Wednesday, September 21, 2016

Oman Officially Ratifies the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

Royal Decree 41 of 2016 (“RD 41/16”), was issued on the 18th of August 2016 in relation to approving the Sultanate of Oman joining and becoming a party to the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the “Convention”).  The Organisation for Economic Co-operation and Development (the “OECD”) created the anti-bribery convention as a means of establishing certain legally binding standards to criminalise the bribery of foreign public officials in international business transactions and to allow the nations who join the convention to have effective measures in this regard.  RD 41/16 comes in the wake of the Sultanate of Oman’s recent focus on combating bribery, money laundering, fraud and other financial crimes.

The Convention was drafted in a manner to give parties a certain amount of flexibility in applying its articles, as it generally makes recommendations regarding the measures that parties should implement rather than forcing the parties to implement them.  The Convention deals with offences committed by persons who promise or give bribes, as opposed to dealing with the offence committed by the official who receives the bribe.   The Convention is the first international anti-corruption mechanism that focuses on this side of bribery transactions and it allows parties to implement the recommendations contained within the Convention without the need to initiate changes in the fundamental principles of the laws of any given party.  It also seeks to maintain efficient uniformity among the measures taken by all the parties in deterring bribery of foreign public officials.

In essence, the Convention allows the parties to implement penalties that they deem fit which would normally apply within their own legal systems. This was illustrated in article three of the Convention which states that the bribery of a foreign public official shall be punishable by effective, proportionate and dissuasive criminal penalties which are comparable to the penalties applicable to the bribery of the party’s own public officials in a manner that allows effective mutual legal assistance and even extradition if the case calls for it.

In order to achieve its main purpose, the convention clearly outlines the required measures needed to be taken by the “accounting” department in order to combat bribery. These measures include the prevention of establishing off the books accounts, recording non-existent transactions, keeping false expenditure records. The Convention strongly urges members that such methods should result in either a civil, administrative or criminal penalisation.

The Convention includes several recommendations for member countries regarding reporting foreign bribery, maintaining external audits and compliance.  Moreover, in order to raise awareness in the public and private sectors for the purpose of preventing foreign bribery, the Convention includes numerous recommendations for parties to have strong ethics and compliance regulations as well as obliging companies to maintain external auditing. Business organisations should be encouraged by the member countries to assist companies in developing internal controls, ethics, and compliance programmes or measures.

Additionally, member countries should necessitate that companies reveal the full scope of material liabilities within their financial statements.   Furthermore, the convention encourages a company’s management to disclose in their annual reports or otherwise publicly disclose their internal controls, ethics and compliance measures, including those measures which contribute to detecting bribery.

Fundamentally, companies should consider visible policies in prohibiting bribery. Clear and strong support from senior management to maintain high standards in ethics and compliance can be considered as one of the expected recommendations from the articles of the Convention. Likewise, a financial and accounting procedural system with internal controls which are reasonably designed to ensure the maintenance of fair and accurate records are required under the Convention. The guideline encourages companies to provide positive support for the observance of ethics and compliance programmes or measures against foreign bribery. Companies should ensure that they have periodical reviews of the ethics and compliance programmes in a manner designed to assess their efficiency in avoiding foreign bribery, taking into account related developments in the field.

With regards to reporting foreign bribery, members should ensure having easily accessible channels in place for the reporting of suspected acts in international business transactions to law enforcement authorities. In addition, appropriate measures should be in place to facilitate the reporting of public officials, in particular those posted abroad. In accordance with Article 8 of this Convention, Members shall provide effective and proportionate civil, administrative or criminal penalties for such omissions in respect of the books, records, accounts and financial statements of such companies.

Therefore, being a member to this Convention and adhering to the articles of the Convention enables companies to avoid financial crimes especially those in relation to bribery. Joining in the Convention does not necessarily mean that the country has been given new regulations. Rather, the Convention reaffirms the regulations that the Sultanate already has in place such as the Code of Corporate Governance for Public Joint Stock Companies, the Law on Anti-Money Laundering issued through Royal Decree 30 of 2016 as well as other laws and regulations which relate to compliance, ethics and avoiding financial crimes.