CMS Roundup of Bribery & Corruption developements: the Verdict ed. 2

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POLANDArkadiusz KorzeniewskiPartnerT +48 22 520 5658E arkadiusz.korzeniewski@ cms-cmck.com

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VerdictThe

Round-up of corporate crime developments across CMS

November 2014

The Dutch parliament has recently adopted legislation that will bring the Dutch anti-bribery statutes more in line with international standards such as the UK Bribery Act, whilst simultaneously raising maximum penalties for bribery offences and for corporate defendants generally.

The most signifi cant changes created by the new law are in the area of private sector bribery. To date, Dutch anti-bribery laws have been primarily concerned with protecting the integrity of the relationship between employer and employee. That perspective explains why passive private sector bribery to date has been defi ned as – in short – the acceptance of a gift (or anything of value) whilst wrongfully failing to disclose this acceptance to one’s employer. In mirror image, active private sector bribery is described as the offer of a gift (or anything of value)in circumstances that must give grounds for the giver to believe that the recipient will wrongfully fail to disclose it to his or her employer.The new statute changes the defi nition of private sector bribery to refl ect the model that most modern anti-bribery laws adopt. Under the new defi nition, private sector bribery is where a private sector employee

accepts a gift (or anything of value) in connection with an act he or she will perform or has performed in contravention of his or her duty. Active private sector bribery is now defi ned as offering a gift (or anything of value) to someone else in connection with the performance of his or her function/ duties, in circumstances that must give grounds for the offeror reasonably to assume that the recipient acts in contravention of his or her duties. The new act explicitly holds that wrongfully failing to disclose the acceptance of the gift (or thing of value) to one’s employer is by defi nition an act in contravention of the employee’s duty, thereby incorporating the old statute in the new statute.

The legislature used this overhaul of anti-bribery and corruption provisions as an opportunity also to raise the maximum penalties for both public and private sector bribery, from 4 and 2 years respectively to 6 and 4 years. Penalties for related offences, most notably money laundering, have also been raised.

In this respect, it is noteworthy that Dutch criminal law is unusual in that it does not distinguish between bodies corporate and individuals. Both can be prosecuted and sentenced for all criminal offences. It is therefore important for corporates to note that the new statute has introduced a new, general maximum fi ne across the board for all corporate defendants for all criminal offences, which is set at 10% of the corporate’s annual turnover for the year prior to the conviction. The fi ne imposed will depend on all the circumstances and will be in the discretion of the court.

Modernisation of Dutch Bribery laws adopted

Dutch spotlight

BELGIUMTwo major bribery cases are making Belgian headlines. In the fi rst case, 31 individuals, amongst whom several managers, players and trainers formerly active in Belgium’s premier league, were prosecuted for active and passive bribery as well as suspected of having fi xed several football matches in the Belgian football competition during the seasons 2004-2005 and 2005-2006. The criminal court of Brussels condemned several players, managers and trainers to fi nes and imprisonment for bribery. The Brussels criminal court has also recently started hearing a case of criminal liability of 12 state employees, 35 building contractors and 24 companies being suspected of having participated in an organized system of corruption almost ten years ago. The companies won public procurement by giving fringe benefi ts to the state employees. The trial will last several months.

BOSNIA AND HERZEGOVINAEnhanced enforcement and new confiscation legislation implemented. In in the recent period, the Prosecutor’s Offi ce of Bosnia and Herzegovina has become signifi cantly more active in the prosecution of corruption cases, and as a result some high ranking offi cials, such as the former Director of the Indirect Taxation Authority of Bosnia and Herzegovina, have been prosecuted on the basis of allegations for corruption and abuse of power. As to legislative developments, a new Law on confi scation of property illegally acquired by criminal offences will enter into force for the Federation of Bosnia and Herzegovina (hereinafter: “FBiH”), on March 03, 2015. This Law regulates the conditions and procedure for confi scation of material gain acquired by criminal offense in FBiH, and also regulates the procedure of managing of temporary and permanent confi scated property even establishing a seperate authority for the management of such property.

ITALYHarsher penalties considered for “self-laundering” in Italy. In 2014, a number of legislative initiatives have been put forward, both by the Italian parliament and the Italian government, to tighten the rules on “self-laundering”, i.e. money laundering committed by the person that contributed in the crime that gave rise to the proceeds. All these initiatives provide for stiff penalties (in some cases up to 12 years imprisonment). The proposed amendments are the subject of intense

parliamentary debate, since they all have a different scope. According to one proposal, self-laundering would be limited to investment of proceeds of crime in economic, fi nancial or speculative activities. According to another, penalties would be higher if the offence is committed in connection with a bank, fi nancial or any other professional activity, or in the exercise of the offi ce of director, auditor or liquidator. A third proposal however, excludes punishment for self-laundering of moneys that were allocated “in order to use them or for personal enjoyment”.

POLANDIncreased activity of the Polish Central Anti-Bribery Bureau (CBA) and focus on corporate criminal liability. The CBA is conducting an increasing amount of investigations involving bribery of public offi cials, in particular in the IT, construction and pharmaceutical sectors. The Head of the CBA – Paweł Wojtunik – announced that the CBA and the prosecutors intend to initiate more proceedings against companies, whose managers or employees have been convicted of bribery. This also includes investigating older cases where the conviction of the manager/employee took place even several years ago. The companies found liable in separate criminal proceedings based on the 2002 Act on liability of collective entities for acts prohibited under pain of punishment may be obliged to return the benefi t obtained by virtue of the crime, face fi nes of up to circa €1,200,000, as well as other sanctions such as debarment from bidding in public tenders or ban on advertising. So far the authorities seldom initiated proceedings against corporate entities (less than 1,000 cases since 2002) but the above announcement suggests that the situation may soon change.

PORTUGALFinal verdict issued in major Portuguese corruption case. Following more than two years of court hearings, the Criminal Court of Aveiro issued the fi nal verdict in a major corruption case, involving some former members of government and other head fi gures of Portuguese politics and their alleged involvement in benefi tting waste management companies, in agreements entered between said companies and public-held companies. The verdict condemned all defendants either to prison or the payment of fi nes, in great part due to evidence collected through phone-tapping. CMS represented two defendants in the criminal proceedings and is currently preparing the appeal aigainst

the verdict. The team is composed by Joaquim Shearman de Macedo, Paulo Trindade and Rui Real.

RUSSIAGuidelines issued on bribery and corruption prevention. Since 1 January 2013 organisations are under a general statutory duty to implement measures to prevent bribery and corruption. On 16 April 2014 the Russian Ministry of Labour and Social Protection issued Guidelines on the Development and Implementation of Anti-corruption Measures These Guidelines provide eight principles for bribery and corruption prevention: conformity of an organisation’s anti-corruption policy with current legislation and generally accepted rules; top-level commitment by setting an example; staff involvement; proportionate anti-corruption measures; effi ciency of anti-corruption measures; liability and inevitability of sanctions; business transparency; and constant control and regular monitoring. In addition to standard compliance measures the Guidelines describe in detail measures mainly directed at employees such as: introducing a Code of professional ethics and conduct; implementing regulations on confl icts of interest; including anti-corruption provisions in employment contracts and internal work regulations; and ensuring that employees complete declarations on any confl icts of interest. Importantly, it is a legal requirement to have such procedures and policies introduced so that non-compliance can be prosecuted whether or not there is an actual bribery offence.

UKUK Government considering expanding corporate bribery offence. The UK Government, following lobbying from the Serious Fraud Office (the lead investigator and prosecutor of serious economic crime), has said it is considering expanding the scope of the corporate offence under the Bribery Act of failing to prevent bribery, to encompass all types of fraud. The offence has a defence where the corporate can demonstrate that it has in place adequate procedures designed to prevent bribery (or, possibly, in future fraud). If implemented, this would have a major impact on the concept of corporate criminal liability generally and make it easier to prosecute corporates when their staff act improperly to win business. It will also, implicitly, impose almost regulatory-style obligations on all businesses to implement anti-fraud controls. There is no current timetable for this proposal to be implemented.

CMS round-up