Introduction to 2014 Anti-Corruption Regulation Survey Welcome to the 2014 edition of the Jones Day Anti-Corruption Regulation Survey of Select Countries. We have added The Netherlands, Hong Kong and Belgium to the survey this year in light of their increasing importance to different segments of our client base. This brings to 39 the total number of countries covered by the Survey. We have kept the same uniform format for each country summary as in the 2013 edition. That format is explained below. There is an increasing awareness among multinational companies of the significance of anti-corruption regulations in many countries and the potential risk of violating these regulations or being associated with companies or individuals that are engaged in such violations. The United States has become increasingly aggressive in enforcing its anti-corruption regulations, including as to non-U.S. companies operating outside of the U.S. with limited connections to the U.S. The United Kingdom has also adopted wide-ranging anti-corruption regulations covering extra-territorial conduct. Even though the regulatory and enforcement environments vary widely from country to country, there has been a clear movement in many countries toward increased regulation and stricter enforcement. This Survey is intended to give an overview snapshot of the complex and evolving anti-corruption regulations in 39 developed and developing countries. Ways in which it may be useful will vary depending on a company’s situation and needs. A few examples follow: x Due diligence. This Survey may be useful to give a sense of key aspects of anti-corruption regulations that apply to the potential target of M&A or partner of a joint venture. x 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 to give a sense of potential landmines in relation to the partner’s local business activities. x Considering efficacy of compliance programs. This Survey may be helpful in considering whether and how to develop a compliance program, whether on a country, regional or global basis. As a baseline starting point, one needs to have an understanding whether a particular action (for example, certain gifts or entertainment) would violate local regulations. In this Survey, the countries are organized by region and then alphabetically by country. For each country, the same categories are covered. They include, among others: (i) whether bribery of domestic and foreign public officials is prohibited; (ii) what “public official” means; (iii) whether and to what extent gifts, entertainment and travel benefits are regulated; (iv) issues in enforcement and (v) recent developments. This Survey also identifies the CPI scores and ranks of each country covered herein. CPI means 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 2014, the CPI ranked 175 countries based on their scores. This Survey also identifies major international conventions to which each country covered by this survey 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 regulation in a particular country, but is not a substitute for a review of 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 do 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 the specific facts and circumstances or guidance as to local counsel where appropriate. If questions come up in relation to multiple jurisdictions, the Jones Day team, including its local correspondents where appropriate, can effectively coordinate to provide a comprehensive and focused response. Stephen J. DeCosse Partner firstname.lastname@example.org Christopher Grant Associate email@example.com Jones Day Kamiyacho Prime Place 1-17, Toranomon 4-chome, Minato-ku, Tokyo 105-0001, Japan TEL +81-3-3433-3939 FAX +81-3-5401-2725 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 2014, 175 countries were ranked by CPI score. The CPI score ranges from 100 (very clean) to 0 (highly corrupt). OAS Organization of American States OAS Convention OAS Inter-American Convention against Corruption. Adopted in March 1996 OECD Organization for Economic Co-operation and Development OECD Convention OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. 41 countries have acceded as of May 30, 2014. OECD cannot force implementation, but 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 November 12, 2014, there are 140 signatories and 173 parties to UNCAC, including the European Union. This publication should not be construed as legal advice on any specific facts or circumstances. The summaries in this publication are general and introductory and are not, and are not intended to be, a comprehensive analysis of any issues or constitute legal advice; the applicable legal rules are technical in nature requiring appropriate legal advice based on the actual facts and circumstances of the situation. The contents of this publication may not be photocopied 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 web site 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 2014 CPI Rank 145/175 Score 25 The Law on Bribery Bribery of Domestic Officials Kenya has a series of laws that cover bribery. The principal statute that covers bribery of all kinds is the Anti-Corruption and Economic Crimes Act of 2003 (ACEC). The ACEC prohibits bribery of “agents,” which may be anyone who functions on behalf of another person in both the public and the private sectors; maximum fine of Kenya shillings one million (approximately USD 11,136) or ten years imprisonment, or both, and additional fines if the person receives a quantifiable benefit (ACEC sec. 48). 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)). 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 (PPDA) prohibits corrupt practices in procurement proceedings; maximum fine of Kenya shillings four million (approximately USD 44,543) or ten years imprisonment, or both, and public officers will be disqualified from public office. The Penal Code prohibits anyone who is employed in the public sector from abusing the authority of his office to act in a prejudicial way that harms the rights of another (which includes bribery); maximum fine of Kenya shillings one million (approximately USD 11,136) or ten years imprisonment, or both. 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 Kenya shillings ten million (approximately 115,437) while that for an individual is Kenya shillings four million (approximately USD 44,543). Bribery of Foreign Officials The ACEC, 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. Commercial Bribery The ACEC covers commercial bribery as well as public bribery. Company employees are “agents” of the company, and the ACEC prohibits the bribery of all agents. Definitions Government Employee The term “public officer” is defined under the Leadership and Integrity Act, No. 19 of 2012 (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. However, under the ACEC’s provisions on bribery, the key term is not “public officer,” but “agent”. 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)). Gratification (Gifts/ Entertainments/ etc) A “benefit” could include any gift, loan, fee, reward, appointment, service, etc. The Constitution 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 Kenya shillings twenty thousand (approximately USD 223); other types of gifts given to officers in their official capacity would be treated as gifts to the public officer’s Jones Day 2 organization. Public officers may also accept gifts from relatives or friends on special occasions recognized by custom. The LIA prohibits a state officer from: (a) 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 state officer’s organization has a role; or (iii) has a contractual or legal relationship with the state officer’s organization; (b) Accepting gifts of jewelry or other gifts comprising of precious metal or stones, ivory or any other animal part protected under the Convention on International Trade in Endangered Species of Wild Fauna and Flora; or (c) Accepting any other type of gift specified by the Ethics and Anti-Corruption Commission (EACC). The LIA provides that a state officer may receive a gift given to him 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 EACC. 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 (KACC) and replacing it with the EACC as the new investigatory body. The KACC, which was under heavy political influence, was not effective in cases involving high-level officials. The EACC has authority to prosecute crimes (although it still forwards most cases to the Director of Public Prosecutions (DPP), independence from politics (the head of the agency is appointed for a six-year non-renewable term) and the authority to engage in out-of-court settlements. Issues in Enforcement 1) Lack of commitment by senior officials who see no difference between their personal gains and official duties. 2) Ineffective enforcement of whistleblower protection, despite the existence of the Witness Protection Act. 3) 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 1) The EACC has recommended to the DPP the prosecution of at least ten (10) persons suspected of having been involved in the “Anglo Leasing Corruption” scandal. The DPP has formed a committee to investigate the allegations leveled against these persons. 2) The EACC is in the process of developing a policy, the National and Anti-Corruption Policy in Kenya, which will set out the framework of implementation of the anti-corruption laws. Participation in International Anti-corruption Conventions OECD Convention No UNCAC Signed Dec. 9, 2003 Ratified Dec. 9, 2003 Last Updated November 10, 2014 Jones Day 3 Region Africa Country Mozambique 2014 CPI Rank 119/175 Score 31 The Law on Bribery Bribery of Domestic Officials The Parliament of Mozambique first adopted legislation on corruption called the Anti-Corruption Act (Law 6/2004, of 17th June) in 2004, supported by its relevant Regulations approved by the Government of Mozambique by Decree 22/2005, of 22nd June) – all together referred to as “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 punishment of incarceration between two and eight years and a fine up to one year – established by a court of law in between 2,00 MT and 30,00 MT per day, up to 365 days/year (ACA art. 9, cl. 1). However, the penalties may be reduced if the action was committed to protect the offeror-violator or his 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 punishment of incarceration between two and eight years and a fine up to one year. However, if the action at issue is an omission or delay, or if it is not carried out, the penalties may be reduced to incarceration up to two years and a corresponding fine, or incarceration up to one year and a fine up to two months (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 one year (Penal Code art. 318, 321). Corporate liability: Neither the ACA nor the Penal Code imposes criminal liability on legal entities. Bribery of Foreign Officials Foreign officials are also subject to the ACA, as per provision of article 2 clause 3 – “the provisions of this Law apply to those that, even not being part of any of the entities subject to the law as foreseen above, induce or contribute in the practice of the crimes foreseen in article 1 of the ACA, or, benefit from them.” 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. 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.” In 2012, the Mozambican Parliament adopted the Public Probity Act (Law 16/2012, of 14 August). This law establishes the bases and the legal regime concerning public morality and respect for public property by a public servant. 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 considered the 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. For the purposes of the Public Probity Act, the following entities are public servants: Jones Day 4 a) Judges and prosecutors from all courts, without exception; b) A Judge of the Constitutional Council; c) Governor and Deputy Governor of the Central Bank of Moçambique; d) President of the tax authority; e) Rectors and Vice-Rectors of public universities and higher education institutions; f) Ambassador; g) Chairman of the Committee on Elections at all levels; h) Consul; i) Secretary-General; j) Inspector of State; k) Permanent Secretary, at all levels; l) Director-General; m) National Director and Deputy National Director or similar; n) Director of the Technical Secretariat of Electoral Administration, at all levels; o) Provincial and District Directors and provincial and District Deputy Directors; p) Employee and agent of the State; q) Public managers; r) Director nominated to a public entity in a legal person governed by public law or public capital company or mixed economy; s) Managers and other employees of courts and public prosecutors; t) Managers, leaders and officials or employees of public institutes, foundations or public funds, public companies and companies in which the State; u) Holders of agencies and officials or employees of the local authorities, members of the municipal councils, members of the provincial assemblies, public associations and entities that receive subsidy of public body; v) Holders responsible and officials or employees of public institutions; w) Managers and employees of private companies invested public functions through concession, license, lease or other contractual ties; x) Civil servants and public-sector workers and administrative business, integrated into direct or indirect State administration or autonomous administration of the State; y) Elements of force and security and Paramilitary forces at all levels; z) Division Directors. 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: a) favorable treatment of a specific person, company or organization; b) benefits, compensation, bribes, loans, adjudication or signing of contracts in violation of the law; c) giving information on public tenders against fair competition law; and d) fraudulently supplying information on examination tests (ACA art. 9, cl. 3). Under the Public Probity Act, the public servant should not, by the exercise of their duties, require or receive benefits and offers, directly or through an intermediary, to natural or legal entities, of Mozambican or foreign law. They are also included in the prohibition, laid down in the preceding paragraph, against all offers with a value greater than one-third of the monthly salary of a holder of political office or public servant, paid by the public entity for providing services, either, particularly in: a) money in national or foreign currency; Jones Day 5 b) movable property of any kind, such as furniture, appliances, jewelry and other artifacts; c) real state property or any repair services of real estate public agent, as well as its lease; d) cars, boats or any means of transport; e) paid vacation; f) any either type of gifts or advantages. It is also forbidden for the public servant to receive any type of gift, regardless of its value, from those who have interest in a decision that he, the agent, will take about a particular subject. Current Status Enforcement Body In 2005, the Central Office for Combating Corruption (Gabinete Central de Combate à Corrupção, 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 has 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 1) Political interference is a major problem in the GCCC because its 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 has jurisdiction only to investigate but not prosecute the corruption-related complaints. 2) Notwithstanding Article 13 of the ACA, which stipulates protection of informant or complainant, Mozambique does not have robust protection for the whistleblowers. Recent Movement In July 2011, the Mozambican Council of Ministers proposed a new anti-corruption law and revision of the criminal code called the “Anti-Corruption Package.” The Anti-Corruption Package proposes stronger whistleblower protection, an ethical behavior code for public officials and criminalization of embezzlement, influence peddling and graft. The Anti-Corruption Package was submitted to the parliament in November 2011 and was scheduled for debate in March 2012. However, due to the complexity of the bill, the scheduled debate was postponed. 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 Dec. 15, 2003 Ratified Aug. 2, 2006 SADCPAC Signed Aug. 14, 2001 Ratified July 9, 2004 Last Updated November 17, 2014 Jones Day 6 Region Africa Country South Africa 2014 CPI Rank 67/175 Score 44 The Law on Bribery Bribery of Domestic Officials The Prevention and Combating of Corruption Act of 2004 (PCCAA) 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 (PCCAA art. 3(b)). Receiving a bribe: It is a criminal offence 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 (PCCAA art. 3(a)). In addition to the general offense of corruption (PCCAA art. 3), the PCCAA further identifies specific acts that would be deemed corrupt, given the role, office or authority that the offender holds: - Public officers (PCCAA art. 4) - Legislative authority PCCAA art. 7) - Judicial officers (PCCAA art. 8) - Prosecuting authority (PCCAA art. 9) The punishment is subject to the discretion of the court responsible for sentencing: - 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 of its members, directors and employees 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 PCCAA may be sentenced to the payment of a fine of an unlimited extent. The PCCAA 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 the OECD recommendations regarding corruption. Reporting Obligations: Any person who holds a position of authority (including within a private corporation) has a duty under the PCCAA 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 up to up to ten years (PCCAA art. 34). Bribery of Foreign Officials Bribery of foreign officials is covered by the PCCAA, which mirrors the provisions on domestic public bribery for offerors of bribes, and criminalizes the giving or offering of any gratification to a foreign official to have him 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 (PCCAA art. 5). The degree of the penalty is subject to the discretion of the court. Commercial Bribery Commercial bribery is covered by the PCCAA’s provisions on the bribery of agents, which prohibit both the accepting or giving of any gratification by an agent, and the accepting or giving of any gratification by a third person to/from an agent (PCCAA art. 6). As with bribery of domestic officials, the degree of penalty is subject to the discretion of the court.