Anti-Bribery and Corruption Review - May 2016 - Clifford ...

Anti-Bribery and Corruption ReviewMay 2016

Global contacts ...................................................... 3

World Map ............................................................... 4

Foreword ................................................................. 6

Europe, the Middle East and Africa ...................... 7

Belgium ............................................................... 8

Czech Republic ................................................... 9

France ................................................................. 10

Germany .............................................................. 12

Italy ...................................................................... 15

Luxembourg ........................................................ 16

Poland ................................................................. 17

Romania .............................................................. 18

Russia .................................................................. 20

Slovak Republic ................................................... 22

Spain ................................................................... 24

The Netherlands .................................................. 25

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

cont

ents

3Anti-Bribery and Corruption ReviewMay 2016

Global contactsEurope, the Middle East and AfricaBelgiumSébastien Ryelandt +32 2533 5988Dorothée Vermeiren +32 2533 5063

Czech RepublicJindřich Arabasz +420 22255 5202

FranceThomas Baudesson +33 14405 5443Charles-Henri Boeringer +33 14405 2464Arthur Millerand +33 14405 5446

GermanyHeiner Hugger +49 697199 1283David Pasewaldt +49 697199 1453Jochen Pörtge +49 2114355 5459

ItalyAntonio Golino +39 028063 4509

LuxembourgAlbert Moro +352 485050 204Claude Eischen +352 485050 268

MoroccoMustapha Mourahib +212 52013 2081

PolandMarcin Cieminski +48 22429 9515Pawel Pogorzelski +48 22429 9508

RomaniaDaniel Badea +40 216666 101Bianca Alecu +40 216666 127

RussiaTimur Aitkulov +7 495725 6415Olga Semushina +7 495725 6418

Saudi ArabiaKhalid Al-Abdulkareem +966 11481 9740

Slovak RepublicAlex Cook +420 22255 5212Stanislav Holec +420 22255 5251

SpainBernardo Del Rosal +34 91590 7566Sonia Trendafilova +34 91590 4172

The NetherlandsJeroen Ouwehand +31 20711 9130Simone Peek +31 20711 9182

Turkey*Mete Yegin +90 212339 0012Zeynep Düzgören +90 212339 0009Jared Grubb +90 212339 0007

Ukraine – Redcliffe PartnersSergiy Gryshko +38 044 390 22 19

United Arab EmiratesJames Abbott +971 4503 2608Matthew Shanahan +971 4503 2723

United KingdomRoger Best +44 20 7006 1640Luke Tolaini +44 20 7006 4666Patricia Barratt +44 20 7006 8853Judith Seddon +44 20 7006 4820

The AmericasBrazil**Anthony Oldfield +55 113019 6010Patrick Jackson +55 113019 6017

United States of AmericaDavid DiBari +1 202 912 5098Megan Gordon +1 202 912 5021Polly Snyder +1 202 912 5025

Asia PacificAustraliaDiana Chang +61 28922 8003Jenni Hill +61 89262 5582Kirsten Scott +61 89262 5517Kate Godhard +61 28922 8021

Hong KongWendy Wysong +852 2826 3460Richard Sharpe +852 2826 2427

Indonesia***Linda Widyati +62 21 2988 8301Gideon Manullang +62 21 2988 8348

JapanMichelle Mizutani +81 35561 6646Masayuki Okamoto +81 35561 6665

South KoreaThomas Walsh +822 6353 8110Dan Park +822 6353 8116

People’s Republic of ChinaWendy Wysong +852 2826 3460Lei Shi +852 2826 3547Min He +861 0653 52298

Singapore****Kabir Singh +65 6410 2273Shobna Chandran +65 6410 2281Andrew Foo +65 6506 2790

ThailandAndrew Matthews +66 2401 8822Vipavee Kaosala +66 2401 8829

* 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-operationagreement 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 orconstrued 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 ReviewMay 2016


UNITEDKINGDOM

THE NETHERLANDS

GERMANY

CZECHREPUBLIC

FRANCE

SPAIN

IT

LUXEMBOURG

UNITED STATESOF AMERICA

BRAZIL

World MapPlease click on the country name on the interactive mapbelow to take you directly to the relevant chapter.

BELGIUM



SLOVAKREPUBLIC

POLAND

ROMANIA

UKRAINE

TALY

TURKEY

UNITED ARABEMIRATES

AUSTRALIA

THAILAND

JAPAN

HONG KONG

PEOPLE’S REPUBLICOF CHINA

RUSSIA

SINGAPORE

INDONESIA

SOUTH KOREA


Foreword


Prosecutions for bribery and corruption continue to attract media headlines around theworld and, in response, international companies continue to review what they have todo to address the risks to their business, and to their reputation. Fundamental to thisis staying on top of relevant legislative developments and enforcement trends in thecountries in which they operate. Some national authorities have even highlighted thisinformation gathering as a regulatory requirement for directors and senior corporateofficers. This review looks at recent developments in some of the jurisdictions aroundthe world where we have offices, focusing particularly on changes to legislation, bothrecent and proposed, and on prosecutions and enforcement trends. We intend toproduce updates at regular intervals.

Patricia Barratt and David Pasewaldt, Editors

Europe, the Middle East and Africa

Changes to legislationA draft Bill is pending before Parliamentwhich is designed to amend the currentBelgian legal principle of mutuallyexclusive liability of natural and legalpersons, further to a recommendation bythe OECD. The Belgian governmentargued that the principle is not fullyexclusive, as both a natural person and alegal entity can be liable where theindividual commits an offence “knowinglyand willingly”, which would be the case inrelation to a bribery offence, where wilfulmisconduct is already a necessaryelement. However, the abolition of theprinciple has been approved by theCollege of Prosecutors and the Bill hasbeen submitted to the Council of Statefor an opinion. The timing of thisproposed change remains unclear.

It is also expected that a Bill will bebrought before Parliament in October toincrease the sanctions for acts offoreign bribery.

Prosecutions andenforcement actionsIn early 2016, the Court of Appeal ofBrussels issued a judgement confirmingthe convictions of 14 public officials,35 contractors and 24 companiesinvolved in a high profile corruption caserelating to contracts tendered by theBelgian Buildings Agency. A number ofother individuals involved in the criminalinvestigation had previously beendischarged following expiry of thelimitation period. The sanctions imposedin the proceedings in first instance hadbeen relatively light in view of the lengthyinvestigation. The Court of Appealincreased the sanctions and pronounced(suspended) prison sentences of up tothree years and a EUR 110,000 fine forone party involved. A limited amount of

EUR 100,000 was confiscated asinstrument of the bribery. The totalamount of bribes leading up to theseconvictions was estimated atEUR 380,135.85 and the value of thecontracts awarded at EUR 16,633,306.

Apart from this case, there have been fewenforcement cases in Belgium, and thereis very little case law. According tostatistics published by the Belgian Servicefor Criminal Policy, there were twoconvictions for private corruption in 2013,and 33 convictions for public bribery.No distinction is made between foreignbribery and domestic bribery. In addition,the records of the Belgian FinancialIntelligence Processing Unit, whichprocesses suspicious financialtransactions, show that it reported12 cases of embezzlement and corruptionto the judicial authorities in 2014, for anamount of EUR 8.9 million in total.

Other developmentsIn a follow-up report in February 2016,the OECD made a number of criticisms ofBelgium’s anti-bribery measures. On theone hand, the report welcomed Belgianefforts to remind the prosecution andenforcement authorities of their reportingobligations in cases of suspected foreignbribery, as well as attempts to raiseawareness amongst its administration inrelation to offences of bribery. However,it found that Belgium had not brought itslegal framework into compliance with theOECD Convention, by not clarifying theattribution of the intentional element ofthe offence of foreign bribery. It alsofound that the time limitation periods(and rules for their suspension) do notprovide sufficient time for an effectiveinvestigation and prosecution.

The OECD report also found that Belgiumhad not dedicated adequate human andfinancial resources to cases involvingbribery, and that Belgian authorities wereinsufficiently proactive in cases whereinformation on foreign bribery is revealedin the context of internationalcooperation. It felt that accountingoffences were not being prosecutedvigorously enough, and criticised the factthat external auditors are not required toreport such offences.

The report criticized the adequacy ofsanctions for foreign bribery cases, inparticular, non-pecuniary sanctions,and found that law enforcement authoritiesand prosecutors do not routinely considerconfiscation measures with respect to theinstrument and the proceeds of bribery.Lastly, the OECD deplored the absence ofa sufficient (and sufficiently accessible)record in respect of criminal convictions forforeign bribery, or of settlements.The OECD Working Group requestedBelgium to present a written report inOctober 2016 on implementation of itsoutstanding recommendations.

At the end of 2015, TransparencyInternational published a study on‘Transparency in Reporting onAnti-Corruption’ amongst Belgian listedcompanies. The main findings are thatlarge multinationals are twice astransparent in terms of theiranti-corruption policies as smallercompanies. Even though the performanceof large multinationals is much improvedsince 2012, they still underperformcompared to the international average(50% compared with 70%). The studyalso found that Belgian companies onaverage do not communicate on theirperformance per country (7%).

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Belgium




Changes to legislationA number of measures aimed atenhancing transparency or otherwisecombating corruption have recently beenproposed or passed. In June 2015, theGovernment approved a draft OnlineSales Reporting Act, which wouldintroduce an obligation on all sellers andservice providers (with some exceptions)to report information about salesgenerating cash revenues to the localfinancial administration body. Despitestrong resistance from opposition parties,the draft Act was approved by theChamber of Deputies and is currentlybeing discussed in the Senate.

In October 2015, the Governmentapproved a draft of an amendment to thePublic Procurement Act. This amendmentaims to relax certain strict rules of thecurrent legislation and to make it easier toblacklist contractors for misconduct.The amendment has been approved bythe Chamber of Deputies and is currentlybeing discussed in the Senate.

In September 2015, the Parliamentapproved the Contract Register Actwhich will therefore become effective in2017. According to this Act, everycontract concluded by a public institutionworth more than EUR 2,000 must bepublished. This measure is perceived as astrong anti-corruption weapon by manyNGOs. However, its real impact isquestionable, because a breach of thepublication duty will not invalidate therespective contract.

Prosecutions andenforcement actionsIn March 2016, OLAF started a formalinvestigation of a Czech company closeto the Minister of Finance on the groundsof European subsidies fraud. The Ministerof Finance has denied any connection tothis company and all related accusations.

In February 2016, the director of theEnergy Regulatory Office was sentencedto eight years in prison. She wascharged with professional misconduct inrelation to issuing licences tounauthorised solar plants. The verdicthas not yet taken effect.

In March 2015, a former head of elitePrague hospital “Na Homolce” andseveral others were accused ofcorruption and bribery. The criminalproceedings are still pending before thecourt and all those charged have beenreleased on bail.

Criminal proceedings are still pendingbefore the court in respect of a formerDefence Minister charged in June 2012with the misuse of power. She wasstripped of her parliamentary immunitylater that year.

In June 2015 an MP, charged inMay 2012 with taking bribes andstripped of his parliamentary immunitylater that year, was sentenced to eightand half years in prison. The verdict hasnot yet taken effect.

Enforcement trendsThere has been a significant increase inhigh profile corruption investigationsduring the last few years and a number ofhigh profile politicians, lobbyists andbusinessmen have been accused ofcorruption and bribery. Combatingcorruption is a priority of the currentgovernment and various newanti-corruption policies have beenintroduced at central and local levels.The sitting Minister of Finance labelled thecombat against tax frauds his top priorityand during the last two years the newlyestablished Special Tax Fraud Unit hasrevealed tax frauds amounting toEUR 150 million.

Public officials are obliged to report thereceipt of possessions, gifts, income andobligations to a publicly accessibleRegister of Conflicts of Interests.Currently, there are plans to introduce thesame obligation for judges also.A significant number of public officialshave been found to be in breach of thisreporting duty, but a failure to reportattracts only a relatively small fine.

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Czech Republic

Changes to legislationSapin II, a draft Bill on transparency,anti-corruption and economicmodernization, may soon introduce anew framework legislation to prevent,detect and punish corruption in Franceand abroad. The ‘Loi relative à la luttecontre la corruption et pour latransparence de la vie économique’,known as Sapin II, is to be debated inthe French National Assembly in 2016,and could be adopted as early as thissummer, according to the Ministry ofFinance (as reported in the media).

Inspired by international standards, itprovides, in particular, for (i) the creationof an agency (Agence nationale deprévention et de détection de lacorruption) (the Agency) with the role ofpreventing and detecting corruption,(ii) the imposition of an obligation toprevent risks, as well as (iii) the creationof additional sanctions for failing tobring a company into compliance.The Agency will be granted broadinvestigative powers (in particular, toconduct on-site investigations, makedocument requests and conductinterviews), as well as the authority toimpose sanctions.

The proposed draft Bill will also create anew obligation for companies to preventcorruption risks. This duty will apply to(i) companies with more than 500employees and (ii) companies belongingto a group with at least 500 employeesand a yearly turnover of more thanEUR 100 million, as well as to theirmanagement. To fulfill this obligation,such companies will be required to

adopt effective anti-corruptionprocedures including:

n a code of conduct that definesprohibited acts and behaviours;

n an internal whistleblowing system thatenables employees to report code ofconduct violations;

n due diligence procedures to verifythe integrity of partners (clients,suppliers, intermediaries);

n accounting control systems to avoidfraud, including acts of concealmentor influence peddling;

n establishment of an inventory ofrisks; and

n implementation of disciplinary sanctions.

In the event of a violation, or if acompany’s anti-corruption procedures aredeemed insufficient or ineffective, theAgency’s enforcement committee willhave the authority to issue warnings ororders to comply, or to imposeadministrative sanctions (up toEUR 1 million for companies andEUR 200,000 for individuals, together withthe possible publication of the sanction).

A further sanction, similar to themonitorship procedure imposed by U.S.authorities, is aimed at ensuring futurecompliance: in the event of a convictionor judgment for corruption or influencepeddling, a company may be forced toimplement a compliance programmeunder the supervision of the Agency, atits own expense, within a maximumperiod of three years.

If implemented, Sapin II’s radical reformsmay raise France’s anti-corruptionlegislation to the same level as otherEuropean countries.

Prosecutions andenforcement actionsIn February 2016, the Paris Court ofAppeal found a major oil company guiltyof corrupting foreign officials in theUnited Nations’ oil-for-food programmefor Iraq, overturning a 2013 ruling thathad cleared the company of all charges.The programme allowed SaddamHussein’s regime to sell crude from 1996to 2003 in exchange for humanitariangoods in short supply because ofsanctions. The oil company was finedEUR 750,000 by the Paris Court ofAppeal, in a case that drew significantglobal media attention.

Enforcement trendsFollowing years of criticism by theOrganization for Economic Cooperationand Development (OECD) and otherorganizations for its lacklustreperformance in enforcing anti-corruptionlaws, the French authorities have recentlybeen relatively active in attempting toramp up the prosecution of these cases,leading to several investigations andcourt cases.

To do so, France strengthened itsanti-corruption enforcement arsenal byadopting a number of new laws in 2013,resulting in the creation of the FrenchParquet National Financier – a financialprosecutor’s office responsible for,among other things, prosecuting certain


France




corruption offences –, a new power forapproved anti-corruption associations toinitiate criminal proceedings for certaincorrupt acts, and increased criminalpenalties for bribery.

Nevertheless, despite these legislativeinitiatives, instances of corruptionprosecutions remain limited at this stage.Indeed, in February 2016, the Council ofEurope Group of States againstCorruption (GRECO) welcomed a seriesof recent anti-corruption reforms inFrance, including the introduction of draftBill Sapin II, but noted that importantgaps remain. In particular, the reportconcluded that France has made noprogress in improving its ability toprosecute corruption-related offencescommitted in a transnational context.Although France is a major exportingcountry, the report finds that its efforts topenalize international corruption have sofar produced minimal results.

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Changes to legislationFollowing the 2014 changes to thecriminal offence of bribing delegates1,further measures strengthening criminalanti-corruption law have now entered intoeffect and there are further draft laws inthe pipeline.

German Law on Fighting Corruptionnow in forceOn 26 November 2015, the German Lawon Fighting Corruption (Gesetz zurBekämpfung der Korruption2) entered intoeffect. The key elements of this new Laware the extension of the criminal offenceof taking and giving bribes in commercialpractice under section 299 GermanCriminal Code (Strafgesetzbuch) to actsbeyond competition and the expansion ofthe criminal offences of bribing publicofficials under sections 331 et seqq.German Criminal Code and theirextraterritorial applicability:

n Under the previous legislation, aperson was criminally liable for theoffence of taking and giving bribes incommercial practice (Bestechlichkeitund Bestechung im geschäftlichenVerkehr) under section 299 GermanCriminal Code if the offender(as “receiver”) allowed himself to bepromised, demanded or accepted, orif he (as “donor”) offered, promised orgranted a benefit in return for obtainingan unfair advantage (unlautereBevorzugung) in competition (theso-called “competition model[Wettbewerbsmodell]). Thus,section 299 German Criminal Codecovered, for example, cases where anemployee in the procurementdepartment selected a service supplierwhich had not submitted the most

economically advantageous offercompared to competitors, but whichhad given the employee in theprocurement department a personalbenefit (such as presents or hospitalityexceeding a “social-adequate” level) inreturn for his selecting that supplier.Since 26 November 2015, the criminaloffence also covers benefits given – onthe basis of an agreement ofwrongdoing (Unrechtsvereinbarung) –to an employee or agent of acompany, without the consent of thecompany, in return for a breach of aduty to that company (the “employermodel” [Geschäftsherrenmodell]).According to the explanatory notes tothe new Law, the relevant duty to thecompany can arise, in particular, as aresult either of law or contract and (forexample, from additional employmentregulations in the form of internalcompany guidelines). Therefore, anemployee of a company could nowpotentially be exposed to criminalcharges of taking bribes if he, forinstance, in breach of internalprocurement guidelines, were to placean order without inviting an offer from acompetitor for comparison, in returnfor a personal benefit, whether or notthe offer from the competitorwould have actually been moreeconomically advantageous.

n In a further legislative change, thecriminal offence of taking and givingbribes in commercial practice hasbeen added to the list of predicateoffences for money laundering(section 261 German Criminal Code),when committed on a commercialbasis (gewerbsmäßig) or by amember of a gang (bandenmäßig).

n Under the new Law, in addition to“public officials” (“Amtsträger”),“European public officials”(“Europäische Amtsträger”) areexplicitly included in the criminaloffences of bribing public officialsunder sections 331 to 334 GermanCriminal Code. Furthermore,section 11 para 1 no 2a GermanCriminal Code now contains a legaldefinition of the term “Europeanpublic officials” which includes, inaddition to members of institutionsand bodies of the European Union(and others), officials or other servantsof the European Union and individualsmandated to execute tasks for theEuropean Union. These amendmentsimport previous provisions of the EUAnti-Corruption Act (EuropäischesBestechungsgesetz) regarding theequivalence of, in particular, officialsand other servants of the EuropeanUnion and public officials “underGerman law” into the GermanCriminal Code. However, thesechanges go beyond the EUAnti-Corruption Act as such officialsand other servants of the EuropeanUnion are now subject not only to thequalified criminal offences of grantingand accepting bribes (sections 334and 332 German Criminal Code), butalso to the basic criminal offences ofgranting and accepting (illegal)benefits (sections 333 and 331German Criminal Code). The basiccriminal offences only require a“benefit” to be given to or acceptedby a public official without approval bythe competent authority. In thiscontext, presents or hospitalityexceeding a “social-adequate” level


Germany

1 For further details, please visit the German section of our Anti-Bribery and Corruption Review July 2015 (pages 11 et seqq.), athttp://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.


http://www.cliffordchance.com/briefings/2016/01/german_law_on_fightingcorruptionstrengthenin.html

http://www.cliffordchance.com/briefings/2015/07/anti-bribery_andcorruptionreview-july2015.html


may, under certain circumstances, beconsidered a “benefit” in this senseunder German case law. However, thequalified offences of granting andaccepting bribes require that thebenefit be granted or accepted on thebasis of an – expressed or implied –agreement of wrongdoing that thepublic official, in return, has violated orwill violate his official duties.

n Finally, section 335a German CriminalCode, newly implemented by the Lawon Fighting Corruption, contains anequivalence arrangement for “foreignand international public servants”.According to this new provision,certain public officials of foreign statesand international organisations aretreated as public officials underGerman law in the context of thecriminal offences of bribing publicofficials if the offence concerns afuture official act. The changes aim atimporting former equivalencearrangements, especially of the Lawon Combating International Bribery(Internationales Bestechungsgesetz),into the German Criminal Code.However, these changes go beyondthe Law on Combating InternationalBribery as well, as they not only applyto the criminal offence of grantingbribes (section 334 German CriminalCode), but also to the criminal offenceof accepting bribes (section 332German Criminal Code). Acceptingbribes is the criminal offence of thepublic official as “receiver”, whodemands, allows himself to bepromised or accepts a benefit on thebasis of an agreement of wrongdoing,whereas granting bribes is the crimeof the “donor” in this arrangement.The Law on Combating International

Bribery previously imposed criminalliability solely on the “donor”.In addition, a connection withinternational business is – unlike underthe Law on Combating InternationalBribery – no longer required.

Law on Fighting Corruption in theHealthcare SectorOn 14 April 2016, the German FederalParliament (Bundestag) adopted the Lawon Fighting Corruption in the HealthcareSector (Gesetz zur Bekämpfung vonKorruption im Gesundheitswesen).This Law sets out new criminal offencesof taking and giving bribes in thehealthcare sector, in sections 299a and299b German Criminal Code. Under newsection 299a (Bestechlichkeit imGesundheitswesen), certain members ofthe medical profession would becriminally liable if they (as “receivers”),in connection with the exercise of theirprofession, were to demand, allowthemselves to be promised or accept abenefit for themselves or a third personon the basis of an – expressed or implied– agreement of wrongdoing(Unrechtsvereinbarung) that they would,in return, grant an unfair advantage incompetition when carrying out functionssuch as prescribing, supplying orprocuring pharmaceutical or medicalproducts. Proposed new section 299bGerman Criminal Code sets out a mirroroffence for the “donor”. The penalty forboth offences is imprisonment of up tothree years or a pecuniary penalty, orimprisonment of between three monthsand five years (in very serious cases).

The background to these new measureslies in a decision of the German FederalCourt of Justice (Bundesgerichtshof)dated 29 March 2012,3 in which the court

had found that contract doctors in privatepractice (niedergelassene Vertragsärzte)were neither “public officials” nor“agents”. According to this case law,illegal benefits granted to contractdoctors in private practice in order toinfluence their behaviour are currently notprohibited under section 299 GermanCriminal Code (taking and giving bribes incommercial practice), nor as granting(illegal) benefits or bribes (section 331et seqq. German Criminal Code) underGerman criminal anti-corruption law. Thenew Law aims at addressing this lacuna.

Prosecutions andenforcement actionsSeveral investigations and court caseshave caught the attention of the media.

In November 2015, the Frankfurt regionalcourt (Landgericht) sentenced fourindividuals to prison sentences of up tothree years (without probation) for takingand giving bribes in commercial practice(section 299 German Criminal Code) inconnection with the expansion of theFrankfurt airport in 2007. In addition, thecourt ordered the confiscation ofapproximately EUR 20 million as grossproceeds of these offences. The courtfound that the four individuals, including areal estate agent and a manager of theairport operating company, hadparticipated in the payment of at leastEUR 2.8 million in bribes in return for apreferential allocation of property toinvestors. Not all judgements are yet finalsince at least one individual has filed anappeal against his conviction withthe German Federal Court ofJustice (Bundesgerichtshof).

Also in November 2015, the Frankfurtprosecution authority announced an

3 File reference: GrS – St 57/202.


investigation into a payment ofEUR 6.7 million by the German FootballAssociation’s (Deutscher Fußball-Bund)organisation committee for the footballworld cup 2006 to the World FootballAssociation (FIFA) in 2005. According toresearch by a German news magazine,this payment was allegedly made from aslush fund to secure the award of thefootball world cup 2006 to Germany bybribing members of the FIFA executivecommittee. Notably, the Frankfurtprosecution authority did not initiateinvestigation proceedings regarding givingbribes in (international) commercialpractice (section 299 German CriminalCode) and embezzlement (section 266German Criminal Code) as it found that aprosecution regarding these offenceswould, in any event, be time-barred (thelimitation period for both offences beingfive years). However, it initiatedinvestigation proceedings regarding theallegation of tax evasion in a very seriouscase (with a limitation period of ten years)against current and former top-levelmanagers of the German Football

Association, following which taxinvestigators searched the Frankfurt officesof the German Football Association on3 November 2015. As in otherjurisdictions, there is a provision in Germantax law that prohibits tax deductibility forcorrupt payments (section 4 para. 5sentence 1 no. 10 sentence 1 GermanIncome Tax Act [Einkommensteuergesetz]).The individuals under investigation,however, allegedly deducted the paymentof EUR 6.7 million as business expensesby declaring it as “cost-sharing for acultural programme” in the GermanFootball Association’s 2006 tax return.

Enforcement trendsAs a general trend, the focus ofcorruption investigation proceedings hasexpanded further from industrialcompanies in the last decade to othersectors, including the financial sector.There have been further investigationproceedings by German prosecutionauthorities into German and foreign banksand financial institutions conductingbusiness in Germany, particularly

regarding alleged granting of (illegal)benefits to German public officials in theform of gifts and hospitality. Germanlegislation, case law and enforcementpractice are quite strict in this regard.This is particularly true when it comes tovalue thresholds for gifts andentertainment granted to public officials,which are low compared to internationalstandards. Furthermore, Germanprosecution authorities continue to stepup cooperation with tax authoritiesregarding allegations of potentiallyunjustified tax deductions with regard toallegedly corrupt payments in the taxreturns of relevant companies.

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Changes to legislationThe Law of 27 May 2015, concerningprovisions on criminal offences againstthe public administration, conspiracy inorganized crimes, false statements in acompany’s financial statements oraccounts, has introduced amendmentsrelating to criminal offences against thepublic administration.

Prime Minister Renzi’s Government hasfocused on the fight against bribery andhas adjusted the applicable penalties withthe intention of ensuring that a defendantconvicted for the commission of acriminal offence against the publicadministration does not benefit from asuspended sentence, or a plea bargain,without further practical consequences.

The Italian Parliament has: (i) increasedthe applicable penalties; (ii) introduceddiscounts to the applicable penalties fordefendants who have cooperated withthe authorities; and (iii) provided for theavailability of suspended sentences andplea bargains where the defendantdisgorges an amount equal to theproceeds of the crime.

The penalties have been increasedas follows:

n bribery: imprisonment from six toten years (previously from four toeight years);

n bribery in the context of litigation:imprisonment from six to 12 years(previously from four to ten years);

n facilitation payments to a publicofficial: imprisonment from one year tosix years (previously from one year tofive years);

n embezzlement by a public official:imprisonment from four to ten yearsand six months (previously from fourto ten years);

n extortion by a public official (coercion):imprisonment from six to 12 years(previously from four to 12 years);

n extortion by a public official (byinducement): imprisonment from sixto ten years and six months(previously from three to eight years).

The defendant may obtain a reducedsentence by cooperating with theauthorities during the investigation and byhelping the public prosecutor to seize theproceeds of the crime.

If a suspended sentence is permittedunder Italian law, in case of conviction fora criminal offence against the publicadministration, a suspended sentence isonly available where the defendant hasdisgorged an amount equal to theproceeds of the crime.

The new Law expands the categories ofpersons in the public administration whocan commit the offence of extortion by apublic official (coercion), so that thisoffence can now also be committed by allemployees of the public administration(whereas previously it could only becommitted by a more narrowly definedcategory of public officials).

The defendant cannot enter into a pleabargain unless an amount equal to theprofits of the crime has been disgorgedto the Italian authorities.

Prosecutions andenforcement actionsPolitical corruption dominated headlinesin Italy during both 2014 and 2015,especially with regard to three maincriminal investigations: Mose (Venice),Expo (Milan) and Mafia Capitale (Rome).In these proceedings several managersand politicians were arrested for allegedcorruption and conspiracy and, in MafiaCapitale also for membership in mafiaorganization group. The ProsecutionService has also seized a large number ofbank accounts, business activities andreal estate assets.

In October 2015 a Milan judge orderedItalian service firm Saipem to stand trialin respect of allegations of bribery inAlgeria. The company and a number offormer executives and intermediaries arealso to stand trial. The prosecutionalleges that intermediaries paid aroundUSD 220 million to win contracts withthe Algerian government-owned oil andgas company Sonatrach, worth aboutUSD 9 billion. Saipem’s parent company,Eni, has already been clearedof wrongdoing.

Enforcement trendsThe Italian Government continues tofocus on both the prevention andprosecution of corruption. The NationalAnticorruption Authority (ANAC) hasoften been appointed by theGovernment to carry out a preliminaryreview and analysis of the main Italianpublic tenders (i.e. Milan’s Expo tradefair and Jubilee 2016).

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Italy

Changes to legislationA decree of 28 December 2015 hasamended the decree of14 November 2014 on the code ofconduct for members of the Luxembourggovernment. The amendments are minor.Apart from a few clarifications theyessentially introduce a de minimisexemption for gifts received bygovernment members. Whereaspreviously all gifts and hospitality,irrespective of their value, needed to bereported to the Prime Minister (and werepublished in a public register), henceforthgifts of a value less than EUR 100received at public events no longer needto be reported.

Furthermore, on 2 February 2015, theCouncil of State (“Conseil d’Etat”),

an institution in the Luxembourg politicalsystem that advises the nationallegislature, adopted a specific code ofconduct as part of its internal rules ofprocedure. This code of conduct remindsthe members of the fact that corruptionand influence peddling are criminaloffences. Importantly, the code foresees ablanket prohibition on accepting any gift,or hospitality, of a value exceedingEUR 150, when representing the Councilof State. Any offered gift or hospitalitymust also be reported.

Prosecutions andenforcement actionsNo significant prosecutions orenforcement actions have been reported.

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Luxembourg




Changes to legislationPolish criminal law (both substantive andprocedural) is currently undergoing rapidand extensive changes. As one of thepriorities of the government in office is astricter criminal policy, some changes tothe anti-corruption provisions can beexpected in the near future.

Substantial changes to the Polish Codeof Criminal Procedure are underconsideration. It is intended to remodelcriminal proceedings in the direction of amore inquisitorial trial system (which wasin effect until July 2015 and then wastemporarily replaced by a moreadversarial one). The courts will againplay an active role in trials and moreactions will be taken ex officio – mostimportantly, judges will once again beactive in evidence proceedings.The amendment also lifts the clearprohibition of the admission of evidencegathered illegally (the so-called “fruit ofthe poisonous tree”).

Moreover, a more centralised model ofcriminal policy will be imposed.In March 2014, the Minister of Justicetook over the duties of the ProsecutorGeneral (the latter office was abolished).Thus, the government gained morepowers and possibilities in setting goalsin criminal policy.

According to press releases, the Ministryof Justice is currently working onamendments to the Polish Criminal Codewhich are expected to lead to theextension of the limitation period foranti-corruption offences. However, no Billin this respect has been drafted so far.

Prosecutions andenforcement actionsIn recent months a few majorcorruption-related prosecutions havedominated the headlines. InFebruary 2016, a former high-rankingofficial of the Ministry of Internal Affairs wassentenced to four and a half years inprison (suspended) for accepting a bribeamounting to PLN 1.7 million(approx. EUR 400,000) in connection withbid rigging. This was the result of the trialagainst the main suspect in one of thebiggest anti-corruption investigations inrecent years, regarding irregularities intender proceedings in connection with thepurchase of IT equipment for the publicadministration authorities in the years2007-2010. In total, almost 70 indictmentswere filed with courts. Most of theproceedings have not yet been finished.

As far as corruption in business-to-businessrelations is concerned, the manager of achain of supermarkets, Kaufland, has beencharged before a court in Wrocław withaccepting bribes from representatives ofleading beverages distributors (who areco-accused in the case) in exchange foraccess to the retail chain in shops belongingto Kaufland. According to the publicprosecutor, the accused manager acceptedbribes amounting to PLN 4 million(approx. EUR 950,000).

Growing compliance cultureThe perception of corruption both inbusiness-to-business relations as well asin cooperation with the public authoritiesis in decline (which is reflected in opinionpolls as well as international reports).

There is also a steadily growingcompliance culture in Poland andawareness of corruptive behaviour in theprivate sector is much higher than even acouple of years ago.

The Warsaw Stock Exchange promotescompliance in its best practices for listedcompanies and good practices areimplemented in companies that are notpublicly traded.

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Poland

Changes to legislationThere is a current trend towardsinstigating changes in criminal law bysubmitting a plea of unconstitutionality�to Romania’s Constitutional Court. Wherethe Constitutional Court upholds such aplea, the legislature is required to amendthe criminal law in accordance with theConstitutional Court’s decision, and someprocedures may be put on hold until thelaw is amended. Recent decisions of theConstitutional Court are mainly aimed atreinforcing observance of fair trials rightsof the parties in line with European Courtof Human Rights case law.

A number of recent pleas haveramifications for anti-bribery andcorruption investigations:

n Enforcement of interception warrantsby the Intelligence Services

In decision No. 51 of 16 February 2015,the Constitutional Court upheld theplea of unconstitutionality in relation toArticle 142 para. 1 of the CriminalProcedure Code which, through theterminology “other specialized bodiesof the state”, allowed the prosecutor todelegate the enforcement of theinterception warrants and the actualrecording activity to the IntelligenceServices. The main grounds were thatsuch terminology in criminallegislation was in breach of theprinciple that criminal law must beclear and foreseeable.

This decision generated intensedebate at the level of relevantauthorities (i.e. Ministry of Justice,National Anti-Corruption Departmentof the Prosecutor’s Office, Presidency,politicians and media) as, accordingto publicly available information,most interception warrants wereexecuted in practice by theIntelligence Services.

The decision will mean that:(i) criminal investigation activity thatshould be performed by prosecutorsand/or the judiciary police could besignificantly impaired due toinsufficient technical equipment and(ii) evidence produced by theIntelligence Services and already usedas evidence in pending criminal trialsmay be invalidated, leading to somecriminal cases being discontinued forlack of evidence.

n The criminalisation of conflict ofinterest in the private sector

The Criminal Code criminalisedconflicts of interest in relation toprivate entities and individuals runningcompanies and their relatives(Article 301 of the Criminal Code).Recently, the Constitutional Courtconsidered that the criminalisationbreaches the right of private entities toconduct economic trade and the rightto hire their relatives in conductingtheir business and thus held thecriminalisation to be unconstitutional(Constitutional Court decision no 603of 6 October 2015).

n Discontinuance of a criminalinvestigation by prosecutors beforetrial (similar to Deferred ProsecutionAgreements in the U.S. and the UK)

The Criminal Procedure Codestipulates (Article 318) that theprosecutor, during the criminalinvestigation stage, may concludethat there is no public interest inprosecuting a case and can close theinvestigation if several conditions aremet i.e. (i) the penalty for the crime isa fine or imprisonment for less thanseven years, (ii) taking intoconsideration the nature of thealleged offence and the manner andmeans of its perpetration, as well asthe consequences or potential

consequences, there is nopublic interest in prosecuting, and(iii) the criminal record of theperpetrator and their efforts toremedy or mitigate the consequencesare such that it is appropriate for thisprocedure to be followed.

If such procedure is followed, theprosecutor may require theinvestigated person or entity to:(i) remedy the consequences of thedeed, repair the damage inflicted orreach a settlement with the relevantcivil party in order to repair thedamage, (ii) apologize in a publicmanner to the victim, and/or (iii)perform unpaid community service fora period of between 30 and 60 days.

Use of this procedure is currentlysuspended following a recent decisionof the Constitutional Court whichprovides that this procedure isunconstitutional unless validated by acourt (i.e. by a judge rather than by aprosecutor) (Constitutional Courtdecision no 23 of 20 January 2016).

Prosecutions andenforcement actionsA number of high stake cases wereprosecuted and/or sent to trial in 2015,involving the former Romanian PrimeMinister and other public officials:

n The Romanian National Anti-CorruptionDepartment indicted the former PrimeMinister, Victor Ponta, and Senator DanSova for complicity in offences of taxevasion, forgery and money laundering.There have also been high profileallegations of corruption in relation toMr Ponta, and a number of requests toapprove preventive arrest for Mr Sova(accused also of complicity in abuse ofoffice) were repeatedly rejected by theParliament. Trial is pending before theHigh Court of Cassation and Justice.


Romania




n The Romanian National Anti-CorruptionDepartment also indicted the Mayor ofBucharest Municipality, Sorin Oprescu,for the offences of initiating andparticipating in a criminal organisation,abusive conduct in public position,receiving bribes and money launderingin relation to his position of Mayor.The case is currently pending trial infront of the Bucharest Tribunal.Mr Oprescu has been suspended fromhis position as Mayor until the criminaltrial is finalised.

n The former chief prosecutor of theDirectorate for Investigating OrganisedCrime and Terrorism (DIICOT), thesecond highest Prosecutor’s Office inRomania, Alina Bica, was sent to trialand faced preventive detention ofapproximately four months forcorruption offences while in his formerposition of representative of theMinistry of Justice within the NationalAuthority for Restitution of Propertiestaken over by the communist regime.The prosecutors have alleged thatsome of the former presidents of theNational Authority for Restitution ofProperties together with the membersof the Restitution Committeeaccepted bribes amounting toEUR 400 million and abused theirpublic position in relation to inflatedprices of several plots of land thatwere returned by the State to theiralleged ‘rightful owners’ ascompensatory measures paid by theState. The prosecutors allege that thebusiness individuals who bought the

rights from the rightful owners paidbribes to the members of theRestitution Committee to increase theamount of compensation(i.e. approximately EUR 62 million intotal) paid for their confiscatedproperties. The cases are currentlypending trial in front of the High Courtof Cassation and Justice.

n Apa Nova Bucuresti, the Romaniansubsidiary of the French-owned VeoliaGroup, has been accused of bribery,tax evasion, money laundering andspying on its employees, in aninvestigation by the RomanianNational Anti-Corruption Department.Prosecutors say the company paidout millions of Euros in bribes toRomanian officials in order to drive upthe price of water for Romanianconsumers. The investigation is stillpending with the prosecutor’s office.

Enforcement trendsFighting against corruption is still the trendin Romania and has intensified during2015. The enforcement trend is on apositive scale, as over 1,250 defendantswere indicted by the Romanian NationalAnti-Corruption Department in the courseof 2015, including the Prime Minister,former Ministers, Members of Parliament,mayors, presidents of county councils,judges, prosecutors and a wide variety ofsenior officials. The interim asset freezingmeasures relating to these casesalso increased, to reach a figure ofEUR 452 million.

A particular trend has been theintensification of the fight against corruptionat local level. Since 2013, the totalnumbers of local officials sent to trial forcorruption amount to almost 100 mayors,over 20 county council presidents anddozens of other local officials.

As for the trial phase, the High Court ofCassation and Justice has maintained itstrack record in terms of bringingcorruption cases to conclusion. In 2015,the Criminal Chamber settled, at firstinstance, eleven high-level corruptioncases and the appeal panels of fivejudges settled, at final instance, elevenhigh-level corruption cases. Amongst thehigh profile defendants convicted werethose who had served in the positions ofMinisters, Members of Parliament,mayors, judges and prosecutors.

Concerning asset recovery procedures, aspecialised agency – the Asset RecoveryAgency – has been set up to manageseized and confiscated criminal assets(under Law no 318/2015). This is animportant step as it seems that currentlyonly around 10% of the value of seizureorders is actually collected, thus weakeningthe dissuasive effect of the sanction.

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Changes to legislationAnti-Corruption LawOn 17 October 2015 a number ofchanges to Federal Law No. 273-FZ OnPreventing Corruption (the Anti-CorruptionLaw) were made, including changes toArticle 10 on conflicts of interest.Previously this article expressly stated thatit applied to state and municipal officersonly. The amended wording provides thatArticle 10 applies to all persons occupyingpositions that impose an obligation toprevent and settle conflicts of interest(Officers). Although the law does not statethis explicitly, we believe that the mostlikely interpretation of this provision, takinginto account other provisions of theAnti-Corruption law as well, is that theconflict of interest restrictions establishedunder the Anti-Corruption Law do notapply to private sector individuals but onlyto state and municipal servants andcertain types of employees of statecorporations, state-owned entitiesand similar.

The concept of conflict of interest hasalso been extended and is now definedas a situation in which the Officer’spersonal interest (direct or indirect) affectsor may affect the proper and impartialconduct of his official duties. Officers areobliged to take measures to avoid andreport conflicts of interest and, if they donot, may be subject to dismissal.

The definition of personal interest wasalso broadened. Personal interest is nowdefined as the possibility of receiving notonly money and other property, includingproperty interests and property-relatedservices, but also results of works andother benefit or preference (Benefit). Thelegislator defined the range of personswho, by obtaining the Benefit, may affectthe Officer’s personal interest.

They include the Officer’s close relativesand relatives-in-law, and persons andorganisations with which the Officerand/or his/her close relatives andrelatives-in-law have a property, corporateor other close relationship.

Anti-Money Laundering LawOn 10 January 2016 amendments toFederal Law No. 115-FZ dated7 August 2001 On Preventing theLegalisation (Laundering) of the Proceedsof Crime and the Financing of Terrorism(the Anti-Money Laundering Law) cameinto force. These make the Anti-MoneyLaundering Law applicable to foreignunincorporated entities for the purposesof identifying their beneficial owners.These entities are defined as anorganisational form established under thelaws of a foreign state (territory) as anunincorporated entity. This may take theform of a fund, partnership, trust or otherform of pooled investment and/orbeneficial ownership that, under theperson’s lex personalis, is entitled to carryon commercial activity in the interests ofits participants or other beneficiaries.

Foreign unincorporated entities are subjectto control and identification procedureswhen conducting operations with monetaryfunds or other assets as required by theAnti-Money Laundering Law. For example,trusts and other foreign unincorporatedentities of a similar structure or function areobliged to disclose the assets that theypossess or administer and thesurname/name and address of theirsettlors or trustees (administrators).

The monetary funds or assets of theseentities, inter alia, may be subject tofreezing or blocking in the event that it isestablished that they are involved interrorism or terrorist financing.

Draft Law on CorporateCriminal LiabilityIn March 2015 a draft law on the criminalliability of legal entities was submitted tothe Russian State Duma. The draft lawcontemplated (for the first time) theimposition of criminal liability againstcompanies and organisations(both Russian and international) forbribery-related and other offences.However, in mid-2015 the RussianGovernment gave a negative response tothe Bill and it was not adopted.

Draft Law on the Protection of PersonsReporting Corruption OffencesIn February 2015 a draft law on theprotection of persons reporting corruptionoffences was also announced by theMinistry of Labour and Social Protectionof the Russian Federation. The draft lawis in the process of amendment. The draftlaw is aimed at protecting those whoreport corruption and encouraging themto come forward by protecting theirconfidentiality, protecting them fromunauthorised dismissal, providing themwith monetary remuneration and/orprotecting their relatives.

Prosecutions andenforcement actionsThe majority of corruption-related cases inRussia are against state and municipalofficials. Recent, much-publicized casesinclude investigations against an ex-officialof the Ministry of Defence of the RussianFederation for receiving bribes in theamount of RUB 45 million (approx.EUR 567,000 or USD 621,000), a formerdeputy minister for economic developmentof Krasnoyarsk Region for receiving aluxury car and RUB 14 million (approx.EUR 176,000 or USD 193,000) as a bribeand the head of Sakhalin Region for takinga bribe of USD 5.6 million.


Russia



Among the better-known bribery cases isthe criminal investigation of the chairmanof the board of directors of Rosbank(Societe Generale Group), Mr Golubkov,and the deputy president of Rosbank(Societe Generale Group),Mrs Polyanitsina. Mr Golubkov wassuspected of extorting a bribe equal toUSD 1.5 million from a borrower forprolonging a loan agreement andreducing the interest rate and monthlypayments. At the end of 2015 criminalproceedings against him were terminated.Mrs Polyanitsina is suspected of actingas an intermediary in this extortion;the criminal investigation against her isstill ongoing.

Recent notable cases in which there hasbeen a conviction for bribe-giving includethe criminal prosecution against the ownerof LLC Trest Magnitostroy, Mr Laknitsky.He was fined RUB 30 million (approx.EUR 378,000 or USD 415,000) for givingthe senator in the Chelyabinsk Region aRUB 10 million (approx. EUR 126,000 orUSD 138,000) bribe to lobby for hisbusiness interests.

According to publicly available figures, inthe first nine months of 2015, 8,800individuals were convicted for corruptionoffences and approximately 11,000officials were held administratively liablefor non-compliance with anti-corruptionstandards. According to the statistics,during 2015 only RUB 588 million(approx. EUR 7.4 million orUSD 8.1 million) was repaid by thoseinvolved in corruption offences, whileabout RUB 15 billion (approx. EUR 188.8million or USD 207.2 million) remains tobe collected.

In the first six months of 2015,182 legal entities were heldadministratively liable under Article 19.28of the Administrative Offences Code ofthe Russian Federation for providing,offering or promising unlawfulremuneration. Penalties took the form ofadministrative fines and confiscation.Administrative fines payable by legalentities held liable under Article 19.28total RUB 395 million (approx.EUR 4.9 million or USD 5.4 million).

Anti-Corruption CouncilOn 26 January 2016 the Anti-CorruptionCouncil and the Russian FederationPresident discussed further measures toimprove state anti-corruption policy. It wasannounced that the NationalAnti-Corruption Plan for 2016-2017 wouldbe presented to the President by the endof March 2016 and that this plan wouldpay special attention to the influence ofethical standards on officials’ compliancewith anti-corruption legislation.

During the Anti-Corruption Council’smeeting, Chief of the Russian FederationPresident’s Administration Mr Ivanovsuggested that the Criminal Code of theRussian Federation be amended toestablish separate criminal liability forgiving and taking small bribes, i.e. thosenot exceeding RUB 10,000 (approx.EUR 126 or USD 138). If adopted, thiswould introduce a simplified procedure forinvestigating these crimes, which wouldfall under the competence of justices ofthe peace. These amendments areintended to make anti-corruption effortsmore effective and statistics on corruptionmore accurate and transparent.

OECD ReportIn March 2016, the Russian Federationsubmitted a report providing informationon the progress it had made inimplementing the recommendations ofthe OECD’s Phase 2 report, whichevaluated the Russian Federation’simplementation of the OECD Conventionon Combating Bribery of Foreign Publicofficials in International BusinessTransactions and the 2009Recommendation of the Council forFurther Combating Bribery of ForeignPublic Officials in International BusinessTransactions. The report sets out detailsof further action in relation to some of theoutstanding recommendations, andnotes, with regard to others, that theRussian authorities are exploring methodsof implementation.4

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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.


http://www.oecd.org/daf/anti-bribery/Russia-Phase-2-Written-Follow-up-Report.pdf

Changes to legislationCriminal Liability of Legal EntitiesThe OECD’s report on the SlovakRepublic’s compliance with its obligationsunder the OECD Convention, published inNovember 2014, had identified a numberof gaps, in particular, the lack of fullcriminal liability of legal entities. The SlovakRepublic has now implemented thisrecommendation with the adoption by theNational Council of the Slovak Republic ofnew legislation on the criminal liability oflegal entities on 13 November 2015 (theAct). The Act, which will become effectiveas of 1 July 2016, introduces the newconcept of the criminal liability of legalentities and enables the punishment ofcriminal conduct that could not previouslybe directly sanctioned at a criminal level.It is also intended to prevent situationswhere individuals are held criminally liablewhilst the legal entity evades liability andcontinues its criminal conduct. The level ofpenalties contemplated under the Act canseverely affect the continued operationand profitability of legal entities. The Actspecifically enumerates the criminaloffences which can be committed by legalentities, which include corruption. The Actalso explicitly states that “effectiveremorse” (under which the criminal liabilityof a legal entity expires in certaincircumstances) will not apply tocorruption-related offences.

Sports-related CorruptionOn 26 November 2015, the SlovakNational Council adopted a new act onsport which became effective on1 January 2016 (the Sport Act). The SportAct introduced complex new regulationsfor sports-related matters and amended anumber of existing legislative acts,

including the Criminal Code, introducing acompletely new criminal offence of sportscorruption (the Amendment). Thesechanges were adopted in response to ahigh level of corruption in the sportsenvironment and the insufficient regulationof sports corruption under the generalcorruption criminal offences; they werealso a reaction to recommendations on themanipulation of sports competitions by theCouncil of Europe and the fact that themajority of other European states havealready adopted similar legislation.

The new criminal offence of sportscorruption is set out in the Criminal Codeas follows -”Who directly or through anintermediary promises, offers or gives abribe to another to act or refrain fromacting in the course of competition [beingan organised sport activity according tothe rules determined by a sportorganisation, aimed at achieving a sportscore or a comparison of sportperformances] or affect the result of thecompetition, shall be punished byimprisonment of one to five years. Equalpunishment shall be imposed on anyperson who directly or through anintermediary, for himself or for anotherperson receives, requests or promises abribe to act or refrain from acting andthus influence the course or result of thecompetition.” The Amendment alsoresolved the issue of the differentpunishments applied in cases of generalcorruption where a person who offers abribe faces imprisonment of six monthsto three years, and a person who acceptsa bribe faces imprisonment of betweenthree to eight years. Another reason forthe Amendment is that it extends criminalliability for “match fixing” from only those

select sports determined by case law,i.e. football, to all fields of sports andsport competitions. Furthermore, theAmendment makes aggravated penaltiesapplicable in cases of sports corruption.Under the new criminal offence of sportscorruption, the punishment faced by bothcategories of persons is the same. Themaximum penalty available for thecriminal offence of sports corruption isimprisonment of up to 12 years. TheSpecialized Criminal Court was appointedas the competent body to adjudicate thecriminal offence of sports corruption.

ProsecutionsEven though charges of sports corruptionand corruption in general are not oftenbrought in Slovak courts, in recent yearstwo important cases occurred where thecourts dealt with sports corruption andalso imposed penalties, described inmore detail below to illustrate the recentchanges made under the Amendment.

The first case dealt with direct corruptionin Slovak football in which the secondhighest officer in the Slovak FootballAssociation, the general secretary, wasarrested while accepting bribes frompolice undercover agents. These bribesrelated to the transfer of players in theSlovak National Football League, and thesecretary general regularly asked forbribes between EUR 300 to EUR 500 foreach transfer of a player. The courtsentenced the secretary general to asentence of three years and four monthsimprisonment (without probation) in 2010.In its decision, the court stated that thesecretary general’s greatest offence wasthe creation of an environment wherebribes were offered on a regular basis


Slovak Republic




and that bribes had been requested evenbefore the deployment of undercoverpolice agents.

The second case dealt with asophisticated group of players from theSlovak and the Czech football leagues aswell as other individuals, who had beenrigging and subsequently betting onfootball matches using Asian bettingsites. In total, over 19 different footballmatches in Slovakia and theCzech Republic had been rigged, and theprofit from one match was betweenEUR 2,000 up to EUR 60,000per person. The case was initiated whenthe group tried to manipulate a juniorplayer from the Czech Republic intorigging one of the matches. The junior

player immediately notified the policeauthorities and a formal investigationbegan in September 2013. From thebeginning of the trial, all of the defendantsdenied any participation in the corruptactions, but after a period, they allpleaded guilty. The Slovak FootballAssociation imposed a disciplinarypenalty of the prohibition of any activitiesin relation to Slovak football on alldefendants. The court sentenced thegroup in 2014 to two to three years’imprisonment with probation andmonetary penalties. The court alsoordered the group to forfeit almostEUR 49,000 which they had obtainedfrom illegal betting.

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Changes to legislationOn 1 July 2015, Organic Law 1/2015,amending the Penal Code, came intoforce, introducing a hugely significantchange to the concept of corporatecriminal liability in Spanish law. This wasreported on in some detail in the July 2015edition of this Update.5

Prosecutions andenforcement actionsAfter years of complete inactivity,enforcement activity for corruptionoffences is currently very high in Spain.A significant number of public officialsare involved in current corruption cases,and private sector company executiveshave also been accused of bribery ofpublic officials.

Cases like Operation Púnica, involvingpublic officials of the Madrid RegionalGovernment and even important privateand listed companies, the ERE case inSevilla, involving officials of the AndalusiaRegional Government, the Gurtel case,involving public officials of the ValenciaRegional Government, and the Taula case,involving the ex-mayor of Valencia, RitaBarberá, and all her counsellors of thePopular Party Group at the Town Hall haveattracted widespread media attention.

OECD reportThe OECD’s follow-up to the Phase 3Report & Recommendation on Spain inMarch 2015 has found that since theentry into force of the OECD Conventionin Spain in 2000, no cases of foreignbribery have been prosecuted.The OECD Working Group continues tohave concerns about the low level offoreign bribery enforcement in Spain andthe lack of implementation of theenforcement-related recommendations.In addition, Spain has not taken steps toensure that bribery-related accountingoffences are effectively investigated andprosecuted. A majority of therecommendations that Spain has notimplemented are related to technicaldeficiencies in Spain’s Penal Code,relating to the scope of Spain’s foreignbribery offences, the regime of liability oflegal persons for foreign bribery, theadequacy of sanctions for naturalpersons, measures for confiscation of theproceeds of bribery, and investigativehurdles such as the statute of limitations.

Limited steps have been taken to improveinternational cooperation, but Spain couldbe more proactive in seeking mutual legalassistance or other forms of internationalcooperation. Regarding extradition, Spain

has not taken steps to assure extraditionin foreign bribery cases or prosecution inthe absence of extradition.

The report found that Spain had improvedtax, anti-money laundering and auditingmeasures to combat foreign bribery, butindicated that further steps are required.

As part of the 2015 reforms, Spain hasalso tried to implement recommendationsrelated to raising awareness and providingtraining on the liability of legal persons andmeasures for confiscation of the proceedsof bribery.

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Spain

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




Changes to legislationA Bill to improve (judicial) protection ofwhistlebwers was adopted in March 2016.The Bill aims to facilitate the reporting ofwrongdoing (so as to expose wrongdoing,such as bribery and corruption, andsafeguard integrity). A key element of thelegislation is the establishment of a‘House for Whistleblowers’ (Huis voorKlokkenluiders). The House, anautonomous administrative authority, willhave a separate advice and investigationdivision. Employees, irrespective of thesector in which they work, will be able toapproach the House for advice aboutreporting (suspected) instances ofwrongdoing and subsequently file arequest with the House to investigate the(alleged) wrongdoing. The Bill is expectedto be enacted into law on 1 July 2016.

By 1 April 2016, banks with a seat in theNetherlands and Dutch branches ofbanks with seats in non-EU/EEA memberstates, must have ensured that most oftheir employees are bound by disciplinaryrules. This obligation was introduced on1 April 2015, through an amendment tothe Dutch Financial Markets SupervisionAct (Wet op het financieel toezicht).However, banks were given a one-yeartransitional period to comply. If bankemployees violate the code of conductapplicable to them, anyone can file areport with the Foundation of DisciplinaryLaw for the Banking Industry (StichtingTuchtrecht Banken). Upon investigation ofthe report, the Foundation may decide toinitiate disciplinary proceedings againstthe bank employee before a disciplinarycommittee. The committee can imposedisciplinary measures, such as a fine upto EUR 25,000 or a temporarydisqualification from a certain position in

banking industry (for a maximum periodof 3 years).

As of 1 January 2016, the maximum finesthat can be imposed for bribery offenceshave been increased as a result of aninflation adjustment:

n Active or passive bribery of a publicofficial is punishable by a maximumterm of imprisonment of six years anda maximum fine of EUR 82,000 fornatural persons and EUR 820,000 forlegal entities.

n Active and passive private commercialbribery is punishable by a maximumterm of imprisonment of four yearsand a maximum fine of EUR 82,000for natural persons and EUR 820,000for legal entities.

n The maximum fine for legal entitiesmay be increased up to a maximumof 10% of annual turnover if themaximum fine of EUR 820,000is not considered anappropriate punishment.

The Dutch financial-economic fraud andanti-bribery rules were amended on1 January 2015.6 Since then no otherchanges were made to the rules.

Prosecutions andenforcement actionsCorruption in the Dutch housing sectorOver the last few years, there have beena number of allegations of corruption inthe Dutch housing sector. In one highlypublicized case, a former director ofRochdale, a Dutch housing association inthe Amsterdam region, was convicted ofpassive commercial bribery (acceptingdifferent types of gifts), money laundering

and tax fraud by the Amsterdam Court ofFirst Instance in December 2015.

Housing associations carry out the publictask of providing affordable housing. Evenso the Court agreed with the PublicProsecutor that the former director wasnot a public official and could only beconvicted of private commercial briberyand not public bribery. According to theCourt, the fact that housing associationsperform a public task does not in itselfmean that the former director wouldtherefore be considered a public official,meaning a person appointed under the(direct) supervision and accountability ofthe government in a role with a seeminglyobvious public character to carry out partof the tasks of the Dutch State or itsorgans. The Court considered that, at thetime the offences took place, thegovernment had no involvement with theappointment and dismissal of(supervisory) directors of housingassociations and that housingassociations became (financially)independent and responsible in thenineties when a greater distance wascreated between housing associationsand the government and supervision wasshifted from the Dutch state to theregulator for the housing sector (i.e. theCentral Fund for Social Housing, CentraalFonds voor de Volkshuisvesting).

The Court sentenced the former directorto two and a half years of imprisonment.According to the Court, the former directorhad an exemplary role and his conductshould have been beyond reproach.

Dutch and U.S. settlementRecently an international settlement withDutch and U.S. (criminal) authorities caughtthe attention of the Dutch and foreign

The Netherlands

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


media. This settlement is an example of aninternationally coordinated approach byauthorities in relation to corruption.

The Dutch Public Prosecutor (OpenbaarMinisterie) announced that theNetherlands headquartered internationaltelecom provider Vimpelcom Ltd and itsDutch subsidiary Silkway Holding B.V.(the Company) had accepted asettlement offered by the PublicProsecutor, the U.S. Department ofJustice and the U.S. Securities andExchange Commission. According to itspress release, the Public Prosecutoraccused the Company of bribinggovernment officials in Uzbekistan andkeeping inaccurate books and records.The allegations relate to the periodstarting from around the time theCompany entered into the Uzbek telecommarket and thereafter (2006-2012).

The Public Prosecutor indicated thatCompany is to pay a total settlement ofUSD 795 million (half is to be paid to thePublic Prosecutor, the other half to theU.S. authorities). According to the PublicProsecutor, the Dutch part of thesettlement consist of a fine ofUSD 100 million; the payment of theestimated value of goods eligible forconfiscation (USD 130 million); andrecovery of criminal proceeds(USD 167.5 million).

According to the Public Prosecutor, it hadtaken the following factors into accountwhen determining the amount of the fine:

n the payments to government officialsoccurred over a long period of time(seven years);

n the payments were significant; and

n the Company cooperated with theinvestigation and shared its owninternal findings. Also, the Company

has been taking steps to get itscompliance in order and persons whohad been (directly or indirectly)involved with the payments were nolonger at the Company.

Enforcement trendsWhistleblowing for the financial sectorThe Dutch Central Bank(De Nederlandsche Bank, or DNB)continues to prioritise anti-corruptionefforts and, on 12 February 2016,opened a Whistleblowing Desk. The Deskprovides professionals in the financialsector with a platform to report instancesor suspicions of fraud, corruption, conflictof interest, or other serious breaches oflaws and regulations or other breaches ofintegrity at financial institutions that aresubject to DNB’s supervision.

Professionals have to first internally reportpotential wrongdoing (e.g. throughinternal whistleblowing procedures).If they are unable to file a report directly(because no internal procedures are inplace), they have well-founded concernsabout disproportionate personalconsequences, or they have filed aninternal report but feel that the financialinstitution in question devoted insufficientattention to it, professionals can file areport with the Desk. DNB employeesprocess the reports and can, wherenecessary, start investigations.

Thematic examination: corruption ininsurance sector DNB has performed thematicexaminations into the risk of corruption atbanks and insurers in the past (theregulator often conducts thematicexaminations to gain insight into risks inthe sector). After such an examination in2014, DNB published a guide to goodpractices to help banks and insurersfight corruption.

DNB announced on 24 February 2016that it had completed its examination intorisk controls aimed at preventingcorruption in the insurance sector in theNetherlands. DNB’s overall conclusion isthat the sector fails to adequately identifyand control corruption risks resulting fromconflicts of interest and/or bribery. In itspress release, DNB identified two mainissues. From examinations conducted atlarge insurers, DNB concluded that ingeneral they have an insufficient structuralview of potential risks of conflicts ofinterest that may arise through thepersonal networks of their directors.Furthermore, DNB concluded that mostinsurers fail to sufficiently identify thirdparty risk (i.e. the risk of becominginvolved with corruption by third partiesor the risk of reputational damageresulting from a relationship with thirdparties accused of corruption, forexample “tied agents” or consultants).DNB stated that it expects insurers to beable to identify such risks and takenecessary measures to control the riskbut observed that due diligence in relationto third parties is not yet standardpractice in the insurance sector.

Professional footballIt was announced on 31 March 2016 thatDNB earlier this year launched aninvestigation into possible moneylaundering in professional football.According to DNB, it is investigating theextent to which banks and trust offices inparticular are capable of recognizing andaddressing forms of money laundering(e.g. match fixing, cash flows involvingrisks of corruption through royaltypayments, transfer and broadcasting feesused for money laundering purposes, taxevasion). The results are expected to bepublished in June 2016.





Dutch Authority for theFinancial MarketsControl of corruption risks byaudit firmsSimilarly, the Dutch Authority for theFinancial Markets (Autoriteit FinanciëleMarkten, or AFM) has also been active inencouraging anti-corruption measures. InMarch 2015, the AFM sent letters to theaudit firms under its supervision bringingto their attention the fact that they – whenconducting audits or other tasks for theirclients – may come across funds flows ortransactions that could be instances offraud or corruption. In its letter (a copy isavailable on the AFM’s websitehttps://www.afm.nl/nl-nl/professionals/nieuws/2016/mrt/corruptierisico-accountantsorganisaties, the AFMnoted that audit firms are required tohave sound and controlled businessoperations pursuant to the Audit FirmsSupervision Act (Wet toezichtaccountantsorganisaties, or Wta), whichentails that they should recognize signs offraudulent and corrupt practices in atimely fashion, and follow up such signsproperly. Otherwise, audit firms may runthe risk of getting involved with theirclient’s corrupt practices, which may leadto reputational risks and in someinstances to criminal prosecution.

According to the AFM, the businessoperations of audit firms should beorganised in such manner that anyinvolvement with violations of laws,including corruption, is tackled. The AFMstated that it is necessary for audit firmsto adequately control risks of becominginvolved with (foreign) corruption by theirclients and/or risks of their clients beinginvolved with (foreign) corruption.The AFM noted in its letter points ofconsideration for adequately controllingthese risks:

n conducting adequate risk-analysis,whereby risks in relation to specificcountries, sectors, the involvement ofthird parties and commercial practicesare taken into consideration;

n having an open and ethical culture,which encourages employees to timelyreport (fraud/corruption) incidents;

n classifying clients in such manner thatif there is an increased risk or thereare signs of corruption, this is takeninto account when conducting workfor the client;

n providing (periodical) training aboutcorruption so that corruption risksare better recognized and dealt with;

n recording properly any signs ofcorruption and any follow-up to ensurethat control of corruption risks is a fixedelement of the business operations;

n indicating in the audit assignment, ifapplicable, how the auditor during theaudit dealt with the risks and signs ofcorruption; and

n reporting incidents in a timely mannerto the AFM pursuant to the Wta.

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https://www.afm.nl/nl-nl/professionals/nieuws/2016/mrt/corruptierisico-accountantsorganisaties



Changes to legislationIn January 2016, Turkey ratified the Councilof Europe Convention on Laundering,Search, Seizure and Confiscation of theProceeds from Crime and on the Financingof Terrorism, which was signed in March2007. This puts Turkey in a better positionas regards compliance with internationallyaccepted policies on anti-moneylaundering and anti-corruption.

In March 2016, the Regulation onMeasures Regarding Prevention ofLaundering Proceeds of Crime andFinancing of Terrorism and the Regulationon Program of Compliance withObligations of Anti-Money Launderingand Combating the Financing of Terrorismwere amended. Accordingly, the ambit ofthe financial and other professionalinstitutions which are subject to certainobligations under anti-money launderinglegislation (obliged parties) has beenextended to include payment institutionsand electronic money institutions.The amendments also set forth a thirtyday time limit for the obliged parties toassign a compliance officer, starting fromthe licence of activity dates.

Prosecutions andenforcement actionsIn October 2014, a bribery investigationinto alleged offences by certain officials ofthe Fire Fighting Department of theIstanbul Metropolitan Municipality wasinitiated. According to the allegations, thepublic officials working in the departmentwere bribed by business owners in orderto grant workplace permits for premisesthat do not meet the required conditionsfor obtaining workplace permits. Theinvestigation is ongoing.

In June 2015, 41 people working in theTurkish Air Institution, including the former

president of the Institution, were detaineddue to corruption allegations. Theprosecution alleges that the president ofthe Turkish Air Institution accepted bribesfrom a French firm in order to executeagreements for purchasing certainhelicopters from their firm. According tothe indictment, the detained personslaundered the illegitimate money througha shell company, owned by thepresident’s son, by purchasing industrialoil. The case is still ongoing.

Changes to policyIn November 2015, during the 2015 G20Antalya Summit, Turkey introduced aseparate anti-corruption working group inaddition to the group established at the2010 summit which took place inCanada. Important anti-corruption policymatters, both in the public and the privatesectors, were discussed. The resultinganti-corruption action plans include:

(i) transparency regarding the mainshareholders of shell companies;

(ii) fight against bribery;

(iii) special attention to sectors within highrisk groups; and

(iv) transparency in the public sector.

Enforcement trendsThe nature of the investigations andprosecutions undertaken in recent yearsindicate that enforcement in Turkey hasbroadened to include bribery andmoney laundering rather than atraditional focus on collusive tendering.Additionally, the modernisationprogramme being conducted by theFinancial Crimes Investigation Board(MASAK) in accordance with FinancialAction Task Force (FATF)recommendations, also suggestpromising enforcement developments.

In the most recent Corruption PerceptionsIndex published by TransparencyInternational in December 2015, Turkeywas ranked 66th among 167 countries,having fallen 13 places in this indexsince 2013. This result suggests that theprosecutions of high-ranking public officialsin December 2013 have reverberated inthe public and the international arena.

OECD ReportIn October 2014, the OECD published anOECD Report on Implementing the OECDAnti-Bribery Convention in Turkey, whichhighlighted Turkey’s improvements to itslegal framework in relation to the foreignbribery offence and its effectivecooperation with other parties to theOECD Convention in relation to twoforeign bribery investigations. However,the OECD Working Group issued severalrecommendations in relation to effectiveinvestigation, detection, prevention andsanctioning of foreign bribery. Inparticular, Turkey was recommended to:

(i) increase efforts to detect, investigateand prosecute foreign bribery actsincluding bribery acts by legal persons;

(ii) rectify deficiencies in its legalframework for corporate liability;

(iii) increase the current level of sanctionsfor legal entities in relation tobribery offences;

(iv) maintain the independence ofprosecutors and provide an enhancedtraining to law enforcement authoritieson the corporate liability provisions inforeign bribery cases; and

(v) provide enhanced protection towhistleblowers in both the public andprivate sectors.

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Turkey*


* 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-operationagreement between Clifford Chance and Yegin Ciftci Attorney Partnership.



Changes to legislationOverall in 2015-2016, Ukraine achievedsignificant progress in aligning itsanti-corruption legislation with applicableinternational standards andrecommendations, including those of theOECD/Istanbul Anti-corruption Action Plan(IAP) monitoring and the Group of StatesAgainst Corruption (GRECO). TheParliament has approved comprehensiveanti-corruption legislation, includingaccess to public information in format ofopen data and financing of politicalparties. All corruption offences and theirelements are now criminalised, includingthe crime of illicit enrichment. However,this legislation has yet to be fully enforced.

Ukraine has also taken steps to establishsignificant new institutional anti-corruptionmachinery that consists of:

n National Anti-Corruption Bureau (NAB);

n National Agency for PreventingCorruption (NAPC);

n Specialized Anti-CorruptionProsecutor’s Office (Prosecutor’sOffice); and

n National Agency for Identifying,Tracing and Management of AssetsDerived from Corruption and OtherCrimes (NAITMA).

The NAB is a specialized law enforcementbody responsible for investigatingcorruption of high profile officials, includingministers, Members of Parliament,high-rank civil servants, judges,prosecutors of the Prosecutor GeneralOffice and regional prosecutor offices,directors and officers of state enterprisesetc. The NAPC is a preventive bodyaimed at prevention of corrupt activitiesincluding monitoring civil servants’incomes and expenditures, creating aunified register for civil servants’declarations, monitoring conflicts ofinterest and ethical standards. The

Prosecutor’s Office is aimed at overseeinghow laws are observed during pre-trialinvestigations conducted by the NAB.

The NAITMA’s mission will be to trace,return and manage criminal property aswell as carry out forfeiture of assetsarising from the crimes disposing suchassets. Within the meaning of the law,criminal property is funds, property,property rights and other rights which areor may be arrested or seized under acourt decision in a criminal proceeding.The NAITMA identifies, searches,evaluates such assets by request of aninvestigator, detective, prosecutor,investigative judge. The assets aretransferred to control of the NAITMA by aresolution of the judge, investigative judgeor upon consent of the owner.

Prosecutions andenforcement actionsAccording to the Head of theProsecutor’s Office, NAB is reportedly inthe process of investigating about20 inquiries on corruption in the topechelons. Current corruptioninvestigations mainly involve former andactive executive officials, judges andofficials of law enforcement agencies.The NAB investigations are focused oncorruption in public enterprises andunlawful arrangements concluded byofficials of such enterprises. TheChairman of the NAB had alsoemphasized that combating corruption injudicial sphere is one of the top priorities.

In March 2016 the detectives of the NABin cooperation with the Prosecutor’s Officeissued a notice of suspicion oninterference with the work of a publicofficial (Mr Aivaras Abromavičius, formerMinister of Economy and Trade) to theCEO of JSC “Naftogaz of Ukraine”,Ukraine’s leading fuel and energycompany. Also the NAB is investigating

alleged interference by Mr Ihor Kononenko(the first deputy faction leader of PetroPoroshenko Bloc, one of Ukraine’s politicalparties) and several other Members ofParliament with the work of Ministry ofEconomic Development and Trade.Charges against them are based on thepublic announcement of Mr Abromavi�iusthat Petro Poroshenko Bloc has beenlobbying their people for senior positions ina number of public companies. Thepre-trial investigation of the statementmade by Mr Abromavičius is in progress.

Also, the NAB has recently interrogatedthe Chairman of the National Bank ofUkraine (Mrs Valeriya Gontareva) in relationto an accusation of abuse of office.

In addition, three indictments had alreadybeen referred by the Prosecutor’s Officeto the court as of 1 March 2016,including one case initiated againstseveral judges, as well as an indictmentof the head of one of the state bodies,who was charged with embezzlement offunds in the amount of UAH 14 million(approx. EUR 480,000 or USD 546,000).Approximately five more cases will bereferred to the court soon.

Enforcement trends As a general trend, Ukrainian officialstend to be the principal targets ofcorruption investigation proceedingsrather than companies or private persons.

Although new legislation outlines theestablishment and functions of theanti-corruption institutions, the actualestablishment of these bodies isproceeding slowly and half-heartedly.Thus, it should be noted that, though it isbecoming more and more difficult forcorrupt officials to receive their illicit gains,there is still room for improvement.

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Ukraine

In our July 2015 briefing, we mentionedthat the Gulf Cooperation Council (GCC)had approved a new anti-corruption law.7

While there has not been any update onthe progress of a GCC-wideanti-corruption law, the subject ofcorruption remains on the GCC’s agendaand was discussed at a recent meetingin Riyadh in March 2016. The discussionfocused on how to enhance cooperationbetween GCC member states, and shareexpertise between relevantanti-corruption agencies at the GCClevel. There is also a proposal for theGCC to sign the UN Convention againstCorruption as a regional organisation.

We also mentioned in our July 2015briefing that a new taskforce has beencreated within Abu Dhabi’s AccountabilityAuthority to promote transparency as wellas to investigate financial breaches andcorruption. Its initial focus has been onpromoting better public financialmanagement, including improvedaccounting and reporting arrangements inthe public sector. It is demanding moredetailed levels of auditing and financialreporting in the public sector, driven inpart by the recent fall in oil revenues. Itsremit includes companies in which thegovernment is a majority shareholder.

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United Arab Emirates


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




Changes to legislationThe government has announced that itdoes not intend to introduce a new crimeof failing to prevent economic crime –similar to the offence in the Bribery Act2010 of failing to prevent bribery bycommercial organisations. During aparliamentary debate following theannouncement the ParliamentaryUnder-Secretary of State for Justice, MrDominic Raab said “there is little concreteand specific evidence of the widercorporate economic wrongdoing that weshould now target that is currently notunlawful and could reasonably be caughtby a proposed new offence” (Hansard3 November 2015, col 264 WH).

The Department for Business Innovation& Skills published a discussion paper inMarch 2016 setting out proposals toenhance the transparency of beneficialownership for foreign companies thatpurchase land or property in England andWales, or participate in public contractingin England. These proposals are stated tobe designed “to help prevent the UK frombeing a safe haven for corrupt moneyfrom around the world”. The proposals,however, are still at an early stage.

Prosecutions andenforcement actionsSweett Group PLC pleaded guilty on18 December 2015 to an offence undersection 7 of the Bribery Act 2010 regardingconduct in the United Arab Emirates.Section 7 makes it an offence for a relevantcommercial organisation to fail to preventbribery by an associated person intendingto obtain business or an advantage in theconduct of business for the organisation.

The investigation launched by the SeriousFraud Office (SFO) in July 2014 resultedin the SFO bringing the following charges:

Between 1 December 2012 and1 December 2015 Sweett Group PLC,

being a relevant commercialorganisation, failed to prevent thebribing of Khaled Al Badie by anassociated person, namely Cyril SweettInternational Limited, their servants andagents. The bribing was intended toobtain or retain business, and/or anadvantage in the conduct of business,for Sweett Group PLC, namelysecuring and retaining a contract withAl Ain Ahlia Insurance Company forproject management and costconsulting services in relation to thebuilding of a hotel in Dubai, contrary toSection 7(1) of the Bribery Act 2010.

His Honour Judge Beddoe described theoffence as a system failure: “[t]he wholepoint of section 7 is to impose a duty onthose running such companiesthroughout the world properly tosupervise them. Rogue elements can onlyoperate in this way – and operate for solong – because of a failure properly tosupervise what they are doing and theway they are doing it”. Construction andprofessional services company SweettGroup PLC was sentenced on19 February 2016 and ordered to payGBP 2.25 million (GBP 1.4 million in fineand GBP 851,152.23 in confiscation),and almost GBP 100,000 in costs.

In another significant case, and one thathas ongoing ramifications for historicalconduct, the Court of Appeal decided thatunder UK anti-bribery legislation beforethe Bribery Act 2010 (in particular, thePrevention of Corruption Act 1906) it wasan offence to corrupt an agent of a foreignprincipal or a foreign public body, evenprior to 2002 (when legislation wasintroduced to clarify the jurisdictional effectof the previous anti-bribery legislation).

The judgment in R v AIL, GH and RH on15 January 2016 overturned a previousCrown Court decision (in November 2015)which found that, before 14 February 2002,

when the Anti-Terrorism, Crime andSecurity Act 2001 came into force, it wasnot an offence under the Prevention ofCorruption Act 1906 to corrupt an agent ofa foreign principal, even where the elementsof the alleged offence took place in Englandand Wales. The case concerns allegationsthat bribes were paid between June 2000and November 2006 from an English bankaccount to officials or other agents of threeforeign organisations in India, Poland andTunisia, disguised as legitimate paymentsto “consultants” for apparentlygenuine services.

Interestingly the judgment vindicates theUK government’s position back in 2001that bribery of foreign agents andprincipals was already covered by the1906 Act; the judgment says that the2001 amendments were enacted“ex abundantae cautelae to address theconcerns expressed by the OECD in the1999 Review [which had criticised thereach of the UK’s anti-bribery legislation]”.The court also said that the point of lawwas of general significance “because ofits implications for other [pending] briberyand corruption prosecutions”.

It was announced on 4 April 2016 thatthe Scottish Crown Office is to recoverGBP 2.2 million under a civil settlementwith a Scottish logistics company inrespect of business obtained throughunlawful conduct, in breach ofsections 1 and 7 of the Bribery Act2010. Braid Group (Holdings) Limited(Braid) had made a self-report to theCrown Office following an investigationinto suspect payments by its subsidiary,Braid Logistics (UK) Limited, whichspecialises in freight forwarding andlogistics. The investigation found thatexpenses, including personal travel,holidays, gifts, hotels, car hire and cash,had been made available to a U.S.customer employee, funded by inflatingthe invoices to the customer. During the

United Kingdom

investigation further bribery offenceswere discovered in relation to a secondcustomer. Criminal prosecutions ofindividuals may follow.

In a related decision the Scottish Court ofSession Outer House held that the CEOof the Braid Logistics (UK) Limited, whowas also a majority shareholder in thecompany, was a “Bad Leaver” under thecompany’s articles, because he knewabout and was involved in the briberyarrangements, and was therefore entitledto receive only par value for hisshareholding – around GBP 18 millionless than the actual value.

UK’s First DeferredProsecution AgreementDetails of the UK’s first DeferredProsecution Agreement (DPA) wereapproved by Lord Justice Leveson, andpublished on 30 November 2015. In theSFO’s first application for a DPA,Standard Bank Plc (Standard Bank), wasthe subject of an indictment allegingfailure to prevent bribery contrary tosection 7 of the Bribery Act 2010. Thisindictment was immediately suspendedfor a three year period. This was also thefirst use of section 7 of the Bribery Act2010 by any prosecutor (a previouscharge in a Scottish case had led to acivil settlement).

As a result of the DPA, Standard Bank willpay financial orders of USD 25.2 millionand will be required to pay the Governmentof Tanzania a further USD 7 million incompensation. The bank has also agreedto pay the SFO’s costs of GBP 330,000 inrelation to the investigation and subsequentresolution of the DPA.

In addition to the financial penalty,Standard Bank has agreed to continue tocooperate fully with the SFO and to besubject to an independent review of its

existing anti-bribery and corruptioncontrols, policies and proceduresregarding compliance with the Bribery Act2010 and other applicable anti-corruptionlaws. It is required to implementrecommendations of the independentreviewer. If the bank has complied withthe terms of the DPA, the SFO willdiscontinue the proceedings once thethree year period has expired.

Commenting on the DPA, Director of theSFO David Green CB QC said:

“This landmark DPA will serve as atemplate for future agreements. Thejudgment from Lord Justice Levesonprovides very helpful guidance to thoseadvising corporates. It also endorsesthe SFO’s contention that the DPA inthis case was in the interests of justiceand its terms fair, reasonable andproportionate. I applaud StandardBank for their frankness with the SFOand their prompt and earlyengagement with us.”

The suspended charge related to aUSD 6 million payment by a former sistercompany of Standard Bank, StanbicBank Tanzania, in March 2013 to a localpartner in Tanzania, Enterprise GrowthMarket Advisors (EGMA). The SFOalleges that the payment was intended toinduce members of the Government ofTanzania to show favour to StanbicTanzania and Standard Bank’s proposalfor a USD 600 million private placementto be carried out on behalf of theGovernment of Tanzania. The placementgenerated transaction fees ofUSD 8.4 million, shared by StanbicTanzania and Standard Bank.

The matter was reported to the SeriousOrganised Crime Agency (now replacedby the National Crime Agency) and to theSFO in April 2013, and the SFO requiredStandard Bank’s solicitors to investigate

and report the findings to the SFO.Following the submission of this report inJuly 2014, the SFO conducted its owninterviews, and, having determined that itwas in the public interest to do so,started negotiating a DPA.

The DPA was part of a coordinatedglobal settlement under which StandardBank also agreed to pay USD 4.2 millionto settle charges brought by the U.S.Securities and Exchange Commission;the SFO thanked the U.S. Department ofJustice and the SEC for their assistance,as well as the UK Foreign andCommonwealth Office and the FinancialConduct Authority.

Enforcement trendsUK prosecutors continue to focus onallegations of corruption, particularly bycompanies and financial institutions, andthey have given a clear indication thatDPAs will only be available where there isfull cooperation. While the SFO enteredinto a DPA with Standard Bank (seeabove) on the basis of their proactivecooperation with the SFO, it went aheadwith criminal charges against SweettGroup PLC (even though Sweett GroupPLC pleaded guilty and the parentcompany had apparently not been awareof the corrupt payments), apparentlybecause of a perceived failure tocooperate fully. The SFO said thatinvestigations into individualswere continuing.

It was reported on 26 February 2016 thatthe police were discontinuing OperationElveden, a five-year investigation byScotland Yard into allegations of paymentsby journalists to police and other publicofficials in exchange for information. Theinvestigation, launched in 2011, resulted in34 convictions, including nine policeofficers and 25 other public officials, overthe years, on charges mainly of





misconduct in a public office. The majorityof journalists charged with conspiracy tocommit misconduct in a public office wereacquitted, having argued that they wereacting in the public interest.

It has also been reported that requests tothe UK for mutual legal assistance infighting financial crime rose by 62% in2015, including a significant rise inrequests to the SFO.

The Serious Fraud Office(SFO)The Attorney General announced on9 February 2016 that David Green’sappointment as Director of the SFO wouldbe extended for a further two years.

Shortly after this announcement, therewere media reports that the NationalCrime Agency (which, since October 2013has been the lead body for combatingserious and organised crime) would begiven the power to direct investigationscarried out by the SFO and would have arepresentative on the SFO’s board.However, no official announcement hasbeen made.

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The Americas



Changes to legislationIn a landmark decision that is also relevantfor corruption cases, the Brazilian SupremeCourt has clarified its understanding of theenforcement of criminal convictions,including when prison terms for convictedcriminals shall commence.

The Brazilian Supreme Court’s previousunderstanding was that a criminalconviction could only be enforced onceall appeals have been exhausted. Inpractice, this meant that those who hadbeen criminally convicted could turn tothe notoriously complex Brazilian appealsystem including courts of secondinstance and even the Brazilian SuperiorCourt of Justice8 before being required toserve their sentences. Often, by the timethat the appeals were ruled on, thecrimes were caught by the criminalstatute of limitations.

The Brazilian Supreme Court has nowchanged its understanding of theenforcement of criminal convictions andhas decided that once the appeals havebeen ruled on by courts of secondinstance, enforcement of the criminalconviction must commence. In practicethis means that those who have beenconvicted and have not had an appealruling in their favour will no longer bepermitted to remain free while appealingto the Brazilian Superior Court of Justiceor even the Brazilian Supreme Court.

The Brazilian Supreme Court’s change ofunderstanding comes at a moment inwhich various high profile Braziliancontractors embroiled in Operation LavaJato (see below) are being tried oncriminal charges in connection withalleged corruption.

Prosecutions andenforcement actionsRecent Developments in OperationLava JatoBrazil’s major corruption scandal,operation Lava Jato9, continues todevelop on two fronts: (i) investigation ofcorruption allegations involving thestate-controlled oil company, Petrobrasand (ii) criminal proceedings in respect ofthe individuals involved in the scandal.

In respect of the ongoing investigations,in late March 2016, Brazilian FederalProsecutors launched the 26th phase ofthe investigation, which alleged a “parallelaccounting structure” operating within amajor Brazilian contractor. This alleged“parallel accounting structure” wasclaimed by investigators to be responsiblefor making bribery payments to variouspoliticians and directors of Petrobras.

Another notable phase of Operation LavaJato was codenamed Aletheia (AncientGreek for truth) and targeted formerpresident Luis Inácio Lula da Silva. Theformer president was detained andquestioned by the Federal Police inrespect of a beachfront apartment andcountry house which Lula is accused of,although denies, owning.

In respect of the ongoing criminalproceedings, the Federal Courts in Curitiba,which are responsible for the Lava Jatocriminal proceedings in first instance,recently convicted the former CEO of amajor Brazilian contractor and others forcorruption (corrupção), money laundering(lavagem de dinheiro) and conspiracy(formação de organização criminosa).

Further to the investigations and criminalproceedings in the courts of first instance,

the Brazilian Prosecutor General and theBrazilian Supreme Court are investigatingvarious members of the Brazilian Congress,including the President of the House andthe President of the Senate.

Plea bargains in the spotlightWhistleblower plea bargains wereintroduced into Brazilian legislation in thelaw against conspiracy which was enactedin 2013 (Federal Law No. 12,850/2013).

The Lava Jato investigations and itsrelated criminal proceedings have sincegiven whistleblower plea bargainswidespread media attention. Further, aftermuch debate in the media, the BrazilianSupreme Court has recently ruled thatwhistleblower plea bargains are alegitimate means of obtaining evidence.

Various players involved in Operation LavaJato, including CEOs of major Braziliancontractors, former Petrobras directors andpoliticians, have entered into plea bargainswith the Brazilian Prosecutors.

In order to enter into a plea bargain, theterms of the plea bargain must:

n identify the conspirators and indicatewhich crimes they committed;

n reveal the hierarchical structure andthe division of responsibilities withinthe conspiracy;

n return, in whole or in part, theproducts of the crimes committed bythe conspirators; or

n prevent future crimes from beingcommitted by the conspirators.

The agreement must then be ratified bythe relevant judge in order to be effective.

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Brazil*

* 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 orconstrued 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.


Enforcement TrendsU.S. government authorities continue tobring enforcement actions againstcompanies for violations of the ForeignCorrupt Practices Act (FCPA) and theoverall enforcement climate in the UnitedStates remains aggressive. This past year,the U.S. Securities and ExchangeCommission (SEC) has continued tofocus on corporate liability for FCPAviolations, and has expanded itsinvestigatory efforts, buoyed by anincrease in whistleblower tips from theDodd-Frank Whistleblower Program. InSeptember 2015, the U.S. Department ofJustice (DOJ) has emphasized its pursuitof individuals, in addition to corporateactors, including by issuing a new policystatement on cooperation credit, the“Yates Memorandum.”10 DOJ alsoannounced a one-year FCPAenforcement pilot program offeringreduced fines for business organizationsthat voluntarily self-disclose criminalconduct, fully cooperate with a criminalinvestigation, and timely and appropriatelyremediate their compliance failures.11

The U.S. authorities have shown theirongoing commitment to anti-corruptionenforcement by expanding theirenforcement staffing and cross-bordercooperation. In remarks made at theAmerican Conference Institute’s 2015International Conference on the ForeignCorrupt Practices Act (ACI Conference),Assistant Attorney General Leslie Caldwell

stated that DOJ planned to grow itsFCPA Unit by at least fifty percent byadding ten new prosecutors12. DOJ hasalso hired a compliance expert to supportthe Fraud Section’s FCPA enforcementprogram. The FBI has also bolstered itsranks, establishing three new squads ofspecial agents focusing on FCPAenforcement and prosecutions.

Reflecting DOJ’s approach to increasedcross-border cooperation, AssistantAttorney General Caldwell stated at the ACIConference that “we are determined to useevery lawful means available to hold theperpetrators of corruption to account.13”Indeed, DOJ cooperated with authorities inLatvia, Sweden, Switzerland, and theUnited Kingdom in connection withresolving at least three of its enforcementactions from this past year.14 The SEC hassimilarly increased the extent to which itcooperates with non-U.S. entities inresolving corruption cases, for examplecooperating with the African DevelopmentBank in the Hitachi case, with the SECleveraging their experience in these casesto expedite resolutions.

Prosecutions andenforcement actionsWhile 2015 was comparatively quiet interms of the total settlement amountsimposed by the SEC and DOJ, there havebeen a number of notable developments inU.S. anti-corruption enforcement.

The SEC’s enforcement actionsThe SEC brought fifteen actions in 2015against eleven entities and four individuals,recovering USD 215 million in the process.As in prior years, the SEC continues tocharge companies with FCPA violationsbased not only on violations of the FCPA’sbribery prohibitions, but also in caseswhere only accounting provision violationsare charged (i.e., based on failures toestablish appropriate internal controls). TheSEC broke new ground in 2015 and early2016, in terms of the types of entitycharged, the type of conduct targeted, andthe method by which the SEC resolved theaction. These actions included:

The SEC’s first case that only dealtwith payments to political parties15

Hitachi, Ltd. agreed to pay USD 19 millionto settle alleged violations of the FCPArelated to inaccurately recording improperpayments to South Africa’s ruling politicalparty, the African National Congress(ANC). Hitachi sold a 25% stake inventure to a front company for the ANC.The sale allowed Hitachi to share inprospective power station contracts in thecountry, and the front company receivedUSD 5 million in “dividends” based on theprofits realized from these contracts.Hitachi also paid, and failed to disclose,an additional USD 1 million in “successfees” that were recorded as consultingfees without appropriate documentation.The African Development Bank and theSouth African Financial Services Board


United States of America


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 examplesof cross-border cooperation do not include cooperation garnered through DOJ’s Office of International Affairs, which while cited in DOJ press releases, does not specifythe 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.

https://www.sec.gov/news/pressrelease/2015-212.html

https://www.justice.gov/opa/pr/iap-worldwide-services-inc-resolves-foreign-corrupt-practices-act-investigation

https://www.justice.gov/opa/speech/assistant-attorney-general-leslie-r-caldwell-delivers-remarks-american-conference

https://www.justice.gov/opa/blog/criminal-division-launches-new-fcpa-pilot-program

http://www.justice.gov/dag/file/769036/download



assisted the SEC with this investigation,with the SEC stating that they hoped thatthis would be “the first in a series ofcollaborations [with the AfricanDevelopment Bank].”

The SEC’s first Deferred ProsecutionAgreement (DPA) with an individual inan FCPA case16

In February 2016, PTC Inc. and its twoChina subsidiaries agreed to pay acombined USD 28.2 million as part of anon-prosecution agreement with DOJ.Related to that agreement, the SECreached a DPA with Mr Yu Kai Yuan, aformer employee at one of those Chinesesubsidiaries. The SEC had alleged that YuKai Yuan caused PTC to violate the FCPA’sinternal accounting controls and books andrecords provisions. The SEC agreed toprovide a three-year DPA to Mr Yu KaiYuan as a result of his significantcooperation with the SEC during itsinvestigation. In accepting the DPA, Mr YuKai Yuan acknowledged full responsibilityfor his conduct and agreed to cooperatewith the SEC, including by providingrequested documents and other materials,submitting to interviews and other inquiries,and testifying at trial, if requested.

DOJ’s enforcement stance and theYates MemorandumDOJ prosecuted five companies in 2015under the FCPA, gaining USD 870 millionin penalties, while charging another eightindividuals, reflecting DOJ’s increasingfocus on pursuing individuals. On

10 September 2015, Deputy AttorneyGeneral Yates issued the “YatesMemorandum”, which formally statedDOJ’s focus on prosecuting individualsand predicated the availability ofcooperation credit on the targetedcompany’s timeliness, diligence, andindependence in carrying out itsinvestigation17. To obtain cooperationcredit, a company must now identifyindividuals involved in or responsible forthe misconduct at issue, regardless of theirposition, status or seniority, and mustprovide DOJ with all facts relating to thatmisconduct. The new policy makes noprovision for compliance with local orforeign data protection or privacy laws.18

Even if DOJ reaches a resolution with acompany, DOJ retains the ability toprosecute individuals. Absent extraordinarycircumstances, DOJ prosecutors will notagree to a corporate resolution thatprovides immunity for individuals. While theYates Memorandum is a formal policyrecognition of the focus on prosecutingindividuals, it should be seen as acrystallization of existing DOJ policy, asarticulated in two September 2014statements by then Principal DeputyAttorney General Marshall Miller andformer Attorney General Eric Holder.19

In remarks made during the 2015 ACIConference, Patrick Stokes, Senior DeputyChief, Fraud Section of DOJ, reflectedupon the effect of the Yates Memorandum,stating that there has been a move by DOJto focus on larger scale bribery schemes

that involve collusion and much moreegregious criminal conduct – thus DOJ willnot participate in every FCPA case giventhat discretion. The ultimate impact of theYates Memorandum on DOJ’s FCPAenforcement priorities, if any, may becomemore apparent during the coming year.

FCPA Pilot ProgramOn 5 April 2016, DOJ announced that itwas conducting an enforcement pilotprogram applicable to all FCPA mattershandled by the Fraud Section effective thatday for a one-year period. DOJ stated thatthe “principal goal of this program is topromote greater accountability forindividuals and companies that engage incorporate crime by motivating companiesto voluntarily self-disclose FCPA-relatedmisconduct, fully cooperate with the FraudSection, and, where appropriate,remediate flaws in their controls andcompliance programs.”20 Where DOJdeems criminal resolution warranted, thepilot program offers businesses reducedfines for self-disclosure, cooperation, andremediation “of up to 50 percent belowthe low end of the applicable U.S.Sentencing Guidelines fine range, andgenerally [without] appointment of amonitor.”21 DOJ may also decline toprosecute companies who meet thesethree requirements. According to DOJ, thepilot program “draws a clear distinctionbetween credit that you can be eligible forvoluntary self-disclosure as opposed tocompanies that may decide to wait to seeif 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; AttorneyGeneral Holder Remarks on Financial Fraud Prosecutions at NYU School of Law, Wednesday, 17 September 2014, available athttps://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.

http://www.fcpablog.com/blog/2016/4/5/doj-launches-fcpa-self-reporting-pilot-program-with-new-guid.html

http://www.fcpablog.com/blog/2016/4/5/doj-launches-fcpa-self-reporting-pilot-program-with-new-guid.html

https://www.justice.gov/opa/file/838386/download

https://www.justice.gov/opa/speech/attorney-general-holder-remarks-financial-fraud-prosecutions-nyu-school-law

https://www.justice.gov/opa/speech/remarks-principal-deputy-assistant-attorney-general-criminal-division-marshall-l-miller

https://www.sec.gov/news/pressrelease/2016-29.html

To qualify for additional fine reductionsunder the pilot program beyond creditavailable under the U.S. SentencingGuidelines, DOJ requires that companiesvoluntarily self-disclose misconduct “priorto an imminent threat of disclosure orgovernment investigation”, “within areasonably prompt time of becomingaware of the offense”, and include allrelevant facts, including the individualsinvolved.23 DOJ clarified that fullcooperation as required under the pilotprogram included, among other things,proactive cooperation; preservation,collection, and disclosure of relevantdocuments and information; provision oftimely updates on the company’s internalinvestigation; provision of facts relevant topotential criminal conduct by third parties;making officers and employees available forinterviews by DOJ; disclosure of all relevantfacts gathered through the company’sinternal investigation; disclosure ofoverseas documents; and provision oftranslations of foreign languagedocuments.24 While recognizing thatremediation “can be difficult to ascertainand highly case specific,” DOJ stated thatwhen assessing a company’s remediationefforts under the pilot program it wouldevaluate the company’s establishment of aculture of compliance; complianceresources; quality and experience ofcompliance personnel and theircompensation and promotion within thecompany; compliance reporting structure;the independence of the compliancefunction; whether the company hasconducted an effective risk assessmentand implemented a tailored compliance

program on that basis; and complianceprogram auditing.25 Additionally, DOJ statedthat they would assess a company’sremedial efforts with regard to discipline ofemployees responsible for themisconduct.26 Highlighting the importanceDOJ places on companies’ voluntaryself-disclosure, DOJ stated that a companywill receive “markedly less” credit under thepilot program if it does not voluntarilyself-disclose its FCPA misconduct – atmost, such companies could receive a25% reduction off the bottom of the U.S.Sentencing Guidelines fine range.27

Other DevelopmentsAs mentioned, DOJ has been increasing itsFCPA enforcement resources, mostnotably by appointing Hui Chen as a fulltime compliance expert. Ms Chen’s rolehas been described as acting as a “bridge”between the compliance community andprosecutors, and she will be involved inboth pre- and post-resolution actions.According to the DOJ announcement ofMs Chen’s hiring, Ms Chen’s duties asCompliance Counsel include providingexpert guidance to the DOJ prosecutorswhen considering “the enumerated factorsin the United States Attorneys’ Manualconcerning the prosecution of businessentities”, which includes an evaluation ofexisting compliance programs at the timeof the conduct giving rise to the criminalinvestigation. Additionally, Ms Chen’s roleextends to helping the prosecutors develop“appropriate benchmarks for evaluatingcorporate compliance and remediationmeasures”, as well as assisting in the post-resolution assessment of the companies’

implementation of agreed remedialmeasures and the effectiveness of thosemeasures in detecting and preventingfuture wrongdoing. While it is unclearwhether her appointment will lead togreater numbers of monitorships, DOJ hasnoted that as in the Alstom resolution,there will be deference given tomonitorships that entities have with otherauthorities so that there are not overlappingmonitorships.28

The role of whistleblowersOf increasing significance to both DOJ andthe SEC is the Dodd-Frank WhistleblowerProgram. While these whistleblowerreports are made directly to the SEC—withreports received both from within the U.S.and internationally – whistleblowers areencouraged to talk to DOJ as well. In2015, there were 3,923 reports made tothe SEC’s whistleblower hotline – 186 ofwhich were related to FCPA issues, whichwas an increase of 27 FCPA-relatedcomplaints from the previous year (therewere 159 FCPA-related complaints madein 2014).29 Moreover, out of the totalnumber of whistleblower reports made in2015, 421 reports were made by foreignwhistleblowers, including from high riskjurisdictions.30 The significance of theDodd-Frank Whistleblower Program to theU.S. authorities’ FCPA enforcement effortsshould not be understated, as SEC Chiefof the Foreign Corrupt Practices Act UnitKara Brockmeyer called it a “gamechanger” and DOJ Senior Deputy ChiefStokes noted that the program’s existenceis “known around the world”.

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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.

Asia Pacific

Changes to legislationOn 1 March 2016, Australia introducednew “books and records” provisions intoits anti-bribery regime. The CrimesLegislation Amendment (Proceeds ofCrime and Other Measures) Act 2016amends the Criminal Code 1995 (Cth)and creates two new offences.

The “books and records” provisions areloosely based on the U.S. Foreign CorruptPractices Act 1997 (FCPA) provisions andrequire a company’s books and records tofairly and accurately reflect thecompany’s transactions.

The new provisions make it an offence tomake, alter, destroy or conceal anaccounting document, or fail to make oralter an accounting document a person isrequired by law to make or alter, with theintention that such conduct wouldfacilitate, conceal or disguise the giving orreceiving (by any person) of a benefit thatis not legitimately due or a loss notlegitimately incurred.

Penalties for individuals who breach theseprovisions include up to ten yearsimprisonment, a fine of up to AUD 1.8 million(approx. EUR 1.2 million or USD 1.35 million)or both. For a corporation, an offence canresult in a fine not more than the greatestof AUD 18 million (approx. EUR 12 millionor USD 13.5 million), an amount threetimes the value of the illegitimate benefitobtained by the company or ten percent ofthe company’s turnover for the 12 monthsbefore the offence was committed.

It is also now an offence to engage inreckless (rather than intentional) conductregarding the facilitation, concealmentor disguise of an illegitimate benefit orloss. Penalties for reckless conduct arehalf that of the above offence – for anindividual up to five years imprisonment,a fine of AUD 900,000 (approx.

EUR 600,000 or USD 675,000) or both.For a corporation, an offence can result ina fine of not more than the greatest ofAUD 9 million (approx. EUR 6 million orUSD 6.75 million), one and a half timesthe value of the illegitimate benefitobtained by the company or five percentof the annual turnover of the company forthe 12 months before the offence wascommitted. Neither offence requires theprosecution to prove that a specificbenefit was given or received, a lossincurred or that the defendant intendedthat a particular person received a benefitor incurred a loss.

Both the Australian Senate Committee onLegal and Constitutional Affairs (SenateCommittee) and the Australian Securitiesand Investments Commission (ASIC)supported the introduction of the newoffences while other stakeholders haveexpressed concern over the lack of anynexus with actual foreign bribery conductraising the possibility that the newoffences could impose criminal liability inan unintended and unreasonable rangeof situations.

Other critics have suggested that theoffences do not apply broadly enough and,unlike the FCPA provisions, do not imposean express obligation to maintain properaccounting records for the purpose ofdemonstrating anti-bribery compliance.

Prosecutions andenforcement actionsIn 2015, two directors of Lifese Pty Ltd,an Australian engineering andconstruction company, were chargedwith attempting to bribe Iraqigovernment officials to secure variousmulti-million dollar contracts. Thedirectors have been released on bailand are awaiting trial. This is only thesecond foreign bribery prosecution to

be brought since the introduction of theforeign bribery legislation.

The first prosecution occurred in 2011when two Australian companies,Securency International Pty Ltd and NotePrinting Australia Limited, twomanufacturers of banknote and passporttechnology, were charged withconspiracy to bribe foreign public officials.There are suppression orders in place inrelation to these proceedings. Theprosecution of several individuals whowere senior employees of thesecompanies also continues.

The Australian Federal Police (AFP) saidlast year that there were 17 activeinvestigations into foreign bribery. This isan increase from the seven investigationsannounced in 2012. The AFP has alsobeen investigating Leighton HoldingsLimited (now and as of 21 April 2015,called Cimic (Construction, Infrastructure,Mining and Concessions)) in relation toforeign bribery allegations since 2011.ASIC also commenced an investigationinto Leighton Holdings in 2013 after beingcriticised for failing to do so. ASICchairman Greg Medcraft had initiallystated that in foreign briberyinvestigations criminal proceedings arethe main game and that ASIC would notdo anything to jeopardise the success ofcriminal actions taken by the AFP.

OECD ReportThe Phase 3 report by the Organisationfor Economic Co-Operation andDevelopment (OECD Report) waspublished in April 2015 and recognisedthe improvement Australia hasdemonstrated in relation to its increasedfocus on foreign bribery, howeveridentified several areas for improvement.

The defence for facilitation payments wasone area that the OECD Report


Australia




highlighted as requiring attention, giventhat a number of jurisdictions around theworld (such as the UK) have noexemption for facilitation payments intheir anti-bribery regimes. Whilegovernment education programmes havediscouraged the use of facilitationpayments the distinction betweenfacilitation payments and bribes stillremains unclear to the Australian public.31

The OECD Report recommendedcontinuing to raise awareness about thedifference between a facilitation paymentand a bribe and discouraging the use ofsmall facilitation payments.32 In light of the

current Australian Senate inquiry intoforeign bribery (discussed below), it ispossible that facilitation payments will beremoved as a defence to foreign briberyin the future.

Senate InquiryThe Senate Committee is currentlyconducting an inquiry into foreign briberywith submissions to the inquiry havingclosed on 24 August 2015. Fortysubmissions have been received by theinquiry from various corporate entities,law firms, law societies, academicsand individuals.

The inquiry is focusing on, amongst otherthings, the anti-bribery measuresgoverning the activities of Australiancorporations and individuals and theextent to which Australia is meeting itsobligations under the OECD Convention.

The Senate Committee is due to releaseits report on 1 July 2016 with somespeculation amongst stakeholders inAustralia that the Senate Inquiry mayresult in various amendments toAustralia’s anti-bribery regime includingthe abolishment of the facilitationpayment defence.

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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.

Http://www.oecd.org/daf/anti-bribery/Australia-Phase-3-Follow-up-Report-ENG.pdf

Http://www.oecd.org/daf/anti-bribery/Australia-Phase-3-Follow-up-Report-ENG.pdf

Changes to LegislationThe new Competition Ordinance, whichcame into force in December 2015,contains provisions to combat thepractice of bid-rigging which has been aparticular issue in building contracts. InJuly 2015, the Independent CommissionAgainst Corruption (ICAC) broughtcharges against a former proprietor of anengineering company in connection witha HKD 45 million (approximatelyEUR 5.1 million or USD 5.8 million)bid-rigging scam. The accused admittedin court he had worked with others tosecure a renovation contract at aninflated price. Under the new legislation,the Competition Commission can obtainsearch warrants and seizecorrespondence and other documentsthat may lead to the discovery of a cartel.Whistleblowers are also promisedleniency if they co-operate with theCommission in its investigations.

Prosecutions andenforcement actionsKwok and Hui lose bribery appealFormer Sun Hung Kai Properties (SHKP)co-chairman Thomas Kwok and RafaelHui, the former Chief Secretary, who hadbeen jailed for five and seven and a halfyears respectively for bribery offences,lost their appeals in February 2016.Mr Justice Wally Yeung Chun-kuen wrotethat it was a “sad day” for the city “ifsenior public officers, such as Hui, couldaccept large sums of money and agreedto be favourably disposed towards their‘paymasters’ in their public offices withimpunity because their money or otheradvantages were paid before theyassumed or after they left public office”.Hui took HKD 8.5 million (approximatelyEUR 960,000 or USD 1.1 million) fromKwok shortly before he became ChiefSecretary in 2005 and HKD 11.2 million(approximately EUR 1.3 million orUSD 1.4 million) from two former

Sun Hung Kai executives after heleft office.

One of the difficulties for the prosecutionhad been a lack of evidence to showspecific acts that Hui had done to favourKwok. The appeal judges dismissed thearguments: “Corrupted conduct of apublic officer as senior as chief secretarywould no doubt be committed secretlyand insidiously. The corrupted conductcould simply take the form of anapproving nod or a knowing wink … Hisheart and soul were with SHKP and hewould have felt obliged to favour SHKPwhen its interest conflicted with that ofthe people of Hong Kong.”

Kwok and Hui have applied to the Court ofFinal Appeal for leave to appeal to HongKong’s highest court (as at March 2016).

Tsang pleads not guilty tomisconduct in officeFormer Chief Executive Donald Tsangwill stand trial in January 2017 inrelation to two counts of misconduct inpublic office. The trial is expected to lastfor 20 days and involve more than25 witnesses. Misconduct in publicoffice carries a maximum penalty ofseven years’ imprisonment.

Tsang is the highest-ranking official ever tobe charged for corruption in Hong Kong.He has been accused of failing to disclosehis interests in a three-storey penthouse inShenzhen between 2010 and 2012, whenhe was the city’s Chief Executive.

The first charge was that he failed todeclare his rental of the apartment froma businessman to policymakers whowere considering his applications forbroadcast licences.

The second was that Tsang hadproposed an architect for an award under

the city’s public honours system withoutdeclaring the architect was the interiordesigner of the flat.

Tsang has often been criticised for hisbehaviour while in office. He admittedusing yachts and jets for private tripseven though he later said he had paidcommercial rates for their hire. Hesurvived a no-confidence vote towardsthe end of his term in office in 2012, thefirst since the resumption of sovereigntyin 1997.

Tsang was arrested on 5 October 2015following a long investigation by theICAC. Critics queried the length of time ithad taken to arrest him.

Tsang’s arrest highlighted what a formerjudge has described as a “fundamentaldefect” in the city’s main anti-corruptionlegislation, the Prevention of BriberyOrdinance (POBO). POBO contains clearrules against gifts but they do not applyto the Chief Executive. Under section 3,soliciting and accepting an advantagewithout the permission of the ChiefExecutive is a crime, but the giver of thepermission is not covered by thewording. The Chief Executive is alsoexempt from section 8, which states thatanyone who offers an advantage to a“prescribed officer” while having dealingswith the government is committing anoffence. Despite repeated attempts torectify the situation, the Government hasstill to commit to a timetable to addressthe issue.

Big rise in corruptioncomplaintsIn January 2016, the ICAC reported a riseof nearly 20 per cent in corruptioncomplaints, excluding those relating todistrict council and village elections. Therise follows significant falls in complaintsin the three previous years. An ICAC


Hong Kong




survey of public perceptions of corruptionrevealed that while corruption wasexpected to worsen in 2015, willingnessto report suspected corruption was thelowest since the surveys began in 2011.

ICAC Commissioner Simon Peh toldlawmakers in January 2016 that althoughthe ICAC received 2000 complaints in2015, only 200 people were prosecuted.He said that most cases foundered

because of insufficient evidence orinaccurate information. Peh also revealeda trend for people to lodge complaintsout of malice. It is an offence underPOBO to make false reports or to makean unauthorised disclosure that someoneis being investigated. The offence ispunishable with a year’s imprisonment ora fine of HKD 20,000 (approximatelyEUR 2,260 or USD 2,580). Pehrecommended a significant increase in

the penalty to five years’ imprisonmentand a fine of HKD 100,000(approximately EUR 11,300 orUSD 12,900), saying that the ICAC had ahuge workload and could not afford to bedistracted by unscrupulous peoplepursuing their own private agendas.

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Changes to legislationThe main government agency thatenforces Indonesian Anti-Corruption Lawis the Corruption Eradication Commission(Komisi Pemberantasan Tindak PidanaKorupsi, commonly known as the KPK),which was established under the 2002Corruption Eradication Commission Law(the KPK Law). The KPK coordinates withother agencies in the eradication ofbribery and corruption, conductsinvestigations, prosecutes briberyoffences, undertakes action to preventbribery, and monitors governance.

To carry out its enforcement duties, theKPK is granted certain powers toundertake specific measures, including,among others, using wire-tapping,instructing relevant institutions to imposetravel bans and ordering banks or otherfinancial institutions to block accountspotentially holding the proceeds ofcorrupt acts.

The KPK Law is currently beingamended, with the Government havingdesignated the Bill amending the KPKLaw as a priority Bill for 2016. However,despite being on the priority list, theIndonesian President has postponeddiscussions on the amendment of theKPK Law due to sections of the public,the KPK and factions of the House ofRepresentatives raising concerns inrespect of certain proposedamendments, including limiting KPK’sauthority to conduct surveillance orwiretapping during the preliminary phaseof investigations.

Prosecutions andenforcement actionsThe KPK has been highly proactive incombating corruption, and this isdemonstrated by the large number of

high profile corruption cases againstjudges, lawyers, high-ranking governmentofficials, and members of the House ofRepresentatives which have beenbrought to court. From 2004 to early2016, there have been approximately 330corruption cases decided. Many of theinvestigations and court proceedingshave caught the attention of the mediaand the public.

In early 2015, the former Chief Justice ofthe Indonesian Constitutional Court(which had previously been heralded asone of Indonesia’s most credibleinstitutions) was sentenced to life inprison for corruption after he was caughtred-handed by the KPK receiving bribesto issue favourable verdicts in electiondisputes filed by local government heads.Related to this case, the former BantenGovernor was found guilty of bribing theFormer Chief Justice. She was sentencedto seven years in prison and finedIDR 200 million (approximatelyUSD 15,000).

In mid 2015, the KPK caught anassociate of a prominent litigation lawfirm, red-handed bribing three judges anda clerk from the Medan StateAdministrative Court on behalf of the lawfirm’s clients, the Governor of NorthSumatera and his wife. The brokeredbribe was intended to secure afavourable decision in respect of theGovernor’s lawsuit against the NorthSumatera Prosecutor’s Office regardingthe issuance of an investigation order forthe misuse of social aid funds by theGovernor’s office. Following a KPKinvestigation, the managing partner of theprominent litigation law firm wassentenced to five years and six months inprison and ordered to pay fines in theamount of approximately USD 23,000

while his associate was sentenced to twoyears in prison and ordered to pay finesin the amount of approximatelyUSD 11,250. The Chief Judge wassentenced to two years in prison andordered to pay fines in the amount ofapproximately USD 15,000, while theGovernor and his wife received prisonsentences of three years and two yearsand 6 months respectively.

International co-operation and intelligencesharing between agencies, including theKPK, has also brought results. The UKSerious Fraud Office (SFO) had beenworking closely with the KPK and hadshared evidence from a UK cooperatingwitness to help resolve the Innospecbribery case. Innospec Limited pleadedguilty in a UK court to conspiracy to bribein relation to delaying the introduction oflead-free petrol in Indonesia (therebyprotecting the sale of its fuel additives).This global case involved variouscountries: the UK, the US, Iraq andIndonesia. In Indonesia in late 2015, theformer director of state-owned oil andgas giant Pertamina was found guilty ofaccepting bribes from an Indonesiancompany, which acted for Innospec. Thecourt sentenced him to five years inprison. Earlier in 2015, the court alsosentenced the former owner ofInnospec’s intermediary to three years inprison for paying the bribes.

DevelopmentsAs highlighted earlier, the KPK is the maingovernment agency that enforces theAnti-Corruption Law. The IndonesianPolice and the Public Prosecutor’s Officeare the principal State agencies thatprosecute any crime against Indonesianlaw, including the Anti-Corruption Law.There was high tension between the KPKand the Police in early 2015, which


Indonesia*


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



started when the KPK decided to namethe (then) only candidate for NationalPolice Chief a bribery suspect. In a movewhich the public saw as retaliation, thePolice charged two KPK commissionerswith offences. This resulted in a standoffbetween the two agencies that is stillongoing, and which has threatened theeffectiveness of the KPK. In late 2015,the House of Representatives appointedfive new KPK commissioners, who weresubsequently “sworn-in” by the President.

To date, prosecutions have been primarilyfocused on individuals, and notcorporations, even though the Anti-Corruption Law and certain other specific

laws provide for the liability ofcorporations. In a recent move toprosecute corporations, the KPK and theDeputy Attorney General of SpecialCrimes have been invited by the SupremeCourt to discuss the issuance of aSupreme Court Circular Letter containingguidelines on investigating andprosecuting corporations.

TrendsIndonesia’s Transparency InternationalCorruption Perceptions Index ranking for2015 improved to 88 (from 107 in theprevious year) out of 168 countries.Indonesia’s move up the rankings can becredited to greater national and

international co-operation and intelligencesharing, including with the KPK, as wellas to improvements in the country’sbureaucracy and public services,including the E-Government andprocurement transparency initiatives andthe recent launch of online web and appplatforms through which the public candirectly file a report on any governmentservices related issue, includingfacilitation payment requests.

These trends and developments offerhope and greater certainty in the fightagainst corruption in Indonesia.

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There have been no significantdevelopments further to those reportedin the previous edition of this review(July 2015).33

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Japan


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





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South Korea

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


Changes to legislationThe Ninth Amendment to theCriminal Law On 29 August 2015, the NationalPeople’s Congress of China promulgatedthe 9th amendment to the Criminal Law.Included in the amendment are changesto the bribery-related provisions toexpand the criminal fines applicable toindividuals, to criminalise the act of givingbribes to “influential persons,” and torestrict the availability of penaltyexemption as leniency for bribe-givers.

Prior to the 9th amendment, criminal finesfor giving bribes were primarily applicableto entity offenders, whilst those applicableto individual offenders were relativelylimited. The 9th amendment expanded theapplication of criminal monetary fines to thefollowing four types of individual offenders:

n any individual who commits the crimeof giving bribes to anyone (non-government officials, governmentofficials, “influential persons” or entities);

n any individual who commits the crimeof brokering bribery;

n any person-in-charge of an entity thatcommits the crime of giving bribes; and

n any person who is directly responsiblefor bribery committed by an entity.

As the calculation of criminal fines is notspecifically set forth under the CriminalLaw, local courts have wide discretion.Therefore, local Chinese courts mayimpose unpredictable and potentially veryhigh criminal fines on individual bribepayers, especially directors and seniormanagers of multinationals, as illustratedby a number of astronomically highcriminal fines imposed in 2014. Thechange may further complicate anyinteraction with the authorities during ananti-bribery investigation since the new

provision may lend more leverage to theauthorities in negotiation.

The 9th amendment added a newsub-provision to Article 390 of theCriminal Law (offence of individual bribinggovernment officials). While “influentialpersons” who receive bribes have beensubject to prosecution since 2009, thenew sub-provision targets those who givebribes to a person who may exertinfluence on a current or formergovernment official. Such “influentialpersons” include any close relative or anyperson who is closely associated with acurrent or former government official.

This amendment is an effort to furtherprevent government officials fromreceiving bribes through their “innercircle,” whether during or after theirservice in the government. Corporatecompliance due diligence should thusbroaden payee background checks to“red flag” not only current and formergovernment officials, but also any of theirclose associates to minimize risks ofbeing caught for giving bribes to friendsand families of government officials.

Prior to the 9th amendment, bribe payersmight be eligible for leniency in the form ofreduced or exempted penalties if theyvoluntarily confessed their crimes beforebeing prosecuted. Now, whilst pre-prosecution confession may still lead toless serious penalties, it alone is insufficientto exempt the bribe payer completely frompenalties. In addition to pre-prosecutionconfession, at least one of the followingcircumstances must exist in order to qualifythe bribe payers for exemption frompenalties: (i) the offence is relatively minor,(ii) the bribe payer has provided crucialinformation leading to successfulinvestigation of others in a significantlyimportant case, or (iii) the bribe payerotherwise makes significant contributions.

This provision is intended to resolve a long-existing problem in practice that bribepayers were prosecuted or penalized farless harshly than were the bribe recipients.This disparity was based on an assumptionthat a bribe payer is often a reluctantparticipant in the bribery transaction, but inreality, bribe givers and payers are ofteninterdependent on each other.

Draft Amendments to the Anti-UnfairCompetition LawOn 25 February 2016, China releaseddraft amendments to its Anti-UnfairCompetition Law (the AUCL), which issupposed to be the first amendment tothe AUCL since its promulgation in1993. As regards commercial bribery,the draft amendments have made thefollowing changes:

n The definition of bribery is expanded.While the current AUCL prohibitsgiving or accepting bribes, it does notclearly prohibit promising to offer orgive bribes. The draft amendmentsexplicitly provide that promising tooffer or give bribes is also prohibited.In addition, the draft amendmentsexpand the scope of recipients incommercial bribery. Under the currentAUCL, bribery is defined as givingbribes to the counter party in atransaction. The draft amendmentswould extend the definition to covergiving bribes to third parties who haveinfluence on a transaction.

n The draft amendments provide foremployers’ vicarious liability, adding aprovision that an employer shall beliable for bribery undertaken by itsemployees for the purpose of seekingbusiness opportunities or competitiveadvantages for the employer. As anexception to this principle, anemployer is not liable for itsemployees’ accepting or receiving


People’s Republic of China




bribes which are against theemployer’s interest.

n The draft amendments contain anaccounting provision. A person orentity will be held liable for providingan economic interest if there hasbeen inaccurate recording of suchinterest in the books oraccounting documents.

n The draft amendments potentiallyincrease the penalty for commercialbribery. For violation of thecommercial bribery provision, thecurrent AUCL provides for anadministrative fine of more thanRMB 10,000 (approximatelyEUR 1,350 or USD 1,550) and lessthan RMB 200,000 (approximatelyEUR 27,000 or USD 31,000) orconfiscation of illegal proceeds. Underthe draft amendments, the fine shouldbe of more than 10 percent and lessthan 30 percent of illegally obtainedbusiness revenue.

The draft amendments are currently opento public comments.

Prosecutions andenforcement actionsThe anti-corruption crackdown in Chinawhich started in 2012 has continued into

2015 and 2016. After the prosecution ofGSK, the headline enforcement actionsseem to have shifted to primarily targetstate-owned enterprises (SOEs). In Marchand July 2015, the central Commissionfor Discipline of the Communist Party ofChina (CCDI) conducted two rounds ofanti-corruption inspections and for eachround identified 26 central SOEs acrosskey industries and sectors underinvestigation. In October 2015, followingChina’s stock market meltdown, theCCDI announced plans to inspect allmajor government agencies and SOEs inthe financial services sector. Theseinclude the People’s Bank of China,China’s stock exchanges, China’sbanking, security and insuranceregulatory commissions and otherstate-owned banks and insurers,totalling 31 organizations.

The anti-corruption drive has alsoreached high-profile China-basedcompanies. In June 2015, the two largestChinese internet companies, TencentHoldings Ltd and Alibaba Group HoldingLtd, were implicated in a briberyinvestigation by Chinese regulators.Shortly afterwards, the Public SecurityBureau detained several formeremployees of Tencent (including oneformer Tencent employee who later

became an Alibaba executive). Tencentstated in a press release that it firstuncovered improper practices by itsonline video department employeesthrough an internal investigation in 2014and reported the matter to localauthorities. These individuals are said tohave accepted kickbacks from onlinevideo providers in the amount of millionsof RMB.

The anti-corruption crackdown has alsotaken on an international dimension, withChina’s strengthened co-operation withother countries to target corrupt officialswho have fled the country. Following thelaunch of the “Fox Hunt” project in 2014to track down and bring home fugitivessuspected of financial crime, the Chineseauthorities widened the scope of FoxHunt by launching “Skynet”. The “Skynet”is an effort to cut off corrupt officials’financial channels by targetingunderground banks and offshorecompanies used for money laundering.

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Changes to legislationThere have been no relevantlegislative changes since the last reviewin July 2015.

Prosecutions andenforcement actions Case law since July 2015 sends a strongsignal for a zero tolerance policy inrelation to corruption and other instancesof corporate and fiduciary misconduct:

n In the high-profile case of PublicProsecutor v Lam Leng Huat andothers [2015] SGDC 326, following athree-year long trial, the Singaporecourts found six leaders of a mega-church (City Harvest Church) guilty ofengaging in a conspiracy to commitcriminal breaches of trust byconducting sham investments andround-tripping transactions. Theywere found guilty notwithstandingabsence of evidence of wrongful gainand their belief that they were actingin the best interests of the church andin obedience to their trusted pastor.They were sentenced to jail termsranging from 21 months to eightyears. The judge regarded this caseas “a vivid illustration of wilfulblindness”. Further, the Commissionerof Charities has resumed regulatoryaction for the removal of thedefendants from their roles asexecutive members of the church.While this case did not concerncharges under the Prevention ofCorruption Act (Cap. 241), it is widelyacknowledged in the internationalpress as one of the biggest corruptionscandals in Singapore.

n In Song Meng Choon Andrew vPublic Prosecutor [2015] SGHC 180,

the Singapore High Court affirmedthat indirect bribery of public officials(i.e. through middlemen) warrantscustodial sentences, because of theerosion this causes to publicconfidence in government. In thiscase, the defendant was sentencedto 12 weeks’ imprisonment, despitenot knowing the identity of the publicofficial in question or the terms onwhich that public official was beingpersuaded (by the middleman) to act.

n In Public Prosecutor v Hong MengChoon [2015] SGDC 246, theSingapore courts demonstrated thetough stance they adopt insentencing persons guilty ofcorruption in the private sector.Despite the defendant being afirst-time offender who had paidbribes of small sums (e.g. USD 50),he was sentenced to 14 months’imprisonment due to the expansivenature of the bribes he gave(number of bribes, number ofpayees, duration).

Pending prosecutionsThere are a number of high-profileprosecutions that demonstrate theSingapore government’s firm and activeapproach against corruption in both theprivate and public sectors.

n Seven Singapore Technologies MarineLimited (ST Marine) senior executiveshave been charged with thefalsification of entertainment expensesand the giving of bribes worth millionsof USD relating to the grant of shiprepair contracts.35

n Of significant public interest is theprosecution of Phey Yew Kok, aformer Member of Parliament and

former president of the NationalTrades Union Congress, for criminalbreach of trust and the investment ofunion funds without ministerialapproval. Phey absconded in 1980and surrendered himself at theSingapore Embassy in Bangkok inJune 2015. He has been sentencedto 60 months’ imprisonment.

n In late 2015, four ex-Singapore Poweremployees were charged withcorruption for accepting bribes ofbetween USD 50 to USD 450 in thecourse of their employment.

Cooperation with othergovernmentsIn December 2015, a Singaporean whowas formerly a lead contract specialist ofthe United States Navy was charged withaccepting bribes from the Chief ExecutiveOfficer of a ship support contractor, inexchange for providing him with non-public U.S. Navy information. Thesebribes appear to have been part of amajor corruption scandal within the U.S.Navy. The Corrupt Practices InvestigationBureau (the CPIB) commented that itworked closely with U.S. authorities toconduct the joint investigation thatresulted in the prosecution, and notedthat Singapore has in place “a frameworkfor international cooperation withoverseas legal, law enforcement andregulatory authorities”, with whom theCPIB would “continue to work closely”.

Global assessment In the Rule of Law 2015 Index compiledby the World Justice Project, Singaporewas ranked 9th overall worldwide, risingby one spot from 2014. Singapore wasranked 1st under “regulatory


Singapore*


* Contributed by Cavenagh Law LLP, our Formal Law Alliance partner in Singapore35 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 ofcorruption”, “criminal justice” and “civiljustice”, and 2nd in Asia Pacific overall.

The Corruption Perceptions Index 2015compiled by Transparency Internationalgave Singapore a score of 85 (out of 100)for the perceived levels of public sectorcorruption, placing it 8th in the worldrankings. While Singapore fell one spotfrom 2014, it improved its score of84 from 2014.

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Thailand


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




Notes



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