As a whole, the region has seen an increase in enforcement actions. Whilst much of this can be attributed to the continued heightened enforcement of the Foreign Corrupt Practices Act (“FCPA”), it is also noteworthy that, for the first time, non-US enforcement actions concerning the bribery of foreign officials have outpaced enforcement actions by the US Department of Justice (“DOJ”). The region has also seen the DOJ engaging with regional partners in running parallel investigations that complement, rather than compete with, each other.
Another positive regional development is the recent establishment of the Asia-Pacific Economic Cooperation (“APEC“) Network of Anti-Corruption Authorities and Law Enforcement Agencies (“ACT-NET”). This is the first such network set up by APEC, and is led by China together with strong support from the US. ACT-NET facilitates the sharing of information among anti-corruption and law enforcement authorities in the 21 member Asia-Pacific countries, and aspires to deny safe haven to those engaged in corruption, including through extradition, mutual legal assistance and the recovery and return of the proceeds of corruption.
The developments in several key Asia-Pacific countries will now be examined.
According to the OECD Working Group on Bribery, Australia has made various improvements to its anti-bribery approach. This comes in the wake of the Working Group’s “Phase 3 Report” on Australia, which was published in October 2012 and which expressed serious concerns about the low rates of enforcement of foreign bribery offences in Australia.
Recent improvements in Australia’s efforts towards anti-bribery enforcement include:
(a) exploring options to introduce a new false accounting offence for the purposes of foreign bribery, with new legislation expected to be tabled in Parliament soon;
(b) actively considering removing the “facilitation payments” defence from its Criminal Code (this defence is currently available in cases involving the bribery of foreign public officials); and
(c) proposing amendments to clarify that the intention to bribe a particular official is not a requirement of the foreign bribery offence, thereby removing the potential defence of not knowing the identity of the foreign official.
It also bears noting that, earlier this year, Australia saw its second ever foreign bribery prosecution. This was against two directors of a construction company for allegedly bribing Iraqi government officials. According to the Australian Federal Police Commissioner, Australia has 14 active foreign bribery investigations ongoing, of which 13 involve foreign bribery as the primary offence.
In its efforts to develop national legislation to fight corruption, China intends to revise the Law on Administrative Supervision shortly. It has also made several draft amendments to its Criminal Law, which were submitted to the National People’s Congress Standing Committee for a first reading in October 2014.
Some of the draft amendments, which are intended to create a stricter anti-graft regime with tougher sanctions for those involved in corrupt activities, include:
(a) imposing criminal liability on those who offer bribes to close relatives and individuals with close relationships with state officials;
(b) imposing monetary fines against all individuals convicted of corruption crimes;
(c) replacing amount-based sentencing standards with more general criteria such as “especially huge” amount or “especially serious” circumstances;
(d) raising the threshold requirement such that bribe-givers will only be exempted from punishment if the underlying crimes are relatively minor and the offenders voluntarily confess and assist with exposing the corrupt activities of others; and
(e) empowering the courts to ban individuals from engaging in related professions for a period of time after completing their prison sentences.
Notable steps taken by China thus far include Operation Fox Hunt, which was an operation to pursue officials accused of wrongdoing and other economic crimes outside of China, with the cooperation of the US, Canada and Australia. China has also ramped up its anti-graft campaign domestically by investigating and issuing fines to a British pharmaceutical company (HK$3.8 billion) and a Chinese subsidiary of a leading global beauty company (US$135 million).
Following from the lead taken by China in its fight against corruption and graft, Hong Kong is also becoming more active in its anti-corruption enforcement efforts, even in cases involving high-ranking officials.
In contrast to its historically passive anti-bribery stance, December 2014 marked the conclusion of one of Hong Kong’s largest anti-corruption investigations to date. This investigation was conducted by the Independent Commission Against Corruption, and resulted in a former Chief Secretary for Administration being convicted of misconduct in public office and bribery. The individual was sentenced to 7.5 years’ imprisonment and ordered to return HK$11 million in cash bribes.
A separate but related corruption case saw the conviction of a property tycoon for bribing the aforesaid Chief Secretary. The individual was sentenced to 5 years’ imprisonment and fined HK$500,000.
Looking ahead, experts predict Hong Kong to maintain its newfound interest in anti-bribery, compliance and regulatory issues, with a strong emphasis on corporate governance and internal investigations.
India’s anti-corruption regime has historically targeted the demand side of corruption. One example is the Prevention of Corruption Act, 1988 (“PoCA“), which focuses primarily on prohibiting corrupt acts by public servants. An Amendment Bill for the PoCA has been underway since 2013. It seeks to target the supply side of corruption by making express provisions for affixing liability on the bribe giver. The Amendment Bill was recently scrutinised by the Indian Law Commission but has yet to be passed by the Indian Parliament.
Some of the amendments that the Bill seeks to introduce include:
(a) imposing a statutory obligation on the government to publish guidance on what procedures companies should put in place to successfully rely on the “adequate procedures” defence;
(b) introducing provisions that affix liability on persons in charge of and responsible to the company for the conduct of business at the time of the offence, unless they are able to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent the commission of the offence; and
(c) introducing provisions that prescribe a maximum trial period of 2 years for corruption cases.
Indonesia’s Corruption Eradication Commission (“KPK”), which was formed in 2002 to combat wide-spread corruption in Indonesia, has been highly proactive in prosecuting various high-ranking officials in the past few years. Unfortunately, its effectiveness is threatened by its ongoing saga with the Indonesian National Police (“Polri”).
Shortly after the Indonesian President nominated Police Commissioner General Budi Gunawan for the post of Polri Chief, the KPK named Budi as a suspect in a corruption investigation. Budi filed a pre-trial motion in the courts to declare invalid and not-legally binding the KPK’s instruction letter to name him as a suspect, as well as its investigations against him. This was upheld by the court. The court’s decision hinged upon its narrow interpretation of the terms “law enforcers” and “state administrators”.
If this decision is upheld, it is likely to limit the scope of the KPK’s powers of investigations into corruption-related activities. As the KPK spearheads Indonesia’s efforts to combat corruption, this development is worrying and may undermine the authority and credibility of the KPK. This, however, should not affect the authority of the Polri and the Attorney-General’s office in investigating bribery under the Anti-Corruption Law.
In a twist to the matter and in apparent retaliation, the Polri has recently named 2 of KPK’s 5 leaders as criminal suspects. Experts have warned that this may cause the KPK’s anti-corruption efforts to come to a halt.
Indonesia’s State Ministry of National Development Planning is also preparing new anti-corruption legislation, with primary focus on preventive measures, to bring Indonesia in line with the United Nations Convention against Corruption. While the planned legislation will criminalise private sector corruption and also empower the KPK to investigate and take action against foreign parties who bribe Indonesian officials, it generally reduces penalties for corruption and allows convicted parties to escape imprisonment. As such, critics have raised concerns that the planned legislation will detract from the enforcement of anti-corruption legislation. In response, Indonesia’s presidential staff has provided reassurance that the KPK’s powers will not be diminished.
Japan does not have a dedicated anti-corruption agency. Its anti-corruption measures emphasise preventing corruption rather than penalising corrupt offenders. Whilst Japan has signed the United Nations Convention against Corruption, it has not ratified it.
Japan historically contributes substantial funds for foreign infrastructure development in foreign countries through its Official Development Assistance (“ODA”) projects. In the wake of the conviction of 3 Japanese Transportation Consultants’ former executives on charges of bribery involving some ¥70 million in 2014, Japan has recently revised its regulatory measures regarding active bribery of foreign public officials in ODA projects.
Some of these new measures include:
(a) increasing the length of the sanction period during which a relevant company (i.e. a company whose employee(s) have been arrested or prosecuted for bribery charges) is prevented from participating in or bidding for future ODA projects (up from between 2 to 12 months to between 6 to 36 months), and
(b) including bidding suspension measures for such relevant companies for a period ranging from between 4 to 18 months.
Last month, Japan also announced that it will address the issue of corruption prevention at the G-7 summit next year.
The principal legislation governing corruption in Malaysia is the Malaysian Anti-Corruption Commission Act 2009 (“MACCA”). The MACCA outlines offences including but not limited to; giving or receiving gratification and bribing public officers. Noteworthy about the MACCA is its extra-territorial reach as any citizen or permanent resident of Malaysia who commits an offence outside of Malaysia may be subject to prosecution under the MACCA.
However, the MACCA lacks in terms of corporate liability, in making CEOs and boards of directors liable for their employees’ actions. Closing this gap within the MACCA has been a recurring subject since 2013 and it seems likely it will be implemented in the near future. The proposed amendments will use the UK Bribery Act and US Foreign Corrupt Practices Act as their models. Another amendment illustrating the efforts in Malaysia to combat corruption is that of the Malaysian Companies Act 1965. This review will broaden the reach of these Acts and allow for better governance of corrupt business dealings
In 2014, the Malaysian Anti-Corruption Commission (“MACC“) also announced its plans to collaborate with the Association of Certified Fraud Examiners (“ACFE“) to certify over 400 MACC investigation officers with the Certified Fraud Examiner Credential, in the hope of improving their officers’ capability in identifying corrupt practices including those related to taxes and claims. In June 2015, the MACC also said that it will host the 16th International Anti-Corruption Conference (“IACC“) in September, which will serve as a platform for participants to share their opinions and experiences in tackling corruption. Over 30 global leaders and 1,000 participants from over 135 countries are expected to attend.
New Zealand is one of the least corrupt countries in the world, even though it has yet to ratify the United Nations Convention against Corruption. In June 2014, the Organised Crime and Anti-Corruption Legislation Bill was introduced in Parliament. The Bill is intended to amend New Zealand’s existing laws on corruption and bribery, and to bring it in line with the United Nations Convention against Corruption so that ratification can take place thereafter.
The key anti-corruption measures introduced in the Bill include:
(a) increasing bribery penalties in the private sector to bring them in line with those in the public sector, with a maximum penalty being 7 years’ imprisonment;
(b) updating the definition of “dishonesty” to ensure that those convicted of corruption-related offences cannot hold positions of trust in their community;
(c) revising the foreign bribery offence, including clarifying the circumstances in which a corporation is liable for foreign bribery;
(d) creating new offences to address gaps in New Zealand’s anti-corruption framework; and
(e) ensuring that New Zealand can provide international assistance in corruption investigations and prosecutions.
Singapore recently dropped 2 places to 7th place in Transparency International’s 2014 Corruption Perception Index rankings. This prompted the Singapore Government to step up its anti-corruption enforcement efforts.
Some of these proposed measures include:
(a) a review of the Prevention of Corruption Act (“PCA”), which is the primary legislation targeting corrupt behaviour, and which was enacted in 1960;
(b) increasing the manpower of the Corrupt Practices Investigation Bureau, which is the central agency for investigating corruption; and
(b) setting up a One Stop Corruption Reporting Centre in the city centre to make it more convenient for the public to report graft incidents.
In recent cases, the Singapore courts have reiterated that the PCA is intended to be far-reaching and, accordingly, the judiciary will continue to adopt a broad and purposive approach to the interpretation and application of the PCA. This is particularly urgent and necessary, given the increasing complexity and sophistication of corrupt schemes being perpetrated in this day and age.
Corruption has traditionally been a problem in South Korea, where personal favours are frequently expected and exchanged in both government and in business. Pressure has continued to mount, especially following the April 2014 ferry accident which caused the deaths of 304 people. An investigation report had suggested that the accident may have been attributed to the corruption of public officials.
In light of this, South Korea approved a new domestic anti-corruption law this year to increase the scope of the anti-corruption laws within South Korea and to impose more severe penalties. The law, which was first proposed 2 years ago, proposes more severe sanctions for public officials who accept bribes. Some of the changes include:
(a) imposing more severe sanctions for public officials who accept bribes; and
(b) doing away with the requirement that a direct link between the gift and the favour must be shown.
However, the new law is confined to domestic bribery and does not amend the existing foreign bribery provisions.
Thailand experiences a high level of corruption within its local, municipal governments. Its National Anti-Corruption Commission (“NACC“) has been criticised for being slow in carrying out investigations. In 2014, Transparency International reported that the NACC is coming under greater pressure against the backdrop of political turmoil in Thailand, which potentially impacts its effectiveness.
As part of its efforts to combat corruption, Thailand’s Ministry of Interior (“MOI“) recently established an anti-corruption centre to coordinate all anti-corruption operations among all provinces. The Partnership Against Corruption for Thailand network, which is described as an anti-corruption milestone in Thailand’s private sector and aims to expand anti-corruption practices throughout specific industries’ supply chains, recently launched its first initiative, the Media Industries Transparency Initiative. This initiative aims to encourage transparency and accountability in media businesses.
Just this month, Thailand’s third amendment of the Constitution Organic law on Counter Corruption 2015 came into effect. The amendment introduces severe penalties for offenders. For instance, under Article 13, seven extra sections were added, listing types of corrupt acts or wrongdoing and penalties including seizing assets from state officials found guilty of corruption. Also, Article 123/2 introduces sentences from five to twenty years, life in jail, or even execution for state officials or foreign officials who call for or take bribes in exchange for malfeasance or negligence. Individuals guilty of taking bribes to force other officials to commit wrongdoing can also face imprisonment of up to five years in jail, a heavy fine, or both. Another notable amendment is that the statute of limitations for court cases is now unlimited, as compared to 20 years for criminal offences previously.
In January this year, the Vietnamese government issued a draft Penal Code for public comments. The suggested changes occur in several aspects of the code, one of which is the extension of criminal liability to include juridical persons. This means that enterprises will be subject to criminal sanctions for offences, including corruption offences (i.e. in contrast with the previous position, where only individuals may be subject to such criminal sanctions). Penalties for enterprises are mainly in the form of monetary fines, forcible termination of businesses, and forcible revocation of business licenses.