Law: No such thing as a free lunch?

The proposed new corruption Bill will tighten up the law on corporate hospitality.

SUPPOSE Company A, hoping to get business from Company B, arranges for B's managing director to attend an important football match as the guest of A's directors.

The match is preceded by drinks and lunch, during which (among other things) A's current and future activities are discussed. A clearly hopes that B's managing director will enjoy the event and be influenced by it.

Few people would consider this exercise in corporate entertaining corrupt. But where should the line be drawn between acceptable and unacceptable hospitality?

For the Law Commission, which last week published its recommendations and draft Bill to modernise the law of corruption, the answer lies in the intentions and expectations of those providing the hospitality.

If A had simply sent B's managing director a ticket for the match with its compliments, the Commission decided it would be "hard to resist" the inference that this was primarily, if not exclusively, a bribe.

But for a prosecution to succeed in the "lunch" scenario, it would have to prove that A thought that, if B's managing director did give it the contract, it would "probably be primarily" in return for the lunch and ticket and not as a result of a constructive discussion in congenial surroundings.

According to the Commission's report: "The practical effect, we believe, would be that corporate hospitality would be the subject of prosecution only where it would blatantly corrupt on any view."

Law commissioner Stephen Silber QC added: "Under our proposals, there would be nothing wrong with any amount of corporate hospitality if it was done with the consent of the principal - if the employer - and the employee involved did not perform a public function."

Some commentators have grumbled that while executive boxes at Wembley or Twickenham and hospitality tents at Wimbledon or Henley may outrage the true sports lover huddled in a rainswept seat, they are no places for law-makers.

But the Commission took the view that corruption struck at the root of commercial life and democracy itself and it was time to reform the existing "obscure, complex, inconsistent and insufficiently comprehensive" legislation covered by the Prevention of Corruption Acts 1889 to 1916 and the common law offence of bribery.

It also highlighted two other areas where the present laws were out of touch with modern society - in making a distinction between public-sector and private-sector corruption and in tackling international corruption.

It had reconsidered the distinction between public and private bodies in the light of the changing economic environment. It was unclear, for instance, how the present law would operate in relation to a privatised utility which still provided a public service but did so for the profit of its shareholders, who may include the Government.

The Commission concluded that the distinction should go. The question of whether there should be any distinction between the behaviour of a public servant and a private employee would be dealt with in sentencing.

Mr Silber said the Commission was also aware of international initiatives to combat corruption and so had recommended the law should apply to the corruption of foreign officials. This would catch attempts by UK companies or their agents to win contracts overseas by offering bribes.

Last summer, the Government declared "war on sleaze and corruption in all areas of public and private life", proposing a new single offence of corruption, covering both public and private sectors, with a maximum sentence of seven years.

The Home Office is now studying the Law Commission's report and, once it has the recommendations of the joint committee on parliamentary privilege on the position of MPs, it could produce new anti-corruption legislation into the next session of Parliament.

Tho Commission recommended four new offences, triable either in magistrates' or Crown courts. These would do away with the "illogicality" of existing legislation which meant that someone committed an offence by accepting a bribe, but not by acting in return for the bribe or by attempting to earn a reward.

Under the proposed offence of performing functions corruptly, it would be sufficient to prove that a person's conduct was motivated by the hope of a corrupt reward, whether or not one had been agreed.

The offences also introduced the concept of "an agent" - someone, such as a solicitor, accountant, employee or company director, who has agreed to act for another person. It also applied to someone acting for the public, ending the uncertainty over whether the law applied to police officers, judges, local councillors and employees of privatised industries.

The other new offences would be:

n Corruptly conferring, or offering or agreeing to confer an advantage;

n Corruptly obtaining, soliciting or agreeing to obtain an advantage; and

n Receipt by an agent of a benefit which consists of, or is derived from, an advantage, which the agent knows or believes to have been corruptly obtained.

Updating the law also meant defining the meaning of "corruptly", because existing case law was in "immense disarray". Their recommended definition was: "A person who confers an advantage should be regarded as doing so corruptly if he or she intends that an agent should do an act or make an omission and believes that, if the agent did so, it would probably be primarily in return for the advantage rather than for some legitimate reason".

Mr Silber said the consent of the agent's principal would be a defence. However, it, would not apply if the agent was pursuing a public function. For example, if a barrister was bribed to act in breach of his or her professional duty, the client's consent would be immaterial.

For Christopher Murray, president of the London Criminal Courts Solicitors' Association and head of criminal law at London solicitors Kingsley Napley, the definition was "too wordy and too confusing for a jury".

"Although the Commission has made a good shot at it, I cannot say I am terribly impressed with their definition. It is unworkable. How can a jury reach a conclusion something was "probably primarily" in return for an advantage. It imparts such a degree of uncertainty.

"I know the Commission was concerned about corporate hospitality but the difficulty with corruption is it requires a moral judgment and that, as with obscenity, is in the eye of the beholder."

George Staple, former head of the serious Fraud Office, is now back with his old law firm Clifford Chance as senior partner in charge of fraud and regulatory matters.

He said the SFO had considerable success in prosecution of corruption cases, such as the conviction of the former chairman of British Bus for paying a pounds 1million bribe. However, it would have been easier to prosecute others if there had been a clearer definition of "corruptly".

"I think the Commission has come up with as good a definition as you are going to get. But you will still have to think hard about a set of facts to decide which side of the line they fall."

Roy Amlot QC, chairman at the Criminal Bar Association, said the Commission's proposals appeared "very sensible and refreshing" and should cope with modern behaviour in a modern society. However, there would still be a major difficulty with corporate entertaining. "Nothing is going to alter that fact that it is bound to involve a big grey area. If you give somebody cash, there isn't a problem. If you give them a ticket to Wimbledon, that is understood as accepted corporate entertaining. But if you give someone an expensive holiday, is that a bribe? That has to be left to the jury to decide."

Legislating the Criminal Code: Corruption, Law Commission No 248, available from The Stationery Office pounds 16.35.