precedent or have unintended consequences. Matters in respect of taxation are properly a matter for the Finance Acts and not for legislation such as this.

In light of these points, I would be grateful if my noble friend Lady Hamwee would agree to withdraw her amendment. In conclusion, I say to the Committee, and in particular to the noble and learned Lord, Lord Goldsmith, that I think it would be beneficial to arrange a meeting with officials so that we can address some of the issues more specifically in advance of Report stage. But for now, I hope that my noble friend Lady Hamwee will agree to withdraw her amendment.

[Baroness Hamwee]

My Lords, of course I will withdraw the amendment. I understand that tax is complicated and that the Government prefer to deal with it in specific legislation. Nevertheless, I think that at the moment there is the very real possibility that a donation to charity made under this provision would be treated as deductible. I hope that the Minister will arrange for that to be confirmed to me or otherwise so that I can consider what to do on the next occasion. I beg leave to withdraw the amendment.

Amendment 43 withdrawn.