Events over the past week have brought heightened international attention to the Kingdom of Saudi Arabia's reinvigorated anti-corruption programme. With the passing of a Royal Decree on 4th November 2017, the Saudi government authorised the formation of a new Anti-Corruption Committee ("Committee"), led by Crown Prince Mohammed bin Salman, with a view to eliminating illicit practices. The newly formed Committee has been granted enhanced powers to investigate and prosecute instances of corruption at all levels, and is comprised of high-ranking officials from across various government branches including security, finance, and existing anti-corruption bodies.
...In the Context of Global Corruption
Corruption is a pervasive global phenomenon and occupies a central space within the national governance agendas of myriad countries. The most recent Corruption Perceptions Index, published by Transparency International in 2017, awarded a failing grade to more than two-thirds of the 176 participating countries, generating a concerning impression of global governance standards; KSA was ranked in 62nd place. As a result, anti-corruption efforts have accrued greater strategic importance at the national level, as they are critical to fortifying the security of the Kingdom's economy, and assuring the confidence of foreign investors.
Navigating the Anti-Corruption Framework in KSA
The Kingdom of Saudi Arabia has had strict anti-bribery legislation in place since 1992 with the promulgation of Royal Decree No. M/36, known as the anti-bribery law. The law was drafted to criminalise a broad range of bribery offences involving public officials and aimed at establishing a culture of zero tolerance regarding corrupt practices. Punitive measures provided by the law vary but convicted perpetrators face imprisonment for up to ten years and fines of up to 1 million Riyals.
The provisions of the law are targeted at acts involving public officials, and Saudi Arabia's continued adherence to Sharia law provides an additional layer of protection to acts that fall outside of this specific sphere. Sharia principles generally prohibit all instances of misusing public funds, irrespective of the entities involved, and consequently extend protection to acts that fall beyond the scope of the anti-bribery law. The extent of religious influence on the new decree is reflected in the language of the opening statement, which underscores the sacredness of public funds over private wealth.
Responsibility for overseeing anti-corruption efforts has been charged to the National Anti-Corruption Commission, also known as Nazaha, since its formation in 2012. Nazaha is responsible for investigating instances of graft in government contracts and ensuring that appropriate action is taken in cases where an offence has occurred. Though its purpose is targeted at protecting national integrity, its limited capacity restricts its involvement beyond an overseeing role.
Despite the ability of Nazaha to refer specific corruption cases to the relevant authorities and conduct subsequent follow-ups, the new Committee will benefit from greater powers to investigate and prosecute instances of graft, including the capacity to issue arrest warrants and order interim measures such as asset freezing and issuing travel bans.
Towards Greater Awareness
Working in parallel with Nazaha and utilising existing laws and regulations, the new Committee is intended as a step towards pursuing corruption crimes in KSA Developments regarding its mandate and implementation are unfolding at a rapid rate and we will continue to monitor the situation for legislative changes and possible legal implications.
The bold new mechanisms are emblematic of the Kingdom's political resolve to eradicate illicit practices from the system and will have immediate consequences for all businesses operating in the country or interacting with Saudi entities.
In light of this drive for accountability, it is increasingly important that businesses are aware of the relevant regulations regarding corruption in KSA.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.