Denmark: Update On Anti-Corruption And Bribery

Last Updated: 16 October 2015
Article by Camilla C. Collet, Lisa Bach and Bitten Elizabeth Hansen

In recent years, the focus on bribery and corruption has increased – not only in the press but also among the local governments, public authorities and international organisations. In Denmark, the recent preliminary charges against 13 people for potential violations of the Danish anti-bribery rules have once more brought anti-corruption into the spotlight.

The numerous rules on anti-corruption, for example the Danish Criminal Code, the UK Bribery Act and the U.S. Foreign Corrupt Practices Act (FCPA), have created a complex regulatory environment requiring companies to take comprehensive measures in order to ensure compliance. Noncompliance with anti-corruption laws may be sanctioned with high fines and hefty imprisonment sentences. For example, in December 2014 the French firm Alstom agreed with the US Department of Justice (DOJ) to pay a record fine of USD 772 million after pleading guilty to bribing officials in Indonesia, Saudi Arabia, Egypt and the Bahamas and falsifying its books and records. The DOJ has also announced charges against five individuals, including four corporate executives.

Danish and foreign authorities are increasingly focusing on enforcement of anti-corruption rules and often cooperate on investigations across borders. This is in line with requirements from international organisations such as OECD and others who have criticised Denmark for not sufficiently enforcing anti-corruption rules.

Below is a brief overview of the Danish laws on anti-corruption and some key points on the UK Bribery Act and the FCPA.

Public sector

Under the Danish Criminal Code sections 122 and 144, it is a criminal offence to bribe public officials ("active bribery") and for public officials to accept a bribe ("passive bribery"). Bribing a public official is the undue granting, promising or offering of a gift or another privilege in order to induce the public official to do or fail to do something in relation to his/her official duties. There must be intent to induce the public official. Accepting a bribe includes the undue receipt, demand or acceptance of a gift or another privilege. It is not permitted for a public official to accept unlawful remuneration even when the party facilitating the remuneration did not intend to bribe the public official.

Private sector

Under the Danish Criminal Act section 299(2), it is a criminal offence to offer a gift or other favour to a private individual with the intent that the receiver shall neglect his/her duties as trustee, i.e. as employee, manager, director, representative, agent etc. Likewise, it is an offence to accept such gift or benefit. The decisive factor is whether it is the intention that the receiver, in return for receiving the gift or favour, shall carry out any act or omission to act in a manner that is in breach of his or her duties.

Grey areas

Under Danish law, facilitation payments, i.e. "grease" payments of small sums of money to induce a public official to carry out his/her duties, normally constitute bribery pursuant to section 122 of the Criminal Code. Only under very special circumstances is this not the case. Facilitation payments made in connection with international business transactions in order to make a public official act in breach of his/her duties always constitute bribery. Accordingly, the general advice is not to make such payments. However, any businesses subject to bookkeeping rules that make lawful facilitation payments must always enter such expenses on their books.

With regard to hospitality and gifts, including gifts to public officials for special occasions such as birthdays, anniversaries and retirement, best practice is to only allow reasonable and proportionate gifts and hospitality. The key is proportionality. Thus, for example, inviting a public official to attend a modestly priced dinner for an appropriate ocassion is unlikely to constitute a bribe, unless it could be seen as trying to induce the recipient to do or refrain from doing something in relation to his official function or duty. However, it should be kept in mind that for many public officials administrative rules apply which prohibit them from accepting also modest gifts and entertainment.

Foreign laws

In addition to the Danish rules, foreign laws on anti-corruption may also be relevant for Danish companies. For example, foreign anti-corruption rules may affect the actions of subsidiaries abroad, acquisitions of foreign companies, the actions of agents and suppliers, and the hiring of e.g. US or UK citizens. Given the strict rules of the UK Bribery Act and the FCPA and the severe consequences of violations businesses are advised to investigate the extent to which such rules may apply and to ensure compliance.

Liability and penalties

A company may be held liable for the acts of its employees if the offence has a natural connection to the company's activities. The company is not liable for employees who act in furtherance of private interests.

Under the Danish Criminal Code, active and passive bribery in the public sector is sanctioned by a fine or imprisonment for a term not exceeding six years. Bribery in the private sector is punishable by a fine or imprisonment up to four years. Further, the profit resulting from the bribe may be confiscated.

Accounting offences committed for the purpose of concealing foreign bribery may be punishable pursuant to section 290 of the Danish Criminal Code on fencing.

Further, under the UK Bribery Act and the FCPA individuals found guilty of bribery may be punished with imprisonment and/or a fine while companies/corporations found guilty of bribery may be sanctioned with a fine.

Fines for violating the FCPA's provisions on bribery combined with the penalties associated with breaches of the books-and-records provisions create a complex system whereby the consequences of violating the FCPA may be significant. There is almost no case law and no guidelines etc. which indicate the level of fines for violation of the provisions on bribery in the Danish Criminal Act or the UK Bribery Act, but the fines are expected to be high. In 2011, a Danish pharmaceutical company paid a fine of DKK 2.5 million and DKK 20 million in confiscation as settlement for charges of private corruption in respect of two Dutch consultants who were employed by a private company to handle UNDP tenders for delivering development aid to the Republic of Congo.

In addition to the risk of high fines and hefty imprisonment sentences, violation of the anticorruption laws may result in the company being held liable to pay damages. Further, there is a risk that a company in violation of the anti-corruption laws will be excluded from participating in public tenders.

What should businesses do to ensure compliance with anti-corruption laws?

In order to ensure compliance with the anti-corruption laws each company must as a starting point assess and evaluate the compliance risks the company faces. Based on this assessment and evaluation the company should draft an appropriate policy on anti-corruption. This policy must be effectively communicated to the employees, business partners and the public. Further, the company should provide adequate training of its employees. In the long run, the company must on a regular basis evaluate and update its policy on anti-corruption. Further, the company should provide for appropriate enforcement of the policy, including e.g. a safe whistle-blower system.

Developing a compliance programme and ensuring that it is effective can prove to be a difficult task. Gorrissen Federspiel is specialised in compliance, including anti-corruption compliance, and may assist companies in connection with, for instance: risk assessment; developing or amending a compliance programme; training of employees; developing and implementing a whistle-blower system; and conducting internal investigations in the case of suspected breaches.

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.

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