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Chaim Gelfand: With first case, Israel joins the foreign bribery enforcement community

Monday marked the beginning of a new phase in Israel’s fight against overseas graft. For the first time, a charging sheet was filed by the Tel Aviv District Prosecutor’s office against an Israeli company for violating Israel’s Bribery of Foreign Public Officials statutes.

Nikuv International Projects Ltd. or NIP agreed to plead guilty and pay a fine of 4.5 million NIS (about $1.2 million) and have additional sanctions.

It was charged with advancing its business interest in Lesotho by paying bribes of more than $500,000, according to the charge sheet.

As part of the plea, NIP and its principals agreed to cooperate with law enforcement authorities in Lesotho, including providing evidence and testimony in local courts.

The company also undertook to implement an anti-corruption compliance program and necessary monitoring and audit procedures to assure future compliance.

No charges were brought against individuals.

This is the first enforcement action under Israel’s Bribery of Foreign Public Officials statute (Section 291A of the Penal Law – 1977). The law was enacted in 2008 as part of Israel’s ratification of the OECD Convention on Combating Bribery.

The lack of enforcement had led to criticism from the OECD and anti-corruption NGOs.

In response to the OECD Working Group in June 2015, Israel said it was investigating 14 cases of foreign bribery. The NIP case is the first to result in actual charges.

Based on Monday’s charge sheet, during 2010 through 2012, NIP engaged local agents in Lesotho to help it win a government tender for the development and integration of a population registration, border control, and electronic ID card system.

NIP hired a local intermediary, Motsotua Makoa, who had connections to the then Director General of the Ministry of the Interior, Retsilisitsoe Kheti, the charge sheet said.

At the beginning of 2012, Kheti agreed to help NIP in return for a bribe through Makoa.

NIP transferred over $500,000 to Makoa in four installments under purported consultancy invoices. Most of the money went to Kheti.

In addition, NIP gave Kheti a mobile phone worth $2,000.

At the beginning of 2012, NIP executed contracts with the government of Lesotho for the systems. The contracts were worth at least $30 million.

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With Monday’s enforcement action and signs more will follow, Israeli companies and other companies doing business in Israel are on notice to establish and implement anti-corruption compliance programs that meet internationally accepted best practices.

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Chaim Gelfand, pictured above, is a Partner at Shibolet and Co. and head of its Anti-Corruption Compliance Practice — one of the first (if not the first) dedicated anti-corruption compliance practices in any of Israel’s first tier law firms. Gelfand has been dealing with anti-corruption compliance in large multinationals companies for almost a decade. He can be contacted here.

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