Financial Crime: Legislation

Lord Marks of Henley-on-Thames Excerpts

Thursday 17th March 2011 Lords Chamber

[Lord Marks of Henley-on-Thames]

My Lords, in no year since the turn of the century have there been more than 25 successful prosecutions for bribery in England and Wales. Indeed, in 2005 there was only one. Those numbers are ludicrously small. Anyone who believes that the numbers reflect a standard of probity in British business that leaves little to be desired is suffering from an excess of complacency or an excess of naivety that leaves them blind to the reality. Those prosecutions were brought under the old legislation, which was principally passed in 1906 and 1889. Those statutes were plainly not fit for purpose. It is a mark of the lack of seriousness with which we have treated bribery, particularly bribery in a commercial context, that it has taken so long to replace legislation which is more than a century old and which produced such a limited response to serious criminal activity.

The OECD anti-bribery convention, to which we are now signatories, marked a milestone in international co-operation in stamping out bribery in international business. However, the UK’s response to its obligations under the convention has to date been mediocre at best. That should all have been set to change with the passage of the Bribery Act last year, yet this admirable legislation has not come into force and we are now entitled to be impatient. It was supposed to come into force last October. In September, a brief consultation on the proposed guidance was announced, which would last until November, with a view to commencement in April this year. The consultation paper had draft guidance annexed to it. In January, further delay was announced and further work on the guidance was said to be needed.

My right honourable friend the Secretary of State for Justice says that we are back on track. He rightly says that corruption is bad for business and that we must be at the forefront of stamping it out, not only in the developing world but in international trade generally. That must mean that he completely rejects the argument that British businesses cannot compete with others that may be corrupt unless they, too, offer bribes. It is that argument that represents precisely the evil that the anti-bribery convention was designed to stamp out.

It is a pity that on occasions in recent months the CBI and the Multinational Chairman’s Group, to which my noble friend referred, have sounded close to rehearsing that argument in seeming to press for further delay and in their complaints about the implications of the Bill. That is the answer to the point powerfully and elegantly but, I suggest, wrongly advanced by my noble friends Lord Hodgson of Astley Abbotts and Lady Wheatcroft. It is no good saying that it is acceptable for small companies to pay small bribes, perhaps disguised as something else such as the transport tax that was referred to, and that it is only large bribes that the Act should outlaw. We have to rely on our markets wanting to buy British goods and services because they are competitive on price and quality.

[Lord Hodgson of Astley Abbotts]

I know that my noble friend has just six minutes, but it is a travesty of what my noble friend Lady Wheatcroft and I were saying to suggest that we were advocating small bribes. From the beginning, both of us have said that we are absolutely against bribery. It is the reality of the situation that we are asking the House to address.

[Lord Marks of Henley-on-Thames]

My Lords, that is what was said, but the description of the transport tax being moneys paid to officials in small amounts to enable goods to be imported into those markets amounts to small bribes. I do not accept that they are acceptable. It is to be conceded by those who take our position that there may be a cost to that strict position, as my noble friends Lord Hodgson and Lady Wheatcroft point out. However, if it is a cost, it is a short-term cost, with the prize of a long-term business environment that is clean. The enforcement of the anti-bribery convention internationally and the Bribery Act in this country is a prize worth gaining.

The delay has been damaging to the reputation of this country and its business. As my noble friend Lady Williams explained, there is great anger with the United Kingdom in the United States and in the OECD. In the United States, the very strong legislation in the Foreign Corrupt Practices Act, which is rigorously enforced by the SEC and other federal enforcement agencies, has brought about a complete change of approach. The United Kingdom’s performance has been seen as hopeless and the delay in passing the Act has been seen as worse than that.

Meanwhile, we have regular reminders of the extent of the problem. Noble Lords have referred to the British Aerospace scandal and, in particular, to the previous Government’s extraordinary decision to stop investigating the Al Yamamah contract for the sale of aircraft to Saudi Arabia. The emergence even now of further evidence, which was highlighted in the past few days by my right honourable friend Sir Menzies Campbell, of a $70 million payment in connection with the contract makes the point

We have recently had the MW Kellogg engineering case, with a £7 million settlement over a contract for a gas liquefaction plant in Nigeria after payment of more than £100 million in bribes by the parent company. We had the disgraceful Innospec case last year, where a British company had paid bribes of $17 million to secure sales in Indonesia of a highly toxic lead fuel additive that is banned in the UK and elsewhere, the bribes having been paid to prevent the chemical from also being banned in Indonesia.

The list goes on. The evil of corruption is a cancer in our international trading system. It must be removed. The anti-bribery convention and the Bribery Act are powerful instruments. In Richard Alderman we have an energetic and effective director of the SFO, but we need the Bribery Act to become law. The guidance is needed fast. It needs to show a commitment to thorough enforcement. It must not be said that it waters down the effect or the effectiveness of the Act. Only in that way can Britain’s damaged reputation for probity in international business be restored.