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The Region Ramps Up Efforts to Combat Bribery and Corruption

Countries across the region are redoubling their efforts to combat bribery and corruption through a mixture of enhanced laws and increased corporate prosecutions. This article provides a short overview of the situation in several key jurisdictions.

with co-authors Tatsuhiko Kamiyama, Hyun Kim and Janice Goh[1][2]

Australia

Increasing resources to combat corruption, proposals to reform foreign official anti-bribery law and to introduce a corporate DPA scheme

The Australian government has committed AUD15 million in funding over three years to bolster law enforcement efforts to detect and combat corruption. Specialist fraud and anti-bribery and corruption teams will be established in Perth, Sydney and Melbourne.

Reforms to the definition of foreign bribery offence have been proposed, which will more closely align Australia’s foreign bribery regime with the equivalent U.S. and U.K. regimes. A public consultation paper has been released, outlining a proposed model for a Deferred Prosecution Agreement (DPA) scheme in relation to serious corporate crimes, including foreign bribery. A DPA would only be available to companies and the proposed model draws on aspects of the U.K. and U.S. DPA schemes.

Hong Kong

Corruption level “stable,, big name features in bribery case

The latest annual report of the Independent Commission Against Corruption (ICAC) describes the overall corruption situation in Hong Kong as “stable and under control,” but nevertheless, the ICAC reported a 3 percent rise in corruption complaints received compared to the previous year. [3]

Recently, Donald Tsang (former Chief Executive of Hong Kong) was found guilty of misconduct in public office by deliberately concealing negotiations with a property businessman to rent a luxury apartment in Shenzhen, while at the same time approving a digital radio broadcast licence in which the businessman was a major shareholder. Tsang is the highest-ranking official ever convicted of a criminal offence in Hong Kong and was sentenced to 20 months’ imprisonment.

Japan

New plea bargaining system, continued pressure from the OECD to step up fight against bribery

By June 2018, a new system of plea-bargaining for certain specified offences, including bribery-related offences, will come into force. Given the focus on third parties, the new system may lead to an increase in employees informing on their employers, resulting in a rise in corporate criminal prosecutions.

The OECD Working Group on Bribery in International Transactions sent a high-level mission to Japan in June 2016 to urge the Japanese government to step up its efforts to fight international bribery. The OECD issued a statement imploring Japan to “make fighting international bribery a priority” noting that, amongst other things, prosecutions for bribery offences have been few and far between, and legislation allowing for the confiscation of proceeds of bribery has yet to be enacted.

Malaysia

New anti-corruption chief stepping up prosecutions

The latest goal, as announced by the new chief of the Malaysian Anti-Corruption Commission (MACC), Datuk Dzulkifli Ahmad, is to prosecute and/or investigate one case per week over the next three years. Consistent with this drive to combat corruption, the MACC currently operates a corruption offenders database, where corruption cases are reported to the public on a regular basis. The purpose of this “name and shame” database is to serve as a deterrent, to send a clear message against corruption and to assist the public in performing due diligence on parties. Additionally, a new Corporate Liability Act may be tabled in the upcoming session of Parliament. The proposed Act targets corporations and attempts to prevent the private sector from bribing public officials.

People’s Republic of China (PRC)

Anti-corruption crackdown continues; regulation of bribery through third parties enhanced

The anti-corruption crackdown in the PRC, which started in 2012, has maintained its momentum. According to the Central Political and Legal Affairs Commission of the Communist Party of China, almost 100,000 corruption-related cases have been prosecuted in the five years since 2012 (representing a 32 percent increase over the previous five-year term), and over 100 of these involved very senior government officials at or above the provincial and ministerial level.

The Standing Committee of the National People’s Congress has reviewed a second draft amendment to the PRC Anti-Unfair Competition Law, which, among other things, addresses commercial bribery through third parties who may exert influence on transactions through the powers of government officials, thus demonstrating a continuing trend for legislators to seek to enhance the regulation of such activities.

Singapore

Corruption complaints reach new low, courts taking tough stance on private sector bribery as well

Overall, the number of corruption complaints and cases investigated by the Corrupt Practices Investigation Bureau (CPIB) reached a new low in 2016. The CPIB received 808 complaints last year, an 8 percent decrease compared to the number received in 2015.

The Singapore courts have sent a strong message through decisions in several cases that private sector bribery will also not be tolerated: a first-time offender was given a custodial sentence and in another case, the judge stated there was no presumption that cases of private sector corruption would only attract noncustodial sentences.

South Korea

New graft law, notable investigations under South Korea’s pre-existing laws 

The Improper Solicitation and Graft Act of Korea (Graft Act) took effect on September 28, 2016, bringing major changes to South Korea’s anti-corruption regime. Under the Graft Act, public officials are prohibited from accepting, requesting or promising to accept cash or benefits in connection with their duties, regardless of whether the cash or benefit is given in exchange for a favour. There is also a blanket prohibition against a public official receiving more than KRW 1 million (USD $875) on a single occasion, or more than KRW 3 million (USD $2,630) in a fiscal year, in circumstances unconnected to their duties. The “3-5-10 Regulation” provides some protection from the prohibition through low and effectively “safe harbour” thresholds for the giving and receiving of cash and other benefits.

Importantly for corporations, Article 24 of the Graft Act provides for joint liability of corporations for their employees’ violations, unless the corporation has shown “due attention and supervision” to prevent the violation in question.

There have been no successful prosecutions under the Graft Act since its implementation. However, several notable investigations and criminal cases under South Korea’s pre-existing laws have made international headlines recently: Former President Park Geun-hye was arrested on charges including, amongst other things, extortion of tens of millions of dollars from South Korean corporations for the benefit of foundations operated by a friend and confidant of Ms. Park. Meanwhile, Samsung Electronics’ Vice Chairman, Jae Yong Lee was sentenced to five years’ imprisonment for bribery, embezzlement, perjury, concealment of criminal proceeds and illicit transfer of assets abroad.

U.S. (as related to Asia)

Trump’s stated lack of support for FCPA may not mean less enforcement, Asia-connected cases feature heavily in 2017 FCPA enforcement

President Trump has publicly stated his lack of support for the Foreign Corrupt Practices Act (FCPA), suggesting in 2012 that FCPA enforcement has become “absolutely crazy,” the FCPA is a “horrible law” that “should be changed,” and it puts U.S. companies at a “huge disadvantage

Nevertheless, in connection with his confirmation hearing, Senator Jeff Sessions stated “if confirmed as attorney general, I will enforce all federal laws, including the Foreign Corrupt Practices Act and the International Anti-Bribery Act of 1998, as appropriate based on the facts and circumstances of each case.

The Department of Justice (DOJ) has begun implementing plans to increase its law enforcement resources by more than 50 percent by adding 10 prosecutors to the Fraud Section’s FCPA Unit. Of note, five out of the nine cases prosecuted in 2017 to date have involved conduct in Asia. It is therefore expected that the DOJ and the Securities and Exchange Commission will continue to pursue FCPA enforcement actions and that Asia will be a key risk region for companies.

Disclaimers

“Any content above relating to the PRC is based on our experience as international counsel representing clients in business activities in the PRC and should not be construed as constituting a legal opinion or legal advice on the application of, or in respect of, PRC law. As is the case for all international law firms with offices in the PRC, while we are authorised to provide information concerning the effect of the Chinese legal environment, we are not permitted to engage in Chinese legal affairs. Should the services of a Chinese domestic law firm be required, we would be glad to recommend one.”

“Content relating to Malaysia and South Korea is based on our experience as international counsel representing clients in their business activities in Malaysia and South Korea. We are not permitted to advise on the laws of Malaysia and South Korea and, should such advice be required, we would work alongside a domestic law firm. Should the services of a domestic law firm be required, we would be glad to recommend one.”

[1] With thanks to Lim Koon Huan (Partner) and Shaleni Sangaran (Senior Associate) of SKRINE for their contributions to the Malaysian section of this article.

[2] Janice Goh is an employee of Clifford Chance Asia which is a Formal Law Alliance in Singapore between Clifford Chance Pte Ltd and Cavenagh Law LLP.

[3] http://www.icac.org.hk/en/about/report/annual/index.html, published in June 2017.

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Wendy Wysong

Wendy L. Wysong, a litigation partner with Clifford Chance, maintains offices in Hong Kong and Washington D.C.  She offers clients advice and representation on compliance and enforcement under the Foreign Corrupt Practices Act, the Arms Export Control Act, International Traffic in Arms Regulations, Export Administration Regulations, and OFAC Economic Sanctions.  She was appointed by the State Department as the ITAR Special Compliance Official for Xe Services (formerly Blackwater) in 2010.

Ms. Wysong combines her experience as a former federal prosecutor with the United States Attorney for the District of Columbia for 16 years with her regulatory background as the former Deputy Assistant Secretary for Export Enforcement at the Bureau of Industry and Security, U.S. Department of Commerce.  She managed its enforcement program and was involved in the development and implementation of foreign policy through export controls across the administration, including the Departments of Justice, State, Treasury, and Homeland Security, as well as the intelligence community.]

Ms. Wysong received her law degree in 1984 from the University of Virginia School of Law, where she was a member of the University of Virginia Law Review.

Contact information:

Wendy L. Wysong
Clifford Chance
28th Floor Jardine House
One Connaught Place
Hong Kong
+852 2826 3460
+852 9280 3612 (cell)

And

2001 K Street, NW
Washington, DC 20006
+1 202 912 5030
+1 202 290 7634
Wendy.wysong@cliffordchance.com

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