Credit Suisse pays USD 47 million fine for allegations of corruption

Compliance, Corruption, Bribery, FCPA

The long arm of the U.S. anti-corruption law once again reaches a Swiss company: Credit Suisse pays a USD 47 million fine to the U.S. for allegations of corruption in Hong Kong.

A Credit Suisse (CS) subsidiary in Hong Kong was prosecuted by the U.S. Department of Justice for allegedly violating the U.S. Foreign Corrupt Practices Act (FCPA) in its business practices in Asia between 2007 and 2013.

CS reached an out-of-court settlement with the U.S. Department of Justice and will pay a monetary penalty of USD 47 million. In return, the U.S. authorities will close the investigation of the CS subsidiary in Hong Kong.

The U.S. Department of Justice accused CS of hiring persons recommended by the government and other state-owned entities, very often family members of officials. In return, the bank benefited from investment banking business and regulatory approvals. This behaviour violates the US Foreign Corrupt Practices Act (FCPA).

While speaking on the investigation, the US Assistant Attorney-General stated: “The so-called sons and daughters programme was nothing more than bribery by another name. Awarding prestigious employment opportunities to unqualified individuals in order to influence government officials is corruption, plain and simple.”

The US FCPA was enacted in 1977 and prohibits certain groups of individuals and entities from making payments or granting direct or indirect benefits to foreign government officials to assist in obtaining or maintaining business. It is a criminal offence to bribe foreign officials such as customs officials and ministers, but also doctors, managers and employees of state hospitals.

The law is characterised by the fact that it was the first to introduce corporate liability, responsibility for third parties and extraterritorial enforcement for corruption offences. As a result, the U.S. FCPA can hold foreign companies liable under criminal and civil law for corruption offences committed abroad.

This long arm has now also reached Credit Suisse. This shows that Swiss companies should not only align their internal compliance policy with Swiss law. According to the Swiss Criminal Code, bribery of foreign public officials is indeed a criminal offense. Consequently, Swiss law also applies to Swiss companies abroad. But Swiss companies must also take into account important foreign regulations in the area of combating corruption. The example also shows very clearly that the application of such foreign criminal norms is possible even if there is only a minimal nexus to the US. In the area of combating corruption, the UK Bribery Act, which is also applied extraterritorially, must also be observed as it is also enforced extraterritorial.

June 2018 | Author: Nadine Küng, Andreas Furrer, Peter Henschel, Chris Gschwend

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