By Borys Dackiw*, Hani Naja* and Sabaa Alyanai * (Baker McKenzie United Arab Emirates)
1. Domestic bribery (private to public)
1.1 Legal framework
At present, the United Arab Emirates (UAE) has no comprehensive anti-corruption legislation. Specific provisions dealing with anti- corruption and bribery (directly or indirectly) are, however, included in a number of federal and local laws, including the UAE Federal Law No. 3 of 1987 (as amended) (the “Penal Code”); the UAE Federal Law No. 21 of 2001 concerning Civil Service; the Dubai Government Human Resources Management Law No. 27 of 2006; and the Abu Dhabi Law No. 1 of 2006 concerning Civil Service in the Emirate of Abu Dhabi (the last three laws are collectively referred to as the “Civil Service Laws”).
1.2 Definition of bribery
The definition of bribery can be culled from several articles in UAE legislation, notably the Penal Code. Under the provisions of the Penal Code, bribery would be anything that confers a benefit on a public or private sector employee, as the case may be, with the intent to influence such employee to act in a way that violates the duties assigned to his or her function, or to commit or abstain from doing an act.
1.3 Definition of public official
With regard to the definition of a public official, Article 5 of the Penal Code provides that: “Shall be considered a public official under this Law any person employed at a federal level or a local level in any legislative, executive, administrative or judicial role, whether appointed to elected:
- Anyone charged to do the works of the main authority and the people in the ministries and governmental departments
- Members of the armed forces
- Employees in security authorities
- Members of the judicial authority, heads of legislative councils, advisory councils and municipalities council and their members
- Any person delegated by a public authority to perform a specific job within the limits of the assigned job
- Chairmen, directors and managers and all employees of public authorities and public corporations and companies totally or partially owned by a federal or a local government
- Chairmen, directors and managers and all employees in public associations and establishments with public benefits
Shall also be considered, under this Law, as entrusted with a public service, any individual who does not belong to any of the categories mentioned in the preceding clauses and who performs a job relating to public service by virtue of a mandate given to him by a public officer who is authorized to do so according to the laws and regulations, provided that said individual shall be considered as a public officer only within the limits of the job assigned to him.”
1.4 Consequences of bribery
(a) For the individuals involved
Depending on the severity of the crime, any public official who is found guilty of a bribe-related crime (offering or accepting or promising) would be subject to a fine equivalent to the benefit accepted by them (provided the fine is not less than AED 5,000); confiscation of the actual benefit accepted; and depending on the circumstances of each case, imprisonment not exceeding five years. In addition, individuals who are found guilty of accepting a bribe in exchange for exerting their influence over a public official would be subject to imprisonment of up to five years.
(b) For the company/legal entity
Entities may also be held liable to the extent that their “inaction,” either when aware or unaware of the bribery activities, resulted in the facilitation of the bribery in question. Article 65 of the Penal Code provides that corporate persons are liable for any criminal act committed, for their account or in their names by their representatives, directors or agents. In such case, the court may only impose upon the corporate person fines, confiscations and other criminal measures provided under the law. However, if the criminal sanction entails other principal sanctions in addition to a fine, only the fine (not exceeding AED 500,000) will apply. The foregoing applies without prejudice to any other special law that prescribes different sanctions.
Civil liability under Civil Transaction Law No. 5 of 1985 discusses the vicarious liability of the employer in this regard.
Despite the provisions discussed earlier, in practice, courts review cases on a case-by-case basis and penalize the liable employee/entity accordingly. In this regard, the Public Prosecutor employs wide discretion, which can lead to inconsistency in enforcement and penalties imposed.
1.5 Political contributions
There are no political parties in the UAE and public officials are appointed by either the government itself or by the rulers of each emirate (ass the case may be).
1.6 Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)
There is no statutory benchmark for business courtesies in the UAE. However, when offering business courtesies to public officials, the following factors should be considered carefully:
(i) The value of such business courtesies
(ii) The frequency with which they are offered
(iii) The intention behind offering them
(iv) The relevance of such gifts/hospitalities to both the recipient and the offeror
Business courtesies benefiting the recipient exclusively are more likely to be considered improper. On the other hand, a business courtesy that is connected with the company’s core business and the function of the relevant official, such as provision of relevant training, is likely to be considered as acceptable. By way of example, if provided in connection with a demonstration or training program, paid travel expenses, unless excessive in value, would unlikely be considered improper. Similarly, paying the fees to attend a third-party conference would not likely be considered improper if connected with the functions of the relevant official (although in such cases, we would ordinarily recommend that the invitation to attend be addressed through the competent organizational unit at the relevant ministry or government agency). Meals, if provided as basic sustenance during a business meeting and unless excessive in value, would unlikely be considered improper.
Promotional items bearing the emblem or logo of the company would be more justifiable than unbranded items, provided that such items offered are not excessive in value. On the other hand, entertainment (golfing, concert, sporting events, among others) is less likely to be acceptable, as this would be difficult to justify as being connected with the functions of the relevant official.
In any event, it should be noted that it is preferable for any invitation to participate in an event that includes payment of business courtesies to not be addressed to the official benefiting from such courtesies but to his or her manager/supervisor/team head who will appoint a direct beneficiary or provide approval
According to the Civil Service Laws, the acceptance, taking, offering and requesting of bribes is prohibited. Under these laws, government employees should not accept any gifts (as opposed to bribes) unless they are symbolic advertising or promotional gifts bearing the name and emblem of the entity presenting them, and each ministry must define the organizational unit allowed to accept gifts on its behalf in accordance with its regulations and standards.
Finally, pursuant to the Code of Professional Conduct and Ethics for Public Servants (Cabinet Resolution No. 15 of 2010), a public servant (or any relative up to the fourth degree) may not accept any gifts, hospitalities or services from any person if it results in any obligation; if it has a direct or indirect effect on the public servant’s objectivity in implementing his or her duties; if it might affect his or her decisions; or if it might make him or her subject to obligations in consideration of what he or she accepted.
2. Domestic bribery (private to private)
2.1 Legal framework
As stated previously, the UAE has no comprehensive anti-corruption legislation. Specific provisions dealing with anti-corruption and bribery (directly or indirectly) in the private sector are mainly found in the Penal Code.
2.2 Definition of private bribery
In relation to acts of bribery committed by individuals in the context of the private sector, Article 236 bis of the Penal Code states that only the individual who requests, accepts or promises a bribe (benefit), in exchange for committing or omitting an act in violation of the duties of his or her position would be guilty of an offense under the Penal Code. The recipient, in this instance, is defined by the Penal Code as any manager or employee of a private sector company.
2.3 Consequences of private bribery
(a) For the individuals involved
Individuals who request, accept or promise bribes in the private sector would be subject to a fine equivalent to the benefit accepted by them (provided the fine is not less than AED 5,000), confiscation of the actual benefit accepted, and imprisonment not exceeding five years.
Article 236 bis of the Penal Code has been amended by virtue of Law No. 7 of 2016 to facilitate the prosecution of bribery in the private sector, such that the offeror of a bribe would also be guilty of an offense.
(b) For the company/legal entity
Entities can also be held liable to the extent that their “inaction,” either when aware or unaware of the bribery activities, resulted in the facilitation of the bribery in question. Article 65 of the Penal Code provides that corporate persons are liable for any criminal act committed, for their account or in their names by their representatives, directors or agents. In such case, the court may only impose upon the corporate person fines, confiscations and other criminal measures provided under the law. However, if the criminal sanction entails other principal sanctions in addition to a fine, only the fine (not exceeding AED 500,000) will apply. The foregoing applies without prejudice to any other special law that prescribes different sanctions.
Civil liability under Civil Transaction Law No. 5 of 1985 discusses the vicarious liability of the employer in this regard.
Despite the provisions discussed earlier, in practice, courts review cases on a case-by-case basis and penalize the liable employee/entity accordingly. In this regard, the Public Prosecutor employs wide discretion, which can lead to inconsistency in enforcement and penalties imposed.
2.4 Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)
See Section 1.5.
3. Corruption of foreign public officials
The new amendment to the Penal Code penalizes corruption of public officials of other countries. The UAE has also ratified the United Nations Convention against Corruption and does abide by its rules, although it did not produce separate legislation to complement the said convention.
4. Facilitation payments
The new amendment to the Penal Code prohibits the corruption of public officials of other countries. The new amendment imposes penalties on foreign public officials and employees of international organizations who request, accept or promise directly or indirectly a benefit/bribe for himself/herself, or for another person or entity to carry out an act or refrain from such act. The UAE has also ratified the United Nations Convention against Corruption and does abide by its rules, although it did not produce separate legislation to complement the said convention.
5. Compliance programs
5.1 Value of a compliance program to mitigate/eliminate the criminal liability of legal entities
UAE laws do not regulate compliance programs.
5.2 Absence of compliance program as a crime
N/A
5.3 Elements of a compliance program
(a) Legal framework
UAE laws do not regulate compliance programs.
(b) Recommended practice
Despite the lack of heavy regulation in relation to the requirement/method that will be used in implementing compliance programs, many international, national and governmental authorities implement a transparent compliance program. This is the case largely because the benefits of having a compliance program system outweigh the risks associated with not adopting one. In many corporations and governmental entities, it is a core policy and part of a wider corporate governance program. Such provisions convey transparency, enabling governmental authorities, companies and senior officers in organizations to have a clear picture of what is going on within the respective entity. Such programs are also commonly used as a preventive mechanism within governmental or corporate structures to combat wrongdoing internally in order to avoid potential violations (such as breaches of international regulations that maybe applicable to multinational companies even when the local UAE laws are not sufficiently incriminating) from happening, in addition to allowing them to be in a position to report and expose such wrongdoing.
6. Regulator with jurisdiction to prosecute corruption
The Public Prosecutor has the power to prosecute bribery cases before the UAE courts, with jurisdiction over such matters, among many others.
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