Bribes and Kickbacks: The Law Commission Recommendations

Following our article on this topic in February’s edition (IHL57 February 1998 page 42 “Bribes and Kickbacks - where are we now?”), on 2nd March 1998, the Law Commission issued Item 11 of its programme of reform of the criminal law: a report and draft bill on the law of corruption. The main recommendations may be summarised as follows:

• The common law on bribery and the Prevention of Corruption Acts should be replaced by a modern statute: a draft bill is proposed by the Law Commission for this purpose.
• The distinction between “public bodies”, against whom there is a “presumption” of corruption, and others against whom there is no such presumption, should be discarded.
• The corrupt performance by an agent of his agency duties should be criminalised in circumstances where he was motivated by the hope of a corrupt reward (whether or not there was an agreement to this effect). Under the current law, an agent commits an offence by accepting a corrupt bribe or reward, but not by acting in return for the bribe or attempting to earn a reward.
• There should be a definition of the word “corruptly”. The proposed definition is discussed in more detail below.
• The jurisdiction of the English Courts over offences of corruption committed abroad should be extended to criminalise acts preparatory to corruption where information, requests, demands or other matters are communicated in any way from England and Wales to elsewhere for a corrupt purpose or if such communications are received in England and Wales from elsewhere.
• The need for the consent of the Attorney General or the Director of Public Prosecutions for prosecution of corruption offences should be abolished.

The report focuses on the meaning of the word “corruptly” and the types of behaviour which it seeks to bring within the ambit of the new offences. In particular, the issue of corporate hospitality and “sweeteners” is discussed, which has attracted a degree of media comment.

The report concludes that the essence of corruption lies:

1. In the case of the bribe giver, in his intent to influence an agent to perform his duties in a particular manner and to do so primarily in return for the conferring of an advantage upon him or a third party; and

2. In the case of the bribe receiver, to act in the manner described in the preceding paragraph whether in the hope that such advantage will be conferred or in the knowledge that it has been conferred, whether or not it is actually conferred and whether or not there is an agreement to that effect.

The report recognises in this context that “corporate hospitality” undeniably attempts to influence the conduct of an agent or employee, but is generally regarded by the business community as acceptable. Being reluctant to criminalise genuine marketing, but on the other hand wishing to avoid creating an avenue for abuse by excluding from the ambit of the offences all corporate hospitality, the report attempts to set down some guidelines as to what is acceptable corporate hospitality and what is not.

The key appears to lie in the way in which it is hoped to influence the agent or client. The following guidelines are given:

Acceptable behaviour

1. The desire to impart to a client information about the host company or portray it in a favourable light in an attempt to secure new or further business.

2. The provision of hospitality with a view to cementing existing relationships or providing an opportunity for new relationships to be formed.

Unacceptable behaviour

3. Where the aim on either side is for the agent to decide to favour the host company in return for an enjoyable occasion.

However, the motivation for and effect of hospitality may be a combination of one or more of the above categories. Accordingly, in future, corporations may wish to ensure that any hospitality which might fall within the third category described above also falls within one or both of the first two categories of acceptable behaviour. One clear example where this might not be satisfied is where hospitality is provided to the client (or potential client) without representatives of the host company being in attendance at the relevant event.

Bringing corporate hospitality within the ambit of the bribery and corruption laws is controversial. It is likely that these measures will be heavily debated before they become law. In practice, it will prove difficult for the prosecution to show that the motivation behind any particular act of corporate entertainment was solely a corrupt one: save in the most blatant of cases, it is likely that individuals will escape liability. However, it seems likely that any new legislation will deal with corporate hospitality in some form and organisations should bear in mind the Law Commission recommendations at this stage.

The Law Commission report appends a draft corruption bill for implementation of its recommendations. The Government is currently considering the report along with other initiatives on the topic and is expected to publish a statement of its proposals for reform of this area of the law before the Summer recess.