Catching up with Corruption in the Asia Pacific Region · 2015-11-06 · Baker & McKenzie.Wong & Leow is incorporated with limited liability and is a member firm of Baker & McKenzie

Baker & McKenzie.Wong & Leow is incorporated with limited liability and is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around

the world. In accordance with the common terminology used in professional service organizations, reference to a "partner" means a person who is a partner, or equivalent, in

such a law firm. Similarly, reference to an "office" means an office of any such law firm.

© 2015 Baker & McKenzie.Wong & Leow

Catching up with Corruption

in the Asia Pacific Region 2015 ACFE Asia Pacific Fraud Conference

Weiyi Tan

Partner

Baker & McKenzie.Wong & Leow

Agenda


3

Agenda

‒ Overview of trends and developments

‒ Legislative Reforms and Updates

‒ Enforcement Trends

‒ Policies and Practices

‒ What lies ahead?

Overview of trends and

developments in Asia Pacific

© 2015 Baker & McKenzie.Wong & Leow 5

Key Trends and Developments

‒ Investigations:

US FCPA and UK Bribery Act offences

Investigations by Local Authorities under local laws

‒ Legislative Reform and Updates

Adopting international standards

‒ Enforcement Trends

‒ New Policies and Practices

Investigations


Foreign Corrupt Practices Act

‒ Application of FCPA - Extra-territorial Effect

Anti-Bribery Provisions: Apply to three broad categories of entities and persons

Companies with securities that are publicly traded in the US (i.e., “issuers”) and their officers, directors, employees agents and shareholders

Any U.S.-organized business or entity, any business with principal place of business in the U.S., as well as US citizens and residents (“domestic concerns”)

Other (i.e., non-U.S.) entities and individuals that take an act in furtherance of a corrupt payment while in the U.S. (i.e., foreign joint ventures, foreign subsidiaries)

Accounting Provisions – Apply only to “issuers” including non-U.S. issuers and indirectly to their subsidiaries

7


Siemens** $800

Alstom** $772

KBR/Halliburton $579

BAE $400

Total S.A. $398

Alcoa $384

ENI S.p.A. $365

Technip $338

JGC Corporation $219

Daimler** $185

Weatherford $152

Alcatel-Lucent** $137

Avon** $135

Hewlett-Packard $108

Deutsche Telekom / Magyar $95

Marubeni Corporation** $88

Panalpina** $82

Johnson & Johnson** $70

Pfizer / Wyeth** $60

ABB $58

2008

2009

2010 2013

2011

2012

2014

Note: 13 of the top

20 settlements

involve non-US

companies

** Asia-related

8


Alstom and Marubeni (2014)

‒ Marubeni (Japanese MNC) and Alstom (French MNC), and certain Alstom subsidiaries, including a power company in Connecticut, were pursuing a contract together to build a major power plant in Indonesia

‒ Marubeni's bribes in Indonesia helped it and Alstom win a $118 million contract, known as the Tarahan project.

‒ Alstom paid $772m and Marubeni paid $88m in penalties to the US authorities.

‒ Indonesia’s anti-corruption court has also sentenced an Indonesian lawmaker to 3 years’ jail for accepting bribes


Avon (2014)

‒ Avon, an issuer, entered into a settlement with DOJ and SEC for FCPA offences

‒ Settlement payment of US$135 million

‒ Avon China (Avon’s wholly owned subsidiary in China) pleaded guilty to conspiring to violate the accounting provisions of the FCPA

‒ Avon China concealed more than US$8 million given in gifts, cash and non-business meals, travel and entertainment to Chinese government officials in order to obtain and retain business benefits


UK Bribery Act

NB: extraterritorial application of offences

Bribing and being bribed (ss1 & 2)

• offering / promising / giving a bribe

• requesting/agreeing to receive/accepting a bribe

• directly or indirectly

• leading to or in the hope of causing improper performance of a relevant function

• covers public and private sectors

Bribing foreign public officials (s6)

• directly or indirectly offering / promising / giving bribe to FPO to influence them in their capacity as FPO

• to obtain / retain business / business advantage

• defence if advantage given is permitted /required by written law of FPO’s jurisdiction

Corporate offence: failure to prevent

bribery (s7)

• strict liability offence, captures UK entities and foreign entities ‘carrying on a/part of a business’ in UK

• associated person (e.g. employee, agent, distributor) bribes to obtain/retain business / business advantage in conduct of business for the company

• adequate procedures defence


SFO - Focus on "top drawer" cases

The SFO

caseload

Glaxo

Smith-

Kline

Rolls

Royce

EADS

/ GPT

Barclays

ENRC

(Gyrus

Group

Limited)

Olympus

Tesco

LIBOR

Quindell

Sweett

Group

FOREX

David Green: “[t]he SFO is here to investigate and, where appropriate, to prosecute, top drawer fraud,

bribery and corruption… By “top drawer fraud”, I mean cases which undermine UK plc in general and the

City of London in particular.”

G4S/

Serco

Soma Oil and

Gas


Singapore - Corruption statistics

Source: CPIB Press Release (Issued on 2 April 2015)

Average number of

prosecutions per year:

170

In 2014, 77% of cases

investigated were

completed

736 complaints received in

2014

88% conviction

rate in 2014

136 complaints registered

for investigation


China – Corruption statistics

Legislative Reforms

and Updates


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United Nations Convention against

Corruption (UNCAC)

‒ Adopted in 2003

‒ 177 signatories as of September 2015

Aus, NZ, China, India, South Korea, ASEAN

‒ Incorporates a comprehensive set of standards for all

signatories to apply, to strengthen their regimes

against corruption

‒ Requires signatories to enact anti-corruption laws that

criminalise bribery of public officials, including local

officials, foreign officials as well as officials of public

international organisations.


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Anti-corruption Legislation in Asia Pacific

Country

Bribery of

domestic public

officials

Bribery of foreign public officials

Bribery in private sector

Bribery via intermediary

FCPA (US) Yes Yes No Yes

Bribery Act (UK) Yes Yes Yes Yes

Australia Yes Yes Yes Yes

China Yes Yes Yes Yes

Hong Kong Yes Not specifically Yes Yes

India Yes

Relevant bill under

review No

"Aiding" and

"abetting"

Indonesia Yes No

Only on grounds of

public interest Yes

Japan Yes Yes No Yes

Malaysia

Yes Yes Yes

Yes for foreign

public officials,

silent on domestic

public officials

New Zealand Yes Yes Yes Yes

Philippines Yes No

Only in limited

circumstances Yes

Singapore Yes Yes Yes Yes

South Korea Yes Yes Yes Yes

Thailand Yes

Yes (July 2015

amendment)

Only in bidding for

state contracts Yes

Vietnam Yes No No Yes


Legislative Updates

‒ Recent legislative developments center around

criminalization of foreign bribery.

‒ ASEAN:

Creation of single market gives rise to need for level

playing field for companies and economies.

Bribery of foreign public officials has become a key

concern due to the regional economic progress and the

rising levels of regional trade and investment.


Bribery – A Widespread Problem

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Bribery – A Widespread Problem

20

ASEAN Nation Ranking on Corruptions Perception Index 2014

Singapore 7

Malaysia 50

Philippines 85

Thailand 85

Indonesia 107

Vietnam 119

Laos 145

Cambodia 156

Myanmar 156


ASEAN Regional Cooperation

‒ Regional Meeting on Curbing Foreign Bribery in the

ASEAN Economic Community.

Held in Siem Reap, Cambodia, October 2014

Objectives:

Trigger foreign bribery investigations by clarifying process

of investigation and prosecution of foreign bribery.

Improve international cooperation in foreign bribery cases.

A guidebook is in the pipeline for practitioners to

facilitate mutual legal assistance and international

cooperation in foreign bribery cases in ASEAN


Thailand

‒ Amendments to Anti-Corruption Law in July 2015

To comply with international standards for prevention and

suppression of corruption.

‒ Offences of acceptance and offer of bribes to local and foreign

officials, and agencies of public international organizations.

‒ Allows the National Anti-Corruption Commission to investigate and

file lawsuits for offences under the Anti-Corruption Law with the

courts against officials of Thailand and foreign countries, or any

person from the private sector.

‒ Facilitates cross-border investigations with international

organizations.


Malaysia

‒ Upcoming amendments to Anti-Corruption Commission

Act 2009.

‒ Higher penalties for corruption offences.

Authorities have commented that it is intended as a

prevention measure, rather than punitive.

‒ Provisions for corporate liability

Benchmarking UK Bribery Act 2010.

Sections 7 - Failure of commercial organizations to

prevent bribery.


India

‒ Prevention of Bribery of Foreign Officials and Officials

of Public International Organizations Bill.

‒ Criminalizes accepting or giving bribes to foreign public

officials.

‒ Jail sentence of up to 7 years.

‒ Prosecution for passive bribery where offence is

committed partly or wholly in India.

‒ Extra-territorial effect.


Indonesia

‒ State Ministry of National Development Planning is

preparing new anti-corruption legislation.

‒ Primary focus on preventive measures.

‒ Bring Indonesia in line with the UNCAC.

‒ Instruct Indonesian state institutions on:

Preventive measures.

Identification of signs of violations and illegal use of

state funds.


Vietnam

‒ Draft Penal Code issued for public comments earlier

this year.

‒ Extension of criminal liability to juridical persons.

‒ Corporate liability for corruption offences.

‒ Penalties:

Fines.

Forcible termination of businesses.

Forcible revocation of business licenses.


Interesting Developments

‒ Going beyond the UNCAC.

‒ Legislation which criminalize foreigners who bribe

domestic officials.

‒ From July 2015, death penalty for foreigners who

partake in bribery of public officials in Thailand.

‒ Indonesia’s Corruption Eradication Commission to

investigate and take action against foreign parties who

bribe domestic officials.


New Zealand

‒ Organized Crime and Anti-Corruption Legislation Bill

proposed.

‒ Has yet to ratify UNCAC.

‒ Penalties will be increased for private sector bribery,

bringing them in line with the public sector.


China ‒ 9th Amendment to Criminal Law.

‒ Takes effect on 1 November 2015.

‒ Criminal liability on those who offer bribes to close

relatives and individuals with connections to state

officials.

‒ Monetary fines.

‒ Prolonged jail sentences to prevent early release by

illegal means.


Singapore

‒ Recent High Court decision clarifies sentencing

guidelines for public and private sector bribery.

PP v Syed Mostafa Romel [2015]

‒ Both public and private sector bribery can attract

custodial sentences.

‒ Consider precise nature of corruption.

‒ Where corruption involves interference with or

deprivation of a person’s legitimate rights unless a

bribe is paid, a custodial sentence can be expected.

Enforcement


TRACE Global Enforcement Report 2014: Investigations Concerning Bribery

of Domestic Officials by Country (ex US)

TRACE International, Inc., 'Global Enforcement Report 2014',


Enforcement Trends

‒ Clear increase in number of reported cases following

successful investigations.

‒ Robust efforts by authorities to look into anti-bribery,

compliance and regulatory issues across the region.

‒ Strong emphasis on corporate governance and internal

investigations.

‒ Increase in resources and manpower to manage

increased caseload.


Australia

‒ 2nd ever foreign bribery prosecution in March 2015.

‒ Against 2 directors of a construction company for

allegedly bribing Iraqi government officials.

‒ Significant number of ongoing bribery investigations,

majority of which involve foreign bribery.

‒ Investigations increasingly cross-border.

‒ Collaboration between the authorities in different

countries.


China

‒ Operation Fox Hunt 2014

‒ “Tigers” and “Flies”

‒ Operation Sky Net 2015

‒ Targeting fugitives in US, UK, France, Canada, New

Zealand, Australia, Thailand, HK, and Singapore.

‒ Record fines for foreign companies involved in bribery

of domestic officials.


Hong Kong

‒ Independent Commission against Corruption’s

investigation in December 2014.

‒ Successful conviction of former Chief Secretary for

Administration and property tycoon.

‒ Both were sentenced to jail.

‒ The tycoon made payments and unsecured loans to

the former Chief secretary in excess of HK$34 million.


Singapore

‒ High profile corruption cases.

‒ CPIB former senior public official jailed for

misappropriation of government funds.

‒ SCDF former senior official jailed for receiving sexual

favors.

‒ Significant increase in CPIB conviction rates.

Policies and Practices


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Policies and Practices

‒ Dedicated agencies for anti-corruption enforcement to

coordinate anti-corruption operations.

‒ Increase in manpower and resources of anti-corruption

agency.

‒ Whistleblowing or reporting agencies.

‒ Protection for whistleblowers.

‒ Regional cooperation: APEC ACT-NET (Network of

Anti-Corruption Authorities and Law Enforcement

Agencies).

What lies ahead?


Asia is Catching Up

‒ Corruption laws brought in line with international

standards.

‒ Collaboration between anti-corruption authorities

‒ Increase in investigations

‒ Increase in convictions and tougher penalties

‒ Education and policies


42

‒ Control Risks Survey 2015 on International Business

Attitudes to Corruption

Control Risks Survey 2015 International Business Attitudes to Corruption Survey, page 7


43

Positive impact on economy

‒ Corruption remains a major cost for companies which

engage in honest business practices.

‒ Companies are still deterred from doing business in

certain countries due to risk of corruption

‒ Tough extra-territorial, anti-corruption laws are seen to

be a force for good.

‒ Honest companies in countries perceived to be more

corrupted also welcome tough extra-territorial laws.


Importance of compliance

‒ Importance of strong corporate compliance program

within organizations.

‒ OECD Foreign Bribery Report emphasized need for

more effective due diligence and oversight through

corporate compliance programs.

‒ Leadership, risk assessment, standards and controls,

training and communication, and oversight.


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Q&A Session

Thank you

[email protected]

Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm.

Documents

Catching up with Corruption in the Asia Pacific Region · 2015-11-06 · Baker & McKenzie.Wong & Leow is incorporated with limited liability and is a member firm of Baker & McKenzie