What are the recent trends in investigations and enforcement in your jurisdiction?
Bribery & Corruption (2nd edition)
The Communist Party of China (“CPC”) is building on the overwhelming momentum and keeping up the pressure and the enforcement intensity on anti-corruption and bribery. The overall goal is to improve the system of disabling corruption and bribery, to create an influential atmosphere and to demonstrate the government’s determination to eradicate corruption and bribery. Anti-corruption, as is reiterated by China’s top leadership that China has zero tolerance for corruption, will continuously be a key enforcement area.
From a structural perspective, the supervisory system reform is among the latest enforcement trend to rein in corruption, as a representative example for improving the mechanism and integrating the resources for anti-corruption and bribery.
As for the enforcement scope, the focus has been extended from bribery taking, to cover both bribery taking and offering acts. The targets will involve more “seeming outliers” such as the friends or relatives of the state functionaries, or people with a connection to the counterparty of the transaction.
In terms of an industrial perspective, the health care industry remains one of the authority’s primary focuses, with commercial bribery being one of the most common investigations taking place at the moment. Other industries such as automobile, fast moving consumer goods, telecommunications, and financial industries are also among the target list of the recent enforcement trend.
In addition, the Chinese government has also attached great importance to the international cooperation on cracking down on bribery and corruption. This is done through continuous efforts, such as the active participation in the internationally joint enforcement programs and facilitating the establishment of the APEC Network of Anti-Corruption Authorities and Law Enforcement Agencies.
A major trend in enforcement is that of negotiated proceedings, which are relatively new to French criminal proceedings. The possibility for a company to enter into a settlement with the prosecutor, without having to admit guilt was introduced by the Sapin II Act and rendered effective in the past few months; in 2018, the CJIP was used in four bribery cases.
Another trend revolves around international cooperation between French enforcement authorities and their foreign counterparts. In effect, in the past, French enforcement authorities have been criticized for not prosecuting bribery cases involving French companies or nationals, thus abandoning them to foreign authorities (e.g. Alstom case). French authorities have thus taken a more proactive approach towards corruption, as set out above, while strengthening international cooperation. For instance, in June 2018, the French public prosecutor entered into a settlement with the French Société Générale, which explicitly mentions exchanges with the US DOJ. Concomitantly, the US DOJ announced that it had reached separate non-trial resolutions with the bank and one of its subsidiaries in relation to the same facts.
Furthermore, it has become clear that French enforcement authorities want to put greater emphasis on the pursuit of natural persons, as clearly expressed by the head of the PNF at the OECD anti-corruption forum in Paris in March 2019. This approach echoes that of the American Department of justice (DOJ), which announced important changes to the Yates Memo in that regard in November 2018, and the British Serious Fraud Office (SFO), which in March 2018 urged companies to facilitate proceedings against individuals.
Since the introduction of section 100b of the Criminal Procedure Code in August 2017 government authorities are able to secretly monitor IT-systems. This new regulation allows prosecutors to monitor corporate structures and gather evidence without being detected.
Furthermore, the number of internal investigations led by third parties have been increasing. Companies initiate internal investigations to prevent search and seizures, severe penalties and bad press.
The competent Prosecuting Authorities (namely the Anti-Corruption Prosecutor Office) have become very active in investigating cases of alleged bribery and have been targeting specific industries and sectors, such as the health industry, public works and financial institutions. Many of these investigations have become high profile cases, covered by the media on a daily basis. In many of these cases members of the Anti-Corruption Prosecutor’s Office have traveled to other jurisdictions to seek assistance by other enforcement agencies in collecting evidence and they have been relying heavily on mutual assistance requests especially for acquiring evidence of money transactions between jurisdictions.
In the past year there has also been a combined co-operation of the Anti-Corruption Prosecutor’s Office and other enforcement agencies, especially the General Inspector of Public Administration and the Financial Police to address allegations on corruption.
Many Irish regulators (for example, the Central Bank of Ireland, ODCE, Charities Regulator) are actively investigating and taking enforcement action in relation to alleged legislative breaches pertaining to their specific industry. This has yet to be mirrored in the anti-bribery and anti-corruption space. However, the 2018 Act is part of a suite of measures published by the Irish government in November 2017 aimed at enhancing corporate governance, increasing transparency and strengthening Ireland’s response to white collar crime. Certain of the elements of the government’s package on the proposed reform on white collar crime, along with the introduction of the 2018 Act, include:
- Establishing an independent company law, compliance and enforcement agency to be known as the Corporate Enforcement Authority, replacing the current Office of the Director of Corporate Enforcement (ODCE). The General Scheme of the Companies (Corporate Enforcement Authority) Bill 2018 was published on 4 December 2018 and under the proposed legislation, the ODCE will take the form of a Commission, as opposed to its current structure as an office within the Department of Business, Enterprise and Innovation, with the intention that this will provide the organisation with more autonomy and flexibility in the investigation and prosecution of complex breaches of company law;
- Piloting a Joint Agency Task Force within the Irish police force to tackle white collar crime;
- Enacting the Criminal Procedure Bill. When enacted, it is envisaged that this legislation will streamline criminal procedures to enhance the efficiency of criminal trials.
In addition, in October 2018, the Law Reform Commission issued a report on Regulatory Powers and Corporate Offences. Among the recommendations were:
- that a properly resourced statutory Corporate Crime Agency be established;
- that economic regulators have the power to impose significant financial sanctions and to make regulatory enforcement agreements, to include redress schemes; and
- a proposal for reform of fraud offences to address egregiously reckless risk taking.
While historically there has been little in the way of investigating or enforcing instances of bribery and corruption in Ireland, given the increased focus among regulators in relation to investigations and enforcement generally in the jurisdiction, one anticipates that this is likely to change in the near term.
The level of attention by the Public Prosecutor’s Offices in relation to bribery crimes is always high, even if nowadays there are not as many proceedings as there used to be in the mid-nineties, when important scandals related to public bribery at both a local and a national level came to light. It has to be pointed out that, in any case, because of the principle of mandatory prosecution, which applies in Italy, every time a Public Prosecutor is informed of the alleged commission of a crime, he/she has no choice but to investigate it and – in case he or she deems that there is any ground to try the case in Court – to seek for the committal to trial of the defendant.
According to the Belgian media which reviewed an internal report on the Central Anti-Corruption Service (Centrale Dienst ter Bestrijding van Corruptie/Office Central pour la Répression de la Corruption) the investigations and enforcement of corruption is not optimal due to a lack of resources. Moreover the investigation of private corruption does not seem to be a priority.
In June 2018, the Japanese version of plea-bargaining took effect. Under the plea-bargaining system, a public prosecutor may enter into an agreement with a suspect or a defendant, including corporate entities, with the consent of his/her defense attorney, under which the prosecutor agrees to drop or reduce criminal charges or provide favourable treatment with respect to certain types of crimes. This includes, but is not limited to, domestic bribery and bribery of foreign public officials regulated by the relevant laws including the Penal Code and the UCPA. The prosecutor has the authority to determine whether to enter into an agreement by taking certain factors into consideration.
Thus far, the plea-bargaining system has been applied in two publicized criminal cases. The first case involved a power plant manufacturer suspected of violating UCPA, i.e., bribery of foreign public officials. The company successfully entered into an agreement whereby the prosecutor agreed not to prosecute in exchange for full cooperation with an investigation to prosecute the three main individual suspects. The second case is a case involving Nissan Motor Company. It is assumed that a plea bargain will be offered to the defendant. At this moment, detailed information regarding the terms of the plea bargain in this case is not available.
The recent trends in investigations have been mostly in the public sector. This year we have had a governor being arrested over suspected Kenya shillings 84 million fraud in his county; two officials from the Kenya Revenue Authority (KRA) arrested by detectives from the Directorate of Criminal Investigations over graft allegations; investigations into alleged multi-billion-shilling fraud in the Arror and Kimwarer dams involving the dubious payments made to some company yet construction works are yet to start. Despite investigations, arrest and charging of high-profile individuals even in the government, none of the individuals have been prosecuted.
A few recent trends have emerged in enforcement of the FCPA:
- Increased incentives to cooperate: The most significant recent change in FCPA enforcement is the DOJ’s FCPA Corporate Enforcement Policy, issued in November 2017. The policy sets forth a presumption of declination if no aggravating circumstances are present and corporate entities provide full cooperation, which includes, among other things, voluntary self-disclosure and timely and appropriate remediation. If DOJ decides declination is appropriate, the corporate entity is still required to pay all disgorgement, forfeiture and/or restitution, as appropriate. If the corporate entity does not meet all of those requirements for a declination, the policy provides avenues for the entity to receive up to a 50% reduction in criminal fines and to avoid the appointment of an independent compliance monitor.
- Multi-jurisdictional enforcement and investigations: The DOJ and SEC seek to closely coordinate their investigations and enforcement actions not only between themselves but with foreign authorities as well. As other countries have passed anti-bribery laws, they have increased their enforcement and worked with US authorities in investigating violators and obtaining global resolution. Recent enforcement actions have included coordination with authorities in, for example, Singapore, Brazil, China, the Netherlands and Switzerland involving companies in the oil and gas support services, telecommunications, pharmaceutical and shipping industries.
- Individual accountability and liability: US government authorities continue to emphasise holding individuals—not just corporate entities—accountable and liable for FCPA violations. In several recent enforcement actions against corporate entities, individuals were also criminally charged for their involvement in the bribery violations.
Mexico has deep corruption problems; it ranked 138 (out of 180, where 1 is the less corrupt and 180 is the most corrupt) in the Corruption Perceptions Index 2018 issued by Transparency International. Hence, the fight against corruption is a daily topic in the spotlight of national media, political parties and civil organizations. By these means, such fight against corruption is one of the main subjects that new President Andrés Manuel López Obrador (“AMLO”), who took office last December 1st, 2018, has adopted as flagship, though, no major prosecution processes have been started, other than messages distributed through media referring to potential prosecution actions against allegedly corrupt offices from previous administration.
The implementation of the SNA has been a huge step towards mitigating corruption, at least, compared to the former system and elements that the government had for such purpose, although criticized by the insufficient autonomy of its organs.
In light with the above, there is still no clear nor defined strategy from the Federal Government to tackle bribery and corruption and to take enforcement actions.
One of the actions that have indeed been carried out is the strategy initiated by the Federal Government to stop and prosecute the robbery and illegal commercialization of hydrocarbons, which is one of the main activities performed by organized crime in Mexico. Allegedly, the coordinated and systematic commission of such crime originated from corrupt schemes implemented by PEMEX’ (the state-owned entity in charge of production and commercialization of hydrocarbons) officers. As informed by the Federal Government, a number of those officers are under investigation and subject to judicial process.
From a private sector perspective, the -every day increasing- actions taken by foreign authorities to implement anticorruption measures and to sanction corrupt conducts of corporations overseas, as well as worldwide known corruption scandals altogether, have raised the awareness of business organizations towards the implementation of robust compliance programs and investment in the setting up of full compliance departments, including full adoption of policies to comply with the U.S. Foreign Corrupt Practices Act, and, in a less common fashion, with the United Kingdom Bribery Act.
In recent years, Brazil has witnessed an outrageous growth of compliance, anti-corruption, investigation and enforcement practices.
A recent trend relates to Brazil’s anti-corruption fight that resulted in a significant political shift both in the Congress and Presidential figure.
Moreover, the President-elect has announced Sérgio Moro for Minister of Justice and Public Security as of January 2019. Moro was for a period the main judge and symbol for the Car Wash Probe. Moro has proposed an anti-corruption package that consists of bills and proposed amendments to the Constitution and resolutions for concerns against corruption in both sectors: public and private. The proposals cover both procedural measures aimed at celerity, as well penalties for crimes committed in both sectors.
Additionally, Car Wash Probe reached its 61st Phase, in which a bank has been dawn raided because of its alleged participation in money laundering schemes. Employees of other banks have also been recently arrested amidst it alleged participation in illicit scheme. Lastly, in June, 2018, a former member of the Federal Police stated to Brazilian newspapers that the material collected during the period in which he was a public investigator would be enough for at least additional 5 years of investigations. There is still a lot to come.
Recent government focus has been on actively raising awareness in the public and private sectors of bribery and corruption in general.
There has been no perceived increase in prosecutions for bribery or corruption offences over the past 12 months, although the level of police and Serious Fraud Office activity in this area is not reported on publically.
Albeit Denmark is being criticised for lagging enforcement against corruption from the OECD and others, there is no imminent changes in law or practice affecting enforcement against corruption in Denmark.
In March 2019 the Danish Ministry of Justice established a whistleblower program. This program includes the department of the Ministry of Justice, the whole Danish Prosecution Service, the Danish police, the Danish Security and Intelligence Service and the Department of Prisons and Probations. The program ensures the employees in the listed organizations and their associates, including the employees in the associated organizations, access to report unacceptable behavior, among these corruption and bribery.
Moreover, the Danish government has signaled that there will be established a whistleblower program for the public sector. The program is intended to include all government agencies. The program has not yet been formally established except for organizations within the Ministry of Justice as explained above. Local governments will not be included in this program.
According to the information made available by the National Anticorruption Directorate regarding the cases in which corruption offenses are investigated, there is now a decrease in the number of public communications through which public opinion was brought to the attention of such cases.
Also, according to the 2018 DNA Report published on the Internet , it can be noticed that between 2015-2018 the number of notifications from persons and institutions has decreased from 3.305 to 1.513, and the number of files to be solved has decreased from 12.353 in 2016 to 9.191 in 2018.
In this context, it can also be mentioned that a series of Decisions of the Constitutional Court of Romania recently adopted and published in the Official Gazette, which found elements of unconstitutionality of the relevant legal provisions from the perspective of investigations in the causes of corruption (a relevant example in this respect being Decision No. 51/2016, where the CCR established that SRI bodies cannot carry out criminal / technical surveillance activities in the criminal proceeding), could have an impact on the DNA activity, which might have led to diminishing the volume of activity of the main investigative judicial body in the material facts of corruption.
Based on the CPIB’s annual report for 2018, cases involving private sector individuals continued to form the majority, or 88%, of all the new cases registered for investigation by the CPIB in 2018. Of these, 15% involved public sector employees rejecting bribes offered by private sector individuals. The proportion of public sector cases remained low, accounting for 12% of all cases registered for investigation in 2018.
The Criminal Justice Reform Act (CJRA) which was passed by Parliament on 19 March 2018 also introduced the option of Deferred Prosecution Agreements (DPA) in Singapore. A DPA is a voluntary alternative in which a prosecutor agrees to grant amnesty in exchange for a defendant agreeing to fulfil certain requirements and specific conditions, such as, for example, implementing compliance programmes, and/or co-operating in investigations into wrongdoing by individuals. For now, there are no publicly-available guidelines on when the AGC will enter into a DPA with a corporate entity.
The introduction of DPAs in Singapore may be an indication of an increased focus on corporate entities by the Singapore government. This is since the Singapore Ministry of Law stated that the DPAs serve two main purposes – to encourage corporate reform to prevent future offending, and facilitate investigations into wrongdoing both by the company and by individuals.
Since a few years, prosecuting international bribery and corruption has been a declared key goal of the OAG. In line with that goal, the prosecution of large international bribery schemes has steadily increased in the recent years.
In doing so, the Swiss authorities have frequently also resorted to so-called "special" procedures, in particular by penalty orders or abbreviated proceedings (where the accused pleads guilty and agrees on a sentence with the public prosecutor, with the court's role being limited to a review of the agreement). In some instances, the prosecutor has also agreed to close the proceedings after reparatory payments were made voluntarily. These special proceedings are in principle highly efficient, in particular where the facts may not have been determined in all details, and allow for a quick resolution without having to resort to full prosecution. However, the OECD has criticized their widespread use as the decisions rendered may lack the necessary dissuasive effect due to overly mild sanctions, and the level of transparency is deemed insufficient as public access to such decisions is limited. Further, the OAG is currently proposing the introduction of deferred prosecution agreements and drafting corresponding legislation.
In the recent past, the authorities have also increasingly collaborated with foreign authorities, in particular in cases of major corruption, aiming at internationally coordinating the prosecution in the various jurisdictions to render it more efficient and avoid having to discontinue investigations at a late stage due to overlaps. In corruption cases involving Swiss perpetrators, the OAG is also supporting mutual legal assistance to allow in a first step a prosecution of the main offences abroad, so that the Swiss companies can be prosecuted domestically in a second step based on the foreign conviction.
In the last two to three years, the SFO has begun to use Deferred Prosecution Agreements (DPAs) following corporate bribery investigations. The SFO entered into its first DPA in 2015, with Standard Bank. Other examples have followed: XYZ (an unnamed company) in 2016; Rolls-Royce and Tesco in 2017.
The SFO has also become more assertive in testing claims of legal professional privilege arising in internal investigations. Companies - particularly against the backdrop of negotiating a DPA - are coming under increasing pressure to waive arguments of privilege.
Finally, there is increased coordination between the SFO and its counterparts in foreign jurisdictions. This can include sharing of information and documents, creating an increasing challenge for companies under investigation to manage their global regulatory risk.
The most significant development in Canada is the introduction of “remediation agreements” with companies accused of offences pursuant to which prosecutors and accused organizations where criminal proceedings are stayed in exchange for certain conditions being met. Remediation Agreements are the Canadian equivalent of American and U.K. deferred prosecution agreements.
Remediation agreements are expected to provide an avenue for companies that identify wrongdoing by company personnel to remedy that wrongdoing, enhance compliance programs and engage with authorities without necessarily incurring the additional punitive effects of a criminal conviction on innocent third parties.
A prosecutor may only enter into a remediation agreement with organizations alleged to have committed a criminal offence if the Attorney General has consented to the negotiation of an RA and if the prosecutor is of the opinion that:
- there is a reasonable prospect of conviction;
- the offence did not result in serious bodily harm, death or injury to national defence/security and was not committed for or with a criminal organization or terrorist group; and
- negotiating the agreement is in the public interest and appropriate in the circumstances.
The most significant trend in Portuguese jurisdiction is the increase or criminal persecution for the so call white-collar crimes.
This trend is an echo of increasing social reprobation of such crimes.
Such a tendency is producing a profound impact in accusations and jurisdictional decisions in terms of the aggravation of penalties.
In such an environment it is also becoming increasingly difficult for defendants to exercise their defense, often seen as illegitimate or abusive.
Investigations and enforcement of anticorruption laws have been boosted by the so called “Repentant Law” (Law 27304), which allows defendants to reach leniency agreements in exchange of cooperation in the investigation.
The main exemplar of current trends is the so called Notebooks Scandal case (“Causa de los Cuadernos”). It began in August 2018, when the notes of a driver of a high-ranking official in the Ministry of Planning came to light. The driver meticulously detailed each trip where his boss picked up bags of cash from government contractors and left them at different destinations, including the House of Government and former Argentine presidents Néstor and Cristina Kirchner’s personal apartment. Copies of the notes were obtained by a journalist and presented to a federal court.
The corrupt scheme was allegedly established during Néstor Kirchner’s presidency, from 2003 to 2007, and allegedly continued during Cristina Kirchner’s two terms in office, from 2007 to 2015. To obtain federal public works and road concessions, member companies of a cartel organised within Argentina’s national construction business association allegedly agreed to pay kickbacks of between 10 and 20 per cent of the total cost of each project. Major businesses in the construction industry have been implicated and similar allegations in Argentina’s energy and transport industries are currently being investigated. The notebooks themselves document at least US$35.6 million in payments, although Argentinian prosecutors estimate that the true figure may be closer to US$200 million.
Since the scandal broke, an aggressive investigation has been conducted. Prosecutors have benefited in particular from the Repentant Law. So far, around 30 executives have cooperated, resulting in the summoning of controlling shareholders and executives of 75 construction and infrastructure companies, including several of the most prominent business persons in the country.
The Repentant Law has some limitations (i.e. the ‘repenter’ cannot receive immunity but only a reduction of the punishment; and the agreement on the reduced sentence will only be applied by a tribunal that didn’t take part of the negotiations after an oral trial that the defendant cannot avoid). However, it has been successfully applied, mainly because it allows investigative magistrates to decide on the freedom of the accused during the proceeding on the basis of his/her cooperation. Because of this, criticism has been made to the law in that it benefits from an extortion, actually inverting the principle of freedom during the process –defendants face the dilemma whether to cooperate with the investigation or face the whole criminal proceeding behind bars.
Besides the Notebooks Scandal, multiple corruption cases are being effectively processed by federal criminal courts, in timeframes which have been much shorter than past average corruption cases. In example, in a separate case former President and current National Senator, Cristina Fernandez de Kirchner, is facing her first oral trial, as she is accused of being the head of a conspiracy ("asociación ilícita”) and having defrauded the State to favour a crony contractor, who received 52 contracts for public works for 46,000 million AR pesos during her administration. Additionally, former high ranks officers are currently convicted in different cases, such as the former Vice President and the former Minister of Federal Planning.
There were no recent trends in investigations and enforcement in our jurisdiction. In fact, and as informed previously, only in 2017 we started having judicial procedures to penalize public officials for corruptions acts.