How would you improve the legal framework and process for preventing, investigating and prosecuting cases of bribery and corruption?
Bribery & Corruption
The proposed introduction of a DPA scheme (see above in response to question 13) is likely to have the most dramatic impact on investigating cases, prosecuting cases and enforcement results. There have been a number of high profile investigations in Australia where the cases have taken many years to investigate and/or many years to prosecute, and other cases where ultimately no charges have been brought after many years of investigation due to the difficulties of establishing the criminal offence beyond a reasonable doubt. The introduction of DPAs offers an efficient alternative to costly and time-consuming investigations, which may be beneficial to both the prosecutors and companies.
The work on both draft Acts (see: answer to Question 18) are at an early stage and they may still be subject to significant changes, but the regulations proposed constitute a step in the right direction towards creating an effective procedure of liability while taking account of compliance measures in place.
It would, however, be better to introduce more incentives for businesses to cooperate with the law enforcement agencies and to give companies an opportunity to cooperate in return for lower sanctions. If companies were allowed to make efforts in good faith in order to deal with corruption, a shift in the approach would follow, enabling the authorities to punish offenders more effectively.
Our view is that the 2017 Bill, coupled with the relatively new whistleblower protections, and sufficient resources for the Director of Public Prosecutions, will aid in the process of preventing, investigating and prosecuting cases of bribery and corruption. The current efforts reflect increased urgency and purpose, which we view as a positive development in this area.
One of the most challenging issues regarding the current framework for preventing, investigating and prosecuting cases of bribery and corruption is the legal uncertainty that arises from the execution of leniency agreements.
Although the Federal Prosecutor’s Office (MPF) has been successfully negotiating leniency agreements with corporate entities, simultaneously with the execution of cooperation agreements with individuals in the criminal sphere, the Brazilian Anticorruption Law provides that the Federal Controller’s Office (CGU) has the jurisdiction to execute such agreements at the federal level. As a result of such discussions, all agreements that were entered with the MPF remain subject to a confirmation by the CGU and other public agencies that may have jurisdiction over the matter, such as the General Attorney’s Office (“Advocacia Geral da União” - AGU) and the Federal Audit Court (“Tribunal de Contas da União” – TCU).
In certain cases, there are judicial decisions (which were not final when this chapter was prepared, to the extent that they were still subject to appeals) that indicate that leniency agreements executed by the MPF are subject to the confirmation by the CGU, for their full validity and enforceability, although preserving the validity and enforceability with respect to the parties who actually executed the agreements. Such discussions bring uncertainty to the parties involved, especially with respect to the amounts of fines to be paid and damages to be reimbursed, since the CGU may challenge the amounts established in the agreements.
In addition to the discussions concerning the agencies with jurisdiction at the federal level in relation to corruption and bribery matters, as described above, there are also discussions with respect to (a) the jurisdiction in respect of wrongful acts that are also violations under other laws, such as, for example, a cartel in the context of a public bid, that would also be a violation under the Brazilian Antitrust Law (Federal Law No. 12.529, of November 30, 2011), and therefore involve the jurisdiction of Administrative Council for Economic Defence (“Conselho Administrativo de Defesa Econômica” - CADE); and (b) the jurisdiction in respect of wrongful acts that affect state, district and/or municipal public agents, in which cases those states, district and municipalities would also have jurisdiction to investigate the wrongdoings.
From the perspective of the corporate entities who are willing to cooperate with the authorities and negotiate and execute a leniency agreement, it is reasonable to expect that once an agreement is entered into with a competent authority, it should be binding to and enforceable against all other authorities that may have a jurisdiction over the investigated matter. At the same time, it is important to acknowledge that under the Federative model adopted by Brazil, the jurisdiction of states, district and municipalities cannot be overruled.
In this context, having the various authorities at the federal level to establish a cooperation agreement among themselves and also developing a model where state, district and municipal authorities could adhere to agreements executed at the federal level (or even by other states, district or municipalities) would be two important steps to provide corporate entities with more certainty when entering into leniency agreements. There is a reasonable expectation that once such steps are taken, more corporate entities would be willing to cooperate with the authorities.
The UK Bribery Act is considered to provide a stringent framework for combating bribery and corruption. The SFO has also been one of the most active enforcing agencies.
However, there are areas for improvement. For example, there is a need for clarity on legal privilege during investigations. As shown in the recent ENRC case, UK enforcement agencies have developed an aggressive stance towards claims of privilege and are testing the boundaries of the previously accepted law, particularly around claims to litigation privilege.
There is also a need for businesses and individuals to have improved clarity on what is expected of a corporate compliance programme, and what constitutes good co-operation during an investigation. What standards are good enough? There is real uncertainty on these issues in the UK (and in most other parts of the world bar the US). This is perhaps not surprising given the body of UK Bribery Act case law is still in its infancy. But this may be mitigated by improved dialogue between the SFO and industry. To date, the SFO has not been particularly forthcoming in setting out the standards it expects. Again, comparisons may be drawn with the US, where the DoJ is more open. The SFO may change its approach with the forthcoming change of leadership.
In addition, although enforcement agencies are co-operating more closely across national boundaries, there may be a need for global enforcement rules to avoid excessive penalties and ensure more effective coordination and enforcement.
First and foremost, we believe there should be protection for whistle-blowers and amnesty for confessions even if it is by the person who accepted the bribe. The idea is to wipe-out bribery and corruption and as mentioned, it relies on the good faith of people. The issue is, why would someone be willing to risk a lawsuit or defamation charges to report it? Secondly, even if someone accepted a bribe and has had a change of heart due to guilt, by them reporting it, they are still exposing the crime. Obviously, they need to be punished in some form, but perhaps jail time should be excluded.
As for investigating it and prosecuting it, we believe that we must continue to support agencies that focus on bribery and corruption and ensure that proper training is given to them and all government officials on what constitutes bribery and corruption.
Reform of the PCA has been under review by the Singapore government for some time. The consensus remains that, on balance, the existing legislation is largely fit for purpose and provides enforcement agencies and prosecutors with the necessary tools to combat corruption effectively. It is argued that Singapore's consistently positive CPI rankings are a testament to this and, a result, only reasonably moderate enhancements to the PCA have been implemented over the years – with the most recent amendments passed in 2012.
However, the recent Keppel case has reignited the debate with various commentators mooting further amendments to bolster the PCA framework. The following suggestions, in particular, merit further consideration:
- Increased fines – the PCA's current maximum fine is S$ 100,000 per charge. Considering that commercial bribes can run into the millions of dollars and may relate to contracts worth billions, this cap is arguably too low in certain circumstances.
- Corporate Liability – Under the current regime, in order for a corporate to be liable for bribery offences under the CPA it must be shown that the offence was driven by the "directing mind and will of the company". This is a reasonably high threshold and can, in practice, make enforcement against corporates challenging. A move towards a strict liability regime – such as that found in the UK Bribery Act 2010 – would be welcomed by some commentators who argue that this would enhance corporates focus on compliance and allow greater flexibility for enforcement agencies.
- Greater clarity on extra-territorial implications for bribery – Section 37 PCA currently imposes liability on Singapore citizens for bribery offences committed outside Singapore. The scope of this extra-territorial effect does not, however, extend to non-Singaporeans or corporates. A levelling of the playing field in that regard should be considered – this could for, example, include an extension of the provisions of Section 37 to non-Singaporeans who commit corruption offences abroad when they are agents of a Singapore company or have a Singapore connection (business or assets in Singapore).
China has completed the initial stage of establishing the legal framework and process for preventing, investigating, and prosecuting bribery and corruption. In order to comply with the relevant laws and regulations, companies should also build up an internal process which covers the ethical standards cultivation, proper delegation of authority, due diligence on business partner selection, internal monitoring and control on the irregular transactions, as well as setting up compliance reporting platform and effective process for internal investigation and crisis management. Special attention is required on the interaction and cooperation under situations whereby a government investigation or inquiry is initiated, companies shall then take responsive actions including the internal investigation and evidence preservation, severity evaluation, proactive communication with the authorities, control of media and public exposure, etc.
We consider that the recent creation of the SNA is indeed a step forward towards fighting corruption. However, its success depends on the real implementation of independent investigating and sanctioning bodies, which are not colluded or politically affiliated with government officials. In our opinion, regulatory measures aiming at providing full independence, resources and protection to investigating and sanctioning bodies, as well as the actual implementation and execution of exemplary and strong sanctions would represent a significant improvement which may derive in a positive impact against corruption.
There is a multitude of legal provisions in respect to procedures and enforcement agencies, which have the power to investigate acts of corruption. Apart of criminal investigations, parallel proceedings may be initiated by Regulatory Bodies or the Tax Authorities. All these proceedings may result to different types of sanctions to individuals or entities, which may be imposed independently. In this respect, the legal framework for reporting to the authorities by implicated individuals is somewhat incomplete as it does not contain provisions for suspension of other, parallel proceedings. Most importantly, there are no provisions in respect to entities that would wish to come forward and report acts of corruption to the competent authorities. Apart from the general provisions for mitigating the sanctions to be imposed there is no legal framework for leniency in respect to entities. A standard leniency procedure would make it easier on the entities to report to the authorities findings form their internal audits.
Tackling of corruption in India is an uphill battle which requires a wide ranging legislative agenda. Technological advancement in services provided by the government and reducing interface with the authorities as well as middlemen may be one way to curb the menace of corruption. India also has a massive backlog of cases. From a practical perspective, the delay in conduct of trial owing to pendency of cases in Courts acts a major hurdle in effective implementation of anti-corruption laws. The time between initiation and final disposition of a case can at times be up to 20 years which leads to a weak law and order enforcement system, prolonged trials and delayed judgments. Swift implementation of laws coupled with improvement in judicial infrastructure is one the many ways in which deter the spread of corruption in India.
We believe the legal framework is (at least for the time being) adequate to the Angolan circumstances and to the country’s specific feature. We believe the next steps will be of adaptation to the current legal framework and to the new paradigm. Once these first steps are taken, then the time will come for Angola to start thinking on the following ones.
We believe that Portuguese legal framework is adequate and sufficient to prevent, investigate and prosecute cases of bribery and corruption.
However, we believe that an example of an amendment that would, in our opinion, improve the anti-bribery and corruption legal framework and particularly contribute to the prevention of bribery and corruption practices is the approval of a legal provision(s) that would clearly state the legal benefits (mitigation or exemption of criminal liability) for a company that creates and implements adequate compliance programs and policies in anti-bribery and corruption matters, similar to the legal framework that exist, in this respect, and for instance, in Spain and Italy.
The main challenge in Denmark in terms of prevention of bribery and corruption is the lack of political priority and the resulting weak enforcement, particularly with respect to international financial crime / corruption. Consequently, an improved legal framework would have to be based on greater political attention resulting in more stringent regulation, more resources to the enforcement bodies, and generally higher societal awareness of corruption risks and its consequences.
Additional regulations regarding increased transparency when it comes to financing in business transactions would be helpful, as well as some changes in the Criminal Procedure Code in order to allow the law enforcement authorities to be more effective. Law enforcement needs highly specialised and centralised units responsible for the investigation of bribery and corruption.
The above-mentioned legislation on criminal liability of corporation is quite effective, but still not binding: that means that even a very big company might decide not to adopt and implement a compliance program. The non-adoption and implementation of a compliance program by a company is likely to mean, on the one hand, that the people who work in the said company might not be well aware in some cases of the nuances between an illicit conduct and a licit one, and, on the other hand, that the said company has not in place procedures and policies regulating sensitive areas of risk (e.g. a policy regulating gifts and sponsoring). On top of that, as already pointed out above, we think that a thorough rethinking of the criminal law system (which might also imply a significant reform of the Criminal Code and the Criminal Procedure Code) is really called for, and that in the end the enforcement – also as regards bribery and corruption crimes – will be much more effective and both the Authorities, the companies and the private persons will benefit from that.
We believe that the Macao anti-bribery and corruption legislation is adequate an in line with the legislative threshold of other developed countries or regions, particularly in what relates to criminal law. However, we also believe that the regulatory framework on anti-bribery and corruption matters could be improved.
HRA: Our opinion is that the legal framework is adequate and accompanies the international trends. The improvements are needed in the enforcement field, by creating more specialized forces, less subject to corruption and bribery themselves.
As mentioned in No. 18 above, a new plea bargaining system is to be introduced and the bribery offences are subject to the system. Under the system, it is likely for the prosecutors to be able to meet the burden of proof and find extra evidence for bribery offences more easily by taking advantage of information obtained in the process of plea bargaining.
Concerning the prevention of corruption, it is absolutely necessary that lawyers encourage the fight against corruption in France which damages the reputation of our companies and reflects a bad image of our country.
However, it is the responsibility of the legislator and AFA to clarify the rules and define precisely what is prohibited and what is not. Notably, with regard to the gifts and invitations, we should not end up in an extreme situation where any invitation to a restaurant is considered suspicious because it is an integral part of our culture and heritage. There should be no confusion between what has to be considered as a criminal offence and what is not. It is very important that anti-corruption regulations, which are a necessity, do not alter the French culture and savoir-vivre.
Regarding prosecuting it should be opportune to include in the Judicial Convention (CJP) incentive measures for virtuous behaviours on behalf of companies via the modulation of the amount of the fine. This amount should depend on the ‘pledges of good conduct’ (e.g. for spontaneous disclosure of facts, cooperation in an investigation etc.) which permit authorities to deal more effectively with the cases of transnational corruption and to multiply the quantity of such cases and to contribute to the generation of culture of ethics and responsibility within companies operating on international markets.
The fight against corruption requires technical, financial and human resources that are currently insufficient in France as well as in many European countries. Harmonisation of European policies seem to be an essential prerequisite. The role played by the OECD has led France to make considerable progress in its fight against corporate financial crime.
The Swiss legal framework is, in essence, robust, as far as bribery and corruption is concerned.
As the OECD has highlighted in its recent report, one key element that should be improved in the future is the transparency of the proceedings and judgments rendered in corruption related cases, as this transparency is a key element when it comes to ensuring the public trust in Switzerland's legal system.
Further, Switzerland should continue to ensure that the legal privilege remains fully intact regarding internal investigations of corruption related irregularities. The recent trend of limiting privilege with the argument that the respective internal investigations were part of the businesses' own compliance obligations should be reconsidered. Otherwise, there is a serious risk that companies may refrain from fully investigating potential compliance shortfalls to avoid any adverse impact on their legal position in criminal proceedings, thereby considerable weakening the overall effectiveness of their compliance.
The number of DOJ and SEC enforcement actions under the FCPA in recent years (ranging between 20 and 74 from 2010 to 2017) and their significant monetary penalties (over $2 billion in 2016 and over $1 billion in 2017), show that the framework and processes for investigations and prosecutions of FCPA violations are robust. However, there is substantial room for improvement of coordination across different government investigations, prosecutions and corporate settlements. Major corruption enforcement authorities should consider forming a clearinghouse to coordinate and decide which authority will lead an investigation, what parameters will apply as to a company’s own internal investigation (for example, as to whether the company may interview employees), and which authorities will seek monetary penalties from a company as part of a negotiated settlement to resolve all governmental inquiries into a bribery matter.