anti-corruption legislation september 2015 · the united nations convention against corruption...

Anti-Corruption LegislationSeptember 2015

Introduction ................................................................. 3

The United Nations Convention Against Corruption..... 4

The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions ................................................. 6

The OECD Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions ......................... 7

Australia ...................................................................... 8

Belgium ....................................................................... 10

Czech Republic ........................................................... 12

France ......................................................................... 15

Federal Republic of Germany ...................................... 18

Hong Kong.................................................................. 22

Italy.............................................................................. 24

Japan .......................................................................... 27

The Netherlands .......................................................... 29

People’s Republic of China.......................................... 32

Poland......................................................................... 36

Russia ......................................................................... 38

Singapore.................................................................... 41

Slovak Republic........................................................... 44

Spain........................................................................... 46

Turkey.......................................................................... 49

Ukraine........................................................................ 51

United Kingdom .......................................................... 53

United States............................................................... 56

contents

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This information is correct as at September 2015

Asia Pacific Wendy Wysong +852 2826 3460Australia Diana Chang +61 28922 8003Belgium Sebastien Ryelandt +32 2533 5988Czech Republic Vlad Petrus +420 22255 5207France Charles-Henri Boeringer +33 14405 2464Germany Heiner Hugger +49 69 7199 1283Hong Kong Richard Sharpe +852 2826 2427Italy Antonio Golino +39 028063 4509Japan Michelle Mizutani +81 35561 6646The Netherlands Simone Peek +31 2071 19182People’s Republic of China Lei Shi +852 2826 3547

Poland Marcin Cieminski +48 22429 9515Russia Timur Aitkulov +7 495725 6415Singapore Nish Shetty +65 6410 2285Slovak Republic Vlad Petrus +420 22255 5207Spain Bernardo del Rosal +34 91590 7566Turkey Mete Yegin +90 212 339 0012Ukraine Jared Grubb +380 44390 2236United Kingdom Roger Best +44 20 7006 1640United States David DiBari +1 202912 5098

Editor: Patricia Barratt +44 20 7006 8853

Corruption is a global phenomenon whichaffects businesses seeking tenders (bothpublic and private sector), contracting withintermediaries and agents, giving charitabledonations, providing corporate hospitality,hiring employees, starting up operationsabroad, keeping accurate accounts, filingtax claims or just carrying out their dailybusiness. Perhaps a local governmentofficial has asked for a favour, or an agentoffers to arrange a private meeting with theMinister awarding a contract. A customsofficial may demand an “expedition fee”before releasing a company’s goods, or anagreement inherited as part of a take-overor merger situation seems to involveunusually high fees.

Corruption is illegal in many countries in theworld, but what constitutes corruptionvaries considerably from jurisdiction tojurisdiction and the murky grey areabetween acceptable corporate behaviourand corruption can be very large. A numberof international agreements on corruptionhave tried to set common standards, andto improve the ability of national authoritiesto prosecute corrupt individuals andcompanies by mechanisms on informationsharing and extradition. Differences remain,however, causing headaches formultinationals wanting to implement globalanti-corruption compliance policies.

There is, indeed, a plethora of internationalinstruments on corruption and relatedissues. The United Nations Conventionagainst Transnational Organized Crime,adopted in 2000, though aimed mainly atorganised crime, also included provisionsdirectly relating to corruption. The Councilof Europe has adopted both a Civil Law

Convention on Corruption, designed toensure that effective remedies existed innational law for persons who had suffereddamage as a result of corruption, and aCriminal Law Convention on Corruption,aimed to coordinate criminalisation of arange of corrupt practices, including theactive and passive bribery of domestic andforeign public officials, parliamentarians,judges and officials of internationalorganisations as well as active and passivebribery in the private sector.

Both the United Nations and the Council ofEurope have adopted model codes ofconduct for public officials (the InternationalCode of Conduct for Public Officialsadopted by the General Assembly inresolution 51/59 of 12 December 1996,and the Model Code of Conduct for PublicOfficials, adopted by the Committee ofMinisters of the Council of Europe on11 May 2000), dealing with generalprinciples of integrity for public officials, andaddressing specific issues such as conflictsof interest, the misuse of confidentialinformation and the acceptance of giftsand hospitality.

Further instruments, such as theConvention on the Fight against Corruptioninvolving Officials of the EuropeanCommunities or Officials of Member Statesof the European Union (adopted by theCouncil of the European Union on 26 May1997 and requiring EU Member States tocriminalise active and passive corruption ofCommunity or national officials), the AfricanUnion Convention on Preventing andCombating Corruption, and theOrganization of American States Inter-American Convention against Corruption,

emphasise both the importance of thetopic and the range of internationalorganisations involved.

This guide looks briefly at what are,arguably, the two most importantagreements, the UN Convention againstCorruption and the OECD Convention onCombating Bribery of Foreign PublicOfficials in International BusinessTransactions (and the related OECDRecommendation for Further CombatingBribery of Foreign Public Officials), andprovides a short overview of theanti-corruption laws in a number of differentcountries around the world. It sets out thekey elements of the offence in eachjurisdiction, looks at how it is treated inrelation to tax, facilitation payments andpublic procurement, and identifies what thepenalties are, using eight questions:

n What is corruption?

n Does the law apply beyond nationalboundaries?

n Is there a difference between thetreatment of corruption in the publicand private sector and how is thepublic sector defined?

n How are “facilitation payments”treated?

n What are the rules on tax andaccounting in relation to corruptpayments?

n Are there special rules for publicprocurement?

n Are companies liable for the actions oftheir subsidiaries?

n What are the penalties?

“...please know that a central priority of my tenure at the World Bank Group will betaking forward the corruption-fighting agenda that Jim Wolfensohn so ably articulatedduring his presidency and adapting it to today’s challenge of shared prosperity and theend of poverty”

Jim Yong Kim, President of the World Bank Group, Speech on Anti-Corruption,Washington DC, 30 January 2013

© Clifford Chance, September 2015

Introduction

3Anti-Corruption LegislationSeptember 2015

The Convention, which was opened forsignature on 9 December 2003, has beensigned by 140 countries1. It came into force90 days after ratification by the 30thcountry to do so, and remained open forsignature until 9 December 2005. The 30thratification took place on 15 September, soit came into force on 14 December 2005.

The purposes of the Convention, statedat Article 1, are:

n to promote and strengthen measuresto prevent and combat corruptionmore efficiently and effectively;

n to promote, facilitate and supportinternational cooperation andtechnical assistance in the preventionof and fight against corruption,including in asset recovery;

n to promote integrity, accountabilityand proper management of publicaffairs and public property.

All Parties to the Convention are requiredto criminalise:

n the bribery of national and foreignpublic officials, as well as officials ofpublic international organisations;

n the embezzlement, misappropriationor other diversion of either public orprivate funds by a public official towhom the funds have been entrusted;

n the laundering of proceeds ofcrime; and

n obstruction of justice.

In addition, Parties must considercriminalising trading in influence, the abuseof functions by a public official, illicitenrichment and private sector bribery.Each Party must, consistent with its legalprinciples, adopt measures to establish theliability of legal persons for participation inConvention offences and must take, “tothe greatest extent possible within itsdomestic legal system”, measures tofacilitate freezing, seizure and confiscationof the proceeds of Convention offences.

Parties are required to cooperate withother Parties in areas such as theextradition of offenders, mutual legalassistance and less formal methods ofcooperation in the course of investigationsand other law-enforcement activities.

Article 51 states that the return of assetsis a “fundamental principle” of theConvention and requires Parties to giveeach other “the widest measure ofcooperation and assistance in thisregard”. In particular, Parties mustestablish mechanisms including both civiland criminal recovery procedures,whereby assets can be traced, frozen,seized, forfeited and returned.

Preventative measures are also required,including the generation of records thatcan be used to assist in the assetrecovery process and the identification ofexperts in developing countries to providetechnical assistance.

While the Convention is clearly a welcomedevelopment as the first truly global legalinstrument on corruption, there are anumber of aspects to the Convention thathave given rise for concern. One of theseconcerns, the lack of any inherentmonitoring or enforcement mechanism inthe instrument itself, was addressed at theNovember 2009 UN Conference in Dohawhen a “Review mechanism” wassupported by a vast number of signatorycountries, and by international companies.Under this mechanism, states parties tobe reviewed in each year of the four-yearcycle are selected by lot, and the countryreview, reports composed ofself-assessments and peer reviews arepublished on the UN website.

Critics argue that a handful of countrieshave compromised the reviewmechanism by weakening key provisions,namely those providing for participation ofcivil society organisations in the reviewprocess and publication of countryreports. The adopted mechanism givesgovernments discretion to exclude civil


The United Nations ConventionAgainst Corruption“The cost of corruption is measured not just in the billions of dollars of squandered orstolen Government resources, but most poignantly in the absence of the hospitals,schools, clean water, roads and bridges that might have been built with that moneyand would have certainly changed the fortunes of families and communities.”

UN Secretary-General Ban Ki-moon’s message for International Anti-Corruption Day,9 December 2012

1 As at 29 May 2013

4 Anti-Corruption LegislationSeptember 2015

society from the review process, andwithhold information from publication incountry reports. Critics also suggest thatthe implementation review group will beineffective because it is an open-endedintergovernmental group of State parties,rather than a smaller group ofindependent experts.

A further concern is the large number of“optional” Articles in the Convention.These include Articles where Parties arerequired simply to “consider” adoptingparticular measures (see above forexamples), as well as Articles whereParties are required to adopt measures,but only “where appropriate and inaccordance with the fundamentalprinciples of its legal system”. Finally,some business organisations have voicedanxiety about Article 35 and how far itgoes in providing a private right of actionagainst persons responsible for damageas a result of corruption.



On 17 December 1997, OECD membercountries and five non-member countries(Argentina, Brazil, Bulgaria, Chile andSolvenia) signed a Convention onCombating Bribery of Foreign PublicOfficials in International BusinessTransactions. There are now 41 signatorycountries to the Convention*, which cameinto force on 15 February 1999.

The Convention requires Parties to makethe bribery of foreign public officials(as defined) a criminal offence, as well asrelated offences of incitement, aidingand abetting, authorisation, attemptand conspiracy.

Parties must also (in accordance withtheir legal principles) establish theliability of legal persons for the bribery offoreign public officials, and must put inplace effective penalties, includingseizure and confiscation or comparablemonetary sanctions.

A key element of the Convention is therequirement that Parties establishjurisdiction where the offence is committedin whole or in part in their territory. Theyare also required to take measures toestablish jurisdiction to prosecute theirnationals for offences committed abroadwhere such jurisdiction exists for otheroffences, according to the same principles.

Parties must also prohibit off-the-bookaccounts and other accountingirregularities for the purpose of bribery orof hiding such bribery.

There are also provisions on moneylaundering, mutual legal assistance,extradition and monitoring.

Signatories to the OECDConvention

Argentina ItalyAustralia JapanAustria KoreaBelgium LatviaBrazil LuxembourgBulgaria MexicoCanada NetherlandsChile New ZealandColombia NorwayCzech Republic PolandDenmark RussiaEstonia PortugalFinland Slovak RepublicFrance SloveniaGermany South AfricaGreece SpainHungary SwedenIceland SwitzerlandIreland TurkeyIsrael United Kingdom

United States

A table showing the date of ratification, thedate of entry into force of the Conventionand the date of entry into force of theimplementing legislation can be found athttp://www.oecd.org/daf/anti-bribery/antibriberyconventionratification.pdf.

Although (or perhaps because) thescope of the OECD Convention, both interms of geographical coverage and interms of the range of subject matter, ismore restricted than the UN Convention,it has proved an effective instrument forchanges in the laws and procedures ofthe Parties. The Parties are required (byArticle 12) to cooperate in carrying out“a programme of systematic follow-up tomonitor and promote the fullimplementation of [the] Convention”, andthe evaluation reports drawn up as partof this programme have identified areasof weakness in the implementinglegislation and policies of the Parties,and made detailed recommendations forchanges, which Parties have, in themain, heeded.


The OECD Convention on CombatingBribery of Foreign Public Officials inInternational Business Transactions“Bribery is a corrosive crime. It erodes the integrity of our institutions, the strength of oureconomies and the trust of our citizens. We need to combat this peril with all the powerand reach of the state, and through effective multilateral cooperation.”

Angel Gurria, OECD Secretary General, 2 December 2014

* As at 29 July 2013


http://www.oecd.org/daf/anti-bribery/antibriberyconventionratification.pdfhttp://www.oecd.org/daf/anti-bribery/antibriberyconventionratification.pdf

On 9 December 2009, the Parties tothe OECD Convention agreed to put inplace further measures to reinforce theirefforts to prevent, detect andinvestigate foreign bribery. Theseinclude provisions for combating smallfacilitation payments, protectingwhistleblowers and improvingcommunication between public officialsand law enforcement authorities.

This Recommendation for FurtherCombating Bribery of Foreign PublicOfficials called on the State Parties tothe OECD Anti-Bribery Convention to,inter alia:

n ensure companies cannot avoidsanctions by using agents andintermediaries to bribe for them;

n periodically review policies andapproach on small facilitationpayments. These are legal in somecountries if the payment is made to agovernment employee to speed up anadministrative process;

n improve co-operation betweencountries on foreign briberyinvestigations and the seizure,confiscation and recovery of theproceeds of transnational bribery;

n provide effective channels forreporting foreign bribery to lawenforcement authorities and forprotecting whistleblowers from retaliation; and

n working more closely with the privatesector, adopt more stringent internalcontrols, ethics and complianceprogrammes and measures toprevent and detect bribery.

Along with the Recommendation, theOECD Council also adopted the GoodPractice Guidance on Internal Controls,Ethics and Compliance.

Specifically, the Good Practice Guidancecalls on businesses to:

n adopt a clear and visibleanti-bribery policy that is stronglysupported by senior management;

n instil a sense of responsibility forcompliance with the policy at alllevels of the company, and establishindependent compliance structures;

n keep up regular communication andtraining on foreign bribery for allemployees, as well as with businesspartners; and

n encourage observance ofanti-bribery compliance measures,and have disciplinary proceduresto address violations.

The Guidance also recommends thatbusiness organisations play a leading rolein providing information, advice andtraining to companies, especially small-and medium-sized enterprises, on how toprotect themselves against the risk offoreign bribery.

The Recommendation was amended inFebruary 2010 to include an annex on‘Good Practice Guidance on InternalControls, Ethics and Compliance’.

The OECD Recommendation for Further Combating Bribery of ForeignPublic Officials in International Business Transactions



What is corruption?Division 70 of the Criminal Code Act 1995(Commonwealth) creates a statutoryoffence of bribing foreign public officials.

Section 70.2 provides:

“(1)A person is guilty of an offence if:

(a) the person:

(i) provides a benefit to anotherperson; or

(ii) causes a benefit to anotherperson; or

(iii) offers to provide, or promisesto provide, a benefit to anotherperson; or

(iv) causes an offer of theprovision of a benefit, or apromise of the provision of abenefit, to be made to anotherperson; and

(b) the benefit is not legitimately dueto the other person; and

(c) the first-mentioned person doesso with the intention of influencinga foreign public official (who maybe the other person) in theexercise of the official’s duties as aforeign public official in order to:

(i) obtain or retain business; or

(ii) obtain or retain a businessadvantage that is notlegitimately due to therecipient, or intended recipient,of the business advantage(who may be thefirst-mentioned person).”

It is not necessary to prove that business,or a business advantage, was actuallyobtained or retained. In working outwhether a benefit, or a businessadvantage, is “not legitimately due” for

the purposes of the section, the CriminalCode requires that the following factorsbe disregarded:

n the fact that the benefit or businessadvantage may be, or be perceived tobe, customary, in the situation;

n the value of the benefit or businessadvantage; and

n any official tolerance of the benefit orbusiness advantage.

The Australian Government is consideringan amendment to section 70.2 to clarifythat it is not necessary to prove that theaccused person intended to influence aparticular foreign public official.

It is also an offence under sections 141.1and 142.1 of the Criminal Code to bribeor give a corrupt benefit to aCommonwealth public official. The publicofficial who receives the bribe can also becriminally liable under the Criminal Code.

Does the law apply beyondnational boundaries?Yes. The law will apply if the offendingconduct occurs wholly or partly inAustralia or wholly or partly on board anAustralian aircraft or Australian ship. Evenif no part of an offence takes place inAustralia, a person may still beprosecuted in Australia if, at the time ofthe alleged offence, that person is:

n an Australian citizen;

n a resident of Australia; or

n a body corporate incorporated by orunder a law of the Commonwealth orof a State or Territory.

The offence of bribing a Commonwealthpublic official applies regardless ofwhether or not the conduct constitutingthe alleged offence occurs in Australia,

and whether or not a result of theconduct occurs in Australia.

Is there a differencebetween the treatment ofcorruption in the public andprivate sector and how isthe public sector defined?The Criminal Code provisions referred toabove only apply to the public sector.

The term “foreign public official” is broadlydefined in the Criminal Code and includes:

n an employee or official of a foreigngovernment body;

n a member of the executive, judiciaryor magistracy of a foreign country;

n a person who performs official dutiesunder a foreign law;

n a member or officer of the legislatureof a foreign country;

n an employee or official or a publicinternational organisation;

n an authorised intermediary of aforeign public official or someone whoholds themselves out to be anauthorised intermediary.

The term “Commonwealth public official”is not defined in the Criminal Code.

There are laws in each State and Territoryof Australia which make bribery of stateand local officials an offence in somecircumstances. In addition, the paymentor receipt of secret commissions orcorrupt rewards as inducements, both inthe public and private sectors, alsoconstitute offences under some Statelaws in Australia.


Australia


How are facilitationpayments treated?The Criminal Code provides a facilitationpayment defence to the offence of bribinga foreign public official in section 70.4. Insummary, there is a defence if:

n the value of the benefit was of aminor nature; and

n the person’s conduct was engaged infor the sole or dominant purpose ofexpediting or securing theperformance of a routine governmentaction of a minor nature; and

n as soon as practicable after theconduct occurred, the person made arecord of the conduct.

A ‘routine government action’ is an actionthat is ordinarily and commonlyperformed by the foreign public official(such as granting a licence, processinggovernment papers, and unloadingcargo), but does not cover decisionsabout whether to award new business orcontinue existing business.

The Australian Government is currentlyconsidering whether to remove thedefence for facilitation payments byrepealing section 70.4 of the Code.

What are the rules on taxand accounting in relationto corrupt payments?Under the Commonwealth Income TaxAssessment Act 1997 sections 26-52and 26-53, a person cannot deduct aloss or outgoing incurred that is a bribe toa foreign public official, or a bribe to apublic official.

Under the Corporations Act 2001(Commonwealth), every company mustkeep financial records that correctly record

and explain its transactions and financialposition and performance, and wouldenable true and fair financial statements tobe prepared and audited. There arevarious civil penalties for a company andits officers, including directors, in respectof falsification of company accounts andpresentation of documents which are falseand misleading.

Are there special rules forpublic procurement?No. The Commonwealth ProcurementRules 2014 issued under the PublicGovernance, Performance andAccountability Act 2013 do not specifyany ground of ineligibility to tender forpublic contracts on the basis that acompany or person has been convictedof corruption offences.

Are companies liable for theactions of their subsidiaries?The Criminal Code provides that acompany can be liable for the conduct ofits employees, agents and officers if it‘expressly, tacitly or impliedly authorised orpermitted the commission of the offence’.This may be established by showing:

n the board of directors or a highmanagerial agent intentionally,knowingly or recklessly carried out theconduct or expressly, tacitly orimpliedly permitted the commission ofthe offence;

n a corporate culture existed thatdirected, encouraged, tolerated or ledto the offence; or

n the company failed to create andmaintain a corporate culture thatrequired compliance with therelevant laws.

Otherwise the Criminal Code does notprovide that a parent company is liablefor the actions of its subsidiaries.

What are the penalties?The maximum penalty for a corporation isthe greater of:

n 100,000 penalty units orAUD 18 million;

n if the value of the benefit obtaineddirectly or indirectly by the corporationor related body corporate can bedetermined by the court then threetimes the value of the benefitattributable to the conductconstituting the offence; or

n if the court cannot determine thevalue of the benefit, 10% of theannual turnover of the corporationduring the 12 month period ending atthe end of the month in which theoffending conduct occurred.

The maximum penalty for an individual is10 years’ imprisonment and/or a fine of10,000 penalty units or AUD 1.8 million.




What is corruption?Belgian law prohibits both active andpassive bribery, and has separateoffences of bribing public officials andprivate sector persons.

Active bribery in the public sector isdescribed as “[t]he act of proposing,whether directly or throughintermediaries, an offer, promise oradvantage of any kind to a personexercising a public function, either forhimself or a third party, in order toinduce him to act in one of the waysspecified in Article 247” (Article 246 (2)of the Criminal Code). Passive briberyconsists of this person asking for oraccepting this offer, promise oradvantage of any kind (Article 246(1) ofthe Criminal Code).

It does not matter whether the offer,promise or advantage is for the benefit ofthe person who exercises a public functionor for a third party, and there is norequirement to prove a connection betweenthe public official and any such third party.

Article 247 of the Criminal Code (asamended by the Bribery Prevention Actof 10 February 1999) defines thedifferent types of behaviour that briberymay seek to induce. Bribery can beaimed at inducing a public official toperform a proper but “unpaid” officialact, to engage in an improper act whilecarrying out official duties or refrain froma proper one, or to commit a criminaloffence or misdemeanour in the courseof official duties.

A separate offence of trading in influenceis defined as bribery that “is aimed atinducing a person exercising a publicfunction to use the real or supposedinfluence he possesses because of hisfunction to induce a public authority oradministration to perform or refrain from

an act” (Article 247 (4) of the CriminalCode). This offence is very broad since itcovers acts that may or may not be apart of the public official’s duties, andprohibits any use of influence.

Does the law apply beyondnational boundaries?Belgian courts have jurisdiction overpublic bribery offences where at least oneelement of the offence took place onBelgian territory.

Where a bribery offence is committedoutside Belgium, Belgian courtshave jurisdiction:

(i) where it is committed by a Belgiancitizen or by someone who has theirmain residence in Belgium; or

(ii) with respect to the bribery of a personholding public office, where theoffence relates to a Belgian official, toa Belgian official of a foreign countryor an international organisation thathas its headquarters in Belgium.

If the public official is neither Belgian noremployed by an international organisationheadquartered in Belgium, Belgian courts

will only have jurisdiction (where thebribe-payer is a Belgian national orresident) if the act is also punishableunder the laws of the country in whichthe act is committed (Article 10 quater (1)of the Belgian Code of CriminalProcedure, introduced by the Law of 11March 2007).

Is there a differencebetween the treatment ofcorruption in the public andprivate sector and how isthe public sector defined?Private sector bribery is a separateoffence in Belgian law (although there issome overlap, as explained below). It isan offence for any person to propose toanother person in his capacity as directoror manager of a legal entity, proxy holderor employees of a legal entity, or proxyholder or employee of a natural person,any offer, promise or benefit, directly orindirectly and whether for himself or for athird party, in order to do, or omit to doan act within his function, without theauthorisation and knowledge of the boardof directors, the general meeting ofshareholders, the principal or theemployer (as the case may be). It is also

Belgium



an offence for a person acting in one ofthe capacities above to request or acceptsuch an offer, promise or benefit (Article504 bis Criminal Code).

The concept of “any person exercising apublic function under Belgian law” (for thepurposes of the public sector briberyoffence) covers all categories of personswho, whatever their status, exercise apublic function of any kind, i.e., federal,regional, community, provincial,communal civil servants or public officials.It includes elected officials, i.e. anypersons holding legislative, communal orother elected office, public officers, andtemporary or permanent holders of publicpower or authority.

The provisions on public sector briberyalso extend to certain persons who donot exercise a public function within theBelgian legal system. The same sanctionsapply to bribery of persons exercising apublic function in a foreign State or in apublic international organisation (Article250). The same broad, functionaldefinition of “persons exercising a publicfunction” applies to them.

Individuals who are applying for a publicposition, who lead others to believe thatthey will exercise a public function orwho, by misrepresenting themselves,mislead others into believing that they willexercise a public function are alsoincluded (Article 246 (3)).

Managers of private enterprises aredeemed to exercise public functions tothe extent that the act of bribery affects apublic service mission entrusted to theenterprise. A political party official in asingle party country would be consideredto be a public official if he performedpublic functions.

How are facilitationpayments treated?There is no exemption in Belgian law forfacilitation payments, and such paymentswill therefore fall within the scope of theArticle 246 offence if the necessaryelements of the offence are present.Article 247 specifically states that a bribefor performing “a proper but unpaidofficial act” will be an offence.

What are the rules on taxand accounting in relationto corrupt payments?The Law of 11 March 2007 explicitlyprohibits the tax deductibility of secretcommissions by companies. The IncomeTax Code states that the following do notconstitute business expenses: “…commissions, brokerage fees, trade orother discounts, occasional or other fees,bonuses, all kinds of other payments andadvantages which are awarded directly orindirectly to a person:

a) in connection with public bribery inBelgium as referred to in Article 246of the Penal Code or private bribery inBelgium as referred to in Article 504bis of the same Code;

b) in connection with public bribery of aperson exercising a public function ina foreign State or in a publicinternational organisation, as referredto in Article 250 of the same Code”(Article 53 (24)).

Are there special rules forpublic procurement?The Law of 20 March 1991 (amended in1999 and 2011) on the authorisation ofpublic works contractors and the Law of15 June 2006 (amended in 2011) on publicprocurement and certain contracts forworks, supplies and services containprovisions under which operators convictedof bribery are debarred from public

procurement. Article 314 of the CriminalCode sanctions individuals who disrupt thefreedom of auctions and/or submissions byway of violence, force, gifts, promises orother fraudulent means.

Are companies liable for theactions of their subsidiaries?Parent companies cannot be held liable foroffences committed by their subsidiaries.On the basis of the concrete circumstancesof the case, a judge can establish that theoffence has been committed by the parentitself. As a consequence, parent companiescan only be held liable for their own actions.

What are the penalties?Sanctions for bribery vary according to thenature of the offence and the public officialwho receives or is offered a bribe.

Active bribery of a person holding publicoffice by an individual is punishable with aprison sentence of up to ten years and/or afine of up to EUR 600,000.

For companies and other legal entities, themaximum fine is EUR 1.44 million, andassets may also be confiscated. Legalpersons may also be dissolved, may beprohibited from carrying on an activityrelating to the corporate services or maybe required to close down one ormore establishments.

Active private bribery by an individual ispunishable with a prison sentence of up tothree years and/or a fine of up toEUR 600,000. For companies and otherlegal entities, the maximum fine isEUR 1.2 million.

For both public and private bribery, othersanctions include being debarred fromcertain offices, from public sector contracts,and confiscation of the proceeds ofthe offence.



What is corruption?Czech Act No. 40/2009 Coll., theCriminal Code, as amended (the“Czech Criminal Code”), defines several“corruption offences” in sections 331 to334, including: (a) accepting bribes,(b) offering bribes, and (c) indirect bribery.

In particular, the Czech CriminalCode prohibits:

(i) giving or accepting bribes inconnection with “procuring matters inthe public interest” for yourself or forsomeone else;

(ii) giving or accepting bribes inconnection with your or someoneelse’s “business activities”; and

(iii) giving or accepting bribes in order toexert influence on public officials(i.e. “indirect bribery”).

Under the Czech Criminal Code“procuring matters in the public interest”means performing all tasks whose proper,due and impartial performance is in theinterests of the public or in the interestsof social groups. The Criminal Code(section 334(3)) further provides that“procuring matters in the public interest”is also deemed to include compliancewith the obligation to cause no harm, andprovide no unjustified advantage toparties to commercial transactions. Inaddition, the Criminal Code prohibitsgiving or accepting bribes in connectionwith “business activities”. Although theterm “business activity” is not defined inthe Criminal Code, this term is indirectlydefined in the definition of “entrepreneur”in Czech Act No. 89/2012 Coll, asamended (the “Czech Civil Code”) as aprofitable trade-like activity carried outindependently on one’s own account and

responsibility and with the intention ofdoing so systematically in order to makea profit.

A “bribe” is defined as any unjustifiedadvantage (i.e. direct property enrichmentor other advantage) obtained directly bythe recipient or by another person withthe recipient’s permission, to which therecipient is not legally entitled (e.g. gifts,hospitality and invitations to events) (s.334(1) of the Czech Criminal Code).

Bribery is also prohibited by the CzechCivil Code under unfair competitionprovisions. It is defined as offering,promising or providing any benefit inorder to obtain an undue competitiveadvantage, as well as requesting,accepting or being promised such benefit(s. 2983 of the Czech Civil Code).

Does the law apply beyondnational boundaries?Yes. The provisions of the Czech CriminalCode have particularly broadextraterritorial reach. Among other things,the Czech Criminal Code applies to (i) anact committed in the Czech Republiceven if the breach of, or threat to, aninterest protected under the CzechCriminal Code took place or wasintended to take place abroad, and (ii) anact committed abroad if the breach of, orthreat to, an interest protected under theCzech Criminal Code, or at least a part ofthe consequence of such act, took placeor was intended to take place in theCzech Republic. The Czech CriminalCode also applies to conduct on board aCzech aircraft or a Czech ship abroad.

The provisions of the Czech Criminal Codeare also applicable to criminal offencescommitted by Czech citizens abroad.

Is there a differencebetween the treatment ofcorruption in the public andprivate sector and how isthe public sector defined?To some extent, yes. The Czech CriminalCode prohibits both bribery in connectionwith procuring matters in the publicinterest as well as in connection withbusiness activities. However, there aretwo main points to be noted with respectto public sector corruption, both of whichreflect the more serious nature of theoffences when compared with corruptionin the private sector.

The first point is that indirect bribery is onlyan offence in relation to public officials.

This term is defined to include, inter alia:(i) the president of the Czech Republic,the members of the Czech Parliament,the members of the Czech governmentor other persons holding a position in apublic authority, e.g. employees of theCzech Permanent Representation to theEU and Czech Embassies; (ii) personsholding office at the legislative body,judicial authority or other public authorityof a foreign state; (iii) persons holdingoffice, employed or working in aninternational organisation formed bystates or other subjects of publicinternational law or its bodies andinstitutions, e.g. employees of the EUinstitutions, members of the EuropeanParliament; and (iv) persons holding anoffice in an enterprise in which the CzechRepublic or a foreign state has a decisiveinfluence (s. 127 and 334(2) of the CzechCriminal Code).

The other point relates to the severity ofthe penalties for corruption offences; the

Czech Republic



fact that a corruption offence has beencommitted by a public official or inrelation to a public official increases themaximum possible term of imprisonment.

How are “facilitationpayments” treated?There is no specific exemption in Czechlaw for facilitation payments. Each paymentis judged according to whether or not itfulfils the criteria of a corruption offence.

What are the rules on taxand accounting in relationto corrupt payments?Section 25 (1) (zf) of Czech Act No.586/1992 Coll., on Income Taxes, asamended, expressly prohibits taxdeductions for any payments or otherbenefits provided to a foreign state official(or with his consent to another person) inconnection with the performance of hisoffice, even if this concerns an official in acountry where the granting of suchpayments or benefits is common ortolerated or is not regarded as a crime.With respect to payments or benefitsmade to other persons, there are no suchexpress rules in Czech tax law, but underprevailing interpretations, such paymentsor benefits would generally be regardedas a tax non-deductible expense if theprovision of such payment or benefitconstitutes a criminal offence.

Are there special rules forpublic procurement?Czech Act No. 137/2006 Coll., on PublicProcurement, as amended, expresslyprohibits participation in publicprocurement by persons who themselvesor whose statutory body (or member

thereof) were effectively convicted of acorruption offence.

Are companies liable for theactions of their subsidiaries?Although under the Czech Criminal Codeonly an individual (not a legal entity) maybe held liable for a criminal offence setout by the Czech Criminal Code, Act No.418/2011 Coll., on Criminal Liability ofLegal Entities (the “Czech Act onCriminal Liability of Legal Entities”)has introduced the concept of criminalliability of legal entities for specific criminaloffences including the criminal offence ofoffering bribes and indirect bribery, asdescribed above.

The Czech Act on Criminal Liability of LegalEntities (s. 8(1) and 8(2)) states that a legalentity may be held criminally liable if thecriminal offence is committed on its behalf,in its interests or as part of its activities andthe offence is committed by:

(i) its statutory body, a member of itsstatutory body or other personsacting on behalf of the legal entity(e.g. agents);

(ii) persons performing managerial orsupervisory activities within the legalentity, even if they are not specifiedin (i) above;

(iii) persons exercising decisive influenceover the management of the legalentity, if the conduct of such personwas one of the causes of theconsequences upon which the criminalliability of the legal entity is based; or

(iv) employees of the legal entity orpersons with similar status whilecarrying out their work tasks on thebasis of resolutions or instructions of

the legal entity’s bodies or personsspecified under (i) to (iii) above, orwhere due supervision by the legalentity’s bodies or persons specifiedunder (i) to (iii) above wasnot exercised.

A legal entity may be held liable even if theindividual offender (as specified under (i) to(iv) above) cannot be identified (s. 8(3) ofthe Czech Act on Criminal Liability of LegalEntities). Moreover, criminal liability of alegal entity is without prejudice to andindependent of the criminal liability of theindividual offenders themselves and legalentities that have used other legal entitiesor individuals to commit criminal offencesare also classed as offenders (s. 9(2) and9(3) of the Czech Act on Criminal Liability ofLegal Entities).

These provisions do not seem to introduceliability of companies for the actions of theirsubsidiaries. However, they have not yetbeen tested in court and it is not entirelyclear how they would apply to parentcompanies and their subsidiaries.

What are the penalties?The penalties for a corruption offenceunder the Czech Criminal Code includeimprisonment for a term of up to12 years, forfeiture of property and/or amonetary penalty of up to approx.EUR 1,350,000 (forfeiture of property anda monetary penalty cannot be imposed atthe same time). The actual length of theterm of imprisonment and/or the amountof the monetary penalty depends, amongother things, on the scale andseriousness of the offence, the amount ofthe bribe etc.


The penalties for a corruption offenceunder the Czech Act on Criminal Liabilityof Legal Entities are the following:

(i) monetary penalty of up to approx.EUR 54,000,000; in addition tofactors such as the scale andseriousness of the offence, theamount of the bribe etc., the actualamount of the monetary penalty isalso based on the value of theproperty owned by the legal entity (s.18 of the Czech Act on CriminalLiability of Legal Entities);

(ii) prohibition of activity (e.g. a businessactivity) for up to 20 years, if thecriminal offence was committed in

connection with such activity (s. 20 ofthe Czech Act on Criminal Liability ofLegal Entities);

(iii) prohibition of performance underpublic procurement contracts,participation in concessionprocedures or public tenders for up to20 years, if the criminal offence wascommitted in connection withparticipation of the legal entity therein(s. 21 of the Czech Act on CriminalLiability of Legal Entities);

(iv) prohibition on accepting grants andsubsidies for up to 20 years if thecriminal offence was committed inconnection with the application,

provision or utilisation of any grant,subsidy or any public aid (s. 22 of theCzech Act on Criminal Liability ofLegal Entities); and/or

(v) publication of a judgment, if the courtdeems that the public should beinformed about a condemningjudgment (s. 23 of the Czech Act onCriminal Liability of Legal Entities).

Under the Czech Civil Code, penaltiesmay include compensation, privatedamages and return of unfair enrichment.



What is corruption?The offences of corruption are set out inthe Criminal Code1. The offences ofcorruption in relation to foreign publicofficials and corruption in relation toprivate individuals were added to theoffences of corruption in relation to publicofficials in the French legislation. Bothpassive and active corruption fall withinthe scope of the legislation.

Corruption in relation topublic officialsPassive corruption: “The direct orindirect request or acceptance,without right, at any time, of offers,promises, donations, gifts oradvantages by a person holding apublic authority or discharging a publicservice mission, or by a person holdinga public electoral mandate, forhimself or for a third party, where itis committed:

(1) either to carry out or abstain fromcarrying out, or because he has carriedout or has abstained from carrying out,an act relating to his office, duty ormandate, or facilitated by his office, dutyor mandate; or

(2) to abuse, or because he has abused,his real or alleged influence with a view toobtaining from any public body oradministration any distinction,employment, contract or any otherfavourable decision” (Article 432-11,Criminal Code).

Active corruption: “The direct or indirectproposal [or acceptance], by anyone,without right, at any time, of offers,promises, donations, gifts or advantagesto a person holding a public authority ordischarging a public service mission or

holding a public electoral mandate, forhimself or for a third party:

(1) either to induce him to carry out orabstain from carrying out, or because hehas carried out or has abstained fromcarrying out, an act relating to his office,duty or mandate or facilitated by hisoffice, duty or mandate; or

(2) either to induce him to abuse his realor alleged public influence, or because hehas abused his real or alleged publicinfluence, with a view to obtaining from apublic body any distinction, contract [...]”(Article 433-1, Criminal Code).

Corruption in relation to foreignpublic officialsPassive corruption: “The direct orindirect request or acceptance, withoutright, at any time, of offers, promises,donations, gifts or advantages by a personholding a public authority, discharging apublic service mission or holding a publicelectoral mandate in a foreign country or inan international public organisation, forhimself or for a third party, where it iscommitted either to carry out or abstainfrom carrying out, or because he hascarried out or has abstained from carryingout, an act relating to his office, duty ormandate or facilitated by his office, duty ormandate” (Article 435-1, Criminal Code).

Active corruption: “The direct or indirectproposal, by anyone, without right, at anytime, of offers, promises, donations, gifts oradvantages to a person holding a publicauthority, discharging a public servicemission or holding a public electoralmandate in a foreign country or in aninternational public organisation, for himselfor for a third party, either to induce him tocarry out or abstain from carrying out, orbecause he has carried out or hasabstained from carrying out, an act relating

to his office, duty or mandate orfacilitated by his office, duty or mandate”(Article 435-3, Criminal Code).

Corruption in relation toprivate individuals“The direct or indirect request oracceptance, without right, at any time,for himself or for a third party, of offers,promises, donations, gifts or advantagesby a person not vested with publicauthority or discharging a public servicemission, nor holding a public electoralmandate, performing in the course of hisprofessional or social duties a function ofmanagement or performing a work for anindividual or a corporate entity or anyorganism, either to carry out or abstainfrom carrying out, or because he hascarried out or has abstained fromcarrying out, an act relating to his activityor office, or facilitated by his activity oroffice, infringing his legal, contractual orprofessional obligations” (Article 445-2,Criminal Code).

Does the law apply beyondnational boundaries?Yes. Article 113-6 of the Criminal Codeprovides that “French criminal law isapplicable to offences committed byFrench nationals outside the territory ofthe Republic if the offence involved ispunishable under the law of the countrywhere it was committed”.

Proceedings may only be initiated at therequest of the public prosecutor andmust be preceded by a complaint lodgedby the victim (or legal successor) or by anaccusation formally made by theauthorities of the country in which theconduct took place.

Under certain conditions, France alsoestablishes jurisdiction over offences,



France

1 Relevant articles are essentially 432-11 and 433-1 (domestic public official), 435-1 to 435-4 (foreign bribery), 445-1 and 445-2 (private sector bribery).

punishable by imprisonment, committedby a French national or a foreigner outsideFrench territory against a French victim(the “victim” being a French national at thetime of the offence) pursuant to Article113-7 of the Criminal Code.

Is there a differencebetween the treatment ofcorruption in the public andprivate sector and how isthe public sector defined?Until the Act No. 2005-750 of 4 July 2005,the offence of bribery committed by privateindividuals was limited to those involving apublic official as defined above (French andforeign public officials). The only exceptionwas the specific offence of corruption of anemployee, which is now abrogated (formerArticle L.152-6 of the Labour Law Code).

Since 4 July 2005, the scope of thecriminal law has been extended to anyperson not vested with public authority ifthat person is performing, in the courseof its professional or social duties, afunction of management or a work for anindividual, a corporate entity or any sortof organisation.

As a result, not only can employees befound liable of commercial bribery butalso in particular:

n top management of companies;

n corporate entities; and

n liberal professions.

There is no major difference betweenthe legal regimes applicable to publicand private sectors. The main differenceis that the maximum penaltiesapplicable to bribery of private

individuals are less than the onesapplicable to bribery of public officials.

How are “facilitationpayments” treated?There are no specific provisions orexemptions in French law for facilitationpayments. Each payment must beconsidered by Courts according towhether it fulfils the criteria for the offenceof bribery or corruption.

What are the rules on taxand accounting in relationto corrupt payments?Existing French law provisions onaccounting and record keeping prohibitthe making of falsified or fraudulentaccounts, statements and records for thepurpose of bribing foreign public officialsor of concealing such bribery.

Article 39-2 bis of the General Tax Codestates that:

“...from the coming into force of theConvention on combating bribery of foreignpublic officials in international businesstransactions, sums paid or advantagesgranted directly or through intermediaries,for the benefit of a public official within themeaning of Article 1(4) of the saidConvention, or of a third party in order thatthe official acts or refrains from acting in theperformance of official duties, with a viewto obtaining or retaining business oranother improper advantage in the conductof international business, shall not bedeductible from taxable profits”.

Are there special rules forpublic procurement?The general provisions on corruptionoutlined above apply to the publicprocurement process.

Public procurements are generallygoverned by two European Uniondirectives2 which have been implementedin the French Public ProcurementContracts Code (“Code des marchéspublics”) and in the 6 June 2005 Order,which deals with procedures for theaward of certain contracts in the water,energy, transport and telecommunicationsectors (“ordonnance n° 2005-649 du6 juin 2005 relative aux marchés passéspar certaines personnes publiques ouprivées non soumises au Code desmarchés publics”).

As a result, any person (including a legalentity) who has been convicted by a finaljudgment of corruption of a foreign publicofficial or corruption of a domestic publicofficial is excluded from bidding for publiccontracts for a period of five yearsfollowing the final judgment.

Are companies liable for theactions of their subsidiaries?According to Article 121-1 of the CriminalCode, legal entities can be held criminallyliable, providing the followingrequirements are met:

n the offence must have been committedby one or more natural personsconstituting either a body or arepresentative of the legal person; and

n the offence must have been committedon behalf of the legal person.

Although a parent company is legallyseparate from its subsidiary, its criminalliability may be involved if it has used itssubsidiary as intermediary for thepayment/receiving of a bribe or if it hasparticipated to the misconduct of itssubsidiary in one way or in another.


2 Directive on procurement in the public sector (2004/18/EC) and Directive on procurement in the utilities sector (2004/17/EC), adopted by the EU’s Council of Ministers andthe European Parliament on 31 March 2004. Nota: both directives will be repealed on 18 April 2016, and be respectively replaced by Directive 2014/24/EU on publicprocurement and Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors.


What are the penalties?Individuals:

n Corruption involving domestic orforeign public officials: imprisonmentof up to ten years and a fine of up toEUR 1 million.

n Private sector corruption:imprisonment of up to five years anda fine of up to EUR 500,000.

When the proceeds derived from theoffence are higher than the maximumpenalty, the court may increase the fineup to the double of the amount ofthe proceeds.

Additional criminal penalties applicable toindividuals include:

n deprivation of rights (civic, criminal andfamily rights) for five years or more;

n possible banishment (in the case offoreign perpetrators);

n professional restrictions (a ban for upto five years on performing a publicfunction or professional or socialactivity in connection with the offenceor/and on performing a commercial orindustrial activity in order to manageor control in any capacity, directly orindirectly, on his own name or onbehalf of another, an industrial orcommercial enterprise);

n confiscation; and

n the display of the Court’s ruling.

Legal entities:

Fines of up to five times the maximumamount of the fines on individuals can beimposed on legal persons. The financialresources of the offender are taken intoaccount when a court orders a fine.

Pursuant to Articles 433-25 and 445-4 ofthe Criminal Code, additional criminalpenalties applicable to legal persons

(each of which may be imposed for aperiod of up to five years) include:

n a ban on directly or indirectlyperforming the professional or socialactivity in connection with which theoffence was committed;

n placement under judicial supervision;

n closure of one or more of theestablishments of the enterprise usedto commit the acts;

n exclusion from public procurements;

n ban on public appeal for funds;

n ban on issuing cheques (with certainexceptions);

n ban on the use of payment cards;

n confiscation; and

n display of the court’s ruling.

With respect to both natural and legalpersons, confiscation of the “instrumentthat was used or intended to be used tocommit the offence, or of the proceeds ofthe offence” may be imposed (Section 3of Act No. 2000-595 of 30 June 2000).

French case law supports a broadinterpretation of the proceeds of anoffence which can, for example, cover theprice of the contract secured as a resultof bribery.

Additional comments

The Act of 6 December 2013 on the fightagainst tax fraud and serious economicand financial crimes has recently modifiedFrench anti-corruption legislation in thefollowing ways:

n a new financial prosecution office isresponsible, at a national level, for theprosecution of some specificcorruption offences;

n approved anti-corruption associationswhich have been in existence for atleast five years will be able to initiatesome criminal proceedings againstoffences of corruption; and

n the penalties for offences ofcorruption are increased (as setout above).





Federal Republic of GermanyWhat is corruption?The principal corruption offences(Straftaten) concerning public officials(Amtsträger) are defined in sections. 331et seqg. of the Criminal Code(Strafgesetzbuch (“StGB”)). Furtherlegislation – the European Bribery Act(EU-Bestechungsgesetz, “EUBestG”) andthe International Bribery Act (Gesetz zurBekämpfung internationaler Bestechung,“IntBestG”) – has extended the scope ofthe offences.

Accepting a benefit(Vorteilsannahme)“(1) A public official or a person withspecial public service obligations whodemands, allows himself to bepromised or accepts a benefit forhimself or for a third person for thedischarge of a duty …

(2) A judge or arbitrator who demands,allows himself to be promised or acceptsa benefit for himself or a third person inreturn for the fact that he performed, orwould in the future perform a judicial act… An attempt shall be punishable.

(3) The act shall not be punishable undersubsection (1), if the perpetrator allowshimself to be promised or accepts abenefit which he did not demand and thecompetent public authority, within thescope of its powers, either previouslyauthorises the acceptance, or theperpetrator promptly makes a report to itand it authorises the acceptance”(section 331 StGB).

Accepting a bribe (Bestechlichkeit)“(1) A public official or person withspecial public service obligations whodemands, allows himself to be promisedor accepts a benefit for himself or for athird person in return for the fact that heperformed or would in the future performan official act, and thereby violated or

would violate his official duties … Anattempt shall be punishable.

(2) A judge or an arbitrator whodemands, allows himself to bepromised or accepts a benefit forhimself or for a third person in returnfor the fact that he performed or wouldin the future perform a judicial act, andthereby violates or would violate hisjudicial duties ...

(3) If the perpetrator demands, allowshimself to be promised or accepts abenefit in return for a future act,subsections (1) and (2) shall already beapplicable if he has indicated to the otherhis willingness to:

violate his duties by the act; or

to the extent the act is within hisdiscretion, to allow himself to beinfluenced by the benefit in theexercise of his discretion.” (section332 StGB).

Granting a benefit (Vorteilsgewährung)“(1) Whoever offers, promises or grants abenefit to a public official, a person withspecific public service obligations or asoldier in the Federal Armed Forces, forthat person or a third person, for thedischarge of a duty …

(2) Whoever offers, promises or grants abenefit to a judge or an arbitrator, for thatjudicial act …

(3) The act shall not be punishable undersubsection (1), if the competent publicauthority, within the scope of its powers,either previously authorised theacceptance of the benefit by the recipientor authorises it upon prompt report bythe recipient” (section 333 StGB).

Granting a bribe (Bestechung)“(1) Whoever offers, promises or grants abenefit to a public official, a person withspecial public service obligations, or asoldier of the Federal Armed Forces, forthat person or a third person, in returnfor the fact that he performed or would inthe future perform an official act andthereby violates or would violate hisofficial duties …

(2) Whoever offers, promises or grants abenefit to a judge or an arbitrator, for thatperson or a third person, in return for thefact that he:

performed a judicial act and therebyviolated his judicial duties; or

would in the future perform a judicialact and would thereby violate hisjudicial duties,

…[A]n attempt shall be punishable.

(3) If the perpetrator offers, promises orgrants the benefit in return for a futureact, then subsections (1) and (2) shallalready be applicable if he attempts toinduce the other to:

violate his duties by the act; or

to the extent the act is within hisdiscretion, to allow himself to beinfluenced by the benefit in theexercise of his discretion” (section334 StGB).

The EUBestG stipulates that the provisionsof the StGB on active and passive briberyof public officials apply also to officials andjudges of EU organisations and courts andof EU member states. The IntBestGextends the provisions of the StGB onactive bribery to officials and judges ofinternational organisations and courts andof other foreign countries.

The criminal corruption offence of briberyof delegates (Mandatsträger) is defined insection 108e of the StGB:

Acceptance by, and granting bribesto, delegates (Bestechlichkeit undBestechung von Mandatsträgern)“(1) A member of Parliament of theFederation (Bund) or of the federal states(Länder) who demands, allows himself tobe promised or accepts an undue benefitfor himself or a third party as aconsideration for the performance of anaction or omission in relation to hismandate and in accordance with anorder (Auftrag) or instruction (Weisung) …

(2) Whoever offers, promises or grants amember of parliament of the Federation(Bund) or of the federal state (Länder) anundue advantage for that member or athird party as a consideration for an actionor omission in relation to that member’smandate and in accordance with an order(Auftrag) or instruction (Weisung) …

(3) The following members are equivalentto the members in paragraphs 1 and 2 …

n a member of the European Parliament;

n a member of a parliamentary assemblyof an international organization: and

n a member of a legislative body of aforeign state.

(4) A benefit will not be undue if theacceptance of the benefit is in line withthe legal status of the member andthe respective regulations ...(section108e StGB).

According to the explanatory notes to theAct, the undue benefit must be granted(offered or promised) in pursuance of aspecific agreement of wrongdoing in thesense that the delegate must act in acertain way in accordance with an orderor instruction of the donor.

However, section 108e StGB does notapply to rewards or benefits agreed forpast actions.

There are also more specific criminaloffences or administrative offences(Ordnungswidrigkeiten) defined in otherprovisions of the StGB (e.g., section 108bon bribery of electors of the EuropeanParliament or German parliamentaryrepresentations) or in other statutes (e.g.,section 2 of the IntBestG on bribery ofmembers of parliamentaryrepresentations of internationalorganisations or foreign states andsection 405 para. 3 no. 2 and 3 of theGerman Stock Exchange Act(Aktiengesetz) on bribery in connectionwith voting rights).

The general criminal offence of bribery ofemployees (Angestellte) and agents(Beauftragte) in the private sector is definedin section 299 paras. 1 and 2 of the StGB:

Accepting and granting a bribe inbusiness transactions(Bestechlichkeit und Bestechung imgeschäftlichen Verkehr)“(1) Whoever, as an employee or anagent of a business, demands, allowshimself to be promised, or accepts abenefit for himself or another in abusiness transaction as consideration forgiving a preference in an unfair manner toanother in the competitive purchase ofgoods or commercial services …

(2) Whoever, for competitive purposes,offers, promises or grants an employee oran agent of a business a benefit or forhimself or for a third person in a businesstransaction as consideration for his givinghim or another a preference in an unfairmanner in the purchase of goods orcommercial services …” (section 299paras. 1 and 2 StGB).

Please note that the concept of a “benefit”under these provisions is construed verybroadly. German prosecution authoritiesand courts may assume such benefit evenin case of modest gifts or hospitality,charitable donations or standard businesscontracts with scientists or otheremployees in the public or private sector(e.g., regarding research, consulting,lectures, etc.).

There are also more specific criminaloffences or administrative offences(Ordnungswidrigkeiten) defined in otherprovisions of the StGB (e.g., section 108band 108e on bribery of members andelectors of the European Parliament orGerman parliamentary representations) orin other statutes (e.g., section 2 of theIntBestG on bribery of members ofparliamentary representations ofinternational organisations or foreign statesand section 405 para. 3 no. 2 and 3 of theGerman Stock Exchange Act(Aktiengesetz) on bribery in connectionwith voting rights).

Does the law apply beyondnational boundaries?Yes. The EUBestG and the IntBestGstipulate that certain provisions of theStGB on bribery of public officials applyalso to activities outside Germany if theyare committed (i) by a Germanperpetrator or (ii) involving a public officialor judge who is employed by Germany orthe EU or who is a German national.Section 108e para. 3 of the StGB statesthat para. 1 and 2 also apply inconnection with, amongst others,members of the European Parliament,members of a parliamentary assembly ofan international organization andmembers of a legislative body of a foreignstate. Section 299 para. 3 of the StGBclarifies that the criminal provisions forbribery of employees and agents apply



also to activities in foreign competition.Furthermore, according to general rules,provisions on German criminal oradministrative offences may apply toactivities outside Germany, in particular, ifthey are committed (i) by a Germanperpetrator, (ii) jointly with co-perpetratorswho act in Germany, or (iii) to thedetriment of a German natural or legalperson (e.g., corruption offences to thedetriment of the German employer of abribed employee or of a Germancompetitor of the person bribing him).Moreover, section 9 para. 2 sentence 2StGB stipulates that German criminal law(including criminal anti-corruption law)applies if someone from Germanyparticipates (in the form of instigation orof aiding and abetting) in a principaloffence committed by a principal offenderoutside Germany, even if this principaloffence is not a criminal offence under thelaw of the country where it is committed.

Is there a differencebetween the treatment ofcorruption in the public andprivate sector and how isthe public sector defined?The term “public official” (“Amtsträger”)within the meaning of sections 331 etseq. of the StGB (see above) is definedas follows:

“2. A public official is whoever, underGerman law:

(a) is a civil servant or judge;

(b) otherwise has an official relationshipwith public law functions or;

(c) has been appointed to a publicauthority or other agency or has beencommissioned to perform duties of publicadministration without prejudice to theorganisational form chosen to fulfil suchduties” (section 11 para. 1, no. 2, StGB).

Please note that such “other agency”may also be a legal entity under civil law.

As mentioned above, the EUBestG andthe IntBestG stipulate that certainprovisions of the StGB on bribery ofpublic officials apply also to officials andjudges of European and internationalorganisations and courts and of EUmember states and other foreigncountries. Furthermore, the StGB andthe IntBestG contain separate criminalprovisions regarding bribery ofmembers and electors of parliamentaryrepresentations of Germany,foreign countries, the EU andinternational organisations.

There are two main differences betweentreatment of corruption in the public andprivate sectors.

In the public sector, the granting of abenefit to a public official may constitutethe criminal offence of granting a benefit(Vorteilsgewährung) if there is no priorpermission by the competent superior. If,

in addition, the benefit is granted on thebasis of an agreement that this willinfluence official activities of the publicofficial, this may constitute the even moreserious criminal offence of granting abribe (Bestechung). In the private sector,criminal liability for granting a bribe inbusiness transactions (Bestechung imgeschäftlichen Verkehr) may not resultfrom the granting of a benefit in itself, butonly from an agreement that suchgranting a benefit will influence thecommercial activities of the recipient.

In the public sector, corruption offences areso-called official offences (Offizialdelikte)which may be prosecuted without ademand for prosecution (Strafantrag). Inthe private sector, corruption offences canonly be prosecuted if, and as long as, thereis such demand for prosecution (e.g., bythe employer of a bribed employee or acompetitor of the person bribing him),unless the criminal prosecution authorityconsiders ex officio that the case should beprosecuted because of a specialpublic interest.



How are “facilitationpayments” treated?There is no specific exemption inGerman law for facilitation payments.Each payment must be judged accordingto whether it fulfils the criteria forcorruption offences.

What are the rules on taxand accounting in relationto corrupt payments?Under German tax law, expenses are nottax-deductible if they were made inconnection with (international or domestic)criminal or administrative offences, inparticular, corruption offences. If suchoffences are made tax-deductible, thismay, under certain circumstances, lead tocriminal or administrative liability for taxoffences. The German criminalprosecution and tax authorities areobliged to inform each other about anysuspicion that expenses were made inconnection with criminal or administrativeoffences, in particular, corruption offences.

False or fraudulent accounting,particularly in connection with corruptionoffences, may, under certaincircumstances, lead to criminal oradministrative liability.

Are there special rules forpublic procurement?Although there are no federal legalprovisions on an exclusion from publicprocurement in the case of corruption,some Federal States (Länder) and otherpublic law bodies have provisions of thiskind. Furthermore, there are generalprovisions on the requirement of reliabilityof a contract partner, which may lead toexclusion from procurement in the caseof corruption. Moreover, many Germancompanies have introduced internalguidelines providing for an exclusion fromprocurement in the case of corruption.

Are companies liable for theactions of their subsidiaries?Section 130 of the German AdministrativeOffences Act (Ordnungswidrigkeitengesetz,“OWiG”) establishes the administrativeoffence of violation of supervisory dutiesconsisting of a failure by superiorsappropriately and efficiently to supervisesubordinate employees in enterprises ifthis leads to criminal or administrativeoffences, in particular, corruption offences.This offence may be sanctioned by anadministrative fine (Geldbuße) against thesuperiors concerned which may amountto up to EUR 1 million or even more if thisis necessary to siphon off higher profits.German prosecution authorities and courtsmay assume such violation of supervisoryduties if superiors do not duly instructemployees regarding anti-corruptionprovisions (e.g., by compliance guidelines)and do not establish effective monitoring(e.g., by appointing a compliance officerand establishing a compliance process).

However, there is debate, not yet settledby the German Federal Court of Justice,whether managers of a parent companydo have supervisory duties with regardto subsidiaries. Regardless of thisquestion, though, there is the risk thatmanagers of a parent company may,under certain circumstances, be heldcriminally liable pursuant to section 13 ofthe StGB for participating by omission incriminal corruption offences committedby employees of subsidiaries if they donot use their influence to preventsuch offences.

If German prosecution authorities andcourts assume that senior executivescommitted an administrative offence ofviolation of supervisory duties(section 130 of the OWiG) or participatedin a criminal offence (e.g., by omissionpursuant to section 13 of the StGB), thismay lead to administrative fines

(section 30 of the OWiG) or forfeitureorders (Verfallsanordnungen) (sections 73para. 3 of the StGB, 29a para. 2 of theOWiG) against the company (legal entity)they are working for.

There are no general anti-corruptionprovisions regarding the use of agents.However, in some procurementprocesses the use of agents is specificallyprohibited. If such prohibitions areviolated and the use of agents is notdisclosed, German prosecutionauthorities and courts may take theposition that this constitutes fraud.Generally, it is advisable to include intoagency agreements clauses expresslyobliging the agent to comply with allapplicable legal provisions, in particular,with all anti-corruption provisions.Furthermore, agency agreements shouldnot provide for inappropriately highcommissions or other remunerationstructures which German prosecutionauthorities or courts could interpret asincentives for corruption offences.

What are the Penalties?The maximum penalty under the StGB fora corruption offence is imprisonment for aterm not exceeding 10 years (in particularlyserious cases of bribery of public officials).Furthermore, the court may impose aforfeiture order (Verfallsanordnung)siphoning off the gross proceeds from acorruption offence (without deduction ofexpenses made). Moreover, if a naturalperson commits a corruption offencewhen acting for a company, the companymay also be subject to a forfeiture order orto an administrative fine which mayamount to up to EUR 1 million or evenmore if this is necessary to siphon offhigher profits. Natural persons convictedof bribing a delegate, and delegatesconvicted of accepting bribes, may alsobe disqualified from voting, and standing inpublic elections.




Hong Kong


What is corruption? The Hong Kong Prevention of BriberyOrdinance (“POBO”) does not define“corruption”, but it sets out various publicsector bribery offences and private sectorbribery offences.

Public sector bribery offences under thePOBO include:

n any prescribed officer, without thegeneral or special permission of theChief Executive, soliciting oraccepting any advantage (section 3);

n any person, without lawful authority orreasonable excuse, offering anyadvantage to the Chief Executive or apublic servant in relation to his(1) performing or abstaining fromperforming any act in public capacity,(2) expediting, delaying, hindering orpreventing the performance of an act inpublic capacity by himself or otherpublic servants, or (3) assisting,favouring, hindering or delaying anyperson in the transaction of anybusiness with a public body (section 4);

n the Chief Executive or any publicservant, without lawful authority orreasonable excuse, soliciting oraccepting any advantage in relation tohis (1) performing or abstaining fromperforming any act in public capacity,(2) expediting, delaying, hindering orpreventing the performance of an actin public capacity by himself or otherpublic servants, or (3) assisting,favouring, hindering or delaying anyperson in the transaction with a publicbody (section 4);

n any person, without lawful authority orreasonable excuse, offering, solicitingor accepting any advantage to theChief Executive or a public servant inrelation to any contract with a publicbody (section 5);

n the Chief Executive or any publicservant, without lawful authority orreasonable excuse, soliciting oraccepting any advantage in relation toany contract with a public body(section 5);

n any person, without lawful authority orreasonable excuse, offering, soliciting or

accepting any advantage for procuringwithdrawal of tenders (section 6);

n any person, without lawful authority orreasonable excuse, offering, solicitingor accepting any advantage in relationto any auction conducted by or onbehalf of any public body (section 7);

n any person, without lawful authority orreasonable excuse, offering anyadvantage to any prescribed officer orpublic servant while having dealingswith the Government or any otherpublic body (section 8); and

n any agent, without lawful authority orreasonable excuse, offering, solicitingor accepting any advantage in relationto his principal’s affairs or business(section 9). This provision provides theroute through which briberyconnected with non-Hong Kongpublic officials is prosecuted.

n the Chief Executive or prescribedofficer possessing unexplainedproperty (section 10).

Private sector bribery offences under thePOBO include:

n any agent, without lawful authority orreasonable excuse, soliciting oraccepting any advantage in relation tohis principal’s affairs or business(section 9);

n any person, without lawful authority orreasonable excuse, offering anyadvantage to any agent in relation tothe latter’s principal’s affairs orbusiness (section 9); and

n any agent, with intent to deceive hisprincipal, using any receipt, accountor other document containingmaterially false, erroneous or defectiveparticular (section 9).

“Advantage” is widely drafted under thePOBO to capture almost limitlesscircumstances in which bribes may beoffered, including, in particular, money,gifts, loans, commissions, offices,contracts, services, favours and dischargeof liability in whole or in part. There is node minimis threshold for an “advantage”.However, evidence of the insignificance of

the advantage may be relevant toestablishing a defence or as proof that itwas not for an illegitimate purpose.

It excludes declared political donations.(Election donations are regulated bythe Elections (Corrupt and IllegalConduct) Ordinance.)

Does the law apply beyondnational boundaries?Section 4 of the POBO as summarisedabove has extraterritorial effect since itincludes an express reference to theadvantage being offered “whether inHong Kong or elsewhere.” As such,bribery offences connected to HongKong public officials are capturedwherever they take place.

For other corruption offences summarisedabove, the position is less certain as theydo not include the words “whether inHong Kong or elsewhere.” Such omissionmay well be construed as a legislativeintention not to afford extraterritorial effectto these sections. Indeed, case lawsuggests that, with regard to section 9 ofthe POBO (which covers private sectorbribery, and bribery connected withnon-Hong Kong public officials), the wholecourse of offer, solicitation or acceptanceof the illegal advantage must take placewithin Hong Kong jurisdiction to becaught by the section. The same logicshould apply to other sections.

Accordingly, the POBO does not haveextraterritorial effect in respect of briberyof foreign public officials; while bribery ofa foreign public official is an offence thatis captured by the broad definition ofagent under section 9 of the POBO, it isonly an offence if the bribery takes placewithin Hong Kong.

Is there a differencebetween the treatment ofcorruption in the public andprivate sector and how isthe public sector defined? Both public sector and private sectorbribery are covered by the POBO, but bydifferent provisions as summarised above.

Public servant is defined under the POBOto mean (1) any prescribed officer and(2) any employee of a public body. TheChief Executive of Hong Kong, thoughnot a public servant, also falls within thepublic sector. Prescribed officers includegovernment officials and judicial officers.

“Public body” is defined broadly to coverthe Hong Kong Government, theExecutive Council, the Legislative Council,any District Council, any board,commission, committee or other body,whether paid or unpaid, appointed by oron behalf of the Chief Executive or theChief Executive in Council and any board,commission, committee or other body(including government owned enterprises)as set forth in Schedule 1 to the POBO.

Therefore, the concept of “public servant” isfar broader than merely the civil service andencompasses all persons employed by, orassociated in any way with, an organisationwhich the Government decides has such asubstantial and important role in the publicaffairs of Hong Kong that it should be madea public body. For instance, any member ofa club or an association vested with anyresponsibility for the conduct ormanagement of its affairs is considered apublic servant. “Club” is not defined andshould be given its general meaning.

Bribery connected to non-Hong Kongpublic officials is covered by section 9 ofthe POBO.

How are “facilitationpayments” treated? Under Hong Kong law, there is noexemption for facilitation payments.

What are the rules on taxand accounting in relationto corrupt payments?There is no specific law in Hong Kongregarding the deduction of corruptpayments in tax assessment. However,Hong Kong has endorsed the OECDAnti-Corruption Action Plan for Asia andthe Pacific, which calls for “effectivemeasures to promote corporate

responsibility and accountability on thebasis of existing relevant internationalstandards through … the existence andthe effective enforcement of legislation toeliminate any indirect support of briberysuch as tax deductibility of bribes.”

Under the Hong Kong CompaniesOrdinance, a Hong Kong company isrequired to keep proper books of accountsto give a true and fair view of the state ofthe company’s affairs and have its financialaccounts audited by external auditorsannually. Listed companies are subject toadditional corporate governancerequirements (for example, establishment ofaudit committees). Falsification of companyaccounts is an offence under, inter alia,section 19 of the Theft Ordinance andsection 349 of the Companies Ordinance.

Are there special rules forpublic procurement?In Hong Kong, public procurement isconducted under the Stores andProcurement Regulations issued under thePublic Finance Ordinance, as well asFinancial Circulars issued by the Secretaryfor Financial Services and the Treasury fromtime to time. Public procurement is basedon principles of public accountability, valuefor money, transparency and open andfair competition.

According to a joint report by the OECDand the Asian Development Bank1, “whileno law [in Hong Kong] explicitly providesfor debarment, it is well-publicisedadministrative practice to remove acompany found to have committedoffences under the [POBO] from the list ofapproved contractors and to temporarilysuspend it from bidding.”

Hong Kong is also a party to the WorldTrade Organization Agreement onGovernment Procurement.

Are companies liable for theactions of their subsidiary?The POBO does not directly cover actionsof subsidiaries. There does not appear to

be any case law in Hong Kong whichdirectly relates to parent companies’liability for bribes or corruption committedby their subsidiaries. However, it has beenaccepted in Hong Kong case law that asa matter of general principle in the contextof public policy or illegality, the courts areinclined to look at the substance ratherthan form of an entity. Thus, in an extremecase, such as where a wholly-ownedsubsidiary may be used to do somethingillegal, the court may be more than readyto equate the subsidiary with its parentcompany. Therefore, a parent companymay be liable for bribes or corruptioncommitted by its subsidiaries, particularlya wholly owned subsidiary.

What are the penalties?For soliciting or accepting an advantage(section 3), maximum penalties are a fineof HKD 100,000 and imprisonment forone year.

For other offences:

n On indictment, maximum penalties for:

• possession of unexplainedproperty (Section 10): fine ofHKD 1,000,000 and imprisonmentfor ten years;

• bribery in relation to any contractwith a public body (Section 5) orfor procuring withdrawal oftenders (Section 6): fine ofHKD 500,000 and imprisonmentfor ten years; and

• other offences: fine ofHKD 500,000 and imprisonmentfor seven years.

n On summary conviction, maximumpenalties for:

• possession of unexplainedproperty: fine of HKD 500,000 andimprisonment for three years; and

• other offences: fine ofHKD 100,000 and imprisonmentfor three years.



1 http://www.oecd.org/site/adboecdanti-corruptioninitiative/37575976.pdf

http://www.oecd.org/site/adboecdanti-corruptioninitiative/37575976.pdf



What is corruption?Italian law criminalises both active andpassive corruption in the public and theprivate sector (including bribery of foreignpublic officials). Common to all theseoffences is that a person gives orpromises to give money or other thing ofvalue, directly or indirectly, to either apublic official (including persons incharge of a public service) or to acompany director aga

anti-corruption legislation september 2015 · the united nations convention against corruption...

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