It is sometimes difficult to identify historical milestones as
they occur, especially if they are small and sometimes may seem
almost insignificant. However, on December 15, 2016, in a
magistrate court in Tel-Aviv a historic event occurred: for the
first time in Israel, an Israeli company was convinced for bribing
a foreign public official. This is especially interesting due to
the fact that this is also the first time the general prosecution
in Israel based an indictment on Section 291A of the Israeli Penal
Law, that was enacted in 2008, in the course of Israel's
efforts to join the OECD as a member country.
As described in the indictment, in 2012 an Israeli company
– NiP Global Ltd ("NiP") that specializes in
developing government IT solutions – entered into a $30
million deal with the government of Lesotho to sell the African
kingdom its products. In order to obtain the contracts, NiP hired a
local consultant who introduced the Israeli company to the director
general of Lesotho's interior ministry, and paid the consultant
$500,000. A significant amount of this sum was intended for the
director general. The case was investigated by the Israeli police
and the Lesotho authorities, resulting in the indictment against
NiP in Israel, and charges being brought against the consultant and
director general in Lesotho.
NiP entered into a plea agreement with the Israeli general
prosecution, according to which it would admit it was guilty of the
charges and fully cooperate with the Lesotho authorities in their
enforcement efforts against the two local individuals.
Additionally, NiP agreed to pay a NIS 2.25 fine and forfeit another
NIS 2.25, and undertook to revise its internal policies and
procedures in order to prevent future cases of corruption and
bribery. The magistrate court noted that the fine and asset
forfeiture were substantially lower than the value of the
ill-gotten gains, and accepted the plea agreement because this was
the first indictment of this offence in Israel and noted that in
the future sanctions will increase gradually until they reach the
appropriate sentencing range.
Admittedly, Israel is a bit late to "join the game",
in the worldwide battle against corruption, but the NiP case should
be viewed as a two-fold signal on the part of law enforcement
agencies in Israel with regards to bribery paid by Israeli entities
outside of Israel. Firstly, the NiP case demonstrates that Israel
will no longer condone such conduct, which is especially
significant given that only a decade ago an Israeli company argued
before the Israeli Supreme Court that payments made as bribery to
foreign officials should be classified as a recognized expense for
tax purposes. In 2008 the Supreme Court rejected the company's
request. In 2016, no company would dare make such a request.
Secondly, the NiP case is a strong indicator that Israeli law
enforcement agencies intend to follow the footsteps of the United
States, and apply the standards established during the many years
of enforcement of the Foreign Corrupt Practices Act. The relatively
low fine and forfeiture were attributed to the fact that this was
the first prosecution under Section 291A, and the court explicitly
indicated that the monetary fines will increase in future cases.
Additionally, as part of the plea agreement, NiP undertook to
revise its internal procedures and policies. Compliance mechanisms
are relatively new to the Israeli corporate and legal culture, and
the fact that they were part of the plea agreement – as one
would expect in almost every FCPA case in the United States –
demonstrates the strong U.S. influence on the Israeli prosecution
in the NiP case.
Clearly, the burden is now on Israeli law enforcement agencies
to follow up with more prosecutions of bribery paid to foreign
officials. However, given the importance of this area of law to
international commerce and global economy, and the attention it
receives from international organizations such as the OECD and the
UN, we can safely predict that while the NiP case will go down in
Israeli history as the first prosecution of foreign bribery, it
will certainly not be the last.
Originally published on December 18, 2016
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
In December 2009, a Federal High Court in Asaba, Delta State discharged and acquitted James Onanefe Ibori of all 170 charges of corruption brought by the Economic and Financial Crimes Commission (EFCC).
A thorough study demonstrates that in the criminal procedure law, the arrest might take place mainly in three potential scenarios.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).