The Irish Minister for Justice and Equality, Mr Alan Shatter, today published the Draft Scheme of the Criminal Justice (Corruption) Bill 2012, 123 years after the enactment of the statute that is the basis of our current law – the Public Bodies Corrupt Practices Act 1889.
In so doing the Minister has lost no time in including measures recommended by the Mahon Tribunal report, published just under 3 months ago.
What are the highlights?
No more hiding behind agents and companies
- Bribery and corrupt practices by employees and agents of a company are to be automatically imputed to the company.
- Companies must "take all reasonable steps" and "exercise all due diligence" to avoid criminal liability.
- Directors and managers who "wilfully neglect" the commission of an offence will be criminally liable.
Persons in high office come under the microscope
- Where a public official maintains a standard of living "above that commensurate with official remuneration" or has control of a disproportionate amount of property, then there will be a presumption that the public official is living off bribes.
- Intimidation of a public official is to be an offence, if motivated by a wish to corrupt the decision of the public official.
Trading in influence is outlawed
- Employing an intermediary to bribe or corrupt a public official is to be expressly outlawed, meaning no more turning a blind eye to what one's agents are up to.
Disclosure of confidential information is outlawed
- Disclosure by a public official of confidential information for gain is outlawed. A little like tipping off in the case of insider dealing on a stock market, an official tipping off a property developer of development plans and proposals will be criminalised.
Punishments for bribery are widened
- Unlimited fines now apply for all bribery and corruption offences under the Act.
- The holder of a public office will be subject to removal from that office – including elected office – and barring from office for 10 years.
- Pensions cannot be forfeited (due to a Supreme Court decision on the constitutional right to property) but the possibility of unlimited fines provides scope to achieve the same economic effect.
The draft legislation also provides for good-faith disclosures or whistleblowing, but these appear likely to be subsumed into the Protected Disclosures in the Public Interest Bill, when it is finalised.
What does it mean for business?
In summary it will mean two things: first, a need to design and operate proportionate structures and procedures to prevent corruption. Second, it will mean considerable challenges for companies with overseas activities.
"All reasonable steps"
The proposed new law will require companies to "take all reasonable steps" and "exercise all due diligence" to prevent bribery, corrupt practices and related unlawful behaviour by:
- officers and managers
- directors and secretaries
The point to emphasise is that the bribery and corrupt practices to be prevented by these steps may occur anywhere in the world. So an Irish company with foreign subsidiaries will now have a responsibility to ensure that ethical behaviour permeates the entire organisation.
This implements a key recommendation of the Mahon Report, mirroring comparable law introduced in the United Kingdom in 2010, which requires commercial organisations to have what the UK law calls "adequate procedures" in order to prevent bribery by the employees of commercial organisations.
What "all reasonable steps" will mean will boil down to a matter of common sense. Under the proposals, a company will need to take anti-bribery precautions that are proportionate to the risks of bribery occurring within the particular organisation. The risk differential will mean, to take an exaggerated example, that a high-street dry-cleaning company can consider that there is no risk, but a road-building company operating in a third-world dictatorship will require an altogether different set of procedures.
The overseas challenge
The big challenge will be the thick grey line that can exist between courtesy, good manners and hospitality to one's hosts in a faraway country and outright graft.
The draft of the proposed Irish law is aligned with that of the UK in not allowing for facilitation of "grease" payments. The USA's Foreign Corrupt Practices Act does allow for perhaps more local "culture" than does the UK. Ireland as an exporting country may be drawn more to the US rather than to the UK model in this area, and the ultimate shape of the law may reflect this.
A better place?
The proposed new law is part of a quartet of laws that will update Irish law to best-in-class standard, the other three being the proposed law on whistleblowing (the Protected Disclosures in the Public Interest Bill), the proposed law on lobbyists and the general consolidation and reform of company law.
Laws of themselves do not change cultures. That said, the unfolding of the facts in the various tribunal reports and a general international tightening up of anti-corruption and related legislation is making it a colder place for corrupt practices.
Central to a change in culture is removing the sense that "everyone's doing it" and the perception of intimidation that some public officials can suffer, particularly in relation to the activities of their masters. The combined effect of this proposed new law and the Protected Disclosures in the Public Interest Bill will be to make it easier for the honest to come forward and to uncover corrupt practices and bribery.
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