Ukraine has revamped its anti-corruption laws. The most significant aspect of the new legislation is the introduction (scheduled for September 2014) of corporate criminal liability for companies whose employees offer or pay bribes, directly or indirectly, to public officials or officers of private companies.
Liability will attach if the offense was committed “on behalf of” and “in the interest of” the company, which is defined as acts committed with the goal of (a) attempting to obtain improper benefits for the legal entity, (b) creating an environment for the receipt of illegal benefits or (c) avoiding liability (i.e., paying a bribe so that the company can avoid the legal consequences of a misdeed).
Another important aspect of the new legislation, which will take effect in December 2013, is the introduction of asset forfeiture (termed “special confiscation”) as a penalty for certain corruption offenses.
In order to encourage the exposure of corruption, the new legislation also includes a provision prohibiting employers from firing or disciplining an employee, or forcing an employee to voluntarily terminate his/her employment, because the employee provided information about corruption to state authorities.
Finally, the legislation also includes a requirement that certain personal information (i.e., name, place of work, nature of the violation and punishment) about government officials and private individuals who have committed corruption offenses be entered in the “Unified State Register” of corruption offenders and published on the web-site of the Ministry of Justice.
Although it is limited to certain corruption offenses, the form of corporate criminal liability adopted by Ukraine is quite broad and promises to be a potent weapon in the hands of prosecutors. For example, liability “on behalf of” or “in the interests of” the company are vaguely defined concepts which do not require proof that the company’s board of directors or management participated in the offense, approved it, or even knew about it.
Moreover, the law goes beyond the FCPA in criminalizing commercial, as well as public, bribery, but in contrast to the UK Bribery Act, does not include an “adequate procedures” defense. In addition, a finding of liability carries with it the possibility of forfeiture of any property obtained as a result of the offense.
These changes make it all the more important that companies operating in the Ukraine have robust compliance programs.
More details about the law and recommendations about how companies can protect themselves are available from Baker & McKenzie here.
Thomas Firestone is a senior counsel in the Washington, D.C. office of Baker & McKenzie. Prior to joining the firm in 2012, he worked at the U.S. Department of Justice, first as an Assistant U.S. Attorney in the Eastern District of New York and then as Resident Legal Adviser at the U.S. Embassy in Moscow. He can be contacted here.
Yuliya Kuchma is an associate in the Kyiv office of Baker & McKenzie, as part of the firm’s anti-corruption and real estate & construction practice groups. Her work includes advising on the Foreign Corrupt Practices Act and anti-corruption and related legislation of Ukraine. She can be contacted here.