DIRECTORATE FOR FINANCIAL AND ENTERPRISE AFFAIRS NORWAY: PHASE 2 REPORT ON THE APPLICATION OF THE CONVENTION ON COMBATING BRIBERY OF FOREIGN PUBLIC OFFICIALS IN INTERNATIONAL BUSINESS TRANSACTIONS AND THE 1997 RECOMMENDATION ON COMBATING BRIBERY IN INTERNATIONAL BUSINESS TRANSACTIONS This report was approved and adopted by the Working Group on Bribery in International Business Transactions (CIME) on 12 April 2004. 1 TABLE OF CONTENTS INTRODUCTION....................................................................................................................................... 4 a) Economic framework.................................................................................................................. 4 b) Corruption awareness.................................................................................................................. 5 c) Methodology and structure of the report..................................................................................... 6 A. PREVENTING AND DETECTING THE OFFENCE OF BRIBERY OF FOREIGN PUBLIC OFFICIALS................................................................................................................................................. 7 1. Prevention ................................................................................................................................... 7 a) In the administration ................................................................................................................... 7 i) Generally................................................................................................................................. 7 ii) Development aid and export credits ....................................................................................... 9 b) In the private sector................................................................................................................... 10 2. Detection................................................................................................................................... 12 a) In public administrations........................................................................................................... 13 b) By tax authorities...................................................................................................................... 15 c) In relation to money laundering cases....................................................................................... 16 d) Accounting and auditing professionals..................................................................................... 18 e) Protection of whistleblowers..................................................................................................... 20 B. PROSECUTING AND SANCTIONING THE OFFENCE OF BRIBERY OF FOREIGN PUBLIC OFFICIALS AND RELATED BREACHES OF THE LAW ................................................................... 22 1. The 2003 amendments and the introduction of two new offences of bribery of a foreign public official 23 a). The role of the preparatory works............................................................................................. 24 b) Elements not affected by the 2003 amendments....................................................................... 25 i) The intentional element of the offence ................................................................................. 25 ii) Whether directly or through intermediaries.......................................................................... 25 iii) For that official or for a third party....................................................................................... 26 iv) In order to retain business or other improper advantage in the conduct of international business .......................................................................................................................................... 26 c) Elements affected by the 2003 amendments............................................................................. 27 i) To offer, promise or give ...................................................................................................... 27 ii) Any undue pecuniary or other advantage ............................................................................. 28 iii) Definition of foreign public officials .................................................................................... 29 iv) Act or omission sought from the foreign public official....................................................... 30 d) The aggravated bribery offence ................................................................................................ 31 2 2. The liability of enterprises with regard to the anti-bribery legislation and to Norwegian law in general .................................................................................................................................................. 32 3. Investigating and prosecuting the offence ................................................................................ 35 a) Law enforcement agencies........................................................................................................35 b) Means of investigation.............................................................................................................. 37 i) Investigating tools................................................................................................................. 37 ii) Witness protection ................................................................................................................ 38 iii) International co-operation..................................................................................................... 39 c) Prosecution................................................................................................................................ 40 i) Prosecutorial discretion......................................................................................................... 40 ii) An extended statute of limitations ........................................................................................ 41 iii) Jurisdiction............................................................................................................................ 43 4. Sanctioning the offence of active bribery of foreign public officials ....................................... 44 a) Applicable sanctions ................................................................................................................. 45 Availability of confiscation ............................................................................................................ 46 b) The penalties actually imposed by courts ................................................................................. 47 C. RECOMMENDATIONS OF THE WORKING GROUP AND FOLLOW-UP ............................ 49 ANNEX 1 Comparative table of the new and previous provisions against briberyof foreign public officials52 ANNEX 2 Composition of the examining team........................................................................................... 54 3 INTRODUCTION 1. The adoption by Norway of amendments to the Penal Code in 1998 to include the offence of active bribery of foreign public servants and servants of public international organisations (section 128) was a new step in Norway’s continued commitment to combat more effectively bribery in international business transactions. As part of Norway’s on-going process of reforms in this area, including the signing of the Council of Europe Criminal Law Convention on Corruption in 1999, amendments to Norway’s anti- bribery legislation were subsequently introduced by Act №79 of 4 July 2003, which resulted in the complete reform of the existing set of provisions dealing with the offence of corruption at large, and their replacement by two new provisions criminalising active and passive bribery of domestic and foreign public officials, as well as private-to-private corruption in Norway and abroad (sections 276a for the basic offence and 276b for the aggravated offence) and one provision introducing the offence of trading in influence (section 276c) (see part B for developments). a) Economic framework 2. Norway is a country with important natural resources such as oil and gas, hydropower, fish and timber. Despite intensive industrial and technological developments, these natural resources continue to be a main backbone of the productive structure of the economy and account for the bulk of Norwegian exports: Norway is one of the world’s largest fish exporter, with 95 per cent of its production exported, and is the world third largest net exporter of oil and supplies approximately 10 per cent of natural gas consumption in Western Europe. Norway’s trade flows are and have traditionally been dominated by trade with countries in the European Union (EU): roughly three quarters of Norwegian exports go the EU, and around 70 per cent of the stock of Norwegian outward direct investment is in EU countries.1 In this respect, Norway’s participation in the European Economic Area (EEA) Agreement between the countries of the European Free Trade Association (Iceland, Lichtenstein, and Norway) and the EU plays an important role. Under this agreement, Norway, along with other EFTA states, is an integral part of the EU’s internal market (with the exception of fisheries and agriculture). Additionally, the EEA Agreement requires Norway to adopt all EU legislation considered relevant to the Agreement.