The PDF server is offline. Please try after sometime.

2016 proved to be a landmark year in the fight against bribery and corruption. High-profile scandals, global investigations and prosecutions dominated the headlines as did the accompanying blockbuster fines. Having started the year with the biggest UK fine to date (against Rolls-Royce), 2017 looks set for more of the same. 

Greater international co-operation and the sharing of intelligence continued to grow, increasing the risk of companies being investigated by enforcement agencies. Surveys conducted throughout 2016 indicate that businesses are still struggling to deal with bribery risks, particularly in relation to third-party agents and intermediaries. The continued increase in investment opportunities in high-risk jurisdictions means that companies need to ensure their policies are being implemented on the ground. Complacency is not an option. 

Here we look at the developments of 2016 and early 2017, the key themes emerging, and the implications for companies in 2017. 

THE UK BRIBERY REGIME: BRIEF RECAP 

The UK Bribery Act has been in force since July 2011. This introduced the section 7 corporate offence of failure on the part of a commercial organisation to prevent bribery being committed by an associated person with the intention of benefiting that organisation (section 7 offence). However, an organisation will have a complete defence if it can show that "adequate" procedures designed to prevent bribery were in place. 

Since February 2014, the SFO has been able to enter into Deferred Prosecution Agreements (DPAs) with corporates guilty of economic crimes. Under a DPA, proceedings are instituted but then deferred on terms (such as the payment of a financial penalty, compensation and implementation of a compliance programme). If, within the specified time, the terms of the agreement are met, proceedings are discontinued; a breach of the terms of the agreement can lead to the suspension being lifted and the prosecution pursued.

The sentencing guidelines on financial penalties for companies convicted of economic crimes came into force in October 2014. They are used to inform the level of any financial penalty that forms part of a DPA or in sentencing anyone found guilty of a Bribery Act offence.
For further detail on the Bribery Act, see our Quickguide.

The year of the incentive…. to self-report

The SFO ended 2015 with a bang: it secured its first DPA and first conviction for the corporate offence of failure to prevent bribery (discussed in our 2015 annual review).

Although only one DPA was approved in 2016, that DPA (with XYZ) is, in many ways, more interesting than the 2015 Standard Bank DPA. In particular, the XYZ DPA sent a clear message to companies of the benefits of self-reporting. 

The XYZ DPA

This was approved by Sir Brian Leveson on 8 July. The company was granted anonymity and the judgment was redacted because the prosecution against the ex-employees is ongoing. 

XYZ is a small to medium-sized UK company that exports to Asian markets. In 2000 it was acquired by a US company, ABC. From June 2004 to June 2012, XYZ - through a small but important group of its senior employees and agents - was involved in the systematic payment of bribes to secure contracts in foreign jurisdictions. Of the 74 contracts examined, 28 were “implicated”. 

The total gross profit from the implicated contracts amounted to just over £6.5 million. During the period following the February 2000 acquisition, ABC received dividend payments totalling some £6 million. 

In late 2011, when it realised that XYZ's compliance was inadequate, ABC implemented its global compliance programme. As a result, concerns were raised about the way in which a number of contracts had been secured. XYZ immediately retained a law firm to undertake an independent internal investigation. It then quickly self-reported to the SFO and, two years later, a DPA was agreed and approved.

It is never too late…..

The first interesting feature is the fact that a DPA was offered. When DPAs were originally introduced it was thought that they would not be offered where the offence was very serious. In this case, the Judge described XYZ's conduct as "…very serious both in terms of type and scale …". The offence involved a course of systematic conduct over eight years which was known to and authorised by senior management. 

However, as the SFO itself has since made clear, there will rarely be a case that puts a DPA out of the question. According to Ben Morgan, Joint Head of Bribery and Corruption at the SFO, the SFO's "view at the moment is that a DPA could be fitting for almost any case….”.1 Genuine co-operation can save you from prosecution. In this case XYZ self-reported quickly and fully, it adopted a genuinely proactive approach to its wrongdoing, and was forthcoming in its disclosure. Other factors such as the new compliance culture and change of management were also relevant. And XYZ continues to provide its full co-operation with regard to the prosecution of the individuals concerned.

The SFO's "view at the moment is that a DPA could be fitting for almost any case….

Leniency on the financial terms….

The next interesting feature was how lenient the SFO and the Court were prepared to be regarding the financial terms offered to XYZ, especially when compared to those offered to Standard Bank. 

The financial terms of a DPA will usually include an element of compensation (if there is a victim, e.g. the Tanzanian Government in Standard Bank), disgorgement of the profits made, and a fine to reflect the seriousness of the offence and the harm caused (usually the profit made). As there was no victim, there was no compensation element, but XYZ was ordered to disgorge gross profits of £6.2 million, and pay a financial penalty of £325,000. The fine is particularly lenient. Under the sentencing guidelines, and looking at the seriousness of the offence and the profits made, the starting point for the fine should have been at least £16.4 million. Why was XYZ ordered to pay so little?

In short, this was all that XYZ could pay. The alternative would have been to force XYZ into insolvency. The Judge considered insolvency to be disproportionate in light of the factors mentioned above. And, when added together, the disgorgement and the financial penalty represented the gross profit XYZ had made from the bribery.

Greater discount offered 

Another interesting feature was the 50 per cent discount the Judge would have applied to the financial penalty if necessary. The sentencing guidelines recommend a one-third discount (akin to that given for a guilty plea). This was applied in Standard Bank. However, it has been criticised as not providing sufficient incentive for companies to self-report. It would appear that both the SFO and the courts have accepted that criticism. As the Judge said: "In the circumstances, a discount of 50% could be appropriate not least to encourage others how to conduct themselves when confronting criminality as XYZ has.

Implications for parent companies?

The final interesting feature concerns the parent company, ABC, which fully co-operated with the SFO and paid £1,953,085 towards disgorgement.
The Judge made it clear that there was no question of the parent knowingly making a profit from its subsidiary's criminality or that it should have known what was going on. Further, there was no contractual or legal obligation that attaches to an innocent parent requiring it to contribute to the financial penalty. But, as the Judge pointed out, a parent company receiving financial benefits arising from the unlawful conduct of a subsidiary (albeit unknown) must appreciate how that will be perceived. ABC had received £6 million in dividends from XYZ since acquiring it in February 2000. 

This would therefore suggest that, where overseas parent companies indirectly and innocently receive a benefit, they will be expected to become more involved if they want to ensure that a DPA is secured. ABC's payment was remarked on as further demonstrating "ABC’s continuing commitment to the DPA process and its support of XYZ". And the "sterling assistance" ABC provided was a factor in ensuring that XYZ avoided insolvency. 

But the threshold remains high…

The XYZ DPA is a clear illustration of the benefits of self-reporting and genuine co-operation. In subsequent speeches, representatives of the SFO have all used the case to encourage companies to self-report. However, and as the Judge pointed out, the case should not be "taken as indicating that the courts take anything other than a stern view of this type of offending. Individuals who are involved in wholesale corporate corruption and bribery can expect severe punishment and, absent exceptional circumstances …… corporations set up or operated in that way are unlikely to survive."

It should also be noted that the individuals are being prosecuted. The SFO remains committed to pursuing those involved in wrongdoing, including individuals who interfere in any investigation. This was demonstrated by the recent conviction and sentencing to 12 months' imprisonment of an individual for concealing or destroying evidence relevant to the SFO’s inquiries into Sweett Group PLC (which pleaded guilty to the section 7 offence last year).

The XYZ DPA is a clear illustration of the benefits of self-reporting and genuine co-operation

More of the same in 2017?

The SFO Director, David Green QC, expects there to be more DPAs in 2017 and that these will raise different and interesting questions. True to his word, 2017 kicked off with the DPA with Rolls-Royce, which was approved by Sir Brian Leveson on 17 January. The investigation into the company's defence, aerospace and energy business was the largest investigation conducted by the SFO to date, as was the fine imposed. 

The allegations concerned conduct on a global scale (jurisdictions involved included Indonesia, India, Russia, Nigeria, Thailand, China and Malaysia), that took place over 24 years, and involved senior management and politically exposed persons. 

The Judge acknowledged the egregious nature of the criminality, but considered that there were still enough public interest factors for a DPA to be granted. In particular, the significant steps the company had taken to remedy the position, which included spending over £15 million on compliance, reviewing its relationships with agents and intermediaries, replacing senior management, and bringing about a change in culture. 

In these respects, the case was similar to XYZ. However, a key difference in Rolls-Royce was the fact that the company did not self-report, despite management being aware of the bribery from 2010. Given the focus the SFO has given to the importance of self-reporting, many would have expected this to be a decisive factor weighing in favour of prosecution. However, Rolls-Royce was saved by the "extraordinary" co-operation it provided, which included spending over £123 million on an internal investigation and dealing with the prosecutors, and waiving privilege (on a limited basis) over witness first accounts.  

Another marked difference between XYZ and Rolls-Royce concerns the terms of the DPA. Rolls- Royce's DPA came with a hefty price tag: payments of £258 million and £239 million (disgorgement and financial penalty), reimbursement of the SFO's costs of £13 million, and completion of its compliance programme (which has already cost £15 million). 

As more DPAs are approved, a clearer picture will develop as to how the SFO and the courts approach the balance to be struck between the need to hold companies accountable and the need to incentivise others to self-report. 

As the picture becomes clearer, it is expected that more corporates will self-report, rather than try to "quietly fix the problem". The SFO has indicated that DPAs are now part of business as usual, and the Rolls-Royce DPA certainly supports that. However, the Judge was at pains to make it clear that a DPA is not a cosy deal and the threshold remains high. As the Sweett Group conviction in December 2015 demonstrates, not all cases will be considered appropriate for a DPA. The key seems to be genuine co-operation. 

XYZ and Rolls-Royce illustrate how this can be done. It will be interesting to see what else 2017 brings.

Co-operation is key but how far does it extend: the privilege debate

It is clear that self-reporting is a key (but not crucial) factor if a DPA is to be secured. However, self-reporting in itself is not enough. If a DPA is to be secured, a substantial amount of documentation, including documents generated during any internal investigation, will need to be provided to the SFO. Of particular interest will be witness first accounts. This raises the issue of privilege and whether the SFO will expect companies to waive privilege as part of "genuine co-operation".

Previously, the SFO has taken a fairly robust stance on this point by making clear it was prepared to challenge any claims of privilege that it considered not valid (as we saw in the SFO's challenge of Barclays' disclosure). In March 2016, Alun Milford (SFO General Counsel) gave a speech in which he referred to the SFO's focus on the underlying facts, including witness first accounts, and that the SFO do "not regard ourselves as constrained from asking for them even if they are privileged…".  

However, both the Standard Bank and XYZ DPAs and speeches made later in 2016 suggest that the SFO may be prepared to compromise. In both Standard Bank and XYZ the lawyers gave the SFO access to their internal investigation reports and electronic and documentary evidence, but notably only gave oral summaries of the witness first accounts. It has also been reported that no reference was made to the content of the interviews in the report handed over to the SFO in order to protect claims to privilege.  Experience from previous investigations highlights how challenges can be raised in follow-on litigation where references to the content of an interview are included in the report or presentation given to the enforcement agency. The cross-border implications should also be considered if a company is considering whether to waive privilege. In some jurisdictions, such as the US, limited waiver is not recognised. This means that, once the privileged document is provided to the enforcement agency, the document may then be disclosable in any foreign follow-on proceedings. Given the increase in follow-on claims brought against companies found guilty of corruption-related offences, this is a legitimate concern. 

That said, this will not be the case in all investigations. Rolls-Royce waived privilege (on a limited basis) over witness interview memoranda as part of its "extraordinary" co-operation, and the SFO continues to challenge what it considers to be invalid claims to privilege. In that context, a recent decision of the English High Court, which confirms that legal advice privilege will be applied restrictively will likely encourage further challenges, particularly in relation to witness first accounts (see our briefing for more detail). The decision is being leapfrogged to the Supreme Court, and is expected to be heard in January 2017. It will be a crucial one in terms of privilege and how it applies in internal investigations. 

Other UK developments

Government focus

The fight against corruption continues to be a priority for the UK Government. On 12 May 2016, the UK hosted a landmark international anti-corruption summit in London. This initiative formed part of the Government's plan to tackle corruption at home and abroad. The summit was attended by leaders from over 40 countries as well as representatives of major international organisations and civil society. It concluded with a strong global declaration against corruption, as well as specific action plans and commitments by participants.

The UK's commitments are some of its most ambitious and significant to date with numerous proposals having direct impact on UK and foreign businesses.

These include: 

  • adoption of the Open Contracting Data Standard in public procurement, meaning greater transparency in the awarding of public sector contracts; 
  • establishment of a public register of company beneficial ownership for foreign companies that own or are buying properties in the UK, or that bid on UK central government contracts; and 
  • enhancing disclosure requirements on commodities trading firms with respect to payments to governments or state-owned enterprises for the sale of oil, gas, and minerals.

Momentum was lost following the June referendum vote to leave the EU. However, recent statements made by the Prime Minister, Theresa May, indicate that she remains committed to the UK's anti-corruption plans, and the first two objectives have been achieved.2

Consultation on corporate liability for economic crime

The most significant announcement at the summit related to the long-mooted consultation on extending the scope of the corporate "failure to prevent" offence beyond bribery (and soon, tax evasion) to include other economic crimes. The consultation was originally planned for the summer but political issues, such as Brexit, hampered its progress. However, on 13 January the "Call for evidence" was published and is open until 24 March 2017.3 The purpose of the paper is to establish whether the extension is needed and to survey the options for possible reform. 

It seeks evidence on the extent to which the identification doctrine is hindering effective criminal law enforcement. The "identification doctrine" requires prosecutors to prove that those who can be regarded as the directing mind or will of the company knew about, actively condoned or played a part in the offending. Critics argue that this encourages companies to decentralise responsibilities to avoid corporate liability, making it difficult to identify a senior individual who is in charge of a particular operation. 

The paper then presents a series of options for reform which include: amending the identification doctrine, introducing a strict liability offence with or without a due diligence defence; or regulatory reform on a sector by sector basis. Having already adopted the failure to prevent approach but with a due diligence defence for bribery and the facilitation of tax evasion, it may be difficult to justify taking a different approach in relation to the offences potentially contemplated in the paper; namely common law conspiracy to defraud, offences under section 1 of the Fraud Act, false accounting and money laundering offences under POCA. If that is the case, this potentially wide-ranging extension may require significant expansion in the corporate compliance programmes of companies. 

This potentially wide-ranging extension may require significant expansion in the corporate compliance programmes of companies

The SFO and interviewing witnesses

As part of its investigation, the SFO may use its section 2 power to compulsorily interview witnesses (section 2 of the Criminal Justice Act 1987). In the past, corporates have sent along their own lawyers to the interviews, particularly where the individual concerned is a "directing mind" or senior individual. The SFO has not always been happy with this, particularly when the corporate concerned is a suspect in the investigation. 

The SFO effectively put an end to this practice in June 2016 when it issued guidance on its process for handling requests for witnesses interviewed under section 2 to be accompanied by a lawyer. In short, the guidance means that:

  • lawyers for the corporate (or any other) suspect will not be permitted to attend; 
  • the witness will only be permitted a lawyer if the SFO case controller considers that this would assist the purpose of the interview or provide essential assistance or pastoral support to the interviewee; and 
  • any lawyer permitted to attend must complete a special application process in advance including giving a commitment to allowing the "free flow of information" during the interview and to undertake not to share documents provided at the interview.4

Companies continue to struggle with intermediary risk

Oversight of third parties is still one of the greatest challenges in managing ABC compliance programmes. This is largely because of the role of these intermediaries in companies' interactions with governments, and the fact that supply chains have become more complex in the context of business globalisation. 

The number of investigations and prosecutions concerning bribes paid to or by third parties further highlights the increased risk and failure by corporates to deal with the issue. Examples include Rolls-Royce, whose DPA concerned claims that the company secured multi-million-dollar contracts in various jurisdictions by using agents who paid bribes. And the investigation opened in August 2016 into allegations of bribery and corruption in the civil aviation business of Airbus Group. These allegations relate to irregularities concerning third-party consultants. 

However, this increased risk does not appear to translate into increased vigilance on the part of companies using these agents. Surveys conducted throughout 2016 indicate that fighting bribery and corruption is not a priority for many global companies, or one that is being addressed at board level.5 More worrying are the surveys that indicate that a significant minority of executives continue to justify unethical behaviour to improve a company's performance.6

As regards third party risk, many corporates still appear to be struggling with the basics, including keeping records of the agents and intermediaries employed, and carrying out adequate due diligence. Lack of resource is often given as the reason. Surprisingly, corporates do not always put in place contractual protections, e.g. anti-bribery clauses and third party audit rights.

Given the increase in cross-border co-operation, intelligence sharing and enforcement activity (see below), companies cannot afford to ignore this risk. See our 2015 update for a guide to the basic steps that should be taken.

UK developments in context: the global fight against corruption 

While the US continues to lead the way in terms of enforcement, more countries are beginning to wake up to the global problem posed by bribery and corruption (the global annual cost of which is estimated at more than £1 trillion). This was evident at both the anti-corruption summit in London and the G20 summit in China. A commitment has been made to exposing corruption, punishing the corrupt, and driving out corruption wherever it may exist.7

Events in 2016 suggest that this is being taken seriously.

Cross-border co-operation

Both the London summit and G20 summit recognised that the global challenges posed by bribery and corruption require ever closer co-operation between the enforcement agencies. This was evident in the ground-breaking US$3.5 billion settlement reached at the end of 2016 with Brazilian construction giant Odebrecht, and its petrochemicals affiliate Braskem. According to reports, almost US$788m was paid to politicians and officials in a dozen countries. The settlement was reached after a cross-border investigation involving Brazilian, Swiss and US authorities. It is the largest ever global anti-bribery deal, with Brazil due to receive 80 per cent, and the remainder split equally between the US and Switzerland.8 The UK Rolls-Royce investigation was part of a wider global investigation, resulting in a global US$800 million resolution with the U.S., UK, and Brazilian authorities. 

In addition to highlighting the need for tight controls when groups are bidding for government contracts in developing countries, the case demonstrates ever closer international co-operation and intelligence sharing. The Swiss involvement, for example, concerned assisting in providing bank account details of many of those involved in the scandal.

Other examples during 2016 included the 1MDB scandal, with several jurisdictions investigating possible corruption, including Singapore, the US and Switzerland. The Unaoil scandal provided another high-profile opportunity for co-operation, with investigations ongoing in Australia, the US and the UK, and assistance given by the Monaco authorities. 

The global challenges posed by bribery and corruption require ever closer co-operation between the enforcement agencies.
A new global standard

In 2016 the ISO (International Organization for Standardisation) developed the first global standard to help corporates fight bribery and promote an ethical business culture. ISO 37001 (Anti-bribery management systems) sets out a series of measures that corporates can take to help them prevent, detect and address bribery. 

The principles will be familiar to those accustomed to the guidelines laid down by the UK Bribery Act and Guidance. They include adopting an anti-bribery policy, appointing a person to oversee anti-bribery compliance, training, risk assessments and due diligence on projects and business associates, implementing financial and commercial controls, and instituting reporting and investigation procedures. There is also a certification process whereby an ISO-approved certifier declares corporate compliance with the standard. 

The ISO is an independent, authoritative standard issuing body. As such, it is likely that ISO 37001 will be regarded as the new global standard by enforcement agencies. It could also become a pre-qualification requirement on major projects and transactions. If corporates are found to fall short of it, their procedures could be deemed inadequate. That said, certification will not, in itself, secure a finding that a corporate's procedures are adequate. Effective implementation and proper monitoring will be key to maintaining the standard set.

This should not pose a problem for corporates that have already implemented (and continue to monitor) procedures that are UK Bribery Act compliant. However, any overseas operations, or corporates previously thought to be outside its scope, would be well advised to check that their systems and controls are in line with the global standard.

The Americas

2016 saw a return to form for the US with blockbuster fines and several new entrants into the "FCPA Top 10".9 As of 29 December, Israeli company Teva Pharmaceuticals Industries Ltd went in at number 4 with its US$519 million fine for corruption by a Russian subsidiary in Ukraine, Mexico and Russia. The US portion of the Odebrecht/Braskem fine estimated at $419.8 million is at number 5. Och-Ziff, the New York listed hedge fund, is at number 6, paying US$412 million in relation to bribes paid to Libya’s Gaddafi regime and other African nations. And Amsterdam-based VimpelCom Limited, and its wholly owned Uzbek subsidiary, took the 9th slot with its US$397.6 million fine for paying more than US$114 million in bribes to a government official in Uzbekistan between 2006 and 2012. Prosecuted by the US and Dutch authorities, it also had to pay US$397.5 million to Dutch prosecutors. 

This enforcement activity is likely to continue into 2017. Although President-elect Donald Trump has commented in the past on how the FCPA placed US companies at a disadvantage internationally, the expectation is that the DoJ and SEC will remain just as active under his presidency. 

The US may have seen a record year for fines, but it was Brazil's 80 per cent share of the US$3.5 billion Odebrecht/Braskem fine that secured it the largest bribery fine ever imposed. The Odebrecht scandal is one of many to hit Brazil, as fallout from Operation Carwash continues. That country, and the region in general, has witnessed a significant cultural shift towards a zero-tolerance approach to corruption. This is reflected in the enforcement action taken, and the steps taken in countries such as Peru to prevent companies involved in corruption from bidding on public work contracts. 

Asia 

While China continues to crack down on domestic (and, increasingly, international) corruption, the headlines in 2016 have been dominated by the 1Malaysia Development Berhad (1MDB) scandal and its repercussions. In 2015, Malaysia's Prime Minister was accused of channelling over RM2.67 billion (nearly US$700 million) from 1MDB, a government-run strategic development company, into his personal bank accounts. Although he was cleared of corruption earlier this year, the Malaysian investigation has led to investigative and enforcement efforts by a number of foreign law enforcement agencies, including the Monetary Authority of Singapore (MAS) and Singapore's Commercial Affairs Department.

In May 2016, MAS forced BSI Singapore to be placed into voluntary liquidation after the bank was found to have flouted anti-money laundering laws. In October 2016, MAS withdrew the merchant bank status of Falcon Private Bank Singapore for serious failures in anti-money laundering laws and improper conduct by senior management. In addition, MAS also imposed fines on a number of other banks (Standard Chartered Singapore, Coutts Singapore, UBS Singapore and DBS) for breaches of anti-money laundering laws.

Singapore has been the first jurisdiction to secure convictions relating to the scandal. BSI Singapore employees Yak Yew Chee and Yvonne Seah were sentenced to 18 weeks and two weeks in prison respectively for forgery and failure to report suspicious transactions. Another BSI Singapore colleague Yeo Jiawei was found guilty and sentenced to 30 months in prison for witness tampering. He faces trial next year on seven further charges, including forgery and money laundering (all of which he denies).  

Australia

Anti-bribery and corruption issues continued to be at the forefront of corporate and legislative agendas in Australia in 2016.

The 2015 inquiry by the Australian Senate into Australia's foreign bribery laws, which had been  driven by a perception that Australia has failed to adequately investigate and prosecute complaints of foreign bribery, was re-launched by the new parliament on 11 October 2016. The new committee is due to report by 30 June 2017. This is likely to result in legislative and/or policy changes in relation to bribery and corruption in Australia, including the introduction of DPAs (which is currently being consulted on), strengthening whistle-blower protections (currently being looked at by the Joint Parliamentary Committee on Corporations and Financial Services), and potential disbarment from government work where an entity is found to have engaged in corrupt conduct.

On 1 March 2016, two new criminal offences for false accounting came into effect. Any corporation; employee, officer or director of a corporation; or supplier or other third-party provider to a corporation will be in breach if they intentionally or recklessly falsify accounting records in the context of any illegitimate benefit or loss, the most obvious being a monetary bribe. The new offences carry significant potential penalties, and represent an important step towards strengthening Australia's anti-bribery regime.

As 2016 drew to a close, Australian news outlets carried headlines of further corruption concerns involving Australian companies in the energy and resources sector. When combined with the other investigations that are understood to be under way, it seems that 2017 is shaping up to be  a year of substantial activity in this space.

Europe

The FIFA scandal and the VimpelCom investigation have kept the Swiss and Dutch authorities busy. There have also been notable developments in France, a country not known for its enforcement track record. Earlier this year it introduced new legislation aimed at bringing French law in line with that of the US and the UK. In addition, new anti-corruption legislation adopted in November allows companies to enter into DPAs. 

To date, the gap in French enforcement has been filled in part by the US. Three French companies have featured on the list of the ten biggest FCPA enforcement actions. That may change with this new legislation. 

The French courts have also been active in this space. Earlier this year the Paris Court of Appeals overturned a 2013 ruling that acquitted Vitol, Total, and several individuals of participating in a bribery scheme to circumvent the UN Iraq Oil-for-Food programme. Fines of €750,000 (Total) and €300,000 (Vitol) were levied. The decision has proven controversial given that the companies had already pleaded guilty to the offence in the US. It could also open up similar cases where companies have pleaded guilty to offences in the US.

Middle East and North Africa

Governments in the Middle East and North Africa continued their efforts to combat fraud, bribery and corruption in 2016. In Egypt, 13 people were arrested following a wheat procurement corruption scandal. According to Egypt's public prosecutor, officials and traders had falsely claimed approximately US$70 million in government subsidies for locally produced wheat that did not exist. The scandal also prompted the resignation of Egypt's Minster of Supply. 

New anti-corruption bodies have also been created in the region. In the UAE, the Dubai Economic Security Centre was established, which has broad powers to tackle financial crimes, including investigating corruption, fraud, bribery and money laundering.  In Jordan, the Integrity and Anti-Corruption Commission was established, which will be responsible for investigating and prosecuting acts of corruption. Also in the UAE, new bribery offences were introduced as part of a broader update of the Federal Penal Code. The amendments to the Penal Code, which came into force in October 2016, introduced new offences to cover bribing a foreign public official and offering a bribe to a manager or employee of a private sector organisation (under the previous law, the private bribery offence only applied to the recipient of a bribe and offences relating to bribing a public official only applied to UAE public officials).

 

 

Notes
  1. See the speech he gave in October 2016, available on the SFO website.
  2. See the Attorney General Jeremy Wright's speech to the Cambridge Symposium on Economic Crime in September 2016
  3. The consultation paper is available on the Ministry of Justice website.
  4. The guidance is available on the SFO website.
  5. See for example the Control Risks survey 2015/2016 on International Business Attitudes to Corruption. The survey of legal and compliance professionals in over 800 companies worldwide revealed that "third party risk continues to be relatively unrecognised" and "remains a critical vulnerability for many companies". Only 58 per cent of those surveyed had a procedure for integrity due diligence assessment of third parties and only 43 per cent had third-party audit rights.
  6. See for example the EY 14th Global Fraud Survey: Corporate misconduct – individual consequences.
  7. These are the three prongs of the Global Declaration Against Corruption made at the London summit.
  8. Source: The FT: Odebrecht ran ‘massive’ global bribery scheme, say prosecutors, 22 December 2016 and A Brazilian bribery machine, 28 December 2016.
  9. As calculated by the FCPA blog.

Key Contacts

We bring together lawyers of the highest calibre with the technical knowledge, industry experience and regional know-how to provide the incisive advice our clients need.

Keep up to date

Sign up to receive the latest legal developments, insights and news from Ashurst.  By signing up, you agree to receive commercial messages from us.  You may unsubscribe at any time.

Sign up

The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying it to specific issues or transactions.

Get Started
WORLD MAP
  • REGION
  • OFFICE

        Forgot Password - Ashurst Account

        If you have forgotten your password, you can request a new one here.

        Login

        Forgot password? Please contact your relationship manager to find out more about our client portal.
        Ashurst Loader