New EU-wide whistle-blower rules approved

On April 16, the European Parliament voted(1) in favor of adopting new European Union (“EU”) wide standards to protect whistle-blowers. The standards are designed to protect whistle-blowers that reveal breaches of EU law in areas of public procurement, financial services and tax, money laundering, product and transport safety, protection of the environment, food and feed safety, animal health and welfare, nuclear safety, public health, security of network and information systems, competition, consumer and data protection, fraud, corruption and any other illegal activity affecting the use of Union expenditures.

The new rules allow whistle-blowers to disclose information either internally to the responsible legal entity, or national authorities, as well as any relevant EU institutions, bodies, offices, and agencies. The law prohibits reprisals and includes safeguards preventing the whistle-blower from being suspended, demoted or from facing other types of retaliation.

Recent scandals such as LuxLeaks, Panama Papers and Football leaks have helped to shine a light on the great precariousness that whistle-blowers suffer today. On the eve of European elections, Parliament has come together to send a strong signal that it has heard the concerns of its citizens, and pushed for robust rules guaranteeing their safety and that of those persons who choose to speak out.” - Virginie Roziere (S&D, FR)

Some Adopted Text

Persons who work for a public or private organisation or are in contact with it in the context of their work-related activities are often the first to know about threats or harm to the public interest which arise in this context. By ‘blowing the whistle’ they play a key role in exposing and preventing breaches of the law that are harmful to the public interest and in safeguarding the welfare of society. However, potential whistleblowers are often discouraged from reporting their concerns or suspicions for fear of retaliation. In this context, the importance of providing balanced and effective whistleblower protection is increasingly acknowledged both at European and international level.”(2)

To enjoy protection, the reporting persons should reasonably believe, in light of the circumstances and the information available to them at the time of the reporting, that the matters reported by them are true. This is an essential safeguard against malicious and frivolous or abusive reports, ensuring that those who, at the time of the reporting, deliberately and knowingly reported wrong or misleading information do not enjoy protection. At the same time, it ensures that protection is not lost where the reporting person made an inaccurate report in honest error. In a similar vein, reporting persons should be entitled to protection under this Directive if they have reasonable grounds to believe that the information reported falls within its scope. The motives of the reporting person in making the report should be irrelevant as to whether or not they should receive protection.”(2)

Next Steps

EU ministers now need to approve the law. Once approved, member states will have two years to come into compliance with the law.

GCSG Advisory Professionals will be keeping up with the progress of this legislation. Contact us to learn more.

References

New DOJ Corporate Compliance Program Guidance

The US Department of Justice - Criminal Division (“USDOJ”) announced(1) on April 30 the release of a new guidance document(2) on the evaluation of corporate compliance programs.

Effective compliance programs play a critical role in preventing misconduct, facilitating investigations, and informing fair resolutions.”(1) - Assistant Attorney General Brian A. Benczkowski

Part I of the document discusses the elements of a “well-designed” compliance program and Part II discusses the features of what an effectively implemented compliance program looks like.

There are three overarching questions prosecutors will ask themselves, when evaluating the effectiveness of a compliance program, at the time of an offense and at the time of a charging decision(2,3):

  • Is the program well designed?

  • Is the program effectively implemented (or applied earnestly and in good faith)?

  • Does the compliance program actually work in practice?

According to the USDOJ’s guidance, the elements of a “Well-Designed” Compliance Program include:

  • Risk Assessment - “Prosecutors should consider whether the program is appropriately designed to detect the particular types of misconduct most likely to occur in a particular corporation’s line of business” and “the manner in which the company’s compliance program has been tailored based on that risk assessment”

  • Policies and Procedures - “Prosecutors should examine whether the company has a code of conduct that sets forth, among other things, the company’s commitment to full compliance with relevant Federal laws that is accessible and applicable to all company employees” and “whether the company has established policies and procedures that incorporate the culture of compliance into it’s day-to-day operations.”

  • Training and Communications - “Prosecutors should assess the steps taken by the company to ensure that policies and procedures have been integrated into the organization, including through periodic training and certification for all directors, officers, relevant employees, and where appropriate, agents and business partners.”

  • Confidential Reporting Structure and Investigation Process - “Prosecutors should assess whether the company’s complaint-handling process includes pro-active measures to create a workplace atmosphere without fear of retaliation, appropriate processes for the submission of complaints, and processes to protect whistleblowers” and “assess the company’s processes for handling investigations of such complaints…”

  • Third-Party Management - “Prosecutors should also assess whether the company knows its third-party partners’ reputations and relationships, if any, with foreign officials, and the business rationale for needing the third party in the transaction” and “assess whether the company engaged in ongoing monitoring of the third-party relationships"…”

  • M&A Due Diligence - “A well-designed compliance program should include comprehensive due diligence of any acquisition targets.”

Today’s guidance document is part of our broader efforts in training, hiring, and enforcement to help promote corporate behaviors that benefit the American public and ensure that prosecutors evaluate the effectiveness of compliance in a rigorous and transparent manner.”(1) - Assistant Attorney General Brian A. Benczkowski

DOJ prosecutors are encouraged to review whether or not a compliance program is a “paper program” or one that has actually been “implemented” and is periodically reviewed and revised when appropriate. According to DOJ guidance some elements of an effectively implemented program include:

  • Commitment by Senior and Middle Management

    • Does the company leadership demonstrate high level commitment to implement a culture of compliance?

  • Autonomy and Resources

    • Is the program adequately resourced with sufficient personnel and funding?

    • Are compliance personnel in senior positions and do they have adequate autonomy?

  • Incentives and Disciplinary Measures - “Prosecutors should assess whether the company has clear disciplinary procedures in place, enforces them consistently across the organization, and ensures that the procedures are commensurate with the violations.”

  • Continuous Improvement, Periodic Testing, and Review - “Prosecutors should likewise look to whether a company has taken reasonable steps to ensure that the organization’s compliance and ethics program is followed, including monitoring and auditing to detect criminal conduct.”

  • Investigation of Misconduct

    • Is there a well-functioning and appropriately funded mechanism for the timely and thorough investigation of any allegations or suspicions of misconduct by the company, its employees, or agents?

  • Analysis and Remediation of Any Underlying Misconduct - “Prosecutors should consider any remedial actions taken by the corporation…”

Contact GCSG Advisory and Audit Professionals today for assistance:

  • In developing a Risk Profile for your business;

  • Evaluating the effectiveness of your existing compliance program;

  • Implementing a compliance program;

  • Providing third-party due diligence; and

  • Providing in-depth compliance audits to detect potential wrongdoing.

References

ICC issues conflict of interest guidelines

The International Chamber of Commerce (ICC)(1) recently published enterprise guidelines for conflicts of interest.(2) The guidelines were prepared by the ICC’s Commission on Corporate Responsibility and Anti-Corruption.

The guidelines “provide recommendations to Enterprises on how to monitor and manage Conflicts of Interest facing their directors, officers, employees, agents and representatives.”(3)

Managing conflict of interest situations is important to the governance of any organization. If these situations are not properly managed they have the potential to result in instances of corruption and ultimately a loss of integrity for the organization. The ICC Rules on Combating Corruption say the following about Conflicts of Interest:

“Conflicts of interest may arise when the private interests of an individual or of his/her close relatives, friends or business contacts diverge from those of the Enterprise or organisation to which the individual belongs. These situations should be disclosed and, wherever possible, avoided because they can affect an individual’s judgment in the performance of his/her duties and responsibilities. Enterprises should closely monitor and regulate actual or potential conflicts of interest, or the appearance thereof, of their directors, officers, employees and agents and should not take advantage of conflicts of interest of others.”(4)

Conflicts of Interest, if left unresolved, can result in corrupt practices within an organization.

For more information on how to establish Conflict of Interest policies within your organization Contact GCSG’s Compliance and Ethics professionals.

References:

  1. ICC - “International Chamber of Commerce - Home Page

  2. ICC - “Guidelines on Conflicts of Interest in Enterprises” - Web page

  3. ICC - “Guidelines on Conflicts of Interest in Enterprises.pdf

  4. ICC - “Rules on Combating Corruption” - Web Page

Weekly Compliance News - Around the World

GCSG's Weekly Compliance News feature is a compilation of some of the previous weeks interesting trade compliance, anti-bribery and corruption, fraud, and due diligence news bites, from around the world.

Global Executives Cooling on M&A Deals Amid Trade Uncertainty | Industrial Distribution

"Executives around the world are cooling to the idea of mergers and acquisitions in the face of rising trade tensions, notably between the U.S. and China, a leading adviser on international corporate deals said Monday." (Click here for the article) - Global

US Imposes Additional Sanctions on Russia | Thompson Hine

"The United States has announced additional financial sanctions on three individuals and nine entities supporting Russia’s attempt to integrate the Crimea region of Ukraine through private investment and privatization projects or engaging in serious human rights abuses in furtherance of Russia’s occupation or control over parts of Ukraine." (Click here for the article) - EU, US, Russia, Ukraine

Africa church leaders join fight against graft | The FCPA Blog

"Eliud Wabukala, a retired Anglican archbishop, became chairman of Kenya's Ethics and Anti-Corruption Commission in 2017. In September, he launched a bible-based anti-graft campaign that includes an anti-corruption bible study." (Click here for the article) - Kenya, Africa

The Growing Menace of Cyber Attacks in the Asia-Pacific region | Entrepreneur Asia Pacific

"Over the past few years, cyber attacks have emerged as one of the biggest global threats to businesses and governments. In September, the largest social networking platform, Facebook announced that data of at least 50 million accounts have been exposed to hackers through a breach." (Click here for the article) - Asia-Pacific region

Top Ten Things to Know About Expanded US Sanctions on Iran | Latham & Watkins

"As reported in the Latham Client Alert dated May 10, 2018, President Trump announced on May 8 that the United States was withdrawing from the Joint Comprehensive Plan of Action (JCPOA), the January 2016 nuclear non-proliferation agreement among China, France, Germany, Russia, the United Kingdom, the US and Iran..." (Click here for the article) - US, Iran

US DOJ Unveils New China Initiative | Thompson Hine

"On November 1, 2018, U.S. Attorney General Jeff Sessions announced the creation of a “China Initiative” aimed at identifying priority Chinese trade theft cases for investigation and enforcement." (Click here for the article) - US, China

Illicit Procurement Network Used Firms in China, Portugal, and Turkey to Supply Iran | Iran Watch

"A recently unsealed indictment provides detail on Iran’s use of deceptive practices to procure export controlled items with military applications from the United States and elsewhere. The indictment details an elaborate, multi-year conspiracy directed by an Iranian-born Canadian to procure such items for an Iranian firm, with help from co-conspirators in China, Portugal, and Turkey." (Click here for the article) - US, Iran, Canada, China, Portugal, Turkey

Romanian anti-corruption prosecutors targeted by new work requirement| Euractiv

"Romanian prosecutors said they feared for their jobs and the rule of law after a new government ordinance increasing the years of professional experience required of them was published...Prosecutors will now need at least 10 years experience to work in the country’s National Anti-corruption Directorate, the anti-mafia bureau or the Public Prosecutor’s office." (Click here for the article) - EU, Romania

Weekly Compliance News - Around the World

GCSG's Weekly Compliance News feature is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

EU and Japan to Recognize the Other’s Persona Data Protection System | JDSupra - K&L Gates LLP

"On 17 July 2018, the EU and Japan reached an agreement to recognize each other’s data protections systems as “equivalent”, and each commits to complete internal procedures by fall 2018 (the “Data Agreement”). Once adopted, this will allow businesses to transfer personal data from the European Economic Area to Japan and vice versa without being required to provide further additional safeguards for each transfer." (Click here for the article) - EU, Japan

Chinese Intelligence Officer Charged with Economic Espionage | US DOJ

"A Chinese Ministry of State Security (MSS) operative, Yanjun Xu, aka Qu Hui, aka Zhang Hui, has been arrested and charged with conspiring and attempting to commit economic espionage and steal trade secrets from multiple U.S. aviation and aerospace companies.  Xu was extradited to the United States yesterday." (Click here for the article) - USA, China

Cyber Tests Showed ‘Nearly All’ New Pentagon Weapons Vulnerable to Attack | NPR

"Passwords that took seconds to guess, or were never changed from their factory settings. Cyber vulnerabilities that were known, but never fixed. Those are two common problems plaguing some of the Department of Defense's newest weapons systems, according to the Government Accountability Office." (Click here for the article) - USA, China

Security firm uncovers new cyber group targeting government and military sectors | The Hill

"A new cyber group appears to have been targeting government and military organizations this past year as part of an espionage campaign, a security firm said on Wednesday." (Click here for the article) - Eastern Europe, Middle East

Oil Industry snubs EU effort to defy US sanctions on Iran | Financial Times

"Big European oil companies are spurning the EU’s attempt to shield Iranian crude from US sanctions because of fears the effort would leave businesses exposed to harsh penalties from the Trump administration." (Click here for the article) - Europe, Iran, USA

Mitigating Compliance Pitfalls in Manufacturing | Manufacturing.net

"The U.S. Department of Justice and the Securities and Exchange Commission have stepped up efforts recently to enforce the Foreign Corrupt Practices Act (FCPA). For manufacturers, this involves regulations surrounding exports and international conduct, including those related to U.S. economic sanctions and export control laws." (Click here for the article) - USA

French ports planning for ‘No-Deal’ Brexit | freightweek

"Norlink Ports, an association of 25 ports and inland gateways in the northern Hauts-de-France region, is planning measures to reduce the commercial impact of Britain leaving the European Union without a trade agreement." (Click here for the article) - UK, France, EU

Three Audit Employees Investigated in Probe of Vehicle Certifications | WSJ

"German prosecutors have launched an investigation into three employees of Volkswagen AG’s luxury car unit Audi suspected of falsifying documents to obtain roadworthiness certifications needed for vehicles to be exported to South Korea…" (Click here for the article) - Germany, South Korea

Countries Face Rising Exposure to Money Laundering | WSJ

"More countries are showing heightened risks of exposure to money laundering, according to an annual ranking of countries assessing their money-laundering risk." (Click here for the article) - Global

Weekly Compliance News - Around the World

GCSG's Weekly Compliance News feature is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

China Tariffs - List 3 Finalized and Taking Effect | Mitchell Silberberg & Knupp LLP

"At the end of the day on September 17, 2018, the U.S. Trade Representative issued notice that List 3 of the China tariffs has been finalized and takes effect with a 10% tariff on September 24, 2018." (Click here for the article) - USA, China

China eases up on winter smog fight as it battles American trade war headwinds  | SCMP

"China will be less severe with its smog curbs this winter as it grapples with slower economic growth and a trade war with the United States, according to a government plan released on Thursday." (Click here for the article) - USA, China

Ferraris, diamond rings: 3 men indicted in massive $364 million Ponzi scheme | USA Today

"Three men have been indicted in an alleged $364 million ponzi scheme that had more than 400 victims who funded their lavish lifestyle, featuring luxury cars, pricey homes and expensive jewelry, federal authorities said." (Click here for the article) - USA

Paris set to triumph as Europe’s post-Brexit trading hub | Financial Times

"Paris is emerging as the favored financial trading hub for continental Europe, as some of the world’s biggest banks and asset managers prepare for life after Brexit by steering their EU operations away from London to the French capital." (Click here for the article) - UK, France, European Union

US reaches trade deal with Canada and Mexico | Politico

"Trade ministers from the U.S., Mexico and Canada have reached a deal to revamp the North American Free Trade Agreement, the Trump administration announced late Sunday night." (Click here for the article) - USA, Mexico, Canada

Rules of Origin are too complicated | FOOD navigator

"Complex rules of origin labelling requirements inhibit trade and SMEs pay a particularly heavy price, trade bodies amfori and EuroCommerce warn. Speaking at a conference on rules of origin in Brussels, the heads of both associations argued that unless rules of origin requirements are reformed, they will continue to discourage European companies from taking advantage of ‘hard won concessions’ in free trade agreements." (Click here for the article) - European Union

North Korean hacking group tried to steal over $1Bn | FireEye

"This new FireEye report reveals a North Korean hacking group tried to steal over $1 billion from banks worldwide." (Click here for the article) - North Korea, Global

USMCA Provision Could Deter Trade Agreements with China | ST&R

"A provision in the updated NAFTA concluded this past weekend could make it more difficult for Canada and Mexico to pursue potential free trade agreements with China. Observers say the Trump administration could look to insert a similar provision in possible FTAs with the European Union and Japan as part of its effort to pressure Beijing to advance economic reforms." (Click here for the article) - USA, Mexico, Canada, China

Dubai enacts changes to anti-money laundering rules | The National

"The Dubai government has enacted changes to the Dubai International Financial Centre's anti-money laundering laws following a self-assessment of the free zone’s capacity to fight financial crime." (Click here for the article) - UAE

Hong Kong Freezes Chairman Assets, Alleges $1.3 Billion Con | Bloomberg

"Hong Kong’s securities regulator froze the assets of an unnamed chairman of a public company on suspicion of fraud totaling $1.3 billion. The person may have conducted two suspicious transactions to make significant profits, the Securities and Futures Commission said in a statement..." (Click here for the article) - Hong Kong, China

Weekly Compliance News - Around the World

GCSG's Weekly Compliance News feature is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

Europe, Russia and China join forces with a new mechanism to dodge Iran sanctions | CNBC

"In the latest sign of the growing divide between Washington and its allies, the European Union's foreign policy chief announced Monday that the bloc was creating a new payment mechanism to allow countries to transact with Iran while avoiding U.S. sanctions." (Click here for the article) - USA, Russia, China, European Union

China says US trying to force it to submit on trade as new tariffs kick in | Reuters

"The United States and China imposed fresh tariffs on each other’s goods on Monday as the world’s biggest economies showed no signs of backing down from an increasingly bitter trade dispute that is expected to hit global economic growth." (Click here for the article) - USA, China

Novartis links bonuses to ethics in bid to rebuild reputation | GAN Integrity Inc.

"Swiss drug maker Novartis has revealed its employees only get a bonus if they meet or exceed expectations for ethical behavior as it seeks to address past shortcomings that have damaged its reputation." (Click here for the article) - Switzerland, USA, South Korea, China

Japan mulls bilateral trade deal with U.S. | Reuters

"Japan is mulling a bilateral trade agreement with the United States that would lower tariffs on U.S. agriculture imports in exchange for avoiding higher tariffs on Japanese autos, the Nikkei newspaper said on Saturday." (Click here for the article) - Japan, USA

Potential NAFTA collapse poses major risk to Canada | Financial Post

"Canada’s economic growth could be pared by about a quarter next year if the North American Free Trade Agreement collapses, and the drag will be extended if an automobile trade war emerges, according to a new Conference Board forecast." (Click here for the article) - Canada, USA

British inquiry intensifies Danske Bank money laundering scandal | Reuters

"Danske Bank’s money laundering scandal spread on Friday to Britain where the National Crime Agency said it is investigating the use of UK-registered companies." (Click here for the article) - Finland, Denmark, Estonia, Russia, UK

BASF commits to complying with US sanctions on Iran | Politico

"German chemical giant BASF has made a firm commitment to comply with all U.S. sanctions against Iran, becoming the latest in a string of large European companies to back away from ambitious plans to invest in the Islamic Republic following Washington’s withdrawal from the Iran nuclear deal." (Click here for the article) - Germany, Iran, USA

US Sanctions Russia and China-based IT companies for connections to DPRK | WorldECR

"The US Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) has sanctioned a Chinese IT company, its Russian counterpart and its North Korean CEO, targeting revenue repatriated to North Korea (‘DPRK’) through overseas IT workers." (Click here for the article) - Russia, China, North Korea, USA

Weekly Compliance News - Around the World

GCSG's Weekly Compliance News feature is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

US President signs miscellaneous tariff bill - eliminates tariffs | crowell moring

"On September 13, 2018, President Trump signed the Miscellaneous Tariff Bill (MTB) Act of 2018, which temporarily reduces or eliminates import duties on specified raw materials and intermediate products used in manufacturing that are not produced or available domestically." (Click here for the article) - USA

Danske Bank CEO quits over $234 billion money laundering scandal | Reuters

"Danske Bank’s chief executive Thomas Borgen resigned on Wednesday after an investigation revealed payments totaling 200 billion euros ($234 billion) through its small Estonian branch, many of which the bank said were suspicious." (Click here for the article) - Estonia, Russia, Denmark, European Union

U.S.’s Ross says China must decide on trade talks | CNBC

"It is up to Beijing to take the next steps on trade talks, U.S. Commerce Secretary Wilbur Ross said on Tuesday as China vowed to retaliate after U.S. President Donald Trump imposed initial duties on $200 billion worth of Chinese goods." (Click here for the article) - China, USA

US Legislation Gives BIS Greater Powers | WorldECR

"The US Department of Commerce’s Bureau of Industry and Security (‘BIS’) has been given statutory authority under the Export Control Reform Act (‘ECRA’), to control certain exports. The act was signed into law by President Trump on 13 August." (Click here for the article) - USA

Europe Moves to Target Money Laundering in Response to Scandals | WSJ

"Europe threw a one-two punch to fight money laundering on Wednesday, with the European Commission proposing enhanced powers for a regulator and lawmakers passing a package of new rules." (Click here for the article) - European Union

Foreign Bribery Rages Unchecked in over half of Global Trade | Transparency International

"Transparency International’s new report, Exporting Corruption, finds that only 11 major exporting countries - accounting for about a third of world exports - have active or moderate law enforcement against companies bribing abroad in order to gain mining rights, contracts for major construction projects, purchases of planes and other deals." (Click here for the article) - Global

Canada returning to NAFTA talks earlier than expected | CBC

"NAFTA talks are resuming at the decision-maker level sooner than expected, with Canada's foreign affairs minister set to return to Washington on Tuesday." (Click here for the article) - Canada, USA, Mexico

Weekly Compliance News - Around the World

GCSG's Weekly Compliance News feature is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

Retaliatory tariffs on US chem exports to China threaten $18Bn in economic harm | ICIS

"The $11Bn worth of tariffs on US chemical exports enacted by China put almost $18Bn in domestic activity at risk along with nearly 55,000 US jobs..." (Click here for the article) - USA, China

New Sanctions Against Russia Have Unfavorable Impact on Defense Sector | BakerHostetler

"the U.S. State Department published new sanctions against Russia based on the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 after determining that the government of Russia had used chemical weapons in violation of international law..." (Click here for the article) - USA, Russia

Trump Rejects EU Offer to Remove Tariffs on Industrial Goods | ST&R Trade Report

"President Trump said Aug. 30 that a European Union offer to remove all tariffs on two-way trade in automobiles and other industrial goods is "not good enough."  (Click here for the article) - USA, European Union

'Urgency' for Asia Pacific mega trade deal | CNBC

"While the administration of U.S. President Donald Trump is considering slapping another $200 billion in tariffs on Chinese goods, 16 economies in Asia Pacific are racing to conclude a mega trade deal that would become the largest trading bloc in the world." (Click here for the article) - 10 ASEAN nations plus China, Japan, South Korea, India, Australia, New Zealand, 

EU lifts five-year old restrictions on solar panels from China | South China Morning Post

"The European Union will end its five-year-old restrictions on solar panel imports from China, officials said on Monday, as Brussels and Beijing increase their own trade cooperation in the face of protectionist steps from the United States." (Click here for the article) - EU, China

Kim struggles to revive North Korean economy battered by sanctions | Nikkei Asian Review

"In the two and a half months since his historic summit with U.S. President Donald Trump, North Korean leader Kim Jong Un has temporarily shelved de-nuclearization talks in favor of inspecting farms and factories to underscore his focus on improving an economy hamstrung by years of sanctions." (Click here for the article) - USA, North Korea, South Korea

Trump reportedly wants to hit China with tariffs on $200Bn worth of goods | Business Insider

"Bloomberg reported Thursday that Trump had told aides that he wants to follow through on a threat to impose tariffs on another $200 billion worth of Chinese goods as early as next week. That would mean more than half of all Chinese imports would be subject to tariffs." (Click here for the article) - USA, China

China may soon regret slapping tariffs on US soybeans | CNN Money

"One of China's major moves in the trade war with the US is in danger of backfiring on its own farmers.  They're facing a potential shortage of soybeans, one of China's biggest imports from the United States, after Beijing slapped a 25% tariff on them last month in retaliation for US tariffs on a swath of Chinese goods." (Click here for the article) - USA, China

Former DP World Manager must pay Dh5 million fine over bribe plot | The National UAE

"A former DP World manager who sought bribes from two companies in exchange for helping them win lucrative construction projects has had her 18-month jail term upheld – and been told she must still pay a fine of nearly Dh5 million." (Click here for the article) - UAE

Wells Fargo bankers fired after falsifying dinner receipts | Fox Business

"Yet another scandal has reportedly broken out at Wells Fargo.  The bank has fired or suspended at least a dozen employees at its investment bank - Wells Fargo Securities - over allegations these individuals doctored after-hours dinner receipts..." (Click here for the article) - USA

An overview of the Danske Bank money laundering scandal | Berlingske Business

"Berlingske has spent more than a year investigating the extensive money laundering at Danske Bank. Here is an overview of the case – with links to the most important articles (some are in Danish)...For years, large and deeply suspicious money flows were channelled unhindered through Danske Bank’s branch in Estonia – in what experts say was in breach of anti-money laundering laws." (Click here for the article) - Denmark, Estonia, Russia

 

Weekly Compliance News - Around the World

GCSG's Weekly Compliance News feature is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

Cyber Crooks Hit British Law Firms, Steal Over 20 million pounds of client money | KYC360

"UK law firms are increasingly coming under attack from cyber criminals, with attacks costing law firms millions..." (Click here for the article) - UK

US State Department Imposes Sanctions on Russia for Use of Chemical Weapons | Baker McKenzie

"On August 24, 2018, the US State Department gave notice of new sanctions on Russia under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (the “CBW Act”) after determining that the Russian Government has used chemical weapons in violation of international law or chemical or biological weapons against its own nationals." (Click here for the article) - USA, Russia

Microsoft Hit With US Bribery Probe Over Deals in Hungary | WSJ

"Microsoft Corp. is being investigated by U.S. authorities over potential bribery and corruption related to software sales in Hungary, according to people familiar with the matter." (Click here for the article) - Hungary, USA

Company expelled from program for abuse, non-compliance | The Fiji Times

"A RENOWNED automotive company in Fiji has been stripped off from the Revenue and Customs’ Gold Card Services Program for abuse and non-compliance to Customs laws on numerous occasions." (Click here for the article) - Fiji

Nearly Half of Responding Organizations Plan to Modernize Compliance in Year Ahead | Corporate Compliance Insights

"Almost half (48.3 percent) of risk and compliance, internal audit, C-suite executive and board professionals plan to modernize their compliance functions by changing core compliance execution practices during the next 12 months, according to a recent Deloitte poll." (Click here for the article) - Global

Treasury blacklists firms, individuals accused of violating North Korean sanctions | WSJ

"Three South Koreans illegally imported North Korean coal and iron via Russia in violation of sanctions, South Korean customs officials said, exposing a crack in the US-led campaign to cut off trade with the Pyongyang regime." (Click here for the article) - North Korea, Russia, USA

SEC Charges Citigroup for Internal Controls Failure | CFO

"Citigroup agreed to an SEC enforcement action on Thursday that charged the bank with inadequate controls that failed to detect “fraudulently-induced” loans made by a Mexican subsidiary. The failure ultimately resulted in $475 million of losses reported by Citigroup.." (Click here for the article) - Mexico, USA

Oil giant Total has pulled out of Iran and giant gas project | CNBC

"French oil giant Total has officially left Iran and abandoned its deal to develop a giant natural gas field in the country, Iran's oil minister reportedly told state television Monday, leaving the isolated republic to look for a replacement." (Click here for the article) - France, Iran, USA

UK Government to publish no-deal Brexit advice | BBC News

"Three South Koreans illegally imported North Korean coal and iron via Russia in violation of sanctions, South Korean customs officials said, exposing a crack in the US-led campaign to cut off trade with the Pyongyang regime." (Click here for the article) - UK, EU

India passes amendments to 1988 Prevention of Corruption Act

On July 24, 2018 the Indian Parliament passed the Prevention of Corruption (Amendment) Bill 2018 (POCA).(1)  The POCA amends the 1988 Prevention of Corruption Act (PCA).  The POCA was necessary to align the existing law with the United Nations Convention against Corruption (UNCAC).(7)  A previous attempt to amend the PCA in 2013 failed.(2)  For the first time, the law now includes a bribery provision for commercial organizations.  

Background

The Criminal Law (Amendment) Ordinance, 1944(3) was the first law in India that dealt with corruption.  The Prevention of Corruption Act, 1947(4) was enacted to supplement the provisions of the Indian Penal Code of 1860.(5)  Eventually it was determined that the scope of the 1947 law was too narrow and as a result the PCA was enacted in 1988.(6)  The PCA replaced the 1947 Act, widened the scope of the definition of public servant and increased the potential penalty assessments.  An unsuccessful attempt was made in 2013 to amend the PCA in order to align it with the UNCAC(7), as a result of India's ratification of the UNCAC in May of 2011. 

Key Changes within the 2018 POCA   

The 2018 POCA amends various provisions of the 1988 PCA:

  • The giving of a bribe is now a direct offence - however, if you are compelled to give a bribe you will not be charged with the crime if you report it to the authorities within seven (7) days;
  • Includes provisions for both bribing a public servant and the offering of a bribe by a commercial organization (including commercial organizations is NEW);
  • Allows for the prosecution of former public officials - previously only currently serving public officials could be prosecuted;
  • Removes the provision that protected a person offering a bribe from prosecution based on statements they make during a corruption trial;
  • Provides more stringent punishments for bribery - for both the giver and taker (including up to seven years of imprisonment or a fine or both for the person offering a bribe); and
  • Redefines criminal misconduct to only cover misappropriation of property and possession of disproportionate assets.

Key New Text from the 2018 POCA

  • "8. (1) Any person who gives or promises to give an undue advantage to another person or persons, with intention - (i) to induce a public servant to perform improperly a public duty; or (ii) to reward such public servant for the improper performance of public duty; shall be punishable with imprisonment for a term which may extend to seven years or with a fine or with both..."
  • "9. (1) Where an offence under this Act has been committed by a commercial organisation, such organisation shall be punishable with fine, if any person associated with such commercial organisation gives or promises to give any undue advantage to a public servant intending - (a) to obtain or retain business for such commercial organisation; or (b) to obtain or retain an advantage in the conduct of business for such commercial organisation: Provided that it shall be a defence for the commercial organisation to prove that it had in place adequate procedures in compliance of such guidelines as may be prescribed to prevent persons associated with it from undertaking such conduct."
  • "Commercial organisation - means (i) a body which is incorporated in India and which carries on a business, whether in India or outside India; (ii) any other body which is incorporated outside India and which carries on a business, or part of a business, in any part of India; (iii) a partnership firm or any association of persons formed in India and which carries on a business whether in India or outside India; or (iv) any other partnership or association of persons which is formed outside India and which carries on a business, or part of a business, in any part of India..."
  • "(c) a person is said to be associated with the commercial organisation, if such person performs services for or on behalf of the commercial organisation irrespective of any promise to give or giving of any undue advantage which constitutes an offence..."

For more information Contact GCSG's anti-bribery and corruption professionals.

References:

Weekly Compliance News - Around the World

GCSG's Weekly Compliance News feature is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

Sanctions Busters Smuggled North Korean Coal, Iron to the South via Russia | WSJ

"Three South Koreans illegally imported North Korean coal and iron via Russia in violation of sanctions, South Korean customs officials said, exposing a crack in the US-led campaign to cut off trade with the Pyongyang regime." (Click here for the article) - North Korea, South Korea, Russia, USA

Iran Sanctions Wind-Down Period Ends and New Iran Executive Order | Baker McKenzie

"In conjunction with the New Iran EO, the US Treasury Department's Office of Foreign Assets Control issued extensive new guidance on the New Iran EO..." (Click here for the article) - Iran, USA, European Union

FIFA eliminates "corruption" from Code of Ethics | NBC Sports

"FIFA eliminated the word "corruption" from its revised code of ethics during "secret meetings"..." (Click here for the article) - Global

Petrobras recovers $274 million from corruption scandal | Yahoo News

"Brazil's state-owned oil major Petrobras said Thursday that it has recovered 1.034 billion reais ($274 million) in funds embezzled during a giant corruption scandal that badly damaged the company and upended Brazilian politics." (Click here for the article) - Brazil

Customs of Ukraine and Serbia will work together to fight corruption | The Bobr Times

"Ukraine and Serbia signed a document that concerns data interchange between the customs authorities of the two countries and should increase the efficiency of the fight against corruption." (Click here for the article) - Serbia, Ukraine

The Long-Term Impact of Brexit on the European Union | Seeking Alpha

"When the United Kingdom leaves the European Union, higher barriers to trade, capital flows, and labor mobility will affect output and jobs not only in the UK but also in the remaining 27 EU member states." (Click here for the article) - UK, European Union

There's a good chance to reach a NAFTA deal this month | BDP International

"The U.S., Mexico and Canada have a good opportunity to reach a NAFTA agreement this month, and getting there will depend on the political flexibility of the Trump administration, according to the top representative for Mexico's private sector." (Click here for the article) - Mexico, Canada, USA

US, China to resume Trade Talks as Tariffs Bite | WSJ

"The US and China reached a modest breakthrough in their trade dispute, saying they would hold lower-level talks later this month on the spiraling dispute." (Click here for the article) - China, USA

Venezuelan President implicated in US investigation of money laundering | Malta Independent

"Venezuelan President Nicolas Maduro has been implicated in an American investigation for having laundered some 160 million euros through an unnamed Maltese private investment firm..." (Click here for the article) - Malta, Venezuela, USA

Weekly Compliance News - Around the World

GCSG's Weekly Compliance News feature is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

An illusion of choice: the conflicts that mire the audit world | Financial Times

"Most listed companies in Britain and the US use one of the Big Four auditing firms.  No fewer than 98 percent of FTSE 350 consituents have their books vetted by one of KPMG, EY, Deloitte or PwC...Conflicts are often hidden discreetly beneath the surface." (Click here for the article) - Global

Deutsche Bank reports show chinks in money laundering armor | Reuters

"Most listed companies in Britain and the US use one of the Big Four auditing firms.  No fewer than 98 percent of FTSE 350 consituents have their books vetted by one of KPMG, EY, Deloitte or PwC...Conflicts are often hidden discreetly beneath the surface." (Click here for the article) - Germany, European Union, Russia, Ireland, Spain, Italy, South Africa

US unveils next round of Chinese imports to face tariffs | BDP International

"The Trump administration on Tuesday unveiled a list of roughly $16 billion worth of imports from China that will be hit with 25% tariffs." (Click here for the article) - China, USA

US guidance on trade sanctions being reimposed on Iran | KPMG

"The US Treasury Department's Office of Foreign Assets Control today announced the following guidance concerning an executive order reimposing sanctions with respect to Iran..." (Click here for the article) - Iran, USA

Fourth Circuit Agrees with Walmart on Privilege Issue Relevant to FCPA Inquiry | FCPA Professor

"Walmart and the government seem to be at an impasse regarding resolution of Walmar'ts FCPA scrutiny first disclosed in late 2011...In late June 2018 the Fourth Circuit, in this decision, agreed with Walmart's position." (Click here for the article) - USA

US slaps export controls on dozens of Chinese firms over threat to national security | South China Morning Post

"Washington has slapped restrictions on dozens of key Chinese companies - including state-owned developers of military-use technologies such as air defence and satellite systems - for reasons of national security." (Click here for the article) - China, USA

 

Saturday Compliance News - Around the World

GCSG's Weekly Compliance News feature is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

Are CEOs Less Ethical Than in the Past? | Strategy + Business

"The job of a CEO at a large publicly held company may seem to be quite comfortable - high pay, excellent benefits, elevated social status, and access to private jets.  But the comfortable perch is increasingly becoming a hot seat, especially when CEOs and their employees cross red lines." (Click here for the article) - Global

What if BREXIT Happened Without an Exit Deal? | Stratfor

"Negotiators for the UK and the EU are racing the clock to reach agreements on a long list of remaining issues before the UK formally leaves the bloc..." (Click here for the article) - UK, European Union

Texas jury indicts Arkema, two executives over chemical releases | Reuters

"A Texas grand jury on Friday indicted chemicals manufacturer Arkema North America and two of its executives for releasing emissions that allegedly endangered the public after a 2017 hurricane." (Click here for the article) - USA

OFAC Sanctions Russian Bank for Moving North Korean Cash | RegTech Post

"The Office of Foreign Assets Control has named Russia's Commercial Bank Agrosoyuz as a Specially Designated National, for moving funds for a DPRK bank, and for two front companies acting for the North Korean Government." (Click here for the article) - Russia, North KoreaUSA

US elevates India to most-important allies list  | The Economic Times

"In a big boost to India, the US has eased the export restrictions for high-technology product sales to India by designating it as a Strategic Trade Authorization-1 country, the only South Asian nation to be on the 36 countries list." (Click here for the article) - IndiaUSA

EU Privacy Becomes Excuse to Withhold in US Bribery Probes | Bloomberg Law

"Companies are improperly using the European Union's fairly new privacy standards as the scapegoat for why they can't disclose documents to the US government during foreign bribery investigations..." (Click here for the article) - European Union, USA

CNPC refutes subsidiary's role in 1MDB money-laundering scandal | South China Morning Post

"China Petroleum Pipeline Engineering, a unit of China's state-owned oil and gas giant China National Petroleum Corp, had refuted a media report that money paid for its pipeline projects in Malaysia was diverted to third-party Cayman Islands companies involved in money laundering." (Click here for the article) - China, Malaysia, Cayman Islands, UAE

OECD Publishes Phase 4 Anti-Bribery Implementation Report on Germany

In June, the OECD published their Phase 4 report (the "Report") on Germany's implementation of the 1997 OECD Anti-Bribery Convention.  The OECD published their Phase 3 report on Germany in March 2011.

The Report describes Germany's achievements, challenges, and enforcement practices related to its foreign bribery laws.  Since 1999, there have been 67 bribery cases in Germany that have resulted in 328 individuals and 18 entities being sanctioned.  A majority of these having occurred in the last 5 years.  This rate places Germany among the highest enforcers of the Anti-Bribery Convention in the world.  

The Working Group commended Germany for holding individuals responsible, but noted a concern that there appeared to be insufficient enforcement against companies.  The Report noted that Germany has demonstrated an ability to detect bribery allegations through multiple sources including Mutual Legal Assistance, self-reporting by companies, coordination with tax authorities, and joint investigative teams in multi-jurisdiction investigations.    

Bribery Risks in Light of Trade Profile

Germany is the largest European economy and the 4th largest economy in the world.  It accounted for 7.85% of the world's exports in 2016.(1)  The German economy is very strongly oriented towards exports. Exports accounted for almost half of Germany's GDP in 2016.(2)  47% of German foreign direct investment is in the United States, UK, Luxembourg, and the Netherlands.(3)  Many of the bribery allegations involving German companies and nationals related to projects in Central, Eastern, and South-Eastern Europe.  

Germany's trading with China has increased substantially recently.  German imports from and exports to China rose to 180 billion USD in 2016 and Germany became the largest recipient of Chinese foreign direct investment in 2017.(4)

Germany has a high exposure to the risk of bribery of foreign officials due to its dependency on exports and its trading in high-risk industrial sectors in high-risk jurisdictions.(5

Bribery Cases        

Since 2011 there have been 121 foreign bribery cases being investigated, with 35 still under investigation and 42 cases terminated due to insufficient grounds.  47 cases have resulted in sanctions on individuals and/or companies.  In the last five years the rate of enforcement has increased significantly over the previous ten years.  

Report Conclusions and Recommendations

  • German tax authorities have played a large role in detecting foreign bribery cases.
  • There is strong cooperation between tax authorities, prosecutors, and the Police.
  • OECD commends Germany's efforts to investigate, prosecute, and sanction individuals.
  • Germany plays a leading role in enforcing the Anti-Bribery Convention.
  • A couple of the many recommendations included that they provide clear guidance to companies about self-reporting procedures and that they amend legislation to provide clear protections for whistle-blowers.

Case Examples from the Report

Aviation company: "A subsidiary of a German aviation company paid bribes amounting to EUR 100 000 between 2007 and 2011 to responsible persons of an aviation authority in a central African state to facilitate the securing more consulting service contracts for the privatisation of the African state run airports. The benefits resulting from the concluded consulting service contract were estimated to equal the paid bribes. The investigation proceedings were initiated in 2013 based on information self-reported by the company and received from foreign authorities. In the course of the investigation, MLA requests were sent to three Parties to the Convention in 2014 and 2017. Informal contacts were established with one Party prior to the execution of one of the MLA requests. The German aviation company was held liable by Cologne Local Court in 2014 and received a EUR 100 000 regulatory fine. No individual was held liable in this case."(6)

DB Schenker (Russia): "DB Schenker, a German logistics provider of the state-owned German rail company Deutsche Bahn, was commissioned to deliver car parts to Russia. Bribes amounting to EUR 1.7 million were paid to customs officers in order to get these officers to forego the customs controls and to accelerate customs clearance. The Cologne Public Prosecutor office opened an investigation in 2013 based on an anonymous report which led Schenker’s parent company DB Deutsche Bahn to self-report to law enforcement authorities. In total, seven individuals, including the former chief executive, entered into a resolution pursuant to section 153a CCP. In turn, DB Schenker was held liable by the Cologne Local Court in 2016 and received an overall regulatory fine of EUR 2 million. The punitive component of the fine is EUR 300°000 and the confiscatory component EUR 1.7 million.186 The prosecutors indicate that the amount of the confiscatory component is equal to the amount of the bribe payments because the proceeds of bribery could not be estimated."

References and Key Links:

Wednesday Compliance News - Around the World

GCSG's Wednesday Compliance News is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

Texas Instruments CEO Resigns after Code of Conduct Violations | WSJ

"Texas Instruments Inc.'s Chief Executive Brian Crutcher has resigned over violations of the company's code of conduct..." (Click here for the article) - USA

US Tariffs are taxing for the whole world, not just China | South China Morning Post

"The United States' unilateral imposition of 25 per cent tariffs on Chinese products worth US$34 billion damages the global economy in the short term, and strategically threatens the economic well-being of numerous other countries." (Click here for the article) - China, USA

Japan's first corporate plea deal resolves overseas bribery case | The FCPA Blog

"Prosecutors in Tokyo used a plea bargain to resolve an overseas bribery case with a power plant maker under a new law adopted in June..." (Click here for the article) - Japan, Thailand

Lativia's Corruption Scandal is Getting Even Weirder | Bloomberg

"It's central bank chief has been charged with bribery.  A lawyer liquidating the bank that was accused of bribing him was killed in a hail of machine-gun fire.  And one of the banks' biggest lenders was shut down after U.S. allegations of money laundering and violations of sanctions on North Korea." (Click here for the article) - Latvia, USA, North Korea, Russia, Luxembourg, EU

Terrorists slipping through net thanks to anti-money laundering unit delays | Handelsblatt Global

"The Financial Intelligence Unit is overworked and understaffed, say police and prosecutors.  Staff only pass on tips six months after crimes are committed..." (Click here for the article) - Germany

Wednesday Compliance News - Around the World

GCSG's Wednesday Compliance News is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

India, South Korea sign agreements on trade and commerce | India Times

"India and South Korea will reduce duties on 11 tariff lines in a bid to expand bilateral trade..." (Click here for the article) - India, South Korea

HMRC doubles fines for breaking money laundering rules | Financial Times

"The UK tax authority almost doubled the fines it handed down for violations of money-laundering rules in the latest financial year..." (Click here for the article) - UK

Iran calls for EU help as shipping giant pulls out for fear of US sanctions | KYC360

"One of the world's biggest cargo shippers announced on Saturday it was pulling out of Iran for fear of becoming entangled in U.S. sanctions..." (Click here for the article) - EU, Britain, France, Germany, China, Russia, Iran, USA

China Implements New Tariffs on US Products | CNBC

"China immediately slapped retaliatory tariffs on US imports on Friday after the US imposed duties on $34 billion worth of Chinese products..." (Click here for the article) - China, USA

Pakistan's Former Prime Minister Found Guilty of Corruption | WSJ

"A Pakistani court found former Prime Minister Nawaz Sharif guilty of corruption in a verdict that will likely affect the country's election..." (Click here for the article) - Pakistan

US SEC Charges Credit Suisse with FCPA Violations | Securities and Exchange Commission Press Release

"The SEC today announced that Credit Suisse Group AG will pay approximately $30 million to resolve SEC charges that it obtained investment banking business in the Asia-Pacific region by corruptly influencing foreign officials in violation of the FCPA..." (Click here for the article) - Pakistan

Tuesday Compliance News - Around the World

GCSG's Tuesday Compliance News is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

European firms are increasingly tackling the scourge of bribery | The Economist

"Governments in Europe are catching up with America in pursuing corporate graft...A spate of scandals in Europe suggest that prosecutors, as well as the politicians who influence how much freedom judicial investigators enjoy, are becoming ever less tolerant of corporate corruption" (Click here for the article) - Europe, USA

Fraud biggest business risk to Middle East Businesses  | Gulf Digital News

"48% of Middle East businesses cited fraud and corruption as the greatest risk to their company, followed by cyber attacks (38%)..." (Click here for the article) - Middle East

Vietnam arrests oil refinery executives amid corruption crackdown  | Reuters

"Police in Vietnam arrested the chairman and the chief accountant of Binh Son Refining and Petrochemical Co. Ltd. on suspicion of embezzlement..." (Click here for the article) - Vietnam

UK Data Protection Act 2018  | Cordery Compliance

"The UK's new data protection legislation, the Data Protection Act 2018 (DPA 2018) received the Royal Assent..." (Click here for the article) - UK, Europe

Serious Fraud Office charges against Barclays dismissed  | Independent

"A court has dismissed charges brought by the Serious Fraud Office against Barclays relating to capital raisings that took place in 2008." (Click here for the article) - UK, Europe

 

 

Monday Compliance News - Around the World

GCSG's Monday Compliance News is a compilation of some of the previous weeks interesting trade compliance, anti-bribery/corruption, fraud, and due diligence news bites, from around the world.

Malaysia proposes amendments to Anti-Corruption Act | GCSG

"On March 26, 2018 the Malaysian Anti-Corruption Commission Amendment Bill 2018 passed its first reading.  The amendments propose several changes to the Malaysian Anti-Corruption Commission Act of 2009." (Click here for the article) - Malaysia

EU Targets US Products in Retaliation of US Section 232 Tariffs | SIDLEY

"The EU has published its response to the US section 232 tariffs on EU steel and aluminum products." (Click here for the article) - USA, European Union

Europe faces limited options on US threat on Iran sanctions | Financial Times

"The EU faces a tough call on whether to hit back against a US squeeze on European companies' dealings with Iran - but history offers the bloc only small comfort that it can prevail." (Click here for the article) - USA, European Union

Russia Remains Chief Sanctions Risk for Companies, Banks | WSJ

"The risk of breaching Russian sanctions remains a top concern for European banks, corporations and wealthy individuals despite market tensions surrounding the US withdrawal from the Iran deal..." (Click here for the article) - USA, European Union, Russia

Novartis investigating $85 million bribery allegations in Turkey | Reuters

"An anonymous whistleblower has accused Swiss drugmaker Novartis of paying bribes in Turkey through a consulting firm to secure business advantages worth an estimated $85 million..." (Click here for the article) - USA, Turkey, UK, Switzerland

 

Malaysia proposes amendments to Anti-Corruption Act

On March 26, 2018 the Malaysian Anti-Corruption Commission Amendment Bill 2018 (the "Amendment") passed the first reading.  The amendments propose several changes to the Malaysian Anti-Corruption Commission Act of 2009 ("2009 Act")

The most significant proposed change is the addition of a new section(1) which for the first time adds a corporate liability(2) provision for corrupt acts committed by persons associated with a "commercial organization"(3).  The 2009 Act only contained provisions for individual liability.  With the Amendment a commercial organization commits an offense if:

"a person associated with the organization(4) corruptly gives, agrees to give, promises or offers to any person any gratification whether for the benefit of that person or another person with intent- (a) to obtain or retain business for the commercial organization; or (b) to obtain or retain an advantage in the conduct of business for the commercial organization."(5)

Penalties under the Amendment are no less than ten times the sum or value of the gratification, or one million ringgit ($253,000), whichever is higher, and/or imprisonment for up to 20 years.  In addition, the Amendment states that commercial organizations will be able to provide a defense against a corruption charge by having adequate procedures in place that were designed to have prevented persons associated with the organization from committing the offense.  The Malaysian government intends to publish guidelines in the future that will provide more clarity on how they will interpret "adequate procedures".

Key Takeaways

  • The Amendment introduces corporate liability for corrupt acts committed by persons associated with a commercial organization
  • Having an adequate compliance program in place may mitigate the potential penalties associated with a corrupt act by an associated person
  • Associated persons include both employees AND third parties providing services on the company's behalf
  • The penalties for non-compliance are potentially severe 

Recommendations

  • If you have a business that operates in Malaysia we recommend a review of your  compliance programs in country and a review of your monitoring and auditing practices to ensure they are adequate to prevent and detect corrupt acts.

GCSG will continue to follow developments and will distribute the guidelines when the Malaysian Anti-Corruption Commission publishes them.  For more information contact your GCSG experts.

E  info@globalcompliancesg.com

References and Definitions:

  • (1) The 2009 Act only provided for individual liability associated with corruption by company employees - Malaysian Anti-Corruption Commission Act 2009
  • (2) The corporate liability amendments are modeled after the UK Bribery Act 2010.
  • (3) "Commercial Organization...means (a) a company incorporated under the Companies Act 2016 and carries on a business in Malaysia or elsewhere; (b) a company wherever incorporated and carries on a business or part of a business in Malaysia; (c) a partnership- (i) under the Partnership Act 1961 and carries on a business in Malaysia or elsewhere; or (ii) which is a limited liability partnership..and carries on a business in Malaysia or elsewhere; or (d) a partnership wherever formed and carries on a business or part of a business in Malaysia."(5)
  • (4) "A person is associated with a commercial organization if he is a director, partner or an employee of the commercial organization or he is a person who performs services for or on behalf of the commercial organization."(5)
  • (5Malaysian Anti-Corruption Commission (Amendment) Bill 2018
  • Malaysian Anti-Corruption Commission