Anti-Corruption in Myanmar

By * Jo Daniels* and Ross Taylor* (Baker McKenzie Myanmar)

1. Domestic bribery (private to public)

1.1       Legal framework

Bribery of public officials is primarily regulated by the Myanmar Penal Code, Chapters IX and XIA, and the Anti-Corruption Law 2013 (the “Anti-Corruption Law”). Other corruption-related offenses and penalty clauses are contained in numerous laws, such as in taxation, banking and financial laws; the Myanmar Official Secrets Act 1923; the Defence Services Act 1959; the Fire Services Law 1997; and the Civil Service Law 2013.

1.2       Definition of bribery

Several offenses related to bribery are created by the Penal Code. The general offense is:

Whoever, being or expecting to be a public servant, accepts or obtains or agrees to accept, or attempts to obtain from any person, for himself or for any other person, any gratification whatever, other than legal remuneration, as a motive or reward for doing or forbearing to do any official act or for showing or forbearing to show, in the exercise of his official functions, favour or disfavour to any person, or for rendering or attempting to render any service or disservice to any person with the Union Parliament or the Government or with any public servant, as such, shall be punished.

All offenses under the Penal Code (except those relating to bribery in connection with elections) can only be committed by public servants. In theory, however, the person offering the gratification could be convicted of abetting the public servant in the crime.

Under the Anti-Corruption Law, “corruption” is defined as follows:

Corruption means doing directly or indirectly of an authoritative person by abusing his authoritative position, such as giving, accepting, receiving, attempting to receive, offering, pledging, or discussing in any way of a consideration from a person concerned for himself or any other or any organization in order to do anything, refrain from doing any lawful act, give a person his legitimate right, or prohibit a person wrongfully from his legitimate right.

1.3       Definition of public official

The Myanmar Penal Code has a broad definition of public servants, ranging from government servants, armed forces personnel, judges and court officials, to the police and inland revenue officials.

Under the Anti-Corruption Law, an “authoritative person” means a public servant who holds authoritative power either by his tenure or by jurisdictional or administrative authority, a public servant abroad, an existing holder of a political post, a high official, or an administrator or representative of any public organization.

1.4       Consequences of bribery

(a)        For the individuals involved

If an offense is committed under the Penal Code, an abettor could be punished with the same punishment as that for the public official. For the offense relating to public servants under the Penal Code used as an example above, this could be a fine, or imprisonment of up to three years, or both.

Under the Anti-Corruption Law, any “political post holder” convicted of corruption is liable to a fine and up to 15 years’ imprisonment; any other authorized person is liable to a fine and up to 10 years’ imprisonment; anyone else is liable to a fine and up to seven years’ imprisonment.

(b)        For the company/legal entity

No separate penalties for companies or legal entities are provided under either the Penal Code or the Anti-Corruption Law. However, under the Myanmar Interpretation of Expressions Law 1973, the word “person” includes any company, and therefore the same penalties theoretically apply to companies as to private individuals. The same position applies under the Penal Code.

1.5       Political contributions

Under the Political Party Registration Law (2010), there is no limit placed on contributions to political parties. However, contributions can only be made from domestic as opposed to foreign sources.

1.6       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

In an effort to reduce corruption, the new Myanmar government issued on 4 April 2016, guidelines to government officials regarding gifts that can be accepted. These guidelines also provide an extremely important guide for foreign investors in an area where there has previously been very little guidance. In the guidelines, the basic principle is that a government officer, member of any commission or committee formed by the government, or member of the public service may not accept any gift given by virtue of their official position. There are, however, important exceptions that will be of interest: (i) gifts not exceeding the value of MMK 25,000 (approximately USD 25) may be accepted; (ii) gifts given due to a family or personal relationship (what “personal relationship” means is not specified) are allowed; and (iii) gifts not exceeding the value of MMK 100,000 (approximately USD 100) may be given on religious occasions such as Christmas and Thadingyut (end of Buddhist lent festival). The position is slightly different where the gift is from a foreign government. In this case: (i) gifts not exceeding the value of MMK 400,000 (approximately USD 400) may be accepted; (ii) travel allowances for official trips may be accepted; (iii) scholarships and medical expenses may be accepted; and (iv) other gifts in certain circumstances may also be accepted.

These guidelines provide a welcome degree of clarity in an area where it has previously been extremely difficult to gauge what is acceptable gift-giving to government officials and what is not. Although the guidelines do not have any clear legal status, they are bound to be extremely influential. We can only wait if they will have any effect on the application of the Anti-Corruption Law.

The entertainment of public officials is not allowed, unless this is in the context of a seminar, workshop or other similar event. It also has to be remembered that context is particularly important where public officials are concerned – a gift by a CEO to a minister would be expected to be of higher value than that given to lower-ranking officials.

2. Domestic bribery (private to private)

2.1       Legal framework

Domestic bribery is regulated under the Anti-Corruption Law.

2.2       Definition of private bribery

There is no separate definition of private bribery. At face value, the Anti-Corruption Law appears intended to apply primarily to public officials. However, on a broad interpretation, it could encompass what might be termed as private corruption. The definition of corruption would therefore be the same as set out in section 1.2.

Authoritative persons who would fall under this category are defined in the Anti-Corruption Law as a director general or managing director of a state and private joint venture company, board, corporation or other organization. However, on wider interpretation, authoritative persons could include other high-level officials or managers.

There have not been any cases that would aid in the interpretation of this provision. However, we would advise that a cautious approach be taken under the circumstances. It should be noted that the intention of the legislature at the time of passing the Anti-Corruption Law was to implement the obligations of Myanmar under the UN Convention Against Corruption, which clearly deals with bribery in the private sector. In addition, the Myanmar legislature have amended the Anti- Corruption Law to include a wider definition of “corruption,” which implies that private-private corruption is included.

2.3       Consequences of private bribery

(a)      For the individuals involved

Any authorized person is liable to a fine and up to 10 years’ imprisonment; anyone else is liable to a fine and up to seven years’ imprisonment.

(b)      For the company/legal entity

No separate penalties for companies or legal entities are provided under the Anti-Corruption Law. However, under the Myanmar Interpretation of Expressions Law 1973, the word “person” includes any company, and therefore the same penalties theoretically apply to companies as to private individuals. The same position applies under the Penal Code.

2.4       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

There are no specific limitations applied to hospitality expenses and therefore to a large extent, what is socially acceptable in the commercial context has to be relied on as a guide.

The usual value of gift and entertainment expenses would be up to USD 75 for gifts, and the same amount per head for entertainment. Obviously, what is acceptable can depend on the context and the status of the individuals involved. As we have indicated, the government have just released guidelines on gifts that may and may not be accepted by government officials, which are of considerably lower value than was previously thought. It is not known how this guidance might influence the treatment of norms of private-to-private gift-giving. Because of the newness of the Anti-Corruption Law and the lack of precedents in this area, we advise prudence.

3. Corruption of foreign public officials

3.1       Legal framework

The Anti-Corruption Law

3.2       Definition of corruption of foreign public officials

There is no separate definition of corruption of foreign public officials. The offense is corruption of authorized persons, and a foreign public official is an authorized person. The offense of corruption is defined in section 1.2.

3.3       Definition of foreign public official

Under the Anti-Corruption Law, a “foreign public service man” is defined as “a person who is appointed or selected by any foreign country legislation, administration or judiciary officer, a person who works in a board, commission, corporation or other organization formed to carry out the duties of a foreign country and an authorized person who works on behalf of an international organization.”

3.4       Consequences of corruption of foreign public officials

(a)        For the individuals involved

A foreign public service man is liable to a fine and up to 10 years’ imprisonment; anyone else is liable to a fine and up to seven years’ imprisonment.

(b)        For the company/legal entity

No separate penalties for companies or legal entities are provided under the Anti-Corruption Law. However, under the Myanmar Interpretation of Expressions Law 1973, the word “person” includes any company, and therefore the same penalties theoretically apply to companies as to private individuals. The same position applies under the Penal Code.

3.5       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

As we have advised in Section 1.6 above, new government guidelines severely limit the value of gifts that may be given to Myanmar government officials. The new guidelines are, however, silent in relation to foreign government officials. However, as corruption of foreign government officials is covered by the Anti-Corruption Law, we would suggest that, given the lack of clarity in this area, the prudent course is to follow the same guidelines in relation to foreign public officials and limit gift-giving accordingly. Entertainment should also be limited in the same manner, and only to that connected with seminars and workshops.

4. Facilitation payments

Neither the Penal Code nor the Anti-Corruption Law recognizes facilitation payments. Facilitation payments could be interpreted as a “gratification” under the Penal Code, or more likely, as corruption within the wide definition of corruption under the Anti-Corruption Law.

5. Compliance programs

5.1       Value of a compliance program to mitigate/eliminate the criminal liability for legal entities

Under Myanmar law, because of the lack of clarity on liability of corporate bodies, it is advisable to have a compliance program in the event that the company was found liable under the Penal Code or Anti-Corruption Law. However, many foreign companies operating in Myanmar have compliance programs for a number of other reasons, primarily for governance, or because they are potentially liable under anti-corruption legislation within their respective jurisdictions (e.g., FCPA, UK Bribery Act), where the existence of a compliance program may at least mitigate the offense.

5.2       Absence of a compliance program as a crime

The absence of a compliance program is not recognized as a crime in Myanmar.

5.3       Elements of compliance program

(1)       Clear policies and procedures should be established to ensure compliance.

(2)        Employees should undergo training explaining the following:

(i)  Relevant legislation;

(ii) Company policies and procedures developed in (1) above

(iii) Situations in which difficulties could occur.

(3)       The effectiveness of the program should be monitored and adjustments be made where necessary.

(4)       Employee training should be repeated at least annually.

(5)       There should be whistleblowing procedures and protection.

(6)       Individuals and companies that you intend to conduct business with should be checked against the Specially Designated Nationals (SDN) list.

(7)       Consideration should be given to having compliance provisions in all material contracts affecting the business, such as compliance with the Anti-Corruption Law, the FCPA and the UK Bribery Act.

6. Regulator with jurisdiction to prosecute corruption

The police investigate any alleged offense under the Penal Code, which would then be prosecuted by the Prosecution Department of the Attorney General’s Office.

Offenses under the Anti-Corruption Law are investigated by a team under a special “Bribery Eradication Commission” established by the Anti-Corruption Law.

Qualifications

Our advice above is qualified by the following:

(1)        Myanmar has had a number of different governments/administrations that have had a different approach to the promulgation and maintenance of its basic laws. This, together with the mixed use of English and the Myanmar language in the writing of these laws, as well as their style and coverage, has meant that they are not always complete or consistent. Thus, there are many areas that are not adequately dealt with and have not been the subject of judicial determination. Furthermore, there are a number of new laws and regulations being introduced for which there is no prior point of reference. This provides significant limitation on the ability to give definitive advice.

(2)        Our advice is based upon the laws, decrees, rules, regulations and official notifications of Myanmar that are available to the public as of the date of publication. There may be new or amended laws, decrees, rules, regulations or official notifications, or unofficial or internal guidelines, which exist but which are not published or which are not generally available to the public, and the existence of the same may affect the advice herein.

(3)        Only a limited number of court judgments are published or made available to the public, and the judicial interpretation of the laws of Myanmar is uncertain. Thus, there may be unpublished opinions or decisions of the courts of Myanmar that may affect the advice expressed herein.

(4)        Our advice is only based upon the laws of Myanmar and we have not considered the laws of any other jurisdiction in rendering our advice.

(5)        While we may refer to policies, practices and customs in our advice, these are only in relation to prevailing policies, customs and practices of which we are aware. It is possible that there are other policies, practices and customs or changes than those known to us, and which may affect the advice expressed herein.

(6)        Administrative interpretation or implementation of the laws of Myanmar is not always consistent or certain and may vary from case to case or with respect to the same facts.


Baker McKenzie Yangon 1206
12th Floor Sakura Tower 339
Bogyoke Aung San Road
Kyauktada Township
Yangon Myanmar

Jo Daniels

Jo Daniels is the managing partner of Baker McKenzie’s Yangon office. She transitioned to this role from the Brisbane office, which she helped launch, bringing over 20 years of expertise in the mining and infrastructure sectors, including in railways, ports, electricity, pipelines and export facilities..

Since moving to Yangon, Jo has advised clients on various aspects of corporate activity in Myanmar, including mergers, acquisitions and joint venture structuring, as well as general FDI questions including permits, licensing and the new investment laws.

jo.daniels@bakermckenzie.com

Tel: +95 1 255 057

Baker McKenzie Yangon 1206
12th Floor Sakura Tower 339
Bogyoke Aung San Road
Kyauktada Township
Yangon Myanmar

Ross Taylor

Ross Taylor re-joined Baker McKenzie in 2013 and is a senior member in the Corporate Practice Group, advising multinational clients in a wide range of industries on investment, project development and ongoing business operations in Myanmar. Ross began his legal career as a barrister in London in 1984, followed by 15 years of common law practice. Ross first became consultant to Baker McKenzie in Bangkok in 2002, where he was involved in numerous aircraft- related and M&A transactions..

ross.taylor@bakermckenzie.com

Tel: +95 1 255056 ext. 833