Source: https://www.jdsupra.com/legalnews/anti-corruption-regulation-survey-of-42-12632/
Timestamp: 2020-01-20 18:03:07
Document Index: 49241325

Matched Legal Cases: ['§78', 'art. 9', 'art. 9', 'art. 7', 'art. 7', 'art. 318', 'art. 7', 'art. 9', 'art. 9', 'art 4', 'art 2', 'art. 389', 'art. 393', 'art. 390', 'art. 391', 'art. 392', 'art. 385', 'art. 387', 'art. 388', 'art. 390', 'art. 164', 'art. 163', 'art. 164', 'art. 7', 'art. 77', 'art. 93', 'art. 12']

Anti-Corruption Regulation Survey of 42 Countries 2019 | Jones Day - JDSupra
Anti-Corruption Regulation Survey of 42 Countries 2019
Javade Chaudhri, Theodore (Ted) Chung, Stephen (Steve) DeCosse, Steven Fleming, Karen Hewitt, Henry Klehm III, Mary Ellen Powers, Luis Riesgo, Sheila Shadmand, Eric Snyder, Hank Bond Walther, Peter Wang
Welcome to the 2019 edition of the Jones Day Anti-Corruption Regulation Survey of Select Countries. Since the 2017–2018 edition of this Survey, there has continued to be an increasing awareness among multinational companies of the significance of anti-corruption regulations in foreign countries and the potential risks of violating these regulations or of being associated with companies or individuals that have violated such regulations.
A number of countries made significant changes to their anti-corruption regulations in 2018 and 2019 to date, including, among others, Chile, India, Indonesia, Italy, Malaysia, Myanmar, Philippines, South Korea, Thailand and Vietnam. Furthermore, since 2018, there have been significant developments in several countries related to anti-corruption, especially with respect to enforcement practice and policy, such as in Brazil, South Africa, the United Kingdom and the United States. Other countries included in this Survey have indicated proposed amendments to anti-corruption regulations, the restructuring of anti-corruption enforcement bodies and enhanced coordination with the anti-corruption authorities of other jurisdictions. The 2019 edition of this Survey includes Qatar, a jurisdiction that had not been covered in previous years.
Please see full Survey below for more information.
Jones Day Table of Contents GLOSSARY ....................................................................................................................................................................... iii Africa ..................................................................................................................................................................... 1 Kenya ...................................................................................................................................................... 1 Mozambique ........................................................................................................................................... 9 South Africa .......................................................................................................................................... 12 Asia Pacific .......................................................................................................................................................... 17 Australia ................................................................................................................................................ 17 China ..................................................................................................................................................... 21 Hong Kong ............................................................................................................................................ 26 India ...................................................................................................................................................... 30 Indonesia ............................................................................................................................................... 33 Japan ..................................................................................................................................................... 37 Laos ....................................................................................................................................................... 42 Malaysia ................................................................................................................................................ 45 Myanmar ............................................................................................................................................... 49 Philippines ............................................................................................................................................. 53 Singapore .............................................................................................................................................. 57 South Korea .......................................................................................................................................... 61 Taiwan ................................................................................................................................................... 65 Thailand ................................................................................................................................................ 67 Timor-Leste .......................................................................................................................................... 74 Vietnam ................................................................................................................................................. 77 Europe ................................................................................................................................................................. 80 Austria ................................................................................................................................................... 80 Belgium ................................................................................................................................................. 84 France .................................................................................................................................................... 86 Germany ............................................................................................................................................... 94 Italy ........................................................................................................................................................ 97 The Netherlands ................................................................................................................................. 102 Poland .................................................................................................................................................. 105 Russia .................................................................................................................................................. 108 Spain .................................................................................................................................................... 110 United Kingdom ................................................................................................................................. 113 Qatar ................................................................................................................................................... 117 Middle East ....................................................................................................................................................... 120 Saudi Arabia ....................................................................................................................................... 120 United Arab Emirates ........................................................................................................................ 123 North America .................................................................................................................................................. 127 Canada ................................................................................................................................................ 127 Mexico ................................................................................................................................................. 131 United States of America ................................................................................................................... 136 South America .................................................................................................................................................. 142 Argentina ............................................................................................................................................ 142 Brazil ................................................................................................................................................... 148 Chile .................................................................................................................................................... 154 Colombia ............................................................................................................................................. 157 Ecuador ............................................................................................................................................... 162 Uruguay............................................................................................................................................... 165 Venezuela ............................................................................................................................................ 169 JONES DAY CONTACTS BY COUNTRY ................................................................................................................. 172 ____________________________________________________________________________________________ .... 172 Jones Day i Introduction to the 2019 Anti-Corruption Regulation Survey Welcome to the 2019 edition of the Jones Day Anti-Corruption Regulation Survey of Select Countries. Since the 2017–2018 edition of this Survey, there has continued to be an increasing awareness among multinational companies of the significance of anti-corruption regulations in foreign countries and the potential risks of violating these regulations or of being associated with companies or individuals that have violated such regulations. A number of countries made significant changes to their anti-corruption regulations in 2018 and 2019 to date, including, among others, Chile, India, Indonesia, Italy, Malaysia, Myanmar, Philippines, South Korea, Thailand and Vietnam. Furthermore, since 2018, there have been significant developments in several countries related to anti-corruption, especially with respect to enforcement practice and policy, such as in Brazil, South Africa, the United Kingdom and the United States. Other countries included in this Survey have indicated proposed amendments to anti-corruption regulations, the restructuring of anti-corruption enforcement bodies and enhanced coordination with the anti-corruption authorities of other jurisdictions. The 2019 edition of this Survey includes Qatar, a jurisdiction that had not been covered in previous years. This Survey is intended to provide an overview of the complex and evolving anti-corruption regulations in the 42 countries covered herein. Ways in which this Survey may be useful will vary depending on a company’s situation and needs. A few examples follow: • Due diligence. This Survey may be useful to give a sense of key aspects of anti-corruption regulations that apply to potential M&A targets and joint venture partners. • Prospective business partners. If a company is considering entering into a relationship with a business partner (e.g., vendor or customer) from another country, this Survey may be useful in giving a sense of potential areas of risk in relation to the partner’s local business activities. • Considering efficacy of compliance programs. This Survey may be helpful in considering whether and how to develop, assess and enhance an anti-corruption compliance program, whether on a national, regional or global basis. As a starting point, one needs to have an understanding of whether a particular action (for example, certain gifts or entertainment) may potentially violate local regulations. In this Survey, the countries are organized by region and then alphabetically by country. Whereas previous editions of this Survey subdivided Asian jurisdictions into three regions, these countries have been combined into one “Asia Pacific” region in the 2019 edition. For each country, the same topics are covered. They include, among others: (i) whether bribery of domestic and foreign public officials is prohibited; (ii) the meaning of the term “public official”; (iii) whether and to what extent gifts, entertainment and travel benefits are regulated; (iv) issues in enforcement; and (v) recent developments. This Survey also sets forth the most recent CPI scoring and ranking information for each of the surveyed countries. “CPI” refers to the Corruption Perceptions Index, published by Transparency International, which scores and ranks countries around the world based on perceived levels of corruption. CPI scores range from 100 (very clean) to 0 (highly corrupt). In the ranking issued on January 29, 2019, the CPI ranked 180 countries based on their scores. In addition, this Survey identifies major international conventions to which each of the countries is a party. These conventions are defined in the Glossary. Jones Day ii This Survey may be useful as a starting point to give some sense of the scope and extent of anti- corruption regulations in a particular country, but it is not a substitute for a review of the actual regulations in light of a particular set of facts. This Survey should not be construed as legal advice on any specific facts or circumstances. If questions come up in relation to the anti-corruption regulations of a specific country, the last section of this Survey lists contacts at Jones Day who would be in a position to provide information based on specific facts and circumstances or provide guidance with respect to contacting local counsel. If questions come up in relation to multiple jurisdictions, the Jones Day team, including its local contacts where appropriate, can effectively coordinate to provide a comprehensive and focused response. Jones Day August 9, 2019 Compiling and editing team: Jones Day Tokyo Stephen J. DeCosse (sdecosse@jonesday.com) Ian M. Wright (iwright@jonesday.com) Jones Day iii GLOSSARY Term Meaning AUCPCC African Union Convention on Preventing and Combating Corruption CPI Corruption Perceptions Index published by Transparency International ranks countries by perceived levels of corruption as determined by expert assessments and opinion surveys. In the ranking issued on January 29. 2019, 180 countries were ranked by CPI score. The CPI score ranges from 100 (very clean) to 0 (highly corrupt). FCPA U.S. Foreign Corrupt Practices Act of 1977 (15 U.S.C. §§78m, 78dd-1 to -3, 78ff) OAS Organization of American States OAS Convention OAS Inter-American Convention against Corruption. Adopted in March 1996. OECD Organisation for Economic Co-operation and Development OECD Convention OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. 43 countries have acceded as of May 2017. The OECD cannot force implementation; it only monitors implementation. SADCPAC Southern African Development Community Protocol Against Corruption UNCAC United Nations Convention Against Corruption. It covers criminalization of corruption, prevention, cooperation and information exchange and asset recovery. As of June 26, 2018, there are 140 signatories and 186 parties to the UNCAC, including the European Union. Jones Day publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our “Contact Us” form, which can be found on our website at www.jonesday.com. The mailing of this publication is not intended to create, and receipt or review of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the contributors and do not necessarily reflect those of the Firm. Jones Day 1 Region Africa Country Kenya 2018 CPI Rank 144/180 Score 27 The Law on Bribery Bribery of Domestic Officials Kenya has a series of laws that cover bribery. These include: the Constitution of Kenya, 2010 (the “Constitution”), the Penal Code, the Anti-Corruption and Economic Crimes Act, the Public Officers and Ethics Act, the Elections Act, the Leadership and Integrity Act, the Bribery Act 2016 and international treaties. The principal statutes that cover bribery are the Anti-Corruption and Economic Crimes Act of 2003 (the “ACEC Act”) and the Bribery Act 2016 (the “Bribery Act”). Constitution Chapter 6 of the Constitution deals with leadership and integrity. This Chapter applies mainly to state officers. Article 76 (1) of the Constitution provides that a gift or donation to a state officer on a public or official occasion is a gift or donation to the Republic and shall be delivered to the State unless exempted under an Act of Parliament. Any state officer who contravenes this Article can be removed from office and disqualified from holding any other public office. The Penal Code The Penal Code largely covers persons employed in the public service. It also covers any person who induces, attempts to induce or influences a public officer to fail his/her duty. Section 102A of the Penal Code provides that a person convicted of an offense is liable on conviction to a fine not exceeding KES 1 million or to imprisonment for a term not exceeding 10 years or to both. The Public Officer Ethics Act (the “POE Act”) The POE Act mainly covers public officers. Section 11 of the POE Act prohibits a public officer from using his/her office to improperly enrich himself/herself or others. It provides that a public officer shall not, except as allowed under the POE Act, accept or request gifts or favors from a person. It also provides that a public officer shall not improperly use his/her office to acquire land or other property for himself/herself or another person, whether or not the land or property is paid for. It further provides that a public officer shall not, for the personal benefit of himself/herself or another, use or allow the use of information that is acquired in connection with the public officer’s duties and that is not public. The Elections Act The Elections Act applies to all candidates, voters and any person who abets, counsels or procures the commission of or attempts to aid, abet, counsel or procure the commission of an election offense. A person who commits an offense of bribery or treating is liable on conviction to a fine not exceeding KES 1 million or to imprisonment for a term not exceeding six years or to both. The Leadership and Integrity Act (the “LIA”) The LIA prohibits a state officer from using the office to unlawfully or wrongfully enrich himself/herself or any other person or accepting a personal loan or benefit that may compromise the state officer in carrying out his/her duties. A state officer may be suspended from office pending the investigation and determination of allegations made against that state officer where such suspension is considered necessary. Jones Day 2 International Treaties Article 2 of the Constitution provides that any treaty or convention ratified by Kenya shall form part of the law of Kenya. Kenya has ratified the UNCAC, so therefore the UNCAC constitutes part of Kenya’s laws. Other international treaties on bribery and corruption that are applicable in Kenya are the AUCPCC and the International Code of Conduct for Public Officials. The Bribery Act The Bribery Act is modeled on the UK Bribery Act and has been enacted to aid in the prevention, investigation and punishment of bribery in Kenya, with particular focus on the private sector. “Bribery” is defined in the Bribery Act as the offer to give financial advantage to public officers or private company employees directly or indirectly through third parties with the knowledge that the acceptance of the financial advantage would constitute the improper performance of a function. Bribery offenses under the Bribery Act are wide ranging, and the Ethics and Anti- Corruption Commission (the “Commission”) has, through the Bribery Act, been granted a more robust mandate to combat bribery in the public and private sectors. The Bribery Act imposes a mandatory duty on private and public persons to report to the Commission, within 24 hours, any knowledge or suspicion of instances of bribery. Failure to comply with this duty is an offense. In addition, it is obligatory for public and private persons to put in place measures to prevent bribery in their organizations. Failure to comply with these provisions constitutes an offense, and certain offenses extend liability to senior management, senior officers and directors should a legal person be found guilty. Further, a private entity commits an offense if a person associated with it bribes another person intending to obtain or retain business for the private entity or an advantage in the conduct of business by the private entity. The Bribery Act operates extra-territorially, which means that prohibited conduct by a Kenyan citizen or a private or public entity that takes place outside of Kenya may constitute an offense under the Bribery Act. The general penalties applicable under the Bribery Act upon conviction are: • imprisonment for a term not exceeding 10 years or a fine not exceeding KES 1 million; • five times the amount of any quantifiable benefit gained by the person or the quantifiable loss suffered by another person or both; and • a fine not exceeding KES 5 million. The Anti-Corruption and Economic Crimes Act (the “ACEC Act”) The ACEC Act covers all persons, including persons in the private and public sector. Section 48 of the ACEC Act provides that a person convicted of an offense under Part V of the ACEC Act shall be liable to a fine not exceeding KES 1 million or to imprisonment for a term not exceeding 10 years or to both and an additional mandatory fine if, as a result of the conduct that constituted the offense, the person received a quantifiable benefit or any other person suffered a quantifiable loss. The ACEC Act was amended by the Statute Law Amendment Act, which inserted a provision that stated that a public officer or state officer who is charged with corruption or an economic crime shall be suspended, at half pay, with effect from the date of the charge until the conclusion of the case, provided that the case shall be determined within 24 months. Offering a bribe: It is a crime for a person to corruptly give, offer or agree to give or offer a benefit (ACEC sec. 39(3) (b)). Jones Day 3 Receiving a bribe: It is a crime for a person to corruptly receive or agree to receive a benefit (ACEC sec. 39(3) (a)). “Corruptly receiving or offering” pertains to benefits that are inducements or rewards for an agent to do or not do something related to the agent’s principal or show favor or disfavor in relation to the affairs of the principal. The Public Procurement and Disposal Act of 2005 (the “PPDA”) prohibits corrupt practices in procurement proceedings; a maximum fine of KES 4 million or 10 years imprisonment, or both, and public officers will be disqualified from public office. Corporate liability: Under Kenyan law, a legal “person” includes a company, association or body of natural persons. Fines imposed on corporate persons who break the law may be more severe than those imposed on natural persons. For example, under the PPDA, the maximum fine for a corporation is KES 10 million while for an individual it is KES 4 million. The Proceeds of Crime and Anti-Money Laundering Act 2009 (“POCAMLA”) POCAMLA was one of Kenya’s first steps in aligning its domestic anti-corruption laws with global anti-money laundering and financial crime standards. POCAMLA established the Financial Reporting Centre (the “FRC”) as a regulatory authority with its principal objectives being to assist in the identification of the proceeds of crime and combating money laundering. Money laundering is an offense under Section 3 of POCAMLA, which is defined as: “a person who knows or who ought reasonably to have known that property is or forms part of the proceeds of a crime, and: a) Enters into any agreement or engages in any arrangement or transaction with anyone in connection with that property, whether that agreement, arrangement or transaction is legally enforceable or not; or b) Performs any other act in connection with such property, whether it is performed independently or with any other person, whose effect is to: i. conceal or disguise the nature, source, location, disposition or movement of the said property or the ownership thereof or any interest which anyone may have in respect thereof; or ii. enable or assist any person who has committed or commits an offense, whether in Kenya or elsewhere to avoid prosecution; or iii. remove or diminish any property acquired directly, or indirectly, as a result of the commission of an offense.” “Proceeds of a crime” is defined in Section 2 of POCAMLA as: “any property or economic advantage derived or realized, directly or indirectly, as a result of or in connection with an offense irrespective of the identity of the offender and includes, on a proportional basis, property into which any property derived or realized directly from the offense was later successively converted, transformed or intermingled, as well as income, capital or other economic gains or benefits derived or realized from such property from the time the offense was committed.” The failure to report suspicions regarding the proceeds of a crime is also an offense under POCAMLA. The powers given to the FRC under POCAMLA are limited in the sense that the FRC was restricted to performing the administrative tasks of receiving annual reports and citing irregularities to its partner organizations. Under POCAMLA, the FRC lacked the power of enforcement. The Proceeds of Crime and Anti-Money Laundering (Amendment) Act 2017 extends the powers of the FRC to include: • Seeking revocation of licenses for financial and real estate institutions that are used as conduits for money laundering activities; • Issuing warnings and directions to reporting institutions; Jones Day 4 • Barring persons from employment with reporting institutions; • Issuing orders to a competent supervisory authority requesting the suspension or revocation of a license or registration of a specified reporting institution whether entirely, in a specified capacity or extending to any employee of the reporting institution. • Apart from financial organizations, the powers of the FRC extend to nongovernmental organizations, non-financial entities such as real estate agencies, those dealing in precious stones, casinos and certain professions such as accountants. Bribery of Foreign Officials The ACEC Act, which prohibits bribery of “agents,” does not distinguish between foreign and domestic officials. The bribery of foreign officials, who are agents of their home government, is criminalized under the ACEC Act. The Bribery Act is the first Kenyan statute to criminalize bribery of foreign public officials. Definitions within Kenyan statutes had previously been interpreted, in accordance with the Constitution, to apply only to Kenyan officers. Under the Bribery Act, Section 8 prohibits the bribing of a foreign public official with the intention of influencing that official’s capacity. Section 2 states that a person commits the offense of bribery of a foreign public official if: • Directly or through a third party, the person promises or gives any financial or other advantage to the foreign official or to another person at the foreign official’s request or with the foreign official’s assent or acquiescence; and • The foreign official is neither permitted nor required by the written law applicable to him or her to be influenced in his/her capacity as a foreign public official by the offer, promise or gift. Section 8 further elaborates that influencing a foreign official means influencing such foreign official in the performance of his/her functions, including: o any omission to exercise those functions; and o any use of the position as such an official, even if not within the official’s authority. For purposes of subsection (2)(b), the written law applicable to a foreign official shall be: • Where the performance of the functions intended to be influenced would be subject to the law of Kenya—the law of Kenya; • Where the official is an agent of a public international organization—the applicable written rules of that organization; or • In any other case—the law of the country or territory which applies to the foreign official so far as that law is contained in: o any provision made by or under legislation, applicable to the country or territory concerned; or o any applicable judicial decision which is evidenced in published written sources. Commercial Bribery The ACEC Act covers commercial bribery as well as public bribery. Company employees are “agents” of the company, and the ACEC Act prohibits the bribery of all agents. Section 9 (1) of the Bribery Act places the obligation on private companies of ensuring that they put in place procedures, taking into account their size and nature of operations, for the prevention of bribery and corruption. Failure to do so is an offense for which directors and senior officers of the company are liable. Section 10 of the Bribery Act provides that a private entity commits an offense under this section if a person associated with the private entity bribes another person intending to obtain or retain: • business for the private entity; or • advantage in the conduct of business by the private entity. A “private entity” is defined to mean any person or organization, not being a public entity, and includes a voluntary organization, charitable organization, faith-based organization, Jones Day 5 religious-based organization, community-based organization, company, partnership, club and any other body or organization howsoever constituted, and includes: • a body which is incorporated under the laws of Kenya and which carries on business in or outside of Kenya; • any other body corporate however established which carries on business, entirely or partially within Kenya; • a charity or such organization established under the law of Kenya or one established for any other purpose; • a partnership which is formed under the law of Kenya and which carries on business, in or outside of Kenya; • any other business partnership in Kenya. Definitions Government Employee The term “public officer” is defined under the LIA by reference to the meaning assigned to it under Article 260 of the Constitution. Article 260 of the Constitution defines “public officer” as any state officer or any person, other than a state officer, who holds a public office. The term “public office” is defined under the Constitution to mean an office in the national government, a county government or the public service, if the remuneration and benefits of the office are payable directly from the Consolidated Fund or directly out of money provided by Parliament. The term “public officer” is defined under the POE Act to mean “any officer, employee or member, including an unpaid, part-time or temporary officer, employee or member, of any of the following: • The Government or any department, service or undertaking of the Government; • The National Assembly or the Parliamentary Service; • A local authority; • Any corporation, council, board, committee or other body which has power to act under and for the purposes of any written law relating to local government, public health or undertakings of public utility or otherwise to administer funds belonging to or granted by the Government or money raised by rates, taxes or charges in pursuance of any such law; • A co-operative society established under the Co-operative Societies Act; • A public university; • Any other body prescribed by regulation for the purposes of this paragraph.” However, under the ACEC Act’s provisions on bribery, the key term is “agent” and not “public officer.” “Agent” means “a person who, in any capacity, and whether in the public or private sector, is employed by or acts for or on behalf of another person….” (ACEC sec. 38(2)). The Bribery Act states in Section 4 that it applies to the public, public officers and private entities. Therefore, public officers are liable if found guilty of an offense under the Bribery Act such as giving or receiving a bribe. Section 14 of the Bribery Act places a duty on every state officer, public officer or any other person holding a position of authority in a public or private entity to report to the Commission within a period of 24 hours any knowledge or suspicion of instances of bribery. Failure to do so amounts to an offense under the Bribery Act. Gratification (Gifts/ Entertainments/ etc.) A “benefit” could include any gift, loan, fee, reward, appointment, service, etc. The LIA provides that gifts and donations to a public officer would be donations to the State and should be delivered to the State instead. Generally, public officers may not accept or request gifts in connection with the execution of public functions. The Public Officer Ethics Act, however, allows officers to accept non-monetary gifts that do not exceed KES 20,000; other types of gifts given to officers in their official capacity would be treated as gifts to the public officer’s organization. Public officers may also accept gifts from relatives or friends on special occasions recognized by custom. The LIA prohibits a state officer from: • Accepting or soliciting gifts, hospitality or other benefits from a person who: (i) has an interest that may be achieved by the carrying out or not carrying out of the state officer’s duties; (ii) carries on regulated activities with respect to which the Jones Day 6 state officer’s organization has a role; or (iii) has a contractual or legal relationship with the state officer’s organization; • Accepting gifts of jewelry or other gifts comprised of precious metals or stones, ivory or any other animal part protected under the Convention on International Trade in Endangered Species of Wild Fauna and Flora; or • Accepting any other type of gift specified by the Commission. The LIA provides that a state officer may receive a gift given to him/her in an official capacity provided that the gift: (a) is within the ordinary bounds of propriety, a usual expression of courtesy or protocol and within the ordinary standards of hospitality; (b) is not monetary; and (c) does not exceed such value as may be prescribed by the Commission. The Bribery Act prohibits the giving and receiving of bribes. The Bribery Act refers to a bribe as an offer, promise or financial or other advantage to a person who knows or believes the acceptance of the financial or other advantage would itself constitute the improper performance of a relevant function or activity. Section 2 of the Bribery Act defines advantage to include gifts. Additionally, a person commits an offense of bribing a foreign public official if the foreign official is neither permitted nor required by the written law applicable to him/her to be influenced in his/her capacity as a foreign public official by the offer, promise or gift. Current Status Enforcement Body The Parliament enacted the Ethics and Anti-Corruption Commission Act, Act No. 22 of 2011 in August 2011, which resulted in the disbanding of the Kenya Anti-Corruption Commission (the “KACC”) and replacing it with the Commission as the new investigatory body. The KACC, which was under heavy political influence, was not effective in cases involving high-level officials. The Commission has the authority to prosecute crimes (although it still forwards most cases to the Director of Public Prosecutions (the “DPP”), is independent from politics (the head of the agency is appointed for a six-year non-renewable term) and has the authority to engage in out-of-court settlements. Under Section 23 of the ACEC Act, the Secretary of the Ethics and Anti-Corruption Commission (the “Secretary”) or a person authorized by the Secretary may conduct an investigation on behalf of the EACC. Police officers also have wide powers to conduct investigations under the National Police Service Act (the “NPS Act”), including requiring any person whom they reasonably believe has information to assist in the investigation of an alleged offense by appearing before them at a police station or police office in the county where that person resides or is currently present. The Directorate of Criminal Investigations (the “DCI”), which is part of the National Police Service, is the department principally responsible for criminal investigations. Pursuant to Gazette Notice No. 10263 published on December 9, 2016, the High Court of Kenya has an Anti-Corruption and Economic Crimes division specifically tasked to deal with cases pertaining to corruption and economic crimes. Further, several codes of conduct have been enacted to prevent bribery by public officers, including the Public Service Commission Code of Conduct, the Judicial Service Commission Code of Conduct and the Code of Conduct and Ethics for Members and Staff of the Kenya Anti-Corruption Commission (now the Commission). Issues in Enforcement • Lack of commitment by senior officials who see no difference between their personal gains and official duties. • Ineffective enforcement of whistleblower protections, despite the existence of the Witness Protection Act. These include lack of incentives for whistleblowers leading to successful enforcement of the provisions of the Bribery Act. Similarly, the penalty charged for disclosing information of whistleblowers and informants, leading to the harassment or intimidation of the informants, is not sufficient (a fine not exceeding KES 1 million under the Bribery Act) and thus may not deter such conduct. Jones Day 7 • The perception that the DPP is unwilling to prosecute corruption cases involving high- level government officials because of political pressure and the lack of insulation from such pressure. Recent Movement • In 2019, KES 1.5 billion was allegedly lost in fictitious transactions, irregular award of tenders and manipulation of systems at the National Health Insurance Fund. Consequently, the Chief Executive Officer was suspended from duty. Similarly, 21 suspects were arrested to answer to seven charges relating to fraud, deception and abuse of office, among others. • In 2018, KES 9 billion of public funds was stolen and allegedly paid to ghost suppliers. Commercial banks pleaded guilty of facilitating the scandal and entered into a plea bargaining agreement with the Director of Public Prosecutions to pay a KES 300 million fine. 40 individuals were charged, including former Youth Public Service Principal Secretary Lilian Omollo and former National Youth Service Director Richard Ndubai, with fraud, money laundering and abuse of office. • In 2018, National Cereals and Produce Board (“NCPB”) officials were found supplying large quantities of cheap imported maize at the expense of Kenyan farmers, who are still owed KES 2.1 billion. The officials also facilitated the buying and repackaging of fertilizers by cartels. In total, the scandal cost Kenyans KES 1.9 billion. Richard Lesiyampe (Agriculture Principal Secretary), Newton Terer (Managing Director), Cornel Kiprotich (former general manager for finance) and other officials were charged with irregular purchase of maize. The Managing Director resigned, while five senior managers were suspended and 59 members of staff were put under investigations, as well as 152 people who include NCPB officials and unscrupulous traders, some of whom are not registered as farmers • In 2018, the government lost KES 470 million involving the supply of faulty transformers and the irregular allocation of contracts to 525 companies by the Kenya Power and Lighting Company. Ken Tarus, Ben Chumo and nine other senior officials were relieved of their duties, and their cases are ongoing in court. • In March 2015, President Uhuru Kenyatta directed five Cabinet Secretaries and six Principal Secretaries to step aside to allow for investigations into corruption allegations leveled against them. The Cabinet Secretaries of the Lands, Agriculture, Transport, Energy and Labor ministries were reprimanded. • In mid-2016, the opposition filed a petition in Parliament against the commission of the electoral body, the Independent Electoral and Boundaries Commission (the “IEBC”), on the grounds of incompetence and lack of integrity with respect to the manner in which the 2013 general elections were conducted. In October 2016, the IEBC chairman and commissioners resigned due to pressure from the opposition, marking Kenya’s first-ever resignation of a fully appointed Board. Below are some recent cases of bribery and corruption that have made the headlines in Kenya, as well as internationally, but have not yet been brought before the courts or have not yet been settled. • The Dam Scandal In 2019, KES 21 billion allocated for the construction of two dams vanished, involving 22 people among whom included two cabinet secretaries and three principal secretaries. Investigations were undertaken and completed by the Directorate of Criminal Investigations, and warrants of arrests were subsequently issued. However, the warrants of arrest were put on hold due to a push and pull within the government. • The Eurobond Scandal: Kenya borrowed more than KES 250 billion through a Eurobond to fund various primarily infrastructure-related developmental projects. At the time the money was acquired, the International Monetary Fund confirmed that the money was deposited in a Central Bank of Kenya account. The government indicated that the money had been disbursed to various ministries for capital projects. However, the opposition in Kenya alleged that more than KES 100 billion from the Eurobond had been misappropriated. As a result, following this exchange there has been a series of counter-accusations Jones Day 8 between the opposition and the government concerning the issue. The Treasury made conflicting statements as to how the billions had been spent and has said that there were no clear records of the projects that had been funded by the Eurobond. • The “Chicken-gate” Scandal: In early 2016, a British government report was sent to the Attorney-General naming commissioners of the IEBC and tender committee members who allegedly received money from a British company, Smith and Ouzman Limited, to ensure it would win a ballot paper printing tender announced in Kenya. The sales and marketing director of Smith and Ouzman Limited was jailed for a three-year term by the British Court for bribing the IEBC and Kenya National Examinations Council (the “KNEC”) officials to win printing contracts. However, there has been no report of any IEBC or KNEC official being penalized for the receipt of the bribes. • The 2016 Rio Olympics: The leader of the Kenya athletics team is alleged to have “stolen” USD 256,000 from the Kenya Government, which funds had been allocated to the National Olympic Committee of Kenya for the travel and accommodations of Kenyan athletes and officials to Rio de Janeiro for the Rio Olympics. Government officials sitting at various sports authorities are currently being tried before Kenyan courts. • The National Youth Service (“NYS”): More than KES 791 million was allegedly looted from the NYS during the devolution of youth projects to Kenya’s 47 counties. The former Devolution Cabinet Secretary Anne Waiguru tendered her resignation following accusations filed against her and her team. Court cases against officials in the Ministry of Devolution are currently ongoing and are yet to be determined. The Chairman of the Commission, Philip Kinisu, resigned a day after the National Assembly’s Justice and Legal Affairs Committee recommended his removal from office, as he was linked to this matter. Waiguru was, however, cleared of all charges by the Ethics and Anti-Corruption Commission on the basis that there was insufficient evidence showing probable cause to warrant recommendations against her. • The Construction of Kenya’s Standard Gauge Railway (“SGR”): This scandal concerned the prices of the material needed for the construction of the SGR. It is alleged that the price of raw materials was inflated from KES 220,921,502,221.08, as was initially quoted by China Road and Bridge Corporation, to KES 1.3 trillion. The Attorney General has raised questions regarding the integrity and transparency of the tendering process for these raw materials and why the actual amounts spent on the SGR remain unknown to the public. Participation in International Anti- Corruption Conventions OECD Convention No UNCAC Signed December 9, 2003 Ratified December 9, 2003 Last Updated June 14, 2019 Jones Day 9 Region Africa Country Mozambique 2018 CPI Rank 158/180 Score 23 The Law on Bribery Bribery of Domestic Officials The Parliament of Mozambique first adopted legislation on corruption—the Anti- Corruption Act (Law 6/2004, of June 17)—in 2004, supported by its relevant Regulations approved by the Government of Mozambique by Decree 22/2005, of June 22 (collectively, the “ACA”). Offering a bribe: It is a crime to give or promise to public officials, directly or indirectly, money or any material or non-material privilege not due to them in return for actions in violation of their duties and tasks. Violators are subject to imprisonment for two to eight years and fines (ACA art. 9, cl. 1). However, the penalties may be reduced if the action was committed to protect the offeror–violator or his/her family from danger (ACA art. 9, cl. 2). Receiving a bribe: It is a crime for public officials, directly or indirectly, to request or receive money or any other assets in return for performing an action in violation of their duties. Violators are subject to imprisonment from two to eight years and fines. However, if the action at issue is an omission or delay, or if it is not carried out, the penalties may be reduced (ACA art. 7, cl. 4-5). Moreover, if the offer or promise accepted is voluntarily repudiated by the public official and the amount received, if any, is returned before such action is performed, the penalties will not apply (ACA art. 7, cl. 6). Under Article 11 of the ACA, violators may also be subject to one or more of the following penalties: (1) loss of assets or possessions accrued by illicit actions; (2) full indemnification of damages caused; (3) expulsion from the profession; (4) prohibition from subcontracting to the state or public enterprises and from receiving tax or credit benefits or incentives. The Penal Code also includes penalties for public officials who accept a donation or gift to perform their official task in an unjust way, as well as any persons who offer gifts, presents or promises to public officials in order to obtain a favor. Individuals who engage in the foregoing conduct are subject to incarceration between two and eight years and a fine (of up to a maximum of approximately EUR 175/day) for up to one year (Penal Code art. 318, 321). The Public Probity Act (Law 16/2012) creates additional offenses for public officials who accept certain gifts or gratuities, abuse their authority or engage in illicit enrichment. Corporate liability: Neither the ACA nor the Penal Code imposes criminal liability on legal entities. A new Penal Code was approved in Mozambique, replacing its predecessor that was more than 100 years old and bringing about a better system for the criminalization of corrupt acts in Mozambique. The new Penal Code dedicates a whole chapter, from Article 501 to 519, stating different kinds of corruption crimes. The crimes established in the new Penal Code for corruption are punishable by penalties that can vary from fines to 16 years in prison. The new Penal Code also allows exemptions from criminal proceedings to those who willingly return the amounts received from acts of corruption. Those who present evidence that the acts of corruption were instigated by public officials as a condition for the performance of the officials’ duties are also exempt from criminal proceedings. Following the approval of the new Penal Code, Mozambique is currently working on a new Code of Criminal Procedure to replace the current 100-year-old code. The Parliament approved by consensus the formal authorization for its Commission for Constitutional and Legal Matters (also known as “The First Commission”) to start working on the project of the new Code of Criminal Procedure. This project was expected to be made public before the end of 2015 but has not yet been made public and is under public consultation. Jones Day 10 Bribery of Foreign Officials The ACA and Penal Code do not distinguish between foreign and domestic officials. Commercial Bribery Article 2, clause 1 of the ACA penalizes corruption in the private sector only when private companies are outsourced to provide public services. However, the Penal Code penalizes corruption both in the public and private sectors, although the penalties are more severe for corruption in the public sector. Definitions Government Employee Article 2, clause 2 of the ACA defines “public official” as “any person that exercises or participates in public or similar services” where such person “has been appointed or nominated pursuant to a law, by election or by resolution of the competent entity.” Article 2, clause 3 extends liability to any persons “who promote or contribute towards” a corruption offense even if they are not “public officers or officials.” The Public Probity Act (Law 16/2012, of August 14) adopted in 2012 establishes the basis for and the legal regime concerning public morality and respect for public property by public servants. Its provisions apply to any public servant and to public entities, as well as natural or legal persons entrusted with public powers. Under the Public Probity Act, a “public servant” is broadly defined to include any person officiating by mandate, or occupying a position, job or function in a public entity by virtue of election, appointment, employment or any other form of investiture or link, even if in a transitional function with or without remuneration. Under the new Penal Code, corruption by public officials/government employees is still more severely punished than corruption by other parties. Gratification (Gifts/ Entertainments/ etc.) Neither the ACA nor the Penal Code provides a clear definition of “bribe,” and references to the forms of bribery are limited to “money or other assets” and “material or non-material privileges” (ACA art. 7, cl. 1; art. 9, cl. 1). A non-material privilege includes: • Favorable treatment of a specific person, company or organization; • Benefits, compensation, bribes, loans, adjudication or signing of contracts in violation of the law; • Giving information on public tenders against fair competition law; and • Fraudulently supplying information on examination tests (ACA art. 9, cl. 3). Under the Public Probity Act, a public servant may not request or accept gifts, donations, favors, tips or benefits of any kind from natural or corporate persons of any nationality in exchange for some form of official action or inaction. Gifts or gratuities may be offered consistent with local protocol on festive dates provided they do not exceed a specified value. However, gifts, regardless of value, may not be accepted from those who have an interest in a decision that the public servant has taken or will take regarding a particular subject within a specified time period. Current Status Enforcement Body In 2005, the Central Office for Combating Corruption (Gabinete Central de Combate à Corrupção, the “GCCC”) was established within the Attorney General’s Office, replacing the now defunct Anti-Corruption Unit that was established in 2003. The GCCC carries out investigations of corruption-related complaints and operates in Maputo, Beira and Nampula. Although the number of investigations is small compared to that of complaints, the number of cases being handled increased from 534 in 2009 to 677 in 2011. In 2011, out of the 677 cases that were investigated, 214 resulted in charges and 81 resulted in trial. Issues in Enforcement One of the major problems in the GCCC is political interference, since the GCCC staff is appointed by the Attorney General, who is appointed by the government. Moreover, the GCCC lacks the expertise, resources and political will to fight corruption, especially since it only has the jurisdiction to investigate but not to prosecute corruption-related complaints. Recent Movement In 2018, the Mozambican Constitution was revised (Law no. 1/2018, of June). The Constitutional reform aimed to readjust the Constitution to the process of consolidation of the democratic reform of the State, the strengthening of participative democracy and guarantee peace. The constitutional reform had an impact on the distribution of Jones Day 11 competences of government bodies in the form of decentralization of powers. New political positions were created, such as the “Provincial Secretary of State” and the “Provincial Executive Council.” Another major change is that the Governors of the Provinces are now elected and not appointed by the President of the Republic. As a direct consequence of the 2018 Constitutional Reform, the Parliament approved Law no. 4/2019 of May 31, 2019, which establishes the principles, rules of organization, powers and functioning of the executive bodies of decentralized government in the provinces. The Mozambican Parliament also approved Law no. 3/2018, of June 19, 2018, which establishes the legal framework of the State-Owned Company Sector. This law provides the principles and basic rules applicable to the state corporate sector and has important provisions regarding integrity, ethics and good faith as guiding principles of state corporate activities. For example, under this law, State-owned companies are subject to financial control by a central supervisory body (article 24). On the other hand, the law also states that companies comprising the corporate sector of the State are mandatorily subject to external auditing, to be conducted by independent entities without prejudice to the powers of their internal auditing mechanisms. Following the approval of this law, the Government has approved the relevant regulations to ensure its implementation (Decree no. 10/2019, of February 29, 2019). The Ministry of Science, Technology, High-Education and Technical-Professional Teaching has approved a diploma (Ministerial Diploma no. 36/2019) with the aim of fighting corruption and sexual harassment in all technical and professional teaching institutions. This diploma states that each technical and professional teaching institution must have a “Commission Against Sexual Abuse, Harassment and Corruption” that shall address all matters related to such malpractices and to which the complaints and reports must be submitted. Another relevant milestone for the year 2018 was the approval of the new Code of Real Estate Registry (Decree-Law no. 2/2018 of August 23, 2018), which introduced the Integrated System of Real Estate Registry. This system will contribute to the reduction of cases of forged registries that are often performed with involvement of public officers under the manual and obsolete methods currently in use. In 2018, the Government approved the Regulations for Management of State Property (Decree 42/2018, of July 24, 2018), which reaffirms the need for thorough control and management of State property, especially with regards to transparency in state property management. Participation in International Anti- Corruption Conventions IACA Agreement Signed February 2013 OECD Convention No UNCAC Signed May 25, 2004 Ratified April 9, 2008 AUCPCC Signed December 15, 2003 Ratified August 2, 2006 SADCPAC Signed August 14, 2001 Ratified July 9, 2004 Last Updated June 21, 2019 Jones Day 12 Region Africa Country South Africa 2018 CPI Rank 73/180 Score 43 The Law on Bribery Bribery of Domestic Officials The Prevention and Combating of Corruption Act of 2004 (“PRECCA”) is the primary source of anti-corruption law in South Africa and creates the general offense of corruption. Offering a bribe: It is a criminal offense to give or offer to give any other person any gratification in order to personally act or influence another to act in a dishonest/illegal way, resulting in an abuse of authority, breach of trust or an unjustified result (PRECCA section 3(b)). Receiving a bribe: It is a criminal offense to accept or agree to accept any gratification from any person in order to act or influence another to act in a dishonest/illegal way, resulting in an abuse of authority, breach of trust or an unjustified result (PRECCA section. 3(a)). In addition to the general offense of corruption (PRECCA section. 3), PRECCA further contains numerous other corruption offenses that pertain to particular persons (public officers, judicial officers, etc.) and activities (auctions, contracts, etc.) The formulation of each specific corruption offense is substantially similar to the general offense of corruption. The punishment is subject to the discretion of the court responsible for sentencing and dependent upon in which court the matter is heard. The possible penalties are listed in section 26 of PRECCA. These are: • High Court—up to life imprisonment and fines • Regional Court—up to 18 years’ imprisonment and fines • Magistrate Court—up to five years’ imprisonment and fines Corporate liability: A company is a separate legal entity apart from its members, directors and employees and can be prosecuted independently for offenses committed by the company. Corporate liability in South Africa is governed generally by the Companies Act, 71 of 2008, and the Criminal Procedure Act, 51 of 1997. South African law provides that the law treat the acts or states of mind of those who represent or control the company as the acts and states of mind of the company itself. Corporate entities convicted of a corruption offense under the PRECCA may be subject to fines to an unlimited extent. PRECCA must also be read with Regulation 43 of the Companies Act 71 of 2008, which requires certain companies to appoint a Social and Ethics Committee. The Social and Ethics Committee has certain obligations in respect of corruption, including actively monitoring and taking steps to reduce corruption and ensuring compliance with OECD recommendations regarding corruption. Reporting obligations: Section 34 of PRECCA states that any person who holds a position of authority (including within a private corporation) has a duty to report acts of corruption about which the person knew or reasonably should have known or suspected. A failure to report may lead to a fine or imprisonment of up to 10 years (PRECCA section. 34, read with section 26), if sentenced by a High Court or regional court; or to a fine or imprisonment of not exceeding three years, if sentenced by a Magistrates Court. Proposed amendments: The Department of Justice and Correctional Services has published the prevention and Combating of Corrupt Activities Amendment Bill, 2017. Although there are number of proposed amendments, the key aspects of the Bill are the following: • Defining the limits to fines that the various courts are competent to hand down, as well as including guidelines for how corporate fines should be calculated; • Expressly prohibiting facilitation payments through amending the definition of “gratification” (although these payments were already illegal based on an interpretation of PRECCA); Jones Day 13 • Expanding the extraterritorial application of PRECCA; and • Creating the offense of “unacceptable conduct relating to a witness,” which relates to witness interference and intimidation and which extends protection to “whistleblowers”. The significant proposed amendments are additions that, on the one hand, provide a degree of comfort for individuals required to file reports and, on the other hand, impose onerous requirements on organizations that fall within a certain category listed in PRECCA. Broadly, these additions are: • A person who bona fide files a report as contemplated in terms of subsection 34(1) may not be held liable to any civil, criminal or disciplinary proceedings in respect of the content of such report; • The imposition of the obligations of section 34 on State-Owned Enterprises; and • All institutions listed in section 34(4) of PRECCA (the subsection detailing those persons defined as persons who “hold a position of authority”) are required to implement appropriate internal compliance programs to ensure that reportable offenses are detected and reported. Bribery of Foreign Officials Bribery of foreign officials is covered by PRECCA, which mirrors the provisions on domestic public bribery for offerors of bribes. PRECCA also criminalizes the giving or offering of any gratification to a foreign official to have him/her personally act, or influence others to act, in an illegal, dishonest or unauthorized manner such that it constitutes an abuse of authority, breach of trust or violation of legal duties, or is otherwise designed to reach an unjustified result (PRECCA section. 5). The degree of the penalty depends on in which court the matter is heard and is subject to the discretion of the court. Commercial Bribery Commercial bribery is criminalized by PRECCA, which also contains provisions on the bribery of agents. Those provisions prohibit both the accepting or giving of and the offering to give or accept any gratification by an agent, and the accepting or giving of, or offering to accept or to give any gratification by a third person to/from an agent (PRECCA section. 6). As with bribery of domestic officials, the degree of penalty depends on in which court the matter is heard and is subject to the discretion of the court. Definitions Government Employee A “public officer” is anyone who is a member, an officer or an employee of a public body, and includes anyone receiving remuneration from the state, any public servant under the Public Service Act of 1994 and any public corporation officer. However, members of the legislature, prosecuting authorities and judicial officers are not public officers (and are covered in separate articles under PRECCA). A “foreign public official” under PRECCA includes anyone holding a legislative, judicial or administrative office in a foreign state, any person performing public functions and any official of a public international organization. Gratification (Gifts/ Entertainments/ etc.) PRECCA prohibits any person from accepting or giving “any gratification” in order to act or induce another person to act corruptly. “Gratification” is defined extremely broadly and may consist of something other than money, such as gifts, entertainment, loans, rights, employment and other types of benefits. There is no minimum threshold stipulating what constitutes gratification. Unlike the FCPA, PRECCA does not provide for the allowance of facilitation payments. The current proposed amendments seek to introduce facilitation payments as an offense by including such offense in the definition of “gratification.” Current Status Enforcement Body South Africa has a number of anti-corruption agencies with overlapping jurisdictions. Special Investigating Unit and National Prosecuting Authority The Special Investigating Unit (the “SIU”) is dedicated to investigating serious malpractices or maladministration relating to state institutions, and any conduct which can materially harm the interests of the public. It reports directly to the President. Since the SIU lacks the authority Jones Day 14 to prosecute and make arrests, it coordinates with the National Prosecuting Authority (the “NPA”). The NPA is South Africa’s primary prosecuting authority and consists of several units. South African Police Service While the South African Police Service (the “SAPS”) has very little credibility as multiple police chiefs have themselves been convicted of bribery, there are specialized units within the SAPS that were formed to focus on the investigation of more sophisticated offenses. One such agency within the SAPS is the Directorate for Priority Crime Investigation (the “Hawks”) The Hawks investigate national priority crimes such as serious organized crime, serious commercial crime and serious corruption. The Hawks also have specialized Units, such as Serious Commercial Crimes Unit to investigate specific crimes. Independent Police Investigative Directorate The Independent Police Investigative Directorate (the “IPID”) is an organization that was created by Parliament to ensure effective independent oversight of the South African Police Service and Municipal Police Services. This is provided for by section 206(6) of the South African Constitution. The IPID has broad powers and is tasked with investigating allegations of misconduct of, or offenses committed by, all members of the police service. The IPID Act grants the executive director extraordinary powers to investigate wrongdoing in the police service. Notably, the IPID Act does not explicitly prevent the IPID from investigating alleged wrongdoing by the Hawks or any of its members. Further, the IPID Act allows the IPID to investigate “corruption matters within the police.” Public Protector The Public Protector was established by section 181 to 183 of the Constitution, 108 of 1996 and the Public Protector Act 23 of 1994. It is the purview of the Public Protector, as regulated by national legislation, to investigate any conduct in state affairs, or in the public administration in any sphere of government, that is alleged or suspected to be improper or to have resulted in any impropriety or prejudice, to report on that conduct and to take appropriate remedial action. The Public Protector is granted additional powers and functions under the Public Protector Act 23 of 1994. The Public Protector has in recent years been involved in several high-profile investigations into various government departments and has been subjected to political interference for carrying out investigations against state departments and senior political officials. On March 31, 2016, the Constitutional Court held that the power of the Public Protector to take appropriate remedial action has legal effect and is binding. Therefore, neither the President nor the National Assembly are entitled to respond to binding remedial action recommended by the Public Protector as if it has no force or effect, unless it has been set aside through a proper judicial process. In that case, the Court also held that the National Assembly’s resolution, based on the Minister’s findings exonerating the President from liability, was inconsistent with the Constitution and unlawful. The Court held that, by failing to comply with the Public Protector’s order, the President failed to “uphold, defend and respect” the Constitution because a duty to repay the money was specifically imposed on him through the Public Protector’s constitutional power. The Court ordered the President to make a payment 45 days thereafter. The President was also ordered to reprimand the Ministers involved in the expenditure at his homestead. The National Treasury was then tasked to determine the cost of the non-security upgrade, of which it estimated that the President is liable to pay R7.8 million. Competition Commission and Competition Tribunal The Competition Commission and the Competition Tribunal are two other highly active enforcement authorities that (i) conduct investigations into unlawful corporate conduct, including cartel conduct and restrictive business practices; and (ii) determine the punishment for these offenses. The Competition Commission has various powers, including the power to raid premises, search for, and remove information pursuant to a warrant or, in limited circumstances, without a warrant. In a highly publicized investigation, the Competition Commission recently charged 14 banks operating in South Africa (including local and international banks) with collusion relating to direct and indirect price-fixing in respect of spot trades between the United States dollar and the South African rand. Jones Day 15 Asset Forfeiture Unit The Asset Forfeiture Unit (“AFU”) was established in order to ensure that the powers to seize criminal assets would be used to their maximum effect in the fight against crime and, particularly, organized crime. For instance, the AFU recently obtained a preservation order for R144 million for municipal land that was sold to private individuals, and in the Northern Cape, the AFU obtained a confiscation order for R59.8 million that was fraudulently claimed by a private company for a lease agreement with the provincial government. Issues in Enforcement • Lack of political will to address high-profile corruption and failure to prosecute high-profile cases. • Anti-corruption agencies are not sufficiently independent from political interference. • The police and other investigative agencies lack sufficient capacity and competency to effectively investigate and prosecute complex cases of corruption and white collar crime. • Inadequate whistleblower protection. The Protected Disclosures Act was enacted to protect whistleblowers but is limited to the protection of employees’ occupational detriment and does not provide broad protection for whistleblowers. However, the recent amendments to the Protected Disclosures Act aim to increase the protection provided to employees and workers who make protected disclosures. • Despite being a comprehensive piece of legislation, there have been very few prosecutions under PRECCA. • PRECCA does not make provision for leniency agreements (deferred prosecution agreements) or compliance programs which may improve the ability of law enforcement agencies to identify and prove corporate crimes by relying on information provided during the deferred prosecution agreements process. • South Africa is the only country in Africa that has adopted the OECD convention; however, South Africa has been criticized for failing to implement the provisions of the convention. In March 2014, Transparency International released a report titled “Phase 3 Report on Implementing the OECD Anti-Bribery Convention in South Africa,” which sets out South Africa’s failure to implement the convention and to address bribery of foreign officials in South Africa. In March 2016, South Africa presented its follow-up report to the OECD, indicating that it has taken the initial steps to implement the recommendations in that report. Recent Movement • To date, the only significant U.S. Securities and Exchange Commission (“SEC”) or Department of Justice enforcement action in relation to South Africa remains the incident where the SEC announced on September 28, 2015, that a major Tokyo-based multinational company (“JapanCo”) agreed to pay USD 19 million to settle charges that it violated the accounting provisions of the FCPA. The SEC alleged that JapanCo’s South African subsidiary inaccurately recorded payments made to an allegedly politically connected company, Chancellor House, in connection with two government energy sector contracts amounting to USD 5.6 billion. • In March 2018, President Cyril Ramaphosa suspended SARS chief Tom Moyane because he brought SARS into disrepute. He also charged Moyane with misconduct such as mishandling of a Financial Intelligence Centre report into suspicious transactions into Makwakwa’s bank accounts, the making of unauthorized bonus payments, misleading Parliament and ordering an employee to feign illness to not give evidence during an investigation. The Hawks also have investigated Moyane and had until the end of June 2019 to finalize their investigation. • Former President Jacob Zuma was charged with 16 counts of fraud, corruption, racketeering and money laundering related to the controversial multibillion rand arms deal concluded in the late 1990s. In May 2019, Zuma made an application to the High Court for a permanent stay of prosecution in relation to the 16 charges. Zuma’s legal team argues that the long delay makes it impossible for him to have a fair trial, while the prosecution argues that it is Zuma who is responsible for the delays and he should not avoid prosecution on this basis. The matter is still being decided by the courts. The “State Capture” Scandal: Jones Day 16 • The release of the Public Protector’s report “State of Capture” dated October 14, 2016, drew attention to the numerous allegations of corruption within multiple state-owned entities and purported links between those entities and an Indian family, the Guptas, who are accused of using their close relationship with South Africa’s former President Jacob Zuma to secure lucrative public contracts. • The State Capture scandal has reached further than just the companies owned by the Gupta family; multiple multinational companies have been implicated in wrongdoing, either as business partners or as service providers to the Guptas or state-owned entities alleged to have been “captured” by the Guptas. • In the light of the recommendations in the Public Protector’s report, a Commission of Inquiry into State Capture was appointed and commenced its work on August 21, 2018 (“SCC”). The SCC is currently busy with hearing testimony from the numerous individuals and entities implicated in “State Capture” as well as undertaking investigations into various entities. The SCC expects to complete hearing testimony in August 2019. • The President has also appointed a new investigating unit within the NPA to investigate the criminal aspect of “State Capture” as well as linked fraud and corruption. The unit will be led by advocate Hermione Cronje, who has extensive experience in prosecution. Participation in International Anti- Corruption Conventions OECD Convention Yes UNCAC Signed December 9, 2003 Ratified November 22, 2004 AUCPCC Signed March 16, 2004 Ratified November 11, 2005 SADCPAC Signed August 14, 2001 Ratified May 15, 2003 Last Updated June 12, 2019 Jones Day 17 Region Asia Pacific Country Australia 2018 CPI Rank 13/180 Score 77 The Law on Bribery Bribery of Domestic Officials The applicable law on bribery of domestic public officials depends on whether the official in question is an official of a federal entity or a state/territory entity. Bribery of public officials of federal entities constitutes an offense under Divisions 141- 142 of Schedule 1 to the Criminal Code Act 1995 (Cth) (the “Federal Criminal Code”). Bribery of public officials of state entities constitutes an offense under the common law offense of bribery (i.e., “the receiving or offering of an undue reward by or to any person in public office, in order to influence that person’s behavior in that office, and to incline that person to act contrary to accepted rules of honesty and integrity”). Certain state legislation also prohibits the bribery of agents and employees, regardless of whether they are in the public or private sector. For example, Part 4A of the Crimes Act 1900 (NSW) makes it an offense for an agent to receive (or agree to receive or to solicit) or be offered a benefit as an inducement to do something, omit to do something, or favor or disfavor someone in relation to the affairs or business of the agent’s principal. Similar provisions exist in other states and territories. In addition, amendments to the Federal Criminal Code (Crimes Legislation Amendment) (Proceeds of Crime and Other Measures) Act 2016 (Cth) enacted on March 1, 2016, introduced new criminal books and records offenses (the Books and Records Offence), which are broad in their scope and may cover books and records that fail to disclose corrupt payments to domestic officials. Bribery of Foreign Officials Bribery of foreign public officials is primarily regulated by the federal Criminal Code. Division 70.2 of the federal Criminal Code makes it an offense for a person to provide (or offer to provide, promise to provide or cause any of those things to happen) a benefit to a foreign public official when that benefit is not legitimately due to the foreign public official, and the benefit is given with the intention of obtaining or retaining business or a business advantage. Division 70.4 of the federal Criminal Code provides that it is a defense if the accused can show that the benefit was minor, was a facilitation payment and was appropriately recorded. Conspiring, aiding and abetting, inciting or attempting bribery of a foreign official are also criminal offenses under the federal Criminal Code. See also: (a) the Proceeds of Crime Act 2002 (Cth), which provides for the forfeiture of foreign bribes paid, the seizure of the benefits of corrupt activity and identifies foreign bribery as a predicate offense for money laundering offenses; (b) the Corporations Act 2001 (Cth), which provides for civil, criminal and administrative sanctions for acts ancillary to foreign bribery; (c) the Mutual Assistance in Criminal Matters Act 1987 (Cth) and the Extradition Act 1988 (Cth), which provide a framework for the investigation of foreign bribery in conjunction with foreign law enforcement agencies; (d) the Income Tax Assessment Act 1997 (Cth), which precludes the tax deductibility of bribes and may form the basis for reassessment and audit of tax liabilities in the event bribes have been wrongfully deducted; and (e) the Books and Records Offence, which was enacted by the federal Parliament in order to assist prosecutors in prosecuting foreign corrupt practices, where prosecution of the underlying offense (bribing foreign government officials) may, for various reasons, be problematic. Moreover, although not specifically designed to prevent foreign bribery, foreign bribery- related prosecutions may also take place under the following legislation: (a) s180(1) of the Corporations Act 2001 (Cth), which imposes statutory duties on directors of Australian corporations in the exercise of their powers; and (b) Division 144 of the federal Criminal Code and similar provisions under state/territory law (e.g., s83A of the Crimes Act 1958 (Vic)), which make it an offense to make fraudulent documents. Jones Day 18 Commercial Bribery Bribery in a commercial context is regulated primarily by state and territory law. The Secret Commissions Act 1905 (Cth) having been repealed, there is no federal legislation which specifically regulates bribery in a corporate context; instead, the fraud-type provisions of the Criminal Code are broad enough to capture most cases of commercial bribery. As discussed above, state legislation prohibiting the receiving or giving of undue benefits to agents and employees is also likely to be effective in criminalizing most cases of commercial bribery. Provisions of the Corporations Law 2001 (Cth) may also be relevant if a person giving or receiving a bribe is a director of an Australian corporation. The new Books and Records Offence is also broad enough to cover books and records that fail to accurately record acts of commercial bribery. In addition, employers will typically have remedies against their employees who take secret commissions or other corrupt benefits under general principles of equity, and may have contractual rights under employment contracts. Finally, it may be possible to bring actions against the party engaging in corrupt conduct under Part 2 of the Australian Consumer Law, which is Schedule 2 to the Competition and Consumer Act 2010 (Cth), on the basis that the bribery is “misleading or deceptive conduct.” Definitions Government Employee The provisions relating to foreign bribery are designed to be read extremely broadly. The relevant recipient for an offense under Division 70 is a “foreign public official.” “Foreign public official” is defined inclusively by 70.1 of the Criminal Code as any person who is an employee, officeholder, appointee of or person owing duties to foreign government bodies, offices, legislatures, militaries, judiciaries and their agents, contractors and intermediaries. Further, the legislation also applies to the employees of state-owned enterprises and public international organizations. Gratification (Gifts/ Entertainments/ etc.) There is no blanket prohibition on hospitality, gifts or other benefits being provided to foreign government officials, either by type or by value. However, the definition of “benefit” is to be read expansively and includes “any advantage and is not limited to property.” A key question in each instance is whether any benefit provided was “not legitimately due.” Companies must ensure that entertainment, gifts and study tours provided to foreign public officials are not actually or apparently excessive. Current Status Enforcement Body There is no single enforcement body in Australia. The lead investigative agency for bribery of foreign public officials and bribery of federal public officials is the Australian Federal Police (the “AFP”). In 2012 and 2013, the AFP was reported to have received substantial additional resources to investigate allegations of foreign bribery, and a number of new cases (arising from both self-reports and complaints) were reported to have been opened. However, it is unclear whether the AFP’s skill base and resources are yet adequate to effectively investigate foreign bribery, especially when issues such as organized crime, trade union corruption and transnational terrorism have been prioritized by the Commonwealth. In an attempt to address the lack of resources, in 2014 the federal government established a Fraud and Anti-Corruption Centre which is overseen by the AFP. The Centre will work in conjunction with, among others, the Australian Taxation Office, the Australian Securities and Investment Commission, the Australian Customs and Border Protection Service and the Department of Foreign Affairs and Trade to tackle federal fraud and anti-corruption offenses, including foreign bribery. The AFP has also established a network of approximately 13 prosecutors nationally to manage foreign bribery matters. To the extent that Australian corporations are alleged to have engaged in bribery of foreign officials, the Australian Securities and Investments Commission (“ASIC,” the corporate regulator) may also have jurisdiction to investigate and sanction companies and officers. To date, there has been no significant action by ASIC in the area of foreign bribery. The lead prosecutorial agency for bribery of foreign public officials and bribery of federal public officials is the Commonwealth Office of the Director of Public Prosecutions. The lead investigative agencies for bribery of state/territory public officials and bribery in a private context are the police forces of the relevant states and territories in which the conduct is alleged to have occurred. In addition to state and territory police forces, a number of states have specific agencies with strong coercive powers to investigate bribery and Jones Day 19 corruption offenses, e.g., the Independent Commission Against Corruption in New South Wales. Prosecutions of federal offenses typically take place in state or territory courts (which are vested with jurisdiction to hear federal criminal matters). Prosecutions of state/territory offenses also take place in state or territory courts. Australian courts are considered generally professional and free from corruption, if sometimes slow. Issues in Enforcement • The primary issue in enforcement of the law related to the bribery of foreign officials to date continues to be the low rate of successful prosecutions under Australian anti- bribery law. Under these circumstances, corporations do not yet feel that investigation, prosecution and conviction for foreign bribery under Australian law is a significant risk. Nevertheless, media attention as a result of charges brought against an Australian engineering company in mid-2018 could have a significant impact on the extent to which corporations in Australia need to consider the adequacy of their policies and procedures to combat corrupt practices. That case involved an alleged conspiracy to provide illegitimate payments to foreign public officials in the Philippines and Vietnam. In addition, the current proposal to introduce a strict liability offense for corporations who do not take adequate procedures to prevent foreign bribery (based on an equivalent offense in the United Kingdom’s Bribery Act) could have an impact. • AFP officers have not traditionally been provided with the skills and resources to pursue long-running, complex and multijurisdictional investigations. The resources of the AFP are in great demand in relation to higher-profile crimes, e.g., terrorism and organized crime. The AFP is, however, a member of the specialized International Foreign Bribery Taskforce (“IFBT”), which involves law enforcement representatives from the FBI, the United Kingdom’s National Crime Agency and the Royal Canadian Mounted Police. • Recent enforcement activity suggests that federal prosecutors will attempt to alleviate some of the evidentiary difficulties associated with the existing foreign bribery offense (such as proving a benefit was not legitimately due in another jurisdiction) by charging companies with conspiracy offenses which do not require the prosecution to prove the elements of the substantive offense (only that an agreement was entered to contravene the substantive offense and that one or more overt acts were committed in pursuance of that agreement). Recent Movement In 2016, the Commonwealth Senate undertook an inquiry into Australia’s laws that prohibit the bribery of foreign public officials, and legislative changes can be expected in order to address the findings made by the senate to tighten and strengthen the legislation. In December 2017, the OECD released its Phase 4 report on Australia’s compliance with the convention on combatting bribery of foreign public officials in international business transactions. The OECD concluded that Australia’s enforcement against foreign bribery has increased markedly since Phase 3, and Australia is now able to report its first successful prosecution. At the time of the report, the AFP had 19 active investigations and had achieved its first prosecution. In July 2017, three individuals pleaded guilty in the Supreme Court of New South Wales to the bribery of foreign public officials in Iraq. The individuals admitted to the payment of bribes in order to secure a construction contract in Iraq worth approximately USD 8.5 million. In September 2017, all three individuals were sentenced to four years’ imprisonment with a non-parole period of two years. Two of the accused were also fined AUD $250,000. In May 2018, the second prosecution in Australia of a corporation for foreign bribery offenses was commenced against an Australian engineering company alleging that, between 2000 and 2012, the company was a party to a conspiracy to provide illegitimate payments to foreign public officials in the Philippines and Vietnam. Five individuals have also been charged as parties to the conspiracy. The proceedings against both the company and the individuals are in the committal stage (prior to any plea being entered). In December 2017, following public consultations on proposed reforms, the federal government introduced a bill to Parliament containing a number of amendments to the federal Criminal Code designed to remove unnecessary impediments to the prosecution of foreign bribery offenses (the “Bill”). Among the proposed changes, the Bill would introduce Jones Day 20 a new corporate offense for a “failure to prevent foreign bribery.” The new offense would impose strict liability on a corporation whose “associates” engaged in foreign bribery unless the corporation can demonstrate that it took adequate measures to prevent the commission of the offense. An “associate” is defined broadly to include an employee, contractor, agent or subsidiary of the corporation. Other proposed amendments include extending the definition of “foreign public official” to include candidates for office, removing the requirement that a business advantage be “not legitimately due,” replacing it with the concept of “improperly influencing a foreign public official” and extending the offense to cover bribery to obtain a personal advantage. Notably, the Bill also contains a deferred prosecution agreement (“DPA”) regime that would apply to foreign bribery and various other specified corporate offenses (excluding taxation offenses). The DPA regime would apply only to offenses committed by corporations and would generally include requirements such as the company paying a fine and/or reparation to affected parties and undertaking remedial steps such as revised policies and training requirements. The DPA would be required to be approved by a retired judicial officer. The proposed amendments were delayed by, among other things, the federal election in May 2019 but are now back before the Senate for consideration. Participation in International Anti- Corruption Conventions OECD Convention Yes UNCAC Signed December 9, 2003 Ratified December 7, 2005 Last Updated June 25, 2019 Jones Day 21 Region Asia Pacific Country China 2018 CPI Rank 87/180 Score 39 The Law on Bribery Bribery of Domestic Officials The Criminal Law of the PRC (“Criminal Law”) imposes criminal penalties for the following conduct: Individuals offering a bribe to state functionaries (individuals): A criminal penalty shall be imposed on persons who give state functionaries property in order to seek illegitimate gain or give state functionaries property, kickbacks, or service charges of a relatively large amount in violation of state provisions (Criminal Law art. 389). Entities offering a bribe to state functionaries (individuals): A criminal penalty shall be imposed on entities (and their responsible personnel) that offer bribes or kickbacks/service charges to state functionaries in violation of state provisions, when the circumstances are serious (Criminal Law art. 393). Individuals/entities offering bribes to close relatives/affiliates of state functionaries: A criminal penalty shall be imposed on individuals/entities who offer bribes to close relatives/affiliates of state functionaries (or former state functionaries) (Criminal Law art. 390A). Individuals/entities offering bribes to state entities: A criminal penalty shall be imposed on individuals/entities who give property to state organs, state-owned entities, and people’s organizations to seek illegitimate gain (Criminal Law art. 391). Individuals facilitating bribes: A criminal penalty shall be imposed on persons who help others bribe state functionaries, when the circumstances are serious (Criminal Law art. 392). Individuals receiving a bribe: A criminal penalty shall be imposed on state functionaries who: (i) take advantage of their or other state functionaries’ authority to solicit property, or illegally accept property from others in exchange for benefits to the person providing the property; or (ii) accept kickback/service charges for personal use in violation of state provisions (Criminal Law art. 385 & 388). Entities receiving a bribe: A criminal penalty shall be imposed on state organs, state-owned entities, and people’s organizations (and their responsible personnel) that: (i) solicit or illegally accept property from others in exchange for benefits to the person providing the property; or (ii) secretly accept kickback/service charges, if the circumstances are serious (Criminal Law art. 387). Close relatives/affiliates receiving a bribe by using influence: A criminal penalty shall be imposed on close relatives/affiliates of state functionaries (or former state functionaries) who solicit or accept property of a relatively large amount and seek illegitimate gain for persons providing the property through the official acts or influence of the state functionaries (or former state functionaries) (Criminal Law art. 388A). Leniency/exemption from punishment and self-reporting: When the underlying crimes are relatively minor and the offenders have assisted by exposing the corrupt activities of others, liability may be mitigated or exempted. Otherwise, offenders who self-report will be entitled to lenient treatment but cannot be completely exempted from liability (Criminal Law art. 390). Bribery of Foreign Officials A criminal penalty shall be imposed on individuals/entities giving property to foreign public officials and officials of public international organizations in order to obtain illegitimate commercial gain (Criminal Law art. 164 para. 2, 3 & 4). Commercial Bribery New laws and regulations: In November 2017, China published an amendment to the Anti- Unfair Competition Law (“New AUCL”) which became effective in January 2018. Notably, the New AUCL introduces new definitions, enhances enforcement measures, and tightens sanctions to regulate commercial bribery. The New AUCL accomplishes the following: Jones Day 22 • Provides a more detailed definition of “commercial bribery,” which applies to “a business operator that uses money or property or other means to give bribes in order to seek opportunities for transaction or [gain] competitive advantage.” • Clarifies that the scope of recipients includes: • Employees of the counterparty in a transaction; • Entities or individuals entrusted by the counterparty in a transaction to handle relevant affairs; and • Entities or individuals that use their authority or influence to influence a transaction. • Clarifies that an employer is liable for its employees’ misconduct if those acts are undertaken for the benefit of the employer. • Provides administrative enforcement authorities with wider and stronger investigatory powers (e.g., carrying out investigations by entering the premises of a business operator (who is the subject of the investigation)). • Imposes more severe penalties on non-cooperation and bribery. The New AUCL increases the amount of fines from the range of RMB 10,000 to RMB 200,000 to the range of RMB 100,000 to RMB 3 million and adds the possible penalty of suspension of a business license. While commercial bribery can arise in the context of bribery of domestic or foreign officials, it also includes bribery of private individuals, including the following: Receiving bribes by non-state functionaries: A criminal penalty shall be imposed on non- state functionaries who, by taking advantage of their positions, solicit or accept property of a relatively large amount from others in exchange for benefits to the person providing the property (Criminal Law art. 163). Individuals/entities offering bribes to non-state functionaries: A criminal penalty shall be imposed on individuals/entities who offer property of a relatively large amount to non-state functionaries for illegitimate gain (Criminal Law art. 164 para. 1, 3 & 4). The Anti-Unfair Competition Law (“AUCL”) art. 7 imposes administrative fines on business operators (individuals/entities) who provide or receive bribes to obtain a transaction opportunity or competitive advantage in private commercial transactions. The AUCL can impose fines ranging from RMB 100,000 to RMB 3 million and suspend business licenses. The Government Procurement Law art. 77(4) imposes civil liabilities on vendors who offer bribes or other illegitimate interests to purchasers or procurement agencies in the context of government procurement. Definitions Government Employee “State functionaries” means: (i) all personnel of state organs; (ii) personnel performing state functions in state-owned corporations, enterprises, institutions, and people’s organizations; (iii) personnel assigned by state organs, state-owned corporations, enterprises, and institutions to engage in state functions in non-state owned corporations, enterprises, institutions, and social organizations; and (iv) other personnel engaged in state functions according to the law (Criminal Law art. 93). Gratification (Gifts/ Entertainments/ etc.) Relevant laws permit the offering of advertising gifts of modest value consistent with common commercial practice. Under criminal law, bribes shall be distinguished from permissible gifts by considering the following factors: (i) background of the property transaction (e.g., relationship of the parties); (ii) value of the property; (iii) cause, timing (bribes given after the fact are also impermissible; e.g., if an official receives a bribe after he/she has performed his/her duties and provided the offeror with an illegal benefit), and method of the property transaction, and whether the offeror has requested any favor from the recipient; and (iv) whether the recipient has used his/her position to reward the offeror. The interpretation jointly issued by the Supreme People’s Court (“SPC”) and the Supreme People’s Procuratorate (“SPP” or “Protectorate”) in 2016 further clarifies that a bribe can be money, goods, a proprietary interest consisting of benefits (the value of which can be calculated in monetary terms, e.g., the release of a debt), and tangible benefits, such as memberships that require payment (2016 Interpretation art. 12). Jones Day 23 Some industry groups have set out strict internal rules regarding gifts and entertainment policies to provide further guidance to their members (e.g., the 2019 version of the Foreign Investment R&D-Based Pharmaceutical Association Committee Code prohibits member companies from providing gifts (including cultural courtesy gifts and non-monetary promotional aids and reminder items for prescription-based medicines) to health care professionals). Current Status Enforcement Body The SPP is in charge of the investigation and prosecution of all criminal law violations, except for the crime of accepting bribes from non-state functionaries and the crime of offering bribes to non-state functionaries, which are investigated by the police and prosecuted by the SPP. Crimes related to state functionaries will be investigated by the Supervisory Commission and prosecuted by the SPP. The Supervisory Commission is in charge of conducting investigations of duty-related violations. The objects within its jurisdiction are state functionaries. After investigation, it transfers the results of investigations on suspected duty-related crimes to the SPP for examination and initiates a prosecution in accordance with the law, and offers supervisory suggestions to the entities where supervisory objects work. In the National Supervision Commission Governing Rules of Jurisdiction, crimes like bribery of foreign officials, receiving bribes by non-state functionaries, and individuals/entities offering bribes to non-state functionaries are included. Therefore, the Supervisory Commission may extend its jurisdiction to non-state functionaries. The State Administration for Market Regulation (“AMR”) and its local branches are responsible for enforcing the anti-bribery provisions in the AUCL and the Government Procurement Law by taking administrative actions and imposing administrative fines. The Central Commission for Discipline Inspection (“CCDI”) and its local branches are responsible for internal Communist Party discipline and investigation. Issues in Enforcement The Protectorate, the Police, and the Supervisory Commission: • These departments are authorized to investigate and/or prosecute bribery crimes that meet certain threshold requirements only. For instance, for the crime of individuals/entities offering a bribe to a state functionary (individuals/entities), PRC authorities will prosecute bribes of more than RMB 10,000 only, unless an exception applies. • The Supervisory Commission is a newly established state entity. It has power to conduct supervision of public officials exercising public power (hereinafter referred to as “public officials”), investigate duty-related violations and crimes, build integrity, and carry out the anti-corruption work. • When the Supervisory Commission or its organs are investigating duty-related crimes, the supervisory organ may, as required for work, make inquiries about and freeze the property such as savings, remittances, bonds, stocks, and fund shares of the entity or individual involved in the case in accordance with relevant provisions. Relevant entities and individuals shall provide cooperation. The AMR: • The AMR’s investigative powers are limited compared to those of the police and the Supervisory Commission. As a result, in serious cases, the AMR may conduct its investigation in conjunction with the police and rely on the power of the latter. • The AUCL is broadly and vaguely drafted. The AMR interpretation of the AUCL may vary between local jurisdictions, and some local AIC offices adopt aggressive and far- reaching interpretations that characterize some common business practices, which would be legal in other jurisdictions, including the United States, as commercial bribery. This is especially true in the context of business dealings between commercial entities, such as with respect to the provision of free products, rebates, and sponsorships to a customer entity. In the event a serious commercial bribery violation may constitute a criminal offense, the AIC should transfer the case to the Procuratorate or the police to initiate a criminal proceeding. Jones Day 24 • The government has established a nationwide database to record and track companies that have violated the AUCL’s anti-bribery provisions. The address of the online database is http://gsxt.saic.gov.cn/. The CCDI: • The CCDI may investigate Communist Party members suspected of corruption, poor management, and misuse of public funds. Additionally, the CCDI may contact private entities as part of its investigation of Party members, especially those entities that may have bribed Party members. Whenever the CCDI believes the misconduct constitutes a crime, it should transfer the case to the Procuratorate or the police to initiate a criminal proceeding. Consequences of Foreign Bribery Prosecutions There are limited instances in which PRC authorities appear to have followed up on foreign bribery convictions by imposing penalties against PRC officials who accepted bribes. There are also indications that AIC officials have approached multinational companies that have settled FCPA prosecutions involving misconduct in China and have used those settlements as evidence of wrongdoing. Moreover, Chinese public opinion strongly supports pursuing multinational companies in China after they have resolved FCPA charges with the U.S. Securities and Exchange Commission or the U.S. Department of Justice. Media reports often reveal a nationalist sentiment, arguing that a multinational company that has paid bribes resulting in harm to the Chinese people should not be allowed to walk away penalty-free after paying huge fines to the United States. Recent Movement The Central Government’s Anti-Corruption Campaign After taking power at the end of 2012, President Jinping Xi has advocated a highly publicized, zero-tolerance corruption campaign against corrupt Party members. In October 2017, during the 19th National Congress of the Communist Party of China (“CPC”), Xi stated that the CPC will “work for the adoption of national anti-corruption legislation and create a corruption reporting platform that covers both disciplinary inspection commissions and supervision agencies,” and “deepen reform of the national supervision system, conduct trials throughout the country, and establish supervisory commissions at the national, provincial, city, and county levels, which share offices and work together with the Party’s disciplinary inspection commissions.” The CPC report makes it clear that the CPC will impose tight constraints, maintain a tough stance, and promote long-term deterrence. The CPC itself has emphasized its willingness to punish both those who take bribes and those who offer them. New Laws and Regulations As described above in the Commercial Bribery section, amendments to the AUCL took effect in January 2018. The New AUCL introduced new definitions, enhanced enforcement measures, and tightened sanctions to regulate commercial bribery. Case Developments • In November 2018, the Shanghai Administration for Market Regulation (“AMR”) penalized Bang & Olufsen Trading (Shanghai) Co., Ltd., a subsidiary of Bang & Olufsen Limited, for providing “sales commissions” to two interior designers to promote its products to the designers’ clients. The Shanghai AMR fined Bang & Olufsen Trading RMB 100,000 and confiscated its illegal gains in the amount of RMB 807,333 (USD 117,363). • In November 2018, the Shanghai AMR fined Shanghai Yingfa Medical Devices Co., Ltd. Yingfa sold medical devices to Nantong Third People’s Hospital and then paid the hospital administration fees based on an oral agreement. The hospital, however, did not provide administrative services on which those fees were based. Because these events occurred before the New AUCL became effective, Yingfa was fined only RMB 15,000 (USD 2,180) and surrendered illegal gains in the amount of RMB 74,050 (USD 10,764). • In May 2018, the Chengdu AMR penalized Chengdu Huangtai Trading Co., Ltd. because of Huangtai’s verbal agreement with three travel agencies in which Huangtai Jones Day 25 provided tourist guides a fixed parking fee and “sales commissions” in cash based on the guides’ product promotion. The Chengdu AMR fined Huangtai RMB 105,000 (USD 15,262) pursuant to Article 7 and 19 of the AUCL. • In August 2018, the Leshan Administration for Industry and Commerce (“AIC”) fined Leshan Bogutang Orthopedics Hospital (“Bogutang”) for providing “information fees” to emergency services dispatchers and crews in exchange for patients’ medical information. By doing so, Bogutang provided emergency medical services ahead of other hospitals and thus disrupted the dispatching rules of emergency medical services. The Leshan AIC fined Bogutang RMB 400,000 (USD 58,144) pursuant to Article 7 and 19 of the AUCL. • In March 2019, the Shanghai AMR fined Daifuku (China) Manufacturing Co., Ltd. Daifuku promised to provide the management personnel of its client with non-business related travel in exchange for the client’s business. After the two signed a sales agreement, Daifuku arranged travel to Japan for three of the client’s managers. The Shanghai AMR fined Daifuku RMB 150,000 (USD 21,839) and confiscated illegal gains of RMB 1,110,505.26 (USD 161,687). • In January 2019, the Shanghai AMR fined Kawashima Textile Manufacturer (Shanghai) Ltd. Kawashima provided free goods (such as food) to employees of its four suppliers for the purpose of maintaining a good relationship with the suppliers and ensuring timely delivery. The AMR did not find that those payments furthered business deals, and thus no illicit gain was identified. Nevertheless, Kawashima was fined RMB 200,000 (USD 29,119) for providing valuables to suppliers. • In September 2018, the Shanghai AMR fined G-Fortune Container Service (Shanghai) Co., Ltd. G-Fortune, a company that provided services for loading and unloading containers, agreed to provide rebates to shipping companies in exchange for the shipping companies’ recommendations of new customers. The Shanghai AMR fined G-Fortune RMB 100,000 (USD 14,559) and confiscated its illegal gains of RMB 862,923.31 (USD 125,640). • In January 2018, the Shanghai AMR fined TCI (Shanghai) Development Co., Ltd. for providing gift cards and pre-paid cards to employees of its clients. The gift cards were recorded under the “Marketing Communication Fees” section. TCI was fined RMB 50,000 (USD 7,279) and ordered to disgorge RMB 867,873.31 (USD 126,361) in illegal gains. Participation in International Anti- Corruption Conventions OECD Convention No (observer status) UNCAC Signed December 10, 2003 Ratified October 27, 2005 APEC Anti- Corruption Declaration Signed November 8, 2014 Last Updated June 14, 2019 Jones Day 26 Region Asia Pacific Country Hong Kong 2018 CPI Rank 14/180 Score 76 The Law on Bribery Bribery of Domestic Officials The primary anti-corruption legislation in Hong Kong is the Prevention of Bribery Ordinance (Cap. 201) ( “POBO”), which sets out a number of bribery-related offenses with respect to public officials and certain persons (defined in the POBO as “agents”) in the private sector. It is supplemented by legislation dealing with elections, crime, proceeds of crime, and money laundering, including the Elections (Corrupt and Illegal Conduct) Ordinance (Cap. 554), the Crimes Ordinance (Cap. 200), the Organized and Serious Crimes Ordinance (Cap. 455), the Drug Trafficking (Recovery of Proceeds) Ordinance (Cap. 405), and the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Cap. 615). Local officials and other culprits are often also charged with or alternatively charged with common law offenses of misconduct in public office and conspiracy. The threshold to convict a public officer under the common law offense of misconduct in public office is lower than that under the POBO. Offering a bribe: It is an offense for any person in Hong Kong or elsewhere to, without lawful authority or reasonable excuse, offer any advantage to the Chief Executive of Hong Kong or any public servant as an inducement to or reward for the performance or abstaining from performance of any act in his/her capacity as the Chief Executive or public servant (Section 4 POBO). Soliciting or accepting a bribe: Any prescribed officer who solicits or accepts any advantage without the general or special permission of the Chief Executive of Hong Kong commits an offense (Section 3 POBO). It is an offense for the Chief Executive of Hong Kong or any public servant in Hong Kong or elsewhere to, without lawful authority or reasonable excuse, solicit or accept any advantage as an inducement to or reward for the performance or abstaining from performance of any act in his/her capacity as the Chief Executive or public servant (Section 4 POBO). In addition to the above, there are a number of other offenses including offering to, or, solicitation or acceptance by, public servants in connection with contracts, tenders, and auctions with public bodies, and by persons having dealings with public bodies (Sections 5-8 POBO). Extraterritorial application of POBO: The offenses in relation to the bribery of the Chief Executive and public servants under Section 4 of the POBO outlined above are expressed to apply whether the advantage is offered, solicited, or accepted in or outside of Hong Kong. There is no express provision for extraterritorial jurisdiction in relation to the other offenses, but the Court of Final Appeal in Hong Kong has held that bribes offered in Hong Kong to a foreign public official for acts or forbearance outside Hong Kong are liable to be prosecuted under Hong Kong law, and the Independent Commission Against Corruption (“ICAC”) will have jurisdiction to investigate. Commentators have concluded that, as a result of this decision, the POBO has an extraterritorial “flavor” and that transactions between “principals” and “agents” (in effect, any commercial transaction) outside Hong Kong may be subject to scrutiny under Hong Kong law if the circumstances result in advantages being offered in Hong Kong. Penalties: Penalties for the above offenses generally range from HKD 500,000 to HKD 1 million and imprisonment for seven to 10 years for conviction on indictment, and from HKD 100,000 to HKD 500,000 and imprisonment for three years for summary conviction. Penalties for offenses under Section 3 of the POBO consist of a fine of HKD 100,000 and imprisonment for one year. The court may also order additional fines to be paid. Bribery of Foreign Officials The POBO does not specifically stipulate an offense in relation to the bribery of foreign officials. However, as noted above, the Court of Final Appeal has indicated that the provisions prohibiting bribery of an agent (i.e., the commercial bribery provisions outlined Jones Day 27 below) may apply in situations where an advantage is offered in Hong Kong to a foreign official and the act or forbearance concerned is in relation to that foreign official’s duties outside of Hong Kong. Commercial Bribery Bribery in the private sector is also prohibited by the POBO. It is an offense for any “agent” who, without lawful authorization or reasonable excuse, solicits or accepts any advantage as an inducement to or reward for him/her to do or forebear from doing any act in relation to his/her “principal’s” business or affairs. Likewise, it is an offense to offer such advantages to an agent (Section 9 POBO). Further, any agent who, with intent to deceive his/her principal, uses any document in which his/her principal is interested and which he/she knows to be materially defective, and intends on misleading, commits an offense (Section 9 POBO). Definitions Government Employee “Agents” include public servants and persons employed by or acting for another person. “Prescribed officers” are persons who hold an office of emolument under the government of Hong Kong or are appointed to certain offices specifically set out in the POBO. “Principal” includes: • An employer; • A beneficiary under a trust; • A trust estate as though it were a person; • Any person beneficially interested in the estate of a deceased person; • The estate of a deceased person as though it were a person; and • The public body, in the case of an employee of a public body. “Public bodies” include government bodies and certain entities that are deemed to be public bodies. “Public servants” are defined to include prescribed officers and employees of public bodies. Gratification (Gifts/ Entertainments/ etc.) “Advantage” is defined in the POBO to include money, gifts, loans, commissions, offices, contracts, services, favors, and the discharge of liability, but does not include entertainment. “Entertainment” means the provision of food or drink, for consumption on the occasion when it is provided, and includes any other entertainment connected with or provided at the same time as such provision. Generally, seasonal or customary gifts are considered “advantages” regardless of the value of such gifts. Current Status Enforcement Body Anti-corruption laws are primarily enforced by the ICAC in accordance with powers vested upon it pursuant to the Independent Commission Against Corruption Ordinance (Cap. 204) and the POBO. Issues in Enforcement Following the conviction of the former Chief Executive of Hong Kong, Donald Tsang Yam- kuen, for misconduct in public office, as early as 2012, private member bills have been introduced to expand the POBO to cover the Chief Executive. In January 2019, Chief Secretary Matthew Cheung said the government was studying the relevant issues and that the government did not have a specific date set for introducing the amendment bill on the POBO to the Legislative Council. Thus far, little progress has been made in response to these calls. In March 2019, government officials advised the Legislative Council that proceeding with a discussion of the bill was not appropriate. The written consent of the Chief Executive is said to be required for such bills relating to government policies before being presented for discussion at the panel. Recent Movement High-Profile Cases and Important Developments in 2018/2019 The trend established by the following high-profile cases demonstrates that ICAC will continue to combat corruption regardless of the social status of well-known individuals and their political alignments. Jones Day 28 • In August 2018, the Court of Appeal dismissed former Chief Executive of Hong Kong Donald Tsang Yam-kuen’s application for appeal against conviction. Tsang was charged with two counts of misconduct in public office. The first charge was for failing to declare or disclose, or purposely concealing, dealings with a major shareholder of a radio company in which various broadcast license applications by that company were being discussed and approved at Executive Council meetings. Tsang’s second charge was for failing to declare or disclose, or purposely concealing, his engagement of an architect for the interior design of a flat for his own benefit when he suggested that the same architect be nominated under Hong Kong’s honors and awards system. Leave was dismissed on grounds that the prosecution’s case did not depend on a finding that the arrangement was corrupt and rather it was compelling that Tsang’s nondisclosure of his dealings was made deliberately. The Court of Appeal further held that the trial judge’s directions were correctly and necessarily given and that given the context of the case, a Hong Kong jury would readily understand the seriousness of the matter without an explicit statement by the trial judge on the importance of the consequences of misconduct in determining whether it was serious enough to warrant a conviction. The former Chief Executive has since been granted leave to appeal in the Court of Final Appeal. The issue in dispute is whether the Court of First Instance judge gave correct instructions to the jury—specifically, whether Tsang was aware of the unlawfulness of nondisclosure of his dealings. The judgment of the Court of Final Appeal is still pending. • The ICAC charged two persons in August 2018 with bribery and misconduct in public office in connection with a flats-swap deal. Former Deputy Secretary for Economic Development and Labour Wilson Fung Wing-yip faces two charges: (i) public servant accepting an advantage, contrary to Section 4(2)(a) of the POBO; and (ii) misconduct in public office, contrary to Common Law. Chan Ung-iok, the head of Helicopters Hong Kong Limited, Hong Kong Express Airways Limited, and/or Heli Express Limited, faces a charge of offering an advantage to a public servant, contrary to Section 4(1)(a) of the POBO. The former government official who had been in charge of air service negotiations and air traffic rights is accused of accepting more than HKD 500,000 in bribes from the Macau businesswoman. According to the prosecution, Fung not only failed to declare a conflict of interest but also acted in a manner favorable to Chan’s companies over a three-year period between 2004 and 2006. Fung is alleged to have received favors from Chan at a time when he was handling applications from firms owned by the businesswoman in relation to air traffic rights and some other proposals related to the aviation business. Having had more than 20 years’ experience as a civil servant, the prosecutor argued that Fung deliberately chose to conceal the dealings from the government. Both Fung and Chan have pleaded not guilty to bribery, while Fung also denies a charge of misconduct in public office. The proceedings are ongoing, and closing submissions were set to be heard on June 18, 2019. • A defeated candidate of the 2016 Legislative Council General Election, Leticia Lee See-yin, was charged by the ICAC with engaging in corrupt conduct at the election. Lee faced one count of engaging in corrupt conduct at election by failing to dispose of certain election donations in compliance with Section 19(2), contrary to Section 19(5) of the Elections (Corrupt and Illegal Conduct) Ordinance. Lee was accused of receiving nine election donations totaling HKD 22,530. The law forbids the use of election donations if they are for amounts of HKD 1,000 or more, and she should have given the money to charity instead. In February 2019, after Lee agreed with the prosecution over the facts of the case, the prosecution decided to offer no evidence against her. A bind-over order was made, requiring Lee to maintain good behavior for 18 months. • In May 2019, a managing director and former vice-chair of a major global investment bank was charged with two counts of offering an advantage to an agent, contrary to Section 9(2)(b) of the POBO. The charge involved offering a job to the son of a potential client. At the time, the individual charged was employed by a subsidiary of the bank and was responsible for sourcing business for it and its affiliates and allegedly offered employment to the son of the chairman of a company as a reward for the chairman favoring the bank to work on the company’s initial public offering. According to the ICAC release, the bank’s “client referral program” dates back to at least 2007, whereby it began to hire candidates referred by its clients or potential client. Jones Day 29 Participation in International Anti- Corruption Conventions OECD Convention No UNCAC Signed December 10, 2003 Ratified January 13, 2006 (Hong Kong is a participant by virtue of China’s participation in the UNCAC) Last Updated June 10, 2019 Jones Day 30 Region Asia Pacific Country India 2018 CPI Rank 78/180 Score 41 The Law on Bribery Bribery of Domestic Officials The primary anti-corruption law in India is the Prevention of Corruption Act, 1988 (“PCA”). The PCA consolidated all prior laws dealing with corruption and the Lokpal and Lokayuktas Act, 2013 (“LLA”), which came into force on January 16, 2014. An amendment to the PCA was enacted in July 2018, pursuant to which: (i) the act of giving a bribe whether directly or indirectly with the intention to induce a public servant to improperly perform him duties is also an offense; and (ii) corporations (and their officers) can be held liable for violations under the PCA. Prior to the amendment, the PCA primarily criminalized the receipt of bribes by public servants and punished only individuals engaging in acts of corruption. Other legislation includes the Prevention of Money Laundering Act, 2002, which provides for confiscation of property derived from, or involved in, money laundering, and the Benami Transaction (Prohibition) Act, 1988 (“Benami Act”). Subject to certain exceptions, the Benami Act prohibits benami transactions (i.e., a transaction in which property is transferred to one person for consideration paid or provided by another person). The Benami Transactions (Prohibition) Amendment Act 2016 came into force in November 2016. At the state level, state governments have local laws that address certain aspects of corruption. Maharashtra was the first state to establish a Lokayukta (anti-corruption ombudsman) in 1972. Further, in May 2014, the Whistle Blowers Protection Act, 2011, came into force, which enables any person (i.e., a whistleblower) to report an act of corruption, willful misuse of power or discretion, or criminal offense by a public servant. The Whistle Blowers Protection (Amendment) Bill, 2015, which seeks to amend the act, is currently pending in the Upper House of Parliament. In May 2015, Parliament passed the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. This act targets the circulation of black money, undisclosed f