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Anti-Bribery and Corruption Review May 2016 Global contacts ...... 3 World Map ...... 4 s Foreword ...... 6

t Europe, the Middle East and Africa ...... 7 Belgium ...... 8 Czech Republic ...... 9 n France ...... 10 Germany ...... 12 e Italy ...... 15 t Luxembourg ...... 16 Poland ...... 17 Romania ...... 18 n Russia ...... 20 Slovak Republic ...... 22 o Spain ...... 24 The Netherlands ...... 25

c Turkey ...... 28 Ukraine ...... 29 United Arab Emirates ...... 30 United Kingdom ...... 31 The Americas ...... 34 Brazil ...... 35 United States of America ...... 36 Asia Pacific ...... 39 Australia ...... 40 Hong Kong ...... 42 Indonesia ...... 44 Japan ...... 46 South Korea ...... 47 People’s Republic of China ...... 48 Singapore ...... 50 Thailand ...... 52 Worldwide contact information ...... 55 Anti-Bribery and Corruption Review 3 May 2016

Global contacts

Europe, the Middle East and Africa United Arab Emirates Belgium James Abbott +971 4503 2608 Sébastien Ryelandt +32 2533 5988 Matthew Shanahan +971 4503 2723 Dorothée Vermeiren +32 2533 5063 United Kingdom Czech Republic Roger Best +44 20 7006 1640 Jind řich Arabasz +420 22255 5202 Luke Tolaini +44 20 7006 4666 Patricia Barratt +44 20 7006 8853 France Judith Seddon +44 20 7006 4820 Thomas Baudesson +33 14405 5443 Charles-Henri Boeringer +33 14405 2464 Arthur Millerand +33 14405 5446 The Americas Brazil** Germany Anthony Oldfield +55 113019 6010 Heiner Hugger +49 697199 1283 Patrick Jackson +55 113019 6017 David Pasewaldt +49 697199 1453 United States of America Jochen Pörtge +49 2114355 5459 David DiBari +1 202 912 5098 Italy Megan Gordon +1 202 912 5021 Antonio Golino +39 028063 4509 Polly Snyder +1 202 912 5025 Luxembourg Albert Moro +352 485050 204 Asia Pacific Claude Eischen +352 485050 268 Australia Diana Chang +61 28922 8003 Morocco Jenni Hill +61 89262 5582 Mustapha Mourahib +212 52013 2081 Kirsten Scott +61 89262 5517 Poland Kate Godhard +61 28922 8021 Marcin Cieminski +48 22429 9515 Hong Kong Pawel Pogorzelski +48 22429 9508 Wendy Wysong +852 2826 3460 Romania Richard Sharpe +852 2826 2427 Daniel Badea +40 216666 101 Bianca Alecu +40 216666 127 Indonesia*** Linda Widyati +62 21 2988 8301 Russia Gideon Manullang +62 21 2988 8348 Timur Aitkulov +7 495725 6415 Olga Semushina +7 495725 6418 Japan Michelle Mizutani +81 35561 6646 Saudi Arabia Masayuki Okamoto +81 35561 6665 Khalid Al-Abdulkareem +966 11481 9740 South Korea Slovak Republic Thomas Walsh +822 6353 8110 Alex Cook +420 22255 5212 Dan Park +822 6353 8116 Stanislav Holec +420 22255 5251 People’s Republic of China Spain Wendy Wysong +852 2826 3460 Bernardo Del Rosal +34 91590 7566 Sonia Trendafilova +34 91590 4172 Lei Shi +852 2826 3547 Min He +861 0653 52298 The Netherlands Jeroen Ouwehand +31 20711 9130 Singapore**** Simone Peek +31 20711 9182 Kabir Singh +65 6410 2273 Shobna Chandran +65 6410 2281 Turkey* Andrew Foo +65 6506 2790 Mete Yegin +90 212339 0012 Zeynep Düzgören +90 212339 0009 Thailand Jared Grubb +90 212339 0007 Andrew Matthews +66 2401 8822 Vipavee Kaosala +66 2401 8829 Ukraine – Redcliffe Partners Sergiy Gryshko +38 044 390 22 19

* Nothing in this client briefing should be interpreted or construed as legal advice in relation to the laws of Turkey. Turkish law advice is provided based on a co-operation agreement between Clifford Chance and Yegin Ciftci Attorney Partnership. ** Clifford Chance, like other international law firms, is not licensed to provide Brazilian legal advice and, therefore, nothing in this client briefing should be interpreted or construed as legal advice in relation to the laws of Brazil. *** Contributed by Linda Widyati & Partners, our associated firm in Indonesia. **** Contributed by Cavenagh Law LLP, our Formal Law Alliance partner in Singapore. © Clifford Chance, May 2016 4 Anti-Bribery and Corruption Review May 2016

World Map Please click on the country name on the interactive map below to take you directly to the relevant chapter.

CZECH REPUBLIC

GERMANY

THE NETHERLANDS UNITED KINGDOM BELGIUM FRANCE UNITED STATES OF AMERICA SPAIN

LUXEMBOURG

BRAZIL

RUSSIA

POLAND SLOVAK REPUBLIC

UKRAINE

ROMANIA PEOPLE’S REPUBLIC OF CHINA

TURKEY JAPAN SOUTH KOREA

TALY HONG KONG THAILAND UNITED ARAB EMIRATES INDONESIA

SINGAPORE

AUSTRALIA

Foreword Prosecutions for bribery and corruption continue to attract media headlines around the world and, in response, international companies continue to review what they have to do to address the risks to their business, and to their reputation. Fundamental to this is staying on top of relevant legislative developments and enforcement trends in the countries in which they operate. Some national authorities have even highlighted this information gathering as a regulatory requirement for directors and senior corporate officers. This review looks at recent developments in some of the jurisdictions around the world where we have offices, focusing particularly on changes to legislation, both recent and proposed, and on prosecutions and enforcement trends. We intend to produce updates at regular intervals. Patricia Barratt and David Pasewaldt, Editors

Belgium Changes to legislation EUR 100,000 was confiscated as The OECD report also found that Belgium A draft Bill is pending before Parliament instrument of the bribery. The total had not dedicated adequate human and which is designed to amend the current amount of bribes leading up to these financial resources to cases involving Belgian legal principle of mutually convictions was estimated at bribery, and that Belgian authorities were exclusive liability of natural and legal EUR 380,135.85 and the value of the insufficiently proactive in cases where persons, further to a recommendation by contracts awarded at EUR 16,633,306. information on foreign bribery is revealed the OECD. The Belgian government in the context of international argued that the principle is not fully Apart from this case, there have been few cooperation. It felt that accounting exclusive, as both a natural person and a enforcement cases in Belgium, and there offences were not being prosecuted legal entity can be liable where the is very little case law. According to vigorously enough, and criticised the fact individual commits an offence “knowingly statistics published by the Belgian Service that external auditors are not required to and willingly”, which would be the case in for Criminal Policy, there were two report such offences. relation to a bribery offence, where wilful convictions for private corruption in 2013, misconduct is already a necessary and 33 convictions for public bribery. The report criticized the adequacy of element. However, the abolition of the No distinction is made between foreign sanctions for foreign bribery cases, in principle has been approved by the bribery and domestic bribery. In addition, particular, non-pecuniary sanctions, College of Prosecutors and the Bill has the records of the Belgian Financial and found that law enforcement authorities been submitted to the Council of State Intelligence Processing Unit, which and prosecutors do not routinely consider for an opinion. The timing of this processes suspicious financial confiscation measures with respect to the proposed change remains unclear. transactions, show that it reported instrument and the proceeds of bribery. 12 cases of embezzlement and corruption Lastly, the OECD deplored the absence of It is also expected that a Bill will be to the judicial authorities in 2014, for an a sufficient (and sufficiently accessible) brought before Parliament in October to amount of EUR 8.9 million in total. record in respect of criminal convictions for increase the sanctions for acts of foreign bribery, or of settlements. foreign bribery. Other developments The OECD Working Group requested In a follow-up report in February 2016, Belgium to present a written report in Prosecutions and the OECD made a number of criticisms of October 2016 on implementation of its enforcement actions Belgium’s anti-bribery measures. On the outstanding recommendations. one hand, the report welcomed Belgian In early 2016, the Court of Appeal of efforts to remind the prosecution and At the end of 2015, Transparency Brussels issued a judgement confirming enforcement authorities of their reporting International published a study on the convictions of 14 public officials, obligations in cases of suspected foreign ‘Transparency in Reporting on 35 contractors and 24 companies bribery, as well as attempts to raise Anti -Corruption’ amongst Belgian listed involved in a high profile corruption case awareness amongst its administration in companies. The main findings are that relating to contracts tendered by the relation to offences of bribery. However, large multinationals are twice as Belgian Buildings Agency. A number of it found that Belgium had not brought its transparent in terms of their other individuals involved in the criminal legal framework into compliance with the anti -corruption policies as smaller investigation had previously been OECD Convention, by not clarifying the companies. Even though the performance discharged following expiry of the attribution of the intentional element of of large multinationals is much improved limitation period. The sanctions imposed the offence of foreign bribery. It also since 2012, they still underperform in the proceedings in first instance had found that the time limitation periods compared to the international average been relatively light in view of the lengthy (and rules for their suspension) do not (50% compared with 70%). The study investigation. The Court of Appeal provide sufficient time for an effective also found that Belgian companies on increased the sanctions and pronounced investigation and prosecution. average do not communicate on their (suspended) prison sentences of up to performance per country (7%). three years and a EUR 110,000 fine for one party involved. A limited amount of BACK TO MAP

Czech Republic Changes to legislation Prosecutions and Enforcement trends A number of measures aimed at enforcement actions There has been a significant increase in enhancing transparency or otherwise In March 2016, OLAF started a formal high profile corruption investigations combating corruption have recently been investigation of a Czech company close during the last few years and a number of proposed or passed. In June 2015, the to the Minister of Finance on the grounds high profile politicians, lobbyists and Government approved a draft Online of European subsidies fraud. The Minister businessmen have been accused of Sales Reporting Act, which would of Finance has denied any connection to corruption and bribery. Combating introduce an obligation on all sellers and this company and all related accusations. corruption is a priority of the current service providers (with some exceptions) government and various new to report information about sales In February 2016, the director of the anti -corruption policies have been generating cash revenues to the local Energy Regulatory Office was sentenced introduced at central and local levels. financial administration body. Despite to eight years in prison. She was The sitting Minister of Finance labelled the strong resistance from opposition parties, charged with professional misconduct in combat against tax frauds his top priority the draft Act was approved by the relation to issuing licences to and during the last two years the newly Chamber of Deputies and is currently unauthorised solar plants. The verdict established Special Tax Fraud Unit has being discussed in the Senate. has not yet taken effect. revealed tax frauds amounting to EUR 150 million. In October 2015, the Government In March 2015, a former head of elite approved a draft of an amendment to the Prague hospital “Na Homolce” and Public officials are obliged to report the Public Procurement Act. This amendment several others were accused of receipt of possessions, gifts, income and aims to relax certain strict rules of the corruption and bribery. The criminal obligations to a publicly accessible current legislation and to make it easier to proceedings are still pending before the Register of Conflicts of Interests. blacklist contractors for misconduct. court and all those charged have been Currently, there are plans to introduce the The amendment has been approved by released on bail. same obligation for judges also. the Chamber of Deputies and is currently A significant number of public officials being discussed in the Senate. Criminal proceedings are still pending have been found to be in breach of this before the court in respect of a former reporting duty, but a failure to report In September 2015, the Parliament Defence Minister charged in June 2012 attracts only a relatively small fine. approved the Contract Register Act with the misuse of power. She was which will therefore become effective in stripped of her parliamentary immunity BACK TO MAP 2017. According to this Act, every later that year. contract concluded by a public institution worth more than EUR 2,000 must be In June 2015 an MP, charged in published. This measure is perceived as a May 2012 with taking bribes and strong anti-corruption weapon by many stripped of his parliamentary immunity NGOs. However, its real impact is later that year, was sentenced to eight questionable, because a breach of the and half years in prison. The verdict has publication duty will not invalidate the not yet taken effect. respective contract.

France Changes to legislation adopt effective anti-corruption If implemented, Sapin II’s radical reforms Sapin II, a draft Bill on transparency, procedures including: may raise France’s anti-corruption legislation to the same level as other anti-corruption and economic n a code of conduct that defines European countries. modernization, may soon introduce a prohibited acts and behaviours; new framework legislation to prevent, detect and punish corruption in France n an internal whistleblowing system that Prosecutions and and abroad. The ‘Loi relative à la lutte enables employees to report code of enforcement actions contre la corruption et pour la conduct violations; In February 2016, the Paris Court of transparence de la vie économique’, n due diligence procedures to verify Appeal found a major oil company guilty known as Sapin II, is to be debated in the integrity of partners (clients, of corrupting foreign officials in the the French National Assembly in 2016, suppliers, intermediaries); United Nations’ oil-for-food programme and could be adopted as early as this for Iraq, overturning a 2013 ruling that summer, according to the Ministry of n accounting control systems to avoid had cleared the company of all charges. Finance (as reported in the media). fraud, including acts of concealment The programme allowed Saddam or influence peddling; Hussein’s regime to sell crude from 1996 Inspired by international standards, it n establishment of an inventory of to 2003 in exchange for humanitarian provides, in particular, for (i) the creation risks; and goods in short supply because of of an agency ( Agence nationale de sanctions. The oil company was fined implementation of disciplinary sanctions. prévention et de détection de la n EUR 750,000 by the Paris Court of corruption ) (the Agency) with the role of Appeal, in a case that drew significant In the event of a violation, or if a preventing and detecting corruption, global media attention. (ii) the imposition of an obligation to company’s anti-corruption procedures are prevent risks, as well as (iii) the creation deemed insufficient or ineffective, the Enforcement trends Agency’s enforcement committee will of additional sanctions for failing to Following years of criticism by the have the authority to issue warnings or bring a company into compliance. Organization for Economic Cooperation orders to comply, or to impose The Agency will be granted broad and Development (OECD) and other administrative sanctions (up to investigative powers (in particular, to organizations for its lacklustre EUR 1 million for companies and conduct on-site investigations, make performance in enforcing anti-corruption EUR 200,000 for individuals, together with document requests and conduct laws, the French authorities have recently the possible publication of the sanction). interviews), as well as the authority to been relatively active in attempting to impose sanctions. ramp up the prosecution of these cases, A further sanction, similar to the leading to s everal investigations and monitorship procedure imposed by U.S. The proposed draft Bill will also create a court cases. new obligation for companies to prevent authorities, is aimed at ensuring future compliance: in the event of a conviction corruption risks. This duty will apply to To do so, France strengthened its or judgment for corruption or influence (i) companies with more than 500 anti -corruption enforcement arsenal by peddling, a company may be forced to employees and (ii) companies belonging adopting a number of new laws in 2013, implement a compliance programme to a group with at least 500 employees resulting in the creation of the French under the supervision of the Agency, at and a yearly turnover of more than Parquet National Financier – a financial its own expense, within a maximum EUR 100 million, as well as to their prosecutor’s office responsible for, period of three years. management. To fulfill this obligation, among other things, prosecuting certain such companies will be required to

corruption offences –, a new power for approved anti-corruption associations to initiate criminal proceedings for certain corrupt acts, and increased criminal penalties for bribery.

Nevertheless, despite these legislative initiatives, instances of corruption prosecutions remain limited at this stage. Indeed, in February 2016, the Council of Europe Group of States against Corruption (GRECO) welcomed a series of recent anti-corruption reforms in France, including the introduction of draft Bill Sapin II, but noted that important gaps remain. In particular, the report concluded that France has made no progress in improving its ability to prosecute corruption-related offences committed in a transnational context. Although France is a major exporting country, the report finds that its efforts to penalize international corruption have so far produced minimal results.

BACK TO MAP

Germany Changes to legislation economically advantageous offer n Under the new Law, in addition to Following the 2014 changes to the compared to competitors, but which “public officials” (“ Amtsträger ”), criminal offence of bribing delegates 1, had given the employee in the “European public officials” further measures strengthening criminal procurement department a personal (“ Europäische Amtsträger ”) are anti-corruption law have now entered into benefit (such as presents or hospitality explicitly included in the criminal effect and there are further draft laws in exceeding a “social-adequate” level) in offences of bribing public officials the pipeline. return for his selecting that supplier. under sections 331 to 334 German Since 26 November 2015, the criminal Criminal Code. Furthermore, German Law on Fighting Corruption offence also covers benefits given – on section 11 para 1 no 2a German now in force the basis of an agreement of Criminal Code now contains a legal On 26 November 2015, the German Law wrongdoing ( Unrechtsvereinbarung ) – definition of the term “European on Fighting Corruption ( Gesetz zur to an employee or agent of a public officials” which includes, in Bekämpfung der Korruption 2) entered into company, without the consent of the addition to members of institutions effect. The key elements of this new Law company, in return for a breach of a and bodies of the European Union are the extension of the criminal offence duty to that company (the “employer (and others), officials or other servants of taking and giving bribes in commercial model” [ Geschäftsherrenmodell ]). of the European Union and individuals practice under section 299 German According to the explanatory notes to mandated to execute tasks for the Criminal Code ( Strafgesetzbuch ) to acts the new Law, the relevant duty to the European Union. These amendments beyond competition and the expansion of company can arise, in particular, as a import previous provisions of the EU the criminal offences of bribing public result either of law or contract and (for Anti-Corruption Act ( Europäisches officials under sections 331 et seqq. example, from additional employment Bestechungsgesetz ) regarding the German Criminal Code and their regulations in the form of internal equivalence of, in particular, officials extraterritorial applicability: company guidelines). Therefore, an and other servants of the European employee of a company could now Union and public officials “under n Under the previous legislation, a potentially be exposed to criminal German law” into the German person was criminally liable for the charges of taking bribes if he, for Criminal Code. However, these offence of taking and giving bribes in instance, in breach of internal changes go beyond the EU commercial practice ( Bestechlichkeit procurement guidelines, were to place Anti -Corruption Act as such officials und Bestechung im geschäftlichen an order without inviting an offer from a and other servants of the European Verkehr ) under section 299 German competitor for comparison, in return Union are now subject not only to the Criminal Code if the offender for a personal benefit, whether or not qualified criminal offences of granting (as “receiver”) allowed himself to be the offer from the competitor and accepting bribes (sections 334 promised, demanded or accepted, or would have actually been more and 332 German Criminal Code), but if he (as “donor”) offered, promised or economically advantageous. also to the basic criminal offences of granted a benefit in return for obtaining granting and accepting (illegal) an unfair advantage ( unlautere n In a further legislative change, the benefits (sections 333 and 331 Bevorzugung ) in competition (the criminal offence of taking and giving German Criminal Code). The basic so -called “competition model bribes in commercial practice has criminal offences only require a [Wettbewerbsmodell ]). Thus, been added to the list of predicate “benefit” to be given to or accepted section 299 German Criminal Code offences for money laundering by a public official without approval by covered, for example, cases where an (section 261 German Criminal Code), the competent authority. In this employee in the procurement when committed on a commercial context, presents or hospitality department selected a service supplier basis ( gewerbsmäßig ) or by a exceeding a “social-adequate” level which had not submitted the most member of a gang ( bandenmäßig ).

1 For further details, please visit the German section of our Anti-Bribery and Corruption Review July 2015 (pages 11 et seqq .), at http://www.cliffordchance.com/briefings/2015/07/anti-bribery_andcorruptionreview-july2015.html . 2 For further details, please see our client briefing “German Law on Fighting Corruption – strengthening criminal anti-corruption law and criminal anti-money laundering law – has entered into effect” of January 2016, at http://www.cliffordchance.com/briefings/2016/01/german_law_on_fightingcorruptionstrengthenin.html .

may, under certain circumstances, be Bribery previously imposed criminal had found that contract doctors in private considered a “benefit” in this sense liability solely on the “donor”. practice ( niedergelassene Vertragsärzte ) under German case law. However, the In addition, a connection with were neither “public officials” nor qualified offences of granting and international business is – unlike under “agents”. According to this case law, accepting bribes require that the the Law on Combating International illegal benefits granted to contract benefit be granted or accepted on the Bribery – no longer required. doctors in private practice in order to basis of an – expressed or implied – influence their behaviour are currently not agreement of wrongdoing that the Law on Fighting Corruption in the prohibited under section 299 German public official, in return, has violated or Healthcare Sector Criminal Code (taking and giving bribes in will violate his official duties. On 14 April 2016, the German Federal commercial practice), nor as granting Parliament ( Bundestag ) adopted the Law (illegal) benefits or bribes (section 331 n Finally, section 335a German Criminal on Fighting Corruption in the Healthcare et seqq. German Criminal Code) under Code, newly implemented by the Law Sector ( Gesetz zur Bekämpfung von German criminal anti-corruption law. The on Fighting Corruption, contains an Korruption im Gesundheitswesen ). new Law aims at addressing this lacuna. equivalence arrangement for “foreign This Law sets out new criminal offences and international public servants”. of taking and giving bribes in the Prosecutions and According to this new provision, healthcare sector, in sections 299a and certain public officials of foreign states enforcement actions 299b German Criminal Code. Under new and international organisations are Several investigations and court cases section 299a ( Bestechlichkeit im treated as public officials under have caught the attention of the media. Gesundheitswesen ), certain members of German law in the context of the the medical profession would be criminal offences of bribing public In November 2015, the Frankfurt regional criminally liable if they (as “receivers”), officials if the offence concerns a court ( Landgericht ) sentenced four in connection with the exercise of their future official act. The changes aim at individuals to prison sentences of up to profession, were to demand, allow importing former equivalence three years (without probation) for taking themselves to be promised or accept a arrangements, especially of the Law and giving bribes in commercial practice benefit for themselves or a third person on Combating International Bribery (section 299 German Criminal Code) in on the basis of an – expressed or implied (Internationales Bestechungsgesetz ), connection with the expansion of the – agreement of wrongdoing into the German Criminal Code. Frankfurt airport in 2007. In addition, the (Unrechtsvereinbarung ) that they would, However, these changes go beyond court ordered the confiscation of in return, grant an unfair advantage in the Law on Combating International approximately EUR 20 million as gross competition when carrying out functions Bribery as well, as they not only apply proceeds of these offences. The court such as prescribing, supplying or to the criminal offence of granting found that the four individuals, including a procuring pharmaceutical or medical bribes (section 334 German Criminal real estate agent and a manager of the products. Proposed new section 299b Code), but also to the criminal offence airport operating company, had German Criminal Code sets out a mirror of accepting bribes (section 332 participated in the payment of at least offence for the “donor”. The penalty for German Criminal Code). Accepting EUR 2.8 million in bribes in return for a both offences is imprisonment of up to bribes is the criminal offence of the preferential allocation of property to three years or a pecuniary penalty, or public official as “receiver”, who investors. Not all judgements are yet final imprisonment of between three months demands, allows himself to be since at least one individual has filed an and five years (in very serious cases). promised or accepts a benefit on the appeal against his conviction with basis of an agreement of wrongdoing, the German Federal Court of The background to these new measures whereas granting bribes is the crime Justice (Bundesgerichtshof ). lies in a decision of the German Federal of the “donor” in this arrangement. Court of Justice ( Bundesgerichtshof ) Also in November 2015, the Frankfurt The Law on Combating International 3 dated 29 March 2012, in which the court prosecution authority announced an

3 File reference: GrS – St 57/202.

investigation into a payment of Association, following which tax regarding alleged granting of (illegal) EUR 6.7 million by the German Football investigators searched the Frankfurt offices benefits to German public officials in the Association’s ( Deutscher Fußball-Bund ) of the German Football Association on form of gifts and hospitality. German organisation committee for the football 3 November 2015. As in other legislation, case law and enforcement world cup 2006 to the World Football jurisdictions, there is a provision in German practice are quite strict in this regard. Association (FIFA) in 2005. According to tax law that prohibits tax deductibility for This is particularly true when it comes to research by a German news magazine, corrupt payments (section 4 para. 5 value thresholds for gifts and this payment was allegedly made from a sentence 1 no. 10 sentence 1 German entertainment granted to public officials, slush fund to secure the award of the Income Tax Act [ Einkommensteuergesetz ]). which are low compared to international football world cup 2006 to Germany by The individuals under investigation, standards. Furthermore, German bribing members of the FIFA executive however, allegedly deducted the payment prosecution authorities continue to step committee. Notably, the Frankfurt of EUR 6.7 million as business expenses up cooperation with tax authorities prosecution authority did not initiate by declaring it as “cost-sharing for a regarding allegations of potentially investigation proceedings regarding giving cultural programme” in the German unjustified tax deductions with regard to bribes in (international) commercial Football Association’s 2006 tax return. allegedly corrupt payments in the tax practice (section 299 German Criminal returns of relevant companies. Code) and embezzlement (section 266 Enforcement trends German Criminal Code) as it found that a As a general trend, the focus of BACK TO MAP prosecution regarding these offences corruption investigation proceedings has would, in any event, be time-barred (the expanded further from industrial limitation period for both offences being companies in the last decade to other five years). However, it initiated sectors, including the financial sector. investigation proceedings regarding the There have been further investigation allegation of tax evasion in a very serious proceedings by German prosecution case (with a limitation period of ten years) authorities into German and foreign banks against current and former top-level and financial institutions conducting managers of the German Football business in Germany, particularly

Italy Changes to legislation n embezzlement by a public official: Prosecutions and The Law of 27 May 2015, concerning imprisonment from four to ten years enforcement actions provisions on criminal offences against and six months (previously from four Political corruption dominated headlines the public administration, conspiracy in to ten years); in Italy during both 2014 and 2015, organized crimes, false statements in a n extortion by a public official (coercion): especially with regard to three main company’s financial statements or imprisonment from six to 12 years criminal investigations: Mose (Venice), accounts, has introduced amendments (previously from four to 12 years); Expo (Milan) and Mafia Capitale (Rome). relating to criminal offences against the In these proceedings several managers n extortion by a public official (by public administration. and politicians were arrested for alleged inducement): imprisonment from six corruption and conspiracy and, in Mafia to ten years and six months Prime Minister Renzi’s Government has Capitale also for membership in mafia (previously from three to eight years). focused on the fight against bribery and organization group. The Prosecution has adjusted the applicable penalties with Service has also seized a large number of The defendant may obtain a reduced the intention of ensuring that a defendant bank accounts, business activities and sentence by cooperating with the convicted for the commission of a real estate assets. criminal offence against the public authorities during the investigation and by helping the public prosecutor to seize the administration does not benefit from a In October 2015 a Milan judge ordered proceeds of the crime. suspended sentence, or a plea bargain, Italian service firm Saipem to stand trial without further practical consequences. in respect of allegations of bribery in If a suspended sentence is permitted Algeria. The company and a number of under Italian law, in case of conviction for The Italian Parliament has: (i) increased former executives and intermediaries are a criminal offence against the public the applicable penalties; (ii) introduced also to stand trial. The prosecution administration, a suspended sentence is discounts to the applicable penalties for alleges that intermediaries paid around only available where the defendant has defendants who have cooperated with USD 220 million to win contracts with disgorged an amount equal to the the authorities; and (iii) provided for the the Algerian government-owned oil and proceeds of the crime. availability of suspended sentences and gas company Sonatrach, worth about plea bargains where the defendant USD 9 billion. Saipem’s parent company, The new Law expands the categories of disgorges an amount equal to the Eni, has already been cleared persons in the public administration who proceeds of the crime. of wrongdoing. can commit the offence of extortion by a The penalties have been increased public official (coercion), so that this Enforcement trends offence can now also be committed by all as follows: The Italian Government continues to employees of the public administration focus on both the prevention and n bribery: imprisonment from six to (whereas previously it could only be prosecution of corruption. The National ten years (previously from four to committed by a more narrowly defined Anticorruption Authority (ANAC) has eight years); category of public officials). often been appointed by the bribery in the context of litigation: n Government to carry out a preliminary imprisonment from six to 12 years The defendant cannot enter into a plea review and analysis of the main Italian (previously from four to ten years); bargain unless an amount equal to the public tenders (i.e. Milan’s Expo trade profits of the crime has been disgorged fair and Jubilee 2016). n facilitation payments to a public to the Italian authorities. official: imprisonment from one year to six years (previously from one year to BACK TO MAP five years);

Luxembourg Changes to legislation an institution in the Luxembourg political A decree of 28 December 2015 has system that advises the national amended the decree of legislature, adopted a specific code of 14 November 2014 on the code of conduct as part of its internal rules of conduct for members of the Luxembourg procedure. This code of conduct reminds government. The amendments are minor. the members of the fact that corruption Apart from a few clarifications they and influence peddling are criminal essentially introduce a de minimis offences. Importantly, the code foresees a exemption for gifts received by blanket prohibition on accepting any gift, government members. Whereas or hospitality, of a value exceeding previously all gifts and hospitality, EUR 150, when representing the Council irrespective of their value, needed to be of State. Any offered gift or hospitality reported to the Prime Minister (and were must also be reported. published in a public register), henceforth gifts of a value less than EUR 100 Prosecutions and received at public events no longer need enforcement actions to be reported. No significant prosecutions or enforcement actions have been reported. Furthermore, on 2 February 2015, the Council of State (“ Conseil d’Etat ”), BACK TO MAP

Poland Changes to legislation Prosecutions and There is also a steadily growing Polish criminal law (both substantive and enforcement actions compliance culture in Poland and awareness of corruptive behaviour in the procedural) is currently undergoing rapid In recent months a few major private sector is much higher than even a and extensive changes. As one of the corruption -related prosecutions have couple of years ago. priorities of the government in office is a dominated the headlines. In stricter criminal policy, some changes to February 2016, a former high-ranking The Warsaw Stock Exchange promotes the anti-corruption provisions can be official of the Ministry of Internal Affairs was compliance in its best practices for listed expected in the near future. sentenced to four and a half years in companies and good practices are prison (suspended) for accepting a bribe implemented in companies that are not Substantial changes to the Polish Code amounting to PLN 1.7 million publicly traded. of Criminal Procedure are under (approx. EUR 400,000) in connection with consideration. It is intended to remodel bid rigging. This was the result of the trial BACK TO MAP criminal proceedings in the direction of a against the main suspect in one of the more inquisitorial trial system (which was biggest anti-corruption investigations in in effect until July 2015 and then was recent years, regarding irregularities in temporarily replaced by a more tender proceedings in connection with the adversarial one). The courts will again purchase of IT equipment for the public play an active role in trials and more administration authorities in the years actions will be taken ex officio – most 2007-2010. In total, almost 70 indictments importantly, judges will once again be were filed with courts. Most of the active in evidence proceedings. proceedings have not yet been finished. The amendment also lifts the clear prohibition of the admission of evidence As far as corruption in business -to -business gathered illegally (the so-called “fruit of relations is concerned, the manager of a the poisonous tree”). chain of supermarkets, Kaufland, has been charged before a court in Wrocław with Moreover, a more centralised model of accepting bribes from representatives of criminal policy will be imposed. leading beverages distributors (who are In March 2014, the Minister of Justice co -accused in the case) in exchange for took over the duties of the Prosecutor access to the retail chain in shops belonging General (the latter office was abolished). to Kaufland. According to the public Thus, the government gained more prosecutor, the accused manager accepted powers and possibilities in setting goals bribes amounting to PLN 4 million in criminal policy. (approx. EUR 950,000).

According to press releases, the Ministry Growing compliance culture of Justice is currently working on The perception of corruption both in amendments to the Polish Criminal Code business-to-business relations as well as which are expected to lead to the in cooperation with the public authorities extension of the limitation period for is in decline (which is reflected in opinion anti -corruption offences. However, no Bill polls as well as international reports). in this respect has been drafted so far.

Romania Changes to legislation The decision will mean that: consequences, there is no There is a current trend towards (i) criminal investigation activity that public interest in prosecuting, and instigating changes in criminal law by should be performed by prosecutors (iii) the criminal record of the submitting a plea of unconstitutionality and/or the judiciary police could be perpetrator and their efforts to to Romania’s Constitutional Court. Where significantly impaired due to remedy or mitigate the consequences the Constitutional Court upholds such a insufficient technical equipment and are such that it is appropriate for this plea, the legislature is required to amend (ii) evidence produced by the procedure to be followed. Intelligence Services and already used the criminal law in accordance with the If such procedure is followed, the as evidence in pending criminal trials Constitutional Court’s decision, and some prosecutor may require the may be invalidated, leading to some procedures may be put on hold until the investigated person or entity to: criminal cases being discontinued for law is amended. Recent decisions of the (i) remedy the consequences of the lack of evidence. Constitutional Court are mainly aimed at deed, repair the damage inflicted or reinforcing observance of fair trials rights n The criminalisation of conflict of reach a settlement with the relevant of the parties in line with European Court interest in the private sector civil party in order to repair the of Human Rights case law. damage, (ii) apologize in a public The Criminal Code criminalised manner to the victim, and/or (iii) conflicts of interest in relation to A number of recent pleas have perform unpaid community service for private entities and individuals running ramifications for anti-bribery and a period of between 30 and 60 days. corruption investigations: companies and their relatives (Article 301 of the Criminal Code). Use of this procedure is currently n Enforcement of interception warrants Recently, the Constitutional Court suspended following a recent decision by the Intelligence Services considered that the criminalisation of the Constitutional Court which In decision No. 51 of 16 February 2015, breaches the right of private entities to provides that this procedure is the Constitutional Court upheld the conduct economic trade and the right unconstitutional unless validated by a plea of unconstitutionality in relation to to hire their relatives in conducting court (i.e. by a judge rather than by a Article 142 para. 1 of the Criminal their business and thus held the prosecutor) (Constitutional Court Procedure Code which, through the criminalisation to be unconstitutional decision no 23 of 20 January 2016). terminology “ other specialized bodies (Constitutional Court decision no 603 of the state ”, allowed the prosecutor to of 6 October 2015). Prosecutions and delegate the enforcement of the n Discontinuance of a criminal enforcement actions interception warrants and the actual investigation by prosecutors before A number of high stake cases were recording activity to the Intelligence trial (similar to Deferred Prosecution prosecuted and/or sent to trial in 2015, Services. The main grounds were that Agreements in the U.S. and the UK) involving the former Romanian Prime such terminology in criminal Minister and other public officials: legislation was in breach of the The Criminal Procedure Code n The Romanian National Anti-Corruption principle that criminal law must be stipulates (Article 318) that the Department indicted the former Prime clear and foreseeable. prosecutor, during the criminal investigation stage, may conclude Minister, Victor Ponta, and Senator Dan This decision generated intense that there is no public interest in Sova for complicity in offences of tax debate at the level of relevant prosecuting a case and can close the evasion, forgery and money laundering. authorities (i.e. Ministry of Justice, investigation if several conditions are There have also been high profile National Anti-Corruption Department met i.e. (i) the penalty for the crime is allegations of corruption in relation to of the Prosecutor’s Office, Presidency, a fine or imprisonment for less than Mr Ponta, and a number of requests to politicians and media) as, according seven years, (ii) taking into approve preventive arrest for Mr Sova to publicly available information, consideration the nature of the (accused also of complicity in abuse of most interception warrants were alleged offence and the manner and office) were repeatedly rejected by the executed in practice by the means of its perpetration, as well as Parliament. Trial is pending before the Intelligence Services. the consequences or potential High Court of Cassation and Justice.

n The Romanian National Anti-Corruption rights from the rightful owners paid A particular trend has been the Department also indicted the Mayor of bribes to the members of the intensification of the fight against corruption Bucharest Municipality, Sorin Oprescu, Restitution Committee to increase the at local level. Since 2013, the total for the offences of initiating and amount of compensation numbers of local officials sent to trial for participating in a criminal organisation, (i.e. approximately EUR 62 million in corruption amount to almost 100 mayors, abusive conduct in public position, total) paid for their confiscated over 20 county council presidents and receiving bribes and money laundering properties. The cases are currently dozens of other local officials. in relation to his position of Mayor. pending trial in front of the High Court The case is currently pending trial in of Cassation and Justice. As for the trial phase, the High Court of front of the Bucharest Tribunal. Cassation and Justice has maintained its n Apa Nova Bucuresti, the Romanian Mr Oprescu has been suspended from track record in terms of bringing subsidiary of the French-owned Veolia his position as Mayor until the criminal corruption cases to conclusion. In 2015, Group, has been accused of bribery, trial is finalised. the Criminal Chamber settled, at first tax evasion, money laundering and instance, eleven high-level corruption n The former chief prosecutor of the spying on its employees, in an cases and the appeal panels of five Directorate for Investigating Organised investigation by the Romanian judges settled, at final instance, eleven Crime and Terrorism (DIICOT), the National Anti-Corruption Department. high-level corruption cases. Amongst the second highest Prosecutor’s Office in Prosecutors say the company paid high profile defendants convicted were Romania, Alina Bica, was sent to trial out millions of Euros in bribes to those who had served in the positions of and faced preventive detention of Romanian officials in order to drive up Ministers, Members of Parliament, approximately four months for the price of water for Romanian mayors, judges and prosecutors. corruption offences while in his former consumers. The investigation is still pending with the prosecutor’s office. position of representative of the Concerning asset recovery procedures, a Ministry of Justice within the National specialised agency – the Asset Recovery Authority for Restitution of Properties Enforcement trends Agency – has been set up to manage Fighting against corruption is still the trend taken over by the communist regime. seized and confiscated criminal assets in Romania and has intensified during The prosecutors have alleged that (under Law no 318/2015). This is an 2015. The enforcement trend is on a some of the former presidents of the important step as it seems that currently positive scale, as over 1,250 defendants National Authority for Restitution of only around 10% of the value of seizure were indicted by the Romanian National Properties together with the members orders is actually collected, thus weakening Anti-Corruption Department in the course of the Restitution Committee the dissuasive effect of the sanction. accepted bribes amounting to of 2015, including the Prime Minister, EUR 400 million and abused their former Ministers, Members of Parliament, BACK TO MAP public position in relation to inflated mayors, presidents of county councils, prices of several plots of land that judges, prosecutors and a wide variety of were returned by the State to their senior officials. The interim asset freezing alleged ‘rightful owners’ as measures relating to these cases compensatory measures paid by the also increased, to reach a figure of State. The prosecutors allege that the EUR 452 million. business individuals who bought the

Russia Changes to legislation They include the Officer’s close relatives Draft Law on Corporate Anti-Corruption Law and relatives-in-law, and persons and Criminal Liability On 17 October 2015 a number of organisations with which the Officer In March 2015 a draft law on the criminal changes to Federal Law No. 273-FZ On and/or his/her close relatives and liability of legal entities was submitted to Preventing Corruption (the Anti-Corruption relatives-in-law have a property, corporate the Russian State Duma. The draft law Law) were made, including changes to or other close relationship. contemplated (for the first time) the Article 10 on conflicts of interest. imposition of criminal liability against Previously this article expressly stated that Anti-Money Laundering Law companies and organisations it applied to state and municipal officers On 10 January 2016 amendments to (both Russian and international) for only. The amended wording provides that Federal Law No. 115-FZ dated bribery -related and other offences. Article 10 applies to all persons occupying 7 August 2001 On Preventing the However, in mid-2015 the Russian positions that impose an obligation to Legalisation (Laundering) of the Proceeds Government gave a negative response to prevent and settle conflicts of interest of Crime and the Financing of Terrorism the Bill and it was not adopted. (Officers). Although the law does not state (the Anti -Money Laundering Law) came this explicitly, we believe that the most into force. These make the Anti-Money Draft Law on the Protection of Persons likely interpretation of this provision, taking Laundering Law applicable to foreign Reporting Corruption Offences into account other provisions of the unincorporated entities for the purposes In February 2015 a draft law on the Anti -Corruption law as well, is that the of identifying their beneficial owners. protection of persons reporting corruption conflict of interest restrictions established These entities are defined as an offences was also announced by the under the Anti-Corruption Law do not organisational form established under the Ministry of Labour and Social Protection apply to private sector individuals but only laws of a foreign state (territory) as an of the Russian Federation. The draft law to state and municipal servants and unincorporated entity. This may take the is in the process of amendment. The draft certain types of employees of state form of a fund, partnership, trust or other law is aimed at protecting those who corporations, state-owned entities form of pooled investment and/or report corruption and encouraging them and similar. beneficial ownership that, under the to come forward by protecting their person’s lex personalis , is entitled to carry confidentiality, protecting them from The concept of conflict of interest has on commercial activity in the interests of unauthorised dismissal, providing them also been extended and is now defined its participants or other beneficiaries. with monetary remuneration and/or as a situation in which the Officer’s protecting their relatives. personal interest (direct or indirect) affects Foreign unincorporated entities are subject or may affect the proper and impartial to control and identification procedures Prosecutions and conduct of his official duties. Officers are when conducting operations with monetary enforcement actions obliged to take measures to avoid and funds or other assets as required by the The majority of corruption-related cases in report conflicts of interest and, if they do Anti-Money Laundering Law. For example, Russia are against state and municipal not, may be subject to dismissal. trusts and other foreign unincorporated officials. Recent, much-publicized cases entities of a similar structure or function are include investigations against an ex -official The definition of personal interest was obliged to disclose the assets that they of the Ministry of Defence of the Russian also broadened. Personal interest is now possess or administer and the Federation for receiving bribes in the defined as the possibility of receiving not surname/name and address of their amount of RUB 45 million (approx. only money and other property, including settlors or trustees (administrators). EUR 567,000 or USD 621,000), a former property interests and property-related deputy minister for economic development services, but also results of works and The monetary funds or assets of these of Krasnoyarsk Region for receiving a other benefit or preference (Benefit). The entities, inter alia , may be subject to luxury car and RUB 14 million (approx. legislator defined the range of persons freezing or blocking in the event that it is EUR 176,000 or USD 193,000) as a bribe who, by obtaining the Benefit, may affect established that they are involved in and the head of Sakhalin Region for taking the Officer’s personal interest. terrorism or terrorist financing. a bribe of USD 5.6 million.

Among the better-known bribery cases is In the first six months of 2015, OECD Report the criminal investigation of the chairman 182 legal entities were held In March 2016, the Russian Federation of the board of directors of Rosbank administratively liable under Article 19.28 submitted a report providing information (Societe Generale Group), Mr Golubkov, of the Administrative Offences Code of on the progress it had made in and the deputy president of Rosbank the Russian Federation for providing, implementing the recommendations of (Societe Generale Group), offering or promising unlawful the OECD’s Phase 2 report, which Mrs Polyanitsina. Mr Golubkov was remuneration. Penalties took the form of evaluated the Russian Federation’s suspected of extorting a bribe equal to administrative fines and confiscation. implementation of the OECD Convention USD 1.5 million from a borrower for Administrative fines payable by legal on Combating Bribery of Foreign Public prolonging a loan agreement and entities held liable under Article 19.28 officials in International Business reducing the interest rate and monthly total RUB 395 million (approx. Transactions and the 2009 payments. At the end of 2015 criminal EUR 4.9 million or USD 5.4 million). Recommendation of the Council for proceedings against him were terminated. Further Combating Bribery of Foreign Mrs Polyanitsina is suspected of acting Anti-Corruption Council Public Officials in International Business as an intermediary in this extortion; On 26 January 2016 the Anti-Corruption Transactions. The report sets out details the criminal investigation against her is Council and the Russian Federation of further action in relation to some of the still ongoing. President discussed further measures to outstanding recommendations, and improve state anti-corruption policy. It was notes, with regard to others, that the Recent notable cases in which there has announced that the National Russian authorities are exploring methods been a conviction for bribe-giving include Anti -Corruption Plan for 2016-2017 would of implementation. 4 the criminal prosecution against the owner be presented to the President by the end of LLC Trest Magnitostroy, Mr Laknitsky. of March 2016 and that this plan would BACK TO MAP He was fined RUB 30 million (approx. pay special attention to the influence of EUR 378,000 or USD 415,000) for giving ethical standards on officials’ compliance the senator in the Chelyabinsk Region a with anti-corruption legislation. RUB 10 million (approx. EUR 126,000 or USD 138,000) bribe to lobby for his During the Anti-Corruption Council’s business interests. meeting, Chief of the Russian Federation President’s Administration Mr Ivanov According to publicly available figures, in suggested that the Criminal Code of the the first nine months of 2015, 8,800 Russian Federation be amended to individuals were convicted for corruption establish separate criminal liability for offences and approximately 11,000 giving and taking small bribes, i.e. those officials were held administratively liable not exceeding RUB 10,000 (approx. for non-compliance with anti-corruption EUR 126 or USD 138). If adopted, this standards. According to the statistics, would introduce a simplified procedure for during 2015 only RUB 588 million investigating these crimes, which would (approx. EUR 7.4 million or fall under the competence of justices of USD 8.1 million) was repaid by those the peace. These amendments are involved in corruption offences, while intended to make anti-corruption efforts about RUB 15 billion (approx. EUR 188.8 more effective and statistics on corruption million or USD 207.2 million) remains to more accurate and transparent. be collected.

4 The full report can be found on the OECD website, and at http://www.oecd.org/daf/anti-bribery/Russia-Phase-2-Written-Follow-up-Report.pdf .

Slovak Republic Changes to legislation including the Criminal Code, introducing a select sports determined by case law, Criminal Liability of Legal Entities completely new criminal offence of sports i.e. football, to all fields of sports and The OECD’s report on the Slovak corruption (the Amendment). These sport competitions. Furthermore, the Republic’s compliance with its obligations changes were adopted in response to a Amendment makes aggravated penalties under the OECD Convention, published in high level of corruption in the sports applicable in cases of sports corruption. November 2014, had identified a number environment and the insufficient regulation Under the new criminal offence of sports of gaps, in particular, the lack of full of sports corruption under the general corruption, the punishment faced by both criminal liability of legal entities. The Slovak corruption criminal offences; they were categories of persons is the same. The Republic has now implemented this also a reaction to recommendations on the maximum penalty available for the recommendation with the adoption by the manipulation of sports competitions by the criminal offence of sports corruption is National Council of the Slovak Republic of Council of Europe and the fact that the imprisonment of up to 12 years. The new legislation on the criminal liability of majority of other European states have Specialized Criminal Court was appointed legal entities on 13 November 2015 (the already adopted similar legislation. as the competent body to adjudicate the Act). The Act, which will become effective criminal offence of sports corruption. as of 1 July 2016, introduces the new The new criminal offence of sports concept of the criminal liability of legal corruption is set out in the Criminal Code Prosecutions entities and enables the punishment of as follows -” Who directly or through an Even though charges of sports corruption criminal conduct that could not previously intermediary promises, offers or gives a and corruption in general are not often be directly sanctioned at a criminal level. bribe to another to act or refrain from brought in Slovak courts, in recent years It is also intended to prevent situations acting in the course of competition [being two important cases occurred where the where individuals are held criminally liable an organised sport activity according to courts dealt with sports corruption and whilst the legal entity evades liability and the rules determined by a sport also imposed penalties, described in continues its criminal conduct. The level of organisation, aimed at achieving a sport more detail below to illustrate the recent penalties contemplated under the Act can score or a comparison of sport changes made under the Amendment. severely affect the continued operation performances] or affect the result of the and profitability of legal entities. The Act competition, shall be punished by The first case dealt with direct corruption specifically enumerates the criminal imprisonment of one to five years . Equal in Slovak football in which the second offences which can be committed by legal punishment shall be imposed on any highest officer in the Slovak Football entities, which include corruption. The Act person who directly or through an Association, the general secretary, was also explicitly states that “effective intermediary, for himself or for another arrested while accepting bribes from remorse” (under which the criminal liability person receives, requests or promises a police undercover agents. These bribes of a legal entity expires in certain bribe to act or refrain from acting and related to the transfer of players in the circumstances) will not apply to thus influence the course or result of the Slovak National Football League, and the corruption -related offences. competition. ” The Amendment also secretary general regularly asked for resolved the issue of the different bribes between EUR 300 to EUR 500 for Sports-related Corruption punishments applied in cases of general each transfer of a player. The court On 26 November 2015, the Slovak corruption where a person who offers a sentenced the secretary general to a National Council adopted a new act on bribe faces imprisonment of six months sentence of three years and four months sport which became effective on to three years, and a person who accepts imprisonment (without probation) in 2010. 1 January 2016 (the Sport Act). The Sport a bribe faces imprisonment of between In its decision, the court stated that the Act introduced complex new regulations three to eight years. Another reason for secretary general’s greatest offence was for sports-related matters and amended a the Amendment is that it extends criminal the creation of an environment where number of existing legislative acts, liability for “match fixing” from only those bribes were offered on a regular basis

and that bribes had been requested even player immediately notified the police before the deployment of undercover authorities and a formal investigation police agents. began in September 2013. From the beginning of the trial, all of the defendants The second case dealt with a denied any participation in the corrupt sophisticated group of players from the actions, but after a period, they all Slovak and the Czech football leagues as pleaded guilty. The Slovak Football well as other individuals, who had been Association imposed a disciplinary rigging and subsequently betting on penalty of the prohibition of any activities football matches using Asian betting in relation to Slovak football on all sites. In total, over 19 different football defendants. The court sentenced the matches in Slovakia and the group in 2014 to two to three years’ Czech Republic had been rigged, and the imprisonment with probation and profit from one match was between monetary penalties. The court also EUR 2,000 up to EUR 60,000 ordered the group to forfeit almost per person. The case was initiated when EUR 49,000 which they had obtained the group tried to manipulate a junior from illegal betting. player from the Czech Republic into rigging one of the matches. The junior BACK TO MAP

Spain Changes to legislation OECD report has not taken steps to assure extradition On 1 July 2015, Organic Law 1/2015, The OECD’s follow-up to the Phase 3 in foreign bribery cases or prosecution in amending the Penal Code, came into Report & Recommendation on Spain in the absence of extradition. force, introducing a hugely significant March 2015 has found that since the change to the concept of corporate entry into force of the OECD Convention The report found that Spain had improved criminal liability in Spanish law. This was in Spain in 2000, no cases of foreign tax, anti-money laundering and auditing reported on in some detail in the July 2015 bribery have been prosecuted. measures to combat foreign bribery, but edition of this Update. 5 The OECD Working Group continues to indicated that further steps are required. have concerns about the low level of Prosecutions and foreign bribery enforcement in Spain and As part of the 2015 reforms, Spain has enforcement actions the lack of implementation of the also tried to implement recommendations related to raising awareness and providing After years of complete inactivity, enforcement-related recommendations. training on the liability of legal persons and enforcement activity for corruption In addition, Spain has not taken steps to measures for confiscation of the proceeds offences is currently very high in Spain. ensure that bribery-related accounting of bribery. A significant number of public officials offences are effectively investigated and are involved in current corruption cases, prosecuted. A majority of the BACK TO MAP and private sector company executives recommendations that Spain has not have also been accused of bribery of implemented are related to technical public officials. deficiencies in Spain’s Penal Code, relating to the scope of Spain’s foreign Cases like Operation Púnica, involving bribery offences, the regime of liability of public officials of the Madrid Regional legal persons for foreign bribery, the Government and even important private adequacy of sanctions for natural and listed companies, the ERE case in persons, measures for confiscation of the Sevilla, involving officials of the Andalusia proceeds of bribery, and investigative Regional Government, the Gurtel case, hurdles such as the statute of limitations. involving public officials of the Valencia Regional Government, and the Taula case, Limited steps have been taken to improve involving the ex-mayor of Valencia, Rita international cooperation, but Spain could Barberá, and all her counsellors of the be more proactive in seeking mutual legal Popular Party Group at the Town Hall have assistance or other forms of international attracted widespread media attention. cooperation. Regarding extradition, Spain

5 For further details, please visit the Spanish section of our Anti-Bribery and Corruption Review July 2015 (pages 20 et seq .), at http://www.cliffordchance.com/briefings/2015/07/anti-bribery_andcorruptionreview-july2015.html .

The Netherlands Changes to legislation banking industry (for a maximum period and tax fraud by the Amsterdam Court of A Bill to improve (judicial) protection of of 3 years). First Instance in December 2015. whistlebwers was adopted in March 2016. The Bill aims to facilitate the reporting of As of 1 January 2016, the maximum fines Housing associations carry out the public wrongdoing (so as to expose wrongdoing, that can be imposed for bribery offences task of providing affordable housing. Even such as bribery and corruption, and have been increased as a result of an so the Court agreed with the Public safeguard integrity). A key element of the inflation adjustment: Prosecutor that the former director was not a public official and could only be legislation is the establishment of a n Active or passive bribery of a public convicted of private commercial bribery ‘House for Whistleblowers’ ( Huis voor official is punishable by a maximum and not public bribery. According to the Klokkenluiders ). The House, an term of imprisonment of six years and Court, the fact that housing associations autonomous administrative authority , will a maximum fine of EUR 82,000 for perform a public task does not in itself have a separate advice and investigation natural persons and EUR 820,000 for mean that the former director would division. Employees, irrespective of the legal entities. sector in which they work, will be able to therefore be considered a public official, approach the House for advice about n Active and passive private commercial meaning a person appointed under the reporting (suspected) instances of bribery is punishable by a maximum (direct) supervision and accountability of wrongdoing and subsequently file a term of imprisonment of four years the government in a role with a seemingly request with the House to investigate the and a maximum fine of EUR 82,000 obvious public character to carry out part (alleged) wrongdoing. The Bill is expected for natural persons and EUR 820,000 of the tasks of the Dutch State or its to be enacted into law on 1 July 2016. for legal entities. organs. The Court considered that, at the time the offences took place, the n The maximum fine for legal entities government had no involvement with the By 1 April 2016, banks with a seat in the may be increased up to a maximum appointment and dismissal of Netherlands and Dutch branches of of 10% of annual turnover if the (supervisory) directors of housing banks with seats in non-EU/EEA member maximum fine of EUR 820,000 associations and that housing states, must have ensured that most of is not considered an associations became (financially) their employees are bound by disciplinary appropriate punishment. rules. This obligation was introduced on independent and responsible in the 1 April 2015, through an amendment to The Dutch financial-economic fraud and nineties when a greater distance was the Dutch Financial Markets Supervision anti-bribery rules were amended on created between housing associations and the government and supervision was Act ( Wet op het financieel toezicht ). 1 January 2015. 6 Since then no other However, banks were given a one-year changes were made to the rules. shifted from the Dutch state to the transitional period to comply. If bank regulator for the housing sector (i.e. the employees violate the code of conduct Prosecutions and Central Fund for Social Housing, Centraal applicable to them, anyone can file a enforcement actions Fonds voor de Volkshuisvesting ). report with the Foundation of Disciplinary Corruption in the Dutch housing sector Law for the Banking Industry ( Stichting The Court sentenced the former director Over the last few years, there have been Tuchtrecht Banken ). Upon investigation of to two and a half years of imprisonment. a number of allegations of corruption in the report, the Foundation may decide to According to the Court, the former director the Dutch housing sector. In one highly initiate disciplinary proceedings against had an exemplary role and his conduct publicized case, a former director of the bank employee before a disciplinary should have been beyond reproach. Rochdale , a Dutch housing association in committee. The committee can impose the Amsterdam region, was convicted of disciplinary measures, such as a fine up Dutch and U.S. settlement passive commercial bribery (accepting to EUR 25,000 or a temporary Recently an international settlement with different types of gifts), money laundering disqualification from a certain position in Dutch and U.S. (criminal) authorities caught the attention of the Dutch and foreign

6 For further details, please visit the Dutch section of our Anti-Bribery and Corruption Review July 2015 (pages 22 et seq .), at http://www.cliffordchance.com/briefings/2015/07/anti-bribery_andcorruptionreview-july2015.html .

media. This settlement is an example of an has been taking steps to get its DNB announced on 24 February 2016 internationally coordinated approach by compliance in order and persons who that it had completed its examination into authorities in relation to corruption. had been (directly or indirectly) risk controls aimed at preventing involved with the payments were no corruption in the insurance sector in the The Dutch Public Prosecutor ( Openbaar longer at the Company. Netherlands. DNB’s overall conclusion is Ministerie ) announced that the that the sector fails to adequately identify Netherlands headquartered international Enforcement trends and control corruption risks resulting from telecom provider Vimpelcom Ltd and its Whistleblowing for the financial sector conflicts of interest and/or bribery. In its Dutch subsidiary Silkway Holding B.V. The Dutch Central Bank press release, DNB identified two main (the Company) had accepted a (De Nederlandsche Bank, or DNB) issues. From examinations conducted at settlement offered by the Public continues to prioritise anti-corruption large insurers, DNB concluded that in Prosecutor, the U.S. Department of efforts and, on 12 February 2016, general they have an insufficient structural Justice and the U.S. Securities and opened a Whistleblowing Desk. The Desk view of potential risks of conflicts of Exchange Commission. According to its provides professionals in the financial interest that may arise through the press release, the Public Prosecutor sector with a platform to report instances personal networks of their directors. accused the Company of bribing or suspicions of fraud, corruption, conflict Furthermore, DNB concluded that most government officials in Uzbekistan and of interest, or other serious breaches of insurers fail to sufficiently identify third keeping inaccurate books and records. laws and regulations or other breaches of party risk (i.e. the risk of becoming The allegations relate to the period integrity at financial institutions that are involved with corruption by third parties starting from around the time the subject to DNB’s supervision. or the risk of reputational damage Company entered into the Uzbek telecom resulting from a relationship with third market and thereafter (2006-2012). Professionals have to first internally report parties accused of corruption, for potential wrongdoing (e.g. through example “tied agents” or consultants). The Public Prosecutor indicated that internal whistleblowing procedures). DNB stated that it expects insurers to be Company is to pay a total settlement of If they are unable to file a report directly able to identify such risks and take USD 795 million (half is to be paid to the (because no internal procedures are in necessary measures to control the risk Public Prosecutor, the other half to the place), they have well-founded concerns but observed that due diligence in relation U.S. authorities). According to the Public about disproportionate personal to third parties is not yet standard Prosecutor, the Dutch part of the consequences, or they have filed an practice in the insurance sector. settlement consist of a fine of internal report but feel that the financial USD 100 million; the payment of the institution in question devoted insufficient Professional football estimated value of goods eligible for attention to it, professionals can file a It was announced on 31 March 2016 that confiscation (USD 130 million); and report with the Desk. DNB employees DNB earlier this year launched an recovery of criminal proceeds process the reports and can, where investigation into possible money (USD 167.5 million). necessary, start investigations. laundering in professional football. According to DNB, it is investigating the According to the Public Prosecutor, it had Thematic examination: corruption in extent to which banks and trust offices in taken the following factors into account insurance sector particular are capable of recognizing and when determining the amount of the fine: DNB has performed thematic addressing forms of money laundering examinations into the risk of corruption at (e.g. match fixing, cash flows involving n the payments to government officials banks and insurers in the past (the occurred over a long period of time risks of corruption through royalty regulator often conducts thematic (seven years); payments, transfer and broadcasting fees examinations to gain insight into risks in used for money laundering purposes, tax n the payments were significant; and the sector). After such an examination in evasion). The results are expected to be n the Company cooperated with the 2014, DNB published a guide to good published in June 2016. investigation and shared its own practices to help banks and insurers internal findings. Also, the Company fight corruption.

Dutch Authority for the According to the AFM, the business n recording properly any signs of Financial Markets operations of audit firms should be corruption and any follow-up to ensure Control of corruption risks by organised in such manner that any that control of corruption risks is a fixed audit firms involvement with violations of laws, element of the business operations; including corruption, is tackled. The AFM Similarly, the Dutch Authority for the n indicating in the audit assignment, if stated that it is necessary for audit firms Financial Markets ( Autoriteit Financiële applicable, how the auditor during the to adequately control risks of becoming Markten , or AFM) has also been active in audit dealt with the risks and signs of involved with (foreign) corruption by their encouraging anti-corruption measures. In corruption; and clients and/or risks of their clients being March 2015, the AFM sent letters to the involved with (foreign) corruption. n reporting incidents in a timely manner audit firms under its supervision bringing The AFM noted in its letter points of to the AFM pursuant to the Wta. to their attention the fact that they – when consideration for adequately controlling conducting audits or other tasks for their these risks: BACK TO MAP clients – may come across funds flows or transactions that could be instances of n conducting adequate risk-analysis, fraud or corruption. In its letter (a copy is whereby risks in relation to specific available on the AFM’s website countries, sectors, the involvement of https://www.afm.nl/nl- third parties and commercial practices nl/professionals/nieuws/2016/mrt/corrupti are taken into consideration; erisico-accountantsorganisaties , the AFM n having an open and ethical culture, noted that audit firms are required to which encourages employees to timely have sound and controlled business report (fraud/corruption) incidents; operations pursuant to the Audit Firms Supervision Act ( Wet toezicht n classifying clients in such manner that accountantsorganisaties, or Wta), which if there is an increased risk or there entails that they should recognize signs of are signs of corruption, this is taken fraudulent and corrupt practices in a into account when conducting work timely fashion, and follow up such signs for the client; properly. Otherwise, audit firms may run n providing (periodical) training about the risk of getting involved with their corruption so that corruption risks client’s corrupt practices, which may lead are better recognized and dealt with; to reputational risks and in some instances to criminal prosecution.

Turkey* Changes to legislation president of the Institution, were detained In the most recent Corruption Perceptions In January 2016, Turkey ratified the Council due to corruption allegations. The Index published by Transparency of Europe Convention on Laundering, prosecution alleges that the president of International in December 2015, Turkey Search, Seizure and Confiscation of the the Turkish Air Institution accepted bribes was ranked 66th among 167 countries, Proceeds from Crime and on the Financing from a French firm in order to execute having fallen 13 places in this index of Terrorism, which was signed in March agreements for purchasing certain since 2013. This result suggests that the 2007. This puts Turkey in a better position helicopters from their firm. According to prosecutions of high -ranking public officials as regards compliance with internationally the indictment, the detained persons in December 2013 have reverberated in accepted policies on anti-money laundered the illegitimate money through the public and the international arena. laundering and anti-corruption. a shell company, owned by the president’s son, by purchasing industrial OECD Report In March 2016, the Regulation on oil. The case is still ongoing. In October 2014, the OECD published an Measures Regarding Prevention of OECD Report on Implementing the OECD Laundering Proceeds of Crime and Changes to policy Anti-Bribery Convention in Turkey, which Financing of Terrorism and the Regulation In November 2015, during the 2015 G20 highlighted Turkey’s improvements to its on Program of Compliance with Antalya Summit, Turkey introduced a legal framework in relation to the foreign Obligations of Anti-Money Laundering separate anti-corruption working group in bribery offence and its effective and Combating the Financing of Terrorism addition to the group established at the cooperation with other parties to the were amended. Accordingly, the ambit of 2010 summit which took place in OECD Convention in relation to two the financial and other professional Canada. Important anti-corruption policy foreign bribery investigations. However, institutions which are subject to certain matters, both in the public and the private the OECD Working Group issued several obligations under anti-money laundering sectors, were discussed. The resulting recommendations in relation to effective legislation (obliged parties) has been anti-corruption action plans include: investigation, detection, prevention and sanctioning of foreign bribery. In extended to include payment institutions (i) transparency regarding the main particular, Turkey was recommended to: and electronic money institutions. shareholders of shell companies; The amendments also set forth a thirty (i) increase efforts to detect, investigate (ii) fight against bribery; day time limit for the obliged parties to and prosecute foreign bribery acts assign a compliance officer, starting from (iii) special attention to sectors within high including bribery acts by legal persons; the licence of activity dates. risk groups; and (ii) rectify deficiencies in its legal Prosecutions and (iv) transparency in the public sector. framework for corporate liability; enforcement actions Enforcement trends (iii) increase the current level of sanctions In October 2014, a bribery investigation for legal entities in relation to The nature of the investigations and into alleged offences by certain officials of bribery offences; prosecutions undertaken in recent years the Fire Fighting Department of the indicate that enforcement in Turkey has (iv) maintain the independence of Istanbul Metropolitan Municipality was broadened to include bribery and prosecutors and provide an enhanced initiated. According to the allegations, the money laundering rather than a training to law enforcement authorities public officials working in the department traditional focus on collusive tendering. on the corporate liability provisions in were bribed by business owners in order Additionally, the modernisation foreign bribery cases; and to grant workplace permits for premises programme being conducted by the that do not meet the required conditions (v) provide enhanced protection to Financial Crimes Investigation Board for obtaining workplace permits. The whistleblowers in both the public and (MASAK) in accordance with Financial investigation is ongoing. private sectors. Action Task Force (FATF) BACK TO MAP In June 2015, 41 people working in the recommendations, also suggest Turkish Air Institution, including the former promising enforcement developments.

Ukraine Changes to legislation Prosecutor’s Office is aimed at overseeing alleged interference by Mr Ihor Kononenko Overall in 2015-2016, Ukraine achieved how laws are observed during pre-trial (the first deputy faction leader of Petro significant progress in aligning its investigations conducted by the NAB. Poroshenko Bloc, one of Ukraine’s political anti -corruption legislation with applicable parties ) and several other Members of international standards and The NAITMA’s mission will be to trace, Parliament with the work of Ministry of recommendations, including those of the return and manage criminal property as Economic Development and Trade. OECD/Istanbul Anti-corruption Action Plan well as carry out forfeiture of assets Charges against them are based on the (IAP) monitoring and the Group of States arising from the crimes disposing such public announcement of Mr Abromaviius Against Corruption (GRECO). The assets. Within the meaning of the law, that Petro Poroshenko Bloc has been Parliament has approved comprehensive criminal property is funds, property, lobbying their people for senior positions in anti-corruption legislation, including property rights and other rights which are a number of public companies. The access to public information in format of or may be arrested or seized under a pre -trial investigation of the statement open data and financing of political court decision in a criminal proceeding. made by Mr Abromavi čius is in progress. parties. All corruption offences and their The NAITMA identifies, searches, elements are now criminalised, including evaluates such assets by request of an Also, the NAB has recently interrogated the crime of illicit enrichment. However, investigator, detective, prosecutor, the Chairman of the National Bank of this legislation has yet to be fully enforced. investigative judge. The assets are Ukraine (Mrs Valeriya Gontareva) in relation transferred to control of the NAITMA by a to an accusation of abuse of office. Ukraine has also taken steps to establish resolution of the judge, investigative judge significant new institutional anti-corruption or upon consent of the owner. In addition, three indictments had already machinery that consists of: been referred by the Prosecutor’s Office Prosecutions and to the court as of 1 March 2016, n National Anti-Corruption Bureau (NAB); enforcement actions including one case initiated against n National Agency for Preventing According to the Head of the several judges, as well as an indictment Corruption (NAPC); Prosecutor’s Office, NAB is reportedly in of the head of one of the state bodies, the process of investigating about who was charged with embezzlement of n Specialized Anti-Corruption 20 inquiries on corruption in the top funds in the amount of UAH 14 million Prosecutor’s Office (Prosecutor’s (approx. EUR 480,000 or USD 546,000). Office); and echelons. Current corruption investigations mainly involve former and Approximately five more cases will be n National Agency for Identifying, active executive officials, judges and referred to the court soon. Tracing and Management of Assets officials of law enforcement agencies. Derived from Corruption and Other The NAB investigations are focused on Enforcement trends Crimes (NAITMA). corruption in public enterprises and As a general trend, Ukrainian officials unlawful arrangements concluded by tend to be the principal targets of The NAB is a specialized law enforcement officials of such enterprises. The corruption investigation proceedings body responsible for investigating Chairman of the NAB had also rather than companies or private persons. corruption of high profile officials, including emphasized that combating corruption in ministers, Members of Parliament, judicial sphere is one of the top priorities. Although new legislation outlines the high -rank civil servants, judges, establishment and functions of the prosecutors of the Prosecutor General In March 2016 the detectives of the NAB anti -corruption institutions, the actual Office and regional prosecutor offices, in cooperation with the Prosecutor’s Office establishment of these bodies is directors and officers of state enterprises issued a notice of suspicion on proceeding slowly and half-heartedly. etc. The NAPC is a preventive body interference with the work of a public Thus, it should be noted that, though it is aimed at prevention of corrupt activities official (Mr Aivaras Abromavi čius, former becoming more and more difficult for including monitoring civil servants’ Minister of Economy and Trade) to the corrupt officials to receive their illicit gains, incomes and expenditures, creating a CEO of JSC “Naftogaz of Ukraine”, there is still room for improvement. unified register for civil servants’ Ukraine’s leading fuel and energy declarations, monitoring conflicts of company. Also the NAB is investigating BACK TO MAP interest and ethical standards. The

United Arab Emirates

In our July 2015 briefing, we mentioned that the Gulf Cooperation Council (GCC) had approved a new anti-corruption law. 7 While there has not been any update on the progress of a GCC-wide anti -corruption law, the subject of corruption remains on the GCC’s agenda and was discussed at a recent meeting in Riyadh in March 2016. The discussion focused on how to enhance cooperation between GCC member states, and share expertise between relevant anti -corruption agencies at the GCC level. There is also a proposal for the GCC to sign the UN Convention against Corruption as a regional organisation.

We also mentioned in our July 2015 briefing that a new taskforce has been created within Abu Dhabi’s Accountability Authority to promote transparency as well as to investigate financial breaches and corruption. Its initial focus has been on promoting better public financial management, including improved accounting and reporting arrangements in the public sector. It is demanding more detailed levels of auditing and financial reporting in the public sector, driven in part by the recent fall in oil revenues. Its remit includes companies in which the government is a majority shareholder.

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7 For further details, please visit the UAE section of our Anti-Bribery and Corruption Review July 2015 (page 26), at http://www.cliffordchance.com/briefings/2015/07/anti -bribery_andcorruptionreview-july2015.html .

United Kingdom Changes to legislation being a relevant commercial when the Anti -Terrorism, Crime and The government has announced that it organisation, failed to prevent the Security Act 2001 came into force, it was does not intend to introduce a new crime bribing of Khaled Al Badie by an not an offence under the Prevention of of failing to prevent economic crime – associated person, namely Cyril Sweett Corruption Act 1906 to corrupt an agent of similar to the offence in the Bribery Act International Limited, their servants and a foreign principal, even where the elements 2010 of failing to prevent bribery by agents. The bribing was intended to of the alleged offence took place in England commercial organisations. During a obtain or retain business, and/or an and Wales. The case concerns allegations parliamentary debate following the advantage in the conduct of business, that bribes were paid between June 2000 announcement the Parliamentary for Sweett Group PLC, namely and November 2006 from an English bank Under -Secretary of State for Justice, Mr securing and retaining a contract with account to officials or other agents of three Dominic Raab said “there is little concrete Al Ain Ahlia Insurance Company for foreign organisations in India, Poland and and specific evidence of the wider project management and cost Tunisia, disguised as legitimate payments corporate economic wrongdoing that we consulting services in relation to the to “consultants” for apparently should now target that is currently not building of a hotel in Dubai, contrary to genuine services. unlawful and could reasonably be caught Section 7(1) of the Bribery Act 2010. by a proposed new offence” (Hansard Interestingly the judgment vindicates the 3 November 2015, col 264 WH). His Honour Judge Beddoe described the UK government’s position back in 2001 offence as a system failure: “[t]he whole that bribery of foreign agents and The Department for Business Innovation point of section 7 is to impose a duty on principals was already covered by the & Skills published a discussion paper in those running such companies 1906 Act; the judgment says that the March 2016 setting out proposals to throughout the world properly to 2001 amendments were enacted enhance the transparency of beneficial supervise them. Rogue elements can only “ex abundantae cautelae to address the ownership for foreign companies that operate in this way – and operate for so concerns expressed by the OECD in the purchase land or property in England and long – because of a failure properly to 1999 Review [which had criticised the Wales, or participate in public contracting supervise what they are doing and the reach of the UK’s anti-bribery legislation]”. in England. These proposals are stated to way they are doing it”. Construction and The court also said that the point of law be designed “to help prevent the UK from professional services company Sweett was of general significance “because of being a safe haven for corrupt money Group PLC was sentenced on its implications for other [pending] bribery from around the world”. The proposals, 19 February 2016 and ordered to pay and corruption prosecutions”. however, are still at an early stage. GBP 2.25 million (GBP 1.4 million in fine and GBP 851,152.23 in confiscation), It was announced on 4 April 2016 that Prosecutions and and almost GBP 100,000 in costs. the Scottish Crown Office is to recover enforcement actions GBP 2.2 million under a civil settlement In another significant case, and one that with a Scottish logistics company in Sweett Group PLC pleaded guilty on has ongoing ramifications for historical respect of business obtained through 18 December 2015 to an offence under conduct, the Court of Appeal decided that unlawful conduct, in breach of section 7 of the Bribery Act 2010 regarding under UK anti-bribery legislation before sections 1 and 7 of the Bribery Act conduct in the United Arab Emirates. the Bribery Act 2010 (in particular, the 2010. Braid Group (Holdings) Limited Section 7 makes it an offence for a relevant Prevention of Corruption Act 1906) it was (Braid) had made a self-report to the commercial organisation to fail to prevent an offence to corrupt an agent of a foreign Crown Office following an investigation bribery by an associated person intending principal or a foreign public body, even into suspect payments by its subsidiary, to obtain business or an advantage in the prior to 2002 (when legislation was Braid Logistics (UK) Limited, which conduct of business for the organisation. introduced to clarify the jurisdictional effect specialises in freight forwarding and of the previous anti-bribery legislation). logistics. The investigation found that The investigation launched by the Serious expenses, including personal travel, Fraud Office (SFO) in July 2014 resulted The judgment in R v AIL, GH and RH on holidays, gifts, hotels, car hire and cash, in the SFO bringing the following charges: 15 January 2016 overturned a previous had been made available to a U.S. Between 1 December 2012 and Crown Court decision (in November 2015) customer employee, funded by inflating 1 December 2015 Sweett Group PLC, which found that, before 14 February 2002, the invoices to the customer. During the

investigation further bribery offences existing anti-bribery and corruption and report the findings to the SFO. were discovered in relation to a second controls, policies and procedures Following the submission of this report in customer. Criminal prosecutions of regarding compliance with the Bribery Act July 2014, the SFO conducted its own individuals may follow. 2010 and other applicable anti-corruption interviews, and, having determined that it laws. It is required to implement was in the public interest to do so, In a related decision the Scottish Court of recommendations of the independent started negotiating a DPA. Session Outer House held that the CEO reviewer. If the bank has complied with of the Braid Logistics (UK) Limited, who the terms of the DPA, the SFO will The DPA was part of a coordinated was also a majority shareholder in the discontinue the proceedings once the global settlement under which Standard company, was a “Bad Leaver” under the three year period has expired. Bank also agreed to pay USD 4.2 million company’s articles, because he knew to settle charges brought by the U.S. about and was involved in the bribery Commenting on the DPA, Director of the Securities and Exchange Commission; arrangements, and was therefore entitled SFO David Green CB QC said: the SFO thanked the U.S. Department of to receive only par value for his Justice and the SEC for their assistance, “This landmark DPA will serve as a shareholding – around GBP 18 million as well as the UK Foreign and template for future agreements. The less than the actual value. Commonwealth Office and the Financial judgment from Lord Justice Leveson Conduct Authority. UK’s First Deferred provides very helpful guidance to those advising corporates. It also endorses Enforcement trends Prosecution Agreement the SFO’s contention that the DPA in UK prosecutors continue to focus on Details of the UK’s first Deferred this case was in the interests of justice allegations of corruption, particularly by Prosecution Agreement (DPA) were and its terms fair, reasonable and companies and financial institutions, and approved by Lord Justice Leveson, and proportionate. I applaud Standard they have given a clear indication that published on 30 November 2015. In the Bank for their frankness with the SFO DPAs will only be available where there is SFO’s first application for a DPA, and their prompt and early full cooperation. While the SFO entered Standard Bank Plc (Standard Bank), was engagement with us.” the subject of an indictment alleging into a DPA with Standard Bank (see above) on the basis of their proactive failure to prevent bribery contrary to The suspended charge related to a cooperation with the SFO, it went ahead section 7 of the Bribery Act 2010. This USD 6 million payment by a former sister with criminal charges against Sweett indictment was immediately suspended company of Standard Bank, Stanbic Group PLC (even though Sweett Group for a three year period. This was also the Bank Tanzania, in March 2013 to a local PLC pleaded guilty and the parent first use of section 7 of the Bribery Act partner in Tanzania, Enterprise Growth company had apparently not been aware 2010 by any prosecutor (a previous Market Advisors (EGMA). The SFO of the corrupt payments), apparently charge in a Scottish case had led to a alleges that the payment was intended to because of a perceived failure to civil settlement). induce members of the Government of cooperate fully. The SFO said that Tanzania to show favour to Stanbic investigations into individuals As a result of the DPA, Standard Bank will Tanzania and Standard Bank’s proposal were continuing. pay financial orders of USD 25.2 million for a USD 600 million private placement and will be required to pay the Government to be carried out on behalf of the It was reported on 26 February 2016 that of Tanzania a further USD 7 million in Government of Tanzania. The placement the police were discontinuing Operation compensation. The bank has also agreed generated transaction fees of Elveden, a five-year investigation by to pay the SFO’s costs of GBP 330,000 in USD 8.4 million, shared by Stanbic Scotland Yard into allegations of payments relation to the investigation and subsequent Tanzania and Standard Bank. resolution of the DPA. by journalists to police and other public officials in exchange for information. The The matter was reported to the Serious investigation, launched in 2011, resulted in In addition to the financial penalty, Organised Crime Agency (now replaced 34 convictions, including nine police Standard Bank has agreed to continue to by the National Crime Agency) and to the officers and 25 other public officials, over cooperate fully with the SFO and to be SFO in April 2013, and the SFO required the years, on charges mainly of subject to an independent review of its Standard Bank’s solicitors to investigate

misconduct in a public office. The majority of journalists charged with conspiracy to commit misconduct in a public office were acquitted, having argued that they were acting in the public interest.

It has also been reported that requests to the UK for mutual legal assistance in fighting financial crime rose by 62% in 2015, including a significant rise in requests to the SFO.

The Serious Fraud Office (SFO) The Attorney General announced on 9 February 2016 that David Green’s appointment as Director of the SFO would be extended for a further two years.

Shortly after this announcement, there were media reports that the National Crime Agency (which, since October 2013 has been the lead body for combating serious and organised crime) would be given the power to direct investigations carried out by the SFO and would have a representative on the SFO’s board. However, no official announcement has been made.

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Brazil* Changes to legislation Prosecutions and the Brazilian Prosecutor General and the In a landmark decision that is also relevant enforcement actions Brazilian Supreme Court are investigating for corruption cases, the Brazilian Supreme Recent Developments in Operation various members of the Brazilian Congress, Court has clarified its understanding of the Lava Jato including the President of the House and the President of the Senate. enforcement of criminal convictions, Brazil’s major corruption scandal, including when prison terms for convicted operation Lava Jato 9, continues to Plea bargains in the spotlight criminals shall commence. develop on two fronts: (i) investigation of Whistleblower plea bargains were corruption allegations involving the introduced into Brazilian legislation in the The Brazilian Supreme Court’s previous state -controlled oil company, Petrobras law against conspiracy which was enacted understanding was that a criminal and (ii) criminal proceedings in respect of in 2013 (Federal Law No. 12,850/2013). conviction could only be enforced once the individuals involved in the scandal. all appeals have been exhausted. In The Lava Jato investigations and its practice, this meant that those who had In respect of the ongoing investigations, related criminal proceedings have since been criminally convicted could turn to in late March 2016, Brazilian Federal given whistleblower plea bargains the notoriously complex Brazilian appeal Prosecutors launched the 26th phase of widespread media attention. Further, after system including courts of second the investigation, which alleged a “parallel much debate in the media, the Brazilian instance and even the Brazilian Superior accounting structure” operating within a Supreme Court has recently ruled that Court of Justice 8 before being required to major Brazilian contractor. This alleged whistleblower plea bargains are a serve their sentences. Often, by the time “parallel accounting structure” was legitimate means of obtaining evidence. that the appeals were ruled on, the claimed by investigators to be responsible crimes were caught by the criminal for making bribery payments to various Various players involved in Operation Lava statute of limitations. politicians and directors of Petrobras. Jato , including CEOs of major Brazilian contractors, former Petrobras directors and Another notable phase of Operation Lava The Brazilian Supreme Court has now politicians, have entered into plea bargains Jato was codenamed Aletheia (Ancient changed its understanding of the with the Brazilian Prosecutors. enforcement of criminal convictions and Greek for truth) and targeted former has decided that once the appeals have president Luis Inácio Lula da Silva. The In order to enter into a plea bargain, the been ruled on by courts of second former president was detained and terms of the plea bargain must: instance, enforcement of the criminal questioned by the Federal Police in respect of a beachfront apartment and n identify the conspirators and indicate conviction must commence. In practice which crimes they committed; this means that those who have been country house which Lula is accused of, convicted and have not had an appeal although denies, owning. n reveal the hierarchical structure and ruling in their favour will no longer be the division of responsibilities within In respect of the ongoing criminal permitted to remain free while appealing the conspiracy; proceedings, the Federal Courts in Curitiba, to the Brazilian Superior Court of Justice which are responsible for the Lava Jato n return, in whole or in part, the or even the Brazilian Supreme Court. criminal proceedings in first instance, products of the crimes committed by recently convicted the former CEO of a the conspirators; or The Brazilian Supreme Court’s change of major Brazilian contractor and others for n prevent future crimes from being understanding comes at a moment in corruption ( corrupção ), money laundering committed by the conspirators. which various high profile Brazilian (lavagem de dinheiro ) and conspiracy contractors embroiled in Operation Lava (formação de organização criminosa ). The agreement must then be ratified by Jato (see below) are being tried on the relevant judge in order to be effective. criminal charges in connection with Further to the investigations and criminal alleged corruption. proceedings in the courts of first instance, BACK TO MAP

* Clifford Chance, like other international law firms, is not licensed to provide Brazilian legal advice and, therefore, nothing in this client briefing should be interpreted or construed as legal advice in relation to the laws of Brazil. 8 The Brazilian Superior Court of Justice is hierarchically superior to the Federal and State courts of second instance and sits beneath the Brazilian Supreme Court. 9 For further details, please visit the Brazilian section of our Anti-Bribery and Corruption Review July 2015 (page 30), at http://www.cliffordchance.com/briefings/2015/07/anti-bribery_andcorruptionreview-july2015.html .

United States of America Enforcement Trends stated that DOJ planned to grow its The SEC’s enforcement actions U.S. government authorities continue to FCPA Unit by at least fifty percent by The SEC brought fifteen actions in 2015 bring enforcement actions against adding ten new prosecutors 12 . DOJ has against eleven entities and four individuals, companies for violations of the Foreign also hired a compliance expert to support recovering USD 215 million in the process. Corrupt Practices Act (FCPA) and the the Fraud Section’s FCPA enforcement As in prior years, the SEC continues to overall enforcement climate in the United program. The FBI has also bolstered its charge companies with FCPA violations States remains aggressive. This past year, ranks, establishing three new squads of based not only on violations of the FCPA’s the U.S. Securities and Exchange special agents focusing on FCPA bribery prohibitions, but also in cases Commission (SEC) has continued to enforcement and prosecutions. where only accounting provision violations focus on corporate liability for FCPA are charged (i.e., based on failures to violations, and has expanded its Reflecting DOJ’s approach to increased establish appropriate internal controls). The investigatory efforts, buoyed by an cross-border cooperation, Assistant SEC broke new ground in 2015 and early increase in whistleblower tips from the Attorney General Caldwell stated at the ACI 2016, in terms of the types of entity Dodd-Frank Whistleblower Program. In Conference that “we are determined to use charged, the type of conduct targeted, and September 2015, the U.S. Department of every lawful means available to hold the the method by which the SEC resolved the 13 Justice (DOJ) has emphasized its pursuit perpetrators of corruption to account. ” action. These actions included: of individuals, in addition to corporate Indeed, DOJ cooperated with authorities in actors, including by issuing a new policy Latvia, Sweden, Switzerland, and the The SEC’s first case that only dealt 15 statement on cooperation credit, the United Kingdom in connection with with payments to political parties “Yates Memorandum.” 10 DOJ also resolving at least three of its enforcement Hitachi, Ltd. agreed to pay USD 19 million 14 announced a one-year FCPA actions from this past year. The SEC has to settle alleged violations of the FCPA enforcement pilot program offering similarly increased the extent to which it related to inaccurately recording improper reduced fines for business organizations cooperates with non-U.S. entities in payments to South Africa’s ruling political that voluntarily self-disclose criminal resolving corruption cases, for example party, the African National Congress conduct, fully cooperate with a criminal cooperating with the African Development (ANC). Hitachi sold a 25% stake in investigation, and timely and appropriately Bank in the Hitachi case, with the SEC venture to a front company for the ANC. remediate their compliance failures. 11 leveraging their experience in these cases The sale allowed Hitachi to share in to expedite resolutions. prospective power station contracts in the The U.S. authorities have shown their country, and the front company received ongoing commitment to anti-corruption Prosecutions and USD 5 million in “dividends” based on the enforcement by expanding their enforcement actions profits realized from these contracts. enforcement staffing and cross-border While 2015 was comparatively quiet in Hitachi also paid, and failed to disclose, cooperation. In remarks made at the terms of the total settlement amounts an additional USD 1 million in “success American Conference Institute’s 2015 imposed by the SEC and DOJ, there have fees” that were recorded as consulting International Conference on the Foreign been a number of notable developments in fees without appropriate documentation. Corrupt Practices Act (ACI Conference), U.S. anti-corruption enforcement. The African Development Bank and the Assistant Attorney General Leslie Caldwell South African Financial Services Board

10 Yates Memorandum, Department of Justice, 9 September 2015, available at http://www.justice.gov/dag/file/769036/download . 11 Criminal Division Launches New FCPA Pilot Program , 5 April 2016, available at https://www.justice.gov/opa/blog/criminal-division-launches-new-fcpa-pilot-program (FCPA Pilot Program Announcement). 12 Department of Justice, Assistant Attorney General Leslie R. Caldwell Speaks at American Conference Institute’s 32nd International Conference on the Foreign Corrupt Practices Act , Tuesday, 17 November 2015, available at https://www.justice.gov/opa/speech/assistant-attorney-general-leslie-r-caldwell-delivers-remarks-american-conference . 13 Id . 14 These actions included: United States v. James Rama, and In Re IAP Worldwide Services , IAP Worldwide Services Inc. Resolves Foreign Corrupt Practices Act Investigation , 16 June 2015, available at https://www.justice.gov/opa/pr/iap-worldwide-services-inc-resolves-foreign-corrupt-practices-act-investigation , These examples of cross-border cooperation do not include cooperation garnered through DOJ’s Office of International Affairs, which while cited in DOJ press releases, does not specify the foreign authorities the DOJ cooperated with. Companies should expect that the DOJ will attempt to cooperate with authorities in the appropriate jurisdiction, where appropriate. 15 SEC Press Release 2015-212, SEC Charges Hitachi With FCPA Violations , 28 September 2015, https://www.sec.gov/news/pressrelease/2015-212.html .

assisted the SEC with this investigation, 10 September 2015, Deputy Attorney that involve collusion and much more with the SEC stating that they hoped that General Yates issued the “Yates egregious criminal conduct – thus DOJ will this would be “the first in a series of Memorandum”, which formally stated not participate in every FCPA case given collaborations [with the African DOJ’s focus on prosecuting individuals that discretion. The ultimate impact of the Development Bank].” and predicated the availability of Yates Memorandum on DOJ’s FCPA cooperation credit on the targeted enforcement priorities, if any, may become The SEC’s first Deferred Prosecution company’s timeliness, diligence, and more apparent during the coming year. Agreement (DPA) with an individual in independence in carrying out its an FCPA case 16 investigation 17 . To obtain cooperation FCPA Pilot Program In February 2016, PTC Inc. and its two credit, a company must now identify On 5 April 2016, DOJ announced that it China subsidiaries agreed to pay a individuals involved in or responsible for was conducting an enforcement pilot combined USD 28.2 million as part of a the misconduct at issue, regardless of their program applicable to all FCPA matters non-prosecution agreement with DOJ. position, status or seniority, and must handled by the Fraud Section effective that Related to that agreement, the SEC provide DOJ with all facts relating to that day for a one-year period. DOJ stated that reached a DPA with Mr Yu Kai Yuan, a misconduct. The new policy makes no the “principal goal of this program is to former employee at one of those Chinese provision for compliance with local or promote greater accountability for subsidiaries. The SEC had alleged that Yu foreign data protection or privacy laws. 18 individuals and companies that engage in Kai Yuan caused PTC to violate the FCPA’s Even if DOJ reaches a resolution with a corporate crime by motivating companies internal accounting controls and books and company, DOJ retains the ability to to voluntarily self-disclose FCPA-related records provisions. The SEC agreed to prosecute individuals. Absent extraordinary misconduct, fully cooperate with the Fraud provide a three-year DPA to Mr Yu Kai circumstances, DOJ prosecutors will not Section, and, where appropriate, Yuan as a result of his significant agree to a corporate resolution that remediate flaws in their controls and cooperation with the SEC during its provides immunity for individuals. While the compliance programs.” 20 Where DOJ investigation. In accepting the DPA, Mr Yu Yates Memorandum is a formal policy deems criminal resolution warranted, the Kai Yuan acknowledged full responsibility recognition of the focus on prosecuting pilot program offers businesses reduced for his conduct and agreed to cooperate individuals, it should be seen as a fines for self-disclosure, cooperation, and with the SEC, including by providing crystallization of existing DOJ policy, as remediation “of up to 50 percent below requested documents and other materials, articulated in two September 2014 the low end of the applicable U.S. submitting to interviews and other inquiries, statements by then Principal Deputy Sentencing Guidelines fine range, and and testifying at trial, if requested. Attorney General Marshall Miller and generally [without] appointment of a former Attorney General Eric Holder. 19 monitor.” 21 DOJ may also decline to DOJ’s enforcement stance and the prosecute companies who meet these Yates Memorandum In remarks made during the 2015 ACI three requirements. According to DOJ, the DOJ prosecuted five companies in 2015 Conference, Patrick Stokes, Senior Deputy pilot program “draws a clear distinction under the FCPA, gaining USD 870 million Chief, Fraud Section of DOJ, reflected between credit that you can be eligible for in penalties, while charging another eight upon the effect of the Yates Memorandum, voluntary self-disclosure as opposed to individuals, reflecting DOJ’s increasing stating that there has been a move by DOJ companies that may decide to wait to see focus on pursuing individuals. On to focus on larger scale bribery schemes if they get caught then cooperate.” 22

16 SEC Press Release 2016-29, SEC: Tech Company Bribed Chinese Officials , 16 February, 2016, https://www.sec.gov/news/pressrelease/2016-29.html . 17 See Yates Memorandum, supra note 6. 18 However, statements by at least one DOJ official suggest that DOJ will not penalize a company that is genuinely unable to access the data in question due to local laws. See Comments by Patrick Stokes at the American Conference Institute’s 32nd International Conference on the Foreign Corrupt Practices Act , Tuesday, 17 November 2015. 19 See Remarks by Principal Deputy Assistant Attorney General for the Criminal Division Marshall L. Miller at the Global Investigation Review Program , Wednesday, 17 September 2014, available at https://www.justice.gov/opa/speech/remarks-principal-deputy-assistant-attorney-general-criminal-division-marshall-l-miller ; Attorney General Holder Remarks on Financial Fraud Prosecutions at NYU School of Law , Wednesday, 17 September 2014, available at https://www.justice.gov/opa/speech/attorney-general-holder-remarks-financial-fraud-prosecutions-nyu-school-law . 20 The Fraud Section’s Foreign Corrupt Practices Act Plan and Guidance, 5 April 2016, available at https://www.justice.gov/opa/file/838386/download (FCPA Plan and Guidance). 21 FCPA Pilot Program Announcement . 22 Comments by Andrew Weissman at the FCPA Pilot Program Announcement, quoted by the FCPA Blog, available at http://www.fcpablog.com/blog/2016/4/5/doj- launches-fcpa-self-reporting-pilot-program-with-new-guid.html .

To qualify for additional fine reductions program on that basis; and compliance implementation of agreed remedial under the pilot program beyond credit program auditing. 25 Additionally, DOJ stated measures and the effectiveness of those available under the U.S. Sentencing that they would assess a company’s measures in detecting and preventing Guidelines, DOJ requires that companies remedial efforts with regard to discipline of future wrongdoing. While it is unclear voluntarily self-disclose misconduct “prior employees responsible for the whether her appointment will lead to to an imminent threat of disclosure or misconduct. 26 Highlighting the importance greater numbers of monitorships, DOJ has government investigation”, “within a DOJ places on companies’ voluntary noted that as in the Alstom resolution, reasonably prompt time of becoming self -disclosure, DOJ stated that a company there will be deference given to aware of the offense”, and include all will receive “markedly less” credit under the monitorships that entities have with other relevant facts, including the individuals pilot program if it does not voluntarily authorities so that there are not overlapping involved. 23 DOJ clarified that full self -disclose its FCPA misconduct – at monitorships. 28 cooperation as required under the pilot most, such companies could receive a program included, among other things, 25% reduction off the bottom of the U.S. The role of whistleblowers proactive cooperation; preservation, Sentencing Guidelines fine range. 27 Of increasing significance to both DOJ and collection, and disclosure of relevant the SEC is the Dodd-Frank Whistleblower documents and information; provision of Other Developments Program. While these whistleblower timely updates on the company’s internal As mentioned, DOJ has been increasing its reports are made directly to the SEC—with investigation; provision of facts relevant to FCPA enforcement resources, most reports received both from within the U.S. potential criminal conduct by third parties; notably by appointing Hui Chen as a full and internationally – whistleblowers are making officers and employees available for time compliance expert. Ms Chen’s role encouraged to talk to DOJ as well. In interviews by DOJ; disclosure of all relevant has been described as acting as a “bridge” 2015, there were 3,923 reports made to facts gathered through the company’s between the compliance community and the SEC’s whistleblower hotline – 186 of internal investigation; disclosure of prosecutors, and she will be involved in which were related to FCPA issues, which overseas documents; and provision of both pre- and post-resolution actions. was an increase of 27 FCPA-related translations of foreign language According to the DOJ announcement of complaints from the previous year (there documents. 24 While recognizing that Ms Chen’s hiring, Ms Chen’s duties as were 159 FCPA-related complaints made remediation “can be difficult to ascertain Compliance Counsel include providing in 2014). 29 Moreover, out of the total and highly case specific,” DOJ stated that expert guidance to the DOJ prosecutors number of whistleblower reports made in when assessing a company’s remediation when considering “the enumerated factors 2015, 421 reports were made by foreign efforts under the pilot program it would in the United States Attorneys’ Manual whistleblowers, including from high risk evaluate the company’s establishment of a concerning the prosecution of business jurisdictions. 30 The significance of the culture of compliance; compliance entities”, which includes an evaluation of Dodd-Frank Whistleblower Program to the resources; quality and experience of existing compliance programs at the time U.S. authorities’ FCPA enforcement efforts compliance personnel and their of the conduct giving rise to the criminal should not be understated, as SEC Chief compensation and promotion within the investigation. Additionally, Ms Chen’s role of the Foreign Corrupt Practices Act Unit company; compliance reporting structure; extends to helping the prosecutors develop Kara Brockmeyer called it a “game the independence of the compliance “appropriate benchmarks for evaluating changer” and DOJ Senior Deputy Chief function; whether the company has corporate compliance and remediation Stokes noted that the program’s existence conducted an effective risk assessment measures”, as well as assisting in the post- is “known around the world”. and implemented a tailored compliance resolution assessment of the companies’ BACK TO MAP

23 FCPA Plan and Guidance at 4. 24 FCPA Plan and Guidance at 5-6. 25 FCPA Plan and Guidance at 7. 26 FCPA Plan and Guidance at 8. 27 Id . 28 Comments by Andrew Weissmann and Hui Chen at the American Conference Institute’s 32nd International Conference on the Foreign Corrupt Practices Act , Tuesday, 17 November 2015. 29 U.S. Securities and Exchange Commission, 2015 Annual Report to Congress on the Dodd-Frank Whistleblower Program 21, 28 (2015). 30 Id. at 30.

Australia Changes to legislation EUR 600,000 or USD 675,000) or both. be brought since the introduction of the On 1 March 2016, Australia introduced For a corporation, an offence can result in foreign bribery legislation. new “books and records” provisions into a fine of not more than the greatest of its anti-bribery regime. The Crimes AUD 9 million (approx. EUR 6 million or The first prosecution occurred in 2011 Legislation Amendment (Proceeds of USD 6.75 million), one and a half times when two Australian companies, Crime and Other Measures) Act 2016 the value of the illegitimate benefit Securency International Pty Ltd and Note amends the Criminal Code 1995 (Cth) obtained by the company or five percent Printing Australia Limited, two and creates two new offences. of the annual turnover of the company for manufacturers of banknote and passport the 12 months before the offence was technology, were charged with The “books and records” provisions are committed. Neither offence requires the conspiracy to bribe foreign public officials. loosely based on the U.S. Foreign Corrupt prosecution to prove that a specific There are suppression orders in place in Practices Act 1997 (FCPA) provisions and benefit was given or received, a loss relation to these proceedings. The require a company’s books and records to incurred or that the defendant intended prosecution of several individuals who fairly and accurately reflect the that a particular person received a benefit were senior employees of these company’s transactions. or incurred a loss. companies also continues.

The new provisions make it an offence to Both the Australian Senate Committee on The Australian Federal Police (AFP) said make, alter, destroy or conceal an Legal and Constitutional Affairs (Senate last year that there were 17 active accounting document, or fail to make or Committee) and the Australian Securities investigations into foreign bribery. This is alter an accounting document a person is and Investments Commission (ASIC) an increase from the seven investigations required by law to make or alter, with the supported the introduction of the new announced in 2012. The AFP has also intention that such conduct would offences while other stakeholders have been investigating Leighton Holdings facilitate, conceal or disguise the giving or expressed concern over the lack of any Limited (now and as of 21 April 2015, receiving (by any person) of a benefit that nexus with actual foreign bribery conduct called Cimic (Construction, Infrastructure, is not legitimately due or a loss not raising the possibility that the new Mining and Concessions)) in relation to legitimately incurred. offences could impose criminal liability in foreign bribery allegations since 2011. an unintended and unreasonable range ASIC also commenced an investigation Penalties for individuals who breach these of situations. into Leighton Holdings in 2013 after being provisions include up to ten years criticised for failing to do so. ASIC imprisonment, a fine of up to AUD 1.8 million Other critics have suggested that the chairman Greg Medcraft had initially (approx. EUR 1.2 million or USD 1.35 million) offences do not apply broadly enough and, stated that in foreign bribery or both. For a corporation, an offence can unlike the FCPA provisions, do not impose investigations criminal proceedings are result in a fine not more than the greatest an express obligation to maintain proper the main game and that ASIC would not of AUD 18 million (approx. EUR 12 million accounting records for the purpose of do anything to jeopardise the success of or USD 13.5 million), an amount three demonstrating anti-bribery compliance . criminal actions taken by the AFP. times the value of the illegitimate benefit obtained by the company or ten percent of Prosecutions and OECD Report the company’s turnover for the 12 months enforcement actions The Phase 3 report by the Organisation before the offence was committed. In 2015, two directors of Lifese Pty Ltd, for Economic Co-Operation and an Australian engineering and Development (OECD Report) was It is also now an offence to engage in construction company, were charged published in April 2015 and recognised reckless (rather than intentional) conduct with attempting to bribe Iraqi the improvement Australia has regarding the facilitation, concealment government officials to secure various demonstrated in relation to its increased or disguise of an illegitimate benefit or multi-million dollar contracts. The focus on foreign bribery, however loss. Penalties for reckless conduct are directors have been released on bail identified several areas for improvement. half that of the above offence – for an and are awaiting trial. This is only the individual up to five years imprisonment, second foreign bribery prosecution to The defence for facilitation payments was a fine of AUD 900,000 (approx. one area that the OECD Report

highlighted as requiring attention, given current Australian Senate inquiry into The inquiry is focusing on, amongst other that a number of jurisdictions around the foreign bribery (discussed below), it is things, the anti-bribery measures world (such as the UK) have no possible that facilitation payments will be governing the activities of Australian exemption for facilitation payments in removed as a defence to foreign bribery corporations and individuals and the their anti-bribery regimes. While in the future. extent to which Australia is meeting its government education programmes have obligations under the OECD Convention. discouraged the use of facilitation Senate Inquiry payments the distinction between The Senate Committee is currently The Senate Committee is due to release facilitation payments and bribes still conducting an inquiry into foreign bribery its report on 1 July 2016 with some remains unclear to the Australian public. 31 with submissions to the inquiry having speculation amongst stakeholders in closed on 24 August 2015. Forty Australia that the Senate Inquiry may The OECD Report recommended submissions have been received by the result in various amendments to continuing to raise awareness about the inquiry from various corporate entities, Australia’s anti-bribery regime including difference between a facilitation payment law firms, law societies, academics the abolishment of the facilitation and a bribe and discouraging the use of and individuals. payment defence. small facilitation payments. 32 In light of the BACK TO MAP

31 Http://www.oecd.org/daf/anti-bribery/Australia-Phase-3-Follow-up-Report-ENG.pdf , page 5. 32 Http://www.oecd.org/daf/anti-bribery/Australia-Phase-3-Follow-up-Report-ENG.pdf , page 8.

Hong Kong Changes to Legislation Sun Hung Kai executives after he the city’s public honours system without The new Competition Ordinance, which left office. declaring the architect was the interior came into force in December 2015, designer of the flat. contains provisions to combat the One of the difficulties for the prosecution practice of bid-rigging which has been a had been a lack of evidence to show Tsang has often been criticised for his particular issue in building contracts. In specific acts that Hui had done to favour behaviour while in office. He admitted July 2015, the Independent Commission Kwok. The appeal judges dismissed the using yachts and jets for private trips Against Corruption (ICAC) brought arguments: “Corrupted conduct of a even though he later said he had paid charges against a former proprietor of an public officer as senior as chief secretary commercial rates for their hire. He engineering company in connection with would no doubt be committed secretly survived a no-confidence vote towards a HKD 45 million (approximately and insidiously. The corrupted conduct the end of his term in office in 2012, the EUR 5.1 million or USD 5.8 million) could simply take the form of an first since the resumption of sovereignty bid -rigging scam. The accused admitted approving nod or a knowing wink … His in 1997. in court he had worked with others to heart and soul were with SHKP and he secure a renovation contract at an would have felt obliged to favour SHKP Tsang was arrested on 5 October 2015 inflated price. Under the new legislation, when its interest conflicted with that of following a long investigation by the the Competition Commission can obtain the people of Hong Kong.” ICAC. Critics queried the length of time it search warrants and seize had taken to arrest him. correspondence and other documents Kwok and Hui have applied to the Court of that may lead to the discovery of a cartel. Final Appeal for leave to appeal to Hong Tsang’s arrest highlighted what a former Whistleblowers are also promised Kong’s highest court (as at March 2016). judge has described as a “fundamental leniency if they co-operate with the defect” in the city’s main anti-corruption Commission in its investigations. Tsang pleads not guilty to legislation, the Prevention of Bribery misconduct in office Ordinance (POBO). POBO contains clear Prosecutions and Former Chief Executive Donald Tsang rules against gifts but they do not apply enforcement actions will stand trial in January 2017 in to the Chief Executive. Under section 3, relation to two counts of misconduct in soliciting and accepting an advantage Kwok and Hui lose bribery appeal public office. The trial is expected to last without the permission of the Chief Former Sun Hung Kai Properties (SHKP) for 20 days and involve more than Executive is a crime, but the giver of the co-chairman Thomas Kwok and Rafael 25 witnesses. Misconduct in public permission is not covered by the Hui, the former Chief Secretary, who had office carries a maximum penalty of wording. The Chief Executive is also been jailed for five and seven and a half seven years’ imprisonment. exempt from section 8, which states that years respectively for bribery offences, anyone who offers an advantage to a lost their appeals in February 2016. Tsang is the highest-ranking official ever to “prescribed officer” while having dealings Mr Justice Wally Yeung Chun-kuen wrote be charged for corruption in Hong Kong. with the government is committing an that it was a “sad day” for the city “if He has been accused of failing to disclose offence. Despite repeated attempts to senior public officers, such as Hui, could his interests in a three-storey penthouse in rectify the situation, the Government has accept large sums of money and agreed Shenzhen between 2010 and 2012, when still to commit to a timetable to address to be favourably disposed towards their he was the city’s Chief Executive. the issue. ‘paymasters’ in their public offices with impunity because their money or other The first charge was that he failed to Big rise in corruption advantages were paid before they declare his rental of the apartment from complaints assumed or after they left public office”. a businessman to policymakers who Hui took HKD 8.5 million (approximately In January 2016, the ICAC reported a rise were considering his applications for of nearly 20 per cent in corruption EUR 960,000 or USD 1.1 million) from broadcast licences. Kwok shortly before he became Chief complaints, excluding those relating to district council and village elections. The Secretary in 2005 and HKD 11.2 million The second was that Tsang had rise follows significant falls in complaints (approximately EUR 1.3 million or proposed an architect for an award under USD 1.4 million) from two former in the three previous years. An ICAC

survey of public perceptions of corruption because of insufficient evidence or the penalty to five years’ imprisonment revealed that while corruption was inaccurate information. Peh also revealed and a fine of HKD 100,000 expected to worsen in 2015, willingness a trend for people to lodge complaints (approximately EUR 11,300 or to report suspected corruption was the out of malice. It is an offence under USD 12,900), saying that the ICAC had a lowest since the surveys began in 2011. POBO to make false reports or to make huge workload and could not afford to be an unauthorised disclosure that someone distracted by unscrupulous people ICAC Commissioner Simon Peh told is being investigated. The offence is pursuing their own private agendas. lawmakers in January 2016 that although punishable with a year’s imprisonment or the ICAC received 2000 complaints in a fine of HKD 20,000 (approximately BACK TO MAP 2015, only 200 people were prosecuted. EUR 2,260 or USD 2,580). Peh He said that most cases foundered recommended a significant increase in

Indonesia* Changes to legislation high profile corruption cases against while his associate was sentenced to two The main government agency that judges, lawyers, high-ranking government years in prison and ordered to pay fines enforces Indonesian Anti-Corruption Law officials, and members of the House of in the amount of approximately is the Corruption Eradication Commission Representatives which have been USD 11,250. The Chief Judge was (Komisi Pemberantasan Tindak Pidana brought to court. From 2004 to early sentenced to two years in prison and Korupsi, commonly known as the KPK), 2016, there have been approximately 330 ordered to pay fines in the amount of which was established under the 2002 corruption cases decided. Many of the approximately USD 15,000, while the Corruption Eradication Commission Law investigations and court proceedings Governor and his wife received prison (the KPK Law). The KPK coordinates with have caught the attention of the media sentences of three years and two years other agencies in the eradication of and the public. and 6 months respectively. bribery and corruption, conducts investigations, prosecutes bribery In early 2015, the former Chief Justice of International co-operation and intelligence offences, undertakes action to prevent the Indonesian Constitutional Court sharing between agencies, including the bribery, and monitors governance. (which had previously been heralded as KPK, has also brought results. The UK one of Indonesia’s most credible Serious Fraud Office (SFO) had been To carry out its enforcement duties, the institutions) was sentenced to life in working closely with the KPK and had KPK is granted certain powers to prison for corruption after he was caught shared evidence from a UK cooperating undertake specific measures, including, red-handed by the KPK receiving bribes witness to help resolve the Innospec among others, using wire-tapping, to issue favourable verdicts in election bribery case. Innospec Limited pleaded instructing relevant institutions to impose disputes filed by local government heads. guilty in a UK court to conspiracy to bribe travel bans and ordering banks or other Related to this case, the former Banten in relation to delaying the introduction of financial institutions to block accounts Governor was found guilty of bribing the lead-free petrol in Indonesia (thereby potentially holding the proceeds of Former Chief Justice. She was sentenced protecting the sale of its fuel additives). corrupt acts. to seven years in prison and fined This global case involved various IDR 200 million (approximately countries: the UK, the US, Iraq and The KPK Law is currently being USD 15,000). Indonesia. In Indonesia in late 2015, the amended, with the Government having former director of state-owned oil and designated the Bill amending the KPK In mid 2015, the KPK caught an gas giant Pertamina was found guilty of Law as a priority Bill for 2016. However, associate of a prominent litigation law accepting bribes from an Indonesian despite being on the priority list, the firm, red-handed bribing three judges and company, which acted for Innospec. The Indonesian President has postponed a clerk from the Medan State court sentenced him to five years in discussions on the amendment of the Administrative Court on behalf of the law prison. Earlier in 2015, the court also KPK Law due to sections of the public, firm’s clients, the Governor of North sentenced the former owner of the KPK and factions of the House of Sumatera and his wife. The brokered Innospec’s intermediary to three years in Representatives raising concerns in bribe was intended to secure a prison for paying the bribes. respect of certain proposed favourable decision in respect of the amendments, including limiting KPK’s Governor’s lawsuit against the North Developments authority to conduct surveillance or Sumatera Prosecutor’s Office regarding As highlighted earlier, the KPK is the main wiretapping during the preliminary phase the issuance of an investigation order for government agency that enforces the of investigations. the misuse of social aid funds by the Anti-Corruption Law. The Indonesian Governor’s office. Following a KPK Police and the Public Prosecutor’s Office Prosecutions and investigation, the managing partner of the are the principal State agencies that enforcement actions prominent litigation law firm was prosecute any crime against Indonesian sentenced to five years and six months in The KPK has been highly proactive in law, including the Anti-Corruption Law. prison and ordered to pay fines in the combating corruption, and this is There was high tension between the KPK amount of approximately USD 23,000 demonstrated by the large number of and the Police in early 2015, which

* Contributed by Linda Widyati & Partners, our associated firm in Indonesia.

started when the KPK decided to name laws provide for the liability of international co-operation and intelligence the (then) only candidate for National corporations. In a recent move to sharing, including with the KPK, as well Police Chief a bribery suspect. In a move prosecute corporations, the KPK and the as to improvements in the country’s which the public saw as retaliation, the Deputy Attorney General of Special bureaucracy and public services, Police charged two KPK commissioners Crimes have been invited by the Supreme including the E-Government and with offences. This resulted in a standoff Court to discuss the issuance of a procurement transparency initiatives and between the two agencies that is still Supreme Court Circular Letter containing the recent launch of online web and app ongoing, and which has threatened the guidelines on investigating and platforms through which the public can effectiveness of the KPK. In late 2015, prosecuting corporations. directly file a report on any government the House of Representatives appointed services related issue, including five new KPK commissioners, who were Trends facilitation payment requests. subsequently “sworn-in” by the President. Indonesia’s Transparency International Corruption Perceptions Index ranking for These trends and developments offer To date, prosecutions have been primarily 2015 improved to 88 (from 107 in the hope and greater certainty in the fight focused on individuals, and not previous year) out of 168 countries. against corruption in Indonesia. corporations, even though the Anti- Indonesia’s move up the rankings can be Corruption Law and certain other specific credited to greater national and BACK TO MAP

Japan

There have been no significant developments further to those reported in the previous edition of this review (July 2015). 33

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33 For further details, please visit the Japanese section of our Anti-Bribery and Corruption Review July 2015 (page 39), at http://www.cliffordchance.com/briefings/2015/07/anti-bribery_andcorruptionreview-july2015.html .

South Korea

There have been no significant developments further to those reported in the previous edition of this review (July 2015). 34

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34 For further details, please visit the South Korean section of our Anti-Bribery and Corruption Review July 2015 (page 40), at http://www.cliffordchance.com/briefings/2015/07/anti-bribery_andcorruptionreview-july2015.html .

People’s Republic of China Changes to legislation provision may lend more leverage to the This provision is intended to resolve a long- The Ninth Amendment to the authorities in negotiation. existing problem in practice that bribe Criminal Law payers were prosecuted or penalized far On 29 August 2015, the National The 9th amendment added a new less harshly than were the bribe recipients. People’s Congress of China promulgated sub -provision to Article 390 of the This disparity was based on an assumption the 9th amendment to the Criminal Law. Criminal Law (offence of individual bribing that a bribe payer is often a reluctant Included in the amendment are changes government officials). While “influential participant in the bribery transaction, but in to the bribery-related provisions to persons” who receive bribes have been reality, bribe givers and payers are often expand the criminal fines applicable to subject to prosecution since 2009, the interdependent on each other. individuals, to criminalise the act of giving new sub-provision targets those who give bribes to “influential persons,” and to bribes to a person who may exert Draft Amendments to the Anti-Unfair restrict the availability of penalty influence on a current or former Competition Law exemption as leniency for bribe-givers. government official. Such “influential On 25 February 2016, China released persons” include any close relative or any draft amendments to its Anti-Unfair Prior to the 9th amendment, criminal fines person who is closely associated with a Competition Law (the AUCL), which is for giving bribes were primarily applicable current or former government official. supposed to be the first amendment to to entity offenders, whilst those applicable the AUCL since its promulgation in to individual offenders were relatively This amendment is an effort to further 1993. As regards commercial bribery, limited. The 9th amendment expanded the prevent government officials from the draft amendments have made the application of criminal monetary fines to the receiving bribes through their “inner following changes: circle,” whether during or after their following four types of individual offenders: n The definition of bribery is expanded. service in the government. Corporate While the current AUCL prohibits n any individual who commits the crime compliance due diligence should thus giving or accepting bribes, it does not of giving bribes to anyone (non- broaden payee background checks to clearly prohibit promising to offer or government officials, government “red flag” not only current and former give bribes. The draft amendments officials, “influential persons” or entities); government officials, but also any of their explicitly provide that promising to close associates to minimize risks of n any individual who commits the crime offer or give bribes is also prohibited. being caught for giving bribes to friends of brokering bribery; In addition, the draft amendments and families of government officials. n any person-in-charge of an entity that expand the scope of recipients in commercial bribery. Under the current commits the crime of giving bribes; and Prior to the 9th amendment, bribe payers AUCL, bribery is defined as giving n any person who is directly responsible might be eligible for leniency in the form of bribes to the counter party in a for bribery committed by an entity. reduced or exempted penalties if they transaction. The draft amendments voluntarily confessed their crimes before would extend the definition to cover As the calculation of criminal fines is not being prosecuted. Now, whilst pre- giving bribes to third parties who have specifically set forth under the Criminal prosecution confession may still lead to influence on a transaction. Law, local courts have wide discretion. less serious penalties, it alone is insufficient Therefore, local Chinese courts may to exempt the bribe payer completely from n The draft amendments provide for impose unpredictable and potentially very penalties. In addition to pre-prosecution employers’ vicarious liability, adding a high criminal fines on individual bribe confession, at least one of the following provision that an employer shall be payers, especially directors and senior circumstances must exist in order to qualify liable for bribery undertaken by its managers of multinationals, as illustrated the bribe payers for exemption from employees for the purpose of seeking by a number of astronomically high penalties: (i) the offence is relatively minor, business opportunities or competitive criminal fines imposed in 2014. The (ii) the bribe payer has provided crucial advantages for the employer. As an change may further complicate any information leading to successful exception to this principle, an interaction with the authorities during an investigation of others in a significantly employer is not liable for its anti-bribery investigation since the new important case, or (iii) the bribe payer employees’ accepting or receiving otherwise makes significant contributions.

bribes which are against the 2015 and 2016. After the prosecution of became an Alibaba executive). Tencent employer’s interest. GSK, the headline enforcement actions stated in a press release that it first seem to have shifted to primarily target uncovered improper practices by its n The draft amendments contain an state-owned enterprises (SOEs). In March online video department employees accounting provision. A person or and July 2015, the central Commission through an internal investigation in 2014 entity will be held liable for providing for Discipline of the Communist Party of and reported the matter to local an economic interest if there has China (CCDI) conducted two rounds of authorities. These individuals are said to been inaccurate recording of such anti-corruption inspections and for each have accepted kickbacks from online interest in the books or round identified 26 central SOEs across video providers in the amount of millions accounting documents. key industries and sectors under of RMB. n The draft amendments potentially investigation. In October 2015, following increase the penalty for commercial China’s stock market meltdown, the The anti-corruption crackdown has also bribery. For violation of the CCDI announced plans to inspect all taken on an international dimension, with commercial bribery provision, the major government agencies and SOEs in China’s strengthened co-operation with current AUCL provides for an the financial services sector. These other countries to target corrupt officials administrative fine of more than include the People’s Bank of China, who have fled the country. Following the RMB 10,000 (approximately China’s stock exchanges, China’s launch of the “Fox Hunt” project in 2014 EUR 1,350 or USD 1,550) and less banking, security and insurance to track down and bring home fugitives than RMB 200,000 (approximately regulatory commissions and other suspected of financial crime, the Chinese EUR 27,000 or USD 31,000) or state -owned banks and insurers, authorities widened the scope of Fox confiscation of illegal proceeds. Under totalling 31 organizations. Hunt by launching “Skynet”. The “Skynet” the draft amendments, the fine should is an effort to cut off corrupt officials’ be of more than 10 percent and less The anti-corruption drive has also financial channels by targeting than 30 percent of illegally obtained reached high-profile China-based underground banks and offshore business revenue. companies. In June 2015, the two largest companies used for money laundering. Chinese internet companies, Tencent The draft amendments are currently open Holdings Ltd and Alibaba Group Holding BACK TO MAP to public comments. Ltd, were implicated in a bribery investigation by Chinese regulators. Prosecutions and Shortly afterwards, the Public Security enforcement actions Bureau detained several former The anti-corruption crackdown in China employees of Tencent (including one which started in 2012 has continued into former Tencent employee who later

Singapore* Changes to legislation the Singapore High Court affirmed former president of the National There have been no relevant that indirect bribery of public officials Trades Union Congress, for criminal legislative changes since the last review (i.e. through middlemen) warrants breach of trust and the investment of in July 2015. custodial sentences, because of the union funds without ministerial erosion this causes to public approval. Phey absconded in 1980 Prosecutions and confidence in government. In this and surrendered himself at the enforcement actions case, the defendant was sentenced Singapore Embassy in Bangkok in to 12 weeks’ imprisonment, despite June 2015. He has been sentenced Case law since July 2015 sends a strong not knowing the identity of the public to 60 months’ imprisonment. signal for a zero tolerance policy in official in question or the terms on relation to corruption and other instances n In late 2015, four ex-Singapore Power which that public official was being of corporate and fiduciary misconduct: employees were charged with persuaded (by the middleman) to act. corruption for accepting bribes of n In the high-profile case of Public n In Public Prosecutor v Hong Meng between USD 50 to USD 450 in the Prosecutor v Lam Leng Huat and Choon [2015] SGDC 246, the course of their employment. others [2015] SGDC 326, following a Singapore courts demonstrated the three-year long trial, the Singapore tough stance they adopt in courts found six leaders of a mega- Cooperation with other sentencing persons guilty of church (City Harvest Church) guilty of governments corruption in the private sector. engaging in a conspiracy to commit In December 2015, a Singaporean who Despite the defendant being a criminal breaches of trust by was formerly a lead contract specialist of first -time offender who had paid conducting sham investments and the United States Navy was charged with bribes of small sums (e.g. USD 50), round-tripping transactions. They accepting bribes from the Chief Executive he was sentenced to 14 months’ were found guilty notwithstanding Officer of a ship support contractor, in imprisonment due to the expansive absence of evidence of wrongful gain exchange for providing him with non- nature of the bribes he gave and their belief that they were acting public U.S. Navy information. These (number of bribes, number of in the best interests of the church and bribes appear to have been part of a payees, duration). in obedience to their trusted pastor. major corruption scandal within the U.S. They were sentenced to jail terms Navy. The Corrupt Practices Investigation Pending prosecutions ranging from 21 months to eight Bureau (the CPIB) commented that it There are a number of high-profile years. The judge regarded this case worked closely with U.S. authorities to prosecutions that demonstrate the as “a vivid illustration of wilful conduct the joint investigation that Singapore government’s firm and active blindness”. Further, the Commissioner resulted in the prosecution, and noted approach against corruption in both the of Charities has resumed regulatory that Singapore has in place “a framework private and public sectors. action for the removal of the for international cooperation with defendants from their roles as n Seven Singapore Technologies Marine overseas legal, law enforcement and executive members of the church. Limited (ST Marine) senior executives regulatory authorities”, with whom the While this case did not concern have been charged with the CPIB would “continue to work closely”. charges under the Prevention of falsification of entertainment expenses Corruption Act (Cap. 241), it is widely and the giving of bribes worth millions Global assessment acknowledged in the international of USD relating to the grant of ship In the Rule of Law 2015 Index compiled press as one of the biggest corruption repair contracts. 35 by the World Justice Project, Singapore scandals in Singapore. was ranked 9th overall worldwide, rising n Of significant public interest is the by one spot from 2014. Singapore was n In Song Meng Choon Andrew v prosecution of Phey Yew Kok, a ranked 1st under “regulatory Public Prosecutor [2015] SGHC 180, former Member of Parliament and

* Contributed by Cavenagh Law LLP, our Formal Law Alliance partner in Singapore 35 ST Marine is a subsidiary of ST Engineering, one of the largest companies listed on the Singapore Exchange, with a paid-up capital of about USD 9 million (as at 2 March 2015). Its majority shareholder is Temasek Holdings, an investment company of the Singapore government.

enforcement”, 3rd under “absence of corruption”, “criminal justice” and “civil justice”, and 2nd in Asia Pacific overall.

The Corruption Perceptions Index 2015 compiled by Transparency International gave Singapore a score of 85 (out of 100) for the perceived levels of public sector corruption, placing it 8th in the world rankings. While Singapore fell one spot from 2014, it improved its score of 84 from 2014.

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Thailand

There have been no significant developments further to those reported in the previous edition of this review (July 2015). 36

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36 For further details, please visit the Thai section of our Anti-Bribery and Corruption Review July 2015 (pages 44 et seq. ), at http://www.cliffordchance.com/briefings/2015/07/anti-bribery_andcorruptionreview-july2015.html .

Notes

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