First Conviction under the UK Bribery Act

Munir Patel

(Reuters) - The first person to be convicted under new bribery laws was jailed on Friday November 18th, 2011, and lawyers said his sentence sent out a warning message to business.

Munir Patel, 22, a court clerk who worked at Redbridge Magistrates' Court in east London, had pleaded guilty to accepting 500 pounds to "get rid" of speeding charges by keeping the details off a court database.

He was given three years in prison for bribery offences and six years for misconduct in a public office, with the sentences to run concurrently, the Press Association reported.

"The sentencing ... demonstrates the significant sentences that the courts are willing to impose on individuals who commit an offence under the (Bribery) Act," said Angela Pearson, a partner with international law firm Ashurst.

"It is only a matter of time before the SFO (Serious Fraud Office) bares its teeth and prosecutes the first corporate or its directors under the Act. In the meantime, the business community collectively hold their breath."

The Bribery Act, which came into force in July, makes failure to prevent bribery - whether committed by staff, subsidiaries or "associated persons" anywhere in the world - a criminal offence.

It also clamps down on so-called "facilitation payments," often used to oil the wheels of business by speeding up services such as visa applications, and "disproportionate" hospitality.

Southwark Crown Court heard Patel had helped at least 53 individuals evade prosecution for driving offences, and that he had advised people on how to avoid being summoned to court.

His salary was 17,978 pounds, but the court heard that 53,814 pounds in cash was deposited in his bank account while another 42,383 pounds was transferred into the same account, both without explanation.

"It hardly needs saying that these were very serious offences," Judge Alistair McCreath said.

"A justice system in which officials are prepared to take bribes in order to allow offenders to escape the proper consequences of their offending is inherently corrupt and is one which deserves no public respect and which will attract none."
(Reporting by Michael Holden; editing by Andrew Roche)

Australia Considering Criminalizing Facilitation Payments

Customer pays for a beer in central Sydney 21/06/2011 REUTERS/Tim Wimborne

Lawyers have welcomed the government's plans to bolster Australia's anti-bribery laws and outlaw facilitation payments, saying the changes would bring the country into line with international best practice and address the "weakest link" in the existing legislation.

In a consultation paper (PDF) launched yesterday the government outlined its proposals to remove the facilitation payments defence from s70.4 of the Criminal Code Act 1995. The reforms would align Australia's laws more closely with the UK's Bribery Act 2010, which took effect in July and has banned facilitation payments for UK-linked companies.

Unlike the UK and U.S., Australia does not have dedicated anti-bribery legislation. In Australia the act of bribing a foreign public official is proscribed under Division 70 of the Criminal Code. The legislation ensures that a person can be prosecuted under Australian law for "offering or providing a bribe to foreign public officials for the purpose of obtaining business or an undue business advantage". Like the UK and U.S. legislation it has extra-territorial effect and covers activities anywhere in the world.

In addition, Divisions 141 and 142 of the Criminal Code make it an offence to bribe a Commonwealth public official or for a Commonwealth public official to solicit a bribe.

Breaches of the legislation carry a maximum penalty of 10 years in prison and A$1.1 million fines for individuals and A$11m million in fines, or three times the benefit gained, for corporations. If the value of benefits obtained through bribery cannot be determined, the penalty for a company is 10 percent of annual turnover in cases where that amounts to more than A$1.1 million.

Brendan O'Connor, the minister for home affairs and justice, said there were strongly divergent views in Australia about the case for an exemption for facilitation payments. He said the purpose of the consultation was to get feedback from stakeholders about the merits or otherwise of removing the facilitation defence.

"I hear anecdotal evidence about the need to retain the defence because it is a reality of doing business, especially in the Asia-Pacific region," O'Connor said at the launch of the consultation paper. "I also note that, internationally, the defence of facilitation payments is gradually being removed from the criminal laws of our international trading partners. Maintaining the defence in Australia could appear incongruous with the aid and assistance message we send out in the region."

O'Connor said the government was aware that banning facilitation payments might put Australian businesses at a competitive disadvantage or in a "difficult situation" if payments were solicited under duress. It might also create an uneven playing field between large and smaller businesses. On the other hand, he said, it might also create greater consistency with the laws of other countries, promote regulatory certainty for businesses that operate across jurisdictions and help to reduce corruption globally. The government was also mindful that international developments, such as the commencement of the UK Bribery Act in July, had turned the tide against the facilitation payments defence.

Industry support

Within the legal and consulting sectors, there has been strong support for the government's decision to review the facilitation payments defence and other aspects of Australia's anti-bribery statutes.

Rob Locke, partner at Ernst & Young in Sydney, said that the latest consultation was further evidence of the global trend to take a harder line on facilitation payments. He said: "It is a timely and healthy initiative and a further sign that there is a global rethink about facilitation payments."

Christopher Keane, special counsel at Middletons, described the facilitation payment defence as the "weakest link" in Australia's foreign bribery legislation. He said the justifications for the defence were "tenuous at best" and said that businesses would be unwise to rely on this as part of their anti-bribery compliance frameworks.

"It is a very limited and complicated defence and is frequently misunderstood, thus exposing Australian businesses operating offshore to criminal liability in circumstances where they might genuinely believe they are acting lawfully," Keane said.

In essence, Keane said that there were three fundamental problems with the facilitation payments defence. "First, the defence is inconsistent with Australia's domestic laws. Secondly, the defence is inconsistent with the extra-territorial UK Bribery Act and the domestic laws of many of Australia's major trading partners. Thirdly, the most effective way for companies to avoid criminal liability arising under any anti-bribery legislation is to encourage a strong culture of compliance, whereas the facilitation payment defence is at the top of a very slippery slope that leads to serious criminal conduct," Keane said.

In view of all these issues, Keane said he was advising clients that Australian businesses should eliminate facilitation payments regardless of the outcome of the current consultation. "The safest approach is to proceed on the basis that there is no such thing as a facilitation payment defence," he said.

Extra-territorial impact

For Australian businesses that have links to the UK, the decision on proscribing facilitation payments has already been made. According to consultants at KPMG, Australian businesses with operations in the UK have already had to take a harder line on facilitation payments. These firms, as well as Australian subsidiaries of UK parent companies, are not only subject to the Australian anti-bribery laws but also to the requirements of the UK Bribery Act.

David Luijerink, partner at KPMG Forensic, said that those businesses with links to the UK could already be found guilty of an offence under the UK laws if they were unable to prove they had adequate procedures in place to prevent people from committing bribery. This applied not only to the activities of their employees but also to third-party associates, such as business partners, agents and contractors.

Luijerink noted: "It is important to note that the Act also covers the actions of non-UK nationals or residents. This means that an Australian business that transacts with the UK could very well find itself facing charges over illegal conduct by a non-British employee or a contractor, or for failing to prevent a third-party supplier from paying or receiving a bribe, even if the misconduct took place in another country."

He added that, under the new legislative landscape, firms would not be able to claim they were ignorant of facilitation payments that were happening under their watch. "Businesses need to cultivate a deeper culture of compliance and be able to demonstrate that they have sufficient risk management practices embedded in the business to mitigate bribery risks. Citing corporate ignorance in this instance will offer no protection from the long reach of the Act," Luijerink said.

A recent report from KPMG, entitled the "Global Anti-Bribery and Corruption Survey 2011", revealed that one third of businesses in the UK and U.S. did not assess the risk of bribery or corruption. Of those with written anti-bribery and corruption policies, 40 percent did not distribute them to relevant third parties and 60 percent did not require third-party representatives to participate in anti-bribery compliance training.

The survey also found that most anti-bribery and corruption compliance programs lacked sufficient depth and breadth to offset any regulatory risk effectively.

Luijerink said: "The potential costs of involvement in bribery and corruption are not limited to economic costs but also extend to reputational harm, and businesses need to weigh up whether not complying with the Act is a risk they can afford."

Broader discussion

Consultants and lawyers have said that, in Australia, the reform of the anti-bribery laws will have to take into account all of these major international developments. As well as the facilitation payments issue, the review of Divisions 70 and 141 of the Criminal Code will also explore a number of related issues regarding the anti-bribery statutes. Under the existing laws, courts must disregard the value of a benefit when determining whether a benefit was "legitimately due". This is to ensure that bribery is an offence irrespective of the value of the benefit.

As an example, the consultation paper stated that there might be situations where a person would be legitimately due a moderate fee in return for providing a particular service connected with obtaining business. "However, in the same situation a very large fee may be highly improper and not legitimately due to the public official or other person," it stated.

The government is considering whether to change para 70.2(2)(b) to clarify that bribery is an offence irrespective of the value of the benefit offered or given.

The consultation has also looked at changing the laws to ensure that prosecutions can proceed where a recipient of a bribe cannot be identified. To achieve this, the laws would need to be changed so that it is not necessary to prove an intention to influence a particular official. This will ensure that the law covers circumstances where a bribe is paid but the particular official to whom the bribe was destined cannot be identified.

The consultation paper stated: "For example, it may be possible to prove a person offered or provided a bribe to an agency in charge of granting public infrastructure contracts, but not possible to identify whether the payment is destined for the official directly responsible for granting contracts or another official who will direct their staff to grant a certain contract."

The final significant reform would be to change the laws so that "dishonesty" was not a requirement of the domestic bribery offence. Under the foreign bribery laws (Division 70) there is an obligation to demonstrate that bribery was committed intentionally but not necessarily "dishonestly". The government has proposed to align the offences in Divisions 141 and 142 with Division 70 by removing the "dishonesty" requirement from these offences, which would assist with the harmonisation of domestic and foreign bribery offences.

The paper noted that "the requirement in Divisions 141 and 142 to prove dishonesty as well as bribery could make it more difficult to prosecute crimes of domestic corruption".

O'Connor said that stakeholders should make the most of the opportunity to improve Australia's anti-bribery laws and to bring them more closely into line with those in other jurisdictions.

"While we consider that we have strong laws to combat foreign bribery, we want to examine our legislation in light of international developments and hear from you about the reality of doing business beyond our shores," he said.

Responses to the consultation paper (PDF) need to be lodged by December 15, 2011.

(A$1 = US$1.01)

New Anti-Corruption Laws passed in Mexico - Spotlight on Contractors and Concession Holders

Introduction

The Senate has passed the Federal Anti-corruption Law regarding Government Contracts. It is expected to be passed by the lower house in the course of 2011, probably before the end of the congressional term.

Mexico is a member state of the United Nations Convention against Corruption, the Inter-American Convention against Corruption and the Organisation for Economic Cooperation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. When the law comes into force, it will fill one of the main legislative gaps in the government's fight against corruption, which focuses specifically on private contractors that do business with the government. This anti-corruption drive will also affect business undertaken with state institutions (eg, Pemex and the Comisión Federal de Electricidad (CFE), the government-owned oil and power companies), and with the agencies in charge of awarding and handling infrastructure concessions (eg, the Ministry of Communications). The purpose of the law is to penalise individuals and companies, from Mexico or abroad, that engage in unethical behaviour in the context of government contracting in Mexico - the law refers to such actions as 'irregular activities'. Public servants are already subject to the Federal Law on the Administrative Responsibilities of Public Servants, but this statute is enforceable only in respect of wrongdoing on the government side, whereas OECD studies and international practice show that corrupt practices are more likely to originate with a contractor or concession holder. In seeking to be more active in regulating and overseeing contractors, Mexico is following an international trend.

Key features

The Anti-corruption Law applies only at federal level, but at which nearly 70% of the federal budget is spent through contracts and concessions. It covers all forms of contract, agreement and concession; it even extends to the granting of permits, from the design, bid preparation, tendering and award stages to their execution and completion. It explicitly applies to Pemex and CFE contracts, and to infrastructure projects. Like most foreign legislation implemented by OECD countries, and following a trend that was started by the US Foreign Corrupt Practices Act, the law also applies to acts beyond the Mexican territory, covering irregular activities by national companies or individuals in international commercial transactions where a foreign official is involved.

The federal agency in charge of enforcing the law is the Bureau of the Federal Comptroller, along with its internal comptroller departments which are integrated into most government agencies and public entities. The bureau is also in charge of enforcing the Law on the Administrative Responsibilities of Public Servants and supervising budget spending at federal level.

The Anti-corruption Law empowers the bureau to punish persons and companies involved in irregular activity. This includes intermediaries, agents and consultants, but also extends to the beneficiaries of irregular activities - which will typically be Mexican-domiciled companies and their shareholders, parents and affiliates, whether foreign or Mexican.

The law identifies eight forms of irregular activity. As well as bribery and peddling influence, these include a catch-all provision that penalises any action that involves obtaining - or has the purpose or effect of obtaining - an undue benefit or advantage in a government contract. 'Bribery' is broadly defined to include promises, undue influence or the giving of money or anything of value to a private contractor that is involved in the design, preparation or execution of a bid or public contract. Unlike anti-bribery laws in some other jurisdictions, the law makes no exception for facilitation or similar payments made to accelerate the receipt of a service or contract that would have been rightfully assigned or granted in any case.

The law provides for large fines, which may be increased in proportion to the benefit gained. It also allows the authorities to blacklist individuals and companies, debarring them from participation in federal government contracts or concessions for up to 10 years. Fines imposed by the bureau will be treated as tax credits and may be collected pursuant to tax laws and regulations. The bureau's penalties are independent and additional to any criminal penalties which may be imposed following prosecution by the Attorney General's Office. The law provides for a 10-year statute of limitations.

The law includes a leniency programme whereby individuals and companies involved in irregular activity may plead guilty to involvement and assist the bureau in conducting its investigation, thereby qualifying for a 50% to 70% reduction in fines.

Anyone has standing to file a claim under the law. In practice, many claims are likely to be filed by the agency or public entity in charge of the government contract or concession in question. However, the law allows claims to be filed online, anonymously, or through the filing of a claim submitted under oath with respect to knowledge of the facts, the indication of evidence and information about the responsible parties - such a claim can be brought only by a private contractor, not by the government. The bureau is mandated to maintain claimant confidentiality. This factor is expected to encourage competitors to file corruption claims if there is reason to believe that a case for corruption may exist, although concerns remain about the submission of false information.

A public servant must make known a fact or activity that violates the law; otherwise, he or she is subject to penalties under the Federal Law on the Administrative Responsibilities of Public Servants and is liable under the Federal Criminal Code.

The bureau may start an investigation on its own initiative or on the basis of information provided in a claim. The law confers broad powers to request production of documents and information not only from government agencies or state entities, but also from third parties. For the purposes of its investigation, the bureau may access information that is classified or reserved under the Freedom of Public Information Laws and Regulations.

If, on the basis of an investigation, the bureau can show probable cause of a violation, it must begin administrative penalty proceedings. Once notified, the defendants have 15 business days to file a plea in response. Thereafter, the bureau must allow the production and admission of evidence by the defendants under the terms of the Federal Rules of Civil Procedure. Thereafter, the defendants have five business days to submit closing arguments. The bureau will then have 10 business days to issue its resolution.

Comment

In future, the law is expected to open up a broad area of practice in respect of claims and investigations. The coming months and years are likely to see the development of significant precedents and further legislation.

Contributed by López Velarde, Heftye y Soria

Jury convicts first corporate Foreign Corrupt Practices Act defendant

Comment by Fulbright & Jaworski LLP

On May 10 2011 Lindsey Manufacturing Company, two of its executives and a Mexican intermediary were convicted by a federal jury on all counts for their alleged respective roles in a bribery scheme involving Mexican government officials. After a five-week trial, the jury took just one day to return the guilty verdicts. Executives Keith E Lindsey and Steve K Lee were each convicted of one count of conspiracy to violate the Foreign Corrupt Practices Act and five counts of Foreign Corrupt Practices Act violations. Angela Aguilar, the Mexican intermediary, was convicted of one count of money laundering conspiracy.

Facts

Lindsey Manufacturing hired Grupo Internacional de Asesores SA to act as its Mexican sales representative and to obtain contracts for Lindsey from Mexico's state-owned utility company, Comisión Federal de Electricidad (CFE). Grupo received a percentage of Lindsey Manufacturing's revenue from CFE contracts. Aguilar and her husband, Enrique Aguilar,(1) were directors of Grupo.

At trial, the Department of Justice presented evidence that from approximately February 2002 until March 2009, Lindsey Manufacturing and Lindsey, Lee and others orchestrated a bribery scheme whereby Mr Aguilar was paid a 30% commission on Lindsey Manufacturing's sales to CFE, a significantly higher commission than that given to previous Lindsey Manufacturing sales representatives. According to the department's evidence, Lindsey and Lee understood that all or part of this commission amount would be used to bribe CFE officials in exchange for contract awards. According to the evidence presented at trial, Lindsey Manufacturing then increased the price of the goods and services sold to CFE by 30% to ensure that CFE, rather than Lindsey Manufacturing, absorbed the cost of the bribes.

The Department of Justice also presented evidence that:

• Grupo submitted fraudulent invoices to Lindsey Manufacturing for the commission amount;
• Lindsey and Lee then wired the money requested into Grupo's account, knowing that the invoices were fraudulent and that at least some of the funds were being used as bribes;
• Lindsey and Lee learned that Mr Aguilar had a corrupt relationship with a top CFE official;
• Mrs Aguilar authorised money in the Grupo account to be used to buy a CFE official a $297,500 Ferrari Spyder and a $1.8 million yacht, in addition to paying more than $170,000 worth of the official's credit card bills; and
• Mrs Aguilar also authorised the transfer of $500,000 from Grupo's account to relatives of another CFE official.

Comment

The convicted defendants face a penalty of up to five years in prison and a fine of the greater of $250,000 or twice the value gained or lost on the Foreign Corrupt Practices Act conspiracy charge. Each of the five Foreign Corrupt Practices Act counts carries a penalty of up to five years in prison and a fine of the greater of $100,000 or twice the value gained or lost. The money laundering conspiracy count carries a penalty of up to 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. In addition, the government is seeking forfeiture against all of the defendants. Sentencing for Lindsey Manufacturing and Lindsey and Lee is scheduled for September 16 2011, while sentencing for Mrs Aguilar is scheduled for August 12 2011.

Before trial, the defendants challenged the Department of Justice's definition of 'foreign official' under the Foreign Corrupt Practices Act; however, the court upheld the department's definition, finding that CFE was an "instrumentality" of the Mexican government.(2) Therefore, the CFE officer who allegedly accepted the bribes was a "foreign official" for Foreign Corrupt Practices Act purposes.

In its press release regarding the convictions, the Department of Justice quoted Assistant Attorney General Lanny Breuer as saying:

"Lindsey Manufacturing is the first company to be tried and convicted on Foreign Corrupt Practices Act violations, but it will not be the last... As this prosecution shows, we are fiercely committed to bringing to justice all the players in these bribery schemes – the executives who conceive of the criminal plans, the people they use to pay the bribes, and the companies that knowingly allow these schemes to flourish."(3)

Several points from the verdicts are noteworthy:

• The Department of Justice will continue to pursue Foreign Corrupt Practices Act enforcement aggressively against companies and individuals – and currently plans to do so under a broad definition of 'foreign official'.(4)
• Coupled with the department's aggressive pursuit of Foreign Corrupt Practices Act enforcement, the speed with which the jury convicted the defendants is also noteworthy.
• Although historically there have been relatively few enforcement actions leading to trial, this case confirms that the department can prevail at trial against both companies and individuals.
• Multiple theories of potential liability will be pursued by the enforcement authorities in Foreign Corrupt Practices Act enforcement actions; here, violation of the Foreign Corrupt Practices Act, conspiracy to violate the Foreign Corrupt Practices Act and conspiracy to money launder were theories on which the government prevailed.
• The department acknowledged in its press release the assistance that it received from the Mexican authorities during the investigation, marking another continuing enforcement trend of increased international enforcement cooperation.

Given the continuing upswing in aggressive enforcement, companies subject to the Foreign Corrupt Practices Act must ensure that they and their employees, agents, consultants or other third-party representatives take steps to comply with the Foreign Corrupt Practices Act.(5) Those steps include:

• assessing the company's international business reach and environment and establishing a robust risk-based compliance programme;
• conducting due diligence on third parties and subsidiaries;
• training company personnel and third parties to understand anti-corruption obligations and identify red flags; and
• ensuring transparency and accuracy when recording financial transactions.

As US Attorney André Birotte remarked in connection with the convictions, the Department of Justice:

"remains committed to prosecuting violations of the Foreign Corrupt Practices Act to ensure that the payment of bribes can no longer be viewed simply as the cost of doing business in a foreign nation. Bribery, wherever it occurs, will carry the potential cost of criminal prosecution, hefty fines and prison terms."(6)

For further information on this topic please contact Marsha Z Gerber, Richard Craig Smith or Paul Simonat Fulbright & Jaworski LLP by telephone (+1 202 662 0200), fax (+1 202 662 4643) or email (mgerber@fulbright.com, rcsmith@fulbright.com or psimon@fulbright.com).

Endnotes

(1) Mr Aguilar has also been charged with conspiracy to violate the Foreign Corrupt Practices Act, violations of the Foreign Corrupt Practices Act and money laundering. Mr Aguilar remains a fugitive and is presumed innocent unless and until proven guilty.

(2) For an analysis of the court's ruling on the definition of 'foreign official' please see "California court retains government's broad interpretation of 'foreign official'".

(3) Department of Justice press release, May 10 2011, "California Company, Its Two Executives and Intermediary Convicted by Federal Jury in Los Angeles on All Counts for Their Involvement in Scheme to Bribe Officials at State-Owned Electrical Utility in Mexico," available atwww.justice.gov/opa/pr/2011/May/11-crm-596.html

(4) The definition of 'foreign official' under the Foreign Corrupt Practices Act has also been challenged in two other current cases – see US v O'Shea (No 4:09-cr-00629 (SD Tex)) and US v Carson (No 8:09-cr-00077 (CD Ca)). Those courts have yet to rule on the pending motions.

(5) Companies with operations providing a nexus to the United Kingdom must equally ensure compliance with the UK Bribery Act of 2010, which will come into force on July 1 2011.

(6) Supra note 3.

Pondering section 27 Integrity in Public Life Act 2000 (as amended) of Trinidad and Tobago

The Hon. Prime Minister, Kamla Persad Bissessar

From the first time I heard that the Hon. PM's "free lodging" at the Gopaul's was being interpreted as a "fee, gift or personal benefit" under section 27 (1) of the Integrity in Public Life Act 2000 as amended, I intuitively thought it an uncomfortable interpretation but I could not put my finger on exactly why it was so.  It was certainly a benefit received and so I understand the readiness to conclude that it must be covered under the section dealing with the prohibition and declaration of gifts by public officials. I held my tongue on the topic ( even though as most of you know I am most inclined to comment on topics of this sort) and pondered a little.  Why was I uncomfortable with this interpretation?  Why did it seem like forcing a square peg into a round hole to me?  

Let us look at section 27 closely :

"27. (1) A person to whom this Part applies shall not accept a fee, gift or personal benefit, except compensation authorized by law, that is connected directly or indirectly with the performance of the duties of his office.

         (2) Subsection (1) does not apply to a gift or personal benefit that is received as an incident of the protocol or social obligations that normally accompany the responsibilities of office.

          (3) Where a gift or personal benefit referred to in subsection (2) exceeds five thousand dollars in value or where the total value received directly or indirectly from one source in any twelve-month period exceeds five thousand dollars, a person in public life shall file with his declaration, a statement indicating the nature of the gift or benefit, its source and the circumstances under which it was given or accepted.

           (4) For the purposes of this section, the amount of a gift comprising property, other than money, shall be deemed to be an amount equal to the value of the property.”

If we were to look at 27 it would appear that there is not there created an absolute bar to the receipt of any gift whatsoever.  Further from a consideration of the section in its entirety it is clear that there are distinctions made between categories of gifts etc.  Let us break it down.  From my reading of it there are at least four potential categories of gifts :

Gift Category 1

Defined by section 27 (1) - those fees, gifts, personal benefits, not authorized by law, that are connected directly or indirectly with the performance of one's duties of office. -Prohibited

Gift Category 2

Defined by section 27 (2) - those gifts/benefits received as an incident of the protocol or social obligations that normally accompany the responsibilities of office (under the value of 5000TT) - Permitted

Gift Category 3

Defined by section 27 (3) - those gifts/benefits received as an incident of the protocol or social obligations that normally accompany the responsibilities of office (over the value of 5000TT) - To be declared

Gift Category 4

Not defined by the section but nonetheless must exist - those fees, gifts, personal benefits received by public officials which are NOT connected directly or indirectly with the performance of one' duties of office. - Not Covered by the Act

It is of course category 4 which causes the most concern but given the manner in which the section 27 is drafted - it must exist.  Section 27 (1) breaks down the elements which one must find in the type of fee, gift or benefit which is prohibited eg. 

1. Must be a Fee, gift or personal benefit

2. Must not be authorized by the law (wages, salaries, benefits or perks of office)

3. Must be connected directly or indirectly to the performance of one's duties of office. 

The Gift of Free Lodging 

In the instant situation relating to the benefit of "free lodging", whilst elements 1 and 2 are made out, it is questionable whether element 3 is made out. There are two sub elements to 3 which are (a) must be connected directly or indirectly and (b) to the performance of one's duties of office. 

Taking the latter sub element first, the reference in s.27(1) (as amended) to “the duties of office” would seem to be a reference to public duties, ie duties which are an incident of the holding of a public office. Section 23 provides that Part IV of the Act applies to “a person in public life and to all persons exercising public functions”. Such persons are defined in section 2 and include all persons holding office under the Public Service. “Public functions” is a term not defined in the Act but “persons exercising public functions” is defined in s.2 to include, inter alia, the Judicial, Police and Teaching services.  Sections 24 to 27 are concerned with the use and misuse of office. This must, ex hypothesi, mean ‘public’ office. Similarly, the reference in s.24(1) to the performance of functions must be a reference to ‘public’ functions.

S.24(1)(a) makes express reference to the exercise of “public duty”. The term is not defined. However, it must necessarily encompass duties which are an incident of the public office and, possibly, which are owed to the public. A public duty may, in principle, be distinct from a ‘private’ duty, which may, eg, include those duties arising by way of contract of employment.

Accordingly, holding a public office may, in principle, give rise to both public and private duties. So a teacher’s duties might include, eg, one to mark exam papers impartially which could properly be characterized as a public duty; and a duty to work the hours stipulated in her contract, which is perhaps more readily categorized as a private duty. 

If this public/private distinction is in principle valid, then one can interpret s.27(1) as being concerned with matters “connected directly or indirectly with the performance of the [public] duties of his office”.

Leaving aside, for one moment, the meaning of “connected directly or indirectly”, one can interpret s.27(1) as, therefore, being concerned with the relationship between the acceptance of a fee, gift or personal benefit and the performance of a public duty which is an incident of the holding of a public office.

Considering the first sub element (a) “Connected” is defined in Collins English Dictionary as meaning “joined or linked together”. Using this definition, the term is suggestive of there being a link or relationship between said acceptance and said performance. That is to say that the acceptance of the benefit (and presumably also its offering) is referable to the performance of the public duty, or is linked to the performance of the public duty. 

It can be seen that s.27 distinguishes between benefits connected directly or indirectly with the performance of the duties of office (s.27(1)) and benefits “received as an incident of the protocol or social obligations that normally accompany the responsibilities of office” (s.27(2)). As explained above, this is not an exhaustive characterization of all benefits that a holder of public office could receive. Thus, by way of example, a birthday present from a family member would not fall under either category of benefit identified in s.27(1) or (2). The gift does not fall within s.27(1) because it is not connected with the performance of the duties of office. It does not fall within s.27(2) because it was not received as an incident of the protocol or social obligations that normally accompany the responsibilities of office, and therefore would not fall within s.27(3) either, even if its value exceeded TT5,000. Let us refer to this type of gift/benefit as the Category 4 gift outlined above. 

Similarly, the gift of free lodging from a friend without any evidence of a "connection directly or indirectly" with the performance of a public duty (for example the public duty to award a contract fairly and impartially) would not therefore appear to infringe section 27 (1). It would also not infringe section 27 (2) as it is not a gift given as an incident of protocol or social obligation accompanying the office and neither is it declarable under section 27 (3). 

On the above interpretation of the Act, it follows that, the mere fact that a fee, gift or benefit may be convenient to the performance of a public duty does not by itself establish the connectivity required by section 27(1).  

A Note on the Integrity in Public Life Act

Ok so I understand the discomfort with this.. it may be readily accepted that the Act is not the best example of parliamentary draftsmanship. Party financiers who are friends can give gifts of value and once no evidence can be adduced showing a connection with the performance of a public duty there is no infringement.  I am uncertain whether this was the intention of the framers. Perhaps a simpler expression of the rules would be 

1. Create an absolute bar on all gifts received in connection with the performance of duties of office (as is done by section 27 (1) as amended). 

2. However, require full disclosure of ALL gifts received over the value of 5000TT so that in the event of an allegation being made there should be appropriate records to assist with the investigation.  Our section 27 (3) requires only the declaration of gifts over 5000TT which are received as an incident of protocol or social obligation relating to the public office, thereby creating a fairly large loophole relative to Category 4 gifts. 

A Note on the NP Procurement Process 

All of this to say, I am not defending the NP procurement process nor am I saying that the Hon. PM did or did not interfere and or influence the process.  All I am saying, is

(1) the mere fact of the acceptance of the gift/benefit of free lodging by the Hon. PM  does not of itself establish a breach of section 27 (1) and

(2) the award by an SOE of a contract to the donor of the said gift/benefit of free lodging,  is not, without more, sufficient to support an allegation of impropriety.  

This notwithstanding, there may be evidence which is adduced later on pointing to unfairness of procedure, breaches of duties to award the contract as tendered, to disqualify non compliant bids etc, and there may even be evidence elicited relating to political interference and influence over the award.   In such circumstances, it may be that the Hon.PM or other public officials may have a case to answer.  

New Anti-Corruption Era in Egypt

Transparency International (TI), the global anti-corruption organisation, hosted a two-day workshop in Cairo to debate the reforms necessary to make Egyptian institutions more resilient to corruption and more accountable to the public.


Entitled “Towards a new integrity system in Egypt”, the workshop brought together more than 75 members of government, media, academics, judiciary and civil society to agree on the first steps to making Egyptian institutions strong and independent so that they can enforce anti-corruption laws and uphold freedom of expression.


These discussions can act as a starting point for a new anti-corruption framework, with measures that ensure all actors in the Egyptian state – including leaders, public officials and security forces - act with integrity.
“In this meeting people inside and outside worked together driven by a common determination to create a truly effective and comprehensive anti-corruption system. There is a very clear mood that we cannot allow rules and institutions to be side-stepped by those in power,” said Omnia Hussein, In-Country Programme Coordinator for Transparency International in Egypt. “Egypt must have a state-of-the-art system of checks and balances so that there are no longer exceptions to anti-corruption rules.”



Among the measures called for to improve accountability and transparency are:

• New laws that guarantee that all public officials are accountable, with no exceptions.

• Ensure the total independence of anti-corruption bodies, and expand their remit to include relations between the public and private sectors such as public procurement. Their reports must be made publicly available.

• Strong laws on freedom of information and whistle-blower protection. Accountability rules must apply to all areas of government, without exemptions for areas like defence or justice

• Financial institutions must exercise constant scrutiny of any clients who are public officials

• Creation of a national body responsible for a comprehensive national strategy for combating corruption

• The creation of the role of ombudsman to investigate citizens’ complaints.

Learning from the past


“Egypt is still suffering from corruption. The fall of one leader will not cure the weakness of institutions that until now have not been able to consistently enforce anti-corruption rules,” said Omnia Hussein. “This is where civil society can make a difference if given space to operate freely, in a way that was not allowed in the past. The fact that members of government and judiciary are openly discussing the future transparency of state institutions is a good start for the new Egypt.”


Last year, Transparency International published an analysis of Egyptian state institutions and their contribution to accountability and integrity. It found that even where mechanisms for transparency and accountability did exist, they were undermined by lack of independence and political will to fight corruption. It also highlighted lack of space for civil society and protection for whistleblowers.


Egypt scores 3.1 on Transparency International’s Corruption Perceptions Index, a scale which goes from 0 (highly corrupt) to 10 (very clean).



Transparency International is the global civil society organisation leading the fight against corruption, with chapters in 94 countries around the world, including Morocco, Lebanon and Palestine.

Media Contact
Deborah Wise Unger
Tel: +49 30 34 38 20 666
Email: press@transparency.org