Recent amendments to the Organic Act on Counter Corruption, B.E. 2542 (the “Organic Act”) have expanded the scope of Thai anti-corruption laws (the “Amendments”). The provisions of the Amendments that are most important or have received the most press concern: (1) application of the Organic Act to “Foreign Officials” (a defined term); (2) provisions that essentially impose strict liability on companies for corrupt acts of “associated persons” of that company; and (3) the expansion of the death penalty as a sanction for participating in corrupt acts.
1. Foreign Officials:
Thai law has long criminalized corruption involving Thai officials, but did not apply to bribes paid or offered to foreign officials and international organization workers (collectively, a “foreign official” – a fuller definition is provided below) until the Amendments were enacted this year. The Amendments add provisions that make it illegal to bribe or attempt to bribe a foreign official and criminalize a foreign official’s request for or acceptance of a bribe.
Starting with the U.S.’s Foreign Corrupt Practices Act (FCPA) in 1977, and then even more so following the OECD Convention in 1997, there has been a press to criminalize trans-national corruption. The aim, at least initially, was to criminalize the “supply side” of trans-national corruption by imposing criminal penalties on an individual or company of one country that bribes or attempts to bribe an official of another country.
For example, the FCPA criminalizes the supply side of trans-national corruption by making it a crime for American nationals and American companies, no matter where they are situated, to bribe or offer a bribe to a foreign official. The FCPA does not criminalize a foreign official’s receipt of a bribe (the “demand side” of corruption), although other legal theories have been employed to pursue foreign officials that are believed to have received bribes in FCPA cases. The FCPA’s anti-bribery provisions have also been applied to foreign persons and foreign companies that, either directly or through an agent, engage in any act in furtherance of a corrupt payment while “in the territory of the United States”. In practice, this has allowed U.S. authorities to cast a wide net in corruption cases that has swept up many companies that would not ordinarily be considered “American”.
2. Compliance Measures:
Because bribes are often paid to local officials without any demonstrable affirmative direction from the executives of a foreign company, anti-corruption enforcement efforts have focused on the presence or absence of compliance systems that prevent trans-national corruption. The U.S.’s FCPA does not explicitly refer to compliance systems, but the FCPA has a rather unique definition of criminal intent that, in practice, has been used to prosecute or threaten prosecution of companies where employees are believed to have engaged in corrupt acts. U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) – the U.S authorities primarily responsible for enforcing the FCPA – may establish liability on the basis of an actor’s “willful blindness” to corruption. During the last few years, the SEC and DOJ have increasingly used the willful blindness standard, rather than actual knowledge, in enforcement actions.
The U.K.’s Anti-Bribery Act, 2010– enacted more than 30 years after the FCPA – does contain provisions that refer to compliance systems. A commercial organization subject the Ant-Bribery Act commits an offense under that law even if it does not have knowledge of all the relevant factors indicating that the organization is committing a corrupt act. But a commercial organization can defend against this offense by showing that the organization had adequate procedures in place that were designed to prevent bribery by people acting for that business organization.
The Amendments contain provisions that are intended to encourage Thai companies to adopt anti-corruption compliance measures. The Amendments provide that criminal fines can be imposed on a company when a “related party” (which could be an employee, agent or affiliated company or any other person acting for or in the name of the company) bribes a Thai or foreign official on behalf of that company even though the related party is not authorized to act on behalf of the company. Although this provision has not garnered much attention in press reports about the Amendments, this may prove to be the most significant provision of the Amendments.
3. Death Penalty:
The provision of the Amendments providing that the death penalty can be imposed against officials who request or receive bribes has received considerable attention in the press. But another Thai law that contains provisions criminalizing corruption, the Thai Penal Code, has long provided that the death penalty can be imposed against Thai officials who request or receive bribes. The Amendments add this same penalty to the Organic Act (along with potential imprisonment and a maximum fine of 400,000 Baht). And because the Organic Act also covers foreign officials, the Amendments raise the specter that this extreme penalty could now be imposed against a foreign official. Neither the Thai Penal Code nor the Organic Act provides that the death penalty can be imposed on persons who pay or offer to pay bribes. And whether we will see cases where Thai authorities actually seek the death penalty against a foreign official is another matter.
Questions
What is a “Foreign Official”?
We use the term “Foreign Official” as short hand to refer to both foreign officials proper and members of international organizations, which can be described as follows:
A foreign official is a person who holds a legislative, executive, administrative or judicial position for a foreign country or any other person who works for the government of a foreign country including an employee of a government agency or state enterprise, whether they are elected or appointed, hold a permanent or temporary position or receive salaries or any other benefit or not.
The term ‘an official of an international organization’ means a person who works for an international organization or who is appointed by an international organization to act on its behalf.
The definition of a “foreign official” is relatively clear, and specifically refers to “state enterprises”, which is presumably intended to avoid arguments similar to those about the FCPA’s application to state owned enterprises. The definition of an “official of an international organization”, however, is a bit unclear, but may gain clarity if and when the Thai authorities promulgate regulations or issue notices under the Organic Act.
What is a Bribe?
It seems like a simple term and we have used it in discussing the Amendments to make our discussion of the Amendments reasonably comprehensible, but it is actually a very technical term with a specific definition. The definitions also differ on the demand (recipient) and supply (payer) side.
On the demand side, a bribe can be described as:
calling for, accepting or agreeing to accept property or any other benefit to lawfully or unlawfully carry out official duties for the benefit of the bribe giver or any other person. (Bolded italics added).
On the supply side, section 123/5 of the Amendments describes a bribe as:
giving, offering or agreeing to give property or any other benefit to state officials or foreign officials or officials of an international organization, in order to induce such person to unlawfully carry out, omit to carry out or delay carrying out their official duties.
Where’s the Compliance?
The Amendments appear to be designed to allow Thai officials to impose fines on companies when employees engage in corrupt acts without the knowledge of the executives (directors in Thailand) of the company. A new provision in section 123/5 essentially provides that:
in cases where [an offense] is committed by a party related to a juristic person and is committed in the interest of such juristic person, such juristic person shall be deemed guilty of the offence under this Section and shall be liable for a fine at the minimum equal to and at the maximum twice the amount of damages incurred or benefits gained, unless it can be proven that the juristic person has in place an appropriate internal control measure to prevent the offence.
This provision is interesting in at least two respects. First, the law expressly provides for a defense if “appropriate internal control measures” and in place to prevent the offense. This is presumably modeled after the U.K.’s Anti-Bribery Act, and intended to create an incentive for Thai companies to put appropriate internal control measures in place. There will, of course, be questions about what constitutes appropriate control measures.
Second, the fine is tied to the value of the bribe that is given or offered or the value of benefits unlawfully gained. In other words, if a company or someone associated with the company offers or pays a bribe, the authorities can fine that company twice the value of that bribe or the benefits unlawfully gained. This is, perhaps, intended to tip the economic calculus in deciding whether to offer or make a bribe in favor of not doing so. Although a corporate penalty of twice the amount of an offered or given bribe or value of benefits unlawfully gained pales in comparison to the fines that have been imposed in the U.S. under the FCPA, it is a step in the direction of incentivizing compliance.
For more information on anti-corruption laws, click here.