The biggest reforms to the law of bribery for more than a century will come under detailed scrutiny today as the government’s Bribery Bill begins its committee stage in the House of Lords.

You would expect a bill of this sort to criminalise both the person who pays a bribe and the person who accepts one. And so it does. But the Bribery Bill also makes it lawful for a very broad range of law enforcement agencies to provide or receive what would otherwise be improper financial inducements.

They include not just the police, prosecutors and bodies such as HM Revenue & Customs and the UK Borders Agency. Clause 12 would allow every environmental health officer and local authority trading standards officer in the land to go around handing out or accepting cash if they can prove, on the balance of probabilities, that this is necessary for the prevention, investigation or detection of ‘serious’ crime.

Officers from all the security and intelligence services would also be able to pay or receive bribes if they can show it was needed for the ‘proper exercise of any function’. So would all troops on active service.

The breadth of these exceptions to the new bribery law was spotted immediately by the House of Lords Constitution Committee, which published a short, sharp report on clause 12 last month. ‘Drawing the defence in terms as wide as this jeopardises the constitutional principle of the rule of law,’ the committee concluded.

Its report clearly benefits from the work of one of the committee’s newer members, the barrister and legal columnist Lord Pannick QC. He reported the committee’s concerns to peers at an early stage of the bill’s main debate in December.

Pannick pointed out that, under a previous draft of the bill, the intelligence services alone would have been allowed to pay or receive bribes – and then only if a senior minister was satisfied that this was necessary. That requirement had been dropped.

‘It is quite unacceptable for any intelligence officer of whatever rank, any employee of the CPS or any employee of a local authority carrying out law enforcement functions to be able to decide for themselves to carry out an act of bribery,’ the QC said.

For the government, Lord Bach suggested that bribes were sometimes needed to gain ‘intelligence critical to our national security or to ensure the safety of military, intelligence service or law enforcement personnel’.

This raises the age-old question of whether the end can ever justify the means. If you allow public officials to pay bribes in the hope of catching minor criminals, why not allow British companies to make payments in order to win valuable contracts against foreign competitors?

After all, the US permits what it calls ‘facilitation payments’. These must be modest in amount, affect the timing rather than the substance of a routine government action and are permitted only to prevent damage to an important commercial interest of the company or a risk to its employees. Examples are payments to foreign officials to speed up the issue of work papers, clear goods through customs and obtain police protection, phone lines or power.

We take a rather more subtle approach in England and Wales. It was summed up by Richard Alderman, director of the Serious Fraud Office, in a recent speech. ‘As a practical investigator and prosecutor with more cases to deal with than I have resources to devote to them,’ he said, ‘the possibility that I might prosecute for a one-off facilitation payment is remote. That does not mean I condone it or believe it to be anything other than unlawful. It simply means that I have more important things to do.’

One aspect of the Bribery Bill that particularly interests Alderman is that it makes businesses criminally liable for failing to prevent bribes being paid by people working for them. At the moment, it is very difficult to charge a large company with serious economic crime because of the need to prove a link between the ‘directing mind’ – at, or near, board level – and the hapless associate who has supposedly ‘taken it upon himself’ to hand over a brown envelope.

In the US, by contrast, companies may be prosecuted for economic crimes carried out for their benefit by their employees or agents. As a result, US companies are much more likely to implement fraud-prevention strategies.

Alderman sees some merit in strengthening the law of corporate criminal liability in England and Wales.

He is also attracted by the US idea of deferred prosecution agreements, under which companies may not be charged if they admit wrongdoing, implement reforms, facilitate the prosecution of individuals who were working for them and pay a civil penalty that could be several hundred million dollars.

Avoiding the stigma of a prosecution may also persuade US companies to report their own wrongdoing to the authorities – something the SFO director would like to be made compulsory in cases of serious economic crime in England and Wales. But some defence solicitors have accused Alderman of ‘Americanising’ the SFO. Jeremy Summers of Russell Jones & Walker pointed out last month that the US model works only because the carrot of leniency is backed by the stick of prosecution.

Certainly, Alderman must now demonstrate that he is not too scared – or too under-resourced – to bring criminal charges in appropriate cases. But if the government can take a pragmatic approach to bribery, the SFO can hardly be blamed for looking at more cost-effective ways of doing justice.