Nowadays, fraud, bribery and corruption issues are rarely constrained by international boundaries. The discovery of bribery or corruption within an organisation can not only damage its reputation, but shake the confidence of its lenders, shareholders, employees, and customers.
Two global powers – the United States of America and the United Kingdom – have taken far-reaching steps to tackle corporate corruption and bribery of foreign government officials.
Anyone doing business in Iraq would be wise to remind themselves of the severe penalties that can be imposed as a result of bribery.
The United States of America, through the Department of Justice and the Securities and Exchange Commission, has dramatically increased its investigation and enforcement of the Foreign Corrupt Practices Act.
In addition, in 2010, the United Kingdom acted aggressively to address a historical weakness in its anti-bribery laws by enacting the UK Bribery Act. The legislation prohibits active bribery, passive bribery, bribing a foreign government official and failure of a corporate to prevent bribery. The UK Bribery Act also prohibits business to business bribery, including “facilitation/grease payments”.
The UK Bribery Act, combined with supporting whistle-blower legislation and active enforcement by the Serious Fraud Office in the UK, represent one of the world’s most aggressive anti-bribery efforts to date. For instance, an individual or a corporate can be prosecuted where they have a close connection with the UK, irrespective of where the bribe was paid. In relation to corporate offence of failure to prevent bribery, this applies to all UK companies and all overseas companies that carry on a business or part of a business in the UK if the bribery was committed in order to obtain or retain business or another commercial advantage for that company. Basically, it is irrelevant where the bribe was paid.
The UK Bribery Act is especially draconian as offences captured by the legislation are one of strict liability accompanied by severe consequences for individuals and companies which face unlimited fines.
In addition to the UK Bribery Act, there are multiple legislations that capture corrupt practices in Iraq, such as the Iraqi Penal Code (Sixth Section, Articles 307-313), Coalition Provisional Authority (CPA) Order No. 55, RCC Resolution No. 1990/1994, CPA Order No. 93 The Anti-Money Laundering Law, Board of Financial Audit Law (1990), Unlawful Gain Law (1958), Commission on Public Integrity Law (2004) and Iraqi Inspectors General Law (2004).
These Iraqi regulations prohibit anyone being an accessory to bribery, solicitation of bribery by public officials, facilitation of bribery, money laundering, financing a crime, providing false information in a financial disclosure, unlawfully hiding assets acquired through official employment, and unlawful gain. The laws apply to any prohibited conduct which has occurred in Iraq or has a predominant effect there. The punishments can be very severe, similarly to the UK Bribery Act where individuals could face fines and imprisonment for up to ten years.
A summary of the UK Bribery Act and the Iraqi regulations can be found at: http://www.eversheds.com/global/en/what/services/fraud-and-financial-crime/index.page