Anti-Corruption Law in Vietnam Foreign Corrupt Practices Act

Transcription

1 Anti-Corruption Law in Vietnam Foreign Corrupt Practices Act Orsolya Szotyory-Grove September 2008

2 Anti-Corruption Law in Vietnam

3 Corruption Perceptions Index Asia Pacific Region, 2007 Transparency International, available at

4 Laws Law on Anti-Corruption Criminal Law

5 Who is Subject to the Laws The laws focus heavily on the recipient, but the offeror is also subject to these laws. Is there a difference between treatment of Vietnamese companies and foreign companies? No. The same penalties apply in the same way to an employee of a Vietnamese company and to an employee of a foreign company if they pay a bribe.

6 The Offer Mere offer sufficient for liability; actual payment not required Criminal Code: persons who have accepted or will accept a bribe are liable Discussion of the bribe, the favor, or the property to be exchanged is sufficient to trigger consequences

7 The Bribe A person with responsible positions and powers must not receive money, property, or other material benefits or interests in any form to abuse his position and powers for self-seeking purposes.

8 The Bribe: Receiving Bribes Those who abuse their positions and power, have accepted or will accept, directly or through intermediaries, money, property or other material interests in any form in order to perform or not to perform certain jobs for the benefit of the bribe offeror do or not do something within the sphere of their responsibility Criminal Code

9 The Bribe: Components of the Definition 1) Positions and powers 2) Material benefits & interests 3) Directly or through intermediaries 4) Self-seeking purposes

10 The Bribe: Material Benefits & Interests Money or property Benefits and interests in any form Includes not only tangible benefits but also intangibles, such as favors

11 The Bribe: Self-Seeking Purposes Self-seeking purposes: material or spiritual benefits obtained through a corrupt act by a person with position or powers.

12 The Bribe: Other Considerations Related to work: the law suggests that the bribe must be related to the work the recipients are handling However, unlikely that courts would accept too generous an interpretation, as many bribes take the form of gifts or favors that do not have an immediate return, but are generally intended to predispose the recipient to the offeror. These are still bribes spiritual interests Action or Omission: bribe must be offered to persuade recipient to perform or not to perform certain jobs for the interest or at the request of the bribe offerors.

13 The Bribe: Corrupt Acts Embezzling property Accepting a bribe Offering a bribe Making a bribe Bribe brokerage Abusing position/powers to appropriate property Taking advantage of position/powers during performance of a task or official duties for self-seeking purposes Taking advantage of a position or powers to influence another person for self-seeking purposes Failure to perform tasks or official duties for self-seeking purposes

14 The Bribe: Value A bribe that carries the lowest criminal responsibility is VND 500,000, but a bribe of less is still actionable if there are other factors present: The recipient is a past offender The bribe causes serious consequences

15 Recipient Position-related crimes are acts carried out by persons holding positions with official duties. Persons with positions are those assigned through appointment, election, contract or other arrangements, with or without salaries, to perform official duties, and who have certain powers while performing official duties

16 Recipient: Public Servants, Public Duties Official Duties public duties or public services Target of the law is the person employed in some capacity by the state: civil servants, officers in state owned enterprises Lesser officials are not immune; no immunity for a government official who has no decision making authority Public or State Employees: persons holding responsible positions and powers include Officials and public servants working in state agencies, political organizations, and agencies of the People s Army and People s Police Management officials in state-owned enterprises or managers who represent the share of state owned capital contribution in an enterprise Includes board members, general directors, chief accountants Public servants at commune, ward, and district levels

17 Reporting Requirement: Citizens Law prohibits attempts to conceal corruption or impede an investigation. Citizens are entitled to detect and denounce a corrupt act. Citizens who are aware of a corrupt act are responsible for reporting it. Organizations must create systems that permit people to report corruption: hotlines, in writing, internet. Limit: Citizens may not take advantage of their right to denounce to accuse falsely or slander another individual or organization; must pay compensation for loss and damage caused by false denunciations. Protection: No retaliation or threats against people who have denounced corrupt acts; organizations must protect the rights and interests of people who have identified a corrupt act.

18 Reporting Requirement: Organizations An entity operating in Vietnam must make all financial reports as required by law without inappropriate omissions or misleading statements; however, these rules relate to compliance with general tax and financial reporting requirements, rather than any specific conditions imposed on bribery (as in the FCPA books and records requirements).

19 Liability of Third Parties Intermediaries: what if a benefit is received by a third party on behalf of the public employee? Law does not define intermediary; we can assume this is a question of fact to be determined in each case Abbettors Bribe Brokerage

20 Entity Liability? Legal entities cannot be criminally liable under Vietnamese law. Legal responsibility understood to be limited to individuals; a specific individual must bear responsibility for the crime Senior management can be responsible for mismanagement or negligence, even if they did not themselves commit a prohibited act.

21 Per Diems caution! No specific expression in the legislation of whether limited per diem payments such as for meals or travel are permissible; such payments probably do not fall under the generally understood definition of a bribe. Material benefit and material interest suggest receipt of an undue enrichment or betterment. Intent: bribe must be offered in an attempt to persuade the recipient to take a certain course of action preferred by the offeror of the bribe.

22 Gifts caution! State employees or officials may not receive money, property or other material interests from an organization or individual related to affairs whose resolution falls under his management or discretion. Any giving or receiving of a gift for the purpose of giving a bribe or performing any other act for selfseeking purposes shall be strictly prohibited. Anti-Corruption Law, art. 40.

23 Facilitating Payments? There is no immunity for a government official who has no decision-making authority. It is reasonable to infer that even a payment made merely to expedite normal business functions of the government official is sufficient to violate the law.

24 Preventing Corruption Organizations & Entities Heads Persons with Positions & Powers Preventing Corruption Social Organizations & Citizens Press & Media Courts Investigators Legislature

25 Responsibilities and Prohibited Conduct Bodies and Organizations Internal policies and information on compliance with anti-corruption laws Systems for receiving and assessing denunciations Transparency, especially when accessing State funds Management Direct the implementation of internal policies Conduct periodic compliance reviews Management and spouses may not make capital contributions to any enterprises operating in the line of business in which they directly have decision-making authority Related persons of management may not assume leadership roles in accounting, finance, and personnel State Employees and Officials: persons with positions/powers May not establish or manage private enterprises, limited liability companies, private hospitals, schools or research institutions For a time after resignation, may not conduct business in the sector in which they were previously employed May not use information or documents for self-seeking purposes

26 Declarations Certain people working in state administrative bodies must declare their assets and income. Examples: people working in the following areas must file declarations Recruiting and promoting state employees and officials Finance and Banking Sectors: people working in tax collection, certification of import and export goods, issuing operating license to banks and credit institutions Construction Sectors: issuing licenses or permits for construction, evaluating construction projects Decision 85/2008/QD-TTg

27 Public Disclosure of Management and Use of State Assets Regulations are intended to provide complete information about the management and use of certain assets. Public disclosure of funding for and plan on investment and procurement of state facilities and assets; ministries shall disclose the allocations the ministry makes to the organizations it manages. Entities shall disclose the budget, volume, and plans for investing in and procuring state facilities and assets. Public disclosure required after transfer, liquidation or sale of state assets. Decision 115/2008/QD-TTg

28 Penalties Penalties depend on the identity of the party Aggravating Circumstances Repeat offense Whether bribery is organized and systematic Whether bribe involved other fraud, for instance forgery Whether the bribe results in other consequences, and how serious those consequences are Concealment of illegal acts or obstruction of investigations Mitigating Circumstances If a person forced to give a bribe later reports it If a person who voluntarily gives a bribe later reports it on his own initiative If a person who has committed a corrupt act takes proactive steps to reduce loss or damage caused by the illegal act Persons commiting a corrupt act causing loss or damage shall pay compensation

29 Civil Penalties Reprimand Warning Pay cut Demotion Dismissal Ban on holding certain jobs for a time Fines up to five times the value of the bribe

30 Penalties for Particular Levels of Bribery Amount of Bribe Identity Penalty VND 500,000 to 10,000,000 VND 10,000,000 to 50,000,000 VND 50,000,000 to 300,000,000 Above VND 300,000,000 Public Employee Recipient Payer Intermediary Public Employee Recipient Payer Intermediary Public Employee Recipient Payer Intermediary Public Employee Recipient Payer Intermediary 2 to 7 years imprisonment 1 to 6 years imprisonment 6 months to 5 years imprisonment 7 to 15 years imprisonment 6 to 13 years imprisonment 3 to 10 years imprisonment 15 to 20 years imprisonment 13 to 20 years imprisonment 8 to 15 years imprisonment 20 years to life; capital punishment 20 years to life; capital punishment 12 to 20 years imprisonment

31 Compliance Develop whistleblower protection Develop internal policies and codes of conduct Require both employees and counterparties (for example, joint venture partners) to report attempted solicitation Have employees and consultants sign an acknowledgment that they understand these internal policies Standard anti-corruption language can be included in company contracts Awareness: know your counterparty. Are they the spouse of a government official who is in charge of a department that makes crucial decisions about your business? Are they an employee of a state-owned enterprise?

32 Foreign Corrupt Practices Act

33 FCPA makes it a federal criminal offense for any US person or entity to make a corrupt payment to a foreign government official to obtain or retain business. FCPA has two sets of provisions: 1) Antibribery regulations 2) Accounting regulations

34 FCPA Antibribery Regulations

35 Antibribery Regulations It is unlawful for any issuer, domestic concern, or foreign person acting within the US to pay, offer to pay, or authorize payment to a foreign official or to any person while knowing that the payment will be made directly or indirectly to a foreign official, for the purpose of influencing action/inaction or a decision of the foreign government official or to secure any improper advantage in order to obtain or retain business.

36 Applicability: Issuers and Domestic Concerns Issuers: publicly held companies subject to the registration or reporting requirements of the US securities laws. Domestic Concerns: any business with its principal place of business in the US or organized under US laws. Includes individuals who are US citizens or residents.

37 Applicability: Foreign Individuals Foreign individuals acting as agents of FCPA covered entities are subject to the FCPA Agents of foreign entities are subject to the FCPA if they violate the FCPA while in the US

38 Applicability: Foreign Affiliates or Subsidiaries The FCPA does not apply directly to a US company s foreign affiliates or subsidiaries, but the US company or person may still be liable for authorizing or participating in the payment.

39 Applicability: Intermediaries A US company can be held liable under the FCPA for corrupt payments made on its behalf by a third party, such as a consultant, if: it has knowledge of such payments it authorizes the payments or it ignores warning signs

40 Who are Foreign Officials? Any officer or employee of a foreign government or government agency Any person acting in an official capacity for a foreign government or government agency Includes employees of state owned enterprises

41 Knowledge The Reasonable Person Awareness of circumstances and the result that is substantially certain to occur Cannot consciously disregard obvious warning signs

42 Business Purpose Requirement FCPA prohibits payments intended to induce foreign officials to misuse their positions in order to assist the issuer or domestic concern to obtain or retain business. Broadly interpreted to include payments intended to influence government decisions that would favorably impact business.

43 Facilitating Payments FCPA permits a limited exception for facilitating payments made to a foreign official to expedite or secure performance of a routine governmental action. Keys: Routine Small amounts of money Keep accurate records of the payments

44 FCPA Accounting Regulations

45 Accounting Regulations Issuers must maintain adequate books and records, and internal accounting systems.

46 Applicability: Issuers Issuers: publicly held companies subject to the registration or reporting requirements of the US securities laws. The Accounting Regulations do not apply directly to individuals, but the SEC has taken the position that officers and directors can be liable for violating these obligations.

47 Applicability: Subsidiaries and Joint Venture Partners Issuers are responsible for the accuracy of the books and records of subsidiaries and affiliates under their control. When an issuer holds 50% or less of the voting power with respect to a domestic or a foreign firm, the books and records and internal controls provisions require only that the issuer proceed in good faith to use its influence to persuade the firm to develop and maintain an FCPA-compliant system of internal accounting controls.

48 Two Avenues of Regulation 1. Books & Records: Requires issuer to keep books and accounts which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of issuer s assets.

49 Two Avenues of Regulation 2. Controls: Issuers must maintain accounting controls that provide reasonable assurance that a) transactions are executed according to management instructions; b) transactions are recorded accurately to maintain accountability for assets; c) access to assets is controlled according to management instructions; and d) records are reconciled with existing assets at reasonable intervals.

50 International Systems

51 International Systems OECD: Vietnam has endorsed the OECD Anti- Corruption Plan for Asia/Pacific World Bank International Chamber of Commerce U.N. Declaration Against Corruption & Bribery in International Transactions