SFO’s pre-investigation powers in relation to bribery and corruption: foreign officers etc

‘(1) The Criminal Justice Act 1987 (c. 38) is amended as follows.

(2) After section 2 insert—

“2A Director’s pre-investigation powers in relation to bribery and corruption: foreign officers etc

(1) The powers of the Director under section 2 are also exercisable for the purpose of enabling him to determine whether to start an investigation under section 1 in a case where it appears to him that conduct to which this section applies may have taken place.

(2) But—

(a) the power under subsection (2) of section 2 is so exercisable only if it appears to the Director that for the purpose of enabling him to make that determination it is expedient to require any person appearing to him to have relevant information to do as mentioned in that subsection, and

(b) the power under subsection (3) of that section is so exercisable only if it appears to the Director that for that purpose it is expedient to require any person to do as mentioned in that subsection.

(3) Accordingly, where the powers of the Director under section 2 are exercisable in accordance with subsections (1) and (2) above—

(a) the reference in subsection (2) of that section to the person under investigation or any other person whom the Director has reason to believe has relevant information is to be read as a reference to any such person as is mentioned in subsection (2)(a) above,

(b) the reference in subsection (3) of that section to the person under investigation or any other person is to be read as a reference to any such person as is mentioned in subsection (2)(b) above, and

(c) any reference in subsection (2), (3) or (4) of that section to the investigation is to be read as a reference to the making of any such determination as is mentioned in subsection (1) above.

(4) Any reference in section 2(16) to the carrying out of an investigation by the Serious Fraud Office into serious or complex fraud includes a reference to the making of any such determination as is mentioned in subsection (1) above.

(5) This section applies to any conduct which, as a result of section 108 of the Anti-terrorism, Crime and Security Act 2001 (bribery and corruption: foreign officers etc), constitutes a corruption offence (wherever committed).

(6) The following are corruption offences for the purposes of this section—

(a) any common law offence of bribery;

(b) the offences under section 1 of the Public Bodies Corrupt Practices Act 1889 (corruption in office); and

(c) the offences under section 1 of the Prevention of Corruption Act 1906 (corrupt transactions with agents).”

(3) In section 17(3) (provisions of Act extending to Northern Ireland) after “sections 2” insert “, 2A”.

(4) This section extends to England and Wales and Northern Ireland only.’.—[Mr. Hanson.]

Brought up, and read the First time.

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

The Serious Fraud Office has compulsory powers under section 2 of the Criminal Justice Act 1987 to compel the disclosure of evidence that may be relevant to a current investigation into serious or complex fraud. The new clause would introduce a new section 2A into the 1987 Act, which would allow the director of the Serious Fraud Office to approve the use of section 2 powers at the vetting stage in cases where it appears that there may have been a corruption offence involving a foreign official. In practice, the provision will be useful in allowing the Serious Fraud Office to compel British companies involved to provide evidence about possible corruption abroad, as long as the material is in the United Kingdom.

I hope that the Committee recognises that the Government are committed to tackling the corruption of foreign officials involving British companies. Corruption abroad is particularly hard to investigate. In domestic cases, the Serious Fraud Office often receives information on serious corruption or bribery from the police or from a domestic regulator. Documentary evidence and witnesses are often available in the United Kingdom.  The information therefore allows the Serious Fraud Office to go through a vetting process to decide whether the case justifies setting up what will often be a multi-million pound investigation. Once an investigation is set up, the Serious Fraud Office has powers to demand relevant material such as documentary evidence and to interview witnesses under section 2 of the 1987 Act.

Unfortunately, in cases of foreign corruption, it is much more difficult to gather information. Witnesses may be thousands of miles away and reluctant to come forward. Corrupt companies rarely co-operate, and the foreign jurisdiction is often unable or unwilling to provide information. The effect is that cases cannot go beyond the vetting stage because the Serious Fraud Office does not have enough information to decide whether a serious or complex fraud justifies the formal investigation to which it would have to be committed. I do not think—and I am sure that the Committee would share my view—that that is acceptable.

We must deal with foreign corruption as well as corruption at home. Organisations such as the Organisation for Economic Co-operation and Development have expressed concern about the UK’s record on investigating and prosecuting cases involving foreign officials. The new clause would extend the SFO’s compulsory powers to demand relevant material at the vetting stage. Those powers will allow the SFO to demand from companies financial information relating to suspect financial transactions, as long as that information is in the UK, and to free professional witnesses from confidentiality obligations. The proposals will help the Serious Fraud Office to tackle corruption abroad, and I commend them to the Committee.

An awful lot could be said about the new clause, but the Committee will be pleased to hear that I do not intend to say much. It should not be possible for investigations to be stopped by anyone so minor as a company official or even an officer of the state. That there is every capacity for princes of a realm or kings to intervene to stop appropriate bribery and corruption investigations in their tracks is only too evident to those who have seen the recent history of this country. It is shameful that we are not better equipped to deal with bribery and corruption in relation to British companies operating abroad.

I say to the Minister that this is a positive move and I support it. However, he knows that his hon. Friend the Member for City of York (Hugh Bayley) introduced a Corruption Bill two years ago. He may know that I, too, proposed a Corruption Bill, which passed through all its stages in the House of Lords but was not given a hearing of any kind in this House in the last Session of Parliament. Both of those Bills would have introduced the changes necessary for us to comply with our international obligations and to correct the deficiencies, which he correctly stated have been pointed out by the OECD.

The Secretary of State for the Department of Environment, Food and Rural Affairs, in his former capacity as Secretary of State for International Development and anti-corruption tsar, as I believe he then was, stated categorically that it was necessary for Britain to adopt such measures and to get our law into  shape. However, such measures are still not being introduced. No Bill is anticipated in this Session of Parliament. Is it not time that we did something about our deplorable international record on dealing with bribery and corruption involving British companies?

I think that this Government have had more tsars than the Romanovs. I sat on the Joint Committee that scrutinised the draft Corruption Bill, chaired by a retired Law Lord whose name escapes me. That Bill, which was advanced by the Law Commission and adopted by the Home Office and by the Government as a whole, did not go anywhere. In the light of new clause 32, can the Minister tell us where it has gone?

The hon. Member for Somerton and Frome and the hon. and learned Member for Harborough are correct. In March this year, my right hon. Friend the Member for Airdrie and Shotts (John Reid), then Home Secretary, announced the next steps arising from the Government’s consultation on the reform of law on bribery and corruption. As the hon. and learned Gentleman said, the Law Commission was asked to undertake a thorough review of the legislation with a view to a fundamental reform. The commission is expected to produce a consultation paper later in the year and a draft Bill for autumn 2008. We intend to introduce proposals for legislation to reform the law as soon as possible—once the Law Commission has reported.

I realise that the hon. Member for Somerton and Frome and the hon. and learned Member for Harborough may view that as slightly longer grass than they would wish, but I point out that the Bill promoted by my hon. Friend the Member for City of York failed because of an absence of consensus on what might constitute new specific offences. The subject is complex, but we are confident that the Law Commission is taking on board the views of a wide cross-section of interested parties to produce what I hope will be a simpler and much more workable Bill.

In the interim, we propose to introduce a specific measure upon which we have previously consulted, namely extending the SFO’s investigatory powers to the vetting stage in any cases involving allegations of bribery or corruption of overseas officials, officers or their agents. I hope that hon. Members accept it as a positive step and understand that there will be a need for wider discussion of the draft Bill following the commission’s report in the new year. I commend the new clause to the Committee.

Question put and agreed to.

Clause read a Second time, and added to the Bill.