Anticorruption Blog

Malaysia scored 4.3 in the Corruption Perceptions Index 2011 (PDF/2.69MB/7 pages) which indicates the perceived level of public sector corruption on a scale of 0 to 10, where 0 means that a country is perceived as highly corrupt and 10 means that a country is perceived as very clean. Malaysia ranks number 60 out of the 183 nations that appear in the Index.

There is increasing public resentment with corruption and bribery in Malaysia, especially from those in the public eye. Recently, Reuters reports that a government minister’s husband was charged with misusing nearly MYR50 million (approximately USD16 million) allocated for a public farming project. The situation is such that the authorities are enlisting the help of taxi drivers “to act as the graftbuster’s “eyes and ears” on the ground,” reports Yow Hong Chieh at The Malaysian Insider.

The principal legislation in Malaysia relating to anti-corruption is the Malaysian Anti-Corruption Commission Act 2009 (Act) (PDF/604KB/65 pages). The Act prohibits any person (by himself or through another) from soliciting or accepting gratification or from offering or giving gratification. Gratification is given a wide meaning under the Act and is not limited to pecuniary bribes and can extend to any service or favour.

The Act applies equally to public officials (both domestic and foreign) and private individuals and so prohibits both public and commercial bribery. The Act does not contain any defences for de minimis payments or for having adequate compliance procedures. There is no exemption for facilitation payments although guidance is available on giving gifts or providing hospitality to public officials in the Guidelines for Giving and Receiving Gifts in the Public Service (No. 3 of 1998). The Act also has extraterritorial effect and applies to offences by Malaysian citizens or permanent residents outside and within Malaysia.

The penalties for bribery can be imprisonment of up to 20 years and a fine which is the greater of (i) not less than five times the sum/value of the gratification where it is capable of being valued or is of a pecuniary nature; or (ii) MYR10,000 (approximately USD3,200).

As part of our continued efforts to monitor the antibribery enforcement environment in the People's Republic of China (PRC), our colleagues in Squire Sanders' Shanghai office have graciously agreed to provide monthly updates of relevant developments in the PRC's antibribery laws, regulations and government enforcement actions. The most recent developments are summarized below.

Enforcement Actions

On March 28, 2012, Wu Shundi (“Wu”), former deputy party secretary of Meilong Town, Minhang District, Shanghai was jailed for life by the Shanghai No. 1 Intermediate People’s Court following his conviction for taking bribes and embezzling money in an amount totaling over RMB 28 million (US$ 4.45 million). Between 2002-2003, as the chairman and general manager of a village-converted company, Shanghai Longxing (Group) Co., Ltd, Wu purportedly concealed more than RMB 3 million by claiming reimbursements for various fabricated expenses, including utility bills, rental payments, employee bonuses, and others. At the same time, Wu allegedly abused his power by aiding real estate developers to develop collectively-owned land in exchange for bribes.

New Laws or Regulations

Communist Party Rules: On March 26, 2012, Interpretation of the Application of Chinese Communist Party Disciplinary Regulations on Breach of Several Rules on Integrity of Leadership Members of State-Owned Enterprises (Circular Zhong Ji Fa (2012) No. 3) was released by CPC (Central Committee of the Communist Party of China) Central Commission for Discipline Inspection providing the rules for the application of punishments provided in the Communist Party Disciplinary Regulations (Circular Zhong Fa (2003) No. 18) on conduct in breach set out in the Several Rules on Integrity of Leadership Members of State-Owned Enterprises (Circular Zhong Ban Fa (2009) No. 26).

Other Developments

On March 11, 2012, Cao Jianming (“Cao”), procurator general of the Supreme People’s Procuratorate (“SPP”) said at an annual session of the National People’s Congress that the Procuratorate at all levels nation-wide should make greater efforts to intensify the punishment of commercial bribery and to establish an anti-corruption system among all levels of Procuratorates. Additionally, according to Cao’s speech, bribery prosecutions increased 6.2% last year compared to the previous year.

The following monthly update on developments in the People's Republic of China's ("PRC") antibribery laws, regulations and government enforcement actions is brought to you with the assistance of our colleagues in Squire Sanders' Shanghai Office.

Enforcement Actions

(1)  On February 8, 2012, Chen Meng (“Chen”), former chief deputy official of Putuo District, Shanghai, went on trial at the Shanghai No. 2 Intermediate People’s Court for taking bribes exceeding RMB 15,000,000 (US$ 2,380,952).

In exchange for the foregoing bribes, Chen is alleged to have abused his power during his term as the deputy chief of Songjiang District, Shanghai to secure construction contracts for the bribers and provide illegal assistance in connection with the company registration and the land trading business of the bribers.

(2)  On February 11, 2012, the dismissal of Gu Junshan (“Gu”), senior officer of People’s Liberation Army was confirmed by an official source.

Gu, a former lieutenant general, was reported to have abused his powers by purchasing up-market real estate in downtown Shanghai for a price significantly lower than the market price and later selling the same property to private real estate developers in exchange for a tidy profit.

(3)  On February 19, 2012, Yang Yiming (“Yang”), former deputy chief of Chinese Football Association (“CFA”), was sentenced to 10 years and 6 months in prison for allegedly taking bribes of RMB 1,254,000 (US$ 200,000). On the same day, Zhang Jianqiang (“Zhang”), former chairman of China Football Association Referee Commission, was sentenced to 12 years in prison for allegedly taking bribes of RMB 2,730,000 (US$ 433,000).

Both Yang and Zhang were exempted from facing the more serious charge of taking bribes as state functionaries, despite earlier debate that their positions in the CFA may have qualified them as state staff members. Under PRC law, state functionaries face much tougher penalties for taking bribes than those who are not civil servants. Officials taking bribes can be sentenced to death for the most serious offenses, while the maximum sentence for non-state officials committing bribery is five years plus set prison terms.

The owner of the football club, Xu Hongta, that purportedly offered the bribes to the convicted, received a one year suspended sentence.

(4)  On February 20, 2012, Liu Yuncai (“Liu”), vice mayor of Xiangxiang City in China’s Hunan province was sentenced to 15 years in prison for allegedly taking bribes worth approximately RMB 1,940,000 (US$ 318,000). Liu was also fined RMB 150,000 (US$ 23,810) and was required to forfeit all of his ill-gotten gains.

The charges alleged that during Liu’a term as a state official in charge of urban construction and utilities supply, he sought kickbacks from contractors and real estate developers in exchange for improper benefits.

(5)  Li Bingchun (“Li”), former bailiff of Liqiao County, Shunyi District, Beijing, was arrested on February 23, 2012 for allegedly taking bribes and embezzling money in a total amount exceeding RMB 38,700,000 (US$ 6,142,857).

During Li’s term as the bailiff of Liqiao County, he purportedly fabricated demolishing property to obtain demolition compensation exceeding RMB 20,000,000 (US$ 3,174,603).

In addition to the foregoing, Li allegedly received bribes in the form of pre-paid bank cards and gold bars and embezzled public funds in the total amount exceeding RMB 178,000,000 (US$ 18,253,968).

Other Developments

Further to a January 2012 announcement by the PRC's Supreme People’s Procuratorate (“SPP”) that it would intensify its investigation and prosecution of anti-corruption and anti-bribery cases, on February 16, 2012, the SPP announced the launch of a nation-wide online database recording individuals and companies convicted of bribery, which can be used for public inquiries and cross-regional investigations into bribery cases. Prior to this, there was no such national listing.

Conduct

• Following the close of the prosecution’s case on a trial for charges arising under the Foreign Corrupt Practices Act (“FCPA”), John Joseph O’Shea (“O’Shea”) was acquitted of all substantive FCPA counts, with the court (Southern District of Texas) finding that O’Shea’s conduct could be reasonably explained by lawful motives.
•  O’Shea, a former general manager of ABB, Inc., a Texas-based business that provided products and services to electrical utilities, was arrested in 2009 for his alleged role in a conspiracy to bribe Mexican government officials to secure contracts with the Comisión Federal de Electricidad (CFE), a Mexican state-owned utility company, through a Mexican sales agent, Esimex.  One of O’Shea’s responsibilities was approving payments to sales representatives.  O’Shea was charged with money laundering, falsification of records in a federal investigation, conspiracy to violate the FCPA, and twelve substantive counts of violating the FCPA.  
•  The indictment alleged that ABB, Inc. contracted with Esimex to serve as its sales representative in Mexico, whereby Esimex received a percentage of the revenue generated from business with Mexican governmental utilities, including CFE.
• In December 1997, CFE awarded ABB with a contract to upgrade Mexico’s electrical network system.  Then, in 2003 CFE awarded ABB with a multi-year contract for maintenance and upgrades of the 1997 contracts.
• For the 2003 contract, the indictment alleged that O’Shea, officials at CFE, and others agreed that approximately ten-percent of the revenue ABB received from CFE would be returned to CFE officials as corrupt payments.  It was also allegedly agreed that O’Shea would receive approximately one-percent of the of the contract revenue as kickback payments.
• O’Shea and others allegedly used false invoices from Mexican companies as a basis to make international wire transfers, presenting such transfers as legitimate payments for technical services and maintenance support services.  The indictment alleged that these were actually corrupt wire transfers to companies that did not do any work for ABB. 
• According to the indictment, O’Shea authorized more than $900,000 in corrupt payments to CFE officials before an internal investigation by ABB’s parent company stopped the transfers and then voluntarily disclosed the payment to the DOJ and SEC.
• The indictment alleged that after O’Shea was terminated from ABB, he conspired with others to conceal the illegal nature of payments, and created fake, back-dated correspondence as well as false documentation purporting to substantiate the work companies claimed to have performed.

Penalties

• On January 17, 2012, the court granted a defense motion for acquittal, and O’Shea was found not guilty of all substantive FCPA charges.  The motion was granted at the close of the federal prosecutors’ case, and the jury was dismissed.
• In a press release, O’Shea’s counsel noted that when announcing his ruling, U.S. District Judge Lynn Hughes found that “the Government’s chief witness, an Esimex principal awaiting sentencing on conspiracy charges, could not tie Mr. O’Shea to the alleged crimes,” and that “O’Shea’s conduct, including efforts to renew an ABB-Esimex contract, was reasonably explained by lawful motives.”
• In 2010, ABB, Inc. pled guilty to one count of conspiracy to violate the FCPA and one count of violating the FCPA.  Also in 2010, ABB, Inc.’s parent company, ABB Ltd., reached a $58 million settlement with DOJ and the SEC.
• In 2009, Fernando Maya Basurto, a Mexican citizen and principal of Esimex, pled guilty to a one-count information charging him for his role in the conspiracy.  He admitted that he conspired to make corrupt payments to CFE officials, helped launder bribe monies, and engaged in a cover up to obstruct the investigations of the DOJ and SEC.  He further admitted that he submitted false invoices and helped fabricate correspondence in anticipation of federal investigations into the bribery.

On February 1, 2012 Russia ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the Convention)

The Convention was adopted by the Organisation for Economic Co-operation and Development (OECD) in 1997. It provides that signatories undertake to amend national legislation to criminalize bribery of foreign public officials by establishing that:

it is a criminal offence under its law for any person intentionally to offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries, to a foreign public official, for that official or a third party, in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of international business. [Convention, Article 1]

The adoption of such national legislation is the main condition for joining the Convention.

The Convention ratification by the State Duma is "a final result of more than ten years of work," said Alexander Fedorov, the first deputy Minister of Justice, who presented the ratification bill. Mr. Fedorov further stated that the Russian legislation already has been amended "to ensure that the Russian law is consistent with the Convention provisions."

In fact, many amendments were introduced in the course of 2009 and 2010 as part of the anticorruption drive initiated by President Medvedev, under which commercial bribery in addition to public bribery became criminal offenses. However, Kirill Kabanov, Head of the National Anticorruption Committee, reportedly said that additional amendments to the law need to be made to allow for legal entities to be criminally prosecuted, which currently is not possible under Russian law.  Mr. Kabanov noted that the areas of greatest risk for Russian companies operating abroad are Latin America and Africa, particularly in the following sectors: natural resources, gas and oil transportation, property management and arms and technology sales. (See Rossiskaya Gazeta, Feb 1, 2012 edition).

Presently, Russian law imposes liability not only for giving and taking a bribe (including both commercial and public official bribery) but also for acting as an intermediary in the transmission of a bribe. Moreover, in May 2011 the Russian Criminal Code and Code of Administrative Offences were amended to increase the liability for corruption-related offenses. The adoption of the Convention, however, broadens current law due to the mutual legal assistance and extradition undertakings adopted by the Russian Federation as a consequence of Convention ratification.

In 2011 Russia’s corruption ranking issued by Transparency International improved to 143 from 154 in 2010. Ratification of the Convention should help to continue this positive trend and further improve Russia’s international standing, which recently was bolstered by Russia’s entry into the WTO.

Squire Sanders' updated overview of Russia's anticorruption laws can be found here.

1 февраля 2012 г. Россия ратифицировала международную Конвенцию ОЭСР по борьбе с подкупом иностранных должностных лиц при осуществлении международной коммерческой деятельности (Конвенция).

Конвенция принята в 1997 году Организацией экономического сотрудничества и развития (ОЭСР). Конвенция предусматривает, что страны, присоединившиеся к ней, обязуются изменить свое законодательство так, чтобы подкуп, включая иностранные лица, признавался уголовным преступлением, а именно включить следующие нормы в национальное законодательство:

сознательное предложение, обещание или предоставление прямо или через посредников любых неправомерных имущественных или иных преимуществ иностранному должностному лицу в пользу должностных лиц иностранных государств или для таких должностных лиц, или для третьих лиц в обмен на определенные действия или бездействие данного должностного лица в связи с выполнением своих служебных обязанностей в целях получения или сохранения деловой выгоды, а также получения ненадлежащих преимуществ при осуществлении международных деловых операций образует состав уголовно наказуемого преступления. [Конвенция, статья 1] 

Измененное таким образом национальное законодательство признается ОЭСР главным условием для присоединения к Конвенции.

Ратификация Конвенции в Госдуме стала "итогом более чем десятилетней работы", сообщил первый заместитель министра юстиции Александр Федоров, который представлял проект закона о ратификации. Далее г-н Федоров отметил, что в российское законодательство уже внесены изменения, "обеспечивающие соответствие российского законодательства положениям Конвенции".

В действительности, большая часть изменений была внесена в 2009 и 2010 годах в ходе законодательного усиления противодействия коррупции, которое инициировал президент России Дмитрий Медведев, в соответствии с которыми не только взятка, но и коммерческий подкуп признаются уголовными преступлениями. При этом, как сообщается,  Кирилл Кабанов, глава Национального Антикоррупционного Комитета, заявил, что для уголовного преследования юридических лиц, которое сейчас по российскому законодательству невозможно, потребуется внесение дополнительных изменений в законодательство. Г-н Кабанов заявил, что наиболее рискованными регионами для российских компаний, работающих за рубежом, являются Латинская Америка и Африка, и в особенности следующие сектора: добыча природных ресурсов, транспортировка нефти и газа, управление имуществом и поставки военной и сложной технической продукции (см. Российская Газета, выпуск от 1 февраля 20112 года). 

В настоящее время российским законодательством предусмотрена ответственность не только за дачу и получение взятки (в том числе лицу, выполняющему управленческие функции в коммерческой или иной организации, а также иностранному должностному лицу), но и за посредничество во взяточничестве. Кроме того, в мае 2011 г. в российский Уголовный кодекс и в Кодекс об административных правонарушениях были внесены изменения, увеличивающие ответственность за правонарушения, связанные с коррупцией. При этом принятие Конвенции расширяет сферу применения действующего законодательства за счет обязательств по взаимной юридической помощи и экстрадиции как следствие ратификации Конвенции.

Международная организация «Трансперенси Интернешнл» обнародовала рейтинг коррумпированности государств, в соответствии с которым в 2011 г. Россия переместилась на 143-е место по сравнению с154-ым местом в 2010 г. Присоединение России к Конвенции должно поспособствовать дальнейшему продвижению вверх в данном рейтинге, а также увеличить привлекательность России для инвесторов, которая повысилась в связи с недавним вступлением России в ВТО.