Foreign bribery

Legal framework

Describe the elements of the law prohibiting bribery of a foreign public official.

Section 291A of the Israeli Penal Law-1977 prohibits the payment of bribes to foreign public officials. This offence has four main elements:

  • giving a bribe;
  • to a foreign public official;
  • for the performance of an act connected to his or her position; and
  • in order to obtain, ensure or advance business activity or another advantage regarding business activity.

 

Issuing an indictment for bribery of foreign public officials requires written approval from the Attorney General.

 

Failing to prevent bribery of a foreign public official itself is not a crime, however, the ability to demonstrate that risk mitigation steps were taken to prevent such crimes from occurring (such as through the adoption of an anti-bribery policy and robust procedures) may positively impact any investigation and subsequent legal proceeding.

Definition of a foreign public official

How does your law define a foreign public official, and does that definition include employees of state-owned or state-controlled companies?

The term ‘foreign public official’ is defined in the Penal Law-1977 as:

  • A civil servant of a foreign country and anyone holding public office or exercising a public function on behalf of a foreign country, including in the legislative, executive or judicial branches of the foreign country, whether by appointment, election or agreement.
  • A person holding public office or exercising a public function on behalf of a public body constituted under legislation of a foreign country, or of a body that is subject to the direct or indirect control of a foreign country.
  • An employee of a public international organisation (ie, an organisation constituted by at least two countries or by organisations that, themselves, were constituted by at least two countries), and any person holding a public office or exercising a public function on behalf of the organisation.

 

This definition includes employees of state-owned and state-controlled companies.

Gifts, travel and entertainment

To what extent do your anti-bribery laws restrict providing foreign officials with gifts, travel expenses, meals or entertainment?

Israeli anti-bribery laws prohibit the payment of ‘bribes’ to public officials, without specifically defining this term and without promulgating specific restrictions for gifts, travel expenses, meals and entertainment. Thus, offering gifts, travel expenses, meals or entertainment as bribes, regardless of their nature or value, would be illegal. To sharpen this point, in theory, giving inexpensive gifts as bribes is illegal, while giving lavish gifts for reasonable purposes (ie, not as a bribe) would not necessarily be illegal (CA 4115-08 Avner Gilad v State of Israel (Nevo, 24 January 2011). In this context, best practices have developed that identify reasonable limits (monetary thresholds) for offering gifts, travel expenses, meals and entertainment to foreign public officials and generally reject anything lavish.

 

Israel has a framework of legislation that applies directly to Israeli public officials (as opposed to offering parties), which dictate when benefits may (and may not) be accepted from outside parties and the procedures guiding how such benefits may be accepted lawfully. Key legislation includes the Public Service (Gifts) Law-1979, the State Service (Discipline) Law 1963, the Civil Service Regulations (the CSR or Takshir), and the Attorney General Directive No. 1.170. Local best practices in this regard are informed by this legislative framework.

Facilitating payments

Do the laws and regulations permit facilitating or ‘grease’ payments to foreign officials?

Israeli law prohibits facilitation or ‘grease’ payments to public officials. While not explicitly set out in the Penal Law-1977, the case of facilitation payments is not distinguished from other unlawful bribes. Moreover, section 293(7) of the law clarifies that no distinction exists between receiving bribes to deviate from standard practices and for performing acts that had to be executed anyway by virtue of the public official’s position – both are unlawful.

Payments through intermediaries or third parties

In what circumstances do the laws prohibit payments through intermediaries or third parties to foreign public officials?

Israeli law generally does not prohibit payments to foreign public officials through intermediaries or third parties per se. However, the Israeli Penal Law-1977 specifically prohibits giving anything of value to a third party for that party to pay a bribe. In other words, the offence of bribery can be committed either directly or indirectly through a third party. It is emphasised that while payments to domestic public officials via third parties technically are permitted (if lawful), such use of third parties generally is viewed as a risk factor for bribery in Israel.

For sake of completeness, brokering bribery is an offence under the Penal Law such that third parties are prohibited from receiving anything of value to pay a bribe.

Individual and corporate liability

Can both individuals and companies be held liable for bribery of a foreign official?

Under the Israeli Penal Law-1977, a company may have criminal liability for the actions of its functionaries. For offences involving strict liability, a company may have criminal liability if the offence was committed by an individual while performing his or her company function. For offences requiring mens rea, a company may have criminal liability if the bribery offence and offender’s criminal intent can be attributed to that company (under the circumstances and considering the position, authority and responsibility of the actual offender in the management of the company’s affairs).

In both cases, the company’s criminal liability would be in addition to the offender’s own personal criminal liability.

Thus, criminal proceedings may be lodged against both specific individuals working on behalf of the company involved in bribery (in their personal capacities) as well as against the company itself (qua corporation), and both may face criminal sanctions simultaneously.

Private commercial bribery

To what extent do your foreign anti-bribery laws also prohibit private commercial bribery?

Israeli law generally does not prohibit foreign private commercial bribery (as opposed to domestic anti-bribery laws that adopt a very wide definition of the term ‘public official’).

Defences

What defences and exemptions are available to those accused of foreign bribery violations?

There are no statutory defences or exemptions that are specific for foreign bribery offences. However, the adoption of an anti-bribery policy and robust procedures that are executed properly may positively impact any investigation and subsequent legal proceeding.

Moreover, those accused of foreign bribery violations will have at their disposal general criminal law defences under Chapter 5(1) of the Penal Law-1977 (eg, necessity or duress).

Finally, it is noted that enforcement and sanctions for foreign bribery offences committed abroad by Israelis may be limited by defences and exemptions adopted by foreign jurisdictions under section 14(b)(3) of the Penal Law (the offender either was acquitted or convicted but was not subjected to sanctions), and under section 14(c) (sanctions under Israeli law will not be imposed that are more severe than the sanctions of the foreign jurisdiction). It is noted that while, as a general rule, Israel requires double criminality for enforcement of offences outside of Israel, the offence of foreign bribery is an exception to this rule and can be enforced even if it is illegal in Israel alone.

Agency enforcement

What government agencies enforce the foreign bribery laws and regulations?

Israel has a few government agencies involved in the enforcement of foreign bribery laws and regulations.

Regarding investigative bodies, the Israel Police has a dedicated unit for investigating serious offences including bribery offences (called Lahav 433). Additionally, the Israeli Money Laundering and Terror Financing Prohibition Authority (an agency of the Ministry of Justice) is a financial crimes intelligence agency that collects information regarding, inter alia, predicate offences of the crime of money laundering, including bribery, and engages in information sharing with other enforcement bodies such as the Israel Police.

Prosecution of foreign bribery offences usually will involve the State Attorney’s Office (under the Ministry of Justice) and may also involve prosecutors from the Tax and Economics Department in the Tel Aviv District Attorney’s Office.

Patterns in enforcement

Describe any recent shifts in the patterns of enforcement of the foreign bribery rules.

Recently, Israeli law enforcement and the State Attorney’s Office have become increasingly active in investigating and prosecuting foreign bribery offences. This is attributable (in part) to the following context.

In 2008, following ratification of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Israel amended its anti-bribery laws to include the offence of bribing foreign public officials. Israel already was actively enforcing domestic bribery offences, however, this was a turning point and foreign bribery came under increased scrutiny. In 2016, Israel saw its first conviction under its new foreign bribery provision (NIP Global was convicted of paying bribes to a foreign public official in Lesotho to advance its own business interests). Additional high-profile foreign bribery cases are currently being pursued.

In 2018, Israel was formally admitted as a member of the Financial Action Task Force, which sets standards and suggests best practices for anti-money laundering and terror financing laws around the world. Increased efforts in preventing and investigating foreign bribery offences has been part of Israel’s attempt to show seriousness in this space.

Prosecution of foreign companies

In what circumstances can foreign companies be prosecuted for foreign bribery?

Under section 12 of the Penal Law-1977, Israeli criminal law applies (inter alia) to:

  • an offence committed in part or in whole within the territory of Israel; and
  • an act in preparation of, or attempt, attempt to induce another, or conspiracy to commit such an offence, which occurred outside of Israel, so long as the intention is to commit at least part of the bribery offence within Israel.

 

Thus, a foreign company may face prosecution in Israel for a foreign bribery offence, depending on the nexus between the offence and Israel. For example, if part of an offence was committed in Israel, or if there was preparation for or an attempt, attempt to induce another or conspiracy to commit an offence outside of Israel but with the intention was to commit foreign bribery within Israel, then Israel may (formally) have jurisdiction over the offence. At the same time, lacking any real Israeli connection, the likelihood of the Israeli authorities investigating a foreign company for foreign (non-Israeli related) bribery is quite small.

Sanctions

What are the sanctions for individuals and companies violating the foreign bribery rules?

In Israel, bribery offences carry criminal sanctions of either imprisonment (up to seven years) or criminal fines (the greater of 1.13 million Israeli shekels for individuals or 2,260,000 shekels for corporations, and four times the value of the benefit intended to be paid as a bribe). In this context, criminal proceedings may be taken against both specific individuals involved in bribery while working on the company’s behalf (in their personal capacities) as well as against the company itself (as a corporation). Moreover, in the event of a conviction, a court can order the forfeiture of the bribe and require the one who paid the bribe to pay the value that would have been received in consideration of the bribe to state treasury.

These criminal sanctions do not preclude an injured party from filing civil claims.

Additionally, bribery is a predicate offence under the Israeli Prohibition on Money Laundering Law-2000.  Accordingly, in addition to the bribery-specific penalties enumerated in the Penal Law-1977, the violation of anti-money laundering laws can carry additional consequences and sanctions, including imprisonment, criminal sanctions, and forfeiture of property or funds used in the offence (even as early as with the commencement of criminal investigations).

Being accused of bribery offences can also result in collateral sanctions, such as temporary delisting (until acquittal or conviction) from the list of authorised Ministry of Defence suppliers, or cancellation of export licences issued by the Ministry of Defence’s Defence Export Control Agency (DECA).

Recent decisions and investigations

Identify and summarise recent landmark decisions or investigations involving foreign bribery.

In recent years, Israel has increased enforcement relating to foreign bribery. While investigations and decisions in this regard have not necessarily been ground-breaking in content (and in the manner in which the offence should be interpreted), the cases often have been high profile and have made a statement to Israeli companies looking to do business abroad. Key investigations and prosecutions (and convictions) have included:

  • In 2016, NIP Global was convicted of foreign bribery offences. The company paid bribes (approximately US$500,000) to foreign public officials in Lesotho via an intermediary as part of a multi-million dollar transaction with the government to procure its products. As part of a plea bargain, the company paid a fine of 4.5 million shekels and forfeited assets.
  • In 2018, Teva agreed to a settlement with Israeli authorities in which it agreed to pay a fine of US$22 million and admitted to paying bribes to foreign public officials in Russia, Ukraine and Mexico between 2007 and 2012.
  • In early 2021, former executives of Shikun and Binui were indicted, subject to a hearing, for allegedly paying bribes in a number of countries in Africa in order to win public tenders for infrastructure projects.