As reported previously, corporate criminal liability was introduced in Ukraine earlier and in a broader scope than originally envisaged. However, developments in this field are only now gaining momentum through the introduction of what may be regarded as strict corporate criminal liability for corruption offences.
On 4 June 2014 the Law, “On Amendments to Certain Legislative Acts of Ukraine to Implement the Action Plan for the European Union Liberalisation of the Visa Regime for Ukraine Regarding State Anticorruption Politics” No. 1261-VII (“the Law”), entered into force introducing new articles of corporate criminal liability for corruption offences.
Even though the Law is aimed at bringing the Ukrainian anticorruption regulations up to speed with European good practice, some of its wording is rather ambiguous and may have the (unintended) effect of imposing strict liability for corruption offences on corporates.
1. THE DEFINITION OF “COMMISSION IN THE INTERESTS” AND LIABLE PERSONS
As reported previously a legal entity can be held criminally liable for the actions of its representative as authorised by contract, law or constituent documents when acting on its behalf, in its interest, by its order or in conspiracy with the legal entity or otherwise. The Law has extended the definition of a corruption offence committed “in the interests” of a legal entity by stipulating that the corruption offence shall be deemed committed in the interests of a legal entity where such crime caused the legal entity to receive undue advantage or created favourable conditions for obtaining such undue advantage or was directed at evading the liability provided by the law.
Further, the Law draws a clear distinction between all public bodies, such as local and national bodies of government and their divisions, and private legal entities, including State-owned companies. In particular, public bodies may not be liable for active corruption offences, such as giving bribes.
The Law also increases fines for corruption offences, which are now double the amount of the undue advantage received by the legal entity.
2. STRICT CORPORATE CRIMINAL LIABILITY FOR CORRUPTION OFFENCES?
The Law provides for two separate grounds for corporate criminal liability for criminal offences, i.e. (i) the commission of an enumerated crime by an authorised representative acting on its behalf, in its interest, by its order or in conspiracy with the legal entity; and/or (ii) failure by the legal entity to prevent the crime.
This is in stark contrast with many other jurisdictions, such as the 1976 US Foreign Corrupt Practices Acts or the 2010 UK Bribery Act which provide a defence where a legal entity makes efforts in good faith to prevent corruption offences. However, due to the ambiguous wording of the two measures mentioned above, one cause of action against corporates appears as two. This prevents legal entities from relying on the anti-corruption compliance defence. In effect, the literal interpretation of the Law would mean the imposition of strict criminal liability for such corruption offences on legal entities.
This is a development to monitor and we shall report any further amendments to corporate criminal liability for corruption offences.
The Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine to Implement the Action Plan for the European Union Liberalisation of the Visa Regime for Ukraine Regarding State Anticorruption Politics” No. 1261-VII dated 13 May 2014
The Criminal Code of Ukraine № 2341-III dated 5 April 2001