It is sometimes difficult to identify historical milestones as they occur, especially if they are small and sometimes may seem almost insignificant. However, on December 15, 2016, in a magistrate court in Tel-Aviv a historic event occurred: for the first time in Israel, an Israeli company was convinced for bribing a foreign public official. This is especially interesting due to the fact that this is also the first time the general prosecution in Israel based an indictment on Section 291A of the Israeli Penal Law, that was enacted in 2008, in the course of Israel’s efforts to join the OECD as a member country.

As described in the indictment, in 2012 an Israeli company – NiP Global Ltd (“NiP”) that specializes in developing government IT solutions – entered into a $30 million deal with the government of Lesotho to sell the African kingdom its products. In order to obtain the contracts, NiP hired a local consultant who introduced the Israeli company to the director general of Lesotho’s interior ministry, and paid the consultant $500,000. A significant amount of this sum was intended for the director general. The case was investigated by the Israeli police and the Lesotho authorities, resulting in the indictment against NiP in Israel, and charges being brought against the consultant and director general in Lesotho.

NiP entered into a plea agreement with the Israeli general prosecution, according to which it would admit it was guilty of the charges and fully cooperate with the Lesotho authorities in their enforcement efforts against the two local individuals. Additionally, NiP agreed to pay a NIS 2.25 fine and forfeit another NIS 2.25, and undertook to revise its internal policies and procedures in order to prevent future cases of corruption and bribery. The magistrate court noted that the fine and asset forfeiture were substantially lower than the value of the ill-gotten gains, and accepted the plea agreement because this was the first indictment of this offence in Israel and noted that in the future sanctions will increase gradually until they reach the appropriate sentencing range.

Admittedly, Israel is a bit late to “join the game”, in the worldwide battle against corruption, but the NiP case should be viewed as a two-fold signal on the part of law enforcement agencies in Israel with regards to bribery paid by Israeli entities outside of Israel. Firstly, the NiP case demonstrates that Israel will no longer condone such conduct, which is especially significant given that only a decade ago an Israeli company argued before the Israeli Supreme Court that payments made as bribery to foreign officials should be classified as a recognized expense for tax purposes. In 2008 the Supreme Court rejected the company’s request. In 2016, no company would dare make such a request.

Secondly, the NiP case is a strong indicator that Israeli law enforcement agencies intend to follow the footsteps of the United States, and apply the standards established during the many years of enforcement of the Foreign Corrupt Practices Act. The relatively low fine and forfeiture were attributed to the fact that this was the first prosecution under Section 291A, and the court explicitly indicated that the monetary fines will increase in future cases. Additionally, as part of the plea agreement, NiP undertook to revise its internal procedures and policies. Compliance mechanisms are relatively new to the Israeli corporate and legal culture, and the fact that they were part of the plea agreement – as one would expect in almost every FCPA case in the United States – demonstrates the strong U.S. influence on the Israeli prosecution in the NiP case.

Clearly, the burden is now on Israeli law enforcement agencies to follow up with more prosecutions of bribery paid to foreign officials. However, given the importance of this area of law to international commerce and global economy, and the attention it receives from international organizations such as the OECD and the UN, we can safely predict that while the NiP case will go down in Israeli history as the first prosecution of foreign bribery, it will certainly not be the last.