White Collar Crime & Investigations
Along with other developments in Saudi Arabia, there is a significant focus on corruption, and the cost it imposes on the economy and national finances. The recent detention of high profile Saudi businessmen and subsequent criminal settlements relating to corruption garnered global attention, providing an indication of the extent to which local authorities are seeking to crack-down on corruption in Saudi Arabia. Anecdotally, it seems that issues relating to anti-bribery prosecutions are getting more and more exposure in local media, indicating that the authorities are being more active in enforcing the law.
The National Anti-Corruption Commission (Nazaha) has overall responsibility for anti-corruption efforts in Saudi Arabia, and works with audit bodies and law enforcement authorities to take action. Furthermore, in an effort to bolster investigative and prosecutorial powers of the authorities, a new Anti-Corruption Committee was recently established by royal decree with a view to eliminating illicit practices in the Kingdom.
The primary anti-corruption provisions are laid down in the Anti-Bribery Law, which was issued in 1996. More recently, a decree setting out rules relating to gifts for public officials was issued in 2015, and a decree to provide adequate protections to whistleblowers was issued in 2018.
The Anti-Bribery Law is primarily focused on ‘public servants’. The definition is fairly broad, and extends to employees of joint stock companies, along with their board members and directors. It could also extend to private sector individuals who are working on government-related projects, such as consultants to government projects, and anyone working in banking. The definition includes:
anyone who works, permanently or temporarily, for the government or any public corporate entity;
any arbitrator or expert assigned by the government or any judicial authority;
any person assigned by a government agency or any other administrative authority to perform a specific task;
any person who works for companies or sole proprietorships that manage, operate or maintain public facilities or provide public services, as well as any person who works for joint stock companies, companies partially owned by the government and companies and sole proprietorships engaged in banking services, and chairmen and members of the board of directors of any such entities.
Under the Anti-Bribery Law, a ‘bribee’ is any public servant who solicits, accepts or receives for himself or for others, a gift or payment of any sort, or a promise thereof, as consideration for (amongst others):
performing any of his official duties or an alleged office duty, even if the action taken is legitimate (and regardless of his intent not to perform the promised act);
not performing an official duty or an alleged office duty, even if such inaction is legitimate (and regardless of his intent not to perform the promised act);
breaching his official duties, or as a reward for the same, even in the absence of a prior agreement;
using a real or alleged influence to obtain, or attempt to obtain, from any public authority, a contract, order, decision, commitment, licence, supply agreement, job, service or a privilege of any type; or
breaching his official duties by performing or refraining from performing any such duties as a result of a plea, recommendation or an intercession.
Penalties for the offences set out above range from imprisonment for a term not exceeding three years and/or a fine not exceeding SAR 100,000 (about USD 27,500) through to imprisonment for a term not exceeding ten years and/or a fine not exceeding SAR 1,000,000 (about USD 275,000).
Along with the specific penalties applicable to bribes of public servants, it should be noted that the Anti-Bribery Law provides for the briber, and any accomplice, to be liable to corresponding punishments. Additionally, anyone who offers a bribe that is rejected shall be punished by imprisonment for a term not exceeding ten years and/or a fine not exceeding SAR 1,000,000 (about USD 275,000). Recidivists (persons proven to have committed another offence under the Anti-Bribery Law within five years of the completion of punishment for a previous conviction under the Anti-Bribery Law) can be subjected to a penalty higher than the maximum limit of the prescribed punishment for the offence. A public servant convicted of any offence set forth in the Anti-Bribery Law shall be dismissed and prevented from assuming any public position or performing any acts that are the responsibility of public servants, for a minimum period of five years. In all cases, where possible, any money, benefit or privilege the subject of the offence shall be confiscated. The publication of judgements issued on bribery offences is also available as a punishment.
The Anti-Bribery Law provides for rewards for individuals who provide incriminating information relating to an offence (i.e. whistleblowing). Any person who is not a briber, or an accomplice, and who provides incriminating information substantiating any offence set out in Anti-Bribery Law, shall receive a reward not less than SAR 5,000 (about USD 1,350) and not more than half of the money confiscated. There may be scope for a higher reward to be approved in appropriate circumstances.
An allegation of bribery would typically be directed to the National Anti-Corruption Commission and/or the Public Prosecutor for further investigation. Legal steps typically taken against a bribe-giver would involve a preliminary investigation, a summons, arrest, indictment, trial, settlement with government, judgment. The culpability of the bribe-giver will not be affected by his or her nationality, with the bribery provisions applying to domestic and foreign nationals alike.
Significantly, where the manager or any employees of a private company is convicted of any offence under the Anti-Bribery Law, and the offence was committed for the benefit of such company, the law provides for corporate liability through a fine not exceeding ten times the value of the bribe and/or a ban from entering into public procurement or project contracts. Such ban would be for a minimum period of five years. The briber can be exempted from punishment if he informs the authorities prior to the discovery of the offence, and this may provide some means by which corporate entities can limit their exposure upon becoming aware of any apparent offences under the Anti-Bribery Law.
The Anti-Bribery Law does not specifically contemplate any reduction in legal exposure to corporate entities where they can show that they have adopted anti-bribery compliance training. Despite this, as a best practice approach, it is typical for international companies operating in the Kingdom to adopt the type of compliance programs required of them in other jurisdictions.
Requirements relating to legitimate gifts and hospitality are not exempted in the Anti-Bribery Law. Any benefit or privilege obtained by the bribee, regardless of its type or designation, whether material or otherwise, shall be considered a (prohibited) gift or promise. Despite this, in practical terms, modest hospitality, such as reasonable meals in the context of negotiating a deal or working on a transaction, are unlikely to be considered bribery subject to the Anti-Bribery Law, provided however that there is no corrupt intent involved. A corrupt intent may be inferred subject to the circumstances, due to which companies are advised to be cautious in regards to provisions of gifts and hospitality, and to document all such occasions in a transparent manner.
Separate to the Anti-Bribery Law, a decree referred to as the Rules on Gifts to Officials was issued in 2015. Pursuant to these Rules, an official may accept gifts, given at visits and official occasions or at receptions of official guests, in accordance with custom and the courtesy protocols of such visits and occasions. Under the Rules, gifts cannot be cash, and the type and value of the gift must be consistent with what is customarily given in accordance with the type of its occasion. Additionally, the person giving the gift should not have any special interest in something (a benefit) to be granted by the official or the public body to which the official belongs. Generally, gifts given to officials will be owned by the public body to which the official belongs, and should be kept on such body’s premises in a suitable place for storage or presentation. There are some exceptions that allow an official to keep a gift for himself. These include gifts of modest value (generally, less than SAR 4,000; about USD 1,000); and perishable/consumable type gifts, usually for personal use, regardless of their value.
Legislative changes to the Anti-Bribery Law are expected to be implemented in the near future, following approval of draft amendments by the Shoura Council in July 2018, which may supersede many of the provisions contained in the existing law. Such reform could have a profound impact on conventional business practices within the Kingdom by providing stronger deterrents against corrupt activity, particularly if considered in conjunction with other improved enforcement tools, such as the recently established specialized anti-corruption units within the Public Prosecution. Overall, authorities have taken significant steps to improve their capacity to detect and prosecute corruption and strengthen the market’s security against associated crimes.
