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Corporate & Commercial

Anti-Corruption Legislation- Corporates Take Action

By Sean O'Reilly
15 August, 2018

Background
The Criminal Justice (Corruption Offences) Act, 2018 (the“2018 Act”) was signed into law on 5 June, 2018. The 2018 Act was subsequently commenced by Ministerial Order with effect from 30 July 2018. It purports to replace a range of anti-corruption legislation stretching as far back as 1889, implement a number of recommendations of the Mahon Tribunal and give effect to a number of international instruments in the field of anti-corruption. Enactment of the 2018 Act is also a key aspect of the Government’s White Collar Crime Strategy. This insight contains a high level summary of the offences provided for in the 2018 Act and recommendations on steps which body corporates should take without delay as a consequence of its commencement. 

Position of Bodies Corporate
Section 18(1) of the 2018 Act ascribes to a body corporate the acts of its human agents. An offence will be deemed to have been committed by a body corporate if an offence under the 2018 Act is committed by any director, manager, secretary, officer, person purporting to act in any of the foregoing capacities, shadow director, employee, agent or subsidiary of that body corporate where such person has the intention of “obtaining or retaining—(i) business for the body corporate, or (ii) an advantage in the conduct of business for the body corporate.” 

Critically, bodies corporate may take proactive steps to ameliorate the risk of criminalisation of the body corporate for the acts of such human agents. It shall be a defence for a body corporate in proceedings for an offence under Section 18(1) for such body corporate to have taken “reasonable  steps  and  exercised  all  due  diligence  to  avoid  the  commission  of  the offence.”

Directors, managers, officers, secretaries, persons purporting to act in any of the foregoing capacities and potentially members may be personally liable for the offences of a body corporate under the 2018 Act where such offence was committed with the consent or connivance or was attributable to the neglect of, such person (Section 18(3)).    

Key Concepts
Corruptly
A number of provisions of the 2018 Act require the applicable acts or omissions to be committed “corruptly” in order for an offence to be established. The term “corruptly” is defined broadly and non-exhaustively to include “acting with an improper purpose personally or by influencing another person, whether- (a) by means of making a false or misleading statement, (b) by means of withholding, concealing, altering or destroying a document or other information, or (c) by other means”.

Official   
A number of the offences provided for in the 2018 Act centre on the “official”, whether as the target or agent of corruption. An official will be either an “Irish official” or a “foreign official”. Lists of categories of person each of whom qualify as an “Irish official” or “foreign official” are set out in Section 1. An “Irish official” includes “an officer, director, employee or member of an Irish public body (including a member of a local authority)” and any person “employed by or acting for or on behalf of the public administration of the State.” Schedule 1 identifies a number of categories of entity each of whom is an “Irish public body”. It includes “a company a majority of the shares in which are held by or on behalf of a Minister of the Government” and any “body, organisation or group appointed by the Government or a Minister of the Government”. The range of persons engaged by the organs of foreign states and international bodies captured by the definition of “foreign official” is similarly all-encompassing and includes any person “employed by or acting on behalf of the public administration of any other state, including a person under the direct or indirect control of the government of such a state.”

Offences
Sections 5 and 6 of the 2018 Act criminalise both sides of a corrupt transaction- donor and recipient.

Section 5- Active and Passive Corruption
Section 5(1) prohibits any person from directly or indirectly, by himself or herself or with another person corruptly offering, or corruptly giving or agreeing to give a gift, consideration or advantage to a person as an inducement to, or reward for, or otherwise on account of, any person doing an act in relation to his or her office, employment, position or business. Section 5(2) prohibits any person from directly or indirectly, by himself or herself or with another person corruptly requesting, corruptly accepting or obtaining, or corruptly agreeing to accept, for himself or herself or for any other person, a gift, consideration or advantage as an inducement to, or reward for, or otherwise on account of, any person doing an act in relation to his or her office, employment, position or business.

Section 6- Trading in Influence
Section 6(1) prohibits any person from directly or indirectly, by himself or herself or with another person corruptly offering, or corruptly giving or agreeing to give, a  gift,  consideration  or  advantage  in  order  to  induce  another  person  to  exert  an improper influence over an act of an official in relation to the office, employment, position or business of the official. Section 6(2) prohibits any person from directly or indirectly, by himself or herself or with another person corruptly requesting, corruptly accepting or obtaining, or corruptly agreeing to accept, for himself or herself or for any other person, a gift, consideration or advantage on account of a person promising or asserting the ability to improperly influence an official to do an act in relation to the office, employment, position or business of the official. 

Importantly, an offence will be committed under Section 6 even if the promised influence of an official cannot be delivered upon. Section 6(3) provides that it is “immaterial whether or not—(a) the alleged ability to exert an improper influence existed, (b) the influence is exerted, (c) the supposed influence leads to the intended result, or (d) the intended or actual recipient of the gift, consideration or advantage is the person whom it is intended to induce to exert influence.”

Section 7- Corruption in relation to office, employment, position or business.
Section 7 focusses on corruption on the part of Irish officials. Section 7(1) prohibits an Irish official from directly or indirectly, by himself or herself or with another person, doing an act in relation to his or her office, employment, position or business for the purpose of corruptly obtaining a gift, consideration or advantage for himself or herself or for any other person.  Section 7(2) prohibits an Irish official from using “confidential information obtained in the course of his or her office, employment, position or business for the purpose of corruptly obtaining a gift, consideration or advantage for himself or herself or for any other person.”

Section 8- Facilitation
Section 8 criminalises the facilitation of an offence under the 2018 Act. In particular, it shall be an offence for a person to give a gift, consideration or advantage to another person where the first mentioned person knows, or ought reasonably to know, that the gift, consideration or advantage, or a part of it, will be used to facilitate the commission of an offence under the 2018 Act.

Section 9- Creating or using false document.
Section 9 prohibits any person from directly or indirectly, by himself or herself or with another person, corruptly creating or using a document, that the person knows or believes to contain a statement which is false or misleading in a material particular, with the intention of inducing another person to do an act in relation to his or her office, employment, position or business to the prejudice of the last-mentioned person or another person. For the purposes of Section 9, a document includes material in electronic form.

Section 10- Intimidation
Section 10 criminalises the threatening of harm to a person “with the intention of corruptly influencing that person or another person to do an act in relation to the person’s office, employment, position or business”. Harm, for the purposes of Section 10, includes loss, disadvantage or injury of any kind.

Extraterritorial Effect
Sections 11 (corruption occurring partly in the State), 12 (corruption occurring outside the State) extend the reach of the 2018 Act outside of the Irish State. For instance, Section 12(1) provides that the commission of an act outside of the Irish State, by an Irish citizen, Irish registered company or body corporate established under the laws of Ireland, which would constitute an offence under Sections 5,6,7,8 or 18(1) or Section 9 concerning the creation or use of a false accounting, auditing or financial document shall be subject to the same penalty as if that act had been done within the Irish State, if that act also constitutes an offence under the laws of the place where it was committed.   

Presumptions
Presumptions provided for in Sections 14, 15 and 16 of the 2018 Act, make the task of those prosecuting alleged corruption easier and consequently that of persons defending alleged corruption more difficult. For instance, a gift, consideration or advantage which it is proven was given to or received by an official or person connected with him or her, by or from or on behalf of a person with an interest in the discharge by such official of any of the functions listed in Section 14(3) shall be presumed “to have been given and received corruptly as an inducement to, or reward for, or otherwise on account of, that official doing an act in relation to the performance of any of those functions, unless the contrary is proved”. A like presumption arises where it is proven that a gift, consideration or advantage was given to or received by, an official or a person connected with him or her who performed or omitted to perform any of the functions listed in Section 14(3) “so as to give rise to an undue benefit or advantage” for the person who gave such gift, consideration or advantage or on whose behalf it was given. The list of functions in Section 14(3) is comprehensive and includes the grant or award of a contract tender or licence and planning decisions.   

Penalties
Penalties for an Offence under Section 6-Trading in Influence
A summary conviction under Section 6 of the 2018 Act carries with it as penalty any one of or a combination of, a fine not exceeding €5,000, imprisonment for a term not exceeding 12 months and the forfeiture of “any gift, consideration or advantage accepted or obtained in connection with the offence or, in the alternative, the forfeiture of land, cash or  other  property  of  an  equivalent  value  to  such  gift,  consideration  or advantage.” Conviction on indictment could result in any of a fine, a sentence of imprisonment of up to five years or like forfeiture.

Penalties for a Body Corporate for an Offence under Section 18(1) - Acts of Human Agents
The penalty for a body corporate which is the subject of a summary conviction is a fine of up to €5,000. Conviction on indictment carries with it the penalty of a fine.

Penalties for Other Offences
The penalty for conviction of any other offence under the 2018 Act is the same as that on conviction of an offence under Section 6, save that the maximum term of imprisonment which may be imposed on conviction on indictment is 10 years.

Subject to certain exceptions, conviction on indictment of an offence under Sections 5, 7, 8, 9 or 10 may result in the loss of office, position or employment as an Irish official or prohibition from seeking to hold or occupy same.  

Actions which bodies corporate should take now

  1. If the organisation does not have an anti-corruption and bribery policy in place, put one in place now.
  2. If the organisation does have in place an anti-corruption and bribery policy in place, it should be reviewed and revised as necessary now in light of the commencement of the 2018 Act. 
  3. Ensure that all persons engaged by or who represent the organisation (including agents) are educated as to the content of the organisation’s anti-corruption and bribery policy and are contractually obliged to comply with it.   

For more information on the content of this Insight please contact:
Sean O'Reilly, Partner, Corporate & Commercial  
sean.oreilly@rdj.ie, +353 21 2332822

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