The ever-dynamic forms of international corruption involving financial crimes have elicited a hard global stance and posture in battling bribery and other related financial crimes. There is now a trend towards symbiotic and collective legal cooperation among various nations of the world in confronting international financial crimes and corruption. The reason for this development is not farfetched as there is no single country in the world that is not negatively affected by the international odium occasioned by this pervasive problem. Recently there have been efforts by some countries to enact extra territorial laws aimed at ensuring that their citizens, wherever they may be, do not contribute to an already escalated crime of global financial crimes. This summary will look at some of the anti corruption legislations in Nigeria together with their extra territorial counterparts in the United Kingdom and United States with a view to advising foreigners intending to invest in Nigeria on the best practices to be adopted in avoiding being caught in the web of the extra territorial laws of their home countries in Nigeria or applicable local laws. We commence with the various anti corruption legislations in Nigeria.
1. CORRUPT PRACTICES AND OTHER RELATED OFFENCES ACT (ICPC ACT)
The Corrupt Practices and Other Related Offences Act Cap C31, Laws of the Federation of Nigeria 2004 established the Independent Corrupt Practices Commission (ICPC), which is one of the major anti corruption agencies in Nigeria. The Act generally prohibits the various perceived acts of corrupt practices arising from interactions or transactions involving public/government officers and the general public or private individuals. The basic thrust of the Act is prohibition of corrupt practices and bribery the essential elements of which are: giving or receiving a thing of value to influence an official act. The Act defines corruption to include bribery, fraud and other related offences while persons are defined to include natural persons, juristic persons or any body of persons corporate or incorporate. Although the Act seems to focus more on acts of corruption in public offices, institutions and parastatals, it equally seeks to curb corrupt practices in private business transactions and inter personal relationships among individuals and persons.
The Act, which is made up of 56 sections is not clearly marked into parts. However the most relevant part of the Act for the purpose of this summary is the offences and penalties part particularly those that are relevant to foreigners who intend to invest in Nigeria. The offences and penalties sections run from section 12 to section 29. The various offences punishable under the sections include willful giving and receipt of gratification and bribery to influence a public duty, fraudulent acquisition and receipt of properties, deliberate frustration of investigation by the anti-corruption commission (ICPC), making of false returns, making of false or misleading statement to the Anti-Corruption Commission, attempts, conspiracies and abetments of the offences under the Act.
Offences and Penalties
The Act created four categories of offences in the eighteen sections dealing with offences under the Act. The four categories of offences are:
- Giving and Receiving of bribes to influence public duty
- Fraudulent Acquisition and Receipt of Properties
- Failure to Report Bribery Transactions
- Concealment of Information and Frustration of Investigation
a. Giving/Offering and Demand/Receipt of Gratification
The Act prohibits direct or indirect giving/offering and receipt of bribes or gratification for the purpose of influencing official acts related to official duties. The various instances under which bribes may be given or received are also treated under the Act. Thus the Act prohibits corruptly giving or receiving gratification for or on behalf of public officers for performance or non performance of official duties (section 12, 13 and 14), giving and receiving of bribery through agents (section 20), bribery of a public officer with intent to influence decision making and other related official acts (section 21), bribery with intent of inducing a person to abstain from bidding on any auction conducted by or on behalf of any public body (section 24) and bribery to influence contract award (section 25).
The gratification need not be in cash alone but also includes non-tangible effects such as dignity, employment and forbearance, office and employment among other things.
A person will be caught by the any of the provision, whether he is the giver or receiver of bribe for himself or on behalf of another, if he or she corruptly and directly or indirectly, offers/receives promises or gives/receives a financial or other advantage, from or to another person, intending that this induces someone to, or rewards someone for, performing a relevant act or duty improperly. The act for which the offer or receipt of bribe is made may be an actual or promised act. The criminal intent or the mens rea in the sections is “corruptly”. The Act only defined corruption but not the word “corruptly”. Both words though literarily related are not synonymous. In the case of Cooper v Slade,  HL Cas 746, the leading case in England on the meaning of “corruptly”, the House of Lords took the view that “corruptly” meant “purposely doing an act which the law forbids as tending to corrupt”. The Black’s Law Dictionary however defines corruptly when used in a criminal law statute to mean as indicating a wrongful desire for pecuniary gain or other advantages. It therefore means that to be guilty under these sections, the gratification must have been given or received with a wrongful desire for pecuniary gains.
Another factor to be borne in mind with respect to the sections is that the acts or omissions for which the bribe is given may or may not be or related to an official act. The Act defined officials to mean any director, functionary, officer, agent, servant, privy or employee serving in any capacity whatsoever in the public body, or in any private organization, corporate body, political party, institution or other empowerment whether under a contract of service or contract for service or otherwise, and whether in an executive capacity or not. A public officer on the other hand is defined in the Act to mean a person employed or engaged in any capacity in the public service of the Federation, State or Local Government, public corporations or private company wholly or jointly floated by any government or its agency including the subsidiary of any such company whether located within or outside Nigeria and includes subsidiary of any such company whether located within or outside Nigeria and judicial officers serving in magistrate or customary courts or tribunals. The definition makes it clear that the Act is not concerned with acts of public officials alone but with acts of management and employees of private companies in which government is a shareholder or which is related to the governments.
Equally worthy of note is Section 13(2) of the Act which creates a presumption of existence of an intention to corruptly give or receive gratifications if in any proceedings for an offence under the sections it is proved that any Property or benefit of any kind, or any promise thereof, was given to a public officer or some other person at the instance of a public officer, by a person:
i. Holding or seeking to obtain a contract, license, permit, employment or anything whatsoever from a Government department, public body or other organization or institution in which that public officer is serving as such, or
ii. Concerned or likely to be concerned in any proceeding or business transacted, pending or likely to be transacted before or by that public officer or a government department, public body or other organization or institution in which that public officer is serving as such, or
iii. Acting on behalf of or relative to such a person,
With respect to gratification through agents, the provisions were wide enough to provide for instances where both the agent and principal may be criminally liable. Once bribery or inducement is proved to have been given or received through or by an agent for an act, then both the agent and principal will be criminally liable. Section 20(2) defines consideration to include valuable consideration of any kind. The expression “agent” under the section is defined to include any person employed by or acting for another. The test to determine guilt in this case will be whether the act was carried out with the intent to corrupt by both or either the agent or the principal and whether the principal will ordinarily be vicariously liable for the act of agent under the circumstances.
b. Fraudulent Acquisition and Receipt of Property
Sections 15 and 16 seek to prohibit fraudulent acquisition of properties. Section 15 states that it is an offence for any person, who being employed in the public service, to knowingly acquire or hold, directly or indirectly, otherwise than as a member of a joint stock company consisting of more than 20 persons, a private interest in any contract, agreement or investment emanating or connected with the department or office in which he is employed or which is made on account of public service in which he is employed or which is made on account of public service. The penalty for the offence is seven years imprisonment. Section 16 on the other hand punishes fraudulent receipt of properties or anything whether within or outside Nigeria, obtained by means of a felony or a misdemeanor or by means of acts done at a place outside Nigeria which if done in Nigeria would have amounted to a felony or misdemeanor and would amount to an offence in the foreign country. To be guilty however, the receiver must have the knowledge that the property was obtained fraudulently by means of a felony or misdemeanor.
c. Duty to report bribery transaction
Section 26 imposes a duty on both public officers and private individuals to report bribery transactions. While it imposes a duty on a public officer to whom bribe is offered to report the incidence to the ICPC or the police, it also imposes a similar duty on private individuals from whom bribery is demanded. Failure to report such an incidence without reasonable excuse is an offence punishable with imprisonment and or fine.
d. Concealment of Information and Frustration of Investigation
Another major offence created by the Act is the concealment of information from the enforcement agencies and deliberate frustration of investigation into corruption related matters. Offences under this heading includes making false or misleading statement to the anti corruption agencies (section 28), deliberate frustration of investigation by the anti corruption agencies (section 18) and concealment of gratification (section 27). However to be guilty under this heading, there must be a proof of knowledge and the intention to conceal or frustrate investigations by the enforcement agencies.
2. ECONOMIC AND FINANCIAL CRIMES COMMISSION (ESTABLISHMENT) ACT
Financial and economic crime is no new phenomenon and Nigeria like all other countries is well aware of the detrimental effects of financial crime on the individuals within the community and society as a whole. The Economic and Financial Crimes Commission Act 2002 (LFN 2004) (the Act) came into force on the 14th December 2002. The Act establishes the Economic and Financial Crimes Commission EFCC (the Commission) as the overarching body designated with the primary responsibility of investigating and prosecuting economic crimes and bringing perpetrators of such crimes within the ambit of the law. Section 46 of the Act defines “Economic Crime” as a „nonviolent criminal activity committed with the objectives of earning wealth illegally” Section 5 of the Act sets out the various offences with which the Act is concerned and the list is not exhaustive.
The Act is a tool for holistic approach to combating economic crimes in Nigeria. This can be seen when a review is made of the membership of the Commission and its powers under the Act. The membership of the Commission is drawn from virtually all the government bodies saddled with economic issues while the Commission has the powers of not only investigating and enforcement of the provisions of the Act but also the enforcement of other legislations dealing with various economic crimes. Thus section 7 of the Act confers special powers on the Commission to enforce the provisions of such other laws as:
- The Money laundering Act
- The Advanced Fee Fraud and Other Related Offences Act
- The Failed Banks (Recovery of Debt and Financial Malpractices in Banks) Act
- The Banks and other Financial Institutions Act
- Miscellaneous Offences Act
- Any other law or regulation relating to economic and financial crimes including the Criminal Code and Penal Code.
However the relevant provisions for the purpose of this summary as it relates to the powers of Commission are:
- Coordination and enforcement of all economic and financial crimes laws and enforcement functions.
- Adoption of measures to eradicate the commission of economic and financial crimes
- Adoption of measures for the prevention of economic and financial crimes.
- Facilitation and rapid exchange of scientific and technical information and the conduct of joint operations geared towards the eradication of economic and financial crimes.
- Examination and investigation of all reported cases of economic and financial crimes with a view to identifying individuals and corporate bodies involved.
- Collaborating with government bodies within and outside Nigeria carrying on functions wholly or in part analogous with those of the commission.
- Identification and determination of whereabouts and activities of persons suspected of being involved in economic and financial crimes.
- Movement of proceeds or properties derived from the commission of economic and financial crimes.
- Establishment and maintenance of a system for monitoring international economic and financial crimes in order to identify suspicious transactions and persons involved.
- Taking charge of supervising, controlling, coordinating all the responsibilities, functions and activities relating to the current investigation and prosecution of all offences connected with or relating to economic and financial crimes in consultation with the attorney general of the federation.
- The coordination of all existing and financial crimes investigating units in Nigeria.
- Carrying out such other activities as are necessary or expedient for the full, discharge of all or any of the functions conferred on it under the Act.
It is apparent that both individuals as well as corporate bodies in their day-to-day business might commit or be a victim of one or more of the various criminal activities proscribed by the Act. This might be deliberate or through inadvertence. It is therefore important that they are watchful of how their business operates, so as to ensure that they are not caught by the provision. It is worth mentioning that the list provided in section 5(1) is not exhaustive, but is only intended to give an idea of the nature of offences, which the EFCC will investigate.
Offences and Penalties
Part IV of the Act provides for the specific offences, which are caught by the Act. However the offences that should be of concern to foreign investors will be highlighted herein. These include the following.
- Offences relating to Financial Malpractice
This provision should be of great importance to investors in the banking and other financial services related sector as it relates to personnel employed in banks or other financial institutions. Moreover with the strict liability and extra territorial posture of the English Bribery Act 2010, foreign business owners with interest in the banking sector will do well to heed the provisions. Section 13 of the Act requires that personnel working in banks and other financial institutions must neither fail nor neglect to secure compliance with the provisions of the Act. Section 13(1) (b) further requires that they must ensure the authenticity of any statement submitted pursuant to the provisions of the Act.
It is therefore important for personnel within the financial sector to know the offences which may be committed under the Act and ensure that they do not violate any of the provisions. It therefore imperative to know the nature of crimes such as failure or neglect to comply with the provisions of the Act under section 14, false information under section 15 and funding of terrorism under section 15 of the Act. Furthermore, where such personnel are required by the Act to provide any particulars or information, they must be sure to secure the authenticity of any statement, meaning any information given must be correct and credible. Breach of this provision incurs a term not exceeding 5 years or fifty thousand naira or both.
- Offences relating to terrorism This provision aims to capture a number of acts which may directly or indirectly fund or aid acts of terrorism. Section 14(1) covers persons who wilfully provide or collect by any means directly or indirectly, any money by any other person with intent that the money shall be used or has knowledge that the money shall be used for any act of terrorism. . It should also be noted that intent is not necessary. What is material is that the person was wilfully involved in the process of collecting the money and had the requisite knowledge that the funds were to be used for the promotion of terrorism. Section 14(2) goes on to cover persons who continue or attempt to participate or facilitate acts of terror. It catches persons who not only perform such acts, but who may attempt or actually facilitate such acts of terror. Lastly, Section 14(3) provides that persons who make funds, financial assets or economic resources or financial or other related services available for use of any other person to commit or attempt, facilitate, or participate in the commission of a terrorist act is liable. Therefore both individuals and corporations alike must ensure that they have full knowledge as to the personality of those affiliates, associates, trading partners and other organizations they may sponsor and ensure that adequate background checks are duly carried out prior to retaining their services. As earlier noted, intention is not a requirement, and an individual or corporate body may violate the provision though they are unaware of the repercussions of their actions/activities. The penalty for being caught by any of the s14 provisions is life imprisonment.
- Acquisition and Retention of Proceeds of a Criminal Conduct These offences are provided for under Sections 17 and 18 of the Act. Section 17(a) applies to persons who knowingly retain control of the proceeds of a criminal conduct or an illegal act on behalf of another. This retention may be by either concealment, removal, from jurisdiction or transfer to nominees. Section16(b) relates to instances where persons having knowledge of the fact that property in whole or part directly or indirectly represents another person’s proceeds of a criminal conduct, acquires or uses that property or has possession of it. The main ingredient for being guilty of the offence under this provision is having the requisite knowledge that the property is obtained or acquired through illegal acts or crime. Section 18 (a) on the other hand, makes it an offence for a person to knowingly acquire, possess or use property derived from the commission of any offence under this section. Section 18(b) also makes it an offence for anyone to manage, organize or finance any offences under the Act. Furthermore, by virtue of Section 18(c), engaging in the conversion or transfer of property which is derived from the commission of an offence is punishable under the Act. From the wording of the provision it appears that knowledge is not a requirement for such acts to fall foul of this sub section.
Lastly, by virtue of section 18(d), where a person attempts to conceal, disguise the true nature, source, location, disposition, movement, rights with respect to or ownership of property derived from commission of an offence, he would contravene the provisions of paragraph B above.
MONEY LAUNDERING PROHIBITION ACT 2004
The Money laundering Prohibition Act 2004 is directed or aimed at tracing, finding, freezing and possibly forfeiting among other things money and properties that have been acquired through illegal or prohibited means. Its intent is to prevent culprits from legitimizing proceeds from their criminal activities. It aims to detect, prevent and capture money acquired through one of many illegal means. The progenitor of the Act was basically enacted to combat “dirty money” gotten through trading in illicit drugs. However, over time, the scope of the law has been expanded through amendments to accommodate the dynamism of money laundering.
The Act is significantly symbiotic in nature, pooling resources and various anti money laundering agencies together in the battle against one of the most sophisticated crimes in the world. Thus bodies such as:
a. The Central Bank of Nigeria
b) The Nigerian Customs Service
c) The Nigerian Securities and Exchange Commission
d) The National Drug Law Enforcement Agency
e) The Economic and Financial Crimes Commission;
f) The Corporate Affairs Commission; and even
g) The Federal High Courts are united under the Act to fight money laundering.
Offences and Penalties
The stance of the Act in combating the crime is in form of prohibition and punishment of concealment and retention of properties obtained through money laundering, obstruction of investigation, conspiracy, aiding and abetting money laundering. Private persons and corporate bodies are also saddled with various duties aimed at aiding in combating the crime.
The Act prohibits certain activities that may encourage money laundering at the pains of imprisonment or fine. Thus it provides in Section 1 that a person or body corporate is prohibited from making or accepting cash payment in excess of N500, 000 in the case of an individual or N2 million in the case of a corporate body. The only exception to this provision is where the transaction in question is made through a financial institution. It should be noted that in addition to the punishment for being caught by this provision, a person found guilty of the offence may be banned indefinitely or for a period of 5 years from exercising the profession that provided him the opportunity to commit the offence.
a. Concealment and Retention of Properties Obtained through Money Laundering: The Act by virtue of Section 14 (1) (a) states that any person who converts or transfers resources or property derived from illicit dealings in narcotic drugs or other crime or illegal act with the aim of concealing or disguising its illegal origin to evade the legal consequences of his action commits an offence. Section 14 (1) (b) on the other hand prohibits any act aimed at collaborating by and with any person in concealing or disguising the illegal nature of properties or resources obtained through money laundering. This is a very fundamental provision of the Act as the possibilities of committing other offences proscribed by this Act depend largely upon successful concealment. Section 16 of the Act proscribes retention of the proceeds of a criminal conduct with the knowledge that their source is prohibited. Again like other forms of offences created in the preceding laws, guilty knowledge is a required ingredient for conviction. From the excerpts above it can be seen that actual participation is not where the law stops. Merely collaborating/concealing or disguising are sufficient to constitute an offence.
b. Conspiracy, aiding and abetting The normal provisions on conspiracy, aiding and abetting of a crime are contained in Section 17 of the Act.
- Obstruction Any person who obstructs the Commission, Agency or officer in the performance of their duties under the Act commits an offence and liable on conviction to a term of imprisonment of not less than 2 years and not more than 3 years without an option of fine in the case of an individual. For a financial institution or corporate body the fine is 1 Million Naira. Although the Act has prohibition as part of its title, these are the few sections couched in the negative sense. The remaining sections are couched in the positive sense, in that they impose duties which we shall now examine.
e. Offences by a Body Corporate Section 18 of the Act is quite instructive. It provides for liability of management and employees of corporate bodies upon proof that a crime was committed on the instigation or with the connivance of or attributable to any neglect on the part of a director, manager, secretary or other similar officer of the body corporate or any person purporting to act in that capacity. Such an officer as well as the body corporate shall be liable to be proceeded against and punished accordingly. Moreover by virtue of Section 11(1) of the Act, where there is evidence of conspiracy between owner of funds and the institution (financial or non financial) criminal proceedings may be brought for all such offences against the directors and employees involved.
As part of means of combating money laundering, the Act saddled private persons and corporate bodies including financial and non financial institutions and their employees with certain duties. The duties include:
1. The Duty of Reporting.
The Act under Section 2(1) requires corporate bodies and individuals to report to the Central Bank and the Securities and Exchange Commission any international transfer of funds or securities in excess of USD 10,000. Similar report must also be made by the Nigerian Customs Service and all these reports must be forwarded to the Economic and Financial Crimes Commission (EFCC) on a weekly basis.
2. The Duty of Documentation/Identification of Customers (KYC)
Know your Clients/Customers (KYC) is another requirement on financial institutions imposed by Section 3 of the Act. Before entering into a business relationship with any clients, the institutions have an obligation to collect certain particulars about the client. This is to ensure
that the firms are fully aware of whom they deal with, and also that in the event that the commission requires this information, it may be readily available. Individuals may be identified by “Original Documents bearing their names” or “Originals of receipts issued within the previous three months by public utilities. Bodies corporate on the other hand, may be identified by their certificate of incorporation or other valid documents attesting to the existence of a body corporate. Where a body corporate seeks to open an account, the designated employee, delegated with any such task must provide a power of attorney as proof of such authority. Casual customers are also caught within the ambit of the Act as they also are required to furnish the financial institution with the same information as individuals. The provision is specially provided for instances where a series or number of transactions are carried out the value of which exceeds USD 5000.
Where a financial Institution suspects that a transactions being made with proceeds of a crime or an illegal act has occur, it has a duty to obtain identification of the customers involved notwithstanding the transaction value may be less than $5000. Furthermore, where there is a suspicion that the customer may be operating an account which is not his, the institution shall seek from the customer by all means, information as to the true identity of the principal.
A similar duty is imposed on Casinos. This is because Casinos are an easy target for money launderers as, lots of cash exchanges hands, in a very non formal manner. This has drawn the attention of the authorities to the potential loophole, leading to the inclusion of Section 4 in the Act. It provides that where a business operates a casino it requires that customers verify their identity through the presentation of documents which bear their name and addresses. Furthermore particulars of all transaction between such gaming houses and the customers must be full and accurately documented and such records must be preserved for a minimum period of 5 years from the date the last transaction was recorded.
4. Special Surveillance on Suspicious Transactions
Where transactions are of an unjustifiable or unreasonable frequency, is shrouded in unusual circumstances, lack an economic justification or a lawful objective, the institution (financial or non financial) must within 7days do the following:
a) Draw up a written report of the transaction,
b) Take appropriate steps to prevent laundering,
c) Provide the commission with a copy of the report.
THE ENGLISH BRIBERY ACT 2010
Bribery Act 2010 (the “Act”), which will come into force in the United Kingdom in April this year, is quite significant when it comes to international commercial trade, transactions and related interactions. It can be regarded as one of the best contribution from the United Kingdom in the global war against trans-border crimes especially corruption. The legislation comes at a time of improved global collaboration between agencies and regulators not only in matters relating to bribery and corruption, but in connection with financial fraud, insider dealing and related activities. The extensive powers provided by the Act will be used by UK enforcement agencies such as the Serious Fraud Office (“SFO”) to clamp down on corrupt behaviour. Furthermore, the Act has far-reaching implications for any business which is either registered in the UK or which has any part of its operation in the UK. The extent, stance and significance of the Act mean that English corporate entities and their senior officers intending to do business in other countries would be well advised to familiarise themselves not only with the effects of the Act but also with the laws of the countries where they intend to do business.
Offences and Penalties
The Act sets out three broad forms of offences namely: giving/ offering and demanding/receipt of bribery, bribing a foreign public official and failure of a commercial organisation to prevent bribery.
The Bribery Act outlaws bribery either in the form of offering/giving or in the form of demanding/ receiving. There have been various laws in the United Kingdom outlawing bribery. The new Act continues to make such conduct illegal. One key element of the bribery offences under the Act is that the intention of the briber is that the person being bribed improperly performs his/her duties. Improper performance is defined by reference to a failure to perform one’s duties in line with a relevant expectation. The relevant expectations as outlined in the Act are:
I. that the function will be performed in good faith
II. that the function will be performed impartially; or
III. that the function imports a position of trust.
It is immaterial that the person to whom the bribe is offered or given is the same person who is to perform the function or activity concerned. It also does not matter if the person who offered or gave the bribe is the same person who is to enjoy the benefit for which the bribe was being given. Moreover, in some cases, it is not necessary for the recipient to know or believe that the performance of the function or activity is improper. This principle applies to both public and private functions.
. Bribing a Foreign Public Official This is the revolutionary provision in the Act. While all other provisions in this Act speak of crimes that can be said to have been taken care of one way or the other in other legislations, the law criminalising bribery of foreign public official is quite novel in England. This crime will be committed if a person (or a third party at the request or acquiescence of the person) offers or gives a financial or other advantage to a foreign public official (or to a third party at the request or acquiescence of the foreign public official) in their capacity as a foreign public official with the aim of influencing the foreign public official and obtaining or retaining business, where the foreign public official was neither permitted nor required by written law to be so influenced. This is a narrower test than the general offences, in particular in view the “business nexus” element. With the extra-territorial posture of the Act, it can be argued that this provision is a mere surplusage. As it is hard to see what this offence adds to the general offences in the Act. There is no requirement for a prosecutor to prove that the person who paid the bribe “intended” to bribe. It is also immaterial that the foreign public official does not have the authority to perform the function which the bribe sought to influence. These Officials must hold legislative, administrative or judicial positions for a foreign country or for a foreign public agency or enterprise.
. Failure of a Commercial Organisation to Prevent Bribery (the “Corporate Offence”). This is another radical provision in the Act. It also saddles on commercial organisations the duty to review their procedures and practices in light of the law. The offence created under this heading has been described as quite controversial. It can be committed only by commercial organisations (companies and partnerships). Under this head of offence, a commercial organisation will be guilty of an offence if it fails to prevent an “associated” person from bribing another person with the intention of obtaining business, or an advantage in the conduct of business, for that commercial organisation. This offence is focused at changing the current rules on corporate attribution as it relates to the offence of bribery. Previously, a company is only likely to be guilty of a bribery offence only if very senior management are involved. However under this new dispensation, a business organisation may be guilty of the offence under this Act even if no one within the company knew of the bribery. Thus the Act creates a strict liability offence. The only defence that can avail a company is provided in Section 7 (2) which states that it is a defence for the accused company to prove that it had in place adequate procedures designed to prevent persons associated with it from undertaking such conduct. This provision effectively creates a burden on business organisations to ensure that their anti-corruption procedures are adequately elaborate to stop any employees, agents or other third parties acting on their behalf from committing bribery.
The Act defines “Person” in this context to mean either a corporate entity or a natural person. For the meaning of „associated person‟, the Act provides that, a person is associated with a business organisation he performs services for or on behalf of the business organisation. The Act further states that the capacity in which the associated person performs services for or on behalf of a business organisation does not matter. Accordingly an associate may (for example) be an employee, agent or subsidiary. The test in determining whether or not an associate is a person who performs services for or on behalf of a corporate body is to be determined by reference to all the relevant circumstances and not merely by reference to the nature of the relationship between the associate and the corporate organisation. The Act goes further to state that if an associate is an employee, it is to be presumed unless the contrary is shown that the associate is a person who performs services for or on behalf of the company.
One innovative character of the Act apart from strict liability imposed on companies and business organisations is that all the offences therein will have extra-territorial application, and the offences may be prosecuted if:
a. committed by a British national or body corporate or by a person who is ordinarily resident in the United Kingdom regardless of whether the act or omission which forms part of the offence took place outside the United Kingdom; and/or
b. any act or omission which forms part of the offence occurs within the UK. In addition, the corporate criminal offence will apply to commercial organisations which have a business presence in the UK (regardless of where the bribe is paid or whether the procedures are controlled from the UK). This extends the reach of the legislation well beyond what used to be that case.
THE AMERICAN FOREIGN CORRUPT PRACTICES ACT
The Foreign Corrupt Practices Act (FCPA) is an American legislative response to the discovery of massive corrupt practices indulged by American companies which in the course of investigations by the American Securities and Exchange Commission in the mid-1970’s admitted making questionable or illegal payments in excess of $300 million to foreign government officials, politicians, and political parties. Basically the anti-bribery provisions of the FCPA which was passed in 1977 make it an offence for a U.S. person, and certain foreign companies, to directly or indirectly make a corrupt payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person. Since 1998, the provisions also apply to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the United States.
Offences and Penalties
Section 78dd-1 of the Act titled Prohibited foreign trade practices by issuers states that it shall be unlawful for companies domiciled in the US, or for any officer, director, employee, or agent of such companies or any stockholder thereof acting on behalf of such companies, to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to any foreign official for the purposes of influencing any act or decision of such foreign official in his official capacity in order to assist the bribing company in obtaining or retaining business for or with, or directing business to, any person. The prohibition also extends to directly or indirectly bribing of foreign political party or official thereof or any candidate for foreign political office for purposes of obtaining undue commercial advantage.
However, by virtue of Section 78dd-1 (b) the Act provides for an exception to the general rule by stating that any facilitating or expediting payment to a foreign official, political party, or party official the purpose of which is to expedite or to secure the performance of a routine governmental action by a foreign official, political party, or party official will not constitute an offence under the Act.
By virtue of Section 78dd-1 (c) It shall be an affirmative defence to actions under the Act to prove that the payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the foreign official‟s, political party‟s, party official‟s, or candidate‟s country; or they were reasonable and bona fide expenditure, such as travel and lodging expenses, incurred by or on behalf of a foreign official, party, party official, or candidate and was directly related to the promotion, demonstration, or explanation of products or services; or the execution or performance of a contract with a foreign government or agency thereof.
Persons that could be caught by the Act include individuals, firms, officers, directors, employees, or agents of a firm and any stockholder acting on behalf of a firm. Individuals and firms may also be penalized if they order, authorize, or assist someone else to violate the anti-bribery provisions or if they conspire to violate those provisions.
Key Points to Note:
The extra territoriality in matters relating to financial crimes and corruption will more generally become increasingly common and take the centre stage globally as time passes. It is therefore crucial that foreign corporate organisations especially those with laws similar to the Bribery Act and the FCPA take local law advice in each jurisdiction in which they operate. They should seek to apply, as a bench mark, the most stringent applicable standards. Moreover the advice to be rendered to a foreign company operating in Nigeria as it concerns anti-corruption compliance program will basically depend on the parent country of the company. For instance, although the BA and FCPA deal with similar offences, their outreach and focus are different. This brings us to a brief comparison between the two statutes to highlight significant differences between the two Acts.
The Differences between the BA and the FCPA:
The BA is more far reaching than the FCPA. Although the two Acts prohibits corrupt payment in any form, the BA also includes corrupt payments made by individuals even if it does not relate to or involve any company. The FCPA on the other hand seeks to tie the corrupt payment to corporate organisations. Moreover, the payment to a foreign official under the FCPA needs to be made “corruptly” while by contrast, under the BA bribery of a foreign public official does not need to include an intention that the official will improperly perform his duties, nor does the payment need to be made “corruptly” as required by the FCPA.
Furthermore, there is no specific exemption for a legitimate promotional expenditure or a facilitation/ “grease” payment under the BA, such as is contained within the FCPA. All payments under the BA, no matter how small or routine, or expected by local customs, would be illegal. Also there is no strict liability provision in the FCPA as contained in the BA. The BA provides for strict liability in situations where a corporate organisation fails to prevent bribery by its associate. The only defence available to a UK company in such instance is to prove that it has in place adequate procedures designed to prevent persons associated with it from undertaking to bribe on its behalf. The failure to prevent bribery offence applies to any corporation or partnership (wherever it is registered, incorporated or conducts its main activities) as long as it carries on a business, or part of a business, in the UK. It also applies to conduct that takes place outside of the UK. This means that, as long as it carries on business in the UK, a foreign company can commit the failure to implement “adequate procedures” offence in relation to conduct in a foreign country that is not connected with any business undertaken in the UK. The Act‟s extra territorial reach is broader than that of the FCPA.
Avoidance of Liability:
The effect of the BA and FCPA are two pronged in nature. Not only must foreign corporate organisations be familiar with the respective Acts, they must also be familiar with the local laws applicable in the countries where they operate. This is more so especially with regards to the extra territorial offences since the corrupt payments to foreigners or foreign public official must be that which are prohibited by the laws of the country concerned. Under this heading various suggestions are proffered on how foreign corporations could avoid liability under the Acts.
a. Preparation and Commitment to Anti Bribery Compliance Policies
A company’s board of directors (or similar body) should take responsibility for establishing an anti-corruption compliance culture and programme. This means that each foreign corporation must develop and get itself committed to anti corruption/bribery policies as encouraged under the two Acts. The FCPA provides for issuance of guidelines and opinions by the Attorney General on, inter alia, general precautionary procedures which corporate organisations may use on a voluntary basis to conform their conduct to the Department of Justice‟s present enforcement policy regarding the preceding provisions of the Act on bribery of foreign officials. Thus the Attorney General shall issue the various forms of payments that may not constitute bribery. Under the BA, The Secretary of State must publish guidance about procedures that relevant commercial organisations can put in place to prevent persons associated with them from bribing as mentioned in section 7(1) of the Act. Corporate organisations will do well to seek professional services in drafting the anti corruption policies in compliance with the relevant provisions and co opting contents of the procedures from their home countries‟ legal departments and the anti bribery/corruption provisions of the local laws of the countries in which they operate. Associates and agents working with the companies must be made aware of such policies and undergo a relevant induction program upon employment by the firm. What this means is that where a company has operations carried out by another individual or entity on its behalf, even in small part, particularly in difficult jurisdictions, it is important to ensure that the third party is aware of and commits itself to the anti-bribery policies of the principal, that it is made aware of a zero tolerance culture within the organisation and that it is subject to appropriate due diligence and monitoring on an on-going basis. A senior officer should be responsible for overseeing the anti-corruption programme policies.
b. Development of Code of Conduct
In addition to policies on anti corruption, there should be developed a clear and unambiguous code of conduct by corporate organisations. The codes should be in line with internationally recognised codes as well as the local laws on corporate governance. The code should also include an anti-corruption element, and procedures established to assess the likely risks of corruption arising in a company’s business. The code should contain appropriate whistleblowing procedures to enable employees to report corruption in a safe and confidential manner, a gifts and hospitality policy to monitor giving and receipt of gifts and entertainment and an efficient system for investigating and resolving any problem that may arise in this area.
c. Training on Anti Corruption
There should be regular, tailored and comprehensive bribery and corruption training programmes at all employee levels (with reminders and updates on a regular basis). In essence corporate organisations should organise mandatory intermittent workshops and training for its staff on anti corruption compliance. Such trainings should be anchored by seasoned professionals and officials from government anti corruption agencies. This would enable the staff, associates and agents to have a firm grasp of the government‟s current attitude on corruption and what actions and payments would constitute bribery. Similarly there should be a constant interaction between the company and the various governmental agencies for the purpose of being familiar with the payments allowed under the law.
d. Anti Corruption Compliance Clauses in Employment and Contract Documents
Employment and documents creating contracts between corporate organisations and third parties should expressly contain anti corruption compliance clauses and state penalties relating to corruption. The documents should also expressly state that the third parties have read and understood the clauses and that they agreed that the clauses are binding on them.
e. Strict Financial Controls.
There is a need for comprehensive monitoring and internal financial controls/record-keeping to minimise the risk of bribery. Corporate organisations should create a strict culture or system of financial control that will go a long way in monitoring of payments and provide adequate financial controls to minimise the scope for corrupt acts to be committed. The financial control system should stipulate proper documentations and receipts for payments made for private and public services.
f. Robust Screening Processes for Third Party Payments.
This is important to avoid not only aiding and abetting corrupt practices but also to ensure that the company does not become a conduit pipe for concealment of properties obtained through illegal means or deal with laundered funds. There should be adequate due diligence and compliance with the local laws on transfer of large sums of money. Intra and inter territorial movement of money and other valuables in form of payments should undertake the legally approved routes. For instance, in Nigeria capital importation and repatriation by foreigners must be through the approved banks and comply with the provisions of the Foreign Exchange (Monitoring and Miscellaneous) Act 2004. Properties used in payment in lieu of cash should be scrutinised through a comprehensive due diligence and background check to prevent dealing with illicit properties.
g. Documented Due Diligence on Third Parties.
There should be a comprehensive and documented due diligence and background check of third parties who are “associated” with the commercial organisation together with detailed and regular audits of those third parties. Due diligence should also be conducted on any country in which business is to be conducted in order to identify country specific risks. In Nigeria, corporate organisations should take note of various duties as stipulated under the Money Laundering (Prohibition) Act 2004 and ensure that their financial and designated non financial associates and agents comply with the stipulated legal duties under the Act. Moreover they should deal only with properly qualified, approved and accredited professional agents both locally and in their respective countries of operations.
It has been stated that the anti-bribery procedures/guidelines as issued by the departments of justice in the US and UK are merely general in nature and may not cover country specifics. Moreover the suggestions outlined above are not exhaustive. Thus commercial organizations and individuals need to consult professionals for advice on country specifics and peculiarities of each financial environment.
S.P.A. Ajibade & Co January 2011.