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Print articleRevised Swedish Anti-Bribery Legislation
September, 2012 - Peter Utterström and Amanda Wassén
Effective July 1st, 2012, the new revised Swedish legislation on bribery entered into force. The last time this area was more thoroughly revised was in 1977. The previous regulation was criticized for being both inaccessible and outdated. In 2009, the Swedish Government therefore appointed an Inquiry to review the provisions then in force, aiming to create a more modern legislation better adapted to its purpose. The changes that have been made are both substantive and structural.
Historically, the regulation on bribery was separated in different chapters of the Swedish Penal Code, but in the revised version they are all in one chapter, Chapter 10, which is headed “On Embezzlement, Other Acts of Breach of Trust and Bribery”. The category of persons who may be held liable for active bribery (giving a bribe) or passive bribery (taking a bribe) has been widened, as well as the criminalized area. Accordingly, the legislation introduces two provisions that regulate entirely new offences: “trading in influence” and “negligent financing of bribery”.
The official report of the Inquiry also included a proposed Code on Gifts, Rewards and Benefits in the Business Sector intended to be part of self-regulation in the business sector. It is likely that this code will be administered by the Institute against Bribery (Institutet Mot Mutor – IMM).
Section 5 (a) and section 5 (b)
Section 5 (a)
An employee or a person performing an assignment, who receives, accepts a promise of or demands an improper reward for the execution of the employment or the assignment, shall be convicted of taking a bribe and sentenced to a fine or imprisonment for a maximum of two years. This also applies to a person who participates in or is a functionary of a competition subject to publicly arranged betting, if it is a question of an improper reward for his or her performance of duties in the competition.
The first paragraph also applies to the situation where the offense was committed before the offender received a position referred to in the first paragraph or after the offender has left such position.
Also, a person who receives, accepts a promise of or demands an improper reward on account of another person shall be convicted of taking a bribe in accordance with the first and second paragraph.
Section 5 (b)
A person who gives, promises or offers an improper reward in cases referred to in section 5 (a) shall be convicted of giving a bribe and sentenced to a fine or imprisonment for a maximum of two years.
Section 5 (a) and section 5 (b) constitute the principal cases of bribery, which have been renamed for the sake of simplicity and are now referred to as taking a bribe and giving a bribe. They consist of three key elements: (i) the persons involved (ii) that the reward must be given or accepted for the execution of an employment or an assignment and (iii) that the reward is considered to be improper.
With regard to the persons involved, the new bribery provisions simplify the way of naming those that can be held liable for giving or taking a bribe, which simplifies the applicability of the provisions. The bribery provisions now cover all employees and persons performing assignments. Consequently, the category of persons that can be held liable has widened. For example, the category now includes self-employed persons without principals. Among other things, an “assignment” can be based on a contract, an appointment, duty or the outcome of an election.
The fact that the reward must have been given or received for the execution of the employment or the assignment is the most important element to both the taking and giving of a bribe. There has to be a relation between the reward and the performance of duties. The purpose of a bribe is to influence the way the recipient performs his or her duties, though it is irrelevant whether the recipient was indeed influenced by the bribe.
However, difficulties arise when the persons involved have more than one relationship to each other, for instance they may have a business relationship as well as being friends. In such case, it must be determined which relationship the reward is connected to.
When determining if a reward is improper, all relevant aspects of the particular case must be taken into consideration. The nature and value of the reward can serve as guidance but are not decisive factors. As previously mentioned, the essential element is the connection between the reward and the performance of duties. Anything of monetary value can per se constitute an improper reward. By a ruling from the district court in Gothenburg in April 2012, a police officer was convicted of bribery since he had accepted a salad worth 65 SEK in exchange for not filing a report of a traffic offence. Rewards of immaterial nature, such as a membership to a golf club or an award, can also be deemed as improper rewards in the context of bribery.
The provisions on taking a bribe and giving a bribe are applicable both within the public and the private sector. They are also applicable on acts of bribery committed abroad or if the persons involved are foreign, provided that the acts of bribery are subject to the jurisdiction of Swedish courts.
The Swedish rules do not make an exception for facilitating payments, nor is there any de minimis rule. Still, the fact that the reward has to be considered improper serves as a limitation to the scope of the provisions.
Just as before, it makes no difference if the improper reward is given before the recipient receives the position or after he or she has left it. The third paragraph of section 5 (a) is new only in the sense that what used to be implicit now is explicitly expressed in the provision. Accordingly, it is still illegal to accept an improper reward on behalf of someone else. It is also possible to be convicted of accessory to taking or giving a bribe.
Section 5 (c)
If an offence referred to in sections 5 (a) or 5 (b) is considered gross, the offender shall be convicted of gross bribe taking or gross bribe giving and sentenced to imprisonment for a minimum of six months and a maximum of six years. When assessing if the offence is gross, it should especially be taken into consideration whether the offense involved the abuse of or the attack on a position involving greater responsibility, concerned significant value or was part of systematic criminal activity or criminal activity of large proportions or otherwise was of a particularly dangerous kind.
Gross bribe taking and gross bribe giving was criminalized earlier as well, but is now governed by a specific provision. The examples of what should be taken into consideration when determining if the offence is gross are not exhaustive. This part of the provision is new and based on case law regarding the old legislation.
The wording “a position involving greater responsibility” targets the most important decision-making processes of society. In accordance with the pre-legislative work, this includes public administration and the exercise of official authority but also big investment decisions within the private sector.
Section 5 (d)
A person shall be convicted of trading in influence and sentenced to a fine or imprisonment for a maximum of two years if the person, in other cases than those referred to in sections 5 (a) and 5 (b),
1. receives, accepts a promise of or demands an improper reward in order to influence the decision or action of another person related to the exercise of public authority or to public procurement, or
2. gives, promises or offers someone an improper reward in order for that person to influence the decision or action of another person related to the exercise of public authority or to public procurement.
Trading in influence constitutes a new offence, targeting situations that do not fall within the scope of the provisions on taking and giving a bribe. The applicability is limited to the public sector and the provision specifically targets decisions and acts in connection with the exercise of public authority and public procurement. The provision covers both the active and passive side of the criminalized act.
The improper reward is given to the recipient in order for that person to influence another person in his or her performance of duties. In other words, the recipient is trading in his or her influence.
The person meant to be influenced does not have to benefit from the reward. Since this provision specifically targets the trading of influence, the relation between the reward and the execution of an employment or an assignment is not needed, i.e. one of the key elements of the provisions on taking and giving a bribe is missing.
A typical case of trading in influence is when the recipient works for the same employer as the person who is meant to be influenced, but is not able to affect the decision-making process that the bribe giver is interested in. Instead, the recipient accepts the improper reward in order to influence the person who is able to affect the process. Another typical case of trading in influence mentioned in the pre-legislative work is when a person receives an improper reward in order to influence a family member or a relative.
The criminalization of trading in influence is an international concept. Sweden is party to the Council of Europe Criminal Law Convention on Corruption and the United Nations Convention against Corruption which both include provisions criminalizing trading in influence.
Section 5 (e)
A representative of a company, who provides money or other assets to a person who represents the company in a particular matter and thereby, through gross negligence, furthers giving a bribe, gross bribe giving or trading in influence in accordance with section 5 (d) (2), shall be convicted of negligent financing of bribery and sentenced to a fine or imprisonment for a maximum of two years.
The most important news of the revised legislation is the provision on negligent financing of bribery, inspired by the UK Bribery Act. It constitutes a new offence and targets the case where a company provides money or other assets to a middleman, who acts on behalf of the company, and thus by gross negligence furthers bribe giving, gross bribe giving or trading in influence. The consequences of this provision are likely to be the most considerable of the revised legislation.
According to established legal principles of Swedish law, only physical persons can be held liable of a crime. The persons who can be held liable for negligent financing of bribery are representatives of the company, i.e. persons with a leading position. Whereas accessory to bribery require intent, this provision only requires gross negligence. Liability further requires that an actual case of bribery has taken place, but not that any legal proceedings have been initiated.
The principal may be a company, an organization, a business proprietor or a corporation. The middleman can be a physical person or a legal entity, representing the principal on the basis of a contract or a position, such as an agent, a distributor or a subsidiary.
There is little specific guidance as to what constitutes gross negligence. While awaiting future case law, the pre-legislative work provides some direction. Situations that could constitute gross negligence are significant deviation from normal cautious behavior, if a representative has been provided with money or other assets despite the fact that there was a significant risk that the act would further bribery and the absence of internal control and precautionary measures. The key question is whether the management has done what can reasonably be expected in order to prevent the personnel or representatives of the company from committing bribery or trading in influence.
Conclusion
The revised legislation on bribery will change the conditions both within the public and the private sector. The provision on negligent financing of bribery will likely have a significant impact on Swedish corporations and organizations which evidently need to take preventive measures. Since the Swedish legislator has not published any specific guidance as to what constitutes adequate preventative measures, we must rely on international best practice and the basic components of a compliance program. It is likely that this is an area where the Code on Bribery will come into play.
Compliance programs are of ever growing importance both to national and international corporations and organizations. With regard to bribery and anti-corruption, the fundamental components of a program are:
- Top level commitment; the management of the company leads the way, bears the responsibility and does not accept bribery or reward “corrupt” results. This is the most important component.
- Risk assessment; the compliance program has to be based on the specific risks of the organization, both internal and external. These risks must be identified and assessed.
- Policies and procedures; the policies should be practical with hands-on guidance based on the identified risks of the particular organization.
- Due diligence; since the representatives of the organization can be held liable for the actions of a middleman, it is important to review the person or company acting on behalf of the organization. “Know your neighbors.”
- Implementation; raise awareness within the entire organization and act by the rules. Make the policies available to everyone, in several languages if needed. Do not forget intermediaries and third parties. Remember the importance of compliance training and follow up. Communicate the compliance program externally.
- Monitoring and review; violations of the compliance policies require reprimands. Appoint a body responsible for monitoring and review. Communicate and cooperate with enforcement authorities. Review the compliance program regularly and identify new risks. Remember to give feed-back to the employee.
It is our experience that compliance programs are an important tool in the area of anti-bribery, both to secure that employees are acting in accordance with local law and corporate policies as well as a method of defense in the event any employee or the company would be accused of being involved in bribery. The compliance program may sometimes be seen as a costly and unnecessary expense; however, the alternative will always be far more expensive.
Anti Corruption
In working with international pharmaceutical and medical-technology companies, Delphi’s Life Science group has considerable experience of the US Foreign Corrupt Practices Act, which concerns subsidiaries of companies listed in the US, as well as Swedish legislation prohibiting bribery and corruption. Delphi’s lawyers have long been involved in matters arising out of the Foreign Corrupt Practices Act, the Sarbanes Oxley Act and Swedish codes such as the Code of Corporate Governance, the pharmaceutical industry’s Cooperation Agreement and its equivalent in the medical technology industry.
With corruption receiving more attention in society, Delphi started a special group in 2010 for such matters – Delphi’s Anti Corruption Group. The group currently consists of nine people and is headed by Peter Utterström, who is also responsible for Delphi’s Life Science Group.
UK Bribery Act
The much debated UK Bribery Act 2010, came into force on 1 July 2011. The act is applicable throughout the United Kingdom and gives authorities there wide extra-territorial powers to deal with bribery abroad.
The act is directed in particular at bribery in the private sector and international transactions. As a result, it is expected to be greatly significant not only for British subjects and companies but also for international organisations and companies in general.
The contents of this publication are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
Historically, the regulation on bribery was separated in different chapters of the Swedish Penal Code, but in the revised version they are all in one chapter, Chapter 10, which is headed “On Embezzlement, Other Acts of Breach of Trust and Bribery”. The category of persons who may be held liable for active bribery (giving a bribe) or passive bribery (taking a bribe) has been widened, as well as the criminalized area. Accordingly, the legislation introduces two provisions that regulate entirely new offences: “trading in influence” and “negligent financing of bribery”.
The official report of the Inquiry also included a proposed Code on Gifts, Rewards and Benefits in the Business Sector intended to be part of self-regulation in the business sector. It is likely that this code will be administered by the Institute against Bribery (Institutet Mot Mutor – IMM).
Section 5 (a) and section 5 (b)
Section 5 (a)
An employee or a person performing an assignment, who receives, accepts a promise of or demands an improper reward for the execution of the employment or the assignment, shall be convicted of taking a bribe and sentenced to a fine or imprisonment for a maximum of two years. This also applies to a person who participates in or is a functionary of a competition subject to publicly arranged betting, if it is a question of an improper reward for his or her performance of duties in the competition.
The first paragraph also applies to the situation where the offense was committed before the offender received a position referred to in the first paragraph or after the offender has left such position.
Also, a person who receives, accepts a promise of or demands an improper reward on account of another person shall be convicted of taking a bribe in accordance with the first and second paragraph.
Section 5 (b)
A person who gives, promises or offers an improper reward in cases referred to in section 5 (a) shall be convicted of giving a bribe and sentenced to a fine or imprisonment for a maximum of two years.
Section 5 (a) and section 5 (b) constitute the principal cases of bribery, which have been renamed for the sake of simplicity and are now referred to as taking a bribe and giving a bribe. They consist of three key elements: (i) the persons involved (ii) that the reward must be given or accepted for the execution of an employment or an assignment and (iii) that the reward is considered to be improper.
With regard to the persons involved, the new bribery provisions simplify the way of naming those that can be held liable for giving or taking a bribe, which simplifies the applicability of the provisions. The bribery provisions now cover all employees and persons performing assignments. Consequently, the category of persons that can be held liable has widened. For example, the category now includes self-employed persons without principals. Among other things, an “assignment” can be based on a contract, an appointment, duty or the outcome of an election.
The fact that the reward must have been given or received for the execution of the employment or the assignment is the most important element to both the taking and giving of a bribe. There has to be a relation between the reward and the performance of duties. The purpose of a bribe is to influence the way the recipient performs his or her duties, though it is irrelevant whether the recipient was indeed influenced by the bribe.
However, difficulties arise when the persons involved have more than one relationship to each other, for instance they may have a business relationship as well as being friends. In such case, it must be determined which relationship the reward is connected to.
When determining if a reward is improper, all relevant aspects of the particular case must be taken into consideration. The nature and value of the reward can serve as guidance but are not decisive factors. As previously mentioned, the essential element is the connection between the reward and the performance of duties. Anything of monetary value can per se constitute an improper reward. By a ruling from the district court in Gothenburg in April 2012, a police officer was convicted of bribery since he had accepted a salad worth 65 SEK in exchange for not filing a report of a traffic offence. Rewards of immaterial nature, such as a membership to a golf club or an award, can also be deemed as improper rewards in the context of bribery.
The provisions on taking a bribe and giving a bribe are applicable both within the public and the private sector. They are also applicable on acts of bribery committed abroad or if the persons involved are foreign, provided that the acts of bribery are subject to the jurisdiction of Swedish courts.
The Swedish rules do not make an exception for facilitating payments, nor is there any de minimis rule. Still, the fact that the reward has to be considered improper serves as a limitation to the scope of the provisions.
Just as before, it makes no difference if the improper reward is given before the recipient receives the position or after he or she has left it. The third paragraph of section 5 (a) is new only in the sense that what used to be implicit now is explicitly expressed in the provision. Accordingly, it is still illegal to accept an improper reward on behalf of someone else. It is also possible to be convicted of accessory to taking or giving a bribe.
Section 5 (c)
If an offence referred to in sections 5 (a) or 5 (b) is considered gross, the offender shall be convicted of gross bribe taking or gross bribe giving and sentenced to imprisonment for a minimum of six months and a maximum of six years. When assessing if the offence is gross, it should especially be taken into consideration whether the offense involved the abuse of or the attack on a position involving greater responsibility, concerned significant value or was part of systematic criminal activity or criminal activity of large proportions or otherwise was of a particularly dangerous kind.
Gross bribe taking and gross bribe giving was criminalized earlier as well, but is now governed by a specific provision. The examples of what should be taken into consideration when determining if the offence is gross are not exhaustive. This part of the provision is new and based on case law regarding the old legislation.
The wording “a position involving greater responsibility” targets the most important decision-making processes of society. In accordance with the pre-legislative work, this includes public administration and the exercise of official authority but also big investment decisions within the private sector.
Section 5 (d)
A person shall be convicted of trading in influence and sentenced to a fine or imprisonment for a maximum of two years if the person, in other cases than those referred to in sections 5 (a) and 5 (b),
1. receives, accepts a promise of or demands an improper reward in order to influence the decision or action of another person related to the exercise of public authority or to public procurement, or
2. gives, promises or offers someone an improper reward in order for that person to influence the decision or action of another person related to the exercise of public authority or to public procurement.
Trading in influence constitutes a new offence, targeting situations that do not fall within the scope of the provisions on taking and giving a bribe. The applicability is limited to the public sector and the provision specifically targets decisions and acts in connection with the exercise of public authority and public procurement. The provision covers both the active and passive side of the criminalized act.
The improper reward is given to the recipient in order for that person to influence another person in his or her performance of duties. In other words, the recipient is trading in his or her influence.
The person meant to be influenced does not have to benefit from the reward. Since this provision specifically targets the trading of influence, the relation between the reward and the execution of an employment or an assignment is not needed, i.e. one of the key elements of the provisions on taking and giving a bribe is missing.
A typical case of trading in influence is when the recipient works for the same employer as the person who is meant to be influenced, but is not able to affect the decision-making process that the bribe giver is interested in. Instead, the recipient accepts the improper reward in order to influence the person who is able to affect the process. Another typical case of trading in influence mentioned in the pre-legislative work is when a person receives an improper reward in order to influence a family member or a relative.
The criminalization of trading in influence is an international concept. Sweden is party to the Council of Europe Criminal Law Convention on Corruption and the United Nations Convention against Corruption which both include provisions criminalizing trading in influence.
Section 5 (e)
A representative of a company, who provides money or other assets to a person who represents the company in a particular matter and thereby, through gross negligence, furthers giving a bribe, gross bribe giving or trading in influence in accordance with section 5 (d) (2), shall be convicted of negligent financing of bribery and sentenced to a fine or imprisonment for a maximum of two years.
The most important news of the revised legislation is the provision on negligent financing of bribery, inspired by the UK Bribery Act. It constitutes a new offence and targets the case where a company provides money or other assets to a middleman, who acts on behalf of the company, and thus by gross negligence furthers bribe giving, gross bribe giving or trading in influence. The consequences of this provision are likely to be the most considerable of the revised legislation.
According to established legal principles of Swedish law, only physical persons can be held liable of a crime. The persons who can be held liable for negligent financing of bribery are representatives of the company, i.e. persons with a leading position. Whereas accessory to bribery require intent, this provision only requires gross negligence. Liability further requires that an actual case of bribery has taken place, but not that any legal proceedings have been initiated.
The principal may be a company, an organization, a business proprietor or a corporation. The middleman can be a physical person or a legal entity, representing the principal on the basis of a contract or a position, such as an agent, a distributor or a subsidiary.
There is little specific guidance as to what constitutes gross negligence. While awaiting future case law, the pre-legislative work provides some direction. Situations that could constitute gross negligence are significant deviation from normal cautious behavior, if a representative has been provided with money or other assets despite the fact that there was a significant risk that the act would further bribery and the absence of internal control and precautionary measures. The key question is whether the management has done what can reasonably be expected in order to prevent the personnel or representatives of the company from committing bribery or trading in influence.
Conclusion
The revised legislation on bribery will change the conditions both within the public and the private sector. The provision on negligent financing of bribery will likely have a significant impact on Swedish corporations and organizations which evidently need to take preventive measures. Since the Swedish legislator has not published any specific guidance as to what constitutes adequate preventative measures, we must rely on international best practice and the basic components of a compliance program. It is likely that this is an area where the Code on Bribery will come into play.
Compliance programs are of ever growing importance both to national and international corporations and organizations. With regard to bribery and anti-corruption, the fundamental components of a program are:
- Top level commitment; the management of the company leads the way, bears the responsibility and does not accept bribery or reward “corrupt” results. This is the most important component.
- Risk assessment; the compliance program has to be based on the specific risks of the organization, both internal and external. These risks must be identified and assessed.
- Policies and procedures; the policies should be practical with hands-on guidance based on the identified risks of the particular organization.
- Due diligence; since the representatives of the organization can be held liable for the actions of a middleman, it is important to review the person or company acting on behalf of the organization. “Know your neighbors.”
- Implementation; raise awareness within the entire organization and act by the rules. Make the policies available to everyone, in several languages if needed. Do not forget intermediaries and third parties. Remember the importance of compliance training and follow up. Communicate the compliance program externally.
- Monitoring and review; violations of the compliance policies require reprimands. Appoint a body responsible for monitoring and review. Communicate and cooperate with enforcement authorities. Review the compliance program regularly and identify new risks. Remember to give feed-back to the employee.
It is our experience that compliance programs are an important tool in the area of anti-bribery, both to secure that employees are acting in accordance with local law and corporate policies as well as a method of defense in the event any employee or the company would be accused of being involved in bribery. The compliance program may sometimes be seen as a costly and unnecessary expense; however, the alternative will always be far more expensive.
Anti Corruption
In working with international pharmaceutical and medical-technology companies, Delphi’s Life Science group has considerable experience of the US Foreign Corrupt Practices Act, which concerns subsidiaries of companies listed in the US, as well as Swedish legislation prohibiting bribery and corruption. Delphi’s lawyers have long been involved in matters arising out of the Foreign Corrupt Practices Act, the Sarbanes Oxley Act and Swedish codes such as the Code of Corporate Governance, the pharmaceutical industry’s Cooperation Agreement and its equivalent in the medical technology industry.
With corruption receiving more attention in society, Delphi started a special group in 2010 for such matters – Delphi’s Anti Corruption Group. The group currently consists of nine people and is headed by Peter Utterström, who is also responsible for Delphi’s Life Science Group.
UK Bribery Act
The much debated UK Bribery Act 2010, came into force on 1 July 2011. The act is applicable throughout the United Kingdom and gives authorities there wide extra-territorial powers to deal with bribery abroad.
The act is directed in particular at bribery in the private sector and international transactions. As a result, it is expected to be greatly significant not only for British subjects and companies but also for international organisations and companies in general.
The contents of this publication are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
Footnotes: For further information please contact: Peter Utterström Head of Delphi’s Anti-Corruption Group Direct phone: +46 8 677 54 45 Mobile phone: +46 709 25 25 35 [email protected] |
