Earlier this month the Monaco National Council unanimously approved a new law to reinforce the existing anti-corruption legislation. The law has now been published as Law 1394 dated 9th October 2012.
Law 1394 is intended to enhance the legislation following the report by the European Group of States against Corruption which highlighted certain deficiencies in Monaco’s legal framework and made 28 recommendations. The new law follows these recommendations.
The law principally reinforces the existing offences in the Criminal Code and the Code of Criminal Procedure.
Among the changes are:
1. Broadening the scope of the individuals subject to the law, notably including the public and private sectors, elected representatives and those in commercial activities;
2. Includes active and passive corruption;
3. Details of the penalties, fines, imprisonment and confiscation of the proceeds of corruption on conviction, for example, up to 15 years imprisonment in the case of passive corruption;
4. Introduction of new techniques to pursue an investigation, including the use of anonymous witnesses to assist investigations and measures for their protection;
5. Authorisation of undercover enquiries, including the use of monitoring equipment by the police subject to prior authorisation by the Monaco courts and certain restrictions within the legislation itself, for example surveillance can be authorised for no more than two months;
6. Any bribes that are paid are not deductible for tax purposes.
Though the instances of corruption in Monaco are few and far between this legislation will bring Monaco to the widely accepted European standard in the fight against corruption.
The Bribery Act 2010 came into force in July 2011 and introduced the crimes of bribery, receiving a bribe, bribery of foreign officials and the failure of a corporate entity to prevent bribery on its behalf. The law is wide in its scope, applying to offences committed in the UK as well as offences outside the UK where, in broad terms, the individual committing the offence is a UK national or has a close connection with the UK. A close connection includes an individual ordinarily resident in the UK or an entity incorporated in the UK.
The Serious Fraud Office (‘SFO’) has published this month new guidelines on its policy towards facilitation payments, business expenditure (hospitality and gifts) and corporate self-reporting. The updated policies show a tightening of the SFO’s enforcement of the 2010 Bribery Act and make clear that there will be no presumption in favour of civil settlements in any circumstances, as there was in the earlier guidance notes, for self-reporting by corporates.
By the publication of these new guidelines, it appears that the SFO seeks to restate its role as investigator and prosecutor of serious fraud and corruption, while ensuring consistency with the approach of other prosecuting entities and to advance the OECD recommendations under the 1997 Convention*.
Facilitation payments: the guidelines indicate a move towards a more stringent application of the law in this regard away from its earlier approach in which it appeared to recognise that in certain areas such payments were a normal part of business life and would take time to eradicate. The SFO guidance now states that it considers facilitation payments to be “…a type of bribe and should be seen as such.”
Business expenditure - hospitality and gifts: the SFO approach is that genuine business hospitality, promotional and related expenditure within limits, is an established part of doing business, however, where business expenditure is used to disguise bribes they will be subject to prosecution.
The guidelines also include a statement as to the SFO’s approach to pursuing criminal prosecution, that is, where it is in the public interest to prosecute and where there is a reasonable prospect of securing a conviction. It appears that if this two stage test is not satisfied, then the SFO might well consider the use of a civil recovery action as an alternative to prosecution.
The tougher stance indicated by the SFO in these guidelines also signals a change from the presumption in favour of a civil recovery in the case of self-reporting by a corporate. In future self-reporting will be a factor to be taken into account as part of the public interest consideration and will weigh against prosecution. As the guidelines state, each case will turn on its facts.
We note that the guidelines emphasise the SFO’s role as investigator and prosecutor, a move away from its previous position in which it invited enquiries from those with questions or concerns to contact it for guidance.
*1997 Convention on Combating Bribery Foreign Officials in International Business Transactions
Recent developments in the fight against corruption: Monaco - United Kingdom