ANTI-BRIBERY AND CORRUPTION REVIEW JUNE 2018 CONTENTS Global contacts 3 World Map 4 Foreword 6 Europe, the Middle East and Africa 7 Belgium 8 Czech Republic 11 France 13 Germany 15 Italy 20 Luxembourg 22 Poland 23 Romania 25 Russia 28 Slovak Republic 31 Spain 32 The Netherlands 34 Turkey 36 Ukraine 38 United Arab Emirates 40 United Kingdom 41 The Americas 44 Brazil 45 United States of America 47 Asia Pacific 50 Australia 51 Hong Kong 53 Japan 56 People’s Republic of China 57 Singapore 58 Thailand 62 ANTI-BRIBERY AND CORRUPTION REVIEW
GLOBAL CONTACTS
EUROPE, THE MIDDLE EAST AND AFRICA Ukraine3 Belgium Sergiy Gryshko +380 44 390 22 19 Sébastien Ryelandt +32 2533 5988 United Arab Emirates Dorothée Vermeiren +32 2533 5063 James Abbott +971 4503 2608 Yana Paulovich +32 2533 5038 Jack Hardman +971 4503 2712 Czech Republic Connor Partos +971 4503 2664 Jan Dobrý +420 22255 5252 United Kingdom France Roger Best +44 20 7006 1640 Thomas Baudesson +33 14405 5443 Luke Tolaini +44 20 7006 4666 Charles-Henri Boeringer +33 14405 2464 Patricia Barratt +44 20 7006 8853 Marc Bailly +33 14405 5312 Zoe Osborne +44 20 7006 8293 Germany Heiner Hugger +49 697199 1283 THE AMERICAS David Pasewaldt +49 697199 1453 Brazil Gerson Raiser +49 697199 1450 Patrick Jackson +55 11 3019 6017 Italy Fernando Zanzarini +55 11 3019 6098 Antonio Golino +39 028063 4509 United States of America Jean-Paule Castagno +39 028063 4317 David DiBari +1 202912 5098 Pasquale Grella +39 028063 4289 Megan Gordon +1 202912 5021 Luxembourg Catherine Ennis +1 202912 5009 Albert Moro +352 485050 204 Olivier Poelmans +352 485050 421 ASIA PACIFIC Morocco Australia Mustapha Mourahib +212 52264 4310 Tim Grave +61 28922 8028 Poland Jenni Hill +61 89262 5582 Marcin Cieminski +48 22429 9515 Kirsten Scott +61 89262 5517 Pawel Pogorzelski +48 22429 9508 Lara Gotti +61 89262 5518 Romania Hong Kong Daniel Badea +40 216666 101 Wendy Wysong +852 2826 3460 Bianca Alecu +40 216666 127 Nigel Sharman +852 2825 8839 Nicholas Turner +852 2825 8854 Russia Feifei Yu +852 2825 8091 Timur Aitkulov +7 495725 6415 Olga Semushina +7 495725 6418 Japan Peter Coney +81 36632 6646 Saudi Arabia Masayuki Okamoto +81 36632 6665 Khalid Al-Abdulkareem +966 11481 9740 People’s Republic of China Slovak Republic1 Wendy Wysong +852 2826 3460 Alex Cook +420 22255 5212 Lei Shi +852 2826 3547 Stanislav Holec +420 22255 5251 Feifei Yu +852 2825 8091 Spain Singapore4 Sonia Trendafilova +34 91590 4172 Kabir Singh +65 6410 2273 Carlos Zabala +34 91590 7515 Janice Goh +65 6661 2021 The Netherlands Lijun Chui +65 6506 2752 Jeroen Ouwehand +31 20711 9130 Wan Yi Ho +65 6410 2275 Frans Muller +31 20711 9318 Thailand5 Guido Bergervoet +31 20711 9534 Jutharat Anuktanakul +662 266 6485 Ext. 148 Turkey2 Pranat Laohapairoj +662 266 6485 Ext. 148 Mete Yegin +90 212339 0012 Suphakorn Chueabunchai +662 266 6485 Ext. 145 Jared Grubb +90 212339 0007 Itir Çiftçi +90 212339 0077 Deniz Göçük +90 212339 0070 Seda Işınman +90 212339 0074
1 Contributed by lawyers from our Czech Republic office. 2 Contributed by Yegin Ciftci Attorney Partnership, our associated firm in Turkey. 3 Contributed by Redcliffe Partners, with whom Clifford Chance has a best friends relationship. 4 Contributed by Cavenagh Law LLP, our Formal Law Alliance partner in Singapore. 5 Contributed by Chandler MHM Limited.
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WORLD MAP
Please click on the country name on the interactive map below to take you directly to the relevant chapter.
CZECH REPUBLIC
GERMANY
THE NETHERLANDS UNITED KINGDOM BELGIUM FRANCE UNITED STATES OF AMERICA SPAIN
LUXEMBOURG
ITALY
BRAZIL
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RUSSIA
CZECH POLAND REPUBLIC SLOVAK REPUBLIC
GERMANY
UKRAINE
ROMANIA PEOPLE’S REPUBLIC OF CHINA
TURKEY JAPAN
HONG KONG ITALY THAILAND UNITED ARAB EMIRATES
SINGAPORE
AUSTRALIA
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FOREWORD
Fighting bribery and corruption continues to be high on the agenda for both legislators and enforcement authorities all over the world, with further measures to encourage the reporting of corruption offences, to stem corruption in public procurement and to impose liability for corruption offences on companies.
Germany has introduced a new law to implement a nation-wide central competition register specifically covering corruption-related offences, while the People’s Republic of China has introduced stricter rules on commercial bribery. The Australian legislator presented a draft Bill that proposes further strengthening of the criminal offence of bribing foreign public officials, while both Russia and Spain have acted to tighten rules on bribery in public procurement.
Italy has adopted new legislation to facilitate whistleblowing and, at the same time, the US and France have both introduced new incentives for companies to disclose corruption offences voluntarily and to cooperate with prosecutors during investigations, while Japan is proposing to implement a similar regime.
The theme of corporate criminal liability is also a focus for governments with new initiatives in Australia, Germany and Poland. Meanwhile, the UK Government’s Anti-Corruption Strategy 2017 – 2022 includes interim freezing orders designed to improve recovery of assets obtained through bribery or corruption.
It remains important for international companies to keep up with these developments in the jurisdictions in which they operate and to keep their compliance programmes up-to-date to address risks to their business.
Patricia Barratt and David Pasewaldt, Editors
Patricia Barratt David Pasewaldt Director of Anti‑Bribery Counsel Compliance Frankfurt London T: +49 697199 1453 T: +44 20 7006 8853 E: david.pasewaldt@ E: patricia.barratt@ cliffordchance.com cliffordchance.com
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BELGIUM
Changes to legislation Belgian national of Kazakh origin to avoid with searches at the Justice of the prosecution. It is also alleged that the Peace’s offices and in the judge’s private In response to a preliminary reference, former French president, Mr Sarkozy, apartment in 2014, the investigation was the Belgian Constitutional Court recently pushed for the adoption of the new law. completed and, according to the press, clarified that, although the Belgian legal The facts date back to 2011. a hearing was set for 30 March 2018 provisions on active bribery formally only before the Court of Appeal of Ghent. incriminate the act of ‘proposing’ an Last year, investigative measures against The outcome of the proceedings is as advantage, it has always been the intent a magistrate involved in the negotiation of yet unknown. of the legislator to also render punishable the criminal settlement with the Belgian the actual ‘giving’ of the advantage. This national were initiated. It is alleged that decision settles the doubts which were Enforcement trends this magistrate obtained a gift of favour to raised by the OECD Working Group in Generally speaking, there have been few a non-profit organisation he is in charge 2005 on this point. enforcement cases in Belgium and there of in exchange for the conclusion of the is very little case law. Recent years have criminal settlement agreement. The Belgian Court of Cassation seen even less activity due to relocations furthermore clarified in a recent judgment of staff and budget cuts in the judiciary. The former president of the Belgian that the offence of trading in influence is The lack of resources has led to long Senate and member of the Brussels’ a form of bribery which aims at the delays in the treatment of cases, the Parliament, who is also a lawyer at the exercise by the bribed person of influence expiry of the statute of limitations in some Brussels bar, was recently indicted for to obtain the omission or performance of instances (especially international bribery trading in influence in connection with an act by a public authority or cases) and a lack of prosecution or the charges that he (allegedly) pushed for the administration, and not at the actual closing of cases. adoption of the new law. While there have omission or performance of the act by been several indictments in France, this is that authority or administration. The According to the latest statistics published the first indictment in Belgium. It is alleged request for the use of influence must be by the Belgian Service for Criminal Policy, that the indicted received EUR 740,000 in addressed to a public official, as there were four convictions for private exchange for his “services”. He was asked determined based on the function which sector corruption and ten convictions for by his political party to resign from all his that person exercises (and not his/her public sector bribery in 20161. No mandates and decided to leave the party. qualification). Whilst the request for the distinction is made between foreign use of the public official’s influence must bribery and domestic bribery. Kazakhgate has led to the creation of a furthermore be addressed to him/her in parliamentary investigation commission, the execution of his/her public mandate, In addition, the records of the Belgian which is currently actively investigating the envisaged, actual or alleged, Financial Intelligence Processing Unit this matter. influence, can exceed the scope thereof. (Cellule de Traitement des Informations Financières/Cel voor Financiële Another noteworthy prosecution is that of Informatieverwerking, or CTIF-CFI), which Prosecutions and a Justice of the Peace (the lowest judicial processes suspicious financial civil instance in Belgium) from Oostende enforcement actions transactions related to money laundering who has been accused of forgery, theft In terms of enforcement actions and and terrorist financing, show that in 2016 from vulnerable persons, passive bribery, prosecutions, several Belgian nationals it reported six cases of embezzlement conflict of interest and money laundering. have become implicated in the so-called and corruption to the judicial authorities, Throughout many years, the judge “Kazakhgate” scandal involving the representing a total amount of concerned allegedly abused vulnerable (suspiciously) expeditious passing of a Bill EUR 658.99 million, while it reported elderly people while supervising their in Parliament to extend the possibilities eight cases in 2015, representing a total provisional administration. After a three- for settlement in criminal cases. It is said amount of EUR 23.3 million. that the law was adopted to allow a year judicial inquiry, which commenced
1 No figures are available for 2017. However, the latest OECD report for Belgium (discussed further below) notes that at least nine investigations into foreign bribery are currently ongoing which, according to the Belgian Government, shows that Belgium is far from closing cases with no action taken. Several investigations (one in 2016 and 2017) appear to have been opened on the basis of information shared by diplomatic missions about Belgian companies with overseas operations.
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The files that CTIF-CFI reported to judicial Evaluation Report. While certain authorities to authorise, at their earliest authorities mainly concern instances of legislative proposals with various convenience, the publication of this bribery of public officials and, to a lesser initiatives (such as the creation of report, which has been done. extent, private sector bribery. The lobbyists’ registers, introduction of more individuals concerned are generally gradual penalties and publication of the OECD Report politically exposed persons, mainly lists of mandates held by Members of By way of a follow-up to its Phase 3 foreign nationals and/or individuals Parliament together with their report of February 2016, the Organisation residing abroad, or public officials or remuneration) were submitted to, and for Economic Cooperation and individuals working in the private sector. adopted by, the Chamber of Development (OECD) published a report Representatives on 1 March 2018, on 12 January 2018 with an update of In the files reported to the judicial others are still pending, and all these its assessment of the structures put in authorities, CTIF-CFI discovered that initiatives still need to be further place by Belgium to enforce the laws there were significant financial flows elaborated and executed. and rules implementing the OECD relating to assets bequeathed to heirs by Convention on Combating Bribery of persons suspected of corruption. The With regard to judges and prosecutors, Foreign Public Officials in International assets, which were held with several GRECO states that likewise slow and Business Transactions. banks in neighbouring countries, were limited progress has been made in this repatriated to Belgium by way of transfers area. While a draft amendment to the In its February 2016 report, the OECD to accounts held by the heirs and Belgian Judicial Code has been Working Group recommended to the opened specifically for these operations circulated, GRECO considers that this Belgian Government, with respect to with banks in Belgium. draft is not sufficient to cater for all investigations and prosecutions of foreign pending matters. Hence, additional steps bribery cases, that it urgently make Other developments are required for nearly all available adequate human and material recommendations, in particular: adoption GRECO report resources to the judicial and law of rules concerning the integrity of the enforcement authorities so that they can On 23 March 2018, the Group of States judiciary, an effective supervisory and effectively investigate, prosecute and against Corruption (GRECO) published a disciplinary system for substitute judges adjudicate foreign bribery cases. report evaluating Belgium’s implementation and an evaluation of the arrangements of the recommendations in GRECO’s for assigning cases between judges. The January OECD report notes that, in Fourth Round Evaluation Report dated order to prevent any more major tax 28 August 2014 on the prevention of In light of the foregoing, GRECO cases running out of time due to a lack of corruption in respect of Members of considers that the measures taken by the specialised knowledge, Belgium Parliament, judges and prosecutors. Belgian authorities to implement its increased its number of specialised tax recommendations are very limited and prosecutors from 15 to 30. These GRECO concludes that Belgium has not concludes that the currently very low level prosecutors engage in the fight against satisfactorily implemented or dealt of compliance with these organised economic and financial satisfactorily with fourteen out of the fifteen recommendations remains globally offences, which includes the fight against recommendations contained in the 2014 insufficient. It has explicitly drawn the bribery and fraud. Further, an additional Evaluation Report. One recommendation attention of the head of the Belgian recruitment process has been initiated for has been satisfactory implemented, delegation to non-compliance with the the Federal Criminal Police in order to while seven recommendations have been relevant recommendations and the need increase the number of investigators partly implemented and seven have still for determined action to achieve concrete working for the Central Office for the not been implemented. progress as soon as possible. Repression of Corruption. Lastly, the number of officials from tax In particular, as far as Members of GRECO requested the Belgian delegation administrations seconded to the Parliament are concerned, GRECO to submit a report on progress in prosecutors’ offices was increased from expresses its regret that there is little implementing the outstanding 18 to (currently) 33. These officials are progress in reforming this area almost recommendations by 31 March 2019 at granted the status of judicial police officer four years after the adoption of the the latest. It has also invited the Belgian and work on bribery and fraud matters.
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As for the urgent recommendation of the In July 2017, the Law on the surveillance In the wake of the data leaks in 2016 OECD for the Belgian Government to of the financial sector and financial exposing offshore dealings and take measures to extend the possibilities services was amended and Article 69bis widespread tax evasion (the so-called for suspending the limitation period to was introduced, which requests the Panama Papers), a special commission allow adequate time for investigating and financial services and markets watchdog, established by Parliament inter alia prosecuting foreign bribery, the Belgian the Financial Services and Markets formulated a recommendation to develop State considers that there are already Authority (FSMA), to set up effective a general framework for the protection of many different possibilities for suspending mechanisms which would allow and whistleblowers in the private and the the limitation period under Belgian law, encourage people active in the financial public sector. Various working groups each “suspensive act” resulting in an sector to report any (alleged) violations of have subsequently been set up within the extension of the limitation period. The financial law. Bona fide whistleblowers in federal public services for Foreign Affairs issue of the limitation period is also that sector are now officially protected and Finance to examine the current state being dealt with by the working group from any civil, criminal or disciplinary of whistleblower protection, both on the reform of the Code of action, any (professional) retaliation, nationally and internationally. Criminal Procedure. discrimination and other forms of unfair treatment for reporting an infringement. BACK TO MAP With respect to reporting acts of bribery, Specific protective measures have been the OECD Working Group recommended implemented for employees, following that Belgium should take appropriate which an employee has the right to be measures to protect public and private re-employed by his employer if he was sector employees who report (actual or fired because of making an infringement potential) acts of foreign bribery to the notification, and if not, he can claim competent authorities (known as indemnification and be assisted by the whistleblowers) from any discriminatory FSMA in all further proceedings. Any or disciplinary action. The most recent contractual provision under which the report indicates that Belgium has taken employee waives all these rights is null several actions to follow-up on this and void. Additionally, a contact point for recommendation and to offer better whistleblowers has been created on the protection to specific categories FSMA’s website. of whistleblowers.
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CZECH REPUBLIC
Changes to legislation In July 2017, the Register of Contracts organisation of the Public Prosecutor’s Act was amended to include more Office, was rejected by the Czech Transparency and combating corruption exceptions to the requirement for Parliament after criticism from the remained key political topics in 2017, as contracts to be published. The most Committee on Constitutional and reflected in numerous legislative controversial exception from the Legal Affairs. amendments, although some of these obligation to publicize contracts is the changes are not aimed at increasing rule excluding contracts made within a transparency, but rather at decreasing Prosecutions and competitive environment. As the the allegedly negative effects of enforcement actions exception relies on proper interpretation such measures. of the rule on a case-to-case basis, the The currently most closely followed sanction of nullification of a contract has prosecution relates to a potential misuse The Conflict of Interest Act (Act No. been softened to some extent. If a of European grants in relation to the 159/2006 Coll.), aimed at preventing contract has not been published in good rebuilding of a local farm, as this case conflicts of interests of public officials in faith that the exception applies to it, the involves the prosecution of the current relation to their business or personal contract may be published within an Prime Minister, Mr Andrej Babiš. The activities, has been amended several additional 30 days after the subject case was investigated by the European times during the past year. Further obliged to publish the contract finds out Anti-Fraud Office (OLAF), an authority amendments have been proposed to that the exception does not apply. investigating fraud against the EU mitigate the effects of the requirements budget, corruption and serious on public exposure of assets owned by In December 2017, the Constitutional misconduct within the European regional politicians since, apparently, the Court of the Czech Republic repealed institutions. OLAF concluded that the present regulation may discourage some of the provisions in the highly case may have involved a potential fraud candidates in the regional elections controversial Electronic Registration of and referred the case to the national this year. Sales Act (Act No. 112/2016 Coll,), which authorities. On 4 May 2018, the regional places an obligation on all sellers and authority dealing with EU grants invited Since 1 July 2017, sanctions may be service providers (with some exceptions) the current direct owner to return the imposed for a failure to publish contracts to report information on all sales grant voluntarily in 30 days. While related made between public organisations and generating cash revenues to the local criminal proceedings against several private businesses. This obligation stems financial administration body, and suspects have been cancelled, the from the Register of Contracts Act stopped the third and fourth stages of prosecution against the current Prime (Act No. 340/2015 Sb.), which came into implementation of this Act. These stages Minister is, however, still pending. effect in July 2017. This Act requires all were to include registration of the sales of contracts with public entities (widely farm markets, food stands, attorneys and A decision is expected to be issued in defined) to be disclosed in the Register of doctors. The amendment to this Act, June 2018 in relation to the case of a Contracts. Such contracts only become which should reflect the decision of the Member of Parliament, Mr David Rath, effective after they have been disclosed; Constitutional Court, is currently being sentenced to eight and half years in the main sanction for a breach of this discussed and drafted. prison in 2015 in one of the most requirement is that contracts that have high‑profile, current corruption-related not been disclosed within three months The draft Public Prosecution Act, cases. The first instance decision was of having been signed, are invalid and prepared by the Ministry of Justice, which successfully appealed in 2016 on the deemed never to have been made2. proposed significant changes to the basis that illegal wiretappings formed the
2 More details can be found in the Clifford Chance Briefing Note Register of Contracts – Penalties for failure to disclose a contract in the Register of Contracts file:///C:/ Users/003532/Downloads/Cliifford_Chance_Client_Briefing___Register_of_Contracts___Penalties_for_failure_to_disclose_a_contract_in_the_Register_of_ Contracts_6036036.pdf .
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main evidence in the case; the Supreme accused of corruption and bribery, very authority have, however, been overruled Court of the Czech Republic overruled few of these prosecutions have resulted by courts within the court review of the this second instance decision and the in final sentences to date. While fighting administrative decisions and the tax case was referred back to the first corruption has been one of the stated authority has been widely criticised for instance court for further proceedings. priorities of the leading political party, the applying disproportionate measures. The final oral hearing took place in fact that their leader, the current Prime March 2018. Minister, is himself being prosecuted on BACK TO MAP corruption-related charges, has brought Enforcement trends the party’s anti-corruption commitment into question. Although there has been a significant increase in high-profile corruption There has been continued focus on investigations during the last few years combating tax fraud in 2017/early 2018. and a number of high-profile politicians, Several of the decisions taken by the tax lobbyists and business leaders have been
12 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
FRANCE
Changes to legislation charter setting out the rights and duties In February 2018, the Agency published of the Agency and the companies subject an exhaustive list of the RFI’s questions. Following the 2016 changes to criminal to its control regime. The list includes 163 questions, divided anti-corruption legislation by the Sapin II into 11 sections including: Statute3, there have been no noteworthy The charter describes the framework of changes to French legislation. • The commitment of the management control regime as follows: against corruption; However, recent months have seen a • The Agency informs the targeted entity • The code of conduct elaborated by number of interesting developments that it is subject to an inspection; the company; regarding the implementation of the • The Agency issues Requests For Convention judiciaire d’intérêt public • The risk mapping of corruption risks Information (RFIs); (judicial agreement of public interest or elaborated by the company; CJIP, a French equivalent of a DPA • The Agency sets up an on-site review; • Third party evaluations of clients, first- introduced by the Sapin II Statute4) and • Following the on-site review and tier suppliers and intermediaries; the practice of the new administrative assessment of the various answers to agency tasked with monitoring the • Training of employees regarding anti- the RFIs, the Agency issues a Report compliance of French companies with corruption matters; (rapport de contrôle) which includes, if the new obligations set forth by relevant, observations, • Possible disciplinary actions within the the Sapin II Statute (the Agence recommendations, and/or deficiencies entity; and française anticorruption or French (manquements) on the effectiveness of anti‑corruption agency). • The various level of controls (including the entity’s compliance programme; accounting controls) and evaluation of CJIP • Following the Report, the controlled the anti-corruption plan. On 31 January 2018, the Ministry of entity has two months to send its Justice issued an administrative circular written observations in response to the The Agency has been very active since it which set forth the first guidelines for the Report and may ask for a meeting with was set up and it has already inspected implementation of the CJIP. These the team within the Agency in charge several major companies, including guidelines clarify when and how a CJIP of the inspection. The purpose of such international firms. It has publicly stated can be initiated as well as how to meeting is to address and clarify the that the frequency of its inspections will determine the amount of the fine. In Report (if necessary) and confirm the increase over the year 2018. particular, the guidelines indicate that the main points of concern; level of cooperation offered by the • At the end of the two-month period, Prosecutions and company should be taken into the Agency may update its Report to enforcement actions consideration by the Prosecutor when he reflect the entity’s written observations. In June 2017, an investigation was decides the amount of the fine. If deficiencies remain, the Director of opened into a leading manufacturer of the Agency may refer the case to the building materials suspected of financing First inspections of the Agence Agency’s Commission of Sanctions. terrorism. More precisely, the company is française anticorruption After an investigation, the Commission suspected of payments to armed groups The Agence française anticorruption of Sanctions may impose a fine of up in order to secure and maintain the (the Agency) was created by a decree to a maximum of EUR 1,000,000 for activity of one of its plants located in issued on 14 March 2017. In the course legal persons. Syria. The company launched an internal of October 2017, the Agency published a
3 For further details, please visit the French section of our Anti-Bribery and Corruption Review 2017 (pages 12 and 13) at https://www.cliffordchance.com/briefings/2017/05/anti-bribery_andcorruptionreview-june2017.html. 4 For further details, please visit the French section of our Anti-Bribery and Corruption Review 2017 (pages 12 and 13) at https://www.cliffordchance.com/briefings/2017/05/anti-bribery_andcorruptionreview-june2017.html.
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investigation and issued a statement foreign jurisdiction. More precisely, the Enforcement trends recognizing part of the facts. As of today, defence used the double jeopardy The past year was marked by the very eight executives have already been principle of Article 14(7) of the first CJIPs. On 14 November 2017, the indicted. The company is also expected International Covenant on Civil and Swiss branch of an international bank to be indicted. Political Rights to argue that it could not agreed to pay EUR 300,000,000 to avoid be tried again in France for the same trial in a matter in relation to illegal In January 2018, a claim lodged by offence it pleaded guilty to in the United banking solicitation and aggravated Anticor (an approved association aiming States. However, the French Supreme money laundering of tax fraud. at fighting corruption) was denied in a Court disagreed, holding that Article 14(7) case involving allegations that a system was not applicable to probes and On 23 February 2018, two companies of false invoices allowed a presidential convictions of foreign sovereign powers. active in the decontamination sector candidate to omit expenses provided by In the same decision, the French and in the construction sector agreed the candidate’s party from the capped Supreme Court gave a rather broad to pay fines of EUR 800,000 and campaign expenses. The French interpretation of article 121-2 of the EUR 2,710,000 respectively. Supreme Court (Cour de cassation) French Criminal Code saying that a noted that despite the nature of the company can be criminally liable for The number of CJIPs is likely to increase facts, none of the specific offences for conduct committed by its corporate by the end of the year. which Anticor may lodge claims were bodies or representatives. In this matter, prosecuted and therefore denied the Supreme Court found that the BACK TO MAP the claim. decision, by its very nature, involving corruption risks, was necessarily taken at In March 2018, the French Supreme senior management level and could Court found that double jeopardy should therefore attract criminal liability for not be a factor in the prosecution, in the company. France, of a company already tried by a
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GERMANY
Changes to legislation other illegal business practises and at “corruption registers”, there has been no facilitating fair competition by listing such register at federal level. Following the legislative measures companies that have engaged in Furthermore, the existing nation-wide significantly strengthening criminal relevant activities and, thereby, enabling central commercial register anti‑corruption legislation in both the public sector customers to screen their (Gewerbezentralregister) lists only some public sector and the private sector5 as potential contractors and to exclude of the relevant offences, but, for instance, well as in the healthcare sector and the “unfair” companies from public does not contain convictions for sports sector6, which were implemented procurement processes. corruption offences. in the time period from 2014 until the first half of 2017, there have been no The implementation of the central Against that background, the purpose of further material changes to criminal competition register has to be seen, the new nation-wide central competition anti‑corruption law. However, the German in particular, in the context of legislative register, which can only be accessed by legislator has adopted a new law to reforms to German public procurement public sector customers, is to simplify the establish a nation-wide central law in 2016. Under provisions assessment by public sector customers competition register covering, in implemented at that time (sections 123 by providing relevant information on particular, corruption-related offences. et seq. of the German Act against corrupt or illegal activities at companies Furthermore, there are current initiatives Restraints of Competition [Gesetz gegen in one single register. Consequently, aiming to reform the German law on Wettbewerbsbeschränkungen]) public the new law sets out, in particular, corporate penalties and to implement sector customers may, or in some the following: protection for whistleblowers. cases, must, exclude companies from • companies are listed in the central public procurement procedures in cases German Law on the Establishment competition register following final where managers of the company have of a Competition Register and the convictions of senior managers for committed certain criminal or Amendment of the Act against certain criminal or administrative administrative offences, or where the Restraints of Competition offences committed while acting for the company itself has been subject to a companies or following final impositions On 29 July 2017, the Law on the corporate administrative fine of corporate administrative fines on the Establishment of a Competition Register (Unternehmensgeldbuße) based on such companies based on such criminal or and the Amendment of the Act against offences. This applies, in particular, to administrative offences; Restraints of Competition (Gesetz zur the corruption offences in both the Einführung eines Wettbewerbsregisters public sector and the private sector. • companies are listed in the central und zur Änderung des Gesetzes gegen competition register for a variety of Wettbewerbsbeschränkungen) came into Up to now, in practice, it has been criminal and administrative offences, in force. This law provides for the difficult for public sector customers to particular, for convictions for (i) taking implementation of a nation-wide central ascertain whether there has been such and giving bribes in commercial competition register maintained by the misconduct at the potential contracting practice (section 299 German Criminal German Federal Cartel Office companies: although several German Code [Strafgesetzbuch, StGB]), (Bundeskartellamt). The central Federal States (Bundesländer) have been (ii) taking and giving bribes in the competition register, which is currently maintaining so called “competition healthcare sector (section 299a and intended to be technically implemented registers”, “procurement registers” or 299b StGB), (iii) bribing delegates by 2020, aims at fighting corrupt and
5 Under the German Law on Expansion of the Criminal Offence of Bribing Delegates (Achtundvierzigstes Strafrechtsänderungsgesetz – Erweiterung des Straftatbestandes der Abgeordnetenbestechung) of 23 April 2014 and the German Law on Fighting Corruption (Gesetz zur Bekämpfung der Korruption) of 20 November 2015. For further details, please visit the German section of our Anti-Bribery and Corruption Review 2015 (pages 11 et seqq.) at https://www.cliffordchance.com/briefings/2015/07/anti- bribery_andcorruptionreview-july2015.html and the German section of our Anti-Bribery and Corruption Review 2016 (pages 12 et seqq.) at https://www.cliffordchance. com/briefings/2016/05/anti-bribery_andcorruptionreview-may20160.html. 6 Under the German Law on Fighting Corruption in the Healthcare Sector (Gesetz zur Bekämpfung von Korruption im Gesundheitswesen) of 30 May 2016 and the German Law on Combating Betting Fraud and Manipulation in the Sports Sector (Einundfünfzigstes Gesetz zur Änderung des Strafgesetzbuches – Strafbarkeit von Sportwettenbetrug und der Manipulation von berufssportlichen Wettbewerben) of 11 April 2017. For further details, please visit the German section of our Anti-Bribery and Corruption Review 2017 (pages 14 et seqq.) at https://www.cliffordchance.com/briefings/2017/05/anti-bribery_andcorruptionreview-june2017.html.
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(section 108e StGB), (iv) granting illegal managers (Leitungspersonen), which can • introduction of “new punitive benefits to public officials (section 333 generally amount to up to EUR 10 million instruments”, including a public StGB) and granting bribes to public for each individual case or more than this announcement of imposed officials (section 334 StGB); amount if necessary to siphon off a corporate penalties; higher economic profit. A determination • public sector customers are required to • implementation of specific rules and of corporate administrative fines on the consult the central competition register requirements for a termination of basis of a company’s annual revenue is if the value of the contract that is investigation proceedings without currently only stipulated for violations in supposed to be awarded meets corporate penalties; and certain areas of the law (antitrust law, certain thresholds; capital market law, anti-money laundering • implementation of incentives for • companies must, under certain law and data protection law) but, in corporates to cooperate with circumstances, be banned from all particular, not for company-related enforcement authorities and rules for public procurement contracts for a corruption offences. Furthermore, both internal investigations. maximum term of five years; German administrative offences law Calls for a law to protect and German criminal law enable a • companies can apply for early whistleblowers confiscation of economic benefits de-listing through a so-called gained by a corporate from criminal Following the presentation of a draft law “self‑cleansing” (Selbstreinigung) that or administrative offences by way to promote transparency and the requires, inter alia, cooperation with the of forfeiture orders protection against discrimination of enforcement authorities in the (Einziehungsanordnungen). whistleblowers (Whistleblower- investigation of the relevant offences. Schutzgesetz) in November 20148, there Against that background, while it still have been various calls for the Calls for a German law on corporate remains to be seen when and how the implementation of a new law to protect criminal liability new Government will actually implement whistleblowers, arguing, in particular, that Following the German parliamentary the announced changes with a concrete appropriate protection for whistleblowers election in September 2017, the political draft law, the most important changes would require changes to German labour parties building the governing coalition announced in the coalition contract are law and civil service law in order to presented their coalition contract in the following: provide certain privileges to February 2018. This contract includes a whistleblowers in the future.9 Despite declaration of intent to comprehensively • introduction of an obligation to enforce these calls, so far, no further draft of such reform the law on corporate sanctions. In and to impose penalties on corporates law explicitly dealing with the protection particular, in the field of economic crime, instead of enforcement authorities of whistleblowers has been discussed at the coalition wants to enable courts to making relevant discretionary decisions; parliamentary level and the coalition impose harsher penalties against • increase of the general maximum contract between the currently governing 7 corporates for misconduct of employees. amount for financial penalties to 10 per political parties in Germany dated March cent of the corporate’s annual revenue; 2018 does not contain any reference to So far, while only individuals can be liable such legislative initiative. and prosecuted under German criminal • introduction of transparent rules for law, German administrative offences the assessment of corporate However, in this context, current law stipulates corporate administrative pecuniary penalties; developments at EU level might trigger fines (Unternehmensgeldbußen) for the implementation of amendments to company‑related offences of senior German law in the near future. In the light
7 For further details, please visit our relevant client briefing at https://www.cliffordchance.com/briefings/2018/03/germany_proposesharsherpenaltiesforcorporates.html. 8 For further details, please visit the German section of our Anti-Bribery and Corruption Review 2015 (pages 11 et seqq.) at https://www.cliffordchance.com/briefings/2015/07/anti-bribery_andcorruptionreview-july2015.html. 9 For further details, please visit the German section of our Anti-Bribery and Corruption Review 2017 (pages 14 et seqq.) at https://www.cliffordchance.com/briefings/2017/05/anti-bribery_andcorruptionreview-june2017.html.
16 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
of car manufacturers’ alleged prosecution. However, under the current activities. According to the Bremen manipulations in connection with draft, such protection would only apply in prosecution authority, investigation emissions testing of diesel engines, of tax cases where the whistleblower discloses a proceedings against individuals dumping and tax avoidance schemes in business secret to reveal an unlawful act are continuing. Luxembourg revealed by the so-called or other misconduct with the intention of “Luxleaks” and of tax evasion schemes protecting the public interest. As this In January 2018, it became public that arising from the so-called “Panama wording falls short of the protection the Munich prosecution authority is Papers”, on 23 April 2018, the European provided for in the relevant EU Directive, conducting investigation proceedings Commission presented a proposal for a the draft law has drawn criticism. against a former manager of a German Directive on the Protection of Persons car manufacturer based in Munich and Reporting on Breaches of Union Law. Prosecutions and eight individuals regarding allegations of This draft directive aims at improving the enforcement actions taking and giving bribes in commercial protection of whistleblowers in the public practice (section 299 StGB), sector and the private sector and at Several investigations and court cases embezzlement (section 266 StGB) and harmonising such protection throughout have caught the attention of the media. tax evasion (section 370 German Tax the EU by, for instance, requiring certain Code [Abgabenordnung]) since mid- companies to implement clear internal In June 2017, in the context of 2016. In particular, the former manager of and external reporting channels allowing investigation proceedings initiated in the car manufacturer is suspected of anonymous reporting. Under the current 2013 against 17 individuals regarding having demanded and accepted at least draft, EU member states would have to allegations of granting bribes to foreign EUR 4.2 million from service providers bring into force all laws and provisions public officials, the Bremen prosecution over an eight year period in return for necessary to comply with the directive by authority issued a forfeiture order awarding contracts to the service 15 May 2021. Particularly in light of the (Verfallsanordnung) of approximately EUR providers on behalf of the car fact that the EU Commissioner of Justice, 48 million against a German armament manufacturer. The Munich prosecution Vera Jourová, recently criticised the company aiming at siphoning off the authority stated that it had already German regulations regarding the profits allegedly generated by the searched the premises of the car protection of whistleblowers, the proposal company from the relevant transactions. manufacturer several times in relation to of the European Commission could Among the charges brought by the these allegations. increase the pressure on the German Bremen prosecution authority was that, in legislator to implement comprehensive the context of the sale of sonar systems In February 2018, following negotiations protective measures for whistleblowers. for submarines to Greece, the armament between the Munich prosecution company had paid EUR 13 million to a authority and a German aviation In a related development in March 2018, Greek commercial agent and, out of this company, a corporate administrative fine the German Ministry of Justice presented amount, several million Euros were of EUR 81.25 million was imposed on the a draft law to protect business and trade transferred to Greek public officials to aviation company in the context of secrets (Gesetz zur Umsetzung der secure the award of the armament order. investigation proceedings initiated in Richtlinie [EU] 2016/943 zum Schutz von As a result of negotiations between the 2012 against, inter alia, several (former) Geschäftsgeheimnissen vor Bremen prosecution authority and the employees of the aviation company with rechtswidrigem Erwerb sowie company, a forfeiture order, but no respect to allegations of granting bribes rechtswidriger Nutzung und Offenlegung), corporate administrative fine to foreign public officials in relation to the intended to implement Directive (EU) (Unternehmensgeldbuße), was imposed sale of combat aircraft to Austria. 2016/943 on the Protection of on the company. The forfeiture order was Following the imposition of this fine, in Undisclosed Know-How and Business based on an alleged negligent violation of March 2018 the Munich prosecution Information of 8 June 2016. The draft law supervisory duties by a managing director authority discontinued the investigation provides for some protection of of the armament company due to failure proceedings against six of the individuals whistleblowers disclosing business secrets to implement appropriate compliance under investigation. The relevant against civil law claims and criminal measures to prevent the alleged corrupt individuals had been under suspicion of
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having transferred funds of more than authority initiated several years ago Football Association. It is now for the EUR 100 million to shell companies for against employees of a German Frankfurt District Court (Landgericht) to corrupt purposes. However, although the armament company regarding allegations decide whether main criminal court Munich prosecution authority regarded it of granting bribes to both domestic and proceedings (Hauptverfahren) will be as proven that such payments had been foreign public officials in the context of initiated. Although the facts underlying made for unclear purposes and without the sale of assault rifles to Mexico. the relevant payment have not been evidence of counter-performance, Although the Stuttgart prosecution clarified so far, according to researches bypassing the company’s internal authority stated that the investigation by a German news magazine, the controls, it could not prove the elements proceedings regarding an alleged bribe to payment was allegedly made from a of bribery. The corporate administrative domestic public officials had been slush fund to secure the award of the fine was based on alleged negligent discontinued in January 2017, according football World Cup 2006 to Germany by violations of supervisory duties by senior to the recent press articles there are bribing members of the FIFA executive managers due to failure to implement indications that the armament company committee.10 However, the Frankfurt appropriate controls to prevent such cash had made payments of EUR 20,000 in prosecution authority did not investigate flows for obscure purposes. In addition, total to German political parties in order the allegations of giving bribes in in light of these circumstances, the to influence the decision of certain (international) commercial practice competent tax authorities had previously members of the German Parliament (section 299 StGB) or embezzlement denied the tax-deductibility of these regarding the granting of an export (section 266 StGB) as it found that a payments and issued a tax repayment licence for the sale of the assault rifles to prosecution regarding such offences order of EUR 26.3 million to the Mexico. It is to be seen whether these would, in any event, be time-barred aviation company. allegedly new findings will impact the (the limitation period for both offences investigation proceedings of the Stuttgart being five years), but did investigate the In April 2018, the Council of Europe prosecution authority. allegations of tax evasion. As in other published an investigation report jurisdictions, there is a provision in prepared by an external investigation In May 2018, the Frankfurt prosecution German tax law that prohibits tax committee, which stated that several authority charged three former top-level deductibility for corrupt payments current and former members of the managers of the German Football (section 4 para. 5 sentence 1 no. 10 Parliamentary Assembly of the Council of Association (Deutscher Fußball-Bund, sentence 1 German Income Tax Act Europe are suspected of having accepted DFB) and a former manager of the [Einkommensteuergesetz]). The payments from Azerbaijan in return for Fédération Internationale de Football individuals under investigation allegedly supporting Azerbaijan’s interests in the Association (FIFA) with tax evasion in a concealed the background of the Council of Europe. Individuals suspected particularly severe case (or aiding and payment of EUR 6.7 million and include two German politicians, which is abetting in this context) in connection deducted it as business expenses by why the investigation report has attracted with the payment of EUR 6.7 million by declaring it as a financial contribution to a media attention in Germany. It is to be the German Football Association’s World Cup gala event in the German seen whether prosecution authorities organisation committee for the football Football Association’s 2006 tax return. In will pick up on the alleged involvement World Cup 2006 to the former CEO of a light of these circumstances, the of the German politicians in corrupt German sportswear company in 2005. In competent tax authorities denied the activities and initiate relevant addition, according to press articles, the non-profit status of the German Football investigation proceedings. Frankfurt prosecution authority also Association for 2006 (the year of the applied to join the German Football World Cup) and issued a tax repayment In May 2018, several German press Association to the proceedings with the order of EUR 19.2 million to the German articles addressed investigation intention of imposing a corporate Football Association in November 2017. proceedings of the Stuttgart prosecution administrative fine on the German
10 For further details, please visit the German section of our Anti-Bribery and Corruption Review 2016 (pages 12 et seqq.) at https://www.cliffordchance.com/briefings/2016/05/anti-bribery_andcorruptionreview-may20160.html.
18 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
Enforcement trends At the same time, despite a lack of a of compliance measures designed to relevant formal legal framework, German prevent repeated violations of laws is an The German prosecution authorities prosecution authorities and courts are important positive indicator, including continue their strict enforcement practice increasingly willing to consider compliance measures introduced after regarding corruption in both the public cooperation and voluntary disclosure as the wrongdoing was uncovered and an and the private sector. Furthermore, as a well as the implementation of compliance investigation initiated. general trend, prosecution authorities are measures by the relevant corporates, focusing more and more not only on specifically when exercising their Furthermore, as a general trend in the individuals, but also on companies discretion regarding whether to take field of corruption and economic crime, engaged in corrupt activities in order to enforcement actions against corporates German prosecution authorities continue impose significant corporate in connection with criminal offences and to increase the level of cooperation and administrative fines or forfeiture orders administrative offences allegedly the exchange of information both with siphoning off the profits generated from committed by senior managers and, in other German authorities, such as tax the alleged corruption offences. Against that case, whether and to what extent authorities or regulatory authorities, and the background of the declared intention they actually impose relevant penalties. In with foreign enforcement authorities. of the governing political parties to particular, in a judgement of 9 May 2017, comprehensively reform the law on the German Federal Supreme Court BACK TO MAP corporate sanctions and to enable the (Bundesgerichtshof, BGH) pointed out imposition of harsher penalties against that, when determining corporate corporates, it is expected that this trend administrative fines, the implementation will continue.
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ITALY
Changes to legislation consistent factual evidence, or of Public sector breaches of the 231 Systems and Italy has adopted new legislation Article 1 of Law No. 179/2017 amended Controls, where they have become so concerning whistleblowing both in the article 54-bis of Legislative Decree aware by reason of the duties they public and in the private sector. Law No. 165/2001, which already provided for have performed; and 179/2017 sets out “provisions for the some safeguards for public employees protection of persons reporting offences • at least one other reporting channel, who reported unlawful conduct which or breaches which they found out about with information technology equally had come to their attention through their in the course of a private or public sector capable of ensuring that the employment. The article also applies to relationship” and aims at: (i) ensuring that whistleblower’s identity remains employees of private sector entities that the whistleblower’s identity remains confidential. are subject to public control, and confidential; and (ii) prohibiting retaliation those working within and assisting Additionally: for whistleblowing actions. businesses that supply goods or • acts of retaliation or discrimination services in the execution of works for The legislation amended article 54-bis of against the whistleblower, for reasons general government. the Consolidated Legislation on the directly or indirectly linked to the Civil Service (Legislative Decree reporting, are prohibited and such acts Law No. 179/2017 lays down provisions 165/2001), and, with respect to the may be reported to the national labour that are more detailed. In particular, private sector, article 6 of Law No. inspectorate, either by the • in the context of disciplinary procedure, 231/2001. Whistleblowers do, however, whistleblower or by a trade union the whistleblower’s identity may be remain subject to various punitive identified by the whistleblower; revealed only where the key allegation measures where they act wilfully, or with • in a complete reversal of the usual in that procedure is based entirely or in gross negligence, in making an burden of proof, in the event of any part upon their report, and knowledge unfounded report. dispute relating to disciplinary of the whistleblower’s identity is measures, demotion or reductions in essential to the ability of the reported Private sector employment duties, dismissals, person to defend themselves, without Article 2 of Law No. 179/2017 amended transfers, or other organisational prejudice to the whistleblower having article 6 of Law No. 231/2001, which measures that directly or indirectly consented to disclosure of their now includes paragraphs 2-bis, 2-ter adversely affect the whistleblower’s identity. In criminal proceedings, and 2-quarter. employment conditions, it is for the article 329 of the Code of Criminal employer to show that those measures Procedure applies; In particular, the changes set forth by were based on grounds that had • the new law’s safeguards are not Law No. 179/2017 require entities to nothing to do with the whistleblowing; assured where the whistleblower has amend the internal systems and controls been found either criminally liable for put in place to prevent the comission • the disciplinary system set forth in the offences of slander or libel, or of certain criminal offences in order systems and controls must provide for otherwise for offences committed in to ensure: sanctions against: the whistleblowing reporting, or • one or more channels that enable – any person who breaches the civilly liable for having acted wilfully directors and employees to act, in measures protecting the or with gross negligence in the guaranteed confidence, by way of whistleblower; and whistleblowing reporting. safeguard to the company’s integrity in – any whistleblower who acts wilfully, presenting particularised reports of or with gross negligence, in making unlawful conduct relevant to Law No. a report that turns out to 231/2001, based upon precise and be unfounded.
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Prosecutions and in 2011. After investigations, the case Moreover, ANAC has recently issued a enforcement actions was recently sent to trial, which is new plan to prevent bribery and expected to begin shortly before the corruption activities for the years 2018- While there have not been new cases of Milan Court. The Prosecution Service of 2020. This new plan reflects some national importance this year, corruption Milan has also opened another legislative innovation such as the cases of a smaller relevance are still investigation concerning operations in Legislative Decree No. 56/2017 (Code of frequently reported in the Italian press. Congo, with the allegation that Eni Public Contracts) and the Law No. agreed to involve in its operations some 179/2017 on whistleblowing, as At the same time, investigations and local companies suggested by the explained above. proceedings concerning Eni – a company Congolese Government, in order to controlled by the Ministry of Economy – obtain the renewal of an oil licence. The new plan: and its operations in Africa have Searches were conducted by the Italian developed since last year. In July 2016 a • in light of the positive outcome of Finance Police in April 2018. Milan Court indicted Eni, Saipem and the 2017, confirms the previous mathematical methodology used to former chief executive of Eni, in relation In addition, Italian Authorities have assess the risk areas in relation to to allegations that Saipem, or an recently been dealing with some cases of Government activities; intermediary, paid bribes in Algeria in corruption involving important hospitals 2010 to obtain oil and gas contracts. and companies working in the medical • reorganizes the general measures to be The trial was due to start on 5 December and pharmaceutical sector. The most adopted in order to prevent bribery and 2016. An Italian judge had acquitted Eni recent case involves two important Milan corruption activities, e.g., the adoption and two ex-Eni senior executives in hospitals, Gaetano Pini-Cto and Galeazzi. of a Code of Conduct, specific duties October 2015 on the same charges, but In April 2018, some Head Physicians of of disclosure in case of conflict of a higher court overturned that judgment these hospitals were arrested on charges interests and protection measures for in February 2016 and sent the case back that they had accepted bribes and whistleblowers; and to prosecutors for further investigation. In facilitations by medical and • lays down some specific objectives in February 2018, the Public Prosecutor pharmaceutical companies to obtain three specific fields, i.e., transparency requested an indictment asking for six supply contracts with the hospitals. There and anti-corruption activities, public years and four months of imprisonment are further cases related to sponsorships contracts and communication for the former chief executive of Eni, and grants made available by and management. together with the sanction of pharmaceutical companies for expenses EUR 900,000 for both Eni and Saipem. actually borne for research activities. BACK TO MAP A number of other companies being investigated in connection with the Enforcement trends allegations were apparently set up by The Italian Government continues to Mossack Fonseca, according to papers focus on the prevention of corruption. published by the International Consortium The National Anticorruption Authority of Investigative Journalists, as part of the (ANAC) has often been appointed by the Panama Papers. It was also reported that Government to carry out a preliminary Eni and Shell had been charged in review and analysis of the main Italian connection with a controversial public tenders (i.e. Milan’s Expo trade fair acquisition of an offshore block in Nigeria and Jubilee 2016).
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LUXEMBOURG
Changes to legislation The facts of this case were as follows: usually paid an advance to the former between 2002 and 2007, approximately official and the remaining amount would There have been no material changes to 200 companies/individuals were granted be paid once the file was processed by anti-corruption legislation since our last business licences (autorisations the commission and the business licence Anti-Bribery and Corruption Review in d’établissement) in Luxembourg, using was granted. Thanks to this profitable June 2017. fake certificates of professional traffic, the former and retired official of the competence, although they did not meet Ministry of Economy received bribes of Prosecutions and the required professional qualifications. To more than EUR 400,000. enforcement actions this end, one member of the network There has been one noteworthy case used his connections in Portugal in order The former official was given a four-year involving bribery and corruption which to get hold of falsified diplomas and suspended prison sentence and received has caught the attention of the media. certificates, supposedly delivered and a EUR 130,000 fine. This first instance certified by the Portuguese Industrial judgement has been appealed. In May 2017 – ten years after the facts Confederation (Confederacão da Indústria occurred and after seven years of Portuguesa). These falsified documents BACK TO MAP investigation – the criminal division were then transmitted to a former official (chambre correctionnelle) of the of the Ministry of Economy, who Luxembourg District Court (tribunal introduced them to the ad hoc advisory d’arrondissement) delivered its commission – through two other former judgement, further to the prosecution officials of the Ministry. (in March 2017) of four men and four women involved in a network of The individuals disbursed between forgery, falsification, bribery and EUR 3,000 and EUR 28,000 in order to influence peddling. receive their business licences. They
22 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
POLAND
Changes to legislation • mechanisms to prevent the costs of Protection would be granted to giving economic and personal benefits whistleblowers providing credible The Polish Government is currently from being financed by the entity; information on specific suspected working on two draft acts: (i) the draft Act offences (including corruption offences on Transparency in the Public Sphere, • the use of anti-corruption clauses and fraud). The public prosecutor would which will, if implemented, require in agreements; decide whether to grant someone companies to apply internal anti- • training for employees on criminal whistleblower status. The whistleblower corruption procedures; and (ii) the new liability for corruption offences. would be protected primarily against draft Act on Liability of Collective Entities termination of his/her employment or for Acts Prohibited under Penalty, which If the public prosecutor’s office brings similar measures. is intended to make the procedure of corruption charges against a person bringing corporate entities to account acting for or on behalf of the entity, the Corporate criminal liability more efficient (under the current Act on Central Anti-corruption Bureau (CBA) Liability of Collective Entities for Acts The purpose of the new draft Act on will be obliged to inspect that entity’s Prohibited under Penalty of 2002, Liability of Collective Entities for Acts anti‑corruption compliance procedures. the procedure has been ineffective Prohibited under Penalty is, first of all, to If the CBA’s inspection finds that internal in practice). introduce corporate criminal liability for all anti‑corruption procedures were not offences, including corruption offences applied, or were ineffective or only Work on both draft acts is at an early and treasury offences (currently, superficial, the entity will be liable to a stage, but it is expected that they could corporate criminal liability is limited to the fine of up to PLN 10,000,000 come into force during 2018. offences specifically mentioned in the Act (approximately USD 2.7 million). on Liability of Collective Entities for Acts Anti-corruption compliance Prohibited under Penalty). It will be The entity will have 30 days to voluntarily obligation possible to conduct criminal proceedings pay the fine initially set by the CBA. If it against a corporate entity, irrespective of Under the draft Act on Transparency in does so, the CBA will not apply to the criminal proceedings pending against an the Public Sphere, the requirement to President of the Office of Competition individual, and conviction of an individual introduce internal anti-corruption and Consumer Protection (OCCP) for will not be a criterion for instituting procedures is to apply to entities that the imposition of a fine. Otherwise, criminal proceedings against a corporate have 50 or more employees and a net proceedings to impose a fine will be entity (which is the case at present). The annual turnover or sum of assets on instituted before the President of the new draft Act on Liability of Collective their balance sheet of EUR 10,000,000 OCCP. The President of the OCCP’s Entities for Acts Prohibited under Penalty or more. decision to impose a fine will be subject would also considerably increase the to an appeal. However, if the decision maximum penalty for criminal liability of Anti-corruption compliance is to consist becomes final, then in addition to being corporate entities to PLN 30,000,000 of, among other things, the following: fined, the entity will also be banned (approximately USD 8.3 million). Currently from taking part in public tenders for • a code of ethics (to be signed by all the maximum fine is PLN 5,000,000 five years. employees, consultants and all entities (approximately USD 1.4 million). acting for the company); The draft Act on Transparency in the The main provisions of the new draft Act • internal procedures and guidelines on Public Sphere also proposes to introduce on Liability of Collective Entities for Acts gifts and other benefits received by measures for protecting whistleblowers. Prohibited under Penalty are: employees; Currently the Polish legal system does not provide for protection such as that • A corporate entity may be liable for any • procedures for reporting corruption available under, for example, the Dodd- offence or treasury offence (current allegations to the entity’s bodies Frank Act in the United States. legislation sets out a list of offences and procedures for dealing with for which a corporate entity may be such reports; held liable).
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• The criminal liability of a corporate procedures preventing the commission Other developments entity is to be independent of any of offences (to demonstrate absence The Polish Government’s Anti- previous conviction of an individual (the of fault). Corruption Strategy 2018-2020 direct perpetrator) and is possible even • Measures will be introduced to protect without establishing who the direct The Polish Government published its whistleblowers, along with an obligation perpetrator of the offence was – Anti-Corruption Strategy 2018-2020 in for the corporate entity to conduct currently corporate entities are liable for December 2017. The main objective of internal investigations in order to specific offences committed by specific the Strategy is to considerably reduce verify irregularities reported by individuals and only after the final corruption and to promote social whistleblowers. Failure to conduct conviction of individuals. awareness in respect of counteracting internal investigations could result in corrupt practices. Specific priorities to • It will be possible to conduct a fine being increased to a maximum achieve this overall objective are: preparatory proceedings against a of PLN 60,000,000 (approximately corporate entity simultaneously with the USD 16.6 million). • the strengthening of educational and proceedings conducted against an preventive activities; • Corporate entities will be subject to individual or even before the criminal liability notwithstanding any • the improvement of monitoring proceedings against an individual have merger, demerger or transformation of mechanisms regarding corruption- been instituted – this is to reverse the the corporate entity. prone issues and monitoring the current rule. application of the anti-corruption • It will be possible for corporate entities • A fine of up to PLN 30,000,000 regulations; and to voluntarily admit liability in order to (approximately USD 8.3 million) could avoid holding a trial and agree a • improving cooperation and be imposed on a corporate entity more lenient fine with the public coordination between the law (currently the fine is up to PLN prosecutor (this might be a similar enforcement authorities, including 5,000,000 [approximately mechanism to the UK/US deferred international cooperation. USD 1.4 million]) and the amount will prosecution agreements). not be related to revenue (at present, BACK TO MAP the fine cannot be higher than 3% of the corporate entity’s revenues Prosecution and generated in the year the offence enforcement actions was committed). No significant prosecutions or • In criminal proceedings against a enforcement actions have been reported corporate entity, the entity will have to since our last Anti-Bribery and Corruption prove that it has introduced efficient Review in June 2017.
24 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
ROMANIA
Changes to legislation communications), defendants may Other changes envisaged to the seek to have such evidence declared Criminal Legislation and the Statute Expected changes following the inadmissible before the criminal courts. of Judges and Prosecutors Constitutional Court’s decisions A special committee has been The Romanian Constitutional Court (CCR) As a consequence of these decisions, it constituted at the level of the Parliament has been very active recently, pleas of is expected that several trials (some of to bring forward changes to the Criminal unconstitutionality being raised in several them at the level of the High Court of Codes as well as to the Laws regarding court files set up following criminal Cassation and Justice) will either be put the Statute of Judges and Prosecutors investigations conducted by the National on hold, returned to the Prosecutor’s and the Supreme Magistracy Council. Anticorruption Directorate (DNA) in Office to resume the criminal cooperation with the Romanian investigation, or closed based on lack of The most important changes to the Law Intelligence Services (also known as SRI). evidence (as the illegal evidence must be regarding the Statute of Judges and As reported in our June 2017 Review, removed from the files and there are Prosecutors are intended to: public disclosures revealed that various several files where the only or main judiciary institutions and the Intelligence evidence is derived from interceptions by • clearly regulate the liability of judges Services had cooperated over a period of the Intelligence Services). and prosecutors, civil or criminal, in the almost ten years, resulting in illegally event of serious negligence, judicial mixed investigation teams running Another relevant ruling of the CCR is error or any act committed with criminal investigations. Decision No. 392/06.06.2017, regarding malicious intent, while running an the criminal offence of abuse in office investigation/trial or when issuing In this respect, two decisions of the (applicable to both public and private a decision; Constitutional Court (Decision no. servants). In addition to the CCR decision • establish a special investigation unit, 802/5.12.2017 and Decision no. reported in our June 2017 Review independent of the existing 91/28.02.2018) are worth mentioning. (which established that the term Prosecutor’s Office, with the specific In brief, the Constitutional Court has “misconduct in performance of duties” remit of investigating criminal offences ruled that: should be read as “performance of duties by breaching a law”) the Constitutional perpetrated by magistrates; • SRI is prohibited from conducting Court found that Parliament must set a criminal investigation activities threshold for the damages resulting from The changes envisaged to the Criminal alongside criminal investigation bodies the non-performance of duties or the Procedure Code seek to implement with regard to offences that do not performance of duties by breaching a several recent Constitutional Court represent a threat to national security. law, in order that such acts be decisions intended to ensure a fair trial The Constitutional Court expressly considered criminal offences. especially relating to preventative stated that SRI may not be involved in measures and measures under Directive criminal investigations that target The Secretary of State for Justice has 2014/42/EU of the European Parliament corruption offences (i.e., giving/taking a informed the special parliamentary and of the Council of 3 April 2014 on the bribe, influence peddling, abuse in committee tasked with ensuring that the freezing and confiscation of office, tax evasion, money laundering) Criminal Codes are in line with CCR instrumentalities and proceeds of crime where such offences do not represent decisions that the Justice Ministry is in the European Union. Furthermore, the a threat to national security; and working on a separate Bill on abuse of changes seek to provide greater protection for witnesses in criminal • With regard to past investigations office and neglect of duty in order to align trials and to enhance the rights of carried out by SRI in which evidence the criminal legislation with the defence lawyers. was gathered through special means Constitutional Court’s decisions. used by the Intelligence Services (mainly by interception of
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Changes to the Criminal Code focus Last month (May 2018), after a trial Former Prime Minister Victor Ponta particularly on the repeal of the offence of lasting almost two years, the High Court The former Prime Minister Victor Ponta negligence in office and the amendments of Cassation and Justice acquitted the (former PSD leader) was indicted on to the offence of abuse in office Senate’s President. This first court 17 September 2015, alongside mentioned above. decision may be challenged with appeal ex-Senator Dan Sova, Laurentiu Ciurel by the prosecutors. (CEO of the Rovinari Energy Holding at The amendments to these laws are still the time the alleged offences took place) being debated in the special committee Liviu Dragnea, the president of the and Dumitru Cristea (CEO of the Turceni and must be passed by Parliamentary Social Democratic Party (PSD) (the Energy Holding at the time the alleged before being enacted by the President. largest political party in the offences took place). There is no timeline as yet. Parliament, currently at power) Lower House Speaker and national leader Prosecutors charged Victor Ponta with Prosecutions and of the Social Democratic Party (PSD) Liviu having received RON 181,439 enforcement actions Dragnea is currently being tried by the (approximately EUR 40,000) between High Court of Cassation and Justice October 2007 and December 2008 from High-Profile Criminal Cases following charges brought by DNA of the Sova & Associates law firm, through Senate’s President Calin establishing a criminal organisation and his own law firm, for services that are Popescu Tariceanu abuse of office while he was chairman of listed in the paperwork but that were National Anticorruption Directorate (DNA) the Teleorman County Council. According allegedly never rendered. Victor Ponta prosecutors had, in 2016, indicted the to DNA, Dragnea, Chairman of the was charged with forgery of private Senate’s President Calin Popescu Teleorman County Council at the time the documents and complicity in tax evasion Tariceanu on charges of perjury, on the alleged acts took place, is being tried for and money laundering, offences allegedly grounds that he had, while testifying establishing an organised crime group, committed in his capacity as lawyer. Dan under oath in a criminal investigation two criminal offences of use or Sova, who was coordinating lawyer at regarding the illegal restitution of former presentation in bad faith of misleading, the Sova & Associates law firm at the royal properties (an area of the Snagov inaccurate or incomplete statements or time the alleged offences were forest and Baneasa Farm), made false documents with the purpose of obtaining committed, was charged with abuse of statements (on15 April 2016) regarding undue European funds, and two criminal office, forgery of deeds under private essential aspects of the case and did not offences of abuse of office (by obtaining signature, tax evasion and money say all he knew about essential undue benefits for himself or others). laundering. Laurentiu-Dan Ciurel was circumstances, with the aim of preventing charged with three counts of abuse of or hindering the criminal prosecution of The DNA has also said that the case was office, while Dumitru Cristea and former the defendants. The prosecutors alleged opened following a complaint from OLAF Turceni Energy Holding CEO Laurentiu- that Tariceanu unrealistically claimed that (European Anti-Fraud Office) on 30 Octavian Graure were charged with he had no knowledge of the retrocession September 2016 regarding several abuse of office. to Paul Philippe of Romania of some land suspected offences, including the plots in Baneasa (the former royal farm) fraudulent acquisition of European funds In a recent decision of the High Court of and Snagov forest, about the involvement for county road repair works. Eight other Cassation and Justice Victor Ponta was of defendants Tal Silberstein, Beny individuals are being investigated in the acquitted on the charges of forgery in Steinmetz, Moshe Agavi and others in same case. deeds by private signature, complicity in the restitution proceedings, nor about tax evasion and money laundering, while the sale-purchase documents for The prosecutors are asking for a seven Dan Sova was acquitted of the charges these goods. year sentence for Liviu Dragnea and a of forgery in deeds by private signature, first court decision is expected later this tax evasion, and money laundering. The month (June 2018).
26 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
decision of the High Court is not final and ten years, and the consequential Deputies, Mr Liviu Dragnea, Ex-Minister may be appealed by the prosecutors. annulment of evidence produced by the Elena Udrea, and the former head of the mixed teams of prosecutors and Directorate for Investigating Organized High Court judge Gabriela Birsan, the Intelligence Services officers. Crime and Terrorism, Ms Alina Bica) have wife of the former ECtHR Romanian requested that the High Court of judge Corneliu Birsan There has also been considerable public Cassation and Justice seek clarification Gabriela Bîrsan, chairman of the debate over the legality of cooperation from DNA on the involvement of SRI in Administrative and Taxation Division of protocols between the judiciary and the their criminal cases. the High Court of Cassation and Justice, Intelligence Services, the existence of at the time of the facts, was sent to trial which was brought to light over the past It is worth mentioning that some in July 2014 charged with two offences year through disclosures in the local and defendants in the high-profile cases of abuse of public interest, bribery, use, in international media by individuals close to investigated by DNA recently left any way, directly or indirectly, of or linked to either DNA or SRI. It was Romania for jurisdictions such as information not intended to be made recently revealed that the Supreme Costa Rica and Madagascar, where they public, allowing unauthorized persons to Magistracy Council, Judicial Inspection, have requested asylum on the grounds access that information and influence the High Court of Cassation and Justice that they have been politically peddling. Iuliana Puşoiu, judge of the and the Prosecutor’s Office attached to prosecuted, wrongfully indicted, sent to same section, was charged with bribery the High Court of Cassation and Justice trial or even convicted. and forgery. had all concluded cooperation protocols with SRI. Following the disclosures on the On 3 May 2018, Ms. Birsan was finally cooperation protocols, and the acquitted of the charges by the High In this respect, the Romania’s Justice declassification of some protocols Court of Cassation and Justice. During Minister, Mr Tudorel Toader, expressed (the declassification procedure is still the investigation carried out by DNA, Ms. his view that “We must analyse if the pending for others), a new trend is Birsan’s spouse was acting as judge at protocols have been illegal and if anticipated, namely, the launch of civil the European Court for Human Rights wrongful convictions were issued based or criminal claims by defendants and and it was found that DNA had illegally on their application”. other interested parties against the conducted surveillance and searches on signatories to the protocols and/or the Ms. Birsan despite the immunity given to Over the same period, as described criminal investigation bodies based on her husband by ECHR Statute. above, there has been a significant the infringements of law and human number of acquittals in high-profile cases civil rights. Enforcement trends (where the charges were brought by DNA) which has led to severe public BACK TO MAP Enforcement activity in Romania has criticism of DNA. decreased in comparison to previous years. This is mainly the result of the CCR Further, on some pending high-profile finding that the Prosecutor’s Office (DNA criminal cases, several defendants and other units of the Prosecutor’s Office) (including the President of the Social and the Intelligence Services had illegally Democratic Party and the Chamber of cooperated in criminal cases for the past
June 2018 27 ANTI-BRIBERY AND CORRUPTION REVIEW
RUSSIA
Changes to legislation Bringing the Criminal Code into line vzyatki) by broadening the definitions with the GRECO Recommendations of bribery and commercial bribery. Criminal Code Recent draft laws currently under review (c) Criminalizing commercial bribery Preventing Corruption in by the Russian State Duma (scheduled to committed by Russian and Public Procurement be considered in May 2018) would, if foreign arbitrators. Amendments to the Criminal Code of the adopted, incorporate into the Criminal Russian Federation regarding criminal Code the following amendments, which Administrative Offences Code liability for bribery in public procurement are aimed, amongst other things, at (Article 200.5) came into effect on 4 May aligning the Criminal Code with On 31 March 2018, a draft law that 2018. The amendments establish criminal recommendations by the Council of would, if adopted, make the following liability for bribe-giving/bribe-taking in Europe Group of States against changes to the Administrative Offences relation to the following persons Corruption (GRECO) published in Code of the Russian Federation was representing interests of the customer in March 2018: submitted to the Russian State Duma: the procurement of goods, services or (a) Measures to enable a legal entity to be works for state or municipal needs: (a) Strengthening criminal liability for corruption-related offences by: exempted from administrative liability • contracting service employees, for providing, offering or promising (i) establishing criminal liability for the unlawful remuneration (Article 19.28) • contracting administrators, following offences: (1) commercial where (1) the legal entity had assisted • persons responsible for the acceptance bribery committed by or in relation in detecting the offence by conducting of goods, services or works and to an employee of a commercial or an administrative investigation and/or other organisation, (2) promising, detecting, disclosing and investigating • other authorised representatives. proposing or requesting participation a crime relating to the offence or (2) in commercial bribery, (3) a promise, the unlawful remuneration had been The offence here is acting (or omitting to proposal or request for a bribe to be extorted from the legal entity. act) in the interests of a bribe-giver or other taken or given and (4) abuse of person in connection with the procurement influence in return for unlawful However, this exemption would not of goods, services or works for state or remuneration; and apply to offences committed in relation municipal needs (in the absence of to foreign officials and officials of elements of the offence of bribery [Article (ii) extending the maximum main public international organizations in the 290] or commercial bribery [Article 204]). penalty for accepting (Article 290(1)) conduct of commercial transactions. The maximum penalty for giving a bribe in and giving (Article 291(1)) a bribe public procurement is imprisonment for up from three and two years’ (b) Measures to enable the property of a to eight years, with or without a fine of 40 imprisonment, respectively, to four legal entity charged with providing, times the value of the bribe and / or years’ imprisonment, where there offering or promising unlawful disqualification from certain positions or are no special aggravating remuneration (Article 19.28) to be certain activities for up to five years. circumstances and the bribe does seized in order to secure the not exceed RUB 25,000 enforcement of any administrative The maximum penalty for accepting a (approximately EUR 337). The penalty (if imposed). bribe in public procurement is amendments would, if adopted, imprisonment for up to 12 years, with or reclassify these crimes, now minor (c) Measures to require a legal entity given without a fine of 50 times the value of the offences, as moderately serious an administrative fine for providing, bribe and/or disqualification from certain offences and, therefore, extend the offering or promising unlawful positions or certain activities for up to limitation period for criminal remuneration (Article 19.28) to pay the seven years. prosecution from two years to fine within seven days (as opposed to six years. 60 days under the law currently in Incitement of a bribe in public (b) Criminalizing the giving and taking of force) from the date that the decree procurement is also now criminally intangible bribes (nematerialniye imposing the fine came into force. punishable (Article 304).
28 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
The reading of the draft law is currently Anti-Corruption Law Mr Sechin’s testimony was important pending in the Russian State Duma. On 13 December 2017, the Russian to the case because he was the State Duma agreed a first reading of a person from whom Mr Ulyukaev On 21 December 2017, the Russian draft law amending Federal Law accepted the bribe and the main State Duma agreed a first reading of No. 273-FZ On Preventing Corruption witness in the case. a draft law that would impose (the Anti-Corruption Law). This Bill aims administrative liability on companies for to protect people who report corruption (e) On 1 February 2018 former governor of providing, offering or promising unlawful offences (for more details please see the the Kirov region Nikita Belykh was, remuneration (Article 19.28) in the Anti-Bribery and Corruption Review of amongst other things, sentenced to 8 interests of one of their related legal June 2017). years’ imprisonment in a strict regime entities (e.g., a subsidiary or affiliate of prison (koloniya strogogo rezhima) and the company). The current law only Prosecutions and fined RUB 48.2 million (approximately enables companies to be held EUR 650,000) for accepting a bribe of administratively liable for this offence enforcement actions EUR 400,000. Mr Belykh received the where it has been committed on behalf Over the past year there have been bribe to protect the interests of two or in the interest of the company itself. numerous cases widely publicized in the companies based in the Kirov region mass media where public officials have and controlled by Mr Yuriy Zudhaimer: Anti-Money Laundering Law been sentenced to lengthy imprisonment JSC Novovyatsky Ski Factory and LLC New amendments to Federal Law No. and fined heavily for committing Forestry Management Company. On 10 115-FZ dated 7 August 2001 On corruption-related offences. For example: May 2018, the appellate court upheld the sentence in that part concerning Preventing the Legalisation (Laundering) (d) On 15 December 2017 former the term of imprisonment and the fine of the Proceeds of Crime and the Economic Development Minister imposed against Mr Belykh. Financing of Terrorism (the Anti-Money Alexei Ulyukaev was, amongst other Laundering Law) and Federal Law No. things, sentenced to 8 years’ (f) On 20 April 2018 former head of the 307-FZ dated 30 December 2008 On imprisonment in a strict regime prison General Directorate of Internal Affairs Auditing (the Auditing Law) came into (koloniya strogogo rezhima) and fined of the Investigative Committee of the force on 4 May 2018. Under these RUB 130 million (approximately Russian Federation Mikhail amendments, auditing organizations and EUR 1.7 million) for accepting a bribe Maksimenko was sentenced to individual auditors are obligated to notify of USD 2 million. As established by 13 years’ imprisonment in a the Federal Financial Monitoring Service the court, Mr Ulyukaev had accepted maximum-security prison and fined (Rosfinmonitoring) if they have reason to the bribe to facilitate the issuance of RUB 165 million (approximately suspect that a transaction or financial an affirmative opinion by the Ministry EUR 2.2 million) for accepting two operation of the audited entity might have of Economic Development allowing bribes totalling USD 550,000. In 2016 been or might be carried out in order to PJSC Rosneft Oil Company to enter Mr Maksimenko received a legalise the proceeds of crime or finance into an agreement on acquisition of USD 500,000 bribe from businessman terrorism (Article 7.1(2.1) of the Anti- the Government’s 50% stake in Mr Oleg Sheikhametov to reduce the Money Laundering Law and Article 13(2) PJSC Bashneft Oil Company. On charges against criminal ‘boss’ (3.2) of the Auditing Law). Before that, 12 April 2018, the appellate court Mr Andrey Kochyikov and arrange his a similar obligation was placed upon upheld the sentence in that part release from pre-trial detention. lawyers (advokaty), notaries public and concerning the term of imprisonment In 2015 Mr Maksimenko was given persons carrying on business in the and the fine imposed against a USD 50,000 bribe by a sphere of legal and accounting services. Mr Ulyukaev. It should be noted that businessman, Mr Badri Shengeliya, to the appellate court questioned arrange the illegal prosecution of The reporting procedure is to be set Mr Sechin, CEO of PJSC Rosneft Oil employees of the General Directorate down by the Government of the Russian Company, for the first time at the trial of the Ministry of Internal Affairs of the Federation. Auditing organizations and stage of the criminal proceedings (he Russian Federation for St. Petersburg individual auditors may not disclose the failed to appear before the first and the Leningrad Region. fact that the information is being reported instance court due to his workload). to Rosfinmonitoring.
June 2018 29 ANTI-BRIBERY AND CORRUPTION REVIEW
(g) Another prominent case concerning (i) In November 2017 criminal (iii) On 11 October 2017 former the bribing of public officials was that prosecution was launched against bankruptcy administrator of the brought against Dmitry Zakharchenko, former Minister of Health of the Plodoviy agricultural production the former deputy chief of the Zabaikalskiy Region Mikhail Lazutkin cooperative Andrei Saveliev was fined ‘T’ Department11 of the Anti-Corruption on suspicion of accepting a bribe of RUB 6.5 million (approximately Directorate of the RF Ministry of approximately RUB 16 million EUR 88,000 at the current exchange Internal Affairs, in September 2016. (approximately EUR 216,000 at the rate) for accepting a commercial bribe Mr Zakharchenko is charged with current exchange rate). Mr Lazutkin of RUB 1.48 million (approximately accepting multiple bribes (on four purportedly arranged the awarding EUR 20,000). Mr Saveliev accepted occasions). In December 2017, at the of contracts to commercial entities the bribe from businessmen for suit of the General Prosecutor, the in public tenders for the supply withdrawing appeals against court court seized assets worth a total of of medical equipment to judgments rendered in favour of the more than RUB 9 billon (approximately regional organisations. businessmen and stating that the EUR 121.3 million) that belonged to latter are entitled to certain immovable Mr Zakharchenko and relatives and As regards criminal prosecution of property which the bankruptcy friends of his. The assets seized officers of commercial organisations, administrator had indicated in the included cash, 27 items of immovable recent cases that have caught the appeals was to be returned property (flats and parking spaces) in attention of the media include to Plodoviy. wealthy areas, four expensive cars the following: and a gold bar weighing approximately (i) In April 2018 criminal proceedings Enforcement trends half a kilo. were opened against deputy general It appears that over the past year director of PJSC Interregional Russian law enforcement authorities have In recent months there has been a Distribution Network Company of the followed the continuing trend of focusing significant increase in criminal North-West (the largest grid operator on corruption offences by public officials prosecutions initiated in the sphere of in North-West Russia) Valeriy Draidt rather than in the commercial sector. It public procurement. Amongst the most and his deputy for investment activity should be noted that public officials, if notable cases are the following: issues Evgeniy Sesuk. They are sentenced, have generally been (h) In December 2017 criminal accused of accepting a commercial imprisoned for lengthy terms and proceedings were initiated against bribe of more than RUB 5 million subjected to hefty fines. In line with this former general director of state-owned (approximately EUR 67,400) from trend there has also been an increase in aviation company JSC Krasavia Valery commercial entities for unverified scrutinising data on the income, material Mordan for accepting a bribe of acceptance of and payment for works liabilities and expenses, etc. of public approximately RUB 4 million under construction contracts. officials and their close relatives, with the (approximately EUR 54,000). materials from such verification exercises (ii) In December 2017 former general Mr Mordan reportedly accepted a being passed on to law enforcement director of JSC Gazpromneft- bribe from a commercial entity that authorities if violations are identified. Noyabrskneftegaz Pavel Kryukov was supplied special-purpose machinery to arrested on suspicion of accepting JSC Krasavia. The bribe was allegedly Another trend in the prosecution of public a commercial bribe of more than equal to 10% of the price of the officials is the increasing number of RUB 1 million (approximately contract between JSC Krasavia and criminal proceedings in the sphere of EUR 13,500 at the current exchange the commercial entity and included public procurement. rate). Rumour had it that this ‘remuneration’ for protecting the commercial bribe was given to entity’s interests in public procurement BACK TO MAP Mr Kryukov by the general director of in the future. LLC Naftagaz‑Burenie (a contractor) for “dealing with a rock drilling incident”
11 This department (now liquidated) was responsible for combating corruption in the fields of fuel and energy complex and chemistry.
30 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
SLOVAK REPUBLIC
Changes to legislation up-to-date records of that identification for accused of corruption. The Mayor allegedly the period of the duration of its UBO status served as the intermediary of corruption On 15 March 2018, an amendment to and for an additional five years. between a waste processing company and Act No. 297/2008 Coll. on the Prevention the District Office. The Mayor was of Legalization of Proceeds of Criminal In addition to the above, as part of the supposed to provide the company with a Activity and Terrorist Financing came into Government’s efforts to increase waste permit. Charges were brought by the effect. The new law introduces several transparency, the National Council of the investigator of the National Criminal Agency changes to the Slovak AML legal Slovak Republic is preparing a new Act who referred the case to the prosecutor of framework and a number of new on the Protection of Whistleblowers, the Special Prosecutor’s Office. obligations towards Slovak entities. which should take effect on 1 January 2019. The Act is aiming to establish an The main objective of the new Enforcement trends independent office for the protection amendment is to transpose Directive While the cases highlighted above of whistleblowers. 2015/849/EU of the European Parliament indicate some movement in the Slovak and of the Council of 20 May 2015 on Republic in the field of fighting corruption the prevention of the use of the financial Prosecutions and in the public sector, according to an system for the purposes of money enforcement actions analysis of Transparency International laundering or terrorist financing, In October 2017, two former Ministers Slovakia, Slovakia’s fight with corruption amending Regulation 648/2012/EU and were convicted of corruption in the has been stagnating. repealing Directive 2005/60/EC of the so-called bulletin–board tender. The European Parliament and of the Council Specialised Criminal Court in Pezinok In June 2017, the Corruption Prevention and Commission Directive 2006/70/EC sentenced Mr Marian Janušek and Department was created in the Prime (the fourth AML Directive). The purpose Mr Igor Štefanov, both former Ministers of Minister’s Office, headed by an of the transposition of the fourth AML Regional Development, to long prison experienced police investigator Directive is primarily to adjust the basic terms. The court established that they Peter Kovařík, who launched the requirements of Customer Due Diligence had deliberately given advantage to a Government’s anti-corruption intentions. or Enhanced Customer Due Diligence. group of contractors, bypassing due The Corruption Prevention Department processes in public procurement. While monitors and creates reports on The amendment imposes an obligation to Janušek was sentenced to twelve years corruption, promotes transparency and disclose the ultimate beneficial owner(s) in prison, Štefanov will serve his nine organizes anti-corruption training. (UBO) in performing basic care in relation years sentence with minimum security. to the client. In the light of the Both were also banned from holding a While the Slovak authorities continue recommendations of the Financial Action public office and sentenced to pay a struggling in their fight against corruption, Task Force and the Council of Europe’s significant financial penalty. there has been a significant development MONEYVAL Committee, the legislative in past months in Slovak public attitudes. amendment tightens the obligations of In March 2017, the Senate of Specialized The murder of investigative journalist Ján property associations that may be misused Criminal Court sentenced two former Kuciak, who had been working on cases to finance terrorism. These entities should, policemen to five and a half and six years covering corruption of public officials, and in addition to identifying UBOs, also identify of imprisonment for accepting bribes and his fiancée Martina Kušnírová, in February donors and natural persons and legal misusing the power of public officials. 2018 sparked public outrage. The persons to whom they have provided a gift The court further imposed a fine of EUR murders led to a series of public protests of at least EUR 1,000. 500 and a ban on the practising of any that exceeded the 1989 Velvet Revolution service in the police for a period of five protests in size and have resulted in Perhaps the most significant change years for both. Prime Minister Robert Fico and Minister introduced by the amendment is the of Interior Robert Kaliňák stepping down. new obligations of privately held companies In March 2017, the Mayor of Devínska to identify their UBO and maintain Nová Ves, part of Bratislava district, was BACK TO MAP
June 2018 31 ANTI-BRIBERY AND CORRUPTION REVIEW
SPAIN
Changes to legislation Prosecutions and on charges of bribery and the embezzlement of public funds, followed Due to the political situation in Spain there enforcement actions by money laundering. have not been many changes to legislation The specialized Anti-Corruption Prosecution in the past two years, with the exception of Office is starting prosecutions related to The Anti-Corruption Prosecution Office is laws required to be introduced by European donations and bribes to political parties, also starting prosecutions for private sector Union legislation, such as the Fourth considering this conduct to be public bribery involving football clubs. In this Money Laundering Directive or the Data bribery. A number of companies are regard, Operación Soule is an investigation Protection Regulation. currently being investigated for paying conducted against the former President of bribes in order to obtain public contracts. the Spanish Football Federation (RFEF), as In the field of public and private corruption, well as members of his family and other relevant changes have been introduced, In particular, the Operación Lezo case is managers of RFEF who allegedly received from a public and administrative law currently one of the most relevant bribes or irregular commissions in exchange perspective, by the Public Sector corruption-related investigations. The for ‘fixing’ the results of football games. The Agreements Law (Law 9/2017, National Investigation Court (which is a estimated damage caused to RFEF is 8 November, updating Spanish legislation specialized court for investigating certain EUR 45 million. following the EU Directives 2014/23/EC crimes of national importance) believes that and 2014/24/EU, on 26 February 2014), Canal de Isabel II, the Region of Madrid There are several prosecutions related to which came into force on 9 March 2018. water supplier company controlled by the the bribery of foreign public officials, regional Government of Madrid, was including the Angola and Mercasa cases. The new Public Sector Agreements Law involved in several suspicious transactions, The Angola case is a complex criminal sets out a more restrictive approach to the including the acquisition of assets in Latin investigation, as a result of which more than public tendering process and new rules for America far above their market value. 30 individuals have been brought before the obtaining public contracts. These National Court in Madrid in connection with modifications and changes are highly This case implicated several high-profile allegations that the Spanish semi-public relevant for anti-corruption matters, given figures in Spain, including a former regional company Defex, which entered into an that a number of the most high-profile president of the Region of Madrid, Ignacio agreement with the Angolan Government proceedings in recent years have related to González, and a Spanish business tycoon for the supply of police equipment for this type of contract with the public and chairman and CEO of the Spain-based EUR 153 million, was involved in offences administration (such as the Gürtel Case, multi-national construction company OHL. of bribery of foreign public officials, money the Púnica Case, or the most recent Reportedly, in order to secure a commission laundering, tax fraud, falsehood and Lezo Case). for an infrastructure project, OHL paid EUR criminal association. 1.4 million to the former regional president Finally, the Public Sector Agreements Law of Madrid, who had been in charge of The Angola case is closely connected to provides, following previous case law state‑owned company Canal Isabel II during the Mercasa case, which relates to jurisprudence from the Spanish Supreme his time as vice president of the region allegations of bribing public officials in Court, that state-owned companies between 2003 and 2012. Angola, Panama and the Dominican (companies in which the state holds more Republic in order to obtain public contracts than the 50% of the shares) are considered Another relevant case is the investigation in these countries. public companies and therefore must apply known as Caso Zaplana in which all the preventative measures for Eduardo Zaplana, the former Spanish Finally, several important judicial rulings were transparency and neutrality applied by the Minister for Employment and Social issued in 2018, after years of investigation. administration to public contracts. Security and former Mayor of Benidorm, The most important ruling, issued in May was arrested by Spanish Civil Guards 2018, is the first and the most high-profile
32 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
part of the Gürtel Case in which a number involving politicians and political parties. responsibility themselves, and (ii) because of business-persons, as well as the This trend is likely to be maintained in the criminal proceedings are a faster way to Treasurer and other individuals from a following years given that a couple of new pursue a claim against a contractor than political party had been convicted of public relevant prosecutions were launched in other methods. A number of prosecutions bribery. The political party was held civilly 2017/2018. In the past few years, there have been commenced in Barcelona liable for obtaining benefit from the has also been a strong interest in related to the construction works of the AVE corrupt practices. prosecuting cases of bribery of foreign (high-speed trains) where the administration public officials and corruption in official has made a claim against the contractors Enforcement trends sports competitions. because the final costs of the works were in excess of the initial budget. A number of Prosecutions for both public and private There is additionally a trend for public different contractors and sub-contractors of sector corruption have become increasingly authorities to send claims against a the Ministry of Transport have been held regular recently. As in previous years, the contractor directly to the Public Prosecutor’s under investigation. most important prosecutions (and those Office, because of two main factors: (i) the attracting most media comment) are those reluctance of the public officials to take BACK TO MAP
June 2018 33 ANTI-BRIBERY AND CORRUPTION REVIEW
THE NETHERLANDS
Changes to legislation • Within the scope of their client Prosecutions and acceptance due diligence efforts: Registration in the UBO-register as enforcement actions institutions with an obligation to notify, required by Directive 2015/849 such as lawyers, civil law notaries, real Dutch oil-engineering company SBM In March 2017, a legislative proposal was estate agents and banks; and Offshore remains in the spotlight. In introduced to Parliament to implement November 2014, SBM Offshore settled part of Directive 2015/84912, in particular, • All people and organizations with a with the Dutch authorities for USD 240 the obligation to maintain a central legitimate interest. million to bring an end to the register with information on the ultimate investigations into alleged bribery in beneficial owner (UBO) of companies and This legislative proposal is expected to be Angola, Brazil and Equatorial Guinea. other legal entities. The obligation to adopted by mid-2018. Investigations were re-opened in the register UBOs will apply to private and United States. SBM Offshores settled public limited companies, partnerships, European Public Prosecutor’s Office with the US Department of Justice for general partnerships, limited partnerships, Furthermore, the current Dutch coalition USD 238 million in November 2017. associations, foundations, and other legal Government announced, in its coalition A request by Jonathan Taylor, a former entities. Listed companies are exempted. agreement of late 2017, that the SBM Offshore in-house lawyer, for The Dutch Chamber of Commerce Netherlands will become a party to the preliminary witness hearings of senior (Kamer van Koophandel) will operate the European Public Prosecutor’s Office SBM offshore executives with a view to register. A UBO-registration must contain (EPPO). The EPPO will be in charge of establishing certain facts was dismissed the following details: investigating, prosecuting and bringing to by a Dutch Court on 17 January 2018. justice the perpetrators of offences Such hearings are a preliminary • Name; against the Union’s financial interests. It is procedural tool to establish whether • Month and year of birth; currently still unclear when the EPPO will there is enough evidence to bring a become operational. lawsuit. The Dutch Court ruled that the • Nationality; requested witness hearings would not • Country of residence; Other be allowed as it follows from the US • Scope and nature of the held Laws are being introduced and/or settlement that the facts in question are interest; and amended to provide a more effective no longer disputed. In Brazil, the framework for the pursuing of corrupt prosecutors rejected leniency • Information such as address details individuals. An example is the recent agreements in September 2016 and the and Citizen Service Numbers (these will Dutch lobbying for an EU or national investigation is still ongoing. only be available to a limited set of Magnitski-law, through which national specifically authorized institutions). Governments may prosecute foreigners Accountancy firm Ernst & Young (EY) is in relation to large scale corruption. being prosecuted by the Dutch Public The UBO-register will be accessible to: The Municipalities Act is also being Prosecution Service (DPPS) following the • Authorities such as the National Bank amended to prevent integrity issues bribery scandal related to its client (DNB), the Authority for Financial within municipal authorities. VimpelCom (currently, Veon). In 2016, Markets (AFM) and the Financial Furthermore, as from July 2018, the VimpelCom settled for a record sum of Intelligence Unit (FIOD) and equivalent FIOD can use new surveillance powers USD 795 million with the DPPS and the organizations from other EU (including phone taps and undercover US Department of Justice after it was member states; surveillance) for serious violations accused of bribing Gulnara Karimova, the without prior police permission, subject oldest daughter of the former president of to a judge’s sign off of the investigation. Uzbekistan. The DPPS alleges that EY
12 Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (Fourth Anti-Money Laundering Directive).
34 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
purposely did not, not timely or not family-owned business in the controlling powers are likewise completely, notify suspicious transactions Netherlands. These include technical contributing to the control and the by VimpelCom, whilst they had an components company Econosto (over pursuit of bribery and corruption. obligation to do so. The DPPS is also controversial payments in the Middle The Dutch Central Bank (DNB) has reported to be investigating whether ING, East) and heavy transport company stated, in its Vision on Supervision in the same bribery scandal, complied Mammoet (in relation to alleged bribery in 2018-2022 report of November 2017, with the applicable rules as financial Africa and Iraq), which are thus that combating financial-economic crime transfers are reported to have been made implicated in an investigation into fraud, is of the highest priority as it may from an ING account. bribery, forgery and sanctions violations. diminish trust in the financial system. The Dutch Authority for Financial Markets The DNB specifically refers to its In a judgment dated 19 April 2018, a (AFM) brought complaints against two measures against trust offices. Dutch Court ruled that the DPPS’ case accountants from PwC before a against three former accountants of specialized disciplinary court in relation to Furthermore, new International Financial KPMG, in relation to the Ballast Nedam their alleged involvement with Econosto. Reporting Standards have been corruption scandal, was inadmissible. In No ruling has been made yet. introduced for listed companies. short, the court deemed it For example, so-called Public Interest incomprehensible that the accountants Enforcement trends Entities (e.g. housing corporations, were prosecuted, but not those actually pension funds, etc.) with more than There remains a strong focus on the role responsible for the bribery of public 500 employees must include in their of auditors and other ‘facilitators’ in the officials in Saudi Arabia and Suriname. annual reporting information on their prevention of bribery and corruption in The case against the eight directors of anti-bribery/anti-corruption policies. the Netherlands. It is expected that this Ballast Nedam allegedly responsible for From 2018 onwards, the AFM monitors will continue during the coming years. the bribery had previously been settled compliance with these rules. with the DPPS. Furthermore, the The Netherlands has risen to place 14 in prosecutors had factually already agreed BACK TO MAP the Financial Secrecy Index of 2018, 27 upon a settlement with the former places higher than its ranking in 2015. accountants. The DPPS indicated that it This higher ranking may largely be intends to appeal this judgement. attributed to failing to implement the UBO-register by the deadline in 2017. The Dutch Fiscal Information and Financial secrecy is considered a Investigation Service (FIOD) is reported to significant contributing factor to be conducting criminal investigations into corruption. Numerous institutions with three subsidiaries of SHV, the largest
June 2018 35 ANTI-BRIBERY AND CORRUPTION REVIEW
TURKEY
Changes to legislation Public Officials Ethics Board send only Turkey 2018 Progress Report and a limited number of suspicious cases Transparency Turkey’s 2017 Transparency In the last couple of years, Turkey has to the prosecutor’s office to launch a Report, the Turkish public procurement gone through back-to-back elections and criminal trial. legislation still falls short of being in line a few corruption scandals that received with EU regulations particularly for tenders global attention, as well as a failed coup According to data provided by the by municipalities or for public-private attempt in July 2016. As a result of this, European Council, corruption related partnerships concerning significant the Government declared a state of sentences by Turkish courts have investments. This is mainly due to emergency on 20 July 2016 which has decreased from 5,497 in 2016 to 3,889 significant exceptions granted under the been extended for successive three in 2017. Corruption and bribery cases framework law (i.e. Public Procurement months periods and is still ongoing. generally involve either the central or Law [Law No. 4749]), which is not fully, regional administrations of title deed but rather broadly, aligned with the 2004 Studies dated late-2017 and early-2018 registries, public procurement bodies EU public procurement Directives. have concluded that the 2016 – 2019 and other governmental entities primarily Government action plan introduced by engaged in construction and Further, legal protections are given to the Circular No. 2016/10 on Increasing transportation sectors. According to public officials such as the requirement of Transparency and Strengthening the data provided by the European Council, having the authorisation of the relevant Combat against Corruption has not as a result of investigations for public official’s superior prior to been duly followed and Turkey has not corruption in public procurement, there prosecution. The European Commission’s yet succeeded in fully implementing the were 583 convictions in 2017, Turkey 2018 Progress Report further United Nations Convention Against decreased from 1,115 in 2016. In 2017, underlines the fact that legal provisions Corruption, to which it is a party. new anti-corruption and bribery continue to be inadequate in terms of Although Turkey’s Public Procurement investigations were initiated against 123 preventing conflicts of interest as well as Law is broadly aligned with EU public traffic police officers, who were allegedly in relation to disclosure of assets for the procurement Directives, in 2017 several bribed by truck drivers for permitting public officials conducting tenders. derogations were introduced for transportation with excessive load, and defence, security and intelligence 12 officers in the Turkish Standard In terms of harmonisation with global related procurements. Institute, who allegedly issued certificates standards, there are still a few to several companies without conducting shortcomings in the Turkish corruption- Prosecutions and the necessary audits on such companies. related legislation. Particularly, certain enforcement actions provisions of the Turkish Criminal Code The Public Officials Ethics Board declared Further, the criminal trial which was (Law No. 5237) do not meet the in its 2016 annual report that 145 petitions launched in mid-2016 remains ongoing standards put in place by the Criminal were received in connection with breach against public officials at İzmir Bayraklı Law Convention on Corruption. For of ethical principles by public officials. Municipality, including the Mayor himself, instance, constituents of the crime of Out of these 145 petitions, 121 were who are accused of rigging tenders and active bribery, although covered as an rejected due to procedural reasons, illegally accepting gifts including mobile offence, is still not aligned with 24 have been accepted and reviewed by phones and plane tickets. international conventions. Also, provisions the board and only five of these 24 cases regarding corruption in the private sector resulted in a board decision confirming Enforcement trends fail to meet the international standards. ethics violation. It should also be noted As analysed under various studies that governmental units such as the including the European Commission’s
36 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
Other developments decline from its former ranking of 75th out of 176 countries in 2016. Turkey International corruption ranking continues to decline in ranking since In 2017, Turkey has continued to 2013, the year which marks the publicly descend in ranking on the Corruption exposed allegations against high-ranking Perception Index published by public officials. Transparency International, which aims to measure the perception of corruption in BACK TO MAP the public sector. Turkey was ranked 81st out of 180 countries, which is a slight
June 2018 37 ANTI-BRIBERY AND CORRUPTION REVIEW
UKRAINE
Changes to legislation cash and own valuables such as luxury these investigations are mainly judges, watches, expensive cars and vintage MPs and heads of local authorities. Recent anti-corruption legislative changes wine collections. Ukraine’s Prosecutor in Ukraine have included the General has vowed to investigate all Investigation against the Head of establishment of specialised anti- politicians/officials who declared savings Parliamentary Faction corruption courts, electronic wealth in excess of USD 100,000 and/or gifts of declarations for public officials Since October 2017, NABU and NAPC over USD 10,000. (E-Declarations) and a range of other have investigated the winning of three anti-corruption preventive measures. suspicious lottery prizes of aggregate Anti-corruption courts UAH 571,000 (USD 21,800) by the Head E-Declarations A new law ‘On the Judicial System and of Parliamentary Faction Oleg Lyashko, Status of the Judges’ (adopted in June which were declared in his E-Declaration. Following the introduction of 2016) provides a basis for the On 26 February 2018, the local court E-Declarations for public officials introduction of specialised anti-corruption granted NABU’s petition to get access to (implemented in practice in August 2016), courts, in particular, the Higher Anti- the documents underlying Mr Lyashko’s which all state officials, MPs and officials Corruption Court. The draft law ‘On Anti- winnings. The investigation is still ongoing. of local Government bodies must Corruption Courts’ has been adopted at complete with details of their assets, the first reading and is expected to be Charges against the son of the income, expenditure and financial finally passed this year, although the date Minister of Interior obligations, the Parliament of Ukraine of voting for the Bill has been delayed extended the E-Declarations requirement On 31 October 2017, NABU conducted several times. The rationale for the to members of anti-corruption NGOs, a search at the premises of Oleksandr introduction of anti-corruption courts is presidential candidates and parliamentary Avakov, the son of the Minister of Interior that the general courts are too candidates in March 2017. Arsen Avakov. The search related to the overloaded with cases and are vulnerable criminal investigation of procurement of to threats or influence from high-ranking They were ordered to submit their 5,000 military backpacks by the Ministry corrupt officials who may be charged E-Declarations by 1 May 2017. These of Interior at inflated prices from a with bribery or other corruption offences. measures are controversial since they company controlled by Arsen Avakov. appear to target specifically anti- corruption NGOs which receive foreign Prosecutions and NABU apprehended Oleksandr Avakov funding. On 3 April 2018, the Parliament enforcement actions and the former Deputy Minister of Interior, who was allegedly involved in the illicit failed to vote for abolition of During 2017 the National Anti-Corruption procurement. However, the local court E-Declarations for NGOs, notwithstanding Bureau of Ukraine (the NABU) released both of them on personal the criticism of international institutions. investigated a constantly increasing commitment, the softest form of restraint At the same time, Parliament abolished number of cases. As of 31 March 2018, in criminal proceeding, while the an obligation to submit E-Declarations for NABU directed 127 indictments to the prosecutors sought the pre-trial some categories of military servicemen courts and obtained 19 verdicts. Overall, detention. On 5 April 2018, NABU participating in the Anti-Terrorist NABU is currently investigating 609 announced that the investigation against Operation in the East of Ukraine. criminal cases. The most recent and Oleksandr Avakov and his alleged famous cases are described below. All senior Ukrainian Government and accomplice was ready for trial. parliamentary officials had to complete New investigations based on the data The criminal investigation against and submit their most recent provided in electronic declarations E-Declarations by 1 April 2018. Around Oleksandr Avakov is very notable for In 2017, the total number of 1,140,000 E-Declarations were filed in Ukrainian enforcement system, since his investigations based on the information 2017, revealing that a large number of father Arsen Avakov belongs to the ruling set out in the E-Declarations was 27. Out Ukrainian top officials/politicians and their coalition and is known as one of the of these, ten E-Declarations were family members keep millions of dollars in most powerful politicians in Ukraine. transferred to NABU. The subjects of
38 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
Criminal case against the Member Bribery case Enforcement trends of Parliament NABU and the Anti-corruption The NABU continues to focus on In 2017, NABU arrested the Member of Prosecutor’s office are proceeding allegations of corruption, particularly by Parliament Mykola Martinenko on against Judge Chaus on allegations of Ukrainian officials. However, there have charges of embezzlement of property of accepting a USD 150,000 bribe. The been no investigations against top the state enterprise in the amount of money was found in two glass jars, officials resulting in convictions yet. USD 17 million. NABU and the Anti- which Judge Chaus had buried in the Moreover, based on a recent NABU corruption Prosecutor’s office alleged that yard of his residence. Since judges in report, most indictments of corrupt the state enterprise had purchased Ukraine have immunity from officials remain unscheduled for hearing uranium through intermediary companies prosecution, the NABU’s detectives for over ten months, highlighting the controlled by Mr Martinenko and could not detain the judge at the time. urgent need for the introduction of the established for the sole purpose of Later, the Ukrainian Parliament anti-corruption court. reselling the goods at a higher price. The supported the petition of the Prosecutor investigation is still in progress. General’s Office to detain and arrest BACK TO MAP Judge Chaus. However, by that time The local court released Mykola Judge Chaus had fled the country. He Martinenko on bail of the Members of was later arrested in Moldova and is Parliament from his own faction. now facing extradition to Ukraine. Mr Martinenko is known as one of the most influential and wealthy Members of Parliament.
June 2018 39 ANTI-BRIBERY AND CORRUPTION REVIEW
UNITED ARAB EMIRATES
Changes to legislation AED 120,000 (approximately Enforcement trends USD 32,670) to a Dubai airport official in There have been no significant changes The UAE authorities do not tend to order to leave the country so that his to anti-corruption legislation since our last publish information about enforcement stem cells could be used in an operation update in June 2017. actions, or enforcement strategy. intended to save his son, who was However, there has been speculation that suffering from leukaemia. The Emirati the recent events in the Kingdom of Prosecutions and airport official was jailed for one year and Saudi Arabia may trigger additional enforcement actions fined the same amount as the bribe. scrutiny of such payments in the United On appeal, the father received a lenient The UAE authorities do not typically Arab Emirates, and companies would be judgement; he was handed a suspended publish information on prosecutions or prudent in taking a conservative sentence of three months and fined enforcement actions. However, the approach when it comes to any form of AED 60,000 (approximately USD 16,335) following recent high profile bribery case payments to public officials. attracted considerable media attention. after the judge accepted the defence’s argument that the defendant had acted The case involved a father who was BACK TO MAP subject to a travel ban paying on “fatherly and humane” grounds.
40 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
UNITED KINGDOM
Changes to legislation implement United Nations sanctions was convicted on 21 February 2018 of regimes and to use sanctions to meet failing to prevent its former managing The Criminal Finances Act 2017 national security and foreign policy director from bribing a project manager in introduced a number of anti-bribery objectives, as well as to enable anti- a property company in connection with related measures which have now been money laundering and counter-terrorist office refurbishment contracts worth GBP brought into effect. The new powers to financing measures to be kept up-to-date 6 million. Skansen Interior Limited (with issue ‘unexplained wealth orders’ and the and in line with international standards staff of only 30 employees) conducted its supporting ‘interim freezing orders’ came following the withdrawal of the UK from own internal investigation, proactively into force on 31 January 2018. A UWO the European Union. The Act includes a brought matters to the attention of the requires persons reasonably suspected of provision requiring the Secretary of State City of London Police and cooperated involvement in, or of being connected to to publish reports on progress towards with their investigation, but was not a person involved in, serious crime, to establishing a register of beneficial offered a deferred prosecution agreement explain the nature and extent of their owners of overseas entities that own or (DPA). Skansen sought to rely on the interest in particular property, and to want to buy property in the UK, or want defence that it had adequate procedures explain how the property was obtained, to participate in UK Government in place to prevent bribery which were where there are reasonable grounds to procurement, an anti-corruption measure proportionate to its (small) size. suspect that the respondent’s known (a Government statement in March However the jury did not accept that the lawfully obtained income would be 201814 said the Government intends to company’s general policies and insufficient to allow the respondent to publish a draft Bill to implement this procedures on ethics, which required obtain the property. A UWO may also be measure in summer 2018, and for the everybody to act honestly and ethically, used against politically exposed persons, register to be operational in 2021.) or its financial controls on the payment without having to meet the requirement There are also provisions in the Sanctions of invoices, amounted to adequate of reasonable suspicion of being involved and Anti-Money Laundering Act relating procedures. There was no specific anti- in serious crime. Failure to respond to a to public registers of beneficial ownership bribery policy in place at the time of the UWO may give rise to a presumption that of companies registered in British conduct, no proper training and no the property is recoverable under any Overseas Territories. individual with specific responsibility for subsequent civil recovery action. The new ABC compliance.15 No penalties could be power has already been used; on In a related development, the new imposed on the company, which has 28 February the UK National Crime corporate criminal offences of failing to been dormant since 2014. Two senior Agency announced that it had secured prevent facilitation of UK or non-UK tax executives at the company pleaded guilty two UWOs to investigate assets totalling evasion came into force on 30 to bribery and corruption offences. GBP 22 million (approximately USD 29.4 September 2017. million)believed to be ultimately owned by As part of the SFO’s investigation into a politically exposed person, and relating Unaoil, launched in March 2016, a to two properties in London and South Prosecutions and number of individuals were charged in East England.13 enforcement actions November 2017 with conspiracy to make In the first instance of a company corrupt payments (under pre-Bribery Act The Sanctions and Anti-Money pleading not guilty to the corporate legislation) to secure the award of Laundering Act 2018 received Royal offence of failing to prevent bribery (under contracts in Iraq to Unaoil’s client SBM Assent on 23 May 2018. The Act is section 7 of the Bribery Act 2010), a Offshore, between June 2005 and intended to enable the UK to continue to small UK interior refurbishment company August 2011. Further charges of
13 See https://www.cliffordchance.com/briefings/2018/03/uk_authorities_secureunexplainedwealthorder.html for more information about UWOs. 14 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachmentdata/file/681844/ROEBO_Gov_Response_to_Call_for_Evidence.pdf. 15 See https://www.cliffordchance.com/briefings/2018/03/first_contested_prosecutionforfailuret.html for more information about the case.
June 2018 41 ANTI-BRIBERY AND CORRUPTION REVIEW
conspiracy to give corrupt payments projects to invest in to benefit the Aerospace and Defence cases. This will, I were announced by the SFO in the poorest in Chad. expect, continue.” Unaoil investigation on 22 May 2018 in connection with the award of a contract In September 2017 F.H. Bertling Ltd and Discussing international cooperation, Ms worth USD 733 million to Leighton six current and former employees were de Silva said the SFO continued to work Contractors Singapore PTE Ltd for a convicted (following guilty pleas) of closely with partners in Europe, the project to build two oil pipelines in conspiracy to make corrupt payments to Americas, Australasia and beyond: southern Iraq. an agent of the Angolan state oil “The trans-border nature of financial company, Sonangol, in relation to F.H. crime means that our links will only On 19 April 2018 the SFO announced it Bertling’s freight forwarding business in strengthen, not just in the area of has opened a criminal investigation into Angola and a contract worth operational cooperation, but also in the suspected corruption in the conduct of approximately GBP 20 million exchange of ideas, such as DPA regimes business in Algeria by Ultra Electronic (approximately USD 26.7 million). and how they are suitably adapted into Holdings plc, its subsidiaries, employees other jurisdictions. and associated persons, following a self- Enforcement trends report by Ultra. On 18 January the SFO Ms de Silva said the SFO continued to Mr David Green, Director of the SFO, said it had opened investigations into be open to the possibility of DPAs but stepped down on 20 April 2018 when his bribery, corruption and money laundering they would not be appropriate for every term of office came to an end. Mr Mark arising from the conduct of business by case; they would consider the Code of Thompson, Chief Operating Officer, took Chemring Group PLC, its subsidiary, Practice and assess whether the over as Interim Director on 21 April, and Chemring Technology Solutions Limited Defendant company had self-reported, will continue in post until 3 September and officers, employees, agents and remediated and how it cooperated. when Mr Green’s successor, Lisa persons associated with them, following Osofsky, will begin her five-year tenure. a self-report. Ms De Silva said that their casework The personality and priorities of the came from a variety of sources, Director can be influential in terms of On 22 March 2018 the High Court increasingly from self-reports but also prosecution strategy and the new granted the SFO’s Civil Recovery Order from intelligence sharing initiatives, Director’s focus will be a matter of of GBP 4.4 million (approximately SARS regime, JIMLIT and the use of considerable interest. Ms Osofsky is a USD 5.8 million) in relation to a Property whistleblower and other forms of foreign former US federal prosecutor, pursuing a Freezing Order originally granted in and domestic intelligence. range of white collar crime, and joins the July 2014, over the proceeds of sale of SFO from Exiger, a risk and compliance company shares held by Mrs Saleh, the Finally, in relation to corporate consultancy. In the short to medium term, wife of a former Chadian diplomatic compliance, Ms de Silva said “Since the it is expected that the SFO will continue official. The underlying case involved passing of [the Bribery Act], we, the SFO, to work to existing priorities, as outlined bribes by Griffiths Energy to Chadian have yet to encounter a corporate with recently in a speech on 18 March 2018 diplomats to secure exclusive contracts sufficient confidence in its compliance by Camilla de Silva, Joint Head of Bribery via a front company, Chad Oil. programme to persuade us of its and Corruption at the SFO. Griffiths Energy self-reported the corrupt adequacy or run a section 7 defence payments and pleaded guilty to argument in court. (…) We saw last week On where the SFO’s attention was corruption charges brought by the the argument run for the first time and a directed, Ms de Silva said that the SFO Canadian authorities. Following the jury rejecting a section 7 defence in a did not focus their sights on a particular takeover by Griffiths Energy by a UK CPS prosecution. (…) The case sector: “However, looking at our corporation and share sale via a UK [Skansen, see above] is perhaps a salient casework, you could identify clusters of broker, the corrupt proceeds came reminder to corporates to ensure their work focused around certain industries, under UK jurisdiction. The SFO said the compliance procedures are sufficiently for example, and by no means limited to, recovered money would be transferred robust and the high bar that will need to the Financial Services Industry and to the Department for International be reached for a section 7 defence to recently early pension release (“pension Development, who would identify key succeed. The starting point is about liberation”) schemes, extractives industry, having bespoke compliance procedures
42 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
in place, but it is more about the investigation with 30 million documents challenging and supporting the substance of the procedures and about submitted for review, and the UK’s first Government in implementing the them actually working in the first place.” criminal case to make use of AI. …The strategy, as well as promoting the UK’s SFO will begin managing all new cases response to corruption both domestically Ms de Silva highlighted a number of with the technology from this month, with and internationally. compliance related issues which could be one case already exceeding Rolls-Royce gleaned from the Rolls-Royce and in size with over 50 million documents A new national economic crime centre Standard Bank DPAs – “for example the requiring review and another larger than within the National Crime Agency is to interaction between and impact of the both cases combined.” coordinate the national response to compliance team on the business unit, a economic crime. New legislation is top level commitment from the Board for Other developments proposed to allow the NCA to directly proper governance and organisation of task the SFO to investigate the worst United Kingdom Anti-Corruption compliance and this effort being properly offenders. The Home Secretary will Strategy 2017 – 2022 resourced, and crucially, a bedding in of a personally chair a new economic crime compliance culture.” The UK Government published its strategic board to drive action. Anti-Corruption Strategy 201 – 2022 in 16 The SFO announced on 19 April 2018 December 2017 . The strategy sets out Joint principles to compensate that its budget had been increased from the Government’s anti-corruption victims of economic crime overseas priorities, both domestic and GBP 34.3 million (previously planned for Following the launch of the Anti-Corruption international, and establishes a long-term 2018/19) to GBP 52.7 million Strategy, new joint principles to framework for tackling corruption up to (approximately USD 45.9 million to compensate victims of economic crime 2022. The Government’s six priorities USD 70.5 million). There is expected to overseas17 were published on 1 June under the strategy are: be a reduction in so-called “blockbuster” 2018. The agreement, between the Crown funding, and the criteria for allocation of • reducing the insider threat in high Prosecution Service, the National Crime blockbuster funding has also changed. risk domestic sectors such as borders Agency and the Serious Fraud Office, is Previously the SFO applied to HM and ports; intended to establish a common Treasury for blockbuster funding when a framework to identify cases where • reducing corruption in public case was forecast to cost more than 5% compensation is appropriate. procurement and grants; of core funding. Blockbuster funding will The announcement pointed to five cases now be available where the spend is over • promoting integrity across the public since 2014 in which GBP 49.2 million GBP 2.5 million (approximately USD 3.3 and private sectors; (approximately USD 65.8 million) had been million) on a single case in a given year. secured as compensation for overseas • strengthening the integrity of the UK as The previous arrangements had been victims, including GBP 28.7 million an international financial centre; criticised by the OECD as providing (approximately USD 38.4 million) potential for political intervention in the • improving the business environment recovered following the conviction of Ao criminal prosecution process. globally; and Man Long, former Secretary of Transport and Public Works in the Macao Special • working with other countries to In April the SFO announced that it would Administration Region for corruption combat corruption. make artificial intelligence available for all offences. Mr Ao’s UK-based assets were of its new casework. In a press release, The Prime Minister also announced the returned to the Region’s authorities. the SFO said “The move to use AI across appointment of John Penrose MP as the SFO cases comes after its successful new anti-corruption champion. BACK TO MAP use in a live pilot in the Rolls-Royce case, Mr Penrose will be responsible for at the time, the SFO’s largest
16 https://www.gov.uk/government/publications/uk-anti-corruption-strategy-2017-to-2022. 17 https://www.sfo.gov.uk/download/general-principles-to-compensate-overseas-victims-including-affected-states-in-bribery-corruption-and-economic-crime-cases/.
June 2018 43 THE AMERICAS ANTI-BRIBERY AND CORRUPTION REVIEW
BRAZIL
Changes to legislation investigation has been trying to discover Operação Câmbio Desliga – May 2018. the relationship between the BRL 51 The Brazilian Federal Police and the Brazil’s main anti-bribery legislation is million dollars (approximately USD 13.5 Public Prosecutor’s Office are Law No. 12,846/2013, referred to as the million) found in cash at the house of investigating 45 alleged money dealers Lei Anticorrupção (the Brazilian former Congressman Geddel Vieira Lima (doleiros), 35 of which were arrested for Anti‑Corruption Law), and various and the supposed corruption schemes money laundering and tax evasion. These associated regulations and rules made involving Caixa Econômica Federal. financial operators may be involved with since 2013. There have been no new Brazilian politicians such as Sergio laws or substantive changes to the Operação Bullish – May 2017. The Cabral, Rio de Janeiro’s former Governor Brazilian Anti-Corruption Law since our Brazilian Federal Police and the Public and other Government officials. Even last Anti-Bribery and Corruption Review Prosecutor’s Office are investigating though this operation is still at the in June 2017. possible frauds and irregularities beginning, the police are estimating that involving subsidies given by Banco USD 1.6 billion has been illegally Prosecutions and Nacional de Desenvolvimento managed by these suspects. enforcement actions Econômico e Social (BNDES) between There has been a significant number of the period of 2007 to 2011 to the Operação Prato Feito – May 2018. The investigations and prosecutions involving Brazilian company JBS, involved in Brazilian Federal Police are investigating corruption in the past year; some of various other corruption schemes. the embezzlement of public funds that these stemmed from the well-known were destined to go to public schools in Operação Lava Jato (Car Wash Operação Rizoma – April 2018. The various Brazilian states. How much money Investigation), which started in March Brazilian Federal Police and the Public was embezzled is still unknown, because 2015 and reached its 51st stage as of Prosecutor’s Office investigated the crimes the operation is still in its early stages. May 2018, while others involved other of money laundering, corruption and However, officials suspect the involvement instances of corruption in the country. unreported remittance of money across of thirteen mayors, four former mayors, the border that ended up causing financial one city councilman, 27 non-elected Operação Unfairplay – October 2017. damages to the Social Security Service of Government officials and a further 40 The Brazilian Federal Police and the Public the Brazilian Post Office (Postalis) and the individuals from the private sector. Prosecutor’s Office investigated and Brazilian Federal Data Processing Agency. arrested the former president of the Enforcement trends Operação Déjà Vu – May 2018. This is Brazilian Olympic Committee and Rio Plea bargains were introduced into the 51st stage of the Car Wash 2016 Committee Carlos Arthur Nuzman Brazilian legislation through Law No. Investigation. During this stage, three and his right hand man, Leonardo Gryner. 12,850/2013. Since then, approximately former Petrobras executives and three Nuzman was accused of bribing officials in fifty plea bargains have been made and financial operators were arrested. The order to bring the Olympic Games to Rio six have been approved and accepted by investigation is into reports that de Janeiro. During the same investigation, the Brazilian Supreme Court. Sergio Cabral, Rio de Janeiro’s former Odebrecht made payments of around BRL 200 million between 2010 and 2012 governor, was accused of being the The most famous of these, and one (approximately USD 54 million) in order to mastermind behind this scheme. Once which attracted the attention of the obtain a contract with Petrobras worth Rio de Janeiro was selected to host the worldwide media in April 2017, was the USD 825 million. It is alleged that the Olympic Games, Sergio Cabral would then plea bargain relating to the Odebrecht money was addressed to the company over-invoice on public constructions. Group, which involved 78 officers and executives and politician’s representatives ex-officers of the engineering and linked to the Brazilian Democratic Operação Tesouro Perdido – September construction global business, as well as Movement (MDB) party. 2017. This is the second stage of the Cui Senators, Federal Deputies, the President Bono investigation, commanded by the of the Congress and of the Senate, a Brazilian Federal Police. This specific Minister of the Federal Court of Auditors
June 2018 45 ANTI-BRIBERY AND CORRUPTION REVIEW
and Ministers of President Michel Temer. the ex-president came as a result of the agreement signed by all anti-corruption The most common crimes described in Car Wash Investigations, during which government entities, including the Public the bargains were corruption, money- the Brazilian Department of Justice found Prosecutor’s Office (MPF), National laundering, fraudulent misrepresentation, out that construction company OAS had Comptroller General (Ministério da collusion, and bid-rigging. Brazilian given Lula an apartment valued at BRL Transparência and Controladoria Geral da President Temer was also mentioned in 2.2 million, in exchange for his help in União), the Attorney General’s Office the plea bargains, but the Public obtaining state-owned Petrobras’ (Advocacia Geral da União) and the Prosecutor’s Office did not include him in construction contracts for OAS. General Accounting Office Tribunal( de the investigations because he is entitled Contas da União) was entered into with to temporary immunity due to his current The use of leniency agreements, Interpublic, an American communications position as President of Brazil, which introduced by Law No. 12,846/2013, has company with activities in Brazil. This means he cannot be investigated for not been as widespread as expected represents a major breakthrough in the crimes that are not a consequence of his because of problems arising from the fact fight against corruption because now that mandated activities. that government entities have had to these government entities have shown come to an agreement as to which one they can work together, it is expected Earlier this year, on April 2018, in one of of them would enter into the agreement that companies will feel more comfortable the most important corruption-related with the company. This has meant that in entering into these types of events of recent times, Brazilian companies which have signed a leniency agreements with the Government. ex-president, Luiz Inácio da Silva, agreement with one government entity commonly referred to as Lula, was may still be prosecuted by another BACK TO MAP ordered to commence a 12-year prison government entity, thus giving companies sentence for corruption and money little incentive to come forward. However, laundering. The evidence used to convict on April 2018, the first leniency
46 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
UNITED STATES OF AMERICA
Changes to legislation statute of limitations to the civil monetary tolling agreements at much earlier stages penalties, but not disgorgement or of negotiation. We also expect Kokesh v. SEC prejudgment interest (an additional defendants to more aggressively The Supreme Court’s interpretation of 28 USD 18.1 million) because the SEC had negotiate with the SEC when determining U.S.C. § 2462 in Kokesh v. SEC has the long argued that disgorgement was settlement terms given the time limits potential to significantly alter the remedial and not a penalty or forfeiture. now imposed on disgorgement, which is Securities and Exchange Commission’s On appeal, the Tenth Circuit upheld the often the largest penalty amount imposed (SEC) approach to investigating and trial court’s award;21 the Supreme Court on defendants. Finally, the decision pursuing complex cases, including those granted certiorari to resolve a circuit split. leaves open the possibility of further 18 involving foreign bribery and corruption. litigation – in footnote three of the In Kokesh, the SEC alleged that the Finding that the imposition of the full Supreme Court’s decision, the court defendant, Charles Kokesh, disgorgement amount against Kokesh wrote, “nothing in this opinion should be misappropriated USD 34.9 million was both punitive and intended to interpreted as an opinion on whether between 1995 and 2009 through two address a public wrong, the Supreme courts possess authority to order investment-adviser firms and “in order to Court held that “SEC disgorgement thus disgorgement in SEC enforcement conceal the misappropriation … caused bears all the hallmarks of a penalty.”22 proceedings or on whether courts have the filing of false and misleading SEC Consequently, the five-year default properly applied disgorgement principles 19 reports and proxy statements.” The statute of limitations contained in § 2462 in this context,”24 which some have SEC prevailed in a jury trial and Kokesh was applicable and Kokesh could not be suggested indicates the court may further was ordered to, among other things, forced to disgorge the sums from before constrain the SEC’s ability to obtain disgorge the full USD 34.9 million he the five-year period. disgorgement in the future. had misappropriated. The SEC’s Co-Director of the Prosecutions and Kokesh appealed the trial court’s Enforcement Division, Steven R. Peikin, disgorgement award, arguing that the full responded to the Supreme Court’s enforcement actions award of USD 34.9 million was decision stating “Kokesh is a very In 2017, there were 11 Foreign Corrupt inappropriate because the majority of that significant decision that has already had Practices Act (FCPA) corporate sum – USD 29.9 million – “resulted from an impact across many parts of our enforcement actions and USD 1.92 billion 20 violations outside the limitations period.” enforcement programme. I expect it will in settlements collectively for the He based his argument on 28 U.S.C. have particular significance for our FCPA Department of Justice (DOJ) and the § 2462, which states that unless matters, where disgorgement is among SEC. While these enforcement specified by Congress, any “action, suit the remedies typically sought.”23 numbers reflect a decrease from 2016 or proceeding for the enforcement of any (which saw 27 enforcement actions and civil fine, penalty or forfeiture” shall have a As a result of the Kokesh decision, we USD 2.48 billion in settlements), we do five-year statute of limitation. In Kokesh’s expect to see an increase in the tempo of not have any reason to believe that case, the trial court applied the five-year SEC investigations and requests for the US authorities have reduced their
18 137 S. Ct. 1635 (2017). 19 Id. 20 Id. 21 Kokesh v. SEC, 834 F.3d 1159 (2016). 22 Id. 23 Steven R. Peikin, “Reflection on the Past, Present, and Future of the SEC’s Enforcement of the Foreign Corrupt Practices Act,” New York University School of Law, New York, NY (9 November 2017). 24 137 S. Ct. at FN 3.
June 2018 47 ANTI-BRIBERY AND CORRUPTION REVIEW
FCPA-related enforcement efforts. Significantly, “if a criminal resolution is Rosenstein explained, “our new policy Included among the 2017 settlements is warranted,” the DOJ will not require a discourages ‘piling on’ by instructing the largest resolution in FCPA history, monitor if the company has adequately Department components to which involved a combined settlement of remediated the misconduct and appropriately coordinate with one more than USD 965 million to be paid to strengthened its internal controls.29 another and with other enforcement US, Dutch, and Swedish authorities.25 As agencies in imposing multiple penalties Deputy Attorney General Rod Rosenstein In addition to its long-term impact on on a company in relation to affirmed in a prepared statement, “The the DOJ’s FCPA enforcement strategy, investigations of the same misconduct.31 FCPA is the law of the land. We will the policy is also likely to reshape the He further noted:32 enforce it against both foreign and Criminal Division’s broader approach to domestic companies that avail voluntary disclosures. According to “In highly regulated industries, a themselves of the privileges of the Benjamin Singer, the securities and company may be accountable to American marketplace.”26 financial fraud unit chief at the DOJ, the multiple regulatory bodies. That creates policy regarding declinations will be a risk of repeated punishments that may Enforcement trends expanded to encourage voluntary exceed what is necessary to rectify the disclosures in other areas of criminal harm and deter future violations. FCPA Pilot Program Made Permanent fraud enforcement, which have The DOJ formally incorporated the FCPA historically been lower than the FCPA Sometimes government authorities Pilot Program, which was first announced rate of self-disclosure.30 coordinate well. They are force multipliers on 5 April 2016, into the U.S. Attorney’s in their respective efforts to punish and 27 Manual on 29 November 2017. As the DOJ’s Newly Announced deter fraud. They achieve efficiencies and permanent successor to the Pilot “Piling On” Policy limit unnecessary regulatory burdens. Program, the FCPA Corporate On 9 May 2018, Deputy Attorney Enforcement Policy strongly encourages General Rod Rosenstein announced a Other times, joint or parallel investigations voluntary disclosure: “when a company new non-binding DOJ policy regarding by multiple agencies sound less like has voluntarily self-disclosed misconduct “Piling On” – the simultaneous singing in harmony, and more like in an FCPA matter, fully cooperated, and imposition of multiple penalties for the competing attempts to sing a solo”. timely and appropriately remediated… same underlying misconduct by different there will be a presumption that the regulatory or criminal authorities. company will receive a declination ….”28
25 DOJ Press Release, “Telia Company AB and Its Uzbek Subsidiary Enter Into a Global Foreign Bribery Resolution of More Than USD 965 Million for Corrupt Payments in Uzbekistan” (21 Sept. 2017), available at: https://www.justice.gov/opa/pr/telia-company-ab-and-its-uzbek-subsidiary-enter-global-foreign-bribery-resolution- more-965; SEC Press Release, “Telecommunications Company Paying USD 965 Million For FCPA Violations” (21 Sept. 2017), available at: https://www.sec.gov/news/press-release/2017-171. 26 Deputy Attorney General Rosenstein Delivers Remarks at the 34th International Conference on the Foreign Corrupt Practices Act (29 Nov. 2017), available at https://www.justice.gov/opa/speech/deputy-attorney-general-rosenstein-delivers-remarks-34th-international-conference-foreign. 27 Rod Rosenstein, Deputy Attorney General, Remarks at Remarks at the 34th International Conference on the Foreign Corrupt Practices Act (29 Nov. 2017), available at https://www.justice.gov/opa/speech/deputy-attorney-general-rosenstein-delivers-remarks-34th-international-conference-foreign. 28 United States Attorneys’ Manual, §9-47.120, available at: https://www.justice.gov/criminal-fraud/file/838416/download. 29 Id. 30 Kelley Swanson, “DOJ Expanding use of FCPA declination policy principles,” Global Investigations Review (Mar. 2, 2018), available at: https://globalinvestigationsreview.com/article/1166274/doj-expanding-use-of-fcpa-declination-policy-principles. 31 Rod Rosenstein, Remarks to the New York City Bar White Collar Crime Institute (9 May 2018), available at: https://www.justice.gov/opa/speech/deputy-attorney-general-rod-rosenstein-delivers-remarks-new-york-city-bar-white-collar. 32 Id. 33 Id. 34 Id.
48 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
Of particular importance for multi-national “egregiousness of the wrongdoing; whether the policy will result in a notable corporations is the directive that DOJ statutory mandates regarding penalties; reduction in DOJ penalties. Where the attorneys should “coordinate with other the risk of delay in finalizing a resolution; policy may have the most significant federal, state, local, and foreign and the adequacy and timeliness of a impact is in cases where foreign entities enforcement authorities seeking to company’s disclosures and cooperation are subject to enforcement actions in resolve a case with a company for the with the Department.”34 While the actual their home or other non-US jurisdictions. same misconduct.”33 The DOJ will impact of the new policy has yet to be consider a number of factors when seen, members of the defence bar have BACK TO MAP applying the policy, including the already voiced their skepticism over
33 Id. 34 Id.
June 2018 49 ASIA PACIFIC ANTI-BRIBERY AND CORRUPTION REVIEW
AUSTRALIA
Changes to legislation AUD 9,450,000 (approximately In September 2017, three individuals USD 760,600 to USD 7.2 million) and were convicted in Australia’s first public On 6 December 2017, the Crimes the maximum civil penalties from AUD sentence of conspiracy to bribe a Legislation Amendments (Combatting 1,000,000 to AUD 10,500,000 foreign public official, following guilty Corporate Crime) Bill 2017 was (approximately USD 760,600 to USD 8.0 pleas shortly before trial. The defendants introduced into the Australian million). Increases are also proposed for were not the original targets of the Parliament. It proposes amendments to individuals who are found to have investigation; investigators were looking Australia’s federal Criminal Code breached the Corporations Act. At the into their business associate when they (the Criminal Code Act 1995 [Cth]) by time of this publication, no draft Bill has happened upon intercepted telephone amending the offence of bribery of a been released. It is likely that there will conversations involving the planned foreign public official, extending the be an extensive consultation process bribery of Iraqi officials. Each of the definition of “foreign public official” and before this occurs. accused received a custodial sentence removing or replacing certain parameters of four years, with a minimum two year for the commission of the offence; it also non-parole period. Two of the individuals adds a new offence of failure of a body Prosecutions and were also fined AUD 250,000 corporate to prevent foreign bribery by enforcement actions (approximately USD 190,150). an associate. The Bill was referred to the In our 2017 publication, we alerted Legal and Constitutional Affairs readers to the AWB Limited case, where Enforcement trends Legislation Committee who published two executives, including the former their report on 20 April 2018. The report chairman, were alleged by ASIC to have As at 29 August 2017, the AFP had ultimately concluded that the Bill should breached their directors’ duties under the received 87 complaints of foreign pass and recommended certain policy Corporations Act, in violating United bribery. Of these, two separate changes to implement the amendments. Nations sanctions against Iraq. ASIC had proceedings (involving seven individuals The Bill has to be passed by both brought proceedings against both in total) were brought during 2017/18 Houses of Parliament before it becomes executives and had been successful following the AFP’s investigations, legislation. Amendments to the Bill may against the former chairman of AWB. including that which resulted in the three occur during this process. Proceedings against the other executive convictions referred to above. At last were dismissed. ASIC appealed the report, the AFP had 19 active There has also been a proposal to dismissal and on 23 April 2018, the NSW investigations, 13 allegations under change corporate misconduct legislation Court of Appeal dismissed ASIC’s appeal. evaluation by the Fraud and Anti- and to introduce significantly increased The Court of Appeal found that ASIC’s Corruption Centre and 20 allegations criminal and civil penalties. In December case against the executive was weaker that had been closed. 2017, the Australian Securities and than the case brought against the former Investments Committee (ASIC) chairman and that the trial judge had not In a press conference on 14 December Enforcement Review Taskforce erred in concluding that the evidence was 2017, AFP Commissioner Andrew Colvin recommended that penalties for some not sufficient to establish the executive said that foreign bribery investigations offences and contraventions under knew about the breaches of UN “present a significant challenge to [AFP’s] Australia’s federal corporations sanctions against Iraq. ASIC has resourcing with an average seven year legislation (the Corporations Act 2001 indicated they are “currently reviewing” duration from the beginning of an [Cth]) be increased, including increasing the decision, which indicates they may investigation to its conclusion.” the maximum criminal penalty for be considering a further appeal. corporations from AUD 1,000,000 to
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In our 2017 review, we referred to the report, amending the definition of “foreign In February 2018, the Australian Federal Senate Committee inquiry into foreign public official” to include candidates for Police (AFP) and the Commonwealth bribery. The inquiry has been running office, a corporate offence for failing to Director of Public Prosecutions (CDPP) since June 2015. On 28 March 2018, the prevent foreign bribery, the introduction of released a new joint guideline on self- Committee’s 234-page report was deferred prosecution agreements for reporting of foreign bribery by released making 22 recommendations on corporations, which should be published, corporations. The guideline outlines AFP’s how Australia can improve its and the introduction of a debarment and CDPP’s principles and processes for performance in the anti-foreign bribery framework to ensure companies are self-reporting. The guideline reflects the space. Recommendations include required to disclose if they have been recommendations made in the OECD prioritising the implementation of the found guilty of foreign bribery offences. Phase 3 report released in 2012. recommendations in the OECD Phase 4 Many of these recommendations have report, ensuring legislative changes for been adopted or are being implemented BACK TO MAP foreign bribery are consistent with that via legislative reform.
52 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
HONG KONG
Changes to legislation Prosecutors had successfully argued that sentence having been reduced by one- Hui received HKD 8.5 million third on grounds of good behaviour. Although a number of defects in Hong (approximately USD 1.1 million) from Kong’s main anti-bribery statute, the Kwok shortly before he took office, to Tsang freed over bribery charge Prevention of Bribery Ordinance (POBO), help ensure that the Government have been identified in recent case law Prosecutors have decided not to put maintained a “favourable disposition” (see below) there have been no former Chief Executive Donald Tsang towards SHKP. The Court of Appeal significant changes to legislation, or new Yam-kuen on trial for a third time on a dismissed an appeal against the legislative proposals, in relation to bribery bribery charge after a jury found itself convictions in February 2016, in which and corruption since our last Anti-Bribery unable to reach a majority decision in the appellants argued that prosecutors and Corruption Review in June 2017. early November 2017. had not been able to point to any specific act that Hui had done to favour SHKP. Tsang was convicted of one count of Prosecutions and misconduct in public office and was enforcement actions In their ruling in June 2017, the five CFA sentenced in February 2017 to twenty Kwok and Hui lose final appeal judges said that, despite the lack of a months’ imprisonment. Tsang, who specific act, Ho had placed himself in a Hong Kong’s Court of Final Appeal (CFA) served from 2005 to 2012, is the “hopelessly compromised” position has rejected an appeal by former Sun highest-ranking official ever to be during his time in office, saying “that Hung Kai Properties (SHKP) co-chairman convicted of a criminal offence and inclination was improper since it was Thomas Kwok Ping-kwong and former imprisoned in Hong Kong. He is wholly inimical to his duties as chief Chief Secretary Rafael Hui Si-yan against presently on bail pending an appeal. secretary ... and involved a serious abuse their convictions for corruption. of office and abuse of public trust”. The The misconduct verdict related to his payment was made to secure an ongoing Kwok and Hui, who were jailed in concealment of private negotiations with inclination on the part of Hui towards December 2014 for five and seven and a a property tycoon to rent a luxury SHKP while in the “golden fetters” half years respectively for bribery apartment in Shenzhen, while at the constituted by the payment. offences, lost their initial appeals against same time approving a digital radio conviction in February 2016. broadcast licence application submitted Hui and Kwok are now serving the by a company in which the tycoon, Bill remainder of their jail terms. In March The CFA had granted the pair leave to Wong Cho-bau, was a major shareholder. 2018, it was announced that Kwok and appeal to determine “whether in the case Hui had been stripped of civic honours of a public officer, being or remaining The jury cleared Tsang of a second awarded to them in 2007 in recognition favourably disposed to another person on count of misconduct in public office in of their services to Hong Kong. account of pre-office payments, is relation to his failure to disclose his Recipients of awards who are convicted sufficient to constitute the conduct connection with the interior designer of of offences that result in jail of one year element of the offence of misconduct in the apartment when proposing him for or more may have their honours forfeited public office?” an honour under the city’s public under Government regulations. honours system. Central to the issue was the validity of Francis Kwan Hung-sang, a former Hong the so-called “sweetener” doctrine, The bribery charge (on which juries twice Kong Stock Exchange official described which says it is not necessary for failed to reach a verdict) related to the as a “middleman” in handling the prosecutors to prove a specific quid pro alleged acceptance of an advantage by payments, was released from prison quo to establish misconduct in public accepting free renovations on the twenty months early in April 2018, his office offences. apartment worth HKD 3.8 million (approximately USD 485,000), as a
June 2018 53 ANTI-BRIBERY AND CORRUPTION REVIEW
reward for considering and making legislation. POBO contains clear rules purchase in 2011 of an insolvent property decisions in relation to the broadcast against gifts but they do not apply to the company, DTZ, of which Leung was a applications. The High Court agreed to a chief executive. Under section 3 POBO, director. It is reported that Leung took the request by prosecutors that the charge soliciting and accepting an advantage money after he was elected chief be left on the court file, should without the permission of the chief executive in 2012 but did not declare it to prosecutors decide to seek a retrial in the executive is a crime, but the giver of the his cabinet. light of new evidence. permission is not covered by the wording. The Chief Executive is also exempt from Contractors arrested at world’s In March 2018, Tsang was ordered to section 8, which states that anyone who longest bridge pay HKD 4.6 million (approximately offers an advantage to a “prescribed In May 2017, 21 employees of a USD 585,000), a third of the officer” while having dealings with the government contractor building the Government’s HKD 13.7 million Government is committing an offence. Hong Kong-Zhuhai-Macau bridge were (approximately USD 1.7 million) legal arrested for allegedly faking test results costs, after counsel for the prosecution The situation is further complicated by on the concrete used in the construction. David Perry QC insisted that Tsang the fact that the ICAC reports directly to The employees allegedly altered time “had given no assistance whatsoever” the Chief Executive. Despite repeated stamps and switched samples in order to to investigators, which had increased attempts to rectify the situation, the demonstrate that compression strength the cost of the case. The amount Tsang Government has still to commit to a standards had been met. Despite the has to pay is in addition to what he timetable to address the issue. arrests, Government authorities insist the would have spent on his own legal bridge, due to open in the autumn of team, estimated to be in the region In August 2017, the ICAC’s Director of 2018, is safe. of HKD 25 million (approximately Investigation (Government Sector) Ricky USD 3.2 million). Yun Chun-cheong said he hoped that the Agencies collaborate in dawn raids Independent Commission Against The Securities and Futures Commission Mr Justice Andrew Chan Hin-wai also Corruption Ordinance could be reviewed (SFC) joined forces with the ICAC in reproached Tsang for seeking to influence in light of the Tsang verdict, saying that December 2017 to raid the offices of two the jury by bringing prominent public the agency should have the same listed companies, heralding a new figures into the public gallery, however powers when investigating misconduct in approach towards regulation and the claim was dismissed by former public office as it does when tackling enforcement in Hong Kong. The two Finance Minister John Tsang Chun-wah other forms of corruption. At present the agencies collaborated closely to gather and former Justice Secretary Wong Yan- ICAC has search and seizure powers in evidence in the run-up to a raid on eight lung, who said they had come to court to respect of a defined list of offences set locations, including the homes and support Tsang on their own initiative. out in section 10 of the Ordinance. The offices of senior executives Lerado offence of misconduct in public office is Financial Group and Convoy Global Tsang was arrested on 5 October 2015 not included on the list. Holdings. Four executives were arrested following a long investigation by the including Convoy chairman Quincy Wong Independent Commission Against Any legislative change may assist the Lee-man, vice-chairman Rosetta Fong Corruption (ICAC). Critics queried the ICAC into what is reported to be an Sut-sam, executive director Christie Chan length of time it had taken to arrest him. investigation of the receipt by former Lai-yee and Laredo’s chairman Mark Mak chief executive Leung Chun-ying of a Kwong-yiu. The SFC ordered the Tsang’s arrest highlighted what a former HKD 50 million (approximately suspension of Convoy’s shares on 27 judge has described as a “fundamental USD 6,4 million) payment by an November 2017. defect” in the city’s main anti-corruption Australian company UGL, after its
54 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
Enforcement trends past 12 months, while only 0.6% said The survey was carried out through face- they had encountered corruption. 78% of to-face household interviews of 1,516 Hong Kong was ranked 13th among respondents said they would report randomly selected citizens between May 180 jurisdictions surveyed by corruption to the ICAC if they came and August 2017. Transparency International (TI) in their across it, similar to previous years. 2017 Corruption Perceptions Index, BACK TO MAP two places up from the 2016 ranking. A spokesperson for the ICAC said that The report coincided with the ICAC’s “corruption in Hong Kong remains well latest opinion survey in which a large under control. The Commission will majority of citizens questioned said they continue to pursue all corruption cases had not personally encountered without fear or favour and in accordance corruption in the past 12 months. with the law, so as to safeguard Hong Kong’s reputation as one of the cleanest According to the 2017 ICAC Annual places around the world”. Survey, 99.1% of people polled said they had not encountered corruption in the
June 2018 55 ANTI-BRIBERY AND CORRUPTION REVIEW
JAPAN
Changes to legislation Second, the Penal Code was also bidders for the job. Further, Kumono had amended in June 2017 to reflect the unlawfully collaborated with the company The amended Code of Criminal aforementioned amendment to the Act so that it received a commission to Procedure establishing a plea-bargaining on the Punishment of Organized Crimes demolish a former public hospital building. system is due to come into effect on and Control of Criminal Proceeds. This 1 June 2018. This is Japan’s first ever means that the Penal Code now applies Another recent case involved an even plea-bargaining regime. to Japanese nationals who offer bribes to heavier punishment. On 23 March 2018, Japanese public officials even when such the Saitama District Court sentenced Joh The system will only apply to certain conduct occurs outside Japan. Shimamura, the former Mayor of Ageo- offences (known as Specified Offences) city in Saitama Prefecture, to 30 months including the bribery of Japanese in prison (suspended for four years) plus Government officials and bid-rigging. The Prosecutions and a fine of JPY 600,000 (approximately bribery of foreign public officials, which is enforcement action USD 6,000). Shimamura had received prohibited under Japan’s Unfair There have been a number of noteworthy bribes totalling JPY 600,000 from the Competition Prevention Law, is not judgments by Japanese courts in bribery president of a facilities management included among the Specified Offences. cases recently. company in exchange for arranging for such company to “win” the commission In short, the plea-bargaining system First, on 22 December 2017, the Osaka to operate an environmental centre in permits a prosecutor to enter into an District Court sentenced Shuji Tsukiyama, Ageo-city. Shimamura did this by illicitly agreement with a defendant (either an a former high level official of a public manipulating the entry qualifications in individual or a legal entity) whereby, in hospital, to 18 months imprisonment the bidding process. return for the defendant assisting (suspended for three years) plus a fine of prosecutors and police in investigating a JPY 500,000 (approximately USD 5,000). Other developments Specified Offence allegedly committed by Tsukiyama had received a JPY 500,000 a third party (a separate individual or legal bribe from the president of a landscape Amendment to the guidelines against entity), the prosecutor can agree to drop gardening company in exchange for Bribery of Foreign Public Officials or amend charges or can agree on the engaging the company to landscape the Japanese companies refer to official penalty for the individual or legal entity to hospital garden. The media reported that guidelines published by the Government be recommended to the court. Tsukiyama had obtained a quotation only to assist them in bribery prevention. The from the landscaping business in question guidelines in relation to the bribery of There have been two other changes despite the municipal rules requiring him foreign public officials were originally of note to Japan’s corporate criminal to obtain more than one fee estimate. published in May 2004 in response to the law regime. May 2004 amendment to Japan’s Unfair In another bribery case also involving a Competition Prevention Law which made First, on 21 June 2017, the Act on the public hospital, on 17 August 2017, the it an offence for Japanese nationals to Punishment of Organized Crimes and Kobe District Court sentenced Machi offer or provide bribes to foreign public Control of Criminal Proceeds was Kumano and two other officials of a public officials even when such nationals are amended to the effect that the illegal hospital to 30 months in prison outside Japan when the conduct occurs. proceeds obtained by a person who (suspended for four years) plus a fine of The guidelines were more recently bribes a foreign public official in breach of over JPY 1 million (approximately amended to reflect the above-mentioned Japan’s Unfair Competition Prevention USD 10,000). Kumano had received a June 2017 amendment to the Act on the Law can be confiscated together with the JPY 1,188,000 bribe from the president of Punishment of Organized Crimes and illegal proceeds received by such foreign a heating and cooling installation company Control of Criminal Proceeds. public official. in exchange for conspiring with that company so that it could submit a fee BACK TO MAP quotation proposing a lower fee than other
56 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
PEOPLE’S REPUBLIC OF CHINA
Changes to legislation The amended AUCL appears to suggest In light of the above, it may be premature a departure from this position. Paragraph to conclude that Article 7 of the amended Amended Anti-Unfair 1 of Article 7 narrows the definition of AUCL has fundamentally changed the Competition Law “bribery recipients” as including definition of commercial bribery. Further The Standing Committee of the National (a) employees of the transaction clarification from the law enforcement People’s Congress (NPC) of the PRC has counterparties, (b) entities or individuals agency, the PRC State Administration for taken a noteworthy step in dealing with entrusted by the transaction Market Regulation (SAMR), will be commercial bribery in China by counterparties to handle relevant matters, necessary if the inconsistent promulgating an amended Anti-Unfair and (c) entities or individuals that take understandings and practices of local Competition Law (AUCL). The AUCL, advantage of their positions or influence regulators are to be standardised. which governs commercial bribery, to affect the transactions. was amended on 4 November 2017; this Another notable feature of the amended amendment, which took effect on This could be read as excluding the direct AUCL is the express provision regarding 1 January 2018, is the first change to commercial counterparties from being employers’ vicarious liability. According to the law since it originally came into considered as potential bribery recipients, Paragraph 3 of Article 7, where an force in 1993. an interpretation supported by some employee commits bribery, this shall be officials from PRC enforcement agencies. deemed to be an act undertaken by the Under the 1993 version of the AUCL and employer, unless the employer can prove its subsidiary regulations, commercial However, other limbs of the legislation cast that the employee’s action was irrelevant bribery was vaguely defined, leading to doubt on this interpretation. Paragraph 2 to the employer’s seeking transaction inconsistent interpretation by national and of Article 7 maintains the same books and opportunities or a competitive advantage. local regulators. Certain types of payments records provision as contained in the 1993 between commercial counterparties were version. Article 19 appears to indicate that The law is not crystal clear on the categorised as bribes, even though they any violation of Article 7 will be viewed as applicable test for this exception, whether did not fall within the traditional and widely a bribery issue. Accordingly, the law may the focus is on the objective impact of the accepted understanding of bribery. still treat as commercial bribery any direct employee’s conduct on the employer’s payments between transaction interests, or on the subjective intent of the One example is the so-called “shelf fee”, counterparties if the provision or receipt of employer and/or the employee. This again where a supplier pays a sum of money to benefits is not properly documented in calls for further practical guidance from the a supermarket or a retailer in exchange contracts or accurately recorded in the SAMR and its local branches. In any for a more prominent location on the parties’ books and records. event, with the introduction of this new shelves for its products. While accepted provision, PRC regulators may have more as usual practice in many countries, such In addition, the transmission of certain incentive to pursue employers in respect payments have been targeted by some types of benefits between parties to a of their employees’ misconduct in the PRC local regulators as commercial transaction remains prohibited by industry- bribery sphere. bribery, on the basis that such payments specific regulations. In the healthcare may not have been accurately recorded sector, for example, the current PRC Supervision Law in contracts, books or records. Some of Pharmaceutical Administration Law On 20 March 2018, the NPC adopted a these regulators have expressed an even prohibits pharmaceutical manufacturers, new Supervision Law with immediate more aggressive view, that even if such dealers and medical institutions from effect. The NPC is also reviewing payments have been properly offering or accepting kickbacks or other proposed amendments to related documented, they should still be treated benefits off the books. legislation such as the PRC Criminal as commercial bribes under the 1993 Procedural Law to align the existing legal AUCL because of a concern that they are framework with the Supervision Law. inherently anti-competitive.
June 2018 57 ANTI-BRIBERY AND CORRUPTION REVIEW
The Supervision Law creates a new The NSC is established against the Administration of Industry and Commerce centralised anti-graft authority, the PRC broader background of organisational (SAIC, previously the major PRC law National Supervisory Commission (NSC), reforms taking place in China to enforcement agency of commercial which incorporates the anti-corruption streamline governmental authorities and bribery and other market misconduct), watchdog of the Communist Party of enhance administrative efficiency. Its China Food and Drug Administration China (CPC) – Central Commission for establishment is also perceived as CPC’s (CFDA), General Administration of Quality Discipline Inspection (CCDI) and commitment to continue the anti- Supervision, Inspection and Quarantine integrates the anti-corruption and corruption crackdown that commenced and relevant anti-trust authorities. As supervisory functions that were divided in 2012. such, SAMR will assume SAIC’s powers among different authorities including the in investigating commercial bribery and Anti-Corruption Bureau of the Supreme Prosecutions and CFDA’s powers in supervising the People’s Procuratorate, the Ministry of enforcement actions pharmaceutical sector. Hence it is worth Supervision and the National Audit Office. observing whether SAMR will take a The pharmaceutical sector has continued more integrated and unified approach in The Supervision Law vests the NSC and to be under heightened scrutiny by PRC dealing with commercial bribery in the its local branches with broad powers to regulators. For example, at the end of pharmaceutical sector. supervise all functionaries exercising public 2017, the Shanghai Administration of power, including the CPC members, Industry and Commerce (Shanghai AIC) As envisaged in our review in June 2017, legislators, the judiciary, the prosecutors, announced a series of administrative the nation-wide anti-corruption crackdown political advisory bodies, management penalties imposed on multinational that started in 2012 continues. According personnel of State-owned enterprises, and pharmaceutical companies including to CCDI, as of October 2017, over personnel undertaking management Bristol-Myers Squibb, China NT Pharma 1.5 million corruption-related cases have responsibilities in state-run institutions in Group, and Chiesi Farmaceutici for been docketed, over 1.5 million individuals sectors such as education, science and commercial bribery. The enforcement have been disciplined, including research, culture, healthcare and sports. actions targeted the pharmaceutical approximately 8,900 officials at or above The NSC has a high rank in the PRC companies’ provision of benefits to department-head level or above, 63,000 Government structure – it is at the same doctors in the form of conference officials at or above county-head level, level as the State Council, the Supreme sponsorship, meals, gifts, travel and and 58,000 individuals were prosecuted.35 People’s Court and the Supreme People’s related expenses for the purpose of Procuratorate, and above all ministries and promoting sales of pharmaceuticals to China is also determined to enhance law enforcement agencies. relevant hospitals. The penalties were cross-border cooperation to hunt down mainly disgorgement of revenues corruption suspects who have fled The NSC and its local branches are obtained through offering bribery ranging overseas. According to CCDI, 3,453 authorized to investigate crimes in from CNY 300,000 to 11,400,000 fugitives have been extradited from more relation to abuse of office (including (approximately USD 47,000 to than 90 countries and regions, and about bribery and corruption) committed by 1,800,000), as well as administrative fines CNY 9.51 billion (approximately functionaries exercising public power. The ranging from CNY 100,000 to 180,000 USD 1.5 billion) has been recovered since NSC may take a broad array of (approximately USD 16,000 to 28,000). 2014. Given the pressures exerted, the investigative measures, such as detaining number of officials who fled overseas has and interrogating the suspects, Enforcement trends seen a drastic decrease: four fugitive questioning witnesses, accessing and In addition to the establishment of the suspects fled China during January to freezing assets. The Supervision Law NSC, another notable change in anti- September 2017, compared with 19 in requires the NSC to comply with corruption law enforcement is the 2016, 31 in 2015 and 101 in 2014. evidentiary rules in criminal procedures creation of SAMR. SAMR has been when collecting and using the evidence. founded by consolidating State BACK TO MAP
35 See the CCDI report dated 24 October 2017, available at http://www.xinhuanet.com/politics/2017-10/29/c_1121873020.htm.
58 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
SINGAPORE
Changes to legislation as contemplated under that provision. As as compared to section 406 of the Penal a result, their sentences were significantly Code) would be limited to those who are There have been no relevant legislative reduced to jail terms of between 7 months engaged in commercial activity in the changes in Singapore since the last and 3.5 years36. conduct of their profession or trade, Review in June 2017. which is the offering of their agency The Attorney General’s Chambers (AGC) services to the community at large, Prosecutions and was dissatisfied with the High Court’s through which they make their living39. enforcement actions decision of 7 April 2017, and on 10 April There have been further developments in 2017 filed a criminal reference to the Later on the same day, the AGC issued a one of the biggest corruption matters in Court of Appeal, to clarify the law under statement saying that it would work with Singapore; the Singapore District Court which the High Court made its decision relevant Government ministries “on the had found six leaders of a ‘mega-church’ to reduce the jail terms of all six appropriate revisions to the Penal Code, 37 (City Harvest Church) guilty of conspiracy church leaders . The AGC’s move to ensure that company directors and to commit criminal breaches of trust by came after Law and Home Affairs other persons in similar positions of trust conducting sham investments and round- Minister K Shanmugam stressed the and responsibility are subject to tripping transactions. They were found Singapore Government’s need to appropriate punishments if they commit 40 guilty notwithstanding the absence of uphold its “zero-tolerance approach” criminal breach of trust” . 38 evidence of wrongful gain and their belief towards corruption . that they were acting in the best interests In a separate corruption investigation of the church and in obedience to their On 1 February 2018, the Court of Appeal involving a corporate entity, Keppel trusted pastor, and were sentenced to jail (Singapore’s apex court) constituting five Offshore & Marine (Keppel O&M) stated terms ranging from 21 months to 8 years. judges unanimously affirmed the High in a press release issued on 23 Court’s view that an “agent” within the December 2017 that it would pay a On appeal, the High Court constituting meaning of section 409 of the Penal record fine (for a Singapore-listed entity) three judges in a decision of 7 April 2017 Code refers to a professional agent (i.e. totalling SGD 567 million (approximately revised the original charges brought one who professes to offer his agency USD 422 million) as part of a global against the key church leaders under services to the community at large and resolution with authorities in the United section 409 of the Penal Code (for from which he makes his living). States, Brazil and Singapore. According aggravated criminal breach of trust), and Therefore, the church leaders could not to court documents released by the US convicted them of a lesser charge under be convicted under section 409 of the Department of Justice, Keppel O&M section 406 of the Penal Code (for criminal Penal Code. This has wider implications “knowingly and wilfully conspired” to pay breach of trust simpliciter). The High Court for future misappropriation cases: it bribes as part of a scheme lasting from found that section 409 of the Penal Code would mean that the prosecution of 2001 to around 2014 to win 13 contracts was not triggered as the church leaders individuals under section 409 of the Penal with two Brazilian oil companies, 41 did not fall within the meaning of “agent” Code (which attracts enhanced penalties Petrobas and Sete Brasil . Millions of
36 See Selina Lum, Ng Huiwen, “City Harvest appeal verdict: Six church leaders get reduced jail terms, Kong Hee gets 3.5 years”, The Straits Times (7 April 2017), please see: https://www.straitstimes.com/singapore/courts-crime/city-harvest-appeal-verdict-six-church-leaders-get-reduced-jail-terms-kong. 37 See Angela Tan, “AGC file criminal reference with Court of Appeal over City Harvest Church verdict”, The Business Times (10 April 2017), please see: http://www.businesstimes.com.sg/government-economy/city-harvest-trial/agc-file-criminal-reference-with-court-of-appeal-over-city. 38 See Charissa Yong, “City Harvest appeal: Ruling may have implications on corruption cases, says Shanmugam”, The Straits Times (9 April 2017), please see: https://www.straitstimes.com/politics/ruling-may-have-serious-implications-shanmugam. 39 See at PP v Lam Leng Hung and others [2018] SGCA 7 at [165]. 40 See Selina Lum, Gracia Lee, Tan Tam Mei, “City Harvest case: Apex Court dismisses bid for longer sentences for Kong Hee, former church leaders”, The Straits Times (1 February 2018), please see: https://www.straitstimes.com/singapore/city-harvest-case-queue-starts-at-330am-to-listen-to-final-verdict. 41 See Tang See Kit, “Keppel O&M briber case: What you need to know”, Channel NewsAsia (7 January 2018), please see: https://www.channelnewsasia.com/news/ singapore/keppel-o-m-bribery-case-what-you-need-to-know-9836154.
June 2018 59 ANTI-BRIBERY AND CORRUPTION REVIEW
dollars in bribes were disguised as large sentences. Mok was found guilty of amongst other things, obtaining commissions to a consultant in Brazil abetment by engaging in a conspiracy to gratification in Shanghai involving about under legitimate consulting agreements, give a Certis CISCO senior protection CNY 11.1 million (approximately USD 1.7 which were eventually transferred to officer gratification amounting to a total of million) as a reward for assisting two Petrobras officials and politicians at the USD 4,500 as a reward for facilitating the Chinese logistics companies in securing then-governing Workers’ Party in Brazil. smuggling of duty-unpaid cigarettes out contracts with Seagate Technology As part of the global resolution, Keppel of a port in Singapore. The CPIB in a International. In the course of its O&M was issued with a conditional statement reiterated that “Singapore investigation, the CPIB worked with the warning from the Singapore Corrupt adopts a zero tolerance approach Chinese authorities and received valuable Practices Investigation Bureau (CPIB) in towards corruption and other criminal assistance from them, leveraging on its lieu of prosecution for corruption offences acts”, and that it “takes a serious view of framework for international cooperation punishable under the Prevention of any corrupt practices and will not hesitate with overseas legal, law enforcement and Corruption Act (PCA) in Singapore. to take action against any party involved regulatory agencies. Several former executives of Keppel in such acts”44. Corporation were arrested by the CPIB Other Developments and are out on bail pending investigations Enforcement trends On 5 July 2017, the CPIB joined law by the AGC and CPIB. Overall, according to statistics released enforcement agencies from Australia, by the CPIB on 11 April 201845, the Canada, New Zealand, the UK and US in In another recent case, a former general number of corruption complaints and launching a new International Anti– manager and secretary of a town council, cases investigated by the CPIB remained Corruption Coordination Centre (IACCC). Wong Chee Meng, was charged with low in 2017. In 2017, CPIB received 778 The multinational centre is intended to corruption on 14 March 2018 for complaints, a 3.7% decrease compared coordinate law enforcement action accepting bribes amounting to SGD to the number received in 2016. A total against global grand corruption. 107,000 from directors of two building of 103 cases were subsequently companies in exchange for advancing the pursuable, an all-time low, down from Grand corruption includes acts of business interests of the companies with 118 cases in 2016. The majority of non- corruption by politically exposed persons the town council42. In connection with this pursuable cases were because of that may involve vast quantities of case, the CPIB released a statement insufficient, vague or unsubstantiated assets and those that threaten political emphasizing that “[c]ompanies and information. In 2017, there were 141 stability and sustainable development. employees are responsible for the lawful individuals prosecuted for corruption These can comprise bribery of public conduct of their businesses. Those who offences and 94% of them were private officials, embezzlement, abuse of run afoul of laws and engage in corrupt sector employees. Custodial sentences functions or the laundering of the practices will have to bear the full brunt were meted out to a majority of them. proceeds of crime. The London–based of the law”43. IACCC is envisaged to improve Singapore also continues to increase its information sharing by bringing In Public Prosecutor v Mok Chee Kin levels of cooperation with other together specialist law enforcement [2018] SGDC 118, the leader of a governments. In June 2017, two officers from multiple jurisdictions into a cigarette smuggling syndicate was Singaporeans were charged in court for single location. As part of its sentenced to five months’ imprisonment offences under the PCA and Corruption, commitment as a founding member, for bribing a Certis CISCO senior Drug Trafficking and Other Serious CPIB will be contributing an officer to protection officer, amongst other Crimes (Confiscation of Benefits) Act for, serve at the IACCC.
42 See Yuen Sin, “Ex-GM of AMKTC faces graft charges”, The Straits Times (15 March 2018), please see: https://www.straitstimes.com/singapore/courts-crime/ex-gm- of-amktc-faces-graft-charges. 43 https://www.cpib.gov.sg/press-room/press-releases/no-place-corruption. 44 https://www.cpib.gov.sg/press-room/press-releases/syndicate-leader-sentenced-five-years-and-eight-months%E2%80%99-imprisonment-and. 45 https://www.cpib.gov.sg/press-room/press-releases/corruption-singapore-remains-low.
60 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
Global assessment The Corruption Perceptions Index 2017 In the Rule of Law 2017-2018 Index compiled by Transparency International compiled by the World Justice Project, gave Singapore a score of 84 (out of 100) Singapore was ranked thirteenth overall for the perceived levels of public sector worldwide, falling four ranks from 2016. corruption, placing it sixth in the world Singapore was ranked second under rankings. While Singapore’s score “regulatory enforcement”, fourth under maintained at 84 from 2016, its ranking “absence of corruption”, fifth under moved up a spot from 2016. “criminal justice” and “civil justice”, and third in the Asia-Pacific region overall46. BACK TO MAP
46 https://worldjusticeproject.org/sites/default/files/documents/WJP_ROLI_2017-18_Online-Edition_0.pdf.
June 2018 61 ANTI-BRIBERY AND CORRUPTION REVIEW
THAILAND
Changes to legislation • communication mechanisms and increased level of transparency and internal protocols that encourage monitoring. Under the new Public On 15 December 2017, the Notification of reporting of incidents and protection of Procurement Act, all bidders shall sign an the National Anti-Corruption Commission whistleblowers; and integrity pact prepared by the relevant Re: Guidelines on Appropriate governmental department before entering Internal Control Measures for Juristic • periodic review and evaluation of anti- into any agreement with the state and Persons to Prevent Bribery of State bribery measures and their must also have in place an internal policy Officials, Foreign Public Officials and effectiveness. against corruption. Agents of Public International Organisations (Notification) was officially The NACC Guidelines also include an On 14 May 2018, the Act on enacted in the Government Gazette, with introductory discussion of the scope of Administrative Measures on the principles largely mirroring those of the section 123/5 and some illustrative case Prevention and Suppression of handbook unofficially launched by the studies on its application, including Corruption (No.3), B.E. 2561 (2018) Office of National Anti-Corruption circumstances leading to potential liability became effective. This law encourages Commission (NACC) on 23 March 2017. of persons such as directors or senior collaboration with the private sector and This Notification officially mandated the management for improper acts of introduces new protection for witnesses NACC to prepare the guidelines on employees. who were involved in the commission of appropriate internal control measures for offences with state officials, and who juristic persons to prevent bribery of state In addition, the NACC has established assist the state in cases against such officials, foreign public officials and agents the Anti-Bribery Advisory Service (ABAS) officials. It also provides for the Public of public international organisations under the Bureau of International Affairs Sector Anti-Corruption Commission (NACC Guidelines) which were already of the Office of NACC to provide advice (PACC) to set up a new committee which published on 26 September 2017. The on anti-bribery measures and good will include representatives from the NACC Guidelines set out the following internal practices for juristic persons to private sector and experts to support, fundamental principles which constitute be in line with international standards. advise and collaborate with the PACC. effective internal control that a juristic person must have: To support its anti-bribery procedures, the NACC has issued the Rule of the Prosecutions and • strong, visible, and clear policy and NACC on Cooperation with Relevant enforcement actions support from top-level management to Offices to increase effectiveness of the fight bribery; The NACC received reports of 4,896 Organic Act on Anti-Corruption by cases of bribery in 2017 (during the • risk assessment to effectively identify collaborating with other state offices period of 1 October 2016 – 30 and evaluate exposure to bribery; and appointing officials at other offices September 2017) which represented an to support anti-bribery cases. The • enhanced and detailed measures for increase from previous years. Most of the NACC has furthermore launched a new high-risk and vulnerable areas; cases involved offences by local policy prescribing additional special politicians and public officials. • application of anti-bribery measures to compensation for investigators to business partners; attract talented individuals, on On 27 September 2017, former Prime 26 September 2017. • accurate book-keeping and accounting Minister Yingluck Shinawatra was found records; guilty by the Supreme Court of dereliction Besides additional regulations under the of duty over a controversial rice subsidy • human resource management policies Organic Act on Anti-Corruption, the new scheme, and was sentenced to five years complementary to and supporting anti- Public Procurement Act, which became in prison in absentia (as she had already bribery measures; effective on 23 August 2017, is centred fled the country on 25 August 2017). on preventing corrupt behaviours, with an
62 June 2018 ANTI-BRIBERY AND CORRUPTION REVIEW
On 18 January 2018, the Central Enforcement trends In line with the above, the National Anti- Criminal Court for Corruption and Corruption Strategy Phase III (2017-2021) Based on the announcement regarding Misconduct Cases delivered the verdict prescribes the establishment of a the Government’s policy and vision, Zero of the Appeal Court for Corruption committee on the integration of national Tolerance & Clean Thailand, in the next Cases for the Black Case No. OrThor. anti-corruption efforts to set policies and five years Thailand will become a country 143/2560. According to the Appeal operational procedures with a supporting where corruption is no longer tolerated. Court and Central Criminal Court, committee and a national strategy in This strategy sets out six sub-strategies, Mr Pongwit Luengchuaychot, the former collaboration with all sectors including the both domestic and international, and Vice President of the Marketing private sector. establishes a long-term framework for Organization for Farmers (OrTorGor) and tackling corruption up to 2021. The six Mr Wicha Sajjawan, shipping operator, BACK TO MAP sub-strategies under the strategy are: had asked the plaintiff in the case to pay a bribe of THB 1.5 million (approximately • to create a society which does not EUR 40,500) in exchange for approving tolerate corruption; a transfer. Mr Pongwit was sentenced to • to promote political will to fight imprisonment of eight years, while corruption; Mr Wicha received five years and seven months, the lesser sentence reflecting • to deter corruption in public policy; the fact that it was not Mr Wicha’s duty • to develop proactive corruption to approve the transfer, and that he just prevention systems; supported Mr Pongwit in committing this act. Mr Wicha was therefore not • to reform corruption suppression considered to be the offender, but an mechanisms and processes; and accomplice, liable to be punished by • to improve Thailand’s score on the two-thirds of the offender’s penalty as Corruption Perceptions Index. provided under section 86 of the Criminal Code.
June 2018 63 This publication does not necessarily deal with every important topic nor cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice. www.cliffordchance.com
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