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Corporate A global perspective Contents

05 Key themes

20 Austria

24 Belgium

A cross-border guide to 28 Brazil

corporate criminal liability 34 China and enforcement 38 France 42 Germany Society’s relationship with The risk of criminal enforcement Hong Kong has shifted over recent years, bringing action in many European 46 and the US has long been a reality corporate conduct firmly into the 50 Italy spotlight. Often in response to calls for multinational companies. But we are now seeing stronger laws and/or for greater corporate , 54 Japan more enforcement activity in governments and enforcement jurisdictions in Asia, Latin America agencies have increasingly been 58 Netherlands and Africa as well. As such, global turning to the to hold companies must actively manage their 62 Russia companies liable for misconduct criminal law risks in all regions occurring within their organisations within which they operate. 66 Singapore or for their benefit. Across various With this in mind, we are delighted jurisdictions, lawmakers have to present our overview of the key 70 South Africa introduced a growing number of themes in corporate criminal law offences for which companies can and practice impacting multinationals 76 Spain be prosecuted. And many agencies today, together with a guide to with criminal powers are increasingly corporate criminal liability and 80 Switzerland using them to pursue companies – in enforcement in 17 jurisdictions across the areas of tax, antitrust, anti- the world. 84 United Kingdom and , financial services 90 and environmental law, to name a few. 96 Freshfields contacts

100 Acknowledgements

101 Our team A global perspective

Key themes at a glance

We are pleased to present the key themes in corporate criminal law and practice impacting multinationals today, which bring together our insights from helping clients to address and defend against corporate criminal liability in various jurisdictions with those of senior former in the firm in Germany, Singapore, the UK and the US.

5 Corporate crime A global perspective

Increasing use of the criminal law to address misconduct in the corporate context

Overall, the scope for corporate criminal liability In addition to new , some prosecutors (or quasi-criminal liability) has been growing. have been using existing laws more forcefully A number of countries have amended their laws to pursue companies for different kinds of in the past five years to introduce or strengthen misconduct. In the US, for example, prosecutors laws relating to corporate criminal liability or have instigated criminal investigations into to put in place tougher corporate administrative companies’ use of software amid allegations liability regimes to punish companies for companies in different sectors have been using economic carried out in their name software to circumvent regulations. And the US or for their benefit. Department of (DOJ) Antitrust Division has also been turning its attention to the use of Combating bribery and corruption, including technology, specifically the use of price-setting foreign corruption, is a stated priority of algorithms set up and designed to distort the many governments around the world. As Trace market. Also, the UK’s Financial Conduct International has reported, as of 31 December Authority (FCA) used its powers under s.384 2016, there were 255 ongoing investigations of the Financial Services and Markets Act for concerning alleged bribery of foreign officials the first time in 2017 to require a listed company being conducted by authorities in 29 countries. to pay compensation for market abuse. 106 of those investigations (42 per cent) were The new corporate offences in the UK by authorities in Europe. And 2017 saw a In the related civil and regulatory sphere, many number of new corruption cases being opened financial services regulators are also taking demonstrate a political will and appetite amongst in various jurisdictions. an increasingly robust attitude to systems and lawmakers and enforcers to bring companies controls failures relating to economic crime. Whilst in some emerging economies the In 2016, the US Federal Reserve imposed its first to account under the criminal law. And new laws increased scope for liability focuses largely on civil fine on a company in relation to US Foreign bribery and corruption, elsewhere prosecutors Corrupt Practices Act (FCPA) related misconduct are just part of the picture. We are also starting to are also focusing on a broader range of offences. in a co-ordinated action with the US Securities see the UK authorities looking to make greater In the UK, in 2017 alone, the government and Exchange Commission (SEC) and the DOJ. introduced (i) two new corporate offences And the Singapore Monetary Authority has use of statutes that have been on the books for for failing to prevent the facilitation of UK started publicly naming banks that have been and overseas (with effect from the subject of regulatory enforcement action, some time in prosecutions of companies. 30 September 2017); (ii) a new corporate offence particularly relating to anti- laundering for contravening a requirement under the failings – in a move away from their previous Ali Sallaway, Partner, London Regulations 2017; and practice of private sanctions. (iii) a new offence, applicable to certain large In light of the above, the need to manage companies and , corporate criminal liability risks and respond for failing to report their payment practices. to potential investigations by prosecutors, The government also revived plans to consult or to related enforcement action by regulators, on a new corporate offence for failing to prevent is now the new norm for multinationals. economic crimes, such as false , and money laundering.

6 Corporate crime A global perspective

International co-operation between prosecutors: understanding the issues that can arise when prosecutors work across borders

Reflecting the reality that the conduct under Of course, where enforcement agencies in investigation in many corporate cases occurs in multiple countries investigate the same conduct, FCPA resolutions multiple countries, co-operation between law the procedures and investigative techniques used enforcement authorities across borders is in different jurisdictions may give rise to difficult increasingly the norm. Such cross-border legal and procedural issues. These differences co-operation has become a fixture of global may impact some of the strategic judgement calls The DOJ publicly acknowledged bribery, money laundering, tax and fraud a company has to make, and they may also affect the assistance of authorities in investigations. And many of the most significant how a company conducts its own investigations economic crime investigations of recent years and its ability to reach a global resolution with have been international in scope. the authorities in the relevant jurisdictions. Law enforcement agencies now regularly make For example, in United States v Allen, the US public statements highlighting the extent to of Appeals for the Second Circuit held that the which they co-operate with, and are assisted by, against the use and derivative use of their counterparts abroad. a defendant’s compelled testimony applies even when the testimony was compelled by a foreign authority (in this case the UK’s FCA). The DOJ 7 20 ‘All our cases have a significant must ensure that, when exchanging information countries countries international dimension. We have with its counterparts, it does not allow its invested real effort in building investigation to become tainted by compelled strong co-operative relations with testimony (compulsion is a common practice in foreign agencies in key financial the UK). Companies looking to co-operate with US prosecutors should be mindful of this. 2012 2016 centres across the globe.’ Otherwise, there is a risk companies could Director of the UK SFO, September 2016 prejudice any co-operation credit they may have built up by, inadvertently, including in their reports to the US authorities information derived Cross-border co-operation takes many forms, from compelled testimony the company has including informal intelligence sharing The SEC acknowledged assistance from received from an authority elsewhere in the (sometimes before a formal investigation has context of a parallel investigation. Or a company begun), case-specific co-ordination, formal mutual that has had access to compelled testimony legal assistance to gather and share , could find its ability to co-operate at all severely and other programmes to share experience and hampered if the DOJ views the company as build capacity. The DOJ, for example, has long tainted and prefers to keep the company at arm’s stationed prosecutors in countries around the length so as not to prejudice any subsequent world to provide, among other things, training prosecutions. and development. In 2017, for the first time, the DOJ sent a white-collar on Whilst there are restraints on what prosecutors secondment to the UK’s Serious Fraud Office (SFO) can share, companies should, nonetheless, assume 0 25 and the FCA. This secondment suggests that authorities will share any information they legally countries countries prosecutors in the US and the UK are committed can with relevant foreign counterparts with to continued co-operation in the years to come. whom they have a close relationship – even if it is And there are plenty of other examples of on an intelligence basis to build a case against a relationship-building initiatives that have company. Understanding how the different pieces 2012 2016 been ongoing for some time. of the puzzle fit together will help companies anticipate what is happening behind the scenes The Singapore Attorney General’s Office, for and plan their strategy accordingly. example, has a long history of sending secondees to its counterparts, particularly in the UK and As cross-border co-operation increases, these the US. types of differing legal and cultural practices will increasingly come to the fore.

8 9 Corporate crime A global perspective

Balancing corporate defence strategies A focus on individual accountability: with individual accountability practical implications for companies

Enforcement agencies are increasingly focusing In another example of the focus on on individual liability as an additional means individuals, prosecutors in Germany may, of deterring corporate misconduct. This focus and often do, pursue board members under Whistleblowing on pursuing individuals and incentivising the German Regulatory Offences Act Some of the largest corporate criminal investigations of recent years have started companies to identify individuals involved in (Ordnungswidrigkeitengesetz) for company- with reporting their concerns directly to the authorities or corporate wrongdoing is a trend that is seen related offences committed by staff members leaking data to the press. Companies should create a whistleblowing framework and in various jurisdictions. that could have been prevented (or made environment that encourages employees to air their concerns internally first, which significantly more difficult to commit) by In the US, the DOJ Fraud Section has described will allow the company to have more control over the process. appropriate supervisory measures. 2017 as a ‘record year’ for individual prosecutions. This trend received significant There are a number of issues that can arise when attention in 2015 with the publication both the company and senior are of what became known as the ‘Yates memo’ in the frame. This situation creates, for example, Internal interviews (the memorandum from former Deputy Attorney the distinct possibility that a company’s interest General Sally Q Yates to DOJ prosecutors and in co-operating will be adverse to its individual Once an investigation has started, some prosecutors may discourage the company other law enforcement on individual liability for employees’ interests in protecting themselves. from interviewing employees for fear of tainting the evidence. This can affect corporate misconduct). The Yates memo directed This greater potential for actual or perceived the company’s ability to obtain the evidence necessary to demonstrate co-operation prosecutors to focus on individuals from the start conflicts of interest can lead to more individuals with authorities in other jurisdictions, and the company may have to tread a difficult of any investigation into corporate misconduct. requesting independent counsel at an early path in order to ensure it complies with the expectations of both authorities. stage in investigations. It also underlines the The Yates memo also put the onus on companies importance of ensuring, at an early stage of to assist in such investigations by requiring an internal investigation on corporate criminal companies to provide all relevant facts about issues, that those individuals who have exposure individuals to the DOJ before the company Securing co-operation are not involved in strategic decisions, such as would be eligible for any co-operation credit. self-reporting or the treatment of whistleblowers. The ability to secure employees’ co-operation may also be impacted by the limited In the UK, the SFO requires companies to comfort that employers can now offer to potential wrongdoers. A focus on individual Equally, in light of this trend, it may be more undertake to co-operate in investigations accountability means that employees are exposed to significant personal risks. In the difficult for companies to offer employees into individuals when entering into deferred face of such risks, a promise by an employer that it will not take disciplinary steps if amnesty in the context of internal investigations. prosecution agreements (DPAs). And the Spanish the employee co-operates may be of little consolation. And companies with individuals based overseas High Court has focused its attention on the may be constrained by the laws of foreign actions of senior managers, calling several jurisdictions in fully co-operating with high-level executives from a number of large prosecutors, in their home , institutions to testify as suspects in money in the provision of data relating to individuals. Legal advice laundering investigations relating to alleged tax evasion by the banks’ customers. Employees may face interviews at short notice in the context of a dawn raid or urgent inspection. Companies wishing to support employees with their own legal ‘The focus on individual accountability is increasing, giving rise to a number counsel may need to plan for this eventuality by ensuring independent counsel of important consequences. There is real potential for employer and is identified in advance. In investigations generally, the possibility of employee and employer interests diverging means that separate legal representation may employee interests to diverge, making any investigation process trickier be required (giving rise to questions such as whether or not the employer should to navigate. Employees’ desire to protect themselves may lead them fund the employee’s advice). to request independent legal advice earlier in any investigation or to approach the relevant regulator directly with any concerns.’ Caroline Stroud, Partner, London

10 11 Corporate crime A global perspective

The relevance of compliance to criminal investigations

When a company faces an investigation, the ‘Sapin 2 is a groundbreaking piece Compliance programmes as a mitigating factor existence of an effective compliance programme of law that has put anti-bribery The existence of an effective compliance is essential. Whether a compliance programme is Assessing corporate programme, either at the time of the wrongdoing legally required, is a defence to criminal conduct, compliance firmly in the spotlight or at the time charges are brought, is a compliance programmes or is considered as a mitigating factor by in France, making robust bribery mitigating factor in a number of jurisdictions, enforcement authorities, compliance prevention procedures not just good including the US, the UK, Brazil, the Netherlands programmes are an important factor in assessing The DOJ considers whether but a very and South Africa. corporate criminal liability globally. We look a company has: here at some of the ways compliance (and clear legal requirement for those The extent of mitigation available can often be corporate culture) play into decisions regarding companies caught by the legislation.’ difficult to quantify, but some jurisdictions have established a culture of compliance; . provided more guidance than others. Dimitri Lecat, Partner, Paris dedicated sufficient resources Failure to put in place a compliance In terms of offering guidance on how prosecutors to the compliance function; programme to address criminal risks as Compliance programmes as a defence assess and evaluate compliance, the US DOJ has the basis for civil or criminal liability been much more forthcoming that some of its In the UK, ‘adequate’ or ‘reasonable’ procedures hired qualified and experienced provide a defence for the offences of failing to counterparts in other jurisdictions. The DOJ France recently adopted the law Sapin 2, compliance personnel; which addresses the prevention and prevent bribery or the facilitation of tax evasion, has identified factors it considers in assessing respectively. And there have been calls from compliance programmes and released a detailed of corruption. It requires certain companies established an independent to implement a compliance programme to within the UK Parliament to expand the ‘failure list of questions it may ask in conducting such compliance function; detect and prevent corruption and influence to prevent’ approach to other economic crimes an . peddling. Russia’s federal anti-corruption law and to human rights abuses, which would likely conducted an effective risk similarly requires companies to implement include a similar compliance procedures defence. ‘Cooperation is often essential to assessment and tailored the compliance programmes. Similarly, in certain other countries – such as position a company for a favorable compliance programme based In the US, if a company with securities on a US Italy, Spain, Russia and Japan, to name a few outcome. But so, too, is what the on that assessment; exchange fails to maintain sufficient ‘internal – companies may escape criminal liability for DOJ calls “timely and appropriate certain crimes if they had an effective controls’ – including an effective compliance remediation,” which includes the compensated and promoted programme – that failure could be a violation compliance programme in place at the time. compliance personnel on a par of the FCPA. implementation of an effective compliance program. That’s one with other employees; In many jurisdictions the failure of relevant ‘Compliance is often a battle for companies (such as professional or financial the hearts and minds – particularly of the three requirements audited the compliance programme services) to maintain an effective anti-money amongst the force in (together with cooperation and to ensure its effectiveness; and laundering programme is also an offence. emerging markets – it’s not enough self-reporting) that companies New money laundering regulations in the UK have to satisfy to qualify for a established an appropriate (the Money Laundering, Terrorist Financing and to tick a box saying “the team has reporting structure. Transfer of Funds (Information on the Payer) had the training”. The business potential declination under the Regulations 2017 (the Money Laundering needs to convince its employees FCPA Corporate Enforcement Regulations 2017)) go further in that they that it actually wants them to Policy. And, more generally, the make it an offence for relevant company’s approach to compliance to fail to comply with a large number of behave in a compliant manner, compliance-related requirements set out not just create the appearance and remediation is a key factor in the regulations. of doing so.’ the DOJ considers when exercising its prosecutorial discretion. Adam Siegel, Partner, New York It’s important to keep that in mind from the outset and act accordingly.’ Brent Wible, Counsel, Washington

12 13 Corporate crime A global perspective

Co-operating with the authorities and resolving criminal law disputes

Companies face a range of potential outcomes Brazilian authorities, an oil and gas services In many jurisdictions, prosecutors encourage In another example of differing attitudes and in settling criminal matters depending on the company was served a conditional warning in companies to co-operate through the possibility rules relating to internal investigations across jurisdiction. In some jurisdictions, there is lieu of prosecution for corruption offences and of resolving a criminal matter on more lenient jurisdictions, in Germany, prosecutors have the possibility of reaching a negotiated resolution ordered to pay over US$105m to Singapore. This terms. But it is important to understand their sought to seize materials produced during a with prosecutors. case represents the first such multijurisdictional expectations, as prosecutors in different corporate investigation that would be protected by Singaporean authorities jurisdictions have different approaches to from disclosure in the US on the grounds of DPAs have long been a tool used by US with counterparts abroad, and it likely signals the corporate co-operation and different expectations legal privilege. Although appeals on this point prosecutors to resolve disputes (although they future of corporate crime investigations there. of what the company should be doing in practice. remain outstanding, this reflects a broader issue may also agree a guilty plea, a non-prosecution regarding differences in approaches to legal agreement (NPA), a declination with Even in countries where there are no formal Prosecutors in the US and the UK, for example, privilege across jurisdictions. Such differences disgorgement in FCPA cases (which is a fairly benefits to self-reporting and co-operating, both emphasise early and voluntary can require careful management if a company new construct introduced in 2016) or a straight there may be good reasons for doing so – self-reporting and full co-operation as the most is to maintain all applicable protections declination). And other jurisdictions are now particularly if the company chooses to self-report important factors. They have different views, available over investigation materials in starting to follow this example. Since February potential misconduct in that jurisdiction to however, as to what full co-operation entails. relevant jurisdictions. 2014, certain UK prosecutors have had authority authorities elsewhere. For example, there are substantial differences to enter into DPAs rather than pursue full in views as to the scope of legal privileges that Given the varying approaches to corporate prosecution for certain economic crimes, and ‘If there is an Asian to a apply in internal investigations and the types co-operation across jurisdictions, an internal four such agreements have been entered into to potential issue and you choose to of materials (such as witness interview notes) investigation may need to be tailored to the date. Under the law Sapin 2, French prosecutors that a company should produce. And while the expectations of the enforcement agency with may also now enter into DPA-style agreements self-report to and co-operate with DOJ is accustomed to companies reporting the the primary claim to jurisdiction, or where there with companies in relation to allegations of US or European authorities, then results of internal investigations conducted by is greatest risk, to ensure that the company will bribery or laundering the proceeds of tax fraud. you should assume the authorities outside counsel (and conducting its own, be deemed co-operative. Such agreements in the UK and France are in Asia will find out. So it is often independent investigations), the SFO often subject to greater judicial scrutiny than in prefers to be more closely involved in directing in the company’s best interests to the US. such internal investigations, particularly in Strategic considerations anticipate that by reporting the terms of data collection and the sequencing As suggested by the recent decisions of two of witness interviews. when investigating federal appeals , US courts play a limited issue in Asia at the same time as role in reviewing DPAs to ensure that they are elsewhere. To do otherwise risks and reporting potential geared towards enabling companies to getting on the wrong side of the ‘With more interagency criminal conduct demonstrate compliance with the law during Asian authorities from the outset.’ co-operation across all regions, the period of the DPA. Courts in both the UK and companies need to develop To whom should the disclosure France, by contrast, must review and approve Sandy Baggett, Counsel, Singapore be made? the substance of DPAs to ensure that they are in a global strategy. But it is the public interest. Moreover, while the US DOJ Whatever the form of a corporate criminal important not to lose sight When should the company disclose? may enter into DPAs with both resolution, penalties generally include the of local peculiarities. and individuals as to any criminal offence, the payment of a substantial fine and can Understanding both the How much investigation should be UK and French equivalents are limited to include other conditions, such as ongoing organisations and certain specified offences. co-operation with law enforcement, improved global and local view will help done before reporting? compliance programmes, a monitorship and companies anticipate any In contrast, in many jurisdictions across Asia, even debarment. What should the company disclose? there is no formal procedure for plea bargaining, challenges they may face in let alone DPAs. However, Australia is considering an investigation as a result of How can the company best preserve introducing a DPA regime and Japan is set to jurisdictional differences.’ privilege to ensure its effectiveness? introduce a new plea bargaining regime from Norbert Nolte, Partner, Germany June 2018. Similarly, the Singapore Attorney Has an appropriate reporting General announced in late 2017 that, as part structure been established? of a resolution led by the US DOJ and involving

14 15 Corporate crime

There is now also closer co-ordination on the But whilst there is scope for global settlements, resolution of investigations between prosecutors companies should not underestimate the working across borders. For example, in challenges in reaching a co-ordinated settlement connection with the Brazilian ‘Car Wash’ with all authorities in all jurisdictions – corruption investigation, a construction company particularly where the means of disposing resolved charges with authorities in the US, of investigations open to prosecutors is more Brazil and Switzerland in a co-ordinated set restricted or their level of discretion much lower of agreements. As part of the co-ordinated than that of their counterparts. English courts, resolution, the US authorities agreed to take into for example, have far greater powers to scrutinise account the amounts to be paid to the other the terms of a DPA than their US counterparts. countries in calculating the penalty levied in the Further, the US FCPA Corporate Enforcement US. Since then, senior DOJ officials have signalled Policy is unique in that it sets out a presumption the DOJ’s willingness to continue to work with that prosecutors will decline to prosecute FCPA counterparts abroad to avoid ‘piling on’ violations where a company satisfies the additional penalties when calculating penalties standards of voluntary self-disclosure, full for FCPA violations. And further co-ordinated co-operation, and timely and appropriate resolutions have followed involving, for example, remediation, provided there are no aggravating the US with Dutch and Swedish authorities and factors that would weigh in favour of prosecution the US with Singaporean and Brazilian and the company pays all disgorgement, authorities, which are structured along similar Everyone talks a lot about the importance forfeiture or restitution relating to the lines – ie each country takes into account the misconduct. DOJ officials have indicated the DOJ amounts to be paid to the others in determining of co-operation to securing an offer of a DPA. will look to this policy as non-binding guidance the level of penalty. in other criminal cases, opening up the But, in the UK, the test is whether it is in the public possibility of further declinations (with interest. Co-operation will be taken into account, ‘In practice, global settlements disgorgement/restitution) in a range of matters can be quite complex for the investigated by the DOJ where the company but it’s one of a range of factors. prosecutors involved. But there satisfies the requirements set out in the FCPA Corporate Enforcement Policy. are steps a company can take Geoff Nicholas, Partner, London – and I saw this from the government side – to make the easier for prosecutors, which can help nudge them in that direction if they are minded to explore a co-ordinated settlement.’ Daniel Braun, Partner, Washington

16 17 Corporate crime A global perspective

'Developments over the last five years show a clear trend of new countries using The growth of alternative and DPAs or similar leniency agreements. These are a precursor to increased enforcement. From my experience, where a prosecutor has a method to resolve corporate criminal co-ordinated multijurisdictional corporate cases without a , it is more likely to commence them, and more likely to participate criminal resolutions over recent years in cross-border resolutions where conduct overlaps with other jurisdictions.’ Ben Morgan, Partner, London

FEBRUARY NOVEMBER OCTOBER JANUARY SEPTEMBER DECEMBER UK: UK: Brazil and US: UK, US and Brazil: Canada: Singapore, Brazil and US: DPAs become available Prosecutors enter into Aerospace company Aerospace company enters Public consultation Singapore Attorney General issues for certain offences. first DPA. Resolution is agrees to pay US$107m into first DPAs co-ordinated opens on introducing first major public conditional warning co-ordinated with US SEC. in plea deal with US DOJ between UK SFO and US DOJ. a DPA regime. to a company in lieu of prosecution. and reaches related Company agrees to leniency Penalty level is co-ordinated with US agreements with US SEC agreement in Brazil. Netherlands, and Brazilian authorities. and Brazilian prosecutors. Sweden and US: UK: Australia: Telecoms company agrees DPAs extended to to a co-ordinated resolution A bill to introduce DPAs sanctions offences. and combined penalty is laid before Parliament. with authorities in three jurisdictions.

2014 2015 2016 2017 2018

JANUARY NOVEMBER FEBRUARY DECEMBER MARCH NOVEMBER FEBRUARY Brazil: Netherlands: Netherlands France: Australia: France: Singapore: Corporate leniency Prosecutors agree and US: France introduces DPA-style Public consultation Prosecutors agree first Government agreements introduced US$240m out-of-court Prosecutors agree agreements for bribery and the opens on introducing French-style DPA (with publishes bill to for bribery under the settlement with oil and US$795m joint resolution laundering of tax proceeds. a DPA regime. a Swiss bank in relation introduce DPAs Clean Company Act. gas services company for to laundering the into Criminal with telecoms company Brazil, Switzerland foreign bribery charges. in first Dutch/US proceeds of tax evasion). Procedure Code. and US: co-ordinated resolution US: of this kind. The Dutch A Brazilian company and its company entered into an affiliate agree to pay US$3.5bn FCPA Corporate out-of-court settlement to US, Swiss and Brazilian Enforcement Policy with Dutch prosecutors authorities in relation to introduces a presumption and a DPA in the US, corruption charges (penalty that the DOJ will decline and its Uzbek subsidiary later reduced due to inability to prosecute companies pleaded guilty in the US. to pay). Prosecutors agree to in FCPA cases if certain take into account payments requirements are met. to the others in determining the level of penalty to be paid in each country.

18 19 A global perspective

Potential corporate liability for Limited liability for foreign/ all types of criminal offence overseas conduct Austria In 2006, Austria introduced criminal liability for As a general principle, Austrian criminal law only entities so that criminal offences contained in applies to offences committed in Austria. Under the Austrian Criminal Code and other laws were certain circumstances, criminal offences made applicable to legal persons. committed by Austrian citizens in a foreign country, or criminal offences committed by This change was introduced through the foreigners where the victim is an Austrian Federal on Responsibility of citizen, are also subject to Austrian criminal law. Entities for Criminal Offences As yet, there are no clear rules or relevant court (Verbandsverantwortlichkeitsgesetz (VbVG)). decisions regarding the liability of Austrian Under the VbVG, a fine can be imposed on a companies for misconduct by foreign subsidiaries. company when either a decision maker or member of staff commits a criminal offence and Compliance programmes may allow the company either gains a benefit or one of the a company to avoid criminal liability company’s legal duties is neglected as a result. for the acts of employees but not The term ‘decision maker’ means a person who for the acts of decision makers is (i) a managing director, (ii) an executive board A comprehensive compliance programme could member, (iii) an authorised officer, (iv) someone allow a company to avoid criminal liability for who is authorised in a comparable manner to the acts employees. This might be the case if represent the company, (v) a member of the appropriate supervisory measures have been or , or undertaken within the company aimed at (vi) who otherwise exercises controlling powers preventing staff from committing such criminal or relevant influence on the management of the offences. However, a compliance programme company. The term ‘staff’ means, in summary, will not exclude corporate criminal liability for a person who works for the company on the basis criminal offences committed by decision makers. of an relationship or is in a situation comparable to that of employees. In addition, a compliance programme may lead to a reduced fine. There are no explicit rules dealing Criminal offences committed by a decision with this question, but the court could, amongst maker can be directly attributed to the company. other criteria, take a compliance programme into Whereas the company may only be liable for any account when determining the amount of a fine. criminal offence committed by staff if (i) all Moreover, the public prosecutor could decide to elements of the case are made out in relation to refrain from or abandon prosecution of an entity that individual (eg if the offence requires on the basis that it has established an appropriate then the staff member must have had compliance programme. the requisite criminal intent), and (ii) the commission of the offence was made possible, or considerably easier, due to the fact that decision makers failed to apply due and reasonable care to prevent such a criminal offence being committed.

Companies may face criminal liability for the actions of both senior decision makers and other members of staff.

21 Corporate crime A global perspective

The main enforcement authorities No clear guidance on the benefits Potential outcomes: resolutions Proponents of change argue that the maximum fine under the VbVG is relatively low in The main enforcement authorities in Austria are of co-operation, although some and penalties comparison to regulatory fines levied for the public prosecutors’ offices. Each federal penalty mitigation may be available The decision to impose a fine against a breaches of the Austrian Cartel Law (which in Austria has its own court districts with its own company (and the specific amount) is at the There is no general obligation to self-report are not classified as criminal). public prosecutor’s offices. In 2011, the Public offences to the public prosecutor’s office under discretion of the court competent to decide Prosecutor’s Office against White-Collar Crime Austrian law. However, a company may have in the criminal proceedings. In addition to fines, other sanctions are possible, and Corruption was established and is the specific obligations, for example under for example exclusion of the right to , According to the VbVG, the fine shall be assessed competent authority to prosecute white-collar anti-money laundering or tax law, to make the confiscation of objects that were used in or in the form of daily rates. The fine shall amount crime, corruption and organised crime. certain disclosures to the relevant authorities. intended for use in committing the offence or to at least one daily rate and up to a maximum It conducts complex procedures in commercial were the product of the offence, or exclusion of 180 daily rates. criminal law matters and investigates abuse There is no general legal provision or guidance in from public (in the case of certain place addressing the co-operation of companies of authority. The daily rate shall be assessed on the basis of offences, including bribery and corruption with the authorities. So the question of whether the income of the entity by taking into account offences, and money laundering). The Austrian Federal Criminal Police Office has and to what extent co-operation with the relevant its financial performance. The daily rate shall prevailing competence in exceptional cases of authorities is opportune is a strategic one. In the be equal to one 360th of the yearly proceeds or Austrian authorities regularly (international) crime as defined by law either majority of cases, however, co-operation is likely exceed or fall short of such amount by not more on its own initiative or whenever a public to be acknowledged in a positive way by the co-operate with counterparts abroad than one-third. In any event, the daily rate shall prosecutor’s office puts it in charge of such authorities and may lead to a reduction of a fine. Austria is a party to numerous international and be not less than €50 and not more than €10,000. investigations due to the significance of the European conventions and bilateral agreements Voluntary self-disclosure may help a company And the maximum fine for a company under criminal offence in question (competence in on mutual legal assistance, and in practice avoid certain criminal tax liabilities. Tax evasion the VbVG is €1.8m. particular in cases concerning organised crime authorities regularly co-operate and exchange (either wilful or grossly negligent) is a general and politically motivated crime). In practice, the information with foreign authorities. competent police, supervised by the prosecutor, criminal offence. However, criminal tax liability There has been some ongoing effectively conducts the investigation. can be avoided if the misconduct is self-disclosed debate in Austria on whether the to the tax authorities before they have started There are other specialised enforcement an investigation. In cases of doubt (which may maximum fine of €1.8m under authorities such as (i) the tax authorities, exist in a complex area like tax), a disclosure the VbVG is appropriate. (ii) custom authorities, which investigate could be made on a precautionary basis to violations of foreign trade regulations, and protect companies and their management (iii) cartel authorities, for example the Austrian from potential criminal exposure. Federal Competition Authority, which is exclusively competent in antitrust law cases. The Financial Supervisory Authority supervises banks, insurers and other financial institutions handling securities and it has the power to impose regulatory fines. However, if the violation of law constitutes a criminal offence, the proceedings are transferred to the public prosecutor.

22 23 A global perspective

Broad scope for corporate form of help or incited its subsidiary to commit criminal liability the offence. Although the law does not expressly provide for successor liability where criminal Belgium The Belgian Criminal Law Code (BCC) provides liability is incurred by a predecessor company, that a may be held criminally liable prosecutors may have viable arguments to for offences that are intrinsically related to its support such an argument. aim or its interests or that are committed on the corporation’s behalf. Although not addressed A corporation can be held criminally liable in the BCC, it is generally understood that a for any offence that can be attributed to it. corporation’s can be established Corporations are prosecuted most often for tax based on an individual officer or employee’s state fraud, money laundering, of documents, of mind, or a more general attitude or culture bribery, financial offences, environmental within the corporation that reflects the offences and social law infringements. corporation’s position towards the conduct. Belgian courts have jurisdiction when part of the criminal conduct occurred in Belgium and Compliance and culture may be extra-territorial jurisdiction over foreign conduct, relevant to establishing a inter alia, when committed by a Belgian national company’s ‘state of mind’ or or resident. In addition, there are specific rules for certain offences, such as bribery. Foreign intention to carry out an offence. companies can be prosecuted in Belgium for bribery occurring outside the country when To establish corporate criminal liability, it is not the bribery involves a Belgian public official necessary to identify a specific individual who is or a Belgian national operating as a public official culpable. Any such individuals, however, can be in a foreign country or for an international held jointly liable with the corporation. Criminal governmental organisation, or when the bribery liability may also exist for unintentional involves a public official in an international offences, committed out of neglect or ignorance. governmental organisation with an established For such offences, criminal liability will be place of business in Belgium, such as the exclusively attributed to either the corporation or the North Atlantic Treaty or the individual, depending on who committed Organisation. the most serious violation. A draft amendment abolishing the exclusive attribution has been Compliance programmes may presented to Parliament, and while expected to be approved, the amendment will most likely be relevant to charging and not be implemented before the end of 2018, sentencing decisions or later. While the existence of a corporate compliance programme is not a legally recognised defence, A parent company can be liable for its an effective programme could demonstrate the subsidiary’s conduct either as a direct perpetrator corporation’s efforts to prevent misconduct and or under the rules of criminal participation. may be taken into consideration by prosecuting The parent company may be considered a direct authorities deciding on declination, settlement perpetrator when it violates a criminal provision or guilty plea. The criminal court may take either through its own conduct or when it uses a the existence of such a programme into account subsidiary as an instrument to commit the act in in assessing the corporation’s mens rea or question. A parent company may be considered determining the penalty to impose. an or to an offence committed by its subsidiary if it provided any

25 Corporate crime A global perspective

Similarly, the absence of a compliance The enforcement authorities A range of outcomes is possible, The public prosecutor determines whether to programme is not a criminal offence. Under accept a judicial settlement or guilty plea. While Criminal investigations are initiated by the including judicial settlements sector-specific laws, however, administrative there are no formal guidelines setting forth the public prosecutor or by the victim of the offence (without trial or conviction) and fines may be levied if certain compliance policies factors to be evaluated in determining how to (by means of a civil complaint) and are conducted plea agreements or measures are not in place, relating to, for treat a corporation that faces corporate criminal under the authority of either the public example, whistleblowing in the financial sector A corporate investigation could result in a liability, public prosecutors generally consider prosecutor (in the case of a police investigation) or detecting and reporting money laundering. declination, judicial settlement, guilty plea the nature and seriousness of the offence and its or the judicial magistrate (in the case of Also, in certain cases, the failure to prevent an or conviction with a fine imposed. impact on society and victims, any co-operation a judicial investigation) with the assistance offence from being committed could qualify by the corporation, the pervasiveness of of the judicial police. Regulators in certain Judicial settlements and guilty pleas may be as an unintentional offence or as criminal wrongdoing within the corporation and its sectors such as tax, finance, telecommunications proposed for all but the most serious offences, participation by neglect if the corporation was history of similar conduct, the feasibility of and nuclear power have investigative authority ie for offences where the law allows a aware of the conduct – or of the possibility obtaining a criminal conviction taking into and are required to report the results of their for individuals to be reduced to two of it occurring – and through its failure to act account potential defence arguments such as investigation to the public prosecutor’s office in years and the prosecutor would not pursue a allowed the offence to occur or to be committed. time-barring, and the adequacy of remedies such the case of potentially criminal conduct. The higher sentence. Both types of agreement require as civil or regulatory enforcement actions. government’s National Security Plan for 2016 to a statement of facts and identification of the Individuals may face liability for 2019 emphasises as priorities the combating of charges, or potential charges, at issue. In the criminal context, courts can impose fines corporate criminal misconduct tax and social fraud and the tracing of the illicit With judicial settlements, the corporation is (for most offences, using a formula to convert the through attribution rules proceeds of domestic and foreign corruption. requested to pay a sum of money, and, if the sentence that would apply to an individual into a Although there are no guidelines addressing charges involve tax or social law offences and/or corporate fine) and require corporations to pay when to seek individual and corporate liability, Few formal incentives to self-report have caused damage to others, the corporation restitution to victims, and to forfeit both ill-gotten prosecutors generally take action against both and co-operate, but it may be must pay the outstanding taxes or social gains and assets related to the offence. In rare individuals and corporations where possible. relevant to plea or settlement contributions and/or compensate the victim or circumstances, a court could require dissolution of the corporation or closure of part of the As a general rule, individuals incur criminal discussions or sentencing accept civil liability. The public prosecutor then liability only when their own conduct meets the declines prosecution, and the judicial settlement corporation. Courts can also require that the Belgium does not have a leniency programme test for the criminal provision infringed. Some is registered in the criminal record (but is not judgment be publicly announced. or any other formalised incentive to report provisions, however, designate a person who is reflected in extracts taken from that record). violations and co-operate with prosecutors. There assumed to be responsible for the violation In cases involving judicial investigation, and New penalties for corporations is an exception to this general rule for voluntary (legal attribution) or require the corporation further to legislative amendments that are disclosures to tax authorities, which can lead to are currently being considered, to designate such a person (conventional expected to be approved and implemented in immunity from prosecution for related tax including a new type of fine based attribution). In these circumstances, the 2018, judicial settlements will require court offences. With the recent adjustments to judicial designated person can be held criminally liable evaluation and validation before payment can on the gain from illegal activity, settlements and the introduction of guilty pleas, when a violation is committed within the be made and a declination obtained. If the court community service and exclusion however, offenders have offered to self-report corporation unless the designee can demonstrate refuses to validate the agreement, the case violations in exchange for a settlement or plea. from certain public contracting that he or she is not guilty. Legal attribution is returns to the public prosecutor, who may refile it While there are no guidelines for assessing for a period of one to 10 years. common in social law, where the ‘employer, at a later date before a different court magistrate. self-reporting and co-operation, judicial its agents or representatives’ (eg the human magistrates may take these factors into account A guilty plea, by contrast, involves an admission resources manager) is assumed to be responsible International co-operation in determining the penalty to impose in a of criminal liability by the corporation as well for criminal violations of certain social law Belgian criminal authorities co-operate particular case. as an agreement as to the penalties that will be provisions. Conventional attribution occurs, with their counterparts in the EU and imposed. A criminal court must evaluate the for example, in environmental law, where the around the world, although much of the agreement before it can become final. If the corporation is ordered to appoint an individual co-operation relates to matters court validates the agreement, the court imposes who is responsible for the corporation’s and non-white-collar offences. the agreed penalties and sets out rules compliance with its environmental obligations governing any claims for civil . Similar and who will be considered criminally liable to judicial settlements, if the court refuses to in the event of a violation. validate the agreement, the case returns to the public prosecutor for a decision on further action.

26 27 A global perspective

Limited corporate criminal liability, carried out the corrupt act: companies may be but companies may still face held liable for the actions of third parties as Brazil significant economic crime well as employees – provided the individual was related penalties acting in the company’s interest or for its benefit. In Brazil, companies can be held criminally liable It is important to emphasise that, under the for only a limited number of environmental Clean Company Act, there is no requirement crimes. However, companies may face significant for the third parties to have been acting under penalties and other administrative sanctions the company’s authority, approval or even for certain economic crimes – such as bribery, knowledge. Companies can be held liable if the bid rigging and criminal cartels – committed third party was merely acting for its benefit or on their behalf by individuals. These civil and in its interest. In addition, companies can face administrative actions against companies are an administrative fine even if no individual is often intertwined with criminal proceedings prosecuted or found criminally liable. against individuals; within which, it is also The Clean Company Act covers bribe payments possible that investigators request and criminal made to domestic officials by Brazilian judges order certain measures against companies or foreign companies operating corporations – such as dawn raids, search and in Brazil (even temporarily). It also has seizure warrants and freezing of assets. extraterritorial reach in that Brazilian Companies operating in Brazil can, therefore, companies may face liability for the bribery find themselves at the centre of investigations of foreign officials, regardless of where the by Brazilian criminal authorities in an misconduct occurred. enforcement environment that, in recent years, has been increasingly robust. Companies within the same group or consortium partners may be jointly liable under the Clean The basis for corporate liability depends on Company Act for any administrative fines or the law in question. Under the Environmental other monetary penalties levied on a related Criminal Law (Federal Law No. 9,605/1998), company for corruption. for example, two conditions must be met before a company will be held criminally In addition, under . 932 of the Brazilian liable: (1) the act or must have been Civil Code, employers may face civil liability attributable to a decision of the company’s legal for the acts of employees in the exercise of or contractual representative or its governing their functions. Although there is no consensus body; and (2) the wrongdoing must have been in Brazilian law as to how criminal acts of committed in the company’s interest or for employees may be attributed to the company, its benefit. companies may have to indemnify other parties for any damages arising from the The Clean Company Act (Federal Law No. unlawful acts of employees. 12,846/2013) makes companies strictly liable on an administrative and civil basis for the bribery Companies may also face civil and administrative of officials carried out in the company’s interest penalties for bid rigging and corruption under or for its benefit. The liability is strict and so the Improbity Law and the Bidding Law there is no need to prove any intent on the part (Federal Laws Nos. 8,429/1992 and 8,666/1993, of the company’s senior management, board or respectively). other governing body. Nor does it matter who

29 Corporate crime A global perspective

Compliance programmes can be • a periodic assessment of the risks facing the Individual criminal liability for Enforcement authorities amongst a key mitigating factor to reduce company is carried out, with any necessary corporate misconduct most active in the world adjustments made to the compliance administrative fines Board members and senior executives are not The civil and federal police are responsible for programme to address evolving risks; The absence of a compliance programme will not, criminally liable for offences committed by the starting criminal investigations. Thereafter the • accurate accounting records are kept and in itself, form the basis for liability. However, in company’s employees or other individuals federal and state public prosecutors’ offices controls are put in place to ensure financial imposing penalties under the Clean Company acting for the company’s benefit, unless they will pursue the case and propose charges, statements and reports are prepared in a timely Act, authorities will consider the company’s were also complicit in the wrongdoing. Such where appropriate. and accurate manner; anti-bribery compliance procedures and controls board members and senior management may, A large number of public bodies have authority at the time of the misconduct. • specific procedures are put in place to prevent however, face civil liability if the illegal acts to start civil/administrative investigations fraud and other misconduct in the context of were carried out as a result of their own Administrative fines under the Clean Company relating to corruption and file administrative public tenders and other interactions with negligence, wilful misconduct or violation Act are, in general, calculated as a percentage proceedings before a judge. These include the government, regardless of whether such contact of the company’s policies or statutes. of the company’s gross revenue in the fiscal year is direct or through an intermediary; Ministry of , Supervision and Brazilian authorities have been active in Control (CGU); other Comptrollerships; and immediately prior to the start of the investigation. • the compliance department is independent; Fines can be as high as 20 per cent of gross pursuing individuals, including senior managers federal and state public prosecutors, including • whistleblowing channels are established and revenue. Where a company can demonstrate it of large corporations, who are suspected of the federal Attorney General’s Office. These their existence is widely communicated within had implemented an effective anti-corruption being involved in white-collar crimes. In doing entities have been particularly active since the the organisation, and mechanisms are in place programme at the relevant time, the percentage so, however, there have been cases in which start of ‘’ – the investigation to protect whistleblowers; basis for such fine may be reduced by between board members and senior executives have faced into corruption involving Brazil’s state-owned oil 1 per cent and 4 per cent (ie, a company facing • disciplinary action is taken against those investigations or even criminal charges relating company, Petróleo Brasileiro SA, or Petrobras – the maximum fine of 20 per cent of its gross who violate the programme and issues to the acts of employees or other individuals. in 2014. This investigation has led to numerous revenue for the previous year could, on the basis identified are remediated; In these cases, prosecutors and judges have been arrests, leniency agreements, plea bargains and of its compliance programme, have this reduced • appropriate compliance procedures are in accused of placing the burden on senior convictions of individuals, as well as debarments to 16 per cent if given full credit for place when contracting parties and steps are managers to demonstrate they are not liable and large monetary penalties for several its compliance programme). taken to supervise them; (even though it is the burden of the authorities companies – including Brazilian subsidiaries • due diligence is carried out during any M&A to prove liability in the criminal context) and of multinational groups. Federal Decree 8,420/2015 sets out the key transactions or restructuring to identify defendants have argued they have been elements of an anti-corruption compliance Car Wash is one of several investigations in misconduct or the risk of misconduct having targeted simply because of their senior position programme. An accused company’s compliance recent years in what is seen as a new era of taken place; within the company. system is measured against the following list to anti-corruption enforcement in Brazil. determine what, if any, mitigation is available: • the effectiveness of the compliance programme The Administrative Council for Economic is continually monitored; and Car Wash is one of several • senior management are committed to the Defence (CADE) – the authority in charge of • donations made to political parties, campaigns investigations in recent programme (ie, the ‘tone at the top’ is set); cartel enforcement in Brazil – has also been and candidates are fully transparent. • the company establishes standards, a code years in what is seen as a new era increasingly active over the past five years. of ethics and related policies both internally of anti-corruption enforcement CADE has been involved in investigating and for third parties; Fines under the Clean Company in Brazil. anti-competitive conduct arising from a • there is periodic training on the compliance Act can be as high as 20 per cent range of well-known investigations, including programme; of the gross revenue of the Operation Car Wash and the LIBOR previous year. investigations into benchmark manipulation.

30 31 Corporate crime A global perspective

Self-reporting and co-operation Whilst such leniency agreements under the Investigations may result in Brazilian authorities working arm may lead to reduced penalties Clean Company Act mean the company will not huge penalties and other in arm with foreign counterparts be pursued by the enforcement agency with In recent investigations in Brazil involving consequences but negotiated Brazilian authorities regularly co-operate with whom it has signed the agreement, there is complex economic crimes, prosecutors have resolutions are possible counterparts abroad on investigations into still a risk other agencies may pursue the adopted a strategy of providing whistleblowers economic crime, most notably with prosecutors company for fines related to the same allegations. Companies may face administrative fines and with reduced penalties or immunity, agreeing in the US and Switzerland. And these leniency agreements do not cover other monetary penalties (eg disgorgement or not to prosecute them if they co-operate with individuals. Both of these are factors a company compensation orders) where economic crimes In late 2016, and after almost a year of investigations into others. will have to take into account when considering such as corruption, bid rigging and cartel negotiations, the Brazilian, Swiss and US Settlements are possible under the Clean whether it is in the company’s interest to behaviours have been carried out in their authorities agreed to resolve a foreign bribery Company Act. Such settlements, referred to as self-report any suspected bribery that has interest or for their benefit. and corruption investigation with a Brazilian ‘leniency agreements’, often require the company benefited the company. In addition to fines (which may be up to 20 per engineering and its subsidiary, to pay a lesser penalty than it might otherwise with the companies agreeing to pay penalties In contrast, in relation to cartel conduct, cent gross revenue from the previous year), have paid had the matter gone to court, provided in each jurisdiction. The investigations found the leniency programme run by the companies can be punished under the Clean the company agrees to co-operate in the the companies had engaged in bribery in Administrative Council for Economic Defence Company Act with a prohibition from receiving investigation and remedy its compliance issues. 12 countries across Latin America and Africa, (CADE), Brazil’s competition law enforcement incentives, subsidies, grants, donations or loans At federal level, for example, the agency with including a large number of kickbacks paid in authority, is well-established and offers a greater from public entities and public banks. And jurisdiction to enter into leniency agreements is relation to with Petrobras. This case degree of certainty that the company will not be companies may be placed on a blacklist for the CGU. However, most recent settlements have has led to investigations in several Latin pursued by any other agency for cartel conduct irregularities in bidding processes, tax fraud been entered into by the federal prosecutors. American countries and information requests arising from the same conduct. CADE’s leniency and non-compliance with public contracts. There is an ongoing discussion on whether such from authorities in these countries to their programme also protects all employees of the While (as noted above) companies within the agreements entered into exclusively with the Brazilian counterparts. successful leniency applicant from prosecution. same group or consortium partners may be prosecutors – without the participation of jointly liable for any fines or other monetary In another Petrobras-related case, a UK aerospace the authorities with jurisdiction over the penalties under the Clean Company Act, only the company agreed with the Brazilian public violations, such as the CGU – are entirely valid. ‘[O]ver the last few years, Brazil entity actually implicated in the corruption may prosecutor to pay US$25m to settle charges it In one case a federal court of appeal held that has become one of the US Justice face debarment. In addition to such penalties, had bribed officials at Petrobras in a resolution such an agreement was defective because not all Department’s closest allies in the companies are also required to compensate the announced in co-ordination with agreements, relevant agencies participated, although the fight against corruption. Thus far, government for damages caused by the violation. totalling nearly US$800m, entered into with agreement was not declared null and void for the UK Serious Fraud Office and the reasons of legal certainty. the Department of Justice and But, as noted above, it is possible for companies Brazilian authorities have entered to enter into a leniency agreement or negotiated US Department of Justice relating to conduct A provisional measure was put in place in 2015 settlement, and there have been several such in a number of countries. Brazil has also, that allowed companies to potentially escape into four global resolutions and agreements in recent years – some of which alongside the US DOJ, co-ordinated a resolution all sanctions for bribery and corruption if the assisted one another in dozens have resulted in huge penalties. A Brazilian with the Singaporean prosecutors in relation company co-operated with prosecutors in the of other cases... On a nearly daily meatpacking company, for example, agreed to to charges a Singaporean company paid investigation into the company and others and basis, our prosecutors and pay US$3.2bn in 2017 to end several probes into bribes in Brazil. remediated its compliance issues. However, that its business in a negotiated settlement with the agents are in touch, exchanging provisional measure has since been revoked. Brazilian authorities. Even without formally entering into a leniency information and assisting one agreement of this nature, companies that another as appropriate.’ co-operate with investigations may still receive Then Acting Deputy Assistant Attorney co-operation credit mitigating the penalties they General in the Criminal Division of the US DOJ, face under the Clean Company Act and Federal speaking in May 2017 Decree No. 8,420/2015.

32 33 A global perspective

Basis for corporate criminal liability The relevance of compliance The concept of corporate criminal liability procedures to corporate China was first introduced into the Criminal Law in prosecutions China in 1997. There are no specific provisions under the A company may be held criminally liable in Criminal Law expressly allowing a company to China if it has been found to have committed one rely on adequate compliance procedures as a of the offences expressly set out in the Criminal mitigating factor or a defence against liability. Law. More than 200 offences could be committed However, in practice, a prosecutor or a judge, at by a company, which range from terrorism, his or her discretion, may decide not to prosecute threats to state security, environmental pollution, or impose a lower penalty if the company shows various economic crimes (eg bribery, tax evasion, it has discontinued the crime and made genuine or bid rigging), false , efforts to prevent future violations. and fraudulently creating corporate records or inducing investment through fraud. The enforcement authorities Acts of employees may be attributed to the Corporate criminal investigations are generally company if the employee acts on behalf of conducted by Public Security Bureaus, which will the company and the illegally obtained proceeds submit the case to the People’s Procuratorates are owned by the company. for prosecution. However, a case that involves the potential misconduct of a governmental official A company, no matter where it is incorporated, or a state-owned enterprise may be investigated may face prosecution if it commits a criminal directly by the People’s Procuratorates or, in the offence within China or if the consequences of future, by the Supervisory Committees that are such offence occur within China. being established to investigate officials’ corruption and dereliction of duty. In some cases, The relationship with investigations are started by other government individual liability bodies (eg the tax authorities), but need to be In principle, the company and the culpable referred to the Public Security Bureau when such individual(s) may be convicted of the same crime bodies suspect a criminal offence in relation to the same misconduct. But there are has occurred. exceptions to this under law and in practice. In recent years, the Chinese authorities have Those individuals who are ‘directly in charge’ taken an aggressive stance against corruption, of the company (eg its legal representatives or and prosecution of corporate bribery crimes has general managers) or ‘directly responsible’ for increased significantly. Other enforcement the criminal offence itself (eg the employee priorities include capital market abuse and who commands, authorises or carries out the crimes in those industries that directly affect the actual misconduct) may be prosecuted in relation public – for example medical care, environmental to the crime in question. The terms ‘directly in protection and food safety. charge’ and ‘directly responsible’ are broad and vague, and could, potentially, cover a board member or senior executive who has no direct involvement in the offence.

35 Corporate crime A global perspective

Reporting and co-operation Resolutions and penalties Article 108 of the Criminal Procedural Law The Chinese law does not recognise plea provides that ‘[a]ny entity or individual, upon bargaining. Nor is there a concept of deferred discovering facts of a crime or a criminal suspect, prosecution agreements in Chinese law. However, shall have the right and duty to report the case or in practice and within the discretion of the provide information to a public security organ, procuratorate, there may be room for companies a People’s Procuratorate or a People’s Court’. to negotiate the charges and/or the level of the Key themes However, there is no penalty for failing to comply penalty. This depends on a range of factors. with this ‘duty’. Self-reporting of a violation For example, if a company defendant and the Austria before a criminal investigation is initiated may victim reach a settlement such as a payment result in leniency in sentencing or exemption of compensation to the victim, the procuratorate Belgium from penalties pursuant to Article 164 and may choose not to prosecute the defendant or Brazil Article 390 of the Criminal Law. This option for may recommend a more lenient sentence. potentially more lenient treatment is available Where a company is found guilty of a crime, China to both corporates and individuals. the court can impose a fine. There is no limit on France the level of fine imposed on companies, and the ‘Any entity or individual, upon law requires the court to take into account the Germany discovering facts of a crime or a circumstances of the crime. Historically, the The Chinese authorities have taken an aggressive criminal suspect, shall have the fines imposed by Chinese authorities tended to Hong Kong be much lower than some other jurisdictions, stance against corruption, and prosecution of right and duty to report the case Italy notably the US, but this is changing, with an or provide information to a corporate bribery crimes has increased significantly. international pharmaceutical company receiving Japan public security organ, a People’s a criminal fine of about US$500m in a bribery Other enforcement priorities include capital market case in recent years Netherlands Procuratorate or a People’s Court.’ abuse and crimes in those industries that directly In addition to fines, companies could face other Russia The criminal authorities may demand evidence penalties under administrative laws, including affect the public. from a company or individual and, in those disciplinary warnings, administrative fines, Singapore circumstances, the company or individual has confiscation of unlawfully obtained property, John Choong, Partner, Hong Kong and China an obligation to co-operate and truthfully of business and revocation of a South Africa provide the evidence in question. regulatory permit or licence. Spain Further, co-operation may result in a mitigated Further, the person in charge of the company punishment or exemption from punishment or directly responsible for the misconduct may Switzerland face one or more types of penalty, including if certain conditions are met, for example if the United Kingdom company/individual plays a crucial role in forfeiture of the illegal proceeds, criminal resolving an important case. On the other hand, detention, and confiscation United States a company that fails to co-operate may face of personal property. tougher penalties than would otherwise have been the case.

36 37 A global perspective

Corporate criminal liability Most commonly, corporate prosecutions in exists for all offences France involve fraud, breach of trust, corruption and forgery. Prosecutions are also brought in France Under French law, a corporate entity may be specific areas of (such as misuse prosecuted for any offence committed on its of company assets, publication of inaccurate behalf by its organs (ie directors, officers, financial statements), finance (such as insider members of the board of the general assembly, trading, market manipulation), tax, customs, etc) or representatives (ie individuals empowered labour and environmental law. to act on behalf of the corporate entity, such as a managing director, a receiver, etc). A company cannot incur any direct criminal liability for Some limited jurisdiction for the actions of employees who are not organs or offences committed abroad representatives of the company. Proceedings are Corporate entities may be prosecuted in France often initiated against corporations, however, for offences committed outside the country in for offences committed by their organs or certain circumstances. Most notably, French representatives, who, in turn, are liable for corporations can be prosecuted for the actions of employees. Directors may also committed abroad and for misdemeanours delegate powers to employees, whose misconduct committed abroad where the conduct is could then lead to criminal liability on the part punishable in the jurisdiction where it was of the company. committed. Prosecutions may also be brought in France for any or misdemeanour When an offence requires criminal intent, the committed abroad by a French or foreign mens rea of the corporation may be established national where the victim was a French national through the criminal intent of the individual at the time of the offence. Additionally, a who committed the offence. An individual, French corporation can be prosecuted in France however, need not be convicted for a corporate as an accomplice to conduct that resulted in a entity to be held criminally liable. conviction in a foreign jurisdiction where the A parent company generally cannot be held conduct violates the law of both jurisdictions. liable for its subsidiary’s conduct in light of the In the case of multinational companies, a principle of personal liability under French final judgment must have been rendered in the criminal law and because the concept of country where the main violation occurred corporate groups does not exist under the before a parent company may be prosecuted, criminal law. There are limited exceptions to as accomplice or co-perpetrator for example, this general rule, however, such as where there for the acts of its subsidiary. is joint liability of the parent company with its subsidiary in the case of concealed work (travail dissimulé), which is an offence specific to . More broadly, a parent company may be held liable as a co-perpetrator, or accomplice in, or receiver of the proceeds of, any criminal activity of its subsidiary.

39 Corporate crime A global perspective

Sapin 2: a strengthened approach Individual liability for Reporting and co-operation In November 2017, the High Court in Paris approved the first French-style DPA. The €300m to anti-corruption corporate crimes In terms of corporate liability, there are no agreement was between the PNF and a Swiss Corporate compliance programmes are There is an emphasis in France on holding both formal leniency programmes or opportunities for private bank; but it also resolved an investigation increasingly important in France with the individuals and corporate entities criminally discounted fines in France. The enforcement into the bank’s . Specifically, enactment of Sapin 2 in December 2016. liable. Directors and officers may be held authorities are nonetheless free to take the PNF had accused the bank of laundering the The law requires certain companies and their criminally liable when acting for the company remediation into account in considering whether proceeds of tax fraud, enabling its customers to representatives to implement programmes even if they lacked criminal intent. Individuals to impose corporate liability and in determining evade paying €1.6bn in tax. to detect and prevent corruption and traffic who created or contributed to creating the the amount of the penalty. d’influence (influence peddling). The law also circumstances that allowed criminal conduct to Save that under competition law, the corporate established an anti-corruption agency (Agence occur – or who failed to take steps to prevent the A range of potential penalties entity that reveals to the French Competition Française Anticorruption), which is empowered conduct – may be held criminally liable if they may be applied Authority the existence of a cartel of which it to impose penalties for the failure to implement did not respect a statutory or regulatory duty In determining the penalty to impose, judges was a member will be exonerated from liability. compliance programmes, including fines of of care (in a manifestly deliberate manner). take into account a variety of factors, including The French Competition Authority has no power up to €1m for a legal entity and €200,000 for Directors and officers may also be held the existence of criminal intent and whether to impose criminal sanctions or bring criminal individuals. The absence of a compliance criminally liable if they commit a specific act the corporate entity had previously committed enforcement proceedings. But it may refer cases programme is not, however, a basis for criminal of misconduct that exposed another person an offence. A corporate entity may be fined to the public prosecutor. However, leniency is a liability, and there is no compliance defence to a particularly serious risk of which they up to five times the amount applicable to legitimate reason for not referring a company or available to corporate entities. Sapin 2 also must have been aware. individuals. The corporate entity can also be its employees to the prosecutor. contains protections for whistleblowers and sentenced to additional penalties, such as introduces French-style deferred prosecution The enforcement authorities (i) in limited circumstances, winding-up of the agreements (DPAs) for corporate entities. Alternatives to prosecution and trial company; (ii) exclusion from public procurement, The main criminal enforcement authority is Two alternatives are available for corporate either permanently or for a period of up to five the Ministère Public, or ‘Parquet’ (the office of entities to settle a criminal matter. A company years; (iii) prohibition, either permanently or New law extends limitation period the director of public prosecutions), which is may enter into a guilty plea agreement referred for a period of up to five years, from making a for criminal prosecutions under the authority of the Minister of Justice. to as Comparution sur Reconnaisance Préalable public offer of securities or having its securities In February 2017, the criminal statute of The National Financial Prosecutor’s Office de Culpabilité (CRPC), roughly translated as admitted to trading on stock exchanges; limitations law was amended to double the (‘Parquet National Financier’ or PNF), created ‘court appearance on a pre-trial guilty plea’. (iv) confiscation of any object that was used limitation period for crimes and misdemeanours in February 2014 to combat corruption and CRCP settlements were introduced in 2004 and in or intended for use in committing the (respectively, from 10 to 20 years and from complex financial fraud, is part of the Ministère expanded in 2011. In January 2016, France offence or was the product of the offence; three to six years) from the time the offence was Public and has exclusive jurisdiction for certain entered into its first corporate plea deal with and (v) publication of the judgment. types of financial offences. There are also a committed or, in the case of hidden or concealed a Swiss bank for laundering tax fraud proceeds. infringements, from the time the infringement number of administrative agencies with enforcement powers, such as the Autorité International co-operation was discovered by the authorities. That said, the In November 2017, the High prosecution of hidden infringements becomes des marchés financiers (Financial Markets France has signed several international treaties time-barred after 12 years for misdemeanours Authority) and the Autorité de la Court in Paris approved the to ensure international co-operation in and 30 years for crimes, starting from the day (the French Competition Authority). first French-style DPA. law enforcement. French authorities have the offence was committed, regardless of when co-operated with their counterparts abroad the infringement was discovered. Alternatively, a company may be offered a in the investigation and prosecution of deferred prosecution agreement (DPA) style white-collar crime. For example, in July 2017, resolution, created by Sapin 2. French-style DPAs a Latvian bank was sentenced to pay a fine of are available to entities suspected of bribery, €80m and was banned from practising in France influence peddling, and/or laundering of tax for a period of five years in connection with fraud proceeds. a tax evasion and money laundering scheme. The investigation involved co-operation between French and Latvian authorities.

40 41 A global perspective

Companies may face regulatory Introducing corporate criminal liability has fines arising from certain been frequently and widely discussed in Germany criminal activity Germany, with many differing viewpoints. The ministry of justice of the federal state German law draws a distinction between North Rhine-Westphalia presented a draft criminal offences and regulatory offences. bill in September 2013 that provided for the Criminal offences can be committed only by introduction of a Corporate Criminal Liability individuals and can be punished by Act. This and other proposals have been imprisonment or a fine. Regulatory offences, widely discussed, but so far they have not by contrast, can be sanctioned only with a been implemented. fine. Although regulatory offences are mostly committed by individuals, fines can be imposed Parent company liability on companies if the offences committed by an officer or employee of the company can for subsidiaries be attributed to the company. It is unclear whether a company can face regulatory sanctions for failing to take A fine can be imposed on a company where, appropriate supervisory measures in relation among other things, a person authorised to to subsidiaries. To date, there has been no represent the company (for example the manager decision by the German Federal Court of Justice or a member of the management board) has (BGH) on this issue. The Higher Regional Court committed a regulatory or criminal offence of Munich, however, stated in a 2014 decision that (i) caused the company to violate its duties; that the duty to take appropriate supervisory or (ii) enriched or was intended to enrich the measures may extend to subsidiaries if the company (s.30 of the German Act on Regulatory management of the parent company has Offences (Ordnungswidrigkeitengesetz (OWiG)). influence over the subsidiaries. This may Offences committed by operational staff can, include foreign subsidiaries. indirectly, be attributed to a company if the In the area of cartels, German law was owner, or an authorised representative/board amended in June 2017 to introduce regulatory member, fails to take appropriate supervisory parent company liability in cases where the measures to prevent criminal or regulatory parent company has a decisive influence on offences from being committed (s.130 and s.30 the subsidiary. of the OWiG). In this case, the company (as well as the representative/board member) can be fined if that offence could have been prevented, ‘In Germany, prosecutors are or rendered significantly more difficult to obliged to investigate if they commit, had there been appropriate controls. have reason to suspect criminal activity, and during my time as a prosecutor I launched some major investigations on the back of newspaper reports. Prosecutors and journalists increasingly exchange information with each other, which adds to the risk for business.’ Simone Kämpfer, Partner, Düsseldorf

43 Corporate crime A global perspective

Compliance management systems Individual liability may be based on Reporting and co-operation Resolutions and penalties may lead to a reduced fine or even a lack of due supervision No general law or guidance exists addressing Many corporate cases are settled in Germany. an exclusion of liability Board members can be held liable for personally co-operation and the impact it can have on the There are no deferred or non-prosecution The establishment of compliance measures or committing a criminal offence or for nature and amount of a corporate resolution. agreements, but the public prosecutor and the a comprehensive compliance management participating in offences committed by others. The Federal Cartel Office, however, has a leniency company may negotiate a deal resulting in system (CMS) may lead to a complete exclusion They can also be held liable if company-related programme. Additionally, the BaFin regulatory a fine. The decision to impose a fine against of regulatory liability. If the CMS ensures that offences committed by staff members could have fine guidelines for breaches of the German a company (and the specific amount) is at the appropriate supervisory measures have been been prevented (or at least made significantly Securities Trading Act provide that self-reporting discretion of the prosecuting authority. more difficult to commit) through appropriate and co-operation are mitigating factors when undertaken within the company, then no A fine of up to €10m can be levied on a company supervision (s.130 of the OWiG). determining the amount of a fine. As to supervisory duties are violated if an employee for intentional offences, while the maximum fine individuals, the law provides for a mitigation commits an offence. Liability is not excluded, for negligent offences is €5m (s.130 of the OWiG). of penalties if an individual contributed to the however, if authorised representatives/members The enforcement authorities The maximum fine for intentional offences may of management have themselves committed a discovery of certain criminal offences. The main enforcement authorities in Germany be exceeded, however, where the economic regulatory or criminal offence. are the public prosecutor’s offices. Each federal advantage gained through the offence is higher Apart from a complete exclusion of liability, a state has its own court districts with its own ‘Prosecutors can, but are not than €10m, and any profits exceeding the CMS may also lead to a reduced fine. There are public prosecutor’s office, some of which have specifically required to, take regulatory fine may be confiscated. The fine is no explicit rules dealing with this issue, but an specialised units that focus on white-collar co-operation into account in determined based on the significance of the enforcement authority could, amongst other crime. In practice, the police, supervised by determining the amount of a offence, the charge the offender faces and the criteria, take a CMS into account when prosecutors, conduct investigations. financial situation of the company. The extent determining the amount of a regulatory fine. Specialised authorities investigate tax offences, fine to impose.’ and consequences of the damage caused may In previous cases, some authorities have taken violations of foreign trade regulations and Thomas Helck, Counsel, Germany also be taken into account. compliance measures into account while others antitrust violations. In addition to fines, other sanctions are possible, (the German Federal Cartel Office, for example) Practice varies in Germany and co-operation is The German Federal Financial Supervisory such as the confiscation of the proceeds of crime have not. In a recent decision, however, the generally assessed on a case-by-case basis. In the Authority (Bundesanstalt für and debarment. A company may be excluded BGH (the Federal Court, Germany’s highest majority of cases, however, co-operation is Finanzdienstleistungsaufsicht, BaFin) supervises from public tenders if a person whose conduct court) ruled that an effective CMS should be acknowledged in a positive way by the authorities banks, insurers and other financial institutions can be attributed to the company (such as the taken into account when determining the and may lead to a reduction of a fine. In some handling securities and also has the power manager) has been convicted or the company amount of a regulatory fine. prominent cases, the company’s co-operation to impose regulatory fines. If a violation itself has been fined for certain offences, was taken into account by prosecutors when constitutes a criminal offence, however, the including bribery and corruption offences Instituting enhanced compliance measures as determining the amount of the fine. a result of an investigation to prevent, or at proceedings are transferred to the public and money laundering. least make it significantly more difficult to prosecutor for investigation. When a company chooses to co-operate, commit, similar violations in the future can prosecutors usually expect full and proactive While German authorities usually do not International co-operation also be important. Just recently, a company that co-operation. This may include, among other publicly set out their priorities, enforcement Germany is a party to numerous multilateral and co-operated with prosecutors and adopted a things, providing sources of information and is common in many areas such as bribery bilateral mutual legal assistance agreements, and new compliance programme avoided a fine in the results of internal investigations, obtaining and corruption, fraud, tax evasion, cartel the enforcement authorities regularly exchange a foreign bribery settlement with German for interviewing employees first, offences, and market information with their foreign counterparts. prosecutors. The company, which signed a and supplying information on compliance manipulation, and environmental offences. €48m disgorgement agreement with the measures taken. Bremen prosecutor’s office, was given credit for co-operating with prosecutors, creating a new compliance programme and undertaking an internal investigation.

44 45 A global perspective

Corporate liability – basis for liability Further, vicarious criminal liability may arise where an employer has wholly Generally, absent any express or implied delegated managerial functions and Hong Kong indication to the contrary, a statutory offence responsibilities to an employee and that for which a person is criminally liable is prima employee commits a crime. facie applicable to a corporation, except, for example: (i) where imprisonment is the only penalty (for example ); or (ii) where only Liability for foreign/ a natural person may commit the offence overseas conduct (for example ). The Criminal Jurisdiction Ordinance (Cap 461) provides that a corporation may be liable for Further, there are certain statutory offences that criminal conduct that occurs outside Hong Kong expressly apply to corporations, for example: in relation to a number of offences under the • the Companies Ordinance (Cap 622) Ordinance (Cap 210) (, (general prohibition on acquisition for example) and Crimes Ordinance (Cap 200) of own shares); (forgery, for example), provided any relevant • the Prevention of Bribery Ordinance (Cap 201) part of the offence occurred in Hong Kong. (giving of a bribe, although not receipt And specific statutes may also contain criminal of a bribe); provisions that have an extraterritorial • the Securities and Futures Ordinance dimension. For example, sections 4 and 5 of the (Cap 571) (insider dealing and market Prevention of Bribery Ordinance provide that misconduct offences); bribing prescribed public officers ‘whether in Hong Kong or elsewhere’ may be a criminal • the Theft Ordinance (Cap 210) offence in Hong Kong. In 2010, the Hong Kong (false accounting provisions); Court of Final Appeal held that offering a bribe • the Trade Descriptions Ordinance (Cap 362) in Hong Kong to a foreign official is also subject (consumer mis-selling offences); and to prosecution under the Prevention of Bribery • the Competition Ordinance (Cap 619) Ordinance (B v The Commissioner of the Independent (provision of false or misleading information Commission Against Corruption (28 January 2010, to the Competition Commission). FACC6/2009)). In terms of attributing acts of employees to the company, the position in Hong Kong is the same as that in England at – that is, the acts and state of mind of those individuals who make up a corporate’s ‘directing mind and will’ are attributable to the corporation. This may extend to (past) directors’ possession of fraudulent knowledge – for example the inflation of profits when the corporate filed its tax returns (Moulin Global Eyecare Trading Limited (in liquidation) v The Commissioner of Inland Revenue [2014] 3 HKC 323).

47 Corporate crime A global perspective

The relationship between Individual criminal liability for The main enforcement authorities International co-operation compliance programmes and corporate misconduct The main criminal enforcement agencies with other prosecutors corporate criminal liability Section 101E of the in Hong Kong include: Hong Kong authorities are generally active in In relation to offences, the Court Ordinance (Cap 221) stipulates that where a • the Department of Justice; co-operating with international enforcement of Final Appeal in Hin Lin Yee v HKSAR [2010] corporation is criminally liable, and if the offence • the Securities and Futures Commission; authorities, including those in mainland China. 3 HKC 403 recognised the defence of ‘honest was committed with ‘the consent or connivance’ • the Independent Commission In the regulatory sphere, the constitutionality of and reasonable mistaken belief’ or having taken of (i) a director; (ii) a manager; or (iii) any person Against Corruption; the transmission of data across borders through ‘all reasonable care’. purporting to act as (i) or (ii), the relevant formal international co-operation between person is similarly liable. In the case of R v MG • the Hong Kong Monetary Authority; and In limited circumstances (for example section 26 authorities is currently subject to judicial review Mirchandani [1977] HKLR 523 the court extended • the Competition Commission. of the Trade Descriptions Ordinance), the relevant proceedings before the High Court of Hong Kong. the ‘consent or connivance’ principle to include statute sets out a reasonable care or reasonable The Department of Justice is currently In the case in question, the Securities and wilful blindness. due diligence defence to a strict liability offence. focused on (i) securities and revenues fraud; Futures Commission of Hong Kong transmitted In the case of the Trade Descriptions Ordinance, There is also a focus on holding those in (ii) anti-bribery and corruption; and (iii) customs data to the Financial Services Agency and the it is a defence for a company to show that it took supervisory roles to account, particularly in and excise matters. Securities and Exchange Surveillance reasonable care to ensure that its employees did the financial services sector. The Securities The Securities and Futures Commission has Commission of Japan, purportedly pursuant not commit an offence under that Ordinance (for and Futures Commission has recently listed its enforcement priorities as including to the International of Securities example that the Company had a good system in required licensed corporations to designate the investigation of (i) corporate fraud; Commissions’ Multilateral Memorandum place to prevent misleading advertising/selling ‘managers-in-charge’ of specific areas (risk (ii) misfeasance; and (iii) anti-money laundering. of Understanding (see AA and EA v Securities practices by its sales persons). management, finance and accounting, IT, and Futures Commission HCAL 41/2016). compliance, etc). The new regime does not create The Hong Kong Monetary Authority largely That action is now the subject of a judicial As a general proposition, the absence of a additional liability for individuals but it is likely focuses on prudential supervision and policy, review, which could impact such sharing compliance programme is not, in itself, the basis to make it easier for the authorities to identify and consumer protection – but it also has of data on investigations in the future. for any criminal liability. However, specific which individuals should be responsible a focus on investigating anti-money laundering statutes may confer more onerous duties on a (including in respect of any criminal liability) and terrorist financing related matters. corporation. For example, the Anti-Money if something does go wrong. These changes took Laundering and Counter-Terrorist Financing effect as of July 2017. Reporting, co-operation and (Financial Institutions) Ordinance (Cap 615) potential settlement stipulates detailed requirements in relation to ‘customer due diligence measures’ and a failure There is no formal leniency regime for criminal to implement a system that observes such offences, yet early self-reporting may impact measure may lead to criminal liability. prosecutorial discretion when bringing criminal proceedings. Furthermore, as a general principle, co-operation and remediation are often recognised by the courts as a mitigating factor in sentencing. There is no current provision under Hong Kong law for deferred prosecution agreements. Corporations can, and sometimes do, reach a settlement with the relevant enforcement agencies before criminal proceedings are brought.

48 49 A global perspective

Companies face administrative With regard to groups of companies, liability liability for certain crimes of one of the group’s companies does not, per se, lead to liability of other companies within the Italy Since 2001, companies and other entities in Italy group, not even of the parent company itself. may face administrative liability for certain However, according to Italian case law, crimes committed by their directors, managers where the liable subsidiary, along with other and ‘employees’ (ie people who are subject to companies of the group, is directed and the supervision of the company’s directors and co-ordinated by the parent company, the latter managers) – provided the individual’s actions may be liable for the subsidiary and its managers’ were in the interests of or to the benefit of the conduct. To this extent, it must be proven that company (Law 231 of 8 June 2001). If the the parent company had an effective influence individuals acted exclusively for their own on the subsidiary’s behaviour with regards to or another person’s benefit, and not in the the commission of the offence (ie an effective company’s interests, then the company will participation in the commission of the crime) not be liable. and the actions were in the interests of the Whilst the liability of companies is defined as parent company. ‘administrative’, such matters are dealt with Law 231 also includes provisions relating to by the criminal courts, applying criminal corporate liability for crimes occurring before procedure, and are often pursued jointly with mergers, disposals or acquisitions. These criminal proceedings against the individuals provisions seek to ensure companies do not who are accused of carrying out the crime. escape liability simply because they are subject Given the quasi-criminal nature of the to a transaction of this kind. These provisions proceedings, companies are afforded the same define, for example, the liability of the transferor rights as individuals facing criminal prosecution. and transferee when a business within which The list of corporate crimes for which a company a relevant crime has been committed is sold. may be held liable includes a range of economic The transferor and transferee are jointly and crimes (eg corruption, false accounting, insider severally liable, subject to certain conditions. trading, market manipulation, money laundering). Other kinds of crime for which a company can be found liable include certain health and safety offences, environmental law violations, fraud, certain data protection breaches, related offences and . For corporate liability of this nature, a limitation period of five years applies from the date the misconduct occurred.

51 Corporate crime A global perspective

Scope of territorial jurisdiction The relationship between liability Penalties Dealing with the authorities and Italian courts will have jurisdiction if the crime and compliance Under Law 231, companies may face the potential outcomes is committed, even partially, in Italy or if it gives A company may escape liability if it can show it following administrative sanctions: The Office of the Public Prosecutor of the place rise to consequences in Italy. In the case of had an effective compliance programme in place where the offence was perpetrated is responsible • fines; bribery of a foreign public official, for example, aimed at preventing the misconduct in question. for investigating and prosecuting both • confiscation of profits and/or a seizure the Italian courts would have jurisdiction To avail itself of this defence, the following individuals and companies. Unlike some other of assets; provided some part of the unlawful conduct conditions must be met: jurisdictions, there is no formal process in place occurred in Italy (eg the decision to pay the • a ban from carrying out the ordinary activities that would allow a company to self-report a • the company must have adopted and official). Foreign companies may be subject to of the company; crime in return for leniency. implemented appropriate organisational, such administrative liability under Law 231 • revocation or suspension of government management and control procedures to Plea bargaining is allowed under the Italian Code if they operate, even in part, in Italy. authorisations or licences; prevent the offence(s); of Criminal Procedure, and companies may • disqualification from certain kinds of contracts Companies headquartered in Italy may also • the company must have entrusted an internal be able to negotiate a plea agreement to avoid (eg commercial contracts with public bodies, be liable for crimes committed abroad by body with the power of supervising the some of the more serious sanctions like access to public subsidies or financing); and ‘employees’ (ie anyone who is subject to the functioning of, and the company’s effective disqualification. However, there is no concept supervision of the company’s directors and compliance with, the programme; • a prohibition on advertising goods of settlement agreements or deferred prosecution managers), provided that the authorities in and services. • that body must have sufficiently exercised agreements under Italian law in relation to the the jurisdiction where the crime took place its supervisory powers; and The judgment may also be publicised, which can quasi-criminal liability of corporations. have not taken action against the company • the people who committed the crime must lead to reputational damage. As regards future developments, an extension for the same issue. have fraudulently eluded the controls the Where a company is found guilty, it will almost of the list of crimes, so to include tax fraud and company put in place. always face a fine. But some of the other potential other fiscal crimes, is likely to occur to cover a broader set of criminal offences. In determining whether the company may avail sanctions, in particular disqualification, are rarer itself of this defence, the judge may consult an and, in any event, depend on the specific crime expert in compliance to assess the effectiveness being committed (ie some of the sanctions may of the company’s compliance programme at the be triggered by certain specific offences only). relevant time. The company will only be disqualified if it is a repeat offender or the company made a Individual liability significant profit from the misconduct of its senior managers or others reporting to those Directors, officers and others in management mangers and, if the latter, the misconduct positions will not incur individual criminal occurred because of, or was facilitated by, liability unless they are personally complicit a serious organisational weakness. in the crime in question. The level of fine depends on the seriousness of Whilst the case against the company is often the crime and the extent of the company’s pursued jointly with that against the accused culpability. The company’s financial position may individuals, the company’s role as a defendant also be taken into account, as will the degree to is separate from the individuals. This means the which it benefited from the misconduct. company may be prosecuted even where the Mitigating factors, which may reduce the penalty prosecutor is not bringing, or has not yet by up to 50 per cent, include remediation of brought, a case against individuals (eg because harm or compensation, improved compliance the individuals in question cannot be identified measures and surrender of any profits. or there is some other reason, except amnesty, which extinguishes the crime or the person is exempt from punishment, for example due to lack of capacity or a pardon).

52 53 A global perspective

Companies may face liability for The relevance of prevention certain crimes carried out procedures as a defence or Japan by officers and employees mitigating factor Companies in Japan do not face general criminal The company may have a defence (or may escape liability for all kinds of crimes. However, there prosecution) if it can show that there was no are a number of statutory provisions that negligence on the part of the company in impose specific liability on companies for crimes relation to the misconduct (which would include carried out by the company’s representatives negligence in relation to the appointment and or employees (regardless of seniority) where the supervision of officers and employees). In other misconduct in question relates to the company’s words, the company may be able put forward activities. Such dual-liability provisions, holding a defence based on the fact it took reasonable both the company and the individual(s) to measures to prevent the crime – although this account, exist in relation to insider trading, as can be a very difficult defence to run successfully well as certain antitrust, tax, environmental in practice. and Companies Act crimes. In addition, Even if the company is unable to escape liability companies may also be held liable for bribing on the basis of its compliance programme foreign public officials under Japan’s Unfair (which is possible although rarely successful), Competition Prevention Act. the company may still put forward its compliance procedures as a mitigating factor Individuals may be prosecuted at during sentencing. the same time as the company Where dual-liability provisions exist, the The investigating and company and the individuals involved may be prosecuting authorities prosecuted simultaneously. The company may The police, the national Public Prosecutor’s only be convicted if the individuals are also Office and certain regulatory bodies (including, convicted. However, a company may choose to for example, tax, customs, securities and accept liability at an early stage to conclude the competition authorities) have the power to proceedings against it even if the case against investigate potential criminal misconduct. the individual(s) remains pending. Only the Public Prosecutor’s Office may initiate a criminal prosecution, and such decisions are at their discretion.

55 Corporate crime

Potential outcomes include fines A new plea bargaining system and debarment for Japan Where a company is found guilty of a crime, A plea bargaining system will be introduced it will usually have to pay a fine. There are in June 2018 in relation to crimes such as no publicly available sentencing guidelines antitrust, fraud, bribery and tax evasion. setting out how such fines will be calculated. Under the new system, a prosecutor can In practice, the court will consider a number negotiate to drop or reduce charges if a of factors, including precedents and the defendant provides testimony or evidence on recommendation of the prosecutor. It may also these types of crime committed by another consider the company’s compliance programme individual or company. This provides as a potential mitigating factor. Other mitigating an incentive to companies as well as individuals factors include voluntary compensation of to provide information about tax, bribery or victims for any harm done and the company’s antitrust violations of others in return for co-operation with the investigation. lesser penalties themselves. Apart from criminal fines, companies may Voluntary disclosure of one’s own potential also face other related administrative sanctions violations can be an informal mitigating factor including the loss of business licences or that leads to a lesser penalty – even if there is exclusion from pubic tenders. no formal mechanism for this – and the extent of the mitigation available depends on all other factors and the discretion of the court. Under a new plea bargaining system to be introduced in 2018, companies and individuals in Japan may be able to negotiate with the prosecutor provided they can provide evidence for crimes committed by another party.

56 57 A global perspective

Wide scope for corporate Individual criminal liability for criminal liability corporate misconduct Netherlands In recent years, international fraud and and parent company liability corruption have been high on the Dutch In principle, an individual director or employee enforcement agenda, with some high-profile will incur criminal liability where he or she is cases pursued in close co-operation with US personally responsible for the criminal conduct authorities. With respect to criminal liability, and all elements of the criminal offence have Dutch law treats corporations, in principle, been met. Where a criminal offence has allegedly in the same manner as natural persons. been committed by a corporation, the prosecutor A corporation can, in principle, commit and may instigate criminal proceedings against subsequently be prosecuted for any kind of (i) the corporation; (ii) those who have ordered or offence. But in practice, there are limitations to directed the commission of the criminal offence this as certain physical offences, by their nature, or were de facto responsible for it (the Principal); cannot be committed by an entity. The offences or (iii) the corporation and the Principal jointly. for which companies are generally pursued are Whether the corporation and/or one or more environmental, economic and tax related. Principals are prosecuted is at the discretion of the prosecutor. A corporation will be liable for illegal acts or omissions that can ‘reasonably’ be attributed to A Principal may be liable if he or she did not act the corporation. This broad norm encompasses to prevent the offence and knowingly accepted conduct that may be regarded as within ‘the the reasonable possibility that the offence would domain’ of the company. According to Supreme occur. Putting in place adequate compliance Court case law, conduct is within the company’s programmes may prevent a Principal from domain if one or more of the following facing such personal liability. circumstances apply: (i) the criminal conduct was A parent company may be held criminally liable executed by a representative or employee of the for its subsidiary’s conduct when the conduct is company acting in their formal capacity; (ii) the attributable to the parent or when the parent conduct is part of the normal business activities qualifies as the Principal. of the company; (iii) the company benefited from the conduct; and/or (iv) the company had control A company may still be held criminally liable over the conduct and had accepted the conduct even if the employee acted against corporate or similar conduct in the past. policy or express instructions – although this will be assessed on a case-by-case basis. Any employee or personnel can incur liability on behalf of a corporation. In general, conduct of highly placed officials is more easily attributed to the company. A series of acts by different employees that would, viewed separately, not constitute a criminal offence may, as a whole, constitute a criminal offence by the company.

59 Corporate crime A global perspective

Liability for foreign/ Reporting, co-operation, does not constitute a ‘suitable’ punishment, In recent years, the Dutch authorities have overseas conduct resolutions and penalties a fine up to 10 per cent of the annual turnover increasingly co-operated with law enforcement of the company may be imposed. While the authorities from jurisdictions around the world. Dutch companies may be prosecuted in the Companies are under no obligation to self-report categories of fine do provide a framework, so far For the Dutch prosecutor, international fraud Netherlands for (any) crimes committed abroad crimes to the public prosecution department. there is little guidance on how penalties and and corruption have been relatively high on if any of the acts partially took place on Dutch However, there are certain reporting duties disgorgement amounts are calculated. the agenda. In 2016 a major telecoms company territory or if the conduct qualifies as a serious to supervisory authorities in regulated sectors. entered into a joint settlement of US$795m offence under Dutch law and is also punishable For instance, Dutch anti-money laundering with US and Dutch authorities in a case in the country in which it was committed. legislation contains a reporting requirement The enforcement authorities and involving bribery and corruption. for suspected money laundering whereby every international co-operation with Further, Dutch corporations may be prosecuted institution providing designated services is other prosecutors Other examples of high-profile cases are the for bribery of foreign officials and violating required to report unusual transactions to its The Openbaar Ministerie is the public prosecutor US$240m settlement with an oil and gas services economic sanctions, even if the conduct was supervisory authority. Note that any corporate in the Netherlands for all criminal offences. company in 2014 in relation to a bribery not punishable in the country where the conduct tax evasion or tax fraud is, in itself, already a Criminal investigations are executed by the investigation relating to Equatorial Guinea, took place. In recent years, there have been specific offence, and almost automatically National Police as well as several specialised Angola and Brazil, as well as the €17.5m several cases in which companies were qualifies as money laundering. institutions, most notably the Fiscal Information settlement with a construction and engineering prosecuted in relation to the payment of bribes and Investigation Service (Dutch abbreviation: company in 2012 in relation to suspected bribes to foreign officials. In addition, a company may Plea bargaining is not allowed as a matter FIOD). The criminal enforcement and in Saudi Arabia. In the latter case, the company’s face prosecution for any economic crime of strict policy of the Dutch public prosecutor. investigative bodies, the Dutch tax authorities, auditors also settled with the Dutch prosecutor committed in the Netherlands, even if the Matters can, however, be resolved by an the supervisory authorities (such as the Authority for €7m following allegations the firm failed company is incorporated abroad. out-of-court settlement, at the sole discretion for Financial Markets (Dutch abbreviation: AFM) to properly verify the suspicious payments. of the public prosecutor. and the Dutch central bank (Dutch abbreviation: The relationship between In recent cases, the prosecutor has publicly DNB) increasingly take a collaborative approach. compliance programmes and signalled that self-disclosure, full-co-operation, Investigations and enforcement are also corporate criminal liability remediation and efforts to ensure compliance increasingly thematically organised. The AFM, The absence of a compliance programme does in the future are factors it will consider when DNB and the tax authorities may issue not, in itself, constitute a basis for criminal determining the nature and magnitude of a administrative fines. A criminal sanction cannot liability, though it may be a relevant factor in resolution. However there are no public be combined, however, with an administrative determining criminal liability of the company – guidelines on what may be expected in return sanction (ie una via). although there is no decisive compliance defence. for such co-operation. Enforcement authorities will consider whether With respect to tax offences, in certain ‘[The company] benefits from the company has taken all reasonable steps to circumstances the entity or individual may the favorable business climate prevent the criminal offence and this be able to reduce or extinguish their exposure in The Netherlands. The company assessment will influence the nature and to criminal sanction if they pro-actively correct magnitude of a resolution. the incorrect tax position before he/she/it knows must adhere to Dutch laws and (or should know) that the tax authorities are regulations, also when trading aware of the issue. abroad.’ Corporate entities face a number of The Dutch Public Prosecution Service when in the criminal context. The focus is primarily announcing a close to US$400m settlement on financial penalties such as fines and the with a telecoms company to resolve foreign forfeiture of ill-gotten gains. Fines are categorised bribery charges by offence. The highest category applies only to corporations and is, in principle, no more than €820,000. Nevertheless, if the maximum fine

60 61 A global perspective

Corporate liability The relationship between In Russia, only individuals may face criminal compliance programmes and Russia prosecution for offences listed in the Criminal corporate liability Code. There is no corporate criminal liability. Article 2.1 of the Administrative Code provides However, crimes committed by a company official that a legal entity will be liable for an may lead to various forms of non-criminal administrative violation only if the legal entity liability for the company. For example, corruption failed to take all possible measures to ensure offences may lead to both criminal prosecution of compliance with the law. Accordingly, an the responsible corporate officers and adequate compliance programme may be administrative liability for the company under helpful in mitigating corporate liability for the Russian Code of Administrative Offences. administrative offences. There can be no Similarly, tax offences committed by a corporate assurance, however, that the existence of such officer may result in personal criminal liability a programme would be deemed sufficient to for the relevant officer along with financial (tax) prevent corporate administrative liability. liability under the Russian Tax Code (however, In relation to bribery and corruption offences, tax issues are not covered in this guide). legal entities operating in Russia have a positive The Administrative Code provides for obligation to implement measures to prevent administrative liability of legal entities for a corruption. The types of measures significant number of criminal offences that specified include: may be committed by corporate officers, • designating departments or officers responsible including for antitrust, environmental, money for preventing corruption and other offences; laundering, exchange and export control, • developing and implementing standards and market manipulation, insider trading, consumer procedures designed to ensure the bona fide protection and other offences. business conduct of the organisation; The basis for corporate liability under the • adopting a code of ethics and professional Administrative Code depends on the offence conduct for all employees; in question. In general, however, the company • preventing and resolving conflicts of interest; may be held liable provided the person in • preventing the creation of unofficial accounts question was acting on the entity’s behalf. and the use of forged documents; and Corporate liability is not limited to the actions • ensuring the company co-operates with of the corporate’s top management team. law enforcement. Companies are not liable for administrative or tax offences carried out by their subsidiaries purely by virtue of the parent company holding shares in the subsidiary.

63 Corporate crime A global perspective

Senior management liability for The main enforcement authorities • the proceeds from the sale of all goods International co-operation with (including services) of the wrongdoer obtained corporate misconduct Corporate administrative offences are other prosecutors in the calendar year preceding the year in With the exception of the personal liability investigated by an authority designated in the Russia is a party to a number of multilateral which a relevant offence has been revealed (this referred to in the next paragraph, board Administrative Code. For example, the Central and bilateral treaties on international assistance penalty is common for antitrust offences); members or senior management are not, Bank of the Russian Federation investigates and co-operation in criminal matters, such as • the value of a public tender contract or the generally, liable for offences committed within insider dealing and market manipulation; extradition and prosecution of liable persons. amount of unlawfully received or spent their organisations, unless such individuals the Federal Service of Financial Monitoring budget funds; or However, there have been a number of cases played a role in the commission of the offence – investigates money laundering and terrorist in 2017 where Russian authorities refused to for example as an instigator, accessory or financing; the Federal Antimonopoly Service • the official value of land, etc. provide information to foreign authorities despite accomplice. Nor will board members or senior investigates antimonopoly and advertisement Although companies found guilty of such treaties. For instance, Russian authorities management automatically face any personal offences; the General Prosecutor’s Office of the administrative offences are not generally debarred refused to assist the US Department of Justice’s liability under the Administrative Code Russian Federation investigates corruption and from public tenders in Russia, companies guilty investigation of alleged money laundering in for offences for which their organisation is bribery offences; and the Federal Service for of an administrative offence stipulated by Article connection with a purchase of property. found guilty. Supervision of Natural Resources investigates 19.28 of the Administrative Code (‘[Payment of] environmental offences. Tax offences are Article 2.4 of the Administrative Code, however, Unlawful Remuneration on Behalf of a Legal investigated by the Federal Tax Service. provides for the liability of members of a board Entity’) are not allowed to participate in public of directors, senior management (CEO and Depending on the nature of the offence, the tenders for a period of two years. management board) and other specific employees relevant authority either imposes liability by its (collectively referred to by the Administrative own out-of-court order (which can be appealed Reporting and co-operation Code as ‘officials’ dolzhnostnye( litsa)) for a number to a court), or brings the case to court. Companies are under no obligation to self-report of offences, such as for failure to satisfy offences committed by the company. Nor is there the statutory requirements relating to the Potential penalties any formal mechanism for companies to disclose retention of corporate documents, the If a company is found guilty of an administrative violations of the Administrative Code in registration of legal entities and the holding of offence it may face a warning, fine, forfeiture exchange for lesser penalties. general meetings of shareholders (participants). of property that was obtained as a result of the There is no mechanism for companies to bring Where a manager or an employee is convicted offence or used for it, or suspension of its administrative proceedings to an end through of a crime carried out in the corporate context, operations – depending on the type of offence a settlement or other resolution with the Russian law enforcement authorities will often in question and its significance. authorities. In determining the penalty to begin administrative proceedings against the Fines for different offences may vary impose, however, courts may take into account company as well. significantly. Fines for some offences are fixed the fact that a company voluntarily reported or fall within a specific set range. Others are a violation and co-operated with authorities. calculated based on related values such as: Other factors the court may consider in setting • the value of goods or services sold or provided the penalty under the Administrative Code in breach of the applicable law; include the level of damage caused to the public • the amount of unpaid taxes, undeclared by the offence; whether the company has amounts of money, stamp duties or unlawful voluntarily compensated victims and repaired operations; the damage; whether it is a first or a repeated • the proceeds from the sale of goods (including violation; and whether the company stopped services) (such proceeds may be calculated in the actions violating the law after the relevant respect of the calendar year preceding the year authority issued an order against the company. in which a relevant offence has been revealed) or the amount of funds spent to obtain such goods in breach of applicable laws;

64 65 A global perspective

Companies face general criminal Alternatively, should the person not be in a liability under the and sufficiently senior position to be considered an Singapore other statutes embodiment of the company, the company may still be liable for an individual’s acts if they are In Singapore, the definition of ‘person’ under ‘within the scope of a function of management both the Penal Code (Cap. 224) (PC) and the properly delegated to him’ (Tom-Reck Security Interpretation Act includes any company or Services Pte Ltd v Public Prosecutor [2001] SLR(R) 327 association or body of persons, corporate or (Tom-Reck)). This approach has been codified in unincorporate. This definition is applied to certain Singapore statutes. criminal offences in the PC and in other statutes such as, for example, money laundering under Corporate criminal liability may also be imposed the Corruption, Drug Trafficking and Other by statute. The English courts previously Serious Crimes (Confiscation of Benefits) Act (Cap. accepted that corporate liability may also be 65A) (CDSA), and bribery and corruption under determined by the purpose and construction of a the Prevention of Corruption Act (Cap. 241) (PCA). particular statute, irrespective of who had performed the offending act (known as the Corporate criminal liability is based Meridian principle). In other words, it is possible to attribute criminal liability to a company even on the identification principle if the individual(s) performing the offending act It is generally accepted that a company being are not the ‘directing mind and will of the a legal entity cannot act and/or have a mind company’, provided the relevant statute may of its own and must act through living persons. be construed in that manner. The Meridian In order for any company to be held liable for principle was approved by the Singapore Court an offence, the relevant actions and/or guilty of Appeal in Singapore Airlines v Fujitsu mind required to commit an offence must Microelectronics (Malaysia) Sdn Bhd [2000] 3 SLR(R) necessarily be that of a living person who can, 810 and recently applied by the Singapore Court also, be held criminally liable for his or her of Appeal in Ho Kang Peng v Scintronix Corp Pte Ltd actions. In this regard, Singapore has closely [2014] 3 SLR 329. However, these cases did not, followed English common law and adopted directly, deal with attributing criminal liability the ‘identification principle’. to companies. Under this approach, the illegal acts/guilty mind of a living person may, generally, be attributed Parent company liability to a company such that the company would be Singapore courts generally recognise the separate regarded as having committed those acts/ legal personality doctrine such that a foreign possessed that state of mind – so long as that parent company would, generally, not be liable person is sufficiently senior in that company’s for the acts of employees at a subsidiary located corporate hierarchy. Sometimes described as ‘an in Singapore – unless the parent was using embodiment of the company’ or the ‘directing the subsidiary as an instrument of crime or mind and will of the company’, those persons otherwise complicit in a material manner. include the board of directors, managing directors and possibly other senior officers who carry out functions of management who may, in certain circumstances, be regarded as the company.

67 Corporate crime A global perspective

Limited criminal liability Other examples of agencies with criminal A move towards alternative The Singapore Attorney General stated that, in for acts abroad investigation powers include the Singapore Police resolutions issuing the conditional warning, consideration Force, which consists of specialised departments was given to substantial co-operation, The criminal law of Singapore has limited Singapore does not, currently, have a formal such as the Commercial Affairs Department self-reporting to Singaporean authorities (not just extraterritorial application. Extraterritorial deferred prosecution agreements regime. But in that investigates fraud, money laundering, US authorities), and the extensive remedial jurisdiction applies for certain more serious February 2018, the government published draft securities and other complex financial crimes, measures taken. crimes, one of which is corruption under the legislation to amend the Criminal Procedure Code and the Corrupt Practices Investigations Bureau, PCA, which extends to acts of Singapore to introduce such agreements. For now, the The prescribed penalties for companies depend which falls under the Prime Minister’s Office citizens committed abroad. primary modes for the resolution of criminal on the offence (for example under section 44(5) and is the primary agency for bribery and investigations against companies are usually a of the CDSA, this can be up to US$1m per offence corruption investigations. The relationship between decision not to prosecute the company at all, the of assisting another to retain the benefits of issuance of a stern/conditional warning in lieu of criminal conduct). compliance programmes No clarity on the extent to and liability prosecution, a composition fine (which, if paid, which co-operation may benefit will not result in any conviction in criminal Singapore prosecutors often The presence of an appropriate compliance a company proceedings) or a criminal charge and prosecution co-operate with counterparts programme and evidence showing that all From a corporate perspective, there have with a fine as a penalty. In December 2017 the abroad reasonable checks and/or inquiries had been made traditionally been limited, if any, benefits to Singapore Attorney General announced that, as may be a strong mitigating factor in a company’s Singapore has been fairly active in co-operating self-reporting a crime in Singapore. Co-operation part of a resolution led by the US DOJ, a Singapore favour when faced with criminal charges. with government agencies from other once an investigation is underway is often oil and gas services company was served a jurisdictions, primarily because it is a global used as a mitigating factor for sentencing, conditional warning in lieu of prosecution for financial centre with significant cross-border Main enforcement authorities but the amount of benefit is not often clear or corruption offences punishable under the PCA and money flows. In this regard, the AGC frequently predictable. There are no public guidelines on ordered to pay over US$105m to Singapore. In The primary criminal prosecution authority sends its prosecutors on secondment or co-operation credit or the extent of co-operation total, the company agreed to a combined penalty in Singapore is the Attorney-General’s Chambers attachment trips to overseas prosecuting necessary to receive mitigation. That said, failure of US$422m to resolve charges with authorities in (AGC). Some government agencies, such as the agencies, such as the US DOJ or the UK’s CPS to report certain crimes may, potentially, be a the United States, Brazil and Singapore arising out tax authority (the Inland Revenue Authority or SFO. Singapore has also received prosecutors breach of section 424 of the Criminal Procedure of a scheme to pay bribes to officials in Brazil. of Singapore), have agency prosecutors embedded from such overseas agencies on integrated Code (Cap. 68), which sets out a positive duty on a This case represents the first such joint corporate within the organisation. assignments. Further, Singapore has recently person to give information on wrongdoing and/or resolution by Singaporean authorities. The Monetary Authority of Singapore (MAS) co-operated with multiple countries in the misconduct to the authorities in certain limited has criminal investigation powers, but criminal Singapore’s choice of a conditional warning as a investigations and prosecutions arising from the circumstances. In addition to this, section 39 enforcement actions arising out of those means for imposing such a large voluntary fine is 1MDB investigation into allegations of fraud and of the CDSA, in certain circumstances, imposes investigations are generally conducted by the an unusual one. Conditional warnings are a form money laundering related to the Malaysia state a duty to disclose knowledge or suspicion that AGC. That said, the MAS is also empowered to of prosecutorial discretion and not governed by development fund. The MAS has also entered into any property represents the proceeds of, or is deal with civil enforcement matters and may, statute. They have usually included the condition a number of Memoranda of Understanding on linked to, ‘drug dealing’ and/or ‘criminal for example, commence civil penalty that the offender remain crime free for a period co-operation in securities-related investigations, conduct’ (as defined in section 2 of the CDSA) enforcement action against those accused of of time or else authorities reserve the right to and Singapore recently ratified the Convention to a Suspicious Transaction Reporting Officer breaching certain rules and regulations set out prosecute the offender for the original offence as on Mutual Administrative Assistance in Tax as soon as is reasonably practicable. in the Securities and Futures Act (Cap. 289). well as any fresh charges. It has been assumed Matters in 2016. Finally, as noted above, in late that conditional warnings do require the consent 2017 Singapore entered into the first joint and acquiescence of the offender before they may corporate resolution alongside US and Brazilian be imposed. Conditional warnings have, at times, authorities to resolve corruption charges against included the requirement to pay restitution or to a Singaporean company. return stolen property, but nothing of the order of the voluntary payment agreed in the co-ordinated settlement with the US and Brazil.

68 69 A global perspective

Broad scope for corporate suspicion that an offence has been committed and criminal liability the company deliberately refrains from making any enquiry to determine whether the belief is South Africa Companies may face corporate criminal liability groundless, so as to avoid learning anything to in South Africa for a wide range of offences. They confirm it with reasonable certainty. may be prosecuted for any crime unless the law specifically limits liability for a particular offence Whilst there is no definition of ‘servant’, to natural persons. the term is understood to encompass not only employees, but anyone whose work falls S.332 of the Criminal Procedure Act No. 51 of 1977 under the company’s control. In general, for a (the CPA) contains express provisions deeming company to incur criminal liability, a degree certain acts and omissions of the directors and of supervision and control by the company over ‘servants’ of the company to be the acts and the relevant individual is required. omissions of the company itself. In general, the acts and omissions of a company’s directors or In other common law jurisdictions, under the ‘servants’, (i) when exercising their powers or principle of , companies will performing their duties or (ii) undertaken in not, generally, be criminally liable for the furtherance of the company’s interests, are conduct of individuals acting outside the scope attributed to the company for the purposes of of their duties. In South Africa, however, imposing criminal liability on the company for companies may face criminal liability if an any statutory or . individual commits a crime while acting to further the company’s interests, regardless of Furthermore, it is contemplated under the whether such conduct was within the scope of Prevention and Combating of Corrupt Activities the individual’s duties. This aspect of corporate Act No. 12 of 2004 (PACCA) that any person criminal liability in South Africa poses a who conspires with, aids, induces, instructs, particular risk to companies. commands or counsels another person to commit an offence under PACCA is guilty of an offence. As separate legal entities, parent companies Accordingly, a company may be liable if a will not, usually, face criminal liability for the director or servant of that company, when conduct of their subsidiaries. exercising their powers or performing their duties in furtherance of the company’s interests, Limited extraterritorial application instructs or is complicit in a third party’s The general rule is that South African laws commission of an offence. do not have extraterritorial application, but The concept of ‘wilful blindness’ is also there are exceptions. S.35 of PACCA provides contemplated under South African law. Knowledge for its extraterritorial application in limited may be attributed to a person where a person circumstances. In terms of companies, if a believes that there is a reasonable possibility of the company performs an act that constitutes an offence having been committed and fails to obtain offence under PACCA anywhere in the world information to confirm that the offence has in but that company is registered under any law fact been committed. Therefore, a company may in South Africa, a South African court would not escape liability for the actions of its directors, have jurisdiction over a criminal prosecution servants or third parties if there is a reasonable of that company.

71 Corporate crime A global perspective

The liability of the company In addition to the Police Service, certain other Self-disclosure of violations The Financial Intelligence Centre Act No. 38 of is not dependent on the liability regulatory bodies may refer criminal matters and co-operation may count 2001 (FICA) also creates an obligation to report of individuals to the NPA. These include the Financial Services towards mitigation suspicious and unusual transactions to the Board (the non-banking financial services Financial Intelligence Centre. Both a company and the individuals involved may regulator) and the South African Reserve Bank No formal mechanism exists for a company These reporting obligations can create a potential be prosecuted for the same crime. A company (responsible for banking regulation).1 Following to receive a reduced penalty as a result of its area of conflict between a company and its is a without any physical existence such a referral, the regulators may assist the disclosure of criminal violations and co-operation directors when allegations of economic crime and has no mind or will of its own. For this NPA in building its case – particularly given the with authorities. But ‘self-disclosure’ and a arise within a company. It may be in the reason, the acts, omissions, intentions, purposes complex and specialised nature of some financial willingness to co-operate may be recognised company’s interests to investigate any allegations and knowledge of certain individuals within the crimes and the fact that the referral may have by the courts as grounds for mitigating any internally before any approach is made to the company are regarded as being the acts, been preceded by an in-depth regulatory sentence in the event the company is found authorities. Individual directors, however, may omissions, intentions, purposes and knowledge of investigation. The Financial Intelligence Centre guilty of a crime. the company. However, even if the individuals who prefer to report the matter at an early stage to also assists the Police Service and the NPA in Further, the Competition Commission has committed an offence are not prosecuted in their protect against any allegation they failed to report the identification of the proceeds of unlawful implemented a corporate leniency policy, personal capacities, a company may be prosecuted their suspicions. In investigating allegations of activities, combating money laundering activities pursuant to which a corporation involved in for the offence. Senior managers, directors and economic crime within a company, corporate and the financing of terrorist and related cartel conduct may self-report in return for officers will face criminal liability only if they counsel should be prepared to help manage this activities, and by providing financial intelligence immunity. Immunity is only available to the were complicit in wrongdoing. 2 potential conflict. for use in the fight against crime. first cartel member that approaches the The Competition Commission and the Competition Commission. In the investigation These reporting obligations can The enforcement authorities by the Competition Commission into collusion Competition Tribunal are two other, highly create a potential area of conflict While a number of entities may investigate active, enforcement authorities that (i) conduct surrounding spot between the US dollar corporate crime in South Africa, most such investigations into unlawful corporate conduct, and the South African rand mentioned above, between a company and its directors investigations are led by specialised units within including cartel conduct and restrictive business the Competition Commission excluded one when allegations of economic the South African Police Service, most notably practices; and (ii) determine the punishment for of the banks that was allegedly involved as it crime arise within a company. the Directorate of Priority Crime Investigation these offences. The Competition Commission has blew the whistle on the traders’ alleged actions. (known colloquially as the ‘Hawks’) and the various powers, including the power to raid commercial crimes unit, which focus on the premises and search for and remove information Directors and senior management’s Companies face fines and, when investigation of sophisticated economic offences. pursuant to a warrant or, in limited duty to report economic crimes convicted of corruption, they The National Prosecuting Authority (NPA) is circumstances, without a warrant. In a highly One aspect of South African criminal law that may also face debarment from empowered to institute and prosecute criminal publicised investigation, the Competition companies, including multinationals with public contracts proceedings on behalf of the state. The Special Commission has recently charged 14 banks entities registered in South Africa, should keep Companies may negotiate plea and sentencing Investigating Unit (a specialised unit constituted operating in South Africa (including local and in mind is the duty to report arising under agreements with prosecutors (s.105A of the CPA). by legislation) and the Unit international banks) with collusion relating to s.34 of PACCA. The law applies to persons in a Such plea bargains, however, are subject to judicial (a specialised unit established within the NPA) direct and indirect price-fixing in respect of ‘position of authority’, including directors and supervision and approval, and the court is under may also become involved in corporate criminal spot trades between the US dollar and the South managers of companies. It requires any such an obligation to examine the veracity of the plea investigations. However, the capacity of the South African rand. person who knows or suspects, or ought to know and sentencing agreement. Deferred prosecution African Police Service to investigate sophisticated or suspect, that another person has committed agreements do not exist in South Africa. white-collar crime and the perceived lack of any of the offences of corruption, theft, fraud, independence of the Hawks as an anti-corruption Fines and, in certain circumstances, the , forgery or a forged document, agency remain significant obstacles in the confiscation and forfeiture of assets are the only involving an amount of R100,000.00 or more, to investigation and ultimate prosecution of forms of punishment courts may impose on report the matter to the Directorate of Priority corporate crime in South Africa. companies found guilty of a crime. The size Crime Investigation within the Police Service. of the fine depends on the nature and scope of While the law has rarely been enforced to date, the crime and the existence of aggravating and an individual obliged to make such a report mitigating factors (such as co-operation with who fails to do so may be liable for a fine or the investigation). Legislation also imposes imprisonment for up to 10 years.

1. It must be noted that the South African government has recently passed the Financial Sector Regulation Bill, in terms of which the Financial Services Board will be replaced with two new regulatory authorities, namely the Prudential Authority and the Financial Sector Conduct Authority. At the time of publication, the South African government has not published the relevant notice in the Government Gazette providing the proclamation date for the new legislation to take effect. 2. The Financial Intelligence Centre Amendment Act No. 1 of 2017 was recently signed into law by the president of South Africa. The amendments have increased the obligations of accountable institutions under the Financial Intelligence Centre Act No. 38 of 2001, particularly within the sphere of (i) such institutions’ dealings with ‘domestic prominent influential person[s]’ (as defined) or ‘foreign prominent public official[s]’ (as defined); and (ii) in the case of determining beneficial ownership behind companies and trusts. Certain of these amendments took effect on 13 June 2017, while other amendments took effect on 2 October 2017.

72 73 Corporate crime

restrictions on the extent of the fine that may be reciprocal basis. South Africa has also entered imposed. The company may raise other factors in into treaties on mutual assistance in criminal mitigation, such as the strength of its compliance matters with a number of countries, and has, programme at the time of the criminal conduct, in the past, acceded to requests for such mutual as well as improvements made to the compliance assistance from countries with which it has environment after discovery of the misconduct. no treaty. The weight accorded to such arguments will Increased enforcement of the US Foreign Corrupt depend on the specific circumstances of the case. Practices Act (FCPA) and the UK Bribery Act has Where a company is convicted under PACCA, had a significant impact on South African details of the company’s particulars and its companies doing business abroad and global conviction are entered in the Register for companies doing business in South Africa. In the Tender Defaulters. Information about any first-ever deferred prosecution agreement under director, manager or other person in a position the UK Bribery Act, a former London branch of a of control within the company who was involved South African bank agreed to pay nearly US$33m in the offence (or knew or ought reasonably to in penalties in an alleged bribery scandal have known or suspected the company was involving a sister office of the bank based in involved in such an offence) may also be entered Tanzania, where certain executives of the sister in the register. Once this information has been office had allegedly bribed Tanzanian entered, government departments are prohibited government officials to secure a bond mandate. from entering into new business relationships In the first FCPA enforcement action relating to with the company or individual for a period of alleged misconduct in South Africa, a Japanese up to 10 years (as determined by the National Increased enforcement of bribery and corruption conglomerate agreed to pay US$19m to settle Treasury after a court has ordered that the charges that it violated the FCPA when it laws in other countries, like the UK and register be endorsed) and they may terminate inaccurately recorded improper payments to a any existing relationships. US, has had a significant impact on the way politically connected front company for South Africa’s ruling political party, in connection with companies do business in South Africa. International co-operation contracts to build two multibillion-dollar power South Africa is a party to several bilateral and plants involving its South African subsidiary. multilateral agreements aimed at facilitating These examples of legislation with co-operation with foreign counterparts on extraterritorial effect, along with the recent criminal investigations and prosecutions, and amendments to FICA, may well result in an it has enacted a comprehensive domestic legal increased focus on international co-operation framework to give effect to those agreements within South Africa. and generally to facilitate the investigation and prosecution of unlawful conduct. The International Co-operation in Criminal Matters Act sets out the basis for South Africa’s co-operation with foreign states on the provision of evidence, the execution of criminal sentences and restraint orders in South Africa, and the confiscation and transfer of the proceeds of crime. Such co-operation is offered on a

74 75 A global perspective

Corporate criminal liability a If a company can show that it had a relatively new concept suitable compliance programme in Spain Spain is a relative newcomer to corporate place, it may escape criminal liability criminal liability, with the concept having first The law providing for such a defence operates been introduced into the Criminal Code in 2010. differently depending on who committed Since then, the law has been amended by Organic the crime. Law 1/2015 to emphasise the importance of the Where the crime was committed by an exercise of ‘due control’ (or lack of such control) employee or someone under the control of over the company’s employees in establishing the directors, the company may escape liability corporate criminal liability. if it can show it adopted and effectively Companies may be held liable in Spain for implemented a compliance programme to certain business-related crimes committed for address the risk at issue. the company’s direct or indirect benefit. They are Where the crime was committed by one of the liable for such crimes committed (i) in the name company’s legal representatives or by someone or on behalf of the company, for its direct or who is otherwise entitled, alone or with others, indirect benefit, by its legal representatives or to make decisions on behalf of the company, persons otherwise entitled to make decisions the compliance defence is similar. The company on behalf of the company – whether that is may escape liability if it can show it had adopted individually or in a committee; and (ii) on behalf and implemented an adequate compliance of the company, for its direct or indirect benefit, programme (ie control and monitoring by anyone else who commits a crime in the procedures to prevent or significantly reduce performance of their corporate duties, where the risk of the crime in question occurring). that person was able to commit the crime But it must also show that: because management grossly breached its duties of supervision and control. • a person or body with independent supervisory powers was authorised to oversee the Companies cannot be held criminally liable for programme (eg a compliance officer or an any crime – only those listed in the Criminal independent committee); Code. The list includes economic crimes such as cartels and criminal anti-competitive behaviour, • that person or body did, in fact, sufficiently corruption, money laundering, tax fraud, carry out their supervisory functions; and securities fraud, market manipulation and • the individuals who carried out the offence insider trading. And the code extends corporate wilfully disregarded the programme. criminal liability to other kinds of business- For the defence to succeed, the compliance related crime, such as environmental crimes, programme must have been in place before crimes related to intellectual and industrial the crime was committed and should contain: property, and urban planning offences. • a risk assessment identifying the activities Where the alleged misconduct took place outside covered by the programme; of Spain, prosecutors may prosecute companies • standards and controls to mitigate the with a registered office in Spain for certain criminal risks detected; offences (such as corruption) – if the crime was allegedly committed by the entity itself or by an • financial controls to prevent crimes; executive, director, employee or collaborator of • an obligation to report any violations such entity. of standards and controls through a whistleblowing channel; • a disciplinary system to sanction violations of the programme; and • reviews of the programme on a periodic basis and also following serious violations or organisational, structural or economic changes to the company.

77 Corporate crime A global perspective

Even if all the conditions are not satisfied so Self-reporting and co-operation Penalties include fines and a In addition to fines, companies could face other as to avoid liability altogether, a compliance may act as mitigating factors range of other consequences penalties under article 33.7 of the Criminal programme may still be relevant to the question Code, including: on sentencing In determining the fine to impose, the court of mitigation and help a company obtain a will take into account the effect the fine will • the dissolution of the company; lesser penalty. If a company admits a crime before an official investigation has begun, that fact will be have on employees, creditors, shareholders and • a suspension of the company’s operations for considered as a mitigating factor under article bond holders, as well as the survival of the up to five years; Individual liability 31 quarter of the Criminal Code, which may lead company. The fine must serve as a deterrent and • a closure of the company’s premises or facilities Both the company and an individual may be to a reduced penalty. How a company conducts is calculated by reference to a daily amount, for up to five years; convicted of the same crime in relation to the which ranges from €30 to €5,000 per day. itself once an investigation has commenced may • a temporary (ie up to 15 years) or even a definite same misconduct. But one does not depend on The minimum fine is 10 days and the maximum also affect the penalties it faces. The other prohibition on carrying out future activities the other — a company may be found guilty fine (for companies) is five years. If specifically mitigating factors listed under article 31 quarter that may be related to the crime in question; of an offence even if no individual is convicted. of the Criminal Code focus on co-operation, provided for in relation to the relevant offence, • disqualification from receiving public subsidies Board members and senior management are remediation and improved compliance to prevent the court may also calculate the fine as a or debarment from entering into public not automatically liable for crimes committed by and detect offences. ‘proportional fine’, determined by reference to contracts for up to 15 years; and the company. For certain crimes, however, they the damage caused, the value of the criminal Under article 259 of the Spanish Criminal may face personal liability if the misconduct product or the benefit obtained by it. After • court intervention in the company’s business Procedure Act any person with knowledge of a occurred as a result of their serious negligence. assessing the severity of the offence and taking for up to five years. public crime (such as bribery) is obliged to report into account aggravating and mitigating factors, it to the authorities. This obligation extends to Criminal liability of a company will also The enforcement authorities the court will either apply a daily amount to professionals such as external auditors, but not involve joint and several civil liability with the severity level or calculate the proportional Corporate criminal investigations are generally to lawyers. In practice, the sanctions imposed the individuals convicted of the same crime. fine. The court must also take into account the conducted by the Public Prosecutor’s Office. for the breach of this obligation are minimal. This liability provides for restitution and requires amount of any fines imposed on individuals In some cases, investigations are started by the company to repair any damage caused by the when calculating the company’s fine (and vice other government bodies (eg the tax authorities), misconduct in question and to pay compensation No DPAs or formal plea versa), although there is no obligation to offset but these investigations are stayed and the for damages. bargaining, but some negotiation or reduce the company’s fine on this basis. matter referred to the Public Prosecutor’s Office may be possible whenever such bodies suspect a criminal offence has occurred. While Spanish law does not recognise formal plea bargaining, companies may negotiate with the prosecutor to resolve a matter through a guilty plea. There is no concept of deferred prosecution agreements in Spanish law. Where a company is found guilty of a crime, the court must (with only a few exceptions) impose a fine. In 2017, Spanish prosecutors secured their first convictions for bribery of a foreign official. The proceedings against two executives of a Spanish company for paying bribes in Equatorial Guinea did not involve the company (the misconduct took place before corporate criminal liability was introduced). Even so, this is a wake-up call for Spanish companies that anti-corruption prosecutors are willing to investigate and prosecute foreign bribery.

Rafael Murillo, Partner, Madrid

78 79 A global perspective

Corporate criminal liability Some extraterritorial jurisdiction for focuses, in general, on economic economic crimes committed abroad Switzerland crimes and the company’s failure where perpetrator is in Switzerland to prevent such crimes Generally, Swiss authorities have jurisdiction Under Swiss law, corporate criminal liability to prosecute crimes committed in Switzerland arises only in a limited set of circumstances. or those that have an impact in Switzerland. Broadly, there are two bases for corporate In addition, Swiss jurisdiction extends in certain criminal liability. circumstances to economic crimes committed outside the jurisdiction where the perpetrator is First: where a crime is committed in the exercise in Switzerland. of a business activity and, due to ‘a deficient corporate organisation’, the acts in question In theory, this provides Swiss prosecutors with cannot be attributed to a specific individual, broad jurisdiction to prosecute economic crimes the company may be held criminally liable for committed abroad. In practice, given most of the the crime. The punishment is a fine of up evidence may be in the jurisdiction where the act to CHF 5m (approx US$5.2m). (Article 101(1) was committed, it can be difficult for the Swiss of the Swiss Criminal Code.) authorities to prosecute crimes committed abroad. For this reason, the Swiss authorities will Second: a company may be held criminally liable often opt to prosecute related offences where the if it failed to take all necessary and reasonable act took place in Switzerland. For example, organisational measures to prevent certain rather than prosecute foreign bribery, the Swiss crimes from occurring – this is irrespective of authorities may investigate and prosecute whether or not the liability can be attributed to money laundering committed in Switzerland an individual. The listed crimes include terrorist or compliance failures that had their effect financing, active bribery of a Swiss or foreign in Switzerland, for example those failures official, bribery in the private sector and money committed in Switzerland that led to money laundering. The offence, therefore, punishes a laundering or foreign bribery. company for not having an adequate compliance framework in place; conversely, having a Forfeiture proceedings may also take place in sufficient framework acts as a defence. As the Switzerland, even where the underlying offence law does not provide further guidance on what occurred abroad. constitutes ‘necessary and reasonable organisational measures’, the prosecuting authorities take available international good practice standards into account. Swiss jurisdiction usually exists whenever a group’s parent company is domiciled in Switzerland (regardless of whether the compliance failure occurred at a foreign subsidiary) or if the compliance failure occurred in Switzerland. (Article 101(2) of the Swiss Criminal Code.)

81 Corporate crime A global perspective

Senior managers will only be liable No concept of deferred prosecution No formal sentencing guidelines Swiss authorities generally if they, too, are culpable agreements but there is the exist, but courts will take into supportive of cross-border criminal The criminal liability of the company does not, possibility of limited de facto account aggravating and mitigating investigations in itself, lead to criminal liability of directors plea bargaining factors when assessing penalties Switzerland is a member of many international or other senior managers. The criminal liability Deferred and non-prosecution agreements do Under Swiss law, there are no binding sentencing treaties on cross-border co-operation in criminal of individuals is determined independently not exist under Swiss law. In theory, therefore, guidelines or rules – so the court has considerable matters. In addition, the International Legal of that of the company and will depend on the if the prosecutor is aware of the commission of discretion in determining the amount of the fine. Assistance in Criminal Matters Act governs individual’s own culpability, including the a crime, it must prosecute it. Although, given Apart from being fined, there is a risk any the Swiss approach to co-operation with states individual displaying the requisite intent to carry workloads, the prosecutors will be selective in proceeds obtained from a crime obtained by a with which it has no treaty. In general, the Swiss out the offence or his/her intentional failure to the cases they pursue. company may be confiscated or have to be repaid. authorities are supportive of legal assistance prevent it from being committed by an employee In practice, the confiscation amount can by far requests in criminal matters. Given Switzerland’s Plea bargaining has existed in Switzerland on a he/she is responsible for. exceed the actual fine. In addition, convicted relevance as a financial centre, the Swiss de facto basis for many years, with prosecutors companies may, indirectly, face non-criminal prosecuting authorities are particularly willing to negotiate with the accused to resolve The enforcement authorities consequences of a conviction, such as exclusion experienced in seizing assets by means of legal the matter by way of a summary penalty order, from tenders, cross-debarments, etc. assistance proceedings. The Swiss courts exercise have a renewed interest in without the need for a full trial. As the content considerable restraint when it comes to reviewing pursuing companies of these penalty orders is agreed with the accused In determining the level of penalty, the courts the authorities’ activities. Investigations may be started by the police or beforehand, they are, in practice, not subject to will usually take into account the gravity of the the public prosecutor. For large, multinational a review by the courts. infringement, whether the company could have corporate investigations, the main prosecutor done more to avoid the commission of the is often the Office of the Attorney General Benefits of self-reporting and offence (ie the gravity of its organisational/ (the OAG). co-operation exist, but they are compliance failings), whether a compliance programme was missing entirely or only slightly In principle, the authorities are under a statutory difficult to calculate deficient, the level of damage caused and the duty to prosecute both the individual and the Swiss courts have traditionally been willing to company’s capacity to pay the fine. company, where possible. In practice, however, agree reduced penalties for those defendants the authorities have, in the past, largely focused who confess and co-operate in the investigation. As noted above, co-operation in the investigation on prosecuting individuals, even where it may But there are no formal rules governing such and self-reporting are mitigating factors that may also have been possible to mount a self-standing discounts on penalties so it can be difficult to be taken into account at the sentencing stage. prosecution against the company under the assess, at the outset, the likely impact of such In a recent case where the company self-reported second limb of corporate criminal liability. But, co-operation on the penalty to be paid. Further, and co-operated in an exemplary manner, the in recent years, there has been a shift in attitude being co-operative will not help a company avoid OAG essentially limited the sanction to the with prosecutors displaying a renewed interest in a prosecution that would otherwise take place. confiscation of illegal profits and a purely pursuing companies, where possible. This mainly Co-operation is only relevant to the question of symbolic fine. Other mitigating factors include concerns large-scale international investigations the level of penalty rather than to the question if there have been any to repair the where bribery or money laundering offences took of whether or not the prosecutors will charge harm caused or improve the company’s place in Switzerland. Very frequently, a key focus the company in the first place. compliance procedures. of these proceedings is the confiscation and return of proceeds of foreign crimes. Cartel law, however, is a notable exception where the impact of self-reporting and co-operation is more clearly defined in the regulations.

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Companies face criminal liability for • Liability arising from the ‘identification a broad range of offences principle’ – In the case of an offence requiring the element of mens rea (ie the intention or United Kingdom Companies can be held liable for a wide range knowledge of wrongdoing), a company can be of criminal offences in the UK, including but prosecuted if the facts satisfy the ‘identification not limited to economic crimes such as market principle’. Under this principle, a company misconduct, bribery and fraud. This is separate may be liable if at least one sufficiently senior and apart from any liability a company may individual who can be regarded as the face in connection with civil or regulatory company’s ‘directing mind and will’ has proceedings. Even so, the ease with which a the relevant criminal intent, which is then prosecutor can secure a successful conviction imputed to the company. The ‘directing mind will often depend on establishing that at least and will’ of a company is generally (but not one sufficiently senior individual was complicit always) the company’s directors or senior in the wrongdoing. However, certain new managers close to the board level. Senior corporate offences, introduced within the last prosecutors in the UK have noted the seven years, have moved away from this model identification principle can make it difficult to a failure to prevent form of corporate criminal to establish corporate liability in practice, liability (explained below) in relation to bribery particularly in relation to large companies and the facilitation of tax evasion. And, in the with complex management structures. future, potential legislative changes now being •  – In some circumstances, considered may result in more economic a company can be prosecuted for the unlawful crimes being modelled in this way. acts of its employees or agents even if they are not regarded as the company’s ‘directing mind The basis for liability depends and will’. This type of vicarious liability usually on the nature of the offence applies in the case of strict liability offences, Corporate criminal liability in the UK can be where no mens rea element is required. established either under a statutory framework For example, many traffic offences fall within or pursuant to the common law principles of the this category in that they do not require identification principle and vicarious liability: intention, or negligence or any other express intent. This kind of • Liability under statute – There are a number corporate criminal liability is most common of statutes that expressly create criminal in the context of an employment relationship liability for companies in relation to certain (when an employer company could be offences. For example, under section 7 of the prosecuted for strict liability offences Bribery Act 2010, companies can be prosecuted committed by its employee if there is a for failing to prevent bribery when a person sufficient connection between the criminal associated with the company engages in conduct and the employment). bribery on the company’s behalf to obtain or retain business or a business advantage. In most cases, prosecutions will be commenced (This is a strict liability offence, subject to the against both the company and individuals defence of having adequate procedures in place responsible for an offence. A company can to prevent bribery, as explained below.) Other be prosecuted, however, even if no cases are offences for which a company may be liable brought against individuals. under statute include corporate under the and Corporate Act 2007 and the new offences of failure to prevent the facilitation of evasion of UK or foreign tax under the Criminal Finances Act 2017, which came into effect on 30 September 2017.

85 Corporate crime A global perspective

Parent companies are not, generally, Companies may be prosecuted for Compliance programmes may be Even if the existence of a compliance programme criminally liable for the acts of certain overseas conduct relevant to the question of whether does not amount to a complete defence against criminal liability, the existence of a genuinely their subsidiaries Generally, prosecutorial agencies in the UK are a prosecutor presses charges proactive and effective compliance programme only able to enforce against corporate Under English law, the liability of a parent Under the criminal law, companies have no is a factor in a prosecutor’s assessment of wrongdoing committed within the jurisdiction. company and that of its subsidiary are, as a general obligation to maintain compliance whether it would be in the public interest to But for certain types of offence, companies can general principle, regarded as separate and programmes. In relation to money laundering pursue a prosecution against the company. The be prosecuted for overseas conduct. For example, distinct. The acts of a subsidiary (even if wholly and sanctions, however, certain statutes impose existence of such a programme is also a factor one of the important aspects of the Bribery Act owned) will generally not be directly attributable obligations on businesses in what is known as prosecutors consider in determining whether it 2010 is its extraterritorial reach. The statute to the parent company solely by virtue of the the regulated sector (eg financial institutions, is appropriate, and in the public interest, to offer applies to any company that carries on a business holding relationship. In certain circumstances, , accounting, legal and tax advisers, trust a company a deferred prosecution agreement or part of a business in the UK, even if the acts however, such as in the case of fraud, English company service providers, etc) to establish (DPA). And in either a prosecution or a DPA, the of bribery take place wholly outside of the UK courts are willing to ‘pierce the corporate veil’ appropriate compliance policies and procedures. quality of a company’s compliance programme and hold parent companies responsible for the and the company is predominantly active Further, a compliance-based defence can be is most likely to be an important factor when acts of their subsidiaries. In addition, under some outside the UK. available for certain corporate offences. calculating the financial sanction. statutes, a parent company could be prosecuted The offences of failure to prevent the facilitation For example, it is a complete defence to the for the acts of its subsidiary. For example, if a of tax evasion under the Criminal Finances offence of failure to prevent bribery under Criminal investigations into foreign subsidiary commits bribery to obtain Act 2017 similarly have extraterritorial section 7 of the Bribery Act 2010 if a company a business advantage for its parent, the parent companies may be started by application. Where there is facilitation of a can show that, at the time of the criminal company could be held liable for failing to a range of authorities UK tax evasion offence, any relevant body is in conduct, it had adequate procedures in place prevent bribery under section 7 of the Bribery The main prosecuting authorities in the UK in scope. Neither of the predicate offences nor the designed to prevent bribery. A similar defence Act 2010 – provided the foreign subsidiary is an relation to corporate crime are the Director of organisation’s acts or omissions need to take of having ‘reasonable procedures’ is available in associated person of the parent (ie it performs Public Prosecutions (as head of the Crown place in the UK. the case of the failure to prevent the facilitation services for or on behalf of the parent). Similar Prosecution Service (CPS)), the Serious Fraud of tax evasion pursuant to the Criminal Finances extended liability can apply in relation to the Where there is facilitation of a foreign tax Office (SFO) and the Financial Conduct Authority Act 2017. failure to prevent the facilitation of tax evasion evasion offence, a company is a potential (FCA). Other authorities with investigative under the Criminal Finances Act 2017, although defendant if it is incorporated or formed in powers in relation to corporate crime include in that case there is no need for the defendant the UK; it carries on a business or undertaking ‘In the context of a criminal Her Majesty’s Revenue and Customs (the UK company to benefit (or be intended to benefit) (or part of one) in the UK (although note there investigation, when prosecutors tax authority (HMRC)) and the National Crime from the actions of the associated person. need be no nexus between the UK business are looking at a company’s Agency (NCA), with any prosecutions arising and the facilitation); or any act or omission compliance, or its efforts to fix from those investigations being carried out ‘The enforcement environment constituting part of the offence takes place by the CPS. in the UK. any compliance issues identified in the UK has transformed in during an investigation, much The SFO has the power to carry out intelligence the past decade. In 2007/08 the For offences such as false accounting, forgery gathering, initiate investigations, and prosecute or the public revenue, for example, of the focus will be on questions cases of complex fraud and bribery and SFO referred to two companies the criminal courts may have jurisdiction if of culture and tone from the top corruption. The SFO’s cases are increasingly high of size in its annual report of any element of the alleged offences took place rather than simply procedures.’ profile and have involved a number of large ongoing cases. By the start of within the jurisdiction. multinational companies. Matthew Bruce, Partner, London 2018, there were close to 20 The NCA is a government department with companies of size referred to in responsibility for tackling serious and organised its public list of ongoing cases.’ crime in the UK. The NCA’s Economic Crime Command co-ordinates with the SFO and FCA, and it is the UK’s financial intelligence unit and central authority for receiving suspicious activity reports in connection with suspected money laundering or terrorist financing. Unlike the SFO, the NCA does not have its own powers of prosecution.

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Investigations carried out by the police, the In evaluating co-operation, the SFO, in particular, Voluntary self-reporting and co-operation may Growing use of the criminal law in NCA or HMRC are then prosecuted by the has adopted an increasingly sceptical approach increase the chances of a more favourable the corporate context and the Director of Public Prosecutions (as head of the to internal investigations conducted by outcome for a company. They can be taken into possibility of even broader corporate CPS). The FCA not only regulates the financial companies. Among other things, the SFO has account as mitigating factors in any subsequent criminal liability in the future services industry but it is also responsible for discouraged companies from interviewing prosecutions, potentially leading to reduced policing the market and may bring criminal witnesses and handling evidence without fines and sanctions. They may even weigh In 2017 alone, the government introduced prosecutions against listed companies – first consulting with it. against the decision to take further investigative (i) two new corporate offences for failing to for example in relation to market abuse. or enforcement action. And in the context of prevent the facilitation of UK and overseas DPAs, English courts may be willing to approve tax evasion; (ii) a new corporate offence for For the offences of failing to prevent the Potential outcomes: resolutions substantial discounts on financial penalties for contravening a requirement under the Money facilitation of tax evasion, the investigating and and penalties self-reporting, full disclosure and co-operation Laundering Regulations 2017; and (iii) a new prosecuting authority will depend on the nature If there is sufficient evidence that there is a with the relevant authorities. In one case, offence, applicable to certain large companies of the tax allegedly evaded. For UK tax, HMRC will realistic prospect of convicting a company upon the ‘extraordinary’ levels of co-operation and limited liability partnerships, for failing investigate and the CPS will prosecute. For overseas investigation, the prosecutor must consider demonstrated by the company resulted in a to report their payment practices. tax, the SFO may investigate and prosecute. whether it would be in the public interest to do 50 per cent reduction in its financial penalty. so. Successful prosecutions can result in penalties Further, in early 2017, the government set out The Competition and Markets Authority has joint a call for evidence on the reform of corporate responsibility with the SFO for the investigation being imposed on the company, such as the payment of fines and compensation to victims, UK authorities regularly co-operate criminal liability laws, following criticism that and prosecution of individuals for the cartel with counterparts abroad the current regime (including the application offence under the Enterprise Act 2002. the imposition of confiscation orders to disgorge companies of the proceeds of crime, and The UK is party to a significant number of of the ‘identification principle’) has made it too debarment from public procurement. multilateral and bilateral mutual legal difficult to hold companies criminally liable for Reporting and co-operation assistance treaties, pursuant to which most economic crimes. This move follows a trend In 2014, DPAs were introduced into English law Even if a company does not have mandatory enforcement authorities can request assistance towards the introduction of ‘failure to prevent’ as an alternative to corporate prosecution. reporting obligations (such as those applying to in gathering evidence. In recent cases the SFO type corporate offences, like those in the Bribery They are not available to individuals and are regulated entities under the Proceeds of Crime has used mutual legal assistance requests to Act 2010 and the Criminal Finances Act 2017. only available in respect of certain specified Act 2002), it may still be in the company’s gather evidence and co-ordinated with The call for evidence outlined five possible economic crimes. interests to self-report suspected offences and to prosecutors abroad who were conducting models for reform, and invited submissions co-operate with enforcement authorities in any Similar to their US counterparts, a UK DPA parallel investigations. A resolution was on questions such as whether a new corporate subsequent investigations. provides for a deferral of prosecution in exchange reached, for example, in co-ordination with offence of failing to prevent economic crime was for the company fulfilling certain conditions, appropriate and whether any new offence should The Deferred Prosecution Agreement Code of the US and Brazilian prosecutors. which could include payment of significant fines be extraterritorial. While the scope of any Practice, a binding code issued jointly by the Outside of the formal process, there is a sense and disgorgement of profits, and other measures proposed change to the law is still unclear, as is heads of the SFO and the CPS, states that that the mode of co-operation is shifting – such as a review of a company’s compliance the timing, this may be the first step towards ‘considerable weight’ will be given to a communications and the sharing of intelligence programmes and the implementation of significant changes to the existing regime. ‘genuinely proactive approach’ by the corporate’s between enforcement authorities in the UK and monitorships and other ongoing compliance senior management after they learn of the abroad are becoming increasingly informal and Looking ahead, it is difficult to foresee the impact measures. DPAs may be offered to companies misconduct. A timely report, however, is not, flexible. While enforcement authorities in each that the UK’s withdrawal from the European by the Director of Public Prosecutions and the in itself, sufficient to meet this standard. country retain their own jurisdiction to Union (which is expected by March 2019) might Director of the SFO on a discretionary basis, investigate and prosecute offences, it would be have on corporate criminal law and enforcement The SFO has stated that co-operation will be but (unlike in the US) court approval is required prudent to assume that information known to UK in the UK. While no significant legislative considered by reference to all the circumstances, before any such agreement becomes effective. authorities is likely to be shared with others and changes have yet been proposed, areas that could including the company’s broader attitude to the This oversight is something the English courts that UK authorities will be informed of reports potentially be affected include the mode of investigation. Aside from early self-reporting, take seriously, and this level of oversight is a elsewhere that may be of interest to them. international co-operation between the UK and factors that indicate co-operation by the company material distinction from the US system. the European Union member states (for example could include facilitating access to witnesses and in relation to the use of the European Arrest voluntarily disclosing materials to which the Warrant and the mutual legal assistance SFO might not, otherwise, have had access procedures). (including providing interview notes on a limited waiver of privilege basis, which is permitted under English law).

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Broad scope for corporate A corporation can be held criminally liable for criminal liability any offence committed by its agents, so long as Congress has not explicitly exempted corporate United States Under principles of respondeat superior, a entities from liability under a particular statute. corporation may be held criminally responsible The most common corporate prosecutions in the for the acts of its agents, including its employees, US are for Foreign Corrupt Practices Act (FCPA), undertaken within the scope of their , money laundering, sanctions, export and intended, at least in part, to benefit the control, healthcare, tax, antitrust and corporation. A corporation is liable for the environmental offences. criminal conduct of its agents even if such actions were against corporate policy or express instructions. Although seldom used as a basis US corporate prosecutions may for prosecution, courts have also recognised a relate to conduct abroad doctrine that imputes to the corporation the Corporations can be prosecuted in the US collective knowledge of all its employees where even where most of the criminal conduct was no individual employee possesses the requisite committed abroad. But the extent to which knowledge to commit a criminal offence. this is so depends upon the offence at issue. Any employee or contract personnel can incur The FCPA’s anti-bribery provisions, for example, liability on behalf of a corporation – a director, apply to the worldwide operations of (i) US issuers officer, or other high-level personnel need not be – companies with securities listed on an liable. At the same time, corporate liability does exchange in the US or that are required to file not shield officers and directors from individual periodic reports with the US Securities liability. While no individual need be convicted in and Exchange Commission (SEC); and (ii) order for a company to face liability, there is an domestic concerns – corporations organised emphasis on individual accountability in the US. under the laws of the US or its states or that have their principal place of business in the US where A parent company may also be liable for its they use any means of interstate commerce subsidiary’s conduct under agency principles. (such as an email or telephone call or using the In assessing such liability, law enforcement US banking system) in furtherance of a corrupt authorities evaluate whether the parent controls payment to a foreign official, even if the payment the subsidiary, including through knowledge and itself and much of the scheme occurred outside direction of the subsidiary’s actions. If an agency the US. Other non-US companies may be subject relationship exists, the criminal conduct to the FCPA if they carry out ‘any other act’ in of the subsidiary can be imputed to the parent. the US in furtherance of such corrupt payments Additionally, when a company merges with to foreign officials, or if they aid, abet, conspire or acquires another company, the successor with or act as agent for a US issuer or domestic company assumes the predecessor company’s concern in relation to such corruption. liabilities, including criminal liabilities. US enforcement authorities, however, have declined In the LIBOR cases, banks were prosecuted in the to take action against companies that conducted US for fraud based on conduct by bank employees comprehensive pre-acquisition due diligence and, in London and elsewhere that involved electronic where issues were identified, voluntarily funds transfers or communications in the US. disclosed and remediated conduct. And foreign banks have been prosecuted in the US for violating US economic sanctions by processing US dollar transactions between foreign countries through the US financial system.

91 Corporate crime A global perspective

Relevance of compliance to the individuals involved in corporate misconduct’. The enforcement authorities Under the Yates Memo, the identification The Yates Memo further states that corporate of responsible individuals is a ‘threshold decisions on corporate prosecutions At the federal level, the DOJ prosecutes corporate investigations should focus on individuals from requirement’ to receive any co-operation credit. Corporate compliance programmes are a key crime. The DOJ has many components, organised the outset and that corporate resolutions will In other words, the DOJ expects companies aspect of corporate criminal liability in the US. both regionally and based on subject matter not provide protection from criminal liability to to ‘identify all individuals involved in or While the existence of an effective compliance expertise. The DOJ actively pursues corporate individuals, absent extraordinary circumstances. responsible for the misconduct at issue, programme is a factor authorities consider in prosecutions in a broad range of areas. Recent It also emphasises that corporate cases should not regardless of their position, status or seniority, determining the nature and magnitude of notable corporate cases include investigations be resolved without a ‘clear plan’ to resolve and provide to the [DOJ] all facts relating to that corporate resolutions, there are some criminal into and prosecutions for FCPA violations; fraud related individual cases. misconduct’. The Yates Memo explains that ‘if a offences in the US for failing to maintain relating to manipulation of the financial company seeking co-operation credit declines to adequate compliance programmes. For example, In nearly all circumstances, directors or officers markets; fraud arising from product liability learn of such facts or to provide the [DOJ] with the FCPA includes an ‘internal controls’ provision of a corporation incur individual criminal issues; Bank Secrecy Act violations for failing to complete factual information about individual that requires issuers to maintain a system liability only when they are personally maintain an effective anti-money laundering wrongdoers, its co-operation will not be of internal accounting controls sufficient to responsible for a violation and act with the programme; and violations of US sanctions and considered a mitigating factor’. Thus, if a assure management’s control, authority requisite intent. For some crimes, however, export controls laws. company is seeking co-operation credit from the and responsibility over the firm’s assets. directors and officers can be criminally A number of federal regulatory agencies have DOJ, it must be prepared to conduct a thorough US enforcement authorities have described an prosecuted in the absence of either personal related civil enforcement powers, including, investigation and identify all responsible effective compliance programme as a ‘critical involvement or intent. Under the so-called Park for example, the SEC and the Futures individuals and to assist the DOJ in investigating component’ of an issuer’s internal controls. Doctrine, a company official can be prosecuted Trading Commission. These agencies often bring and possibly prosecuting those individuals. The FCPA provides criminal penalties for internal for violating the Food, Drug, and Cosmetic Act civil enforcement actions alongside criminal The extent of that co-operation credit ‘will controls violations. And the failure to maintain (FDCA) – including for the adulteration or charges filed by the DOJ. States’ Attorneys General depend on all the various factors that have an effective anti-money laundering programme misbranding of any drug, food item or cosmetic and local prosecutors’ offices also have substantial traditionally applied in making this assessment is a felony offence, with several prominent – even if the official was unaware of the criminal and civil enforcement authority. And the (eg the timeliness of the cooperation, the corporate resolutions for violations of this violation. A ‘responsible corporate officer’ who Attorney General of New York and the district diligence, thoroughness, and speed of the provision in recent years. was in a position of authority to prevent or attorney in Manhattan have traditionally played internal investigation, the proactive nature correct the violation and did not do so can be an active role in prosecuting white-collar matters. of the cooperation, etc)’. Prosecutors emphasise importance prosecuted for a misdemeanour offence. of individual liability Notwithstanding this doctrine, however, most Building upon the Yates Memo, the DOJ issued prosecutions brought under the FDCA have The DOJ has sought to emphasise a memorandum in 2016 announcing a pilot Guidance issued by US Department of Justice concerned a company officer’s own conduct its expectations on self-reporting programme to encourage companies to (DOJ) leadership in September 2015 emphasises or, at a minimum, an official who was aware and co-operation and to define voluntarily self-disclose FCPA-related the importance of individual accountability of the conduct giving rise to the violation but the benefits misconduct, co-operate with the DOJ in related as one of the most effective ways to combat failed to correct it. The US Sentencing Guidelines – which are used investigations, and remediate flaws in the corporate misconduct. The guidance, referred to calculate fines in connection with guilty pleas companies’ internal controls and compliance to as the ‘Yates Memo’ after former Deputy and serve as a benchmark for determining fines programmes. Since then, the DOJ has updated Attorney General Sally Yates and incorporated ‘To be eligible for any co-operation credit, imposed pursuant to other resolutions – provide the US Attorneys’ Manual to make the pilot into the Principles of Federal Prosecution of corporations must provide to the [DOJ] for fine reductions if a company voluntarily, and programme permanent, with some Business , provides that ‘[t]o be all relevant facts about the individuals in a timely manner, self-disclosed misconduct, modifications. The FCPA Corporate Enforcement eligible for any co-operation credit, corporations involved in corporate misconduct.’ co-operated fully in the investigation, and clearly Policy provides that when a company satisfies must provide to the [DOJ] all relevant facts about demonstrated acceptance of responsibility. the standards of voluntary self-disclosure, full co-operation, and timely and appropriate remediation, there will be a presumption that the DOJ will resolve the company’s case through a declination. That presumption may be overcome if there are aggravating circumstances related to the nature and seriousness of the offence or if the company is a repeat offender. To qualify for the FCPA Corporate Enforcement Policy, the company is required to pay all disgorgement, forfeiture and/or restitution resulting from the misconduct at issue.

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Further, the policy states that where a company Finally, in the antitrust context, the DOJ has a The Principles of Federal Prosecution of Business In sentencing corporate defendants following voluntarily discloses wrongdoing and satisfies leniency programme for detecting cartel activity. Organizations require prosecutors to consider 10 guilty pleas, judges are required to consider all other requirements, but aggravating If a corporation reports such activity before the factors in determining the proper treatment of a the factors set forth in 18 USC § 3553(a) and circumstances compel an enforcement action, DOJ has received information about it from any corporate entity that faces criminal liability. Chapter 8 of the US Sentencing Guidelines the DOJ will recommend a 50 per cent reduction other source (or, at a minimum, before any other These factors are: (the Guidelines). Prosecutors also use these off the low end of the Sentencing Guidelines fine corporation has come forward and at a time sources as benchmarks in negotiating fines to be • the nature and seriousness of the offence; range. Here again, criminal recidivists may not when the DOJ does not yet have sufficient paid pursuant to DPAs and NPAs. The Guidelines be eligible for such credit. Companies that fail to evidence to prosecute) and the corporation meets • the pervasiveness of wrongdoing within the take into account, among other factors, the voluntarily self-disclose misconduct but satisfy the other requirements of the programmes, it corporation, including the in, or the involvement in or tolerance of criminal activity the other requirements may be eligible for up to can avoid criminal conviction and fines. condoning of, the wrongdoing by corporate by high-level personnel and any history of similar a 25 per cent discount off the low end of the management; misconduct at the corporation. Companies Sentencing Guidelines fine range. Prosecutors have discretion to • the corporation’s history of similar conduct; receive credit under the Guidelines if they • the corporation’s willingness to co-operate in voluntarily self-disclosed misconduct and This FCPA Corporate Enforcement Policy is agree a range of outcomes with the investigation of its agents; co-operated fully with the DOJ. Unlike in unique in setting out a presumption that, in corporate defendants individual cases, where judges typically retain certain circumstances, a declination will be • the existence and effectiveness of the Several alternatives are available for corporate discretion to fashion an appropriate sentence, appropriate and it is formally only applicable in corporation’s pre-existing compliance entities to settle a criminal matter. A company most corporate guilty pleas are structured so the FCPA context. However, DOJ officials have programme; could enter a guilty plea, sign a deferred that the judge, in accepting the plea, commits indicated the DOJ will look to the FCPA Corporate • the corporation’s timely and voluntary prosecution agreement (DPA) or a non-prosecution to sentence the corporation as agreed with the Enforcement Policy as non-binding guidance in disclosure of wrongdoing; agreement (NPA), or receive a declination (possibly DOJ in the plea agreement. other criminal cases. We have already seen the conditioned on the disgorgement of criminal • the corporation’s remedial actions; DOJ decline to prosecute a large bank for possible proceeds). The DOJ may be willing to negotiate • collateral consequences; fraud offences relating to the International co-operation whether the parent company or a subsidiary • the adequacy of remedies such as civil or and misuse of confidential information. Increasingly, the DOJ co-operates with law should be a party to such a resolution. regulatory enforcement actions; and The DOJ indicated the bank had satisfied the enforcement authorities around the world. • the adequacy of the prosecutions of individuals requirements of voluntary self-reporting, In contrast to a guilty plea, with a DPA, criminal Such international co-operation is particularly responsible for the corporation’s malfeasance. co-operation, remediation and the payment charges are publicly filed but deferred for a set common, but not exclusively seen, in FCPA period of time. No charges are filed with an NPA, of restitution. As discussed, key factors for securing a DPA or matters. In late 2016, for example, the DOJ which is a private agreement and, unlike a DPA, NPA, rather than a guilty plea, are timely and announced three notable FCPA resolutions So the FCPA Enforcement Policy may provide does not involve court proceedings. Both forms of voluntary self-disclosure, full co-operation in parallel with Brazilian authorities. This key guidance for achieving favourable outcomes agreement, however, require a statement of facts (which includes identifying all individuals continued in 2017 with the US authorities in a wide variety of other kinds of cases – in which the company admits misconduct. Both involved in the conduct regardless of their agreeing FCPA-related resolutions co-ordinated particularly given the policy reflects aggravating types of agreement also require the satisfaction position, status or seniority) and remediation. with Dutch, UK, Swedish and Singaporean and mitigating factors already set out in the US of other conditions, which can include, among authorities – often agreeing to take into account Sentencing Guidelines. Corporate entities face a number of punishments other things, the payment of a fine, continued penalties to be paid to authorities abroad when in the criminal context. Financial penalties Indeed, in late 2016, the DOJ component co-operation with government authorities (for calculating the penalty payable. And in the include fines, the payment of restitution to responsible for prosecuting sanctions and export example to investigate individuals) and enhanced LIBOR and foreign exchange matters, the DOJ victims and the forfeiture of ill-gotten gains. controls violations issued guidance emphasising compliance programmes. With both DPAs and co-operated with law enforcement authorities Corporations can also be put on court-supervised those same factors. NPAs, the corporation is ultimately released in many countries, perhaps most notably the UK. and required to implement from criminal prosecution for certain specified In addition, US tax treaties entitle the DOJ to monitorships, enhance compliance programmes, conduct unless the company has breached enlist treaty partners in gathering information or take other steps to reduce and the agreement. or otherwise assisting in investigating tax detect and deter future wrongdoing. crimes or other tax-related matters.

94 95 Corporate crime A global perspective

Freshfields contacts

Austria Belgium China and Hong Kong Japan Netherlands Russia Thomas Kustor Silvia Van Dyck John Choong Takeshi Nakao Hub Harmeling Dmitry Surikov Partner Principal Associate Partner Partner Partner Partner T +43 1 515 15 116 T +32 2 504 7663 T +852 2913 2642 (Hong Kong) T +81 3 3584 8332 T +31 20 485 7604 T +7 495 785 3023 E [email protected] E [email protected] +86 130 5215 9947 (China) E [email protected] E [email protected] E [email protected] E [email protected] Sabine Prossinger Kaori Yamada Jeroen van Hezewijk Alexey Yadykin Counsel Georgia Dawson Partner Partner Counsel T +43 1 515 15 611 Asia Regional Managing Partner T +81 3 3584 8512 T +31 20 485 7656 T +7 495 785 3083 E [email protected] T +852 2846 3492 E [email protected] E [email protected] E [email protected] E [email protected] Alexander Dmitrenko William Robinson Senior Associate Partner T +81 3 3584 8514 T +852 2846 3336 E [email protected] E [email protected]

Jonathan Wong Counsel Singapore Spain T +852 2913 2683 Georgia Dawson Raquel Flórez E [email protected] Asia Regional Managing Partner Partner T +65 6908 0789 T +34 91 700 3722 E [email protected] E [email protected] France Germany Italy Sandy Baggett Rafael Murillo Stéphane Bénouville Martina de Lind van Wijngaarden Fabrizio Arossa Counsel Partner Partner Partner Partner T +65 6908 0797 T +34 91 700 3740 T +33 1 44 56 44 83 T +49 69 27 30 87 29 T +39 06 695 33310 E [email protected] E [email protected] E [email protected] E [email protected] E [email protected] Vicente Sierra Dimitri Lecat Simone Kämpfer Giuseppe Curtò Partner Partner Partner Partner T +34 91 700 3748 T +33 1 44 56 55 14 T +49 211 49 79 0 T +39 02 625 30358 E [email protected] E [email protected] E [email protected] E [email protected]

Norbert Nolte Renato Paternollo Partner Partner, Tax T +49 211 49 79 528 T +39 02 625 30496 E [email protected] E [email protected]

Norbert Schneider Partner, Tax T +49 211 49 79 377 E [email protected]

Thomas Helck Counsel T +49 211 49 79 483 E [email protected]

96 97 Corporate crime A global perspective

Freshfields contacts (continued)

UK US Global knowledge contact For more information, visit: Matthew Bruce Daniel Braun Caroline Doherty de Novoa Freshfields’ white-collar defence Partner Partner Senior Knowledge Lawyer and corporate crime page T +44 20 7785 2758 T +1 202 777 4528 T +44 20 7716 4291 E [email protected] E [email protected] E [email protected]

Helen Buchanan Tom Ensign Partner, Tax Partner Related content T +44 20 7716 4884 T +1 202 777 4527 E [email protected] E [email protected] Bribery Watch: a tool to help you keep track of new anti-bribery and corruption laws. To answer our clients’ questions, we developed Bribery Watch, Ben Morgan Aaron Marcu an online summary and comparison of anti-bribery and corruption laws and Partner Partner enforcement activity across 150 countries. For more information, please speak T +44 20 7716 4158 T +1 212 284 4954 to your local Freshfields contact. E [email protected] E [email protected] The Freshfields Risk : regular updates providing content on a range of risks Geoff Nicholas Bruce McCulloch facing business today. For more information, visit risk.freshfields.com Partner Partner T +44 20 7832 7773 T +1 202 777 4547 E [email protected] E [email protected]

Sarah Parkes Olivia Radin Partner Partner T +44 20 7832 7630 T +1 212 284 4925 E [email protected] E [email protected]

Christopher Robinson Benito Romano Partner Partner T +44 20 7785 5781 T +1 212 230 4696 E [email protected] E [email protected]

Ali Sallaway Adam Siegel Partner Partner T +44 20 7832 7242 T +1 212 277 4032 E [email protected] E [email protected]

May Smith Kim Zelnick Partner, Tax Partner T +44 20 7785 2692 T +1 212 277 4010 E [email protected] E [email protected]

Caroline Stroud Daniel Cendan Partner, People and Reward Counsel T +44 20 7832 7602 T +1 212 277 4019 E [email protected] E [email protected]

Nicholas Williams Richard Snyder Partner Counsel T +44 20 7785 5683 T +1 202 777 4565 E [email protected] E [email protected] Brent Wible Ruby Hamid Counsel Counsel T +1 202 777 4583 T +44 20 7716 4358 E [email protected] E [email protected]

98 99 Corporate crime A global perspective

Acknowledgements Our corporate crime team

We would like to thank our colleagues at the following firms for their support in producing this guide: Advice you can trust Allen and Gledhill Bowmans • A long history of criminal investigations and defence work – advising businesses and individuals facing criminal risk in Europe, Africa, Asia and the Americas. Aaron Lee Matthew Purchase Partner Partner • Former senior prosecutors in the UK, Continental Europe, the US and Asia who work with our experienced criminal defence lawyers to give a sophisticated view of the risks you face T +65 6890 7852 T +27 11 669 9568 and the options for addressing them. E [email protected] E [email protected] • A team at the cutting edge of the new wave of complex compliance, and Cameron Dunstan-Smith ethics best practice, trusted by leading businesses around the world. Senior Associate • Full-service corporate crime capabilities, with acknowledged market experts in bribery T +27 11 669 9467 and corruption, money laundering, fraud (including tax fraud and false accounting), sanctions E [email protected] and trade controls, antitrust, employee relations, pensions compliance, investigations and defence. • A team with experience negotiating many of the most high-profile and recent corporate Homburger Mattos Filho criminal law resolutions in the world, from both sides of the table. Roman Richers Rogério Fernando Taffarello Partner Partner Delivered effectively and efficiently T +41 43 222 10 00 T +55 11 3147 2598 • Corporate criminal issues are rarely isolated to a single jurisdiction or authority – we provide a E [email protected] E [email protected] single point of entry to connect you with the support that you need across our global network. Flavia Guimarães Leardini • We field one team, giving you a common strategy, clear communication, integrated working Counsel and a smooth interface. T +55 11 3147 4699 • We are skilled at addressing the potential commercial, civil, regulatory and market E [email protected] consequences of a criminal law issue, focusing on enabling business to continue. • We respond in a reasonable, step-by-step and proportionate manner that is defensible before potentially multiple authorities and results in an efficient allocation of resources. • Innovation is one of our primary concerns and we work hard to set the standard for how investigations and defence work can be improved, fusing the best of current technology with our experience of handling major international cases.

Our reputation is second to none – we provide credibility and authority when you need it most.

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Chambers Global 2018: Corporate Investigations – Global-wide

100 101 Corporate crime

Notes

102 freshfields.com

This material is provided by the international law firm Freshfields Bruckhaus Deringer LLP (a limited liability organised under the law of England and Wales) (the UK LLP) and the offices and associated entities of the UK LLP practising under the Freshfields Bruckhaus Deringer name in a number of jurisdictions, and Freshfields Bruckhaus Deringer US LLP, together referred to in the material as ‘Freshfields’. For regulatory information please refer to www.freshfields.com/support/legalnotice. The UK LLP has offices or associated entities in Austria, Bahrain, Belgium, China, England, France, Germany, Hong Kong, Italy, Japan, the Netherlands, Russia, Singapore, Spain, the United Arab Emirates and Vietnam. Freshfields Bruckhaus Deringer US LLP has offices in New York City and Washington DC. This material is for general information only and is not intended to provide legal advice.

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