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«the Pacific THE CRIMINALISATION OF BRIBERY IN ASIA AND THE PACIFIC Frameworks and Practices in 28 Asian and Pacific jurisdictions Thematic Review – ...»

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ADB/OECD Anti-Corruption Initiative for Asia and the Pacific 470 Criminalisation of Bribery in Asia and the Pacific The Penal Code and Bribery Act offences cover bribes of both a monetary and non-monetary nature. An explanatory note to Penal Code Section 158 states that ―The word ‗gratification‘ is not restricted to pecuniary gratifications, or to gratifications estimable in money.‖ Section 90 of the Bribery Act defines ―gratification‖ to include not only money, but also any office, employment, contract, service, favour or advantage, among other things.

Neither statute provides further information on whether the definition of ―gratification‖ is affected by its value, its results, the perceptions of local custom, the tolerance by local authorities, the alleged necessity of the bribe, or whether the briber is the best-qualified bidder.

The Penal Code and Bribery Act do not expressly contain specific defences to bribery, such as solicitation; small facilitation payments (i.e.

payments to officials to induce them to perform non-discretionary routine tasks such as issuing licenses or permits); and ―effective regret‖ (when a briber reports the crime to law enforcement). The absence of these defences could enhance the effectiveness of the bribery offences.

However, the Penal Code and Bribery Act each provides a defence of ―consent‖. Under Penal Code Section 158, it is not an offence if the gratification in question is ―legal remuneration‖, which is in turned defined as ―remuneration which a public servant can lawfully demand‖, and ―all remuneration which he is permitted by the Government which he serves to accept‖. There is no guidance on how the Government may grant such permission, e.g. by public regulations.

The Bribery Act similarly provides that it is not an offence for a public servant to solicit or accept any gratification ―which he is authorised by law or the terms of his employment to receive.‖ This definition is slightly more precise as it prescribes the source of the authorisation. Nevertheless, the phrase ―terms of employment‖ can be vague. Nothing on the face of the provision prohibits an official and his superior from modifying the terms of employment orally or retroactively after the gratification has been accepted.

BRIBERY OF FOREIGN PUBLIC OFFICIALS

It is not a crime in Sri Lanka to bribe officials of foreign governments or public international organisations in the conduct of international business. The definition of ―public servant‖ in the Penal Code and Bribery Act refer to Sri Lankan officials. The bribery offences in these two statutes therefore do not cover active or passive foreign bribery.

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LIABILITY OF LEGAL PERSONS FOR BRIBERY

Sri Lanka can impose criminal liability against legal persons for bribery.

Section 2 of the Penal Code provides that every person shall be liable to punishment under the Code. Section 10 defines ―person‖ as including ―any company or association or body of persons, whether incorporated or not‖.

Whether corporate criminal liability for bribery is actually imposed in practice is wholly unclear.

Nothing in the Penal Code indicates when a company is considered to have committed a crime. There is no guidance on when the acts or omissions of a natural person may be attributed to a legal person, whose acts or omissions may trigger liability, or whether the conviction of a natural person is a prerequisite to convicting a legal person.

Should Sri Lankan courts be confronted with the issue of liability of legal persons, they may well apply U.K. case law, given the country‘s common law history. The leading case is the well-known U.K. House of Lords decision in Tesco Supermarkets Ltd. v. Nattrass, [1972] AC 153. The principle is commonly known as the ―identification‖ doctrine. Under Tesco, a company would be liable for bribery only if the fault element of the offence is attributed to someone who is the company‘s ―directing mind and will‖.

The limits of the identification doctrine in cases of complex corporate crimes such as bribery are now well-documented. Prosecutors, law enforcement officials, and academics in the UK have denounced the Tesco regime as ineffective and unsatisfactory for bribery offences. The problem is at least three-fold. First, the identification theory requires guilty intent be attributed to a very senior person in the company. Liability is unlikely to arise when bribery is committed by a regional manager or even relatively senior management, let alone a salesperson or agent, even if the company benefitted from the crime.

Second, there is also no liability even if senior management knowingly failed to prevent the employee from committing bribery, or if the lack of supervision or control by senior management made the commission of the crime possible.

Third, the identification theory requires the requisite criminal intent to be found in a single person with the directing mind and will; aggregating the states of mind of several persons in the company will not suffice. This ignores the realities of the modern multinational corporation in which complex corporate structures make it difficult to identify a single decision maker.

An effective regime of liability of legal persons for bribery must address these limitations. The OECD Working Group on Bribery has recognised minimum standards for meeting the corporate liability requirement in the OECD Anti-Bribery Convention. These standards are instructive for meeting the

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comparable standard under the UNCAC. When deciding whether liability of

legal persons should be imposed, countries should take one of two approaches:

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JURISDICTION TO PROSECUTE BRIBERY

Sri Lanka has jurisdiction over bribery committed in its territory. Penal Code Section 2 states that ―Every person shall be liable to punishment under this Code, and not otherwise, for every act or omission contrary to the provisions thereof, of which he shall be guilty within Sri Lanka.‖ However, it is unclear whether territorial jurisdiction is extended to offences that only take place partly in Sri Lanka.

There is no nationality or extraterritorial jurisdiction to prosecute the bribery offences in the Penal Code or the Bribery Act.

SANCTIONS FOR BRIBERY

The general active and passive bribery offences in the Penal Code are punishable by imprisonment of up to three years and/or a fine. The Code does not prescribe a maximum limit for fines. As noted above, a bribe that is offered but rejected by a public servant constitutes abetment but is subject to only onequarter of the maximum jail sentence for an accepted bribe. All bribery offences in the Bribery Act are punishable by imprisonment of up to seven years and a fine not exceeding LKR 5 000 (USD 40 or EUR 30). Overall, the maximum punishment available against natural persons is in line with international standards. For legal persons, who can only be fined and not imprisoned, the fines available under the Bribery Act are extremely inadequate.

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific Sri Lanka 473 Only limited confiscation is available as a penalty for bribery. The Penal Code does not provide for confiscation as a sanction for bribery, even though forfeiture of property is an available penalty for other crimes (Penal Code Section 52). When a person is convicted of accepting a gratification under the Bribery Act, a court may either order the offender to pay a sum equal to the value of the gratification, or forfeit property of the offender that had been acquired by bribery or the proceeds of bribery (Bribery Act Sections 26 and 28A). However, it is unclear whether this provision allows a court to confiscate indirect proceeds of bribery. Furthermore, these provisions do not allow forfeiture against a person convicted of active bribery, or a third party who acquired the property in bad faith. In addition, upon a conviction for money laundering (including laundering proceeds of bribery), a court may forfeit any property of the offender that derived directly or indirectly from any unlawful activity (Prevention of Money Laundering Act Section 13A).

Additional administrative sanctions may be imposed for bribery. Public servants convicted of bribery under the Bribery Act are dismissed immediately.

Membership in an institution listed in the Act also ceases. In addition, the person is disqualified from voting or running in elections for Parliamentary and local authorities for seven and five years respectively. The person is also banned from being a member of Parliament or a local authority for the same period of time, and banned permanently from being a public servant, a member of the institutions listed in the Act, and the governing body of such institutions (Bribery Act Section 29). The Penal Code bribery provisions do not contain comparable provisions. Information was not available on whether a person convicted of bribery (whether under the Penal Code or the Bribery Act) may be blacklisted and debarred from seeking procurement contracts.

TOOLS FOR INVESTIGATING BRIBERY

Sri Lankan bribery investigators may access documents and information possessed by private individuals or companies. Bribery investigations are conducted by the Commission to Investigate Allegations of Bribery or Corruption (CIABC). The CIABC has the power to request a person to attend the Commission to answer questions. It may also summon any person to produce any document or thing in his/her control (CIABC Act Sections 5(1)(a) and (b)). Section 66 of the Criminal Procedure Code also allows a court to issue a summons to order the production of a document or thing.

Additional provisions deal with obtaining information and documents from banks and financial institutions. Once a person receives a request to attend CIABC for questioning, the Commission may require a bank manager to produce any book, document or cheque of the bank containing entries relating

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to the account of this person or his/her immediate family member (CIABC Act Section 5(1)(d)).

This arrangement for obtaining bank documents raises two questions, however. First, the procedure is available only after the CIABC has summoned a person for questioning. It may therefore be unavailable in the early stages of an investigation, e.g. when investigators do not wish to alert a person that he/she is under investigation. Second, there are doubts that confidential bank documents can be obtained. The provision does not expressly override bank secrecy, unlike other statutes. Furthermore, the Banking Act Section 77 states that bank secrecy shall be maintained except ―when required to do so by a court of law.‖ The CIABC does not have the status of a court.

The CIABC Act also provides access to documents and information held by other Government bodies. The CIABC may request relevant information from Sri Lankan tax authorities. However, as with bank information, this power only arises after a person has been summoned by the CIABC for questioning (CIABC Act Section 5(1)(e)). The Commission may also request information and documents from any department, office or establishment of the Government, a local authority, Provincial Council, certain designated institution, or a company in which the Government owns more than 50% of the shares (CIABC Act Section 5(1)(f)). State-controlled companies in which the Government has a minority shareholding are therefore not covered.

The extent to which property (especially bank accounts) can be frozen during a bribery investigation is not entirely clear. Under the CIABC Act Section 5(1)(i), the Commission may prohibit a person from ―transferring the ownership of, or any interest in, any movable or immovable property‖. The CIABC may also serve a copy of the written order ―on any such authority as the Commission may think fit‖. The Act lists a number of authorities (e.g. the Land Registry) but does not refer to banks and other financial institutions. The wording of the provision is also relatively narrow. It does not refer to accounts, unlike other statutes that clearly deal with the freezing of bank accounts. It also only prohibits the transfer of ownership of or an interest in property, which arguably would not prevent a transfer of funds between two accounts held by the same person.



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