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FCPA Blog Daily News

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Tuesday
Dec202016

Chaim Gelfand: Israeli enforcement takes off

Israel's enforcement of its foreign bribery statute took years to get off the ground but it's now going full speed ahead.

Last week we witnessed Israel's first conviction under its foreign bribery statues that was recorded in the NIP case, which I reported here in November.

Monday Israeli authorities detained Beny Steinmetz as part of the investigation of the Guinea Simandou project bribery allegations.

I'll try to capture this quick rise in enforcement from a personal standpoint as it parallels my recent professional change of direction.

Over ten years ago, in July 2006, I left private practice to join the in-house legal department of one of Israel's largest defense contractors. My first day at work turned out to be also the first day of the Second Lebanese War. About 45 minutes after I got to my new job, the air raid sirens went off and I spent most of the day in a bomb shelter. I always said this gave a new literal definition to "starting with a bang."

In 2008, while I was working in-house, Israel enacted Section 291A of the Penal Code, criminalizing foreign bribery. Since that enactment, I began working on anti-corruption compliance for the company, first in establishing a compliance plan and then in its implementation.

Recently, I decided to leave my in-house position and return to private practice. This despite the fact that at the time Israel's foreign bribery law had been on the books for eight years and no enforcement action had been taken.

I don't know if my move was with great clairvoyance or foolhardiness or a combination of both (the Talmud says that since the destruction of the Temple prophecy resides only with fools).

But here's what has happened in Israel in the month and a half since I began my new practice:

  • The first charging sheet for foreign bribery was issued against NIP Global, a maker of high-tech ID cards, and a plea agreement was announced.
  • Teva, a big pharma and one of the largest Israeli companies, announced that it is close to an agreement with the U.S. DOJ and SEC to settle FCPA allegations and has reserved $520 million for this purpose.
  • Reports of additional allegations against Teva related to business practices in Romania are published.
  • Israeli courts accepted NIP's guilty plea and upheld the terms of the plea agreement, stating that they recognize that the fine is low for the alleged actions, but that in  this instance it is acceptable as this is the first enforcement action under this statute.
  • Beny Steinmetz, one of Israel's wealthiest businessmen, was detained on foreign bribery charges, investigated for many hours by the National Fraud Investigation division of the Israeli Police, and released to house arrest after posting NIS 100 million in bail (about $26 million).

I guess it's better to start with the metaphorical bang than the literal one.

___

Chaim Gelfand is a Partner at Shibolet and Co. and head of its Anti-Corruption Compliance Practice -- one of the first (if not the first) dedicated anti-corruption compliance practices in any of Israel's first tier law firms. Gelfand has been dealing with anti-corruption compliance in large multinationals companies for almost a decade. He can be contacted here.