Anti-Corruption in Israel
Anti-Corruption laws in Israel impose strict scrutiny and compliance requirements in conducting business in Israel or with Israeli agents and officials. Alas, anti-corruption norms are not codified and the code of conduct is scattered among multiple Acts of legislation, regulations, stare decisis, official communiqué and administrative precedence.
Thus, anti-corruption compliance is sometimes tricky as, more often than not, compliance mistakes, if discovered, are irreversible.
Key Points in Israeli Anti-Corruption Practice
The Israeli Penal Code prohibits corrupt payments, offers or promises of money, valuable consideration, a service or any other benefit, to influence any act or decision (including a decision not to act) of a foreign or local government official to induce the official to use his or her influence to affect an administrative act (or failure to act) or decision, in order to obtain, to assure or to promote business activity or other advantage in relation to business activity.
The Israeli Penal Law defines “foreign public official” as any employee of a foreign country or of a public international organization, or any person acting in an official capacity for or on behalf of a foreign country, a public body constituted by an enactment of a foreign country, or a public international organization. It is mentionable that the definition also applies to entities over which the foreign country exercises, directly or indirectly, control, including where more than one foreign government exercises such control, such as in the case of State-owned enterprises. Consequentially, the scope of the prohibition is wide and enforcement is firm. Thus, foreign and Israeli companies must tread lightly when semblance of misconduct is possible.
As noted above, the prohibition applies to more than just payments and offers and promises of payments: an offer or promise would (in itself) be sufficient to complete the offence of bribery. Non-pecuniary advantages such as sexual favors, or appointments to a public position are also strictly forbidden. Most importantly, Israel has chosen not to introduce an exception of small “facilitation” payments.
Conflict of interests
The prohibition on conflict of interests is a principle fundamental to Israeli administrative law. This prohibition holds that a public official may not serve in an office if there are reasonable grounds to suspect that he may be influenced by interests contradicting those he is supposed to promote in his office. This principle has wide applications. The prohibition applies not only to situations in which the public official might be influenced by personal interests (his own or those of relatives or friends). It also applies in situations in which the official serves in another public position, for the advancement of which he may need to support conflicting considerations. Compliance with this principle calls for thorough internal inquiries and disclosure whenever a corporation might be seen as to be wrongfully benefitting from its, of indeed, its lawyer’s, well-established connections within the government’s higher echelons.
The prohibition on conflict of interests is one of the main reasons for the more specific prohibition on the delegation of statutory powers to private actors. This prohibition, which is especially important in the context of privatization and transaction on a national scale or national importance, derives, among other things, from the concern that a private actor will be influenced by the desire to promote his own private interests at the expense of the public.
Responsibility of Legal Persons and Protection of Whistleblowers
Legal persons, by virtue of the general provisions of the Penal Code, are held criminally liable for the offence of bribery of public officials.
In appropriate circumstances, both the legal person and the individuals responsible for committing the offence, or involved in the same, may be held criminally liable for the bribery offence. It is highly recommended to raise awareness amongst employees to the bribery offence, to develop training programs aimed at internalizing the severity of the action and to create internal mechanisms to prevent it.
It is also advised to take measures to encourage employees to report to company management bodies on suspicions of acts of bribery of local and foreign public officials by the company. Israeli Law emphasizes the importance of exposing acts of corruption to the authorities and thus, the protection provided by law to whistleblowing employees according to the Protection of Employees (Exposure of Offences, of Unethical Conduct and of Improper Administration) Law, 1997 is expansive and broad. Means of reporting of corruption and misconduct (and applying for the protection granted by law) is explicitly made simple – a form filled at any police station or even a call to the general police call center is usually enough to trigger a full-on investigation.