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

Baroness Bowles of Berkhamsted Excerpts

Wednesday 3rd February 2021 Grand Committee

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I welcome this report and commend the work and conclusions of the committee and the opening speeches by the noble and learned Lord, Lord Saville, and the noble Lord, Lord Hain.

I will speak about “failure to prevent” offences generally, but before that will speak briefly on the lack of clarity about what is meant by procedures being “adequate” for preventing bribery. This was brought about by the subsequently enacted tax facilitation offences using the alternative phrase “reasonable in all circumstances”. This is despite that having been dismissed in the Bribery Act debate as too high a standard by referring to “all circumstances”. In that context “adequate” was thought to be a lower bar. Certainly, if I congratulated a fictitious noble Lord on their “adequate speech”, it may not be taken as altogether complimentary.

Others switched the emphasis around so that, looking after the event, the bar is suddenly higher because procedures had failed and must therefore be inadequate. I am comforted that a senior judge said that he would have accepted them as both meaning the same had it been presented to him, but clarification on what is intended is desirable for both purposes.

I have mentioned the two “failure to prevent” offences and the reason for their existence is to strengthen the prospect of finding responsible parties guilty—which is very difficult because of the need to find a directing mind, and is tantamount to impossible with the board structures of large firms. Therefore, I welcome the point made in paragraph 109 that there are arguments to make corporations vicariously liable more generally, even though there is not a recommendation due to the inquiry’s scope.

It is some time since the Ministry of Justice made a call for evidence on corporate liability—to which I made a submission—and, after a long delay, the response is that there was not a sufficient evidence base on which to base reform. It has been sent off for lengthy procedures in the Law Commission, which already said in its 2010 paper on Criminal Liability in Regulatory Contexts that

“the identification doctrine can make it impossibly difficult for prosecutors to find companies guilty of some … crimes, especially large companies”,

and in its 2019 paper on suspicious activity reports that

“The identification doctrine can provide an incentive for companies to operate with devolved structures in order to protect directors and senior management from liability.”

Regrettably, I do not believe that the department has any heart to follow through on the Prime Minister’s call for action in 2016 and the good start shown by the Bribery Act. The only reason I can imagine for that squeamishness is that somehow it thinks it is a competitive advantage to shield directors in a way that they are not shielded elsewhere, such as in the United States.

A read of the call for evidence background document gives a good exposition of how bad matters are and many of the reasons why evidence of failures in prosecutions is relatively scant—because prosecutors know they cannot succeed against large companies and give up, unless sector-specific legislation has been introduced such as the “failure to prevent” regimes or the now systematically compromised financial services senior managers’ regime.

The current common law “directing mind” principle, first expounded in 1915, is unfairly discriminating to small businesses. The Crown Prosecution Service’s legal guidance, under “Further Evidential Considerations”, states:

“The smaller the corporation, the more likely it will be that guilty knowledge can be attributed to the controlling officer and therefore to the company itself.”


Given the general guidance for prosecution that there must be a “realistic prospect of conviction”, no wonder evidence is scant and statistics show a preponderance of prosecutions against small companies.

How can that unfairness be left to stand? What does it say about the culture of our country and why people feel left out? While acknowledging the fact of wrongdoing, people nevertheless rightly resent there being one law for the big and another for the small. Dancing-on-pins excuses do not cut that.

Civil law developed to take account of the complexity of modern companies, but not criminal law. Civil law is not enough: the ultimate deterrent of deprivation of liberty cannot apply to corporations, and in the end it does not apply to directors in large corporations. Culture will not change until it does, and the UK being “a good place to do business” is a tainted phrase—maybe even a loaded phrase. Surely directors should be required to ensure systems to prevent all bad corporate behaviour. Only then will action make its way to the boardroom, rather than be kept away in the safety of the executive committee or below.

But if the ministry is reluctant—whatever the cause—will it at least not stand in the way of further sectoral facilitation of crime measures?