catching up with corruption in the asia pacific region · 2015-11-06 · baker & mckenzie.wong...
TRANSCRIPT
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© 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
© 2015 Baker & McKenzie.Wong & Leow
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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
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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
© 2015 Baker & McKenzie.Wong & Leow
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
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© 2015 Baker & McKenzie.Wong & Leow
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
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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
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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
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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
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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
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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
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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
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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.
© 2015 Baker & McKenzie.Wong & Leow
Bribery – A Widespread Problem
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Bribery – A Widespread Problem
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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
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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
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TRACE Global Enforcement Report 2014: Investigations Concerning Bribery
of Domestic Officials by Country (ex US)
TRACE International, Inc., 'Global Enforcement Report 2014',
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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.
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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.
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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.
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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.
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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?
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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
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‒ Control Risks Survey 2015 on International Business
Attitudes to Corruption
Control Risks Survey 2015 International Business Attitudes to Corruption Survey, page 7
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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.
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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
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.