How would you improve the legal framework and process for preventing, investigating and prosecuting cases of bribery and corruption?
Bribery & Corruption (2nd edition)
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.
Within the French context, we would first advocate for the implementation of a robust legal framework for internal investigations, which would effectively safeguard the rights of natural as well as legal persons. Such a framework should notably allow natural persons to effectively participate in the investigations, along with their counsel, thus preventing counterproductive misunderstandings or antagonisms. Similarly, we are of the opinion that negotiations between companies and judicial authorities should include natural persons and their counsel, so as to lead to a comprehensive and stable settlement, which will not run the risk of being contradicted and shattered in the context of subsequent proceedings.
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 specialized and centralized units responsible for the investigation of bribery and 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 or procedure for settlement with the authorities would make it easier on the entities to report to the authorities findings form their internal audits.
The 2018 Act is currently in its infancy and, to date, there have been no prosecutions under the Act. Until this has been tested, there will remain a level of uncertainty as to the lengths the authorities will go to in terms of enforcing suspected cases of bribery and corruption. In the meantime, in order to review the effectiveness of the legislative framework in place, there may be merit in considering the commissioning of a committee tasked with a single purpose of reviewing the effectiveness of the 2018 Act, somewhat akin to the Bribery Act Committee appointed by the House of Lords in the UK for the purpose of reviewing the effectiveness of the Bribery Act, 2010.
In that instance, the Committee pinpointed certain areas of improvement to include recommending that the government improve their advice to SME’s about how best to export their products and services while remaining compliant with the Bribery Act, and noting that witnesses reported a lack of cooperation between the Crown Prosecution Service (CPS), Serious Fraud Office (SFO), the Police, National Crime Agency, HMRC and others which the Committee recommended be remedied. The Committee also recommended that the CPS and SFO publish plans outlining how they would speed up bribery investigations and improve the level of communication of those placed under investigation for bribery.
In order for a Committee such as that established in the UK to add value in an Irish context, it would be important that there has been some attempt by the authorities to enforce Irish legislation in a meaningful way. This may therefore be a consideration for a number of years down the line but it is perhaps something to keep under review.
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 as a result of the same, the enforcement – also as regards bribery and corruption crimes – could be much more effective and both the Authorities, the companies and the private persons will benefit from that.
In Belgium a sufficient legal framework exists for investigating and prosecuting cases of bribery and corruption. However, due to a lack of available resources (personnel and material) the investigation and prosecution of bribery and corruption lacks efficiency and efficacy. We advocate for an improvement in this regard.
Investigative authorities would be expected to find information and collect evidence of domestic and foreign bribery and corruption mainly by way of utilizing the plea-bargaining system.
On the other hand, from the businesses’ perspective, the first step is to analyse and identify the potential risk of bribery and corruption in their own business activities. The next step is to implement an effective global compliance program to prevent bribery and corruption based on the results of the first step. Appointment of a compliance officer or a general compliance supervisor to oversee compliance personnel and implementation of educational activities in companies are the typical components of global compliance programs. In addition, taking effective measures to detect information related to bribery and corruption at an early stage is significant. The typical measures are implementation and improvement of domestic and/or global whistleblowing systems, and establishment and reinforcement of domestic and/or global audit systems.
Kenya has a robust legal framework and process for preventing, investigating and prosecuting cases of bribery and corruption. There are multi-agencies dealing with investigation and prosecution of bribery and corruption. The major challenge is in enforcement of the legal framework. Investigating, prosecuting and Judicial officers need to be trained on these areas to ensure that culprits are punished for their crimes.
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.
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.
The main challenge we have in Brazil nowadays is that politicians have the right to be prosecuted in special courts. For instance, Senators, Members of the lower house, ministers, among several others, have the right to be prosecuted directly before the Supreme Federal Court. The Supreme Federal Court does not have criminal investigations in its DNA, neither has enough staff to analyze all the cases that are under course. Because of that, we have seen several former politicians, money exchangers and executives being convicted as a result of its participation in illicit schemes, but we do not see the same when it comes to politicians still under their mandates. This improvement in our legal framework would be crucial to maintain and expand the fight against corruption, but the main challenge we have is that those politicians with the privilege are the ones entitled to analyze any bill in this sense.
The removal of the ‘facilitation payment’ exception in the case of foreign public officials would assist. This leads to too many potential grey areas as to what is permissible and what is not. There is also inconsistency. It is not a defence in respect of domestic officials, yet is available in the case of foreign officials.
The ‘de minimus’ common law defence is also confusing. The approach ought to be for the judge to determine that the thing given or offered did not influence or was, by its nature, incapable of influencing the recipient. This would lead to a ruling that the mens rea of the offence is not made out. It is a misnomer to address the issue as a positive defence to the charge.
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.
An improvement of the legal framework in the anti-corruption field could aim to increase the clarity and predictability of norms that sanction corrupt practices, considering that in present the law provides a wide range of interpretation and application, likely to create a degree of uncertainty regarding the qualification of some actions/inactions which may fall under the rules of corruption.
From this perspective, one may take into account the deficiencies found by the Constitutional Court of Romania regarding the quality of the law, many exceptions of unconstitutionality being admitted from the point of view of the meaning of legal norms in criminal matters.
One of the ways that the legal framework for preventing corruption can be improved is the enaction of robust whistle-blower protection laws, and raising awareness of such laws once they are enacted. Such whistle-blower protection laws are in place in most developed countries, and may encourage employees to report wrongdoing and protect them when they do. Otherwise, a whistle-blower may be concerned that reporting any wrongdoing may lead to him losing his job, being threatened, physically harmed or sued for defamation. The issue of stigma for whistle-blowers is a real and present one.
The Swiss legal framework is, in essence, robust, as far as bribery and corruption is concerned.
As the OECD has highlighted, one key element that should be improved 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 current 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 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 its recently appointed Director, Lisa Osofsky.. Ms Osofsky is a former US prosecutor and commentators expect that she will aim to add some US-style force to the SFO's operations.
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.
Focus should be shifted from the punishment and external enforcement of anti-bribery laws to the internal regulation, monitoring and preventing of bribery and corruption.
This could be done by introducing clear compliance programs with reporting requirements to prevent and not prosecute breaches. The benefit achieved by internalizing information collection to the sources themselves would likely be more accurate and complete data. Another aspect that would be required to ensure proper use of compliance programs is ensuring sufficient training is provided to those parties responsible for the collection and interpretation of the reported data.
The obligation to keep files of necessary information as set forth and required by regulations affecting the protection of personal data, since May 2018, has been positive in order to disclose the handling of information.
However, we consider that current legislation does not clearly state the legal beneﬁts for a company that creates and implements adequate compliance programs and policies in anti-bribery and corruption matters. For this reason, new legislation regarding these matters would improve the legal framework and process for preventing, investigating and prosecuting cases of bribery and corruption.
Important improvements were introduced in recent years to the anticorruption framework. They should be accompanied by the strengthening of the Judiciary’s legitimacy, which will depend on prosecutors’, magistrates’, and courts’ public perception of impartiality, professional capacity, and effectiveness.
The enforcement of Law 27401 will help clarifying many legal ambiguities or vagueness in relation to corporate liability for corruption offenses and legally incentivized compliance practices.
The enforcement of administrative regulations on integrity in public procurement, together with SOEs transparency and integrity policies implementation will promote corruption prevention where it is more needed.
Finally, a legal solution could be promoted to allow businesses cooperating with State’s investigations to reach joint agreements over all different proceedings against them, either criminal, civil, or administrative. Otherwise, incentives to reach cooperation agreements under Law 27401 will never be complete –because a company agreeing before criminal prosecutors won’t get rid of related administrative actions, e.g. on competition law, tax matters, or civil liability against competitors.
We do have legal framework and I do believe that there is no need to approve new regulations. We just need to implement the law.