Comparative Guides
Welcome to Mondaq Comparative Guides - your comparative global Q&A guide.
Our Comparative Guides provide an overview of some of the key points of law and practice and allow you to compare regulatory environments and laws across multiple jurisdictions.
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Results: 4 Answers
Anti-Corruption & Bribery
1.
Legal and enforcement framework
1.1
Which legislative and regulatory provisions govern anti-corruption in your jurisdiction, from a regulatory (preventive) and enforcement (criminal) perspective?
 
United Arab Emirates
The United Arab Emirates has been fighting bribery and corruption since the 1980s, with the enactment of Federal Law 3/1987, otherwise known as the UAE Federal Penal Code, and specifically Articles 234 to 239. The Federal Human Resources (Federal Decree Law 11/08) also combats bribery.

In Dubai, the above laws are supplemented by the Code of 1970 and Dubai Law 37/2009 on the Procedures for the Recovery of Illegally Obtained Public and Private Funds.

Other laws also have the secondary effect of combating bribery and corruption, as follows:

  • Federal Law 4/2002 regarding the Criminalisation of Money Laundering;
  • the Regulations Governing Declarations by travellers 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; and
  • Dubai Law 4/2016 on Financial Crimes.
For more information about this answer please contact: Nadim Bardawil from BSA Ahmad Bin Hezeem & Associates LLP
1.2
Which bilateral and multilateral instruments on anti-corruption have effect in your jurisdiction?
 
United Arab Emirates
The United Arab Emirates has ratified the United Nations Convention against Corruption (UNCAC) pursuant to Federal Decree Law 8/2006. The United Arab Emirates also signed the Arab Convention to Fight Corruption on 21 December 2010, which includes 21 Arab countries, including the United Arab Emirates.

Both the UNCAC and the Arab Council (which is responsible for the creation of the Arab Convention) were created specially to combat corruption on a global and territorial scale respectively. Ratification of the UNCAC means that, along with all 178 countries, as of October 2017 the United Arab Emirates can combat corruption on a global scale. With so many countries ratifying the agreement, a unified front is being presented against corruption and all members are tackling the problem in the same or similar ways. Membership of the Arab Council is also important: unique problems regarding corruption face the Arab states that may not be applicable in the rest of the world, so it is vital that the Arab states join forces to combat corruption on a regional scale.

For more information about this answer please contact: Nadim Bardawil from BSA Ahmad Bin Hezeem & Associates LLP
1.3
Are there accessible directives or other guidance from enforcement authorities in your jurisdiction?
 
United Arab Emirates
Yes. The government has published the Laws and Regulations on Bribery and Corruption, and has created obligations for companies in the Federal Law on Commercial Companies (2/2015), which sets out obligations for companies to follow. These include a requirement to appoint a completely independent auditor who is listed in the Register for Auditors and Accountants as per the Federal Law the Organisation of Auditing Profession (12/2014), which regulates the professions of auditing and accountancy and stipulates that an auditor must have more than five years’ experience in auditing private and public companies.

Article 153 of the Law on Commercial Companies prevents the following:

  • Article 153(1) states that a joint stock company may not issue any loans or guarantees to any member of the board. It further states that 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 in which a board member (or family member, as described in Article 153(1)) owns more than a 20% share.
  • Article 153(3) states that any agreement in contravention of Article 153 shall be invalid, and the auditor must report on the extent of compliance by the company in its annual report to the general assembly of the company.

Article 222 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; or
  • providing security or guarantees for the obligations of another person.

Article 242 prevents the company from making any donations within the first two years. After this period, donations may be made if they meet the following requirements:

  • The donation cannot exceed 2% of the company’s average net profits of the previous two years;
  • The donation must be for the benefit of society;
  • The beneficiary of the donation must be disclosed in the company’s audit report; and
  • A special resolution must be passed to make the donation.
For more information about this answer please contact: Nadim Bardawil from BSA Ahmad Bin Hezeem & Associates LLP
1.4
Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?
 
United Arab Emirates
Numerous authorities have jurisdiction to combat bribery and corruption, as follows:

  • the anti-corruption unit (known as the Abu Dhabi Accountability Authority), established in 2015 by Abu Dhabi Law 14/2008, which applies to public sector bodies;
  • the State Audit Institution, which is also for public sector bodies;
  • the Anti-money Laundering and Suspicious Cases Unit of the Central Bank of the United Arab Emirates;
  • the police forces of the United Arab Emirates (jurisdiction restricted to each emirate); and
  • the Dubai Financial Services Authority of the Dubai International Financial Centre, which is the only free zone to have its own specific authority (apart from the Abu Dhabi Global Market, which is still relatively new and is thus not dealt with here).

Dubai has also established the Dubai Economic Security Centre (DESC), which will focus specifically on bribery and corruption. DESC will have an extensive list of competences, including:

  • proposing and auditing legislation to regulate financial and economic affairs in Dubai;
  • preparing and publishing periodical reports and statistics on the financial and economic position of Dubai;
  • following up on cases that DESC is concerned with, including transnational crimes in coordination with the judicial authority;
  • holding and participating in conferences and seminars, cooperating with relevant regional and international organisations to exchange experience, knowledge and information about economic security;
  • combating corruption, fraud, bribery, embezzlement, destruction of public property, forgery, counterfeiting, money laundering, financing of terrorism and other illegal organisations, and other crimes that may be committed in entities that are under the jurisdiction of DESC;
  • monitoring abuses and financial irregularities committed in Dubai;
  • supervising the trading of currencies, commodities, precious metals and securities (listed and unlisted); and
  • developing rules and procedures to prevent interactions with individuals or organisations involved in terrorism or with any individual connected to such organisations.

DESC has the power to:

  • request the public prosecutor to seize funds, documents or anything else in relation to a DESC investigations;
  • liaise with international institutions in order to gain information pursuant to an investigation;
  • suspend trade in the stock market, and freeze, suspend or reactivate any regulations that relate to the financial market; and
  • obtain details of any bank account of any natural or legal person with any relevant body.
For more information about this answer please contact: Nadim Bardawil from BSA Ahmad Bin Hezeem & Associates LLP
1.5
What are the statistics regarding past and ongoing anti-corruption procedures in your jurisdiction?
 
United Arab Emirates
The Corruptions Percentage Index (CPI) ranks countries and territories based on how corrupt their public sector is perceived to be; the higher the score out of 100, the less corrupt the country is perceived to be.

In 2018 the CPI awarded the United Arab Emirates a score of 70, which is a decent score - especially when compared to the score of 52 awarded in 2003. The average CPI ranking from 2003 was 64.56, with the average since 2009 being 68.

The following table highlights the United Arab Emirates' CPI rating for the past 10 years.

The table illustrates the vast improvements the United Arab Emirates has made to tackle bribery and corruption, and how these are working in practice.

For more information about this answer please contact: Nadim Bardawil from BSA Ahmad Bin Hezeem & Associates LLP
1.6
What are the shortcomings identified in your jurisdiction’s anti-corruption legislation (including recommendations of the Organisation for Economic Co-operation and Development, where applicable)?
 
United Arab Emirates
First and foremost, we believe there should be protection for whistleblowers and amnesty for confessions, even where these are made by the person who accepted the bribe. The goal of wiping out bribery and corruption relies on the good faith of people. So why would someone be willing to risk a lawsuit or defamation charges to report an offence? Second, even if someone accepted a bribe and has had a change of heart due to guilt, if they report 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 and prosecuting bribery and corruption, 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.

For more information about this answer please contact: Nadim Bardawil from BSA Ahmad Bin Hezeem & Associates LLP