It will cover the definition of bribery, regulation, compliance, liability and enforcement as well as insight and opinion and any upcoming legal changes planned for their respective country. This Q&A is part of the global guide. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/b ribery-corruption/
What is the legal framework (legislation/regulations) governing bribery and corruption in your jurisdiction?
There are numerous anti-corruption and bribery laws in the United Arab Emirates (UAE). Firstly, the UAE has ratified the United Nations Convention against Corruption (UNCAC) pursuant to Federal Decree Law No. 8 of 2006 (2006 Law). The UAE also signed the Arab Convention to Fight Corruption (the Arab Convention) on the 21 December 2010, which includes 21 Arab Countries, including the UAE.
The UAE has been fighting bribery and corruption since the 1980’s with the enactment of Federal law 3/1987 otherwise known as the UAE Federal Penal Code (the Code) and specifically Articles 234-239 of the Code. Federal Decree Law 11/08 (also known as the Federal Human Resources Law also combats bribery.
In Dubai, the above laws are supplemented by the Penal Code of 1970 and Dubai Law 37/2009 on the Procedures for the Recovery of Illegally Obtained Public and Private Funds (Financial Fraud Law).
There are also other laws which have the secondary effect of combatting bribery and corruption and they are:
- Federal Law 4/2002 regarding the Criminalization of Money Laundering;
- The Regulations governing the declarations by travelers entering or leaving the UAE carrying cash or negotiable instruments;
- Federal Law 7/2014, Combating Terrorism Crimes;
- Federal Law 9/2014 amending certain provisions of Federal Law 4/2002 concerning the Combating of Money Laundering Crimes;
- Cabinet Resolution 38/2014, Executive Resolution of Federal Law 4/2002;
- Dubai Law 4/2016 on Financial Crimes.
Which authorities have jurisdiction to investigate and prosecute bribery in your jurisdiction?
There are numerous Authorities that have jurisdiction to combat bribery and corruption:
- The Anti-Corruption U nit (known as the Abu Dhabi Accountability Authority) was established in 2015 by Abu Dhabi Law no 14 of 2008 which applies to public sector bodies;
- The State Audit Institution (SAI) which is also for public sector bodies;
- The Central Bank of the UAE has the Anti-Money Laundering and Suspicious Cases Unit;
- The Police Forces of the UAE (jurisdiction restricted to each Emirates jurisdiction);
- The Abu Dhabi Accountability Authority;
- Finally, the only f ree zone to have their own specific Authority, (apart from the Abu Dhabi Global Market, which is still relatively new and we are not dealing with it here) is the Dubai International Financial Centre (DIFC) which has the Dubai Financial Services Authority;
- Dubai has also passed a law that will allow for the creation of the Dubai Economic Security Centre (DESC) which will focus on bribery and corruption.
Which authorities have jurisdiction to investigate and prosecute bribery in your jurisdiction?
There is no “set in stone” definition for bribery in a specific law in the UAE, however when one looks the United Nations Convention Against Corruption (UNCAC) which was adopted as per the 2006 Law, specifically Chapter 3, the definition of bribery is defined as being a criminal offence when the following is committed intentionally:
“(a) The promise, offering or giving, to a public official either directly or indirectly, of an undue advantage, for the official himself or another person or entity. In order that the official act or refrain from acting in the exercise of his or her official duties;
(b) The solicitation or acceptance by a public official, directly or indirectly, of an undue advantage, for the official himself or herself or another person or entity, in order that the official act or refrain from acting in the exercise of his or her official duties.”
The Penal Code, supports the above definition.
Does the law distinguish between bribery of a public official and bribery of private persons? If so, how is ‘public official’ defined? Are there different definitions for bribery of a public official and bribery of a private person?
Yes, it does distinguish between bribery of a public official and a public person. Furthermore, there isn’t a different definition of bribery for a public official and a private person merely a difference in how bribery can apply to each.
Article 5 of the Penal Code defines a Public Official as follows:
“A public servant shall be defined in the present Law as any person in a federal or local position, whether legislative, executive, administrative or judicial, whether be appointed or elected such as:
I. Persons entrusted with public authority and employees of ministries and government departments;
II. Members of the military forces;
III. Employees of security bodies;
IV. Members of the judiciary, chairmen and members of legislative, advisory and municipal boards;
V. Any person assigned to a certain task by a public authority, to the extent of the delegated task;
VI. Chairmen and members of boards of directors, directors and other employees of public authorities and institutions, as well as companies owned, wholly or partially by the Federal Government or local governments;
VII. Chairmen and members of the boards of directors, directors and other employees of societies and associations of public welfare.
Public servants shall be deemed by the present law as any person who is not included within the categories set forth in preceding clauses. Any person engaged in the work of public service as assigned to him by a public servant in charge under laws or regulations with respect to the assigned task.”
Article 236 bis (1) of the code deals with the offence of accepting a bribe as a public official as follows:
“Any person who administers an entity or establishment that pertains to the public sector, or is employed by either one of whatever capacity, who requests, accepts, either directly or indirectly, a gift, benefit or a grant that is not due, or is promised of the same, and, whether to the benefit of himself or another person, in order for such person to commit or omit an act that is included in his duties, even if he has intended not to fulfil or omit such act, or if the request, offer or promise is made after the fulfilment or omission of such act, shall be sentenced to imprisonment for no more than five years.
In the private sector, article 236 bis (2) deals with the offences of accepting a bribe in the private sector and states the following:
“Any person who promises another person managing an entity or establishment of the private sector, or who is employed by him in any capacity, with a gift, benefit or grant that is not due, or who offers or grants the same, either directly or indirectly, whether to the benefit of the person himself or for another person, in order for that person to perform or to omit an act that is included in his duties or constitutes a violation thereof, shall be sentenced to imprisonment for no more than five years.”
What are the civil consequences of bribery in your jurisdiction?
The aggrieved party may sue the offenders for any losses sustained. This is the only civil consequence of bribery in this jurisdiction. An example of this would be if “A” was awarded a contract from “B” but “B” was later bribed by “C” to give the contract to him and cancel any arrangement with “A.” In such cases, “A” could sue both “B” and “C” and the respective organisations they may represent for damages.
What is beneficial here is that there is no prescription for a claim against bribery. Article 239 bis 2 of the code states as follows:
“A criminal lawsuit shall not be terminated by lapse of time limitation in any of the crimes set forth in this Chapter, and the punishment imposed shall not be extinguished. Moreover, civil actions either arising or related thereto shall not be terminated by the lapse of time limitation.”
“A” could also file charges and request fines, however these fall under criminal sanctions.
What are the criminal consequences of bribery in your jurisdiction?
It varies depending on the offence and who committed the offence but can range from a fine that can be equal to the bribe or AED 5,000.00 if greater, to imprisonment of up to fifteen years. The code tends to treat the accepter of the bribe far more harshly than the person who orchestrated the bribe.
Does the law place any restrictions on hospitality, travel and entertainment expenses? Are there specific regulations restricting such expenses for foreign public officials?
Yes, the law does place restrictions on hospitality, travel and entertainment expenses. There are also specific regulations restricting such expenses for foreign public officials.
Article 234 and article 237 of the code punishes the acceptor of a bribe, the offeror of the bribe or intermediary as well as regulates the acceptance of any benefits.
Article 234 of the code states as follows:
“Any public servant or person entrusted with a public service, a foreign public servant or an employee of an international organisation who requests or accepts, whether directly or indirectly, a gift, benefit or other grant that is not due, or is promised the same; whether to the benefit of the employee himself or for another entity or establishment, in order for such employee to commit or omit an act included in his duties even if he has intended not to commit or omit such act, or if the request, acceptance or promise is made after the fulfilment or omission of such act, shall be sentenced to temporary imprisonment.”
Article 237 states as follows:
“Any person who promises, offers or gives a public servant or a person entrusted with a public service, a foreign public servant or an employee of an international organisation, a gift, benefit or grant that is not due, either directly or indirectly, whether to the benefit of the employee himself or for another person or entity, for such employee to commit or omit an act included in his duties, shall be sentenced to imprisonment for no more than five years”
Article 237 bis states as follows
“Any person who promises, offers, grants or gives, either directly or indirectly, a public servant or any other person, a gift, benefit or grant that is not due, to abet that public officer or person to abuse his power, whether actual or presumed, to obtain, from a public department of authority, an unlawful benefit for the benefit of the original abettor of such act or for the benefit of any other person.
Any public servant or any other person who requests or accepts a benefit, gift or grant that is not due, whether for himself or for another person, either directly or indirectly, so as such public servant or person abuse his power, whether actual or presumed, to obtain, from a public department or authority, that unlawful benefit.”
Finally, Article 237 bis 2 states as follows
“An intermediary between the briber and a bribe-taker to offer, request, accept, take a briber or any promise thereof shall be sentenced to imprisonment for no more than five years.
As you can note from the above code, it is clearly prohibited for public officials, whether foreign or local, to accept any form of hospitality, travel and entertainment expenses of any other kind."
Any gifts that are of a symbolic nature or promotional material must have the “gifters” logo on the material.
Are political contributions regulated?
The UAE is a federation comprised of seven sheikhdoms. As such, political contributions are generally not an issue as there is a lack of politicians to influence via bribery.
Are facilitation payments regulated? If not, what is the general approach to such payments?
Yes, they are regulated. Article 234 and Article 237 of the code will again come into play here. The code was updated in 2016 to allow for the inclusion of foreign public officials specifically to combat such issues. The penalties as described in question 7 will apply in this case as well.
Are there any defences available?
When you consider Article 234 and article 237, you can see that there is no defence to bribery. Article 234 goes further and specially states the following, “Any person who commits or omits an act included in his duties even if he has intended not to commit or omit such act.” Even if the accepter of the bribe has no intention of committing or omitting the act in question, it is irrelevant. With such a strenuous onus placed on the population, whether public or private, there are clearly no defences to the act of bribery and corruption.
Are compliance programs a mitigating factor to reduce/eliminate liability for bribery offences in your jurisdiction?
In terms of Article 239 of the Code, should the briber or intermediary report the offence before it is discovered, they shall be exempt from the penalty. It makes no mention of the accepter of the bribe being exempt from the penalty if they report the bribe.
Should the offender (in any context as defined) plead guilty then it would likely be considered a mitigating circumstance.
The court in these types of cases have a wide discretion to consider the circumstances of each matter and any mitigating factors that may apply. They can then apply these mitigating factors to decide the type of punishment that should be handed down.
Who may be held liable for bribery? Only individuals, or also corporate entities?
Both individuals and corporate entities can be held liable for bribery.
The penalties may differ however.
Individuals found guilty of bribery will face possible jail time whereas corporate entities will typically be issued with a fine.
Both individuals and companies can also face administrative penalties such as sector exclusion and trade license cancellation.
Has the government published any guidance advising how to comply with anti-corruption and bribery laws in your jurisdiction? If so, what are the elements of an effective corporate compliance program?
- The Government has published the Laws and Regulations on Bribery and Corruption and has created obligations for companies in Federal Law No. 2 of 2015 on Commercial Companies (the Company Law) which sets out obligations for companies to follow. These include appointing a completely independent auditor who is listed in the Register for Auditors and Accountants as per Federal Law No. 12 of 2014, the Organisation of Auditing Profession (OAP) law, which regulates the professions of auditing and accountancy and stipulates that the auditor must have more than five years’ experience in auditing private and public companies.
- Article 153 of the Company Law prevents the following
- I) Article 153(1) states that joint stock company may not issue any loans or guarantees to any member of the board. It further states that the board members’ family members up to the second degree, will also be considered “Board members” in terms of the law.
- Article 153(2) states that no loan may be granted to a company where a Board member, [and his family as described in 153(1)], owns more than a 20% share of that company
- Article 153(3) states that any agreement in contravention of the provisions of Article 153, shall not be valid and the Auditor is to include the extent of compliance by the company in their annual report to the General Assembly of the company.
- Article 222 of the Company Law prevents the company or its subsidiaries from giving financial aid to a shareholder to enable the shareholder to hold shares, bonds or Sukuk issued by the company. It further defines financial Aid as any of the following:
- Providing loans;
- Providing gifts or donations;
- Providing assets of the company as security;
- Providing security or guarantees for the obligations of another person.
- Article 242 of the Company Law prevents the company from making any donations within the first two years. Therefore, after this period, donations may be made once they meet the following requirements:
- It cannot exceed 2% of the company’s average net profits of the previous two years;
- It must be for the benefit of society;
- The beneficiary of the donation must be disclosed in the company’s audit report;
- A special resolution is required to make the donation.
Does the law provide protection to whistle-blowers?
There is no Federal protection for whistle-blowers who in fact may end up with a charge of defamation and civil liability for breach of confidentiality.
Dubai does offer some protection for whistle-blowers in terms of the Dubai Law 4/2016 on Financial Crimes, however, in compliance with the UAE constitution, these provisions will need to be read with the Federal Law.
How common are government authority investigations into allegations of bribery?
The UAE scored 71 points out of 100 on the 2017 Corruption Perceptions Index reported by Transparency International, so the perceived level of bribery and corruption in the public sector is not high. The UAE treats bribery and corruption very seriously and any allegation will be investigated.
What are the recent trends in investigations and enforcement in your jurisdiction?
As mentioned in question 15, the UAE treats corruption and bribery very seriously and is constantly striving to ensure that it can minimise the risks of both. The establishment of the DESC, (Dubai Electronic Security Center) in 2014 is clear evidence of this. DESC was established with the aim to develop and implement information security practices, it has been setting goodpractice criteria for cyber security across the Emirate. DESC’s strategic plan includes initiatives to combat threats, cyber-attacks, and cyber-crime.
Is there a process of judicial review for challenging government authority action and decisions?
Yes, there is. A Government Authority’s decision can be challenged in the competent Courts however prior to doing so, a party is required to seek permission from the relevant Emirate’s Rulers Court. Once the permission is given, only then can the matter proceed to the competent courts.
Are there any planned developments or reforms of bribery and anti-corruption laws in your jurisdiction?
There is nothing planned at this stage other than what has been discussed.
To which international anti-corruption conventions is your country party?
As discussed in question one, the UAE has ratified the UNCAC treaty and is a member of the Arab Council. Both UNCAC and the Arab Council were created specially to combat corruption on a global and territorial scale respectively. Ratifying of the UNCAC means that along with all 178 countries, as of October 2017, the UAE can combat corruption on a global scale. With so many countries ratifying the agreement, there is a unified front against corruption and everyone will be tackling it in the same or similar ways. Being a member of the Arab Council is also important as there are unique problems regarding corruption facing the Arab states that may not be applicable in the rest of the world, so it is vital that the Arab states join forces in combatting corruption on a smaller scale than UNCAC allows.
Do you have a concept of legal privilege in your jurisdiction which applies to lawyer-led investigations? If so, please provide details on the extent of that protection.
Firstly, there is a distinction between how the UAE (the mainland) operates and how the Dubai International Financial Centre (DIFC), a major global financial hub for the Middle East, Africa and South Asia markets, and Abu Dhabi Global Market (ADGM), a broad-based international financial centre for local, regional and international institutions, operates with respect to legal privilege
On the mainland,
- There is no legal privilege as it is recognised in common law jurisdictions and there is no protection for “without prejudice” correspondence.
- The principle for the confidentiality of communication between attorneys and clients is entrenched in the professional codes of conduct that govern the legal profession.
- Article 42 of the Federal Advocacy Law No. 23 of 1991 (as amended) (the Advocacy law) stipulates that an attorney is under a duty to maintain the confidentiality of any information entrusted to them by their clients throughout the course of their profession and can only disclose this information if it is to prevent committing a crime.
- Disclosure is permitted in certain limited instances, such as:
- With the written consent of the client and the rightful owner of the information.
- An express court order indicating what must be revealed and to what extent.
- If the Attorney is accused of a criminal or civil charge stemming from the relationship with the client.
In the DIFC
- The Dubai International Financial Centre (DIFC) is a financial free zone in the Emirate of Dubai exempt from the civil and commercial laws of the UAE and operates largely as a self-regulated common law jurisdiction. The UAE criminal laws regulations, including the regulations on anti-money laundering do still apply in the DIFC
- The DIFC glossary defines privilege as the right of a party to refuse to disclose information of any kind on the ground of a specially recognised legal interest.
- Privileged communication is defined in the Regulations of the Dubai Financial Supervisory Authority’s (DFSA), as “a privilege arising from the provision of professional legal advice and any other privilege properly applicable by law to the communication in question, but does not include a general duty of confidentiality”.
- The Code of Conduct of Legal Practitioners in the DIFC (the DIFC code) imposes a duty on practitioners to keep attorney-client communication private unless the client permits its release, the DIFC court orders the release or it is required by law. This privilege continues even if the client ceases to be a client.
How much importance does your government place on tackling bribery and corruption? How do you think your jurisdiction’s approach to anti-bribery and corruption compares on an international scale?
We believe that the UAE takes an extremely harsh stance on bribery and corruption and prioritizes its prevention and punishment. As discussed above, the UAE has ratified UNCAC and is a member of the Arab Council. Both are internationally recognised mechanisms with the sole purpose of combatting corruption. Anti-corruption plays a huge part in the UAE from the top of the government sector to the bottom of the private sector. Corruption is not taken lightly and the authorities do not hesitate to act against it.
Generally how serious are organisations in your country about preventing bribery and corruption?
The UAE is very serious about corruption and bribery and the obligation to prevent it is placed on public offices, private companies and individuals alike. The penalties for committing bribery and corruption are serious and in the case of private companies, if the board consented to the bribery, the entire board can be found guilty which encourages companies to prevent bribery and corruption. As such all companies have developed their own internal mechanisms in line with the law to deal with corruption. They have instituted platforms that will restrict the chances of bribery and corruption occurring and will punish the occurrence of either very strictly.
What are the biggest challenges enforcement agencies/regulators face when investigating and prosecuting cases of bribery and corruption in your jurisdiction?
Enforcing bribery and corruption laws, relies a lot on people reporting it and if they are not giving proper protection on a federal level, it could prevent their co-operation. The ultimate issue, is the lack of evidence. Bribes are usually done in such a way that they are extremely difficult to trace such as cash payments etc. Without evidence it is hard to discover the occurrence of bribery, let alone prosecute it. Without the good faith of people, it is almost impossible to detect in some circumstances.
What do you consider will be the most significant corruptionrelated challenges posed to businesses in your jurisdiction over the next 18 months?
VAT has now come into place and the fines for failing to adhere to the law can be severe. This may increase people trying to get out of the fines by any means necessary.
Another substantial challenge are the sanctions placed on Iran by the EU, UN and USA due to their terrorist activity. The UAE supports the sanctions implemented by the parties. People have been trying all manners of ways to bypass the sanctions such as the recent case in 2013 where people were using currency exchange houses to funnel money of third parties into Iran. This has not changed as very recently in May 2018, an Iranian currency exchange house was sanctioned by the USA (and supported by the UAE) where it is alleged that the house has been used to funnel hundreds of millions of dollars to the Iranian Revolutionary Guard. It is clear that there will be challenges in ensuring that the sanctions against all nations that have them are enforced are upheld and that there are no members of the public, including companies, that try to bypass these sanctions and deal with the sanctioned countries or entities within them.
How would you improve the legal framework and process for preventing, investigating and prosecuting cases of bribery and corruption?
First and foremost, we believe there should be protection for whistle-blowers and amnesty for confessions even if it is by the person who accepted the bribe. The idea is to wipe-out bribery and corruption and as mentioned, it relies on the good faith of people. The issue is, why would someone be willing to risk a lawsuit or defamation charges to report it? Secondly, even if someone accepted a bribe and has had a change of heart due to guilt, by them reporting it, they are still exposing the crime. Obviously, they need to be punished in some form, but perhaps jail time should be excluded.
As for investigating it and prosecuting it, we believe that we must continue to support agencies that focus on bribery and corruption and ensure that proper training is given to them and all government officials on what constitutes bribery and corruption.