PREVENTION OF CORRUPTION BILL [H.L.] (Hansard, 2 April 1900)

§ LORD RUSSELL OF KILLOWEN
My Lords, this is practically the Bill which I introduced last year, and which, after some discussion, passed the Second Reading and through Committee of the whole House, with the exception that in its present form it gives effect to some suggestions made by, amongst others, the 920 noble and learned Lord on the Woolsack. The object of the Bill is to check, by making them criminal, a large number of inequitable and illegal secret payments. I do not propose, at this stage, to do more than formally move the Second Reading.

§ THE LORD CHANCELLOR (The Earl of HALSBURY)
I am sure none of us have any doubt that the object aimed at by this Bill is one which all must desire to see attained. The difficulty in such legislation, however, has always been that you might either do too much or too little. But if the noble and learned Lord should succeed in carrying the present Bill, he will suppress a practice which we must all recognise is injurious to society and the State, and he will be entitled to the gratitude of the country. So far as I am concerned, I will do all I can to help the noble and learned Lord in the matter, and I earnestly hope that he may succeed in solving a problem which, for many years, has sought a solution, but has never yet found it.

§ LORD JAMES OF HEREFORD
My Lords, although this Bill will, I am sure, pass with unanimity in your Lordships' House, I wish to say a few words in support of it. Some twenty-five years ago, in conjunction with the late Mr. Russell Gurney, I tried my hand at a Bill for the purpose of stopping the practice of giving illicit commissions. I must confess that our efforts were not successful, for it was pointed out to us that we had framed our Bill in such a way that anyone who gave a small sum to a railway porter was liable to imprisonment. I am pleased to observe that my noble and learned friend the Lord Chief Justice has surmounted those difficulties, and it seems to me that the Bill as framed will be sufficient and efficient for the purpose aimed at. Though my noble and learned friend, on the introduction of the Bill last year, made a full statement of the evils he sought to deal with, I am not quite sure that even now your Lordships, and, still less, the public, are aware of the great extent to which this evil system has been carried, or of its far-reaching effects. Some years ago a suit was instituted before the late Master of the Rolls, Sir George Jessel, by a large firm of merchants at Bombay, who com- 921 plained that their shipping agent in Lancashire had systematically charged them with a very large amount of commission which he had no right to charge. The merchants, for instance, would order certain printed calico. The white calico had to be bought, bleached, dyed, printed, packed in boxes, and shipped, and in every one of those processes, representing so many trades, the commission agent had received two invoices, one for the merchant abroad and the other, the real invoice, for the commission agent; and investigation showed that the transactions were so conducted as to make, in respect of one process, a difference of 70 per cent. in favour of the commission agent. With good consistency the commission agent also charged commission on the sum he had pocketed. In the course of the hearing Sir George Jessel inquired of the eminent counsel who appeared for the commission agent what was the answer to the charge; and the reply was that the practice was universal throughout the whole shipping trade in Lancashire, and was prevalent elsewhere. Sir George Jessel asked, "Are you about to prove that?" and counsel replied, "Yes, I have a mass of evidence. There are a large number of most respectable people in court to give evidence in proof that the practice is universal." Sir George Jessel said, "You can send those respectable people home; they have come to prove an iniquitous practice, and the sooner they leave the court the better." Judgment went in favour of the firm of merchants, but I have no doubt the practice was universal. There was another case in connection with a very large industrial and manufacturing business in the Midland counties, in which the cashier was charged with the embezzlement of several thousands of pounds. He admitted that he had not accounted for the money, but pleaded he had paid it away in commissions on behalf of the firm. When this was mentioned to the directors, who were prosecuting, they said it was nonsense, and that they had already allowed for the commissions. Books were produced showing that thousands upon thousands a year were paid away in commissions, and it was stated that the firm could seldom get contracts and could never secure the passing of their goods unless they paid these commissions to the people behind the scenes. This surely is a matter of great importance. The evil of the 922 system is not only that the money goes out of the pockets of persons who ought not to pay it into the pockets of those who ought not to receive it. That is not the extent of the evil. The whole practice is demoralising, and one of the consequences is that the person purchasing generally gets an inferior article. I will give your Lordships a concrete case. A submarine cable had to be laid. Tenders were advertised for, obtained, and opened, and the contractors whose tender was about to be accepted, and the amount of whose tender approximated to the real value of a good cable which would answer the requirements contained in the advertisement, were told by those behind the scenes that before the contract would be given to them they would have to pay commission amounting to some £100,000. What was the result? The contracting company were compelled to consider their shareholders. They could not make a profit if they paid this large sum of money in commissions, and so were compelled to deliver an inferior cable, which, in the course of a few months, frayed away, and when lifted was found to be so badly constructed that it could not properly be repaired, and the whole of the £600,000 which had been spent upon the undertaking was entirely lost. Surely evils like these are worthy of the attention of the Legislature. I do not know anyone more capable of dealing with this phase of commercial dishonesty than one who administers justice, and who constantly sees the evils that arise from the system. I sincerely congratulate the noble and learned Lord, the Lord Chief Justice, on the introduction of this Bill, and I trust that with the good aid of the noble and learned Lord on the Woolsack he may be able to carry into law this measure, which will tend to the destruction of an evil and disgraceful system.

§ LORD RUSSELL OF KILLOWER
My Lords, I am glad that the noble and learned Lord on the Woolsack and the noble and learned Lord who has just addressed the House find themselves able to give such cordial support to this Bill. The evils of the system of illicit secret commissions have been pointed out so frequently that I do not propose to trouble your Lordships now with any observations upon them. The matter could not have been more pithily stated than it was some time ago in the columns 923 of The Times newspaper. The Times published an article in reference to the correspondence on the matter which had appeared in its columns, in the course of which it said— First came solicitors accused of betraying the trust of their employers, and leaguing with third parties to divide fees to which they had no sort of just claim. Then followed bankers, auctioneers, architects, insurance agents, and accountants. There does not seem, in short, to be any end to the ramification of this canker, which has grown to such a height as to threaten the extinction of honest plain-dealing altogether, It may be traced, indeed, through a much wider ramification than the correspondence we have published has as yet disclosed, and through all shades of questionableness, from direct bribery of the most corrupt kind, such as that of the architect or engineer who receives douceurs from the contractors and tradesmen whom he is bound to overlook, to the more venial, but still not justifiable, gifts or 'discounts' or 'half commissions' which nominally unpaid agents, such as bankers, may receive from a broker. I am glad to be able to say that the public discussion of this question has already worked for the public advantage. I have received a great many communications from firms, notably from some in the printing trade, which was the theatre of some of the most pernicious of these practices, to the effect that they are binding themselves together so as by co-operation on their part to do away with the system. This Bill comes before your Lordships and before the public under circumstances which I venture to think are unique. It has been circulated more widely and has received a larger amount of what I may call representative support than any Bill I know of. I will only trouble your Lordships with two or three of the more important instances. The Association of Trade Protection Societies, representing seventy-four societies and comprising 34,000 members, passed a resolution unanimously expressing— the necessity for a great effort being made to attack, expose, and eradicate the pernicious system of illicit secret commissions. Another even more important resolution is the one passed by the Congress of Co-operative Societies, including a membership of one million and a half, representing a capital exceeding £20,000,000, and with a yearly turn-over in trade of nearly £70,000,000. The resolution was as follows— That this Congress expresses its strong approval of the principle of the Bill promoted by the Lord Chief Justice with the object of 924 bringing the practice of giving and taking secret and illicit commissions in trade and commerce under the Criminal Law, believing that such practices are seriously demoralising to individual character, injurious to industrial and commercial enterprise of every kind, and especially destructive and harmful to all forms of co-operation and to municipal and public bodies generally, and we trust that the means of putting the principle of the Bill in operation will be unrestricted. A similar resolution was passed by the Manchester Society of Chartered Accountants and by a public meeting held in Birmingham to consider the Bill; and those resolutions were passed not upon the general principle of the measure, but after they had had the opportunity of seeing and fully considering the Bill itself. The Association of Chambers of Commerce of the United Kingdom, representing ninety-three Chambers of Commerce, passed the following resolution during the last month— That this Association approves in principle of the Prevention of Corruption Bill introduced in the Session of 1899 by Lord Russell of Killowen, and trusts that, with such amendments as may be necessary on points of detail, the measure may pass into law during the present session. Only this morning, as I was coming down to your Lordships' House, I received a letter from a gentleman who does not wish his name to be made public, but whom I personally know, which I think is worth reading to your Lordships because it justifies the remark of the noble and learned Lord on the Woolsack that the ramifications of this system are almost infinite. My correspondent is in a large way of business as a carriage maker and seller, and is also a large buyer of horses. He writes— The custom of coach builders giving commissions to the servants of their customers is universal, and I know of no exceptions. The rate varies from 2½ to 5 per cent. on new carriages, and as much as 10 per cent. on repairs. It would be impossible for a coach-builder to continue his business in the present state of the law if he did not give commissions, owing to the fact that carriages require extraordinary care taken of them in the way of washing off the mud, etc., and if a coachman did not receive his commission he would not take that extra care of his carriage, and in six months the carriage would have suffered very greatly, and yet nothing could be proved against the coachman. The result would be a customer would have a damaged carriage and the coach builder's reputation would have suffered. With regard to horses, I have bought several hundreds and know something of the trade, and it is the usual practice for the coachman to receive 'the shillings' (as the 925 shilling in each guinea is called in the trade), and though I think in many cases the coachman does not ask for it, it is hard for him to refuse if the dealer offers it on condition of his master buying the horse. In the building trade commissions are paid to servants for repairs and decorations to houses, but not on a serious scale. It is within my own knowledge that the general practice amongst provision dealers is to give commissions to the servants; and I know of a cook who was approached by a provision dealer with a bribe to actually spoil in the cooking the provisions supplied by a rival firm, and when the cook refused she was approached a second time, and then she informed her master of the circumstances. I hope I shall have the benefit of the advice of the noble and learned Lord on the Woolsack as to the best way of dealing with this Bill, in order to secure its passing into law at as early a period as possible.