Financial Crime: Legislation

Viscount Eccles Excerpts

Thursday 17th March 2011 Lords Chamber

[Viscount Eccles]

My Lords, I think I must have led a very sheltered life. I knocked around the developing world for some 20 years during which I was involved with both commercial companies and the Commonwealth Development Corporation. The corporation brought with it some really quite attractive money, risk capital as well as relatively low-interest loan capital, and a lot of technology. It operated in 53 countries in the developing world and we had around 450 investments. I shall come later to the more commercial aspects. I suppose we had a reputation for being incorruptible or something really unlikely like that, if I listen to the dark messages that are coming from my noble friends to my right. I was never on any occasion offered a bribe, and never asked for one, although I spent a great deal of time with people who lived at a much higher standard than I did myself, another point I shall come back to.

I turn first to the certainties of the Bribery Act. I do not understand the degree of uncertainty in the legislation, but what I do understand is that no one working for a company in the UK would wish to go to prison, so people have a reasonable case for saying, “Please may we be as certain as possible as to what an infringement of this Act would be”. I want to give two examples, but I have to admit that they are not from the immediate past. On two occasions I negotiated in countries where you were required by law to have a local agent. You could not operate in those countries unless you could show that you had an agency agreement, which was signed off by the government of the country.

In one case, the agreed fee was 2.5 per cent of any contract you got in that country. In the event, we won a contract which, from memory, was worth around £10 million. It was to supply a major piece of equipment for a steelworks. The chairman of the company was a cigar-smoking general. I remember that when, in the middle of the negotiations, he came to stay in our spare bedroom, he put his shoes outside the door because he expected that someone would clean them, and indeed I did clean them. When we eventually got the contract, I remember the agents, a commercial company rather than an individual in that country, saying, “You know, the general has a great ambition to own a villa in Florida”. I said that I did not know, to which the response was, “We thought you might just like to know that”. The agents did not say any more and I did not ask any more questions. Noble Lords will have worked out that 2.5 per cent of £10 million is £250,000, and this was quite a long time ago. I leave this account with noble Lords as an example and would ask whether it was an offence. Was that an associated person? I do not know. Was it an offence under Section 7, or whichever section it is, or not?

I recall another occasion in a Middle Eastern country when we were one of the last two bidders for a contract, the other bidder being a German company. Again, we were required under the law of the country concerned to have formal representation. It became absolutely clear that it did not matter which of us got the contract because the adjudicating committee was going to collect a proportion of whatever was coming from the two different local agents. You did not have to be a genius to understand that that was what was going to happen. Up to a point we outflanked them, because although my company did not get the contract, the German company then very kindly gave us a large sub-contract. Everyone came out a winner from a business point of view, but what about the Bribery Act? I do not know the answer and I hope that there is someone in this House who does. But certainty about what is or is not an offence is much more important than the high moral line which, to be frank, I do not have much regard for.

Perhaps I may turn to tax avoidance. I understand from the excellent Library note that now I must remember that it is not avoidance, it is mitigation. If I put shares into my charitable trust, thus saving myself some tax, I am no longer an avoider, I have become a mitigator.