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Anti-Corruption in Saudi Arabia

By Ayman Alawad* (Baker McKenzie Riyadh)

1.      Domestic bribery (private to public)

1.1      Legal framework

Bribery of public officials in Saudi Arabia is prohibited by the Regulations for Combating Bribery, issued under Royal Decree M/36 dated 29/12/1412H, corresponding to 27/6/1992G (the “Bribery Regulations”). The Civil Service Regulations and the Military Officers Regulations also prohibit public servants and military officers from misusing their positions or using influence, including in connection with accepting bribes, and they may be disciplined or terminated for doing so. But unlike the Bribery Regulations, these regulations do not impose any penalties on anyone other than the public servants or officers.

1.2      Definition of bribery

For purposes of the Bribery Regulations, bribery generally means the request or acceptance, and the offer or making, of any promise or gift (defined as any profit or other advantage, tangible or intangible, regardless of what it is called) by or to a public official in order to cause him or her to perform or fail to perform his or her official duties (whether or not to act or the failure to act is lawful), or to pursue any matter with the government.

1.3      Definition of public official

The term “public official” is broadly defined to include the following:

(a) Persons working for the government or any public service whether on a permanent or temporary basis

(b) Arbitrators or experts appointed by the Saudi government or by any authority with judicial capacity

(c) Any person assigned to a specific mission by the Saudi government

(d) Directors and employees of any company or other business establishment who manage or maintain a public establishment or perform a public service, as well as directors and employees of joint stock companies or companies to which the government contributes capital or perform banking activities.

1.4      Consequences of bribery

Penalties under the Bribery Regulations include fines not exceeding SAR 1 million or imprisonment for a period not exceeding 10 years, or both. They may be imposed on either or both the person offering or making, and the person requesting or accepting a bribe. Pursuing matters with the government that are not within the official duties of the public official is punishable by either or both a fine not exceeding SAR 200,000 and imprisonment for a period not exceeding two years. In both cases, the penalties will include the seizure of the bribe.

Companies and other firms, whether Saudi or foreign, are subject to fines of up to 10 times the value of the bribe and, significantly, may be blacklisted from bidding for or participating in government projects if it is proven that a director or an employee was involved in bribery for the benefit of the business entity.

1.5      Political contributions

There are no political parties in Saudi Arabia and public officials are appointed by either the government itself or by the king.

1.6       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

There are no statutory exceptions for or limitations on “hospitality expenses” that exempt them from the definition of bribery. Each such expense must be evaluated on its own and with consideration to the surrounding facts in order to make a judgment on whether it is likely to be considered a bribe.

2. Domestic bribery (private to private)

2.1      Legal framework

The Bribery Regulations do not generally extend to promises or gifts as defined, requested or accepted, and offered or made among persons in the private sector, subject to certain exceptions. Technically, the definition of “public servant” in the Bribery Regulations does include persons who work for joint stock companies and banks (whether or not they have any government ownership or other relationships with the government), a joint stock company being a reasonably common form of doing business in Saudi Arabia. In addition, the Bribery Regulations also extend to persons performing a “public service,” presumably even if not employed by the government. These terms are not defined in the Bribery Regulations and may be interpreted very broadly (e.g., a person performing medical services could be categorized as a public servant even if performing services for a private hospital or clinic).

Other theories of liability may apply to render the participants in wholly private sector bribery, subject to either civil or even criminal exposure. For example, under the Islamic Law (the “Shari’ah”), the overriding law of Saudi Arabia, bribery is generally condemned, and although whether civil or criminal penalties may be imposed in cases other than those involving public servants is a matter of debate, Shari’ah law scholars believe that they may be. Other Saudi regulations, such as the Labour, Competition and Procurement Regulations and the Health Professions Law also contain possible bases to impose liability for private sector bribery, including on an aiding and abetting theory.

2.2      Definition of private bribery

The wide definition of the term “bribery” is as under the Bribery Regulations.

Under the Shari’ah, bribery is generally taken to mean the offer or payment of money or any benefit to a person with control over “public” interests, in order to obtain entitlements or to stop others from same.

In the Health Professions Regulation, bribery means to request, accept or receive commissions or gratuities, or obtain any benefits in return for the promotion of, or commitment to prescribe certain preparations, or for directing patients to some particular hospital or laboratory or any other acts of similar nature.

2.3      Consequences of private bribery

Penalties that may result from private to private bribery, otherwise subject to the Bribery Regulations, are the same as described in Section 1.4.

Under the Shari’ah, the penalties may include fines, the seizure of the bribe or benefit, and the termination of the position held by the bribe taker.

2.4       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

See Section 1.6, which also pertains to the Shari’ah and the other regulations cited.

3. Corruption of foreign public officials

There are no Saudi Arabian laws prohibiting or regulating the corruption of public officials of other countries.

4. Facilitation payments

There are no statutory exceptions for or limitations on “facilitation expenses” that exempt them from the definition of bribery, either public or private. Each such expense must be evaluated on its own and with consideration to the surrounding facts in order to judge whether it is likely to be considered a bribe.

5. Compliance programs

There are no compliance program defences to liability that otherwise might be attached to acts of bribery in Saudi Arabia, although it is possible (though there is no jurisprudence on the issue as far as we are aware), as an equitable matter, that a court might take into account the existence and operation in fact of such programs in considering the liability of or penalties to be assessed against, for example, a corporate body whose employee engaged in the act of bribery without authorization. The absence of such a compliance program is not in itself an offense, and Saudi law does not prescribe what elements must be part of a compliance program.

6. Regulator with jurisdiction to prosecute corruption

The Public Prosecutor of the Control and Investigation Board has power to prosecute bribery cases before the Board of Grievances, the Saudi court with jurisdiction over such matters, among many others. The investigation is generally carried out by the Administrative Investigation Office. In addition, Saudi Arabia has established the National Anti-Corruption Commission (also known as Nazaha) to investigate corruption allegations and follow up on prosecution, as well as implement judgments made by the Board of Grievances.

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Ayman Alawad

Ayman Alawad actively assists in general corporate and commercial matters in relation to listed companies, joint stock companies and limited liability companies, as well as in ongoing initial public offerings, including due diligence reviews and work on prospectuses. Prior to joining Legal Advisors, Ayman was a Safety and Environmental Compliance Advisor at Saudi Aramco.

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