Bribery and Corruption Legal Elements of Bribery and Corruption 2018 Association of Certified Fraud Examiners, Inc. 2018 Association of Certified Fraud Examiners, Inc. 1 of 27
Introduction This section addresses: Legal avenues for recovery Common actions for bribery and corruption Legal elements of a cause of action Corruption offenses in several countries Ensuring that proceeds, property, and assets are retained to satisfy a judgment Jurisdiction Employee rights during fraud investigations Privacy issues 2018 Association of Certified Fraud Examiners, Inc. 2 of 27
Legal Avenues for Recovery Civil action Evaluating the potential for recovery Types of civil remedies Criminal actions Offenses of a public nature Brought by the government 2018 Association of Certified Fraud Examiners, Inc. 3 of 27
Corruption Bribery Common Actions for Bribery and Corruption Conflict of interest Breach of contract Economic extortion Breach of fiduciary duty 2018 Association of Certified Fraud Examiners, Inc. 4 of 27
Common Actions for Bribery and Corruption Laundering, acquisition, possession, or use of illegal proceeds Money laundering Structuring violations Engaging in monetary transactions using property derived from unlawful activities 2018 Association of Certified Fraud Examiners, Inc. 5 of 27
Common Actions for Bribery and Corruption Misrepresentation fraud Misappropriation or diversion of funds or property Conversion Larceny Embezzlement Misappropriation 2018 Association of Certified Fraud Examiners, Inc. 6 of 27
Common Actions for Bribery and Corruption Facilitating crimes Collusion Forgery Falsifying documents Accounting crimes Tax fraud (tax evasion) Smuggling Conspiracy Aiding or abetting crimes Obstruction of justice 2018 Association of Certified Fraud Examiners, Inc. 7 of 27
The Legal Elements of a Cause of Action A cause of action is established by proving all of the elements of the underlying claim. The elements of any legal offense specify what must be shown to prove the claim. Examiner must be able to match the facts and circumstances of a specific loss to one or more legal causes of action. 2018 Association of Certified Fraud Examiners, Inc. 8 of 27
Global Trends in Corruption Legislation Increased legislation criminalizing the bribery of foreign (not just domestic) officials Introduction of corporate liability for bribery offenses Increased sanctions and penalties, in addition to fines and imprisonment Extra-territoriality Extension of legislation to cover agents and intermediaries 2018 Association of Certified Fraud Examiners, Inc. 9 of 27
Examples of Country-Specific Offenses Many countries have laws that specifically address corruption. The following are just a few examples. 2018 Association of Certified Fraud Examiners, Inc. 10 of 27
Corruption Offenses in the United States Anti-Kickback Act of 1986 Sherman Antitrust Act Bribery of Public Officials Bank Bribery Conflicts of Interest Mail Fraud and Wire Fraud Federal Statutes Relating to False Claims and Statements Racketeer Influenced and Corrupt Organizations Act Foreign Corrupt Practices Act State Criminal Anti- Corruption Statutes 2018 Association of Certified Fraud Examiners, Inc. 11 of 27
Corruption Offenses in the UK The UK Bribery Act creates three categories of offenses: General commercial bribery offenses Bribing a foreign public official A corporate offense of failure to prevent bribery 2018 Association of Certified Fraud Examiners, Inc. 12 of 27
Corruption Offenses in Hong Kong Prevention of Bribery Ordinance, Chapter 201 of the Laws of Hong Kong, identifies the following as offenses: Soliciting or accepting any advantage by a prescribed officer (government officials) Offering any advantage to a public servant (government officials and other employees of public bodies) 2018 Association of Certified Fraud Examiners, Inc. 13 of 27
Corruption Offenses in Indonesia Law No. 31 of 1999, Eradication of the Criminal Act of Corruption, as amended by Law No. 20/2001, criminalizes active and passive bribery in the public sector. 2018 Association of Certified Fraud Examiners, Inc. 14 of 27
Ensuring That Judgment Debts Are Satisfied Procedures that preserve and protect the victim s ability to recover vary by case and by jurisdiction. Some examples include: Prejudgment attachment Prejudgment writ of possession (replevin) Notice of lis pendens Preliminary injunctions and temporary restraining orders 2018 Association of Certified Fraud Examiners, Inc. 15 of 27
Jurisdiction Jurisdiction is the power of a court to hear, decide, and enforce legal matters. Jurisdiction is the subject matter or persons over which lawful authority may be exercised by a court. To hear and decide a case, a court must have jurisdiction over the parties and subject matter involved and proper venue. 2018 Association of Certified Fraud Examiners, Inc. 16 of 27
Jurisdiction Determining the proper court requires a three-part test: Does the court hear cases of the type in question? Does the court have the authority to exercise its power over a particular defendant or piece of property? Does the claim arise within the court s venue? 2018 Association of Certified Fraud Examiners, Inc. 17 of 27
Employee Rights During Fraud Investigations Employees have certain rights during fraud examinations, and examiners must be aware of such rights. Before beginning any fraud examination, it is important for the fraud examiner to determine the employee s rights. 2018 Association of Certified Fraud Examiners, Inc. 18 of 27
Privacy Issues Fraud examiners must ensure that the rights of individuals are protected during an investigation. Organizations must be thoroughly knowledgeable about the rights that are available to their employees. 2018 Association of Certified Fraud Examiners, Inc. 19 of 27