Catching up with Corruption in the Asia Pacific Region

Transcription

1 Catching up with Corruption in the Asia Pacific Region 2015 ACFE Asia Pacific Fraud Conference Weiyi Tan Partner Baker & McKenzie.Wong & Leow Baker & McKenzie.Wong & Leow is incorporated with limited liability and is a member firm of Baker & McKenzie International, 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 Baker & McKenzie.Wong & Leow

2 Agenda

3 Agenda Overview of trends and developments Legislative Reforms and Updates Enforcement Trends Policies and Practices What lies ahead? Baker & McKenzie.Wong & Leow

4 Overview of trends and developments in Asia Pacific

5 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 2015 Baker & McKenzie.Wong & Leow 5

6 Investigations

7 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 2015 Baker & McKenzie.Wong & Leow 7

8 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 $ Baker & McKenzie.Wong & Leow Note: 13 of the top 20 settlements involve non-us companies ** Asia-related 8

9 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 2015 Baker & McKenzie.Wong & Leow 9

10 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 2015 Baker & McKenzie.Wong & Leow 10

11 UK Bribery Act Bribing and being bribed (ss1 & 2) Bribing foreign public officials (s6) Corporate offence: failure to prevent bribery (s7) 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 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 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 NB: extraterritorial application of offences 2015 Baker & McKenzie.Wong & Leow 11

12 SFO - Focus on "top drawer" cases LIBOR Soma Oil and Gas Quindell Barclays Glaxo Smith- Kline The SFO caseload ENRC Rolls Royce (Gyrus Group Limited) Olympus Sweett Group EADS / GPT G4S/ Serco Tesco 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 Baker & McKenzie.Wong & Leow 12

13 Singapore - Corruption statistics 736 complaints received in complaints registered for investigation In 2014, 77% of cases investigated were completed Average number of prosecutions per year: % conviction rate in 2014 Source: CPIB Press Release (Issued on 2 April 2015) 2015 Baker & McKenzie.Wong & Leow 13

14 China Corruption statistics 2015 Baker & McKenzie.Wong & Leow 14

15 Legislative Reforms and Updates

16 United Nations Convention against Corruption (UNCAC) Adopted in 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 Baker & McKenzie.Wong & Leow

17 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 Only on grounds of Yes No 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 Only in limited Yes No circumstances Yes Singapore Yes Yes Yes Yes South Korea Yes Yes Yes Yes Thailand Yes (July 2015 Only in bidding for Yes amendment) state contracts Yes Vietnam Yes No No Yes Baker & McKenzie.Wong & Leow

18 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 Baker & McKenzie.Wong & Leow 18

19 Bribery A Widespread Problem 2015 Baker & McKenzie.Wong & Leow 19

20 Bribery A Widespread Problem 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 Baker & McKenzie.Wong & Leow 20

21 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 2015 Baker & McKenzie.Wong & Leow 21

22 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 Baker & McKenzie.Wong & Leow 22

23 Malaysia Upcoming amendments to Anti-Corruption Commission Act 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 Sections 7 - Failure of commercial organizations to prevent bribery Baker & McKenzie.Wong & Leow 23

24 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 Baker & McKenzie.Wong & Leow 24

25 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 Baker & McKenzie.Wong & Leow 25

26 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 Baker & McKenzie.Wong & Leow 26

27 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 Baker & McKenzie.Wong & Leow 27

28 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 Baker & McKenzie.Wong & Leow 28

29 China 9 th Amendment to Criminal Law. Takes effect on 1 November 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 Baker & McKenzie.Wong & Leow 29

30 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 Baker & McKenzie.Wong & Leow 30

31 Enforcement

32 TRACE Global Enforcement Report 2014: Investigations Concerning Bribery of Domestic Officials by Country (ex US) TRACE International, Inc., 'Global Enforcement Report 2014', 2015 Baker & McKenzie.Wong & Leow 32

33 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 Baker & McKenzie.Wong & Leow 33

34 Australia 2 nd ever foreign bribery prosecution in March 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 Baker & McKenzie.Wong & Leow 34

35 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 Baker & McKenzie.Wong & Leow 35

36 Hong Kong Independent Commission against Corruption s investigation in December 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 Baker & McKenzie.Wong & Leow 36

37 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 Baker & McKenzie.Wong & Leow 37

38 Policies and Practices

39 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) Baker & McKenzie.Wong & Leow 39

40 What lies ahead?

41 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 2015 Baker & McKenzie.Wong & Leow 41

42 Control Risks Survey 2015 on International Business Attitudes to Corruption Control Risks Survey 2015 International Business Attitudes to Corruption Survey, page Baker & McKenzie.Wong & Leow

43 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 Baker & McKenzie.Wong & Leow

44 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 Baker & McKenzie.Wong & Leow 44

45 Q&A Session 2015 Baker & McKenzie.Wong & Leow 45

46 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.