In recent years, Israel has seen an increase in the number of criminal investigations, indictments, and convictions related to economic crimes, as well as a corresponding increase in the number of criminal investigations, indictments, and convictions related to public corruption offenses. Many prominent individuals, including important Israeli business heavyweights, have been charged with and convicted of crimes committed while doing their duties, with some of them receiving significant prison sentences.
Simultaneously, as part of Israel’s efforts to follow international norms in the fight against economic crime, money laundering, cross-border bribery, and the financing of both terror and criminal organizations, there has been an upward trend in growing criminal prohibitions and sanctions. In this context, the punishment for a variety of offenses was increased, procedures were established by the enforcement authorities aimed at increasing enforcement activity against perpetrators accused of such offenses, and new provisions were enacted, all of which were derived from international legislation and treaties to which Israel is a party.
In addition to the imposition of more stringent sanctions and the inclusion of broader criminal prohibitions in relation to corruption offenses, there has been a trend of corporations operating in Israel, as well as Israeli enforcement authorities and courts, internalizing the importance of preventing offenses from occurring. As a result, many organizations have placed a greater emphasis in recent years on having strong enforcement and compliance programs in place on a variety of corporate governance concerns, including corruption offenses, in order to avoid such offenses within the firm.
The basic law intended at preventing corruption, recent tendencies toward implementing more punitive laws in regard to corruption offenses, and the respective viewpoints of enforcement authorities and courts will all be summarized in this article. Finally, the associated trend of firms transitioning from managing crises to preventing them through the implementation of effective enforcement programs, as well as the first tell-tale signals of enforcement bodies realising the value of such programs, will be discussed.
The Penal Law, 5737-1977 (the Penal Law) and the Prohibition on Money Laundering Law, 5760-2000 (the Prohibition on Money Laundering Law) are two significant pieces of legislation now in effect in Israel that are targeted at addressing bribery and corruption offenses (the Anti-Money Laundering Law).
Bribing domestic public servants is illegal under Sections 290 and 291 of the Penal Code, with Section 290 governing the act of taking a bribe by a public worker and Section 291 governing the act of paying a bribe by a public worker. As a result, the two offenses are completely distinct.
Bribes are defined as any consideration with a benefit, in money or money’s worth, paid to a public official in connection with an act connected to his or her office, according to Sections 290 and 291 of the Penal Law. Under Israeli law, the phrase “gift” has such a broad definition that any reward might effectively be regarded as a bribe.
Various actions that would be considered bribery offences are described in Sections 292-295 of the Penal Law, such as offering a bribe in sporting or other competitions, offering or requesting a bribe that would be considered giving or taking a bribe, brokering a bribe, and offering a bribe in exchange for senior appointments.
A public servant is prohibited from committing fraud or a breach of trust that hurts the public under Section 284 of the Penal Law. The Israeli legislator did not clearly define the meaning and breadth of the term “breach of trust,” but the Israeli Supreme Court defined the crime as a conflict between a public servant’s obligations to the public and any other interest, such as personal gain.
In order to combat money laundering and prevent activities resulting from criminal behavior, the Anti-Money Laundering Law was enacted in 2000.
The Anti-Money Laundering Law clearly bans doing anything with property derived from a criminal crime referred to in the Anti-Money Laundering Law, such as bribery, with the intent of concealing its source and the identity of its owners. A person who engages in money laundering will be prosecuted with a criminal offense and will be penalized according to the Anti-Money Laundering Law’s sanctions.
Following the passage of the Anti-Money Laundering Law, a slew of orders and sub-regulations were implemented, putting obligations on service providers such as banks, attorneys, and accountants in order to combat money laundering through the financial system. Such orders require financial service providers to receive and verify the identifying information of anyone wishing to conduct business with them.
In addition to any punishment imposed by the court, the Anti-Money Laundering Law establishes measures to facilitate the seizure of money and property. Forfeiture proceedings can be started as part of a criminal case or as part of a separate civil case.
The Anti-Money Laundering Law was enacted as part of Israel’s commitment to joining the worldwide fight against money laundering and international crime, as well as to provide Israel with the instruments required by the Financial Action Task Force (FATF). Other pieces of legislation, such as the Combating Criminal Organizations Law, 5763-2003, and the Counter Terrorism Law, 5776-2016, were enacted to deal with these offenses in addition to the Anti-Money Laundering Law. Both are aimed at combating the phenomenon of money laundering, which serves as the underlying economic foundation for criminal and terrorist organizations alike. Following the adoption of the FATF’s stringent requirements into Israeli law, Israel is now regarded as one of the world’s leading countries in the fight against money laundering.
In recent years, there has been a continued trend of widening criminal law in the area of corruption offenses, with extensive and strict enforcement activities against perpetrators suspected of such offenses, as well as more severe fines imposed by the courts. There has also been an increase in the number of bribery and corruption investigations and indictments carried out and filed in Israel.
The introduction of the offence of corrupting a foreign public official into the Penal Law over the last decade has been a significant development. The reason for including such an offense is the United States Foreign Corrupt Practices Act of 1977, which was enacted in reaction to a slew of instances involving US firms bribing foreign public officials.
In 2008, Israel ratified the OECD Anti-Bribery Convention (officially known as the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions) and amended the Penal Law to include new Section 291A, which essentially states that anyone bribing a foreign public official in order to achieve, ensure, or promote any business activity is guilty of bribery. As a result, Israel became embroiled in a global battle over the payment of bribes to foreign public officials.
Only one indictment for bribing a foreign public official has been filed in Israel to date, but several criminal investigations have been launched against firms and major Israeli business people suspected of giving bribes in numerous countries across the world. As a result, it is realistic to expect an increase in the number of indictments filed for bribery offenses in the coming years. As a result of the Israeli enforcement authorities’ efforts to eradicate the phenomenon of foreign public official bribery, Israel has improved its standing in international indices in the fight against bribery, and was ranked first by Transparency International in the Corruption Perception Index for 2018, with the highest score for combating the phenomenon of foreign public official bribery.
Another noteworthy difference is the more stringent approach chosen with regard to the maximum penalty that can be imposed for bribery offenses, which took effect in 2010. Thus, for giving a bribe, a seven-year prison sentence was issued, rather than a five-year prison penalty, and for taking a bribe, a ten-year prison sentence was imposed, rather than a seven-year prison term. Furthermore, the fines that will be levied on individuals and corporations guilty of bribery have been increased, with the goal of compounding the economic punishment for those who perpetrate bribery. Furthermore, the penalties imposed by the courts on perpetrators of bribery offenses have gradually and consistently become harsher in recent years, and the vast majority of bribery convictions have resulted in the accused receiving active and prolonged prison sentences in addition to exorbitant fines.