LEGAL REGULATION OF CORRUPTION AND RELATED LIABILITY

 

The application of criminal law is a last resort measure (ultima ratio) for protection of society from actions contrary to law and shall be applied solely for the most dangerous acts to which corruption-related criminal acts are also assigned.

 

Corruption-related acts that incur criminal liability are established in the Criminal Code of the Republic of Lithuania. Less dangerous corruption-related offences are established in other legal acts and usually incur more lenient consequences (for example, disciplinary or administrative liability).

 

INTERNATIONAL LEGAL ACTS ON CORRUPTION

 

Lithuania is a party to the main international anti-corruption conventions where the State commitment for criminalisation of corruption is enshrined. The major part of these conventions, inter alia, obliges the signatory states to them to provide criminal liability also for bribery in the private sector.

EU Council Framework Decision 2003/568/JHA on combating corruption in the private sector 

Point 10 of recital of the Framework Decision establishes that the aim of this Framework Decision is in particular to ensure that both active and passive [122] corruption  in the private sector are criminal offences in all Member States, that legal persons may also be held responsible for such offences, and that these offences incur effective, proportionate and dissuasive penalties. Article 2 of the Framework Decision defines what constitutes active and passive corruption in the private sector.  

 

United Nations Convention against Corruption[123]

 

Lithuania ratified the Convention on 5 December 2006. Article 21 of the Convention establishes that Each State Party shall consider adopting such legislative and other measures as may be necessary to establish as criminal offences, when committed intentionally in the course of economic, financial or commercial activities:

a) The promise, offering or giving, directly or indirectly, of an undue advantage to any person who directs or works, in any capacity, for a private sector entity, for the person himself or herself or for another person, in order that he or she, in breach of his or her duties, act or refrain from acting;

b) The solicitation or acceptance, directly or indirectly, of an undue advantage by any person who directs or works, in any capacity, for a private sector entity, for the person himself or herself or for another person, in order that he or she, in breach of his or her duties, act or refrain from acting.

 

Article 26 of the Convention establishes that each State Party to this Convention shall adopt such measures as may be necessary, consistent with its legal principles, to establish the liability of legal persons for participation in the offences established in accordance with this Convention; subject to the legal principles of the State Party, the liability of legal persons may be criminal, civil or administrative; such liability shall be without prejudice to the criminal liability of the natural persons who have committed the offences.

 

Criminal Law Convention on Corruption[124]

 

Lithuania ratified the Convention on 25 January 2002. Articles 7 and 8 of this Convention also oblige the States which have acceded to it to adopt such legislative and other measures as may be necessary that under their domestic law would result in criminal liability for bribery in the private sector.   

Moreover, Article 19 of this Convention prescribes that each Party shall ensure that legal persons held liable shall be subject to effective, proportionate and dissuasive criminal or non-criminal sanctions, including monetary sanctions.

 

Civil Law Convention on Corruption[125]

 

This Convention establishes that each Party shall provide in its internal law for persons who have suffered damage as a result of corruption to have the right to initiate an action in order to obtain full compensation for such damage. Such compensation may cover material damage, loss of profits and non-pecuniary loss.

 

OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions[126]

 

Lithuania is a candidate country to accede to the Organisation for Economic Co-operation and Development  (hereinafter referred to as the OECD[127]) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 21 November 1997. On 9 April 2015 the Council of the OECD at its meeting unanimously decided to invite Lithuania to start accession process to the OECD.

The OECD members and the countries which have acceded to the Convention shall undertake the obligation to establish criminal liability for bribery of foreign public officials in their domestic law. The aim of the Convention is to prevent exporting corruption to foreign states, in particular in the cases where more developed countries are trying to enter the markets of third countries in unfair ways.

Currently, Article 230(2) of the Criminal Code of the Republic of Lithuania establishes the concept of a person held equivalent to a civil servant which also includes foreign public officials and  heads of undertakings and organisations managed by foreign states[128], therefore, the Lithuanian business organisations that develop their businesses not transparently in any foreign country and pay bribes to foreign public officials and heads of undertakings and organisations managed by foreign states may even now be subject to criminal liability in Lithuania (it is noteworthy that the amendments to the CC as of 19 November 2015 prevented release from criminal liability of a person who offered or promised to give or gave a bribe to a foreign public official).

It should be noted that legal regulation in Lithuania within the context of bribery of foreign public officials in international business transactions essentially meets the requirements of the OECD Convention and the OECD recommendations.

 

Pursuant to the OECD Best Practice Guidelines on the Implementation of Individual Articles of the Convention[129], on 10 November 2016 the Seimas (Parliament) of the Republic of Lithuania adopted Law No. XII-2780 On the Amendment to Articles 20, 225, 226, 227, 230 of the Criminal Code of the Republic of Lithuania and the Annex to It which established that:

  • A legal entity may be held liable under the Criminal Code also in such cases where a natural person is not subject to criminal liability for the act committed by him or her; 
  • A legal entity shall be held liable not only in such cases where a crime  has been committed by an employee or authorised representative of the legal entity as a result of insufficient supervision or control by his or her head, but also upon instruction or permission by the head;
  • A legal entity may be held liable also for the act committed for the benefit of it by its related legal entity. 

 

Under the newly established legal regulation, parent organisations in Lithuania will be also subject to criminal liability for corruption-related acts committed by subsidiaries of Lithuanian organisations operating abroad in these foreign countries, where criminal acts are committed for the benefit of the parent organisation upon the instruction or permission by the person in the executive position or his authorised person, or as a result of insufficient supervision or control.

As an example illustrating such situation, it is worth mentioning the case, when the US Department of Justice punished the Company Data Systems & Solutions established in the State of Virginia by a fine in the amount of 8.82 million US dollars for it that in 1999-2002 the representatives of the Company through intermediaries paid bribes to the officials of SE Ignalina Nuclear Power Plant of Lithuania to obtain contracts for provision of services to the Plant[130].

On the other hand, in analysing the routine practice for imposition of sanctions in Lithuania, it is noteworthy that penalties imposed on both natural persons and legal entities trigger criticism by foreign experts as insufficiently dissuasive. For example, in assessing the penalty of a fine imposed on legal entities, the Generalisation of the OECD Anti-Corruption Network for Eastern Europe and Central Asia distinguishes that the minimum amount of a fine in Lithuania, which may be imposed on a legal entity, is the lowest among the surveyed countries. The Generalisation also presents the fact as subject to criticism that in Lithuania the maximum amount of a fine imposed on a legal entity was well below the average of a fine which may be imposed on it.  In addition, the property confiscation conditions applied in Lithuania are also criticised as not providing the total benefit of property, directly or indirectly received from bribery or taking.

Such attitudes allow stating that the current Lithuanian regulation and internationally developed practice, including fines imposed on legal entities, may be considered as still requiring additional review and amendments not only in the direction of imminence of liability, but also in the direction of its tightening.  
 

It should be noted that after the receipt of information indicating characteristics of possible bribery of a foreign public official, it should be immediately transferred to the Special Investigation Service. 

More detailed information on liability for bribery of foreign public officials and the role of the Lithuanian diplomatic missions in limiting bribery cases abroad is provided in Annex No. 7

 

REGULATION OF CRIMINAL LIABILITY FOR CORRUPTION-RELATED CRIMINAL ACTS IN NATIONAL LAW

 

In the Criminal Code of the Republic of Lithuania[131] (hereinafter referred to as the CC) the following 6 corruption-related criminal acts are criminalised: bribery, trading in influence, graft, abuse of office, unlawful registration of rights to an item, and failure to perform official duties. Under appropriate circumstances other criminal act, for example, swindling, disclosure of official secrets, etc., may also be regarded as corruption-related criminal act.

The persons who have committed criminal acts within the territory of the state of Lithuania or citizens of the Republic of Lithuania and other permanent residents of Lithuania who have committed the crimes abroad shall be subject to criminal liability for the aforementioned criminal acts; and all persons regardless of their citizenship and place of residence, also of the place of commission of a crime and whether the act committed is subject to punishment under laws of the place of commission of the crime shall be liable for criminal acts referred to in Articles 225-227 of the CC (bribery, trading in influence and graft) that must be criminalised under binding international conventions and international treaties to which Lithuania is a signatory.

 

Article 225 of the CC Bribery (passive corruption)

 

1. A civil servant or a person equivalent thereto who, for own benefit or for the benefit of other persons, directly or indirectly himself/herself or through an intermediary, promises or agrees to accept a bribe, or demands or provokes giving it, or accepts the bribe for a lawful act or inaction in exercising his/her powers,

shall be punished by a fine or by arrest or by imprisonment for a term of up to five years.

2. A civil servant or a person equivalent thereto who, for own benefit or for the benefit of other persons, directly or indirectly himself/herself or through an intermediary, promises or agrees to accept a bribe, or demands or provokes giving it, or accepts the bribe for an unlawful act or inaction in exercising his/her powers,

 shall be punished by a fine or by imprisonment for a term of up to seven years.

3. A civil servant or a person equivalent thereto who, for own benefit or for the benefit of other persons, directly or indirectly himself/herself or through an intermediary, promises or agrees to accept a bribe, or demands or provokes giving it, or accepts the bribe in the amount exceeding 250 MSLs for a lawful or unlawful act or inaction in exercising his/her powers,

shall be punished by imprisonment for a term of two up to eight years.

4. A civil servant or a person equivalent thereto who, for own benefit or for the benefit of other persons, directly or indirectly himself/herself or through an intermediary, promises or agrees to accept a bribe, or demands or provokes giving it, or accepts the bribe in the amount less than 1 MSLs for a lawful or unlawful act or inaction in exercising his/her powers shall be considered to have committed a misdemeanour and

shall be punished by a fine or by arrest.

5. A legal entity [132] shall also be held liable for the acts provided for by this Article.

 

Article 226 of the CC Trading in influence

 

1. Any person who, seeking that a person, by taking advantage of his/her social status, office, powers, family relationship, contacts or other likely influence on a state or municipal institution or agency, international public organisation, a civil servant thereof or a person equivalent thereto, exerts an influence on the respective institution, agency or organisation, civil servant or person equivalent thereto to ensure their lawful or unlawful act or inaction in exercising their powers, has offered, promised or agreed to give or has given a bribe to that person or the third person directly or indirectly himself/herself or through an intermediary,

shall be punished by a fine or by restriction of liberty or by arrest or by imprisonment for a term of up to four years.

2. Any person who, by taking advantage of his/her social status, office, powers, family relationship, contacts or other likely or supposed influence on a state or municipal institution or agency, international public organisation, a civil servant thereof or a person equivalent thereto, for own benefit or for the benefit of other persons, directly or indirectly himself/herself or through an intermediary, has promised or agreed to accept a bribe, or has demanded or provoked giving it, or has accepted the bribe upon promising to exert an influence on the respective institution, agency or organisation, civil servant or person equivalent thereto to ensure their lawful or unlawful act or inaction in exercising their powers,

shall be punished by a fine or by arrest or by imprisonment for a term of up to five years.

3. Any person who has committed the acts provided for in paragraph 1 of this Article by, directly or indirectly himself/herself or through an intermediary, offering or agreeing to give or giving a bribe in the amount exceeding 250 MSLs,

shall be punished by imprisonment for a term of up to seven years.

 4. Any person who has committed the acts provided for in paragraph 2 of this Article by, directly or indirectly himself/herself or through an intermediary, promising or agreeing to accept, or demanding or provoking to give or accepting a bribe in the amount exceeding 250 MSLs,

shall be punished by imprisonment for a term of two up to eight years.

5. Any person who has committed the acts provided for in paragraphs 1 and 2 of this Article by, directly or indirectly himself/herself or through an intermediary, offering, promising or agreeing to give or giving, or promising or agreeing to accept, or demanding or provoking to give or accepting a bribe in the amount less than 1 MSL, shall be considered to have committed a misdemeanour and

shall be punished by a fine or by restriction of liberty or by arrest.

6. A person who has committed the act provided for in paragraphs 1, 3 or 5 of this Article shall be released from criminal liability if he/she was demanded or provoked to give a bribe, and if he/she, directly or indirectly himself/herself or through an intermediary, upon offering or promising to give or giving a bribe, within the shortest possible time, but no later than before the delivery of a notice of suspicion raised against him (her), has notified on his own free will a law enforcement institution thereof, and shall also be released from criminal liability if he/she has promised to give or has given the bribe with the law enforcement institution being aware thereof.

7. Paragraph 6 of this Article shall not apply to a person who, directly or indirectly himself/herself or through an intermediary, has offered or promised to give or has given a bribe to the person referred to in paragraph 2 of Article 230 of this Code. 

8. A legal entity shall be also liable for the acts provided for in paragraphs 1, 2, 3, 4 and 5 of this Article.

 

Article 227 of the CC Graft (active corruption)

 

1. Any person who, directly or indirectly himself/herself or through an intermediary, has offered, promised or agreed to give or has given a bribe to a civil servant or a person equivalent thereto or the third person for a desired lawful act or inaction of the civil servant or a person equivalent thereto in exercising his/her powers,

shall be punished by a fine or by restriction of liberty or by arrest or by imprisonment for a term of up to four years.

2. Any person who, directly or indirectly himself/herself or through an intermediary, has offered, promised or agreed to give or has given a bribe to a civil servant or a person equivalent thereto or the third person for a desired unlawful act or inaction of the civil servant or a person equivalent thereto in exercising his/her powers,

shall be punished by a fine or by arrest or by imprisonment for a term of up to five years.

3. Any person who has committed the actions provided for in paragraph 1 or 2 of this Article by, directly or indirectly himself/herself or through an intermediary, offering, promising or agreeing to give or giving a bribe in the amount exceeding 250 MSLs, 

shall be punished by imprisonment for a term of up to seven years.

4. Any person who has committed the actions provided for in paragraph 1 or 2 of this Article by, directly or indirectly himself/herself or through an intermediary, offering, promising or agreeing to give or giving a bribe in the amount less than 1 MSL shall be considered to have committed a misdemeanour and

shall be punished by a fine or by restriction of liberty or by arrest.

5. A person shall be released from criminal liability for grafting if he/she was demanded or provoked to give a bribe, and if he/she, directly or indirectly himself/herself or through an intermediary, upon offering or promising to give or giving a bribe, within the shortest possible time, but no later than before the delivery of a notice of suspicion raised against him (her), has notified on his own free will a law enforcement institution thereof, and also if he/she has promised to give or has given the bribe with the law enforcement institution being aware thereof.

6. Paragraph 5 of this Article shall not apply to a person who, directly or indirectly himself/herself or through an intermediary, has offered or promised to give or has given a bribe to the person referred to in paragraph 2 of Article 230 of this Code.

7. A legal entity shall also be held liable for the acts provided for in paragraphs 1, 2, 3 and 4 of this Article.

 

Article 228 of the CC Abuse of Office

 

1. A civil servant or a person equivalent thereto who abuses his/her official position or exceeds his/her powers, where this incurs major damage to the State, European Union, an international public organisation, a legal or natural person,

shall be punished by a fine or by arrest or by imprisonment for a term of up to five years.

2. Any person who has committed the act provided for in paragraph 1 of this Article seeking material or another personal gain, in case of the absence of characteristics of bribery,

shall be punished by a fine or by imprisonment for a term of up to seven years.

3. A legal entity shall also be held liable for the acts provided for in this Article.

 

Article 2281 of the CC Unlawful Registration of Rights to an Item

 

A civil servant or a person equivalent thereto who, while performing the functions of a registrar in a public register, has unlawfully registered rights to an item,

shall be punished by a fine or by arrest or by imprisonment for a term of up to five years.

 

Article 229 of the CC Failure to Perform Official Duties

 

A civil servant or a person equivalent thereto who fails to perform his/her duties through negligence or performs them inappropriately, where this incurs major damage to the State, European Union, an international public organisation, a legal or natural person,

shall be punished by a fine or by arrest or by imprisonment for a term of up to two years.

 

Article 230 of the CC Interpretation of Concepts

 

1. The civil servants indicated in this Chapter shall be state politicians, state officials, judges, civil servants according to the Law on Civil Service and other persons who, while working or performing official duties on other grounds established by this Law at state or municipal institutions or agencies, perform the functions of a government representative or hold administrative powers, also official candidates for such office.

2. A person who performs the functions of a government representative, holds administrative powers or otherwise ensures the implementation of public interest while working or performing official duties on other grounds at a foreign state or European Union institution or agency, international public organisation or international or European Union court institution, or a legal entity or other organisation controlled by a foreign state, also official candidates for such office shall be held equivalent to civil servants.

3. Moreover, a person who works or on other grounds established by the Law performs official duties at a public or private legal entity or other organisation or pursues professional activities and holds appropriate administrative powers, or has the right to act on behalf of a legal entity or other organisation, or provides public services, and has the right to act as an arbiter or juror shall also be held equivalent to a civil servant. 

4. The bribe referred to in this Chapter shall be an unlawful or undue advantage in the form of any property or other personal gain for oneself or other person (material or immaterial, having economic value in the market or having no such value) for a desired lawful or unlawful act or inaction of the civil servant or a person equivalent thereto in exercising his/her powers.

5. For the purposes of application of the provisions of Article 72 of this Code, property of any form obtained directly or indirectly from acts prohibited by paragraphs 1, 3, 5 of Article 226 and Article 227 of this Chapter shall be considered as a result thereof, including the gain which has occurred due to a desired act or inaction of the civil servant or a person equivalent thereto in exercising his/her powers, regardless of whether it has been received through operational activities that may be pursued lawfully or unlawfully in accordance with the procedure prescribed by legal acts.

 

FOREIGN STATES’ LEGAL ACTS DEALING WITH CORRUPTION

 

Business organisations engaged in or planning to be engaged in their commercial activities internationally or in certain foreign states should know the specific anti-corruption requirements applicable in such states.

 

The Foreign Corrupt Practices Act of the United States of America (the US) of 1977 (hereinafter referred to as the FCPA).

 

This federal law consists of the following three principal parts:

  • Anti-corruption provisions;
  • Requirements for companies’ accounting;
  • Requirements for companies’ internal control.

 

The FCPA characterizes with strict anti-corruption requirements applicable both in the US and, in certain cases, outside the US.

According to this federal law any actions by a US national or organization, aimed at, directly or indirectly, giving or promising to give any benefit to a foreign official in order to acquire or keep illegitimate advantage are considered a crime.

 

The concept of the “US national or organization” covers:

  • All US residents, including any other US citizens, independently of their location;
  • Legal entities incorporated in accordance with the US laws;
  • US securities’ issuers[133];
  • Employees, officials, managers, directors, shareholders and agents of the US legal entities and issuers;
  • Any natural persons or legal entities during their stay in the US.

 

For instance, in 2016 the US Department of Justice publically announced that the Massachusetts IT company PTV INC will have to pay 28 million US dollars for violation of provisions of the FCPA, namely for organization of amusement trips, costing approximately 1 million dollars, for employees of Chinese companies in 2006 – 2011 by covering it as training courses. As the result, PTV INC signed contracts with the said Chinese companies for the amount of 13 million US dollars. It was established that the Chinese employees spent one day in training at PTV INC headquarters in Massachusetts and, during the remaining days, enjoyed leisure activities, which included different excursions to other states and other entertainment, including golf playing. In order to disguise such illegitimate expenses, PTV INC stated them in its books as paid commission fees and business expenses[134.]

 

With reference to the foregoing, the FCPA may, in certain cases, be applicable to the Lithuanian business organizations, for instance:

  • Lithuanian companies listed on the US securities’ stock exchange;
  •  Lithuanian companies’ subsidiaries operating in the US;
  • US companies’ subsidiaries operating in Lithuania;
  • Lithuanian companies performing their commercial activities in the US;
  • US employees, hired by Lithuanian companies;
  • Lithuanian citizens during their stay in the US.

 

Differently from the Lithuanian legal regulation, the FCPA allows businesses to perform small payments to representatives of foreign states’ public sector, i.e. so-called facilitation payments for the latter’s legitimate activities under respective authorizations.

 

In order for such payments to be legitimate, the following several conditions must be satisfied:

  1. The payment must be small (in each case it is individually established whether the payment is a bribe or a facilitation payment);
  2. The payment may be paid only to a foreign state’s officer;
  3. The payment is paid only for legitimate actions, i.e. the paying subject has the right to expect such actions and has completed all the requirements in order for such actions to be performed and the state officer, performing the actions or making the decisions is authorized to perform such actions or make such decisions;
  4. The only legitimate aim of the payment is to ensure that a certain public or administrative service is provided as soon as possible;
  5. Business organizations must account for such payments, the payments must be declared and clearly accounted in the organization’s financial accounting.

 

For instance, according to the FCPA, a US company, which provides all the necessary documents in order to obtain a permission to perform construction works in Lithuania and pays a small facilitation payment to the municipal officer, holding the respective authorizations, for a quicker issuance of such permission, will not incur criminal liability in the US. However, in this case it is necessary to state that such actions are forbidden according to the Lithuanian criminal laws, therefore in Lithuania both the US company who paid the facilitation payment and the state officer who accepted the payment would incur criminal liability for bribery.

 

The United Kingdom’s UK Bribery Act of 2011 (hereinafter referred to as the UKBA).

The UKBA is considered among the strictest anti-corruption legal acts in Europe, which, differently from the FCPA, forbids any facilitation payments and foresees criminal liability for bribery in the private sector and establishes requirements for business as regards prevention of corruption and compliance programmes.

According to the aforementioned Act, non-performance of preventive measures in business is equal to criminal acts; therefore, in case a person, employed in a business organisation or acting on behalf of a business organisation commits a corruption related crime, as the result of which the represented organisation could receive benefit, the organisation also incurs criminal liability. The only possibility for such company to defend against the incriminations is to evidence that the company has taken all the possible actions in order to prevent the employee’s criminal behaviour, i.e. implemented the respective corruption prevention measures in its activities.

 

The British legal institutions have prepared the guidelines, which are considered the proper anti-corruption programme, allowing for avoiding a legal entity’s criminal liability, i.e. The Bribery Act 2010 – Guidance[135], which includes the following six main principles:

  • The corruption prevention measures must be proportionate, clear and efficient, prepared in consideration of the peculiarities of the performed business and potential specific corruption risks;
  • When implementing the corruption prevention measures, obligation and participation of the company’s management, board and shareholders / owners is necessary;
  • The business must be continuously evaluated, taking into consideration the external and internal risk factors;
  • The business partners must be evaluated in advance in a proportionate and risk based manner;
  • There must be appropriate communication and training in order for the anti-corruption procedures to be realized and comprehended at all levels of business;
  • The procedures must be continuously controlled, revised and, if necessary, updated.

 

In addition, it should be mentioned that:

  • In Belgium for bribery a legal entity can be disqualified from state supported contracts and agreements.
  • In 2013 in Denmark the tax code was modified, resulting from prohibiting companies to perform deductions from facilitation payments.
  • In Estonia a parent company incurs criminal liability as a co-defender in case it is established that its subsidiary committed a crime of bribery after being authorized or financed by the parent company. The Estonian Public Procurement Act stipulates that a contracting authority may not conclude a contract with a legal entity or apply public procurement procedure in regard to a tender participant, who has been convicted for bribery or similar crimes.
  • in Latvia a company, convicted for bribery, is prohibited to participate in public procurement procedures for three years and Latvia’s Law on Enterprise Income Tax establishes that the expenses, not related with the economic activities (including bribes), may not be deducted from the applicable taxes.
  • In France a parent company may incur criminal liability as a co-defendant or the main culprit in the crime of bribery, committed by its subsidiary in another country.
  • In Germany a legal entity is liable for corruption crimes under the procedure established by the Law on Administrative Violations. A company may also incur liability in case it does not take sufficient preventive measures in order to prevent its employees from bribery; the company’s liability exists independently of whether the natural person, who actually performed the act of bribery, incurred criminal liability. The amount of fine, applicable to such companies, may reach up to one million euros. Such companies may also lose much more in case their economic benefit, obtained through bribery, is confiscated and also may be penalized by withdrawal or temporary suspension of licences or permits to engage in certain activities.

 

DEFINITIONS AND PRACTICAL EXAMPLES OF CORRUPTION-RELATED CRIMINAL OFFENCES

 

Each business organisation employee should be aware of the following:

  • what is corruption (i.e. what are corruption-related offences, what liability those incur to the offender and his or her organisation),
  • what is the conflict of interest and how to deal with such situations,
  • how gifts are regarded in the public sector,
  • what kind of gift policies are implemented by his or her business organisation (i.e. the employer),
  •  what is charity and support and how to provide those in order to avoid suspicion due to a lack of transparency.

 

Therefore, it would be appropriate to at least briefly discuss these aspects in an anti-corruption policy or developed anti-corruption policy of each organisation.

 

BRIBERY

 

Currently, the majority of the public identifies corruption, first and foremost, with bribery. This form of corruption has been regarded as a particularly latent event[136]. The latency of bribery is determined by the following factors:

  • both parties (the briber and the bribe taker) are interested in covering up the event;
  • the criminal offence is useful to both parties involved;
  • the consequences are not obvious and is usually revealed after a certain period of time (if revealed at all);
  • although, in general, the public condemns this phenomenon, many are still willing and ready to give/take bribes.

 

According to Article 225 of the Criminal Code of the Republic of Lithuania, there are five independent forms of bribery:

  • accepting a bribe;
  • promise to accept a bribe;
  • agreement to accept a bribe;
  • demanding a bribe;
  • provoking a bribe.

 

The listed bribery-related offences are further differentiated according to:

  • the nature of actions defining a bribe:
    • legal actions performed in exchange for a bribe;
    • illegal actions performed in exchange for a bribe.
  • the value of a received bribe:
    • under 1 MGL (up to EUR 38) – misdemeanour;
    • 1 MGL to 250 MGL (EUR 38 to EUR 9,500) – average-gravity crime;
    • ver 250 MGL (over EUR 9,500) – serious crime.

 

Taking bribe

 

The first and foremost, bribery is viewed as accepting a bribe (in other words, misappropriation of illegally obtained material benefits). It is the oldest form of bribery defined by the criminal legislation of all countries, criminalizing this phenomenon,  as one of the acts of alternative manifestation of bribery.

Taking of a bribe is deemed complete from the moment when the offender becomes the bribe holder, for example, takes the money into his or her hands, places the money into his or her pocket, briefcase or desk drawer, signs a fictitious contract or agreement, withdraws a loan note, learns about of the emergence of money in the bank account, and so on. The criminal offence is deemed complete after the offender accepts at least part of the bribe.

 

For example: an environmental inspector agrees with an offender that for a bribe of EUR 100 the offender will receive no protocol of administrative offence for inappropriate disposal practices. Since the offender does not have the specified amount of money on him or her, the parties agree that the offender shall give part of the amount (i.e. EUR 50) to the inspector immediately, and another EUR 50 later in a location agreed upon by the parties.

 

In this particular case, the offence is considered complete after the first part (i.e. EUR 50) of the bribe has been given.

 

Promise or agreement to accept bribe

 

Based on the definition of bribery established by the Criminal Code, criminal liability arises for a promise or agreement[137] to accept a bribe alone, i.e. the criminal offence is deemed complete from the moment of such promise or agreement and the person may be prosecuted.

Article 6.162 of the Civil Code of the Republic of Lithuania indicates that “an agreement is made by submitting a proposal (offer) and accepting this proposal (acceptance)”. In this way, an agreement to accept a bribe, as one of the acts of alternative manifestation of bribery, may also be viewed as a certain criminal transaction, where the briber (offerer) submits his or her proposal (offer), and the bribe taker (acceptor) accepts it.

The concepts promise and agreement to accept a bribe are often used as synonyms and generally considered together, without separating one from the other. However, the promise is usually given without specifying the nature and size of a bribe, or agreeing upon specific activities, for which the bribe will be given. The agreement, on the other hand, requires mutual willingness and compatibility, i.e. both parties of criminal transaction agree upon the actions to be performed, the size of the bribe, also, when, how and in what form the bribe will be paid.

For example: A member of the Seimas (Parliament) of the Republic of Lithuania is offered to vote for a certain amendment useful only to a small group of interested participants. In return, he or she is offered a “generous” reward. However, the bribe itself is not specified. Being tempted by the unspecified bribe, the member of the Seimas promises to perform the actions required without even delving into the contents of provisions of the amendment proposed.

In this case, the offence is considered complete even from the moment of extracting a promise to perform actions in return for an unspecified undue benefits.

 

Demanding or provoking bribe

 

The definition of demand is any expression of desire to receive a bribe, which may be associated with a threat to cause damage to both legal and illegal interests of a person as well as any other insistence without an explicit threat to cause any damage.

A bribe may also be demanded for lawful or unlawful actions already performed to satisfy one's interests.

In addition to demanding a bribe, the definition of bribery includes provoking[138] a bribe, both acts constituting an alternative (in a way similar to agreement and promise). The major difference between demanding a bribe and provoking a bribe is that the demand is open, straightforward and usually expressed verbally; the provocation, by contrast, is indirect, masked, and often encouragement is the result of the culprit's implicative[139] actions.

Usually civil servants or other equivalent persons create situations, where individuals are forced to give them bribes in order to protect personal interests or speed up problem solving. In other words, the bribe is provoked, triggered.

For example: in order to engage in food processing activities, a legal entity accordingly equipped its new cooking facilities and provided the State Food and Veterinary Inspectorate with all necessary documents. However, authorized inspectors linger and examine the documents unreasonably scrupulously, do not arrive to assess equipped facilities and use all means possible to delay the issuance of a food business operator's certificate, thus provoking the legal entity to pay a bribe for the lawful conduct of their powers.

It should be noted that in the case of demanding or provoking a bribe it is the offender who shows the initiative to receive a bribe without being encouraged to do so.

 

The nature of actions defining bribe

 

For a bribe the offender may perform legal or illegal active actions, or not perform such actions, or refrain from such actions.

Legal actions – actions to which the offender is obliged and authorized by the law, resolutions of the Government, organisation's internal rules of procedure, organisation's approved rules of conduct, job description, and so on.

Illegal actions / inaction – actions, by which the requirements of the above-mentioned laws are violated or the authorisations are exceeded:

  • illegal actions are associated with actions that a civil servant or another equivalent person may not and should not perform while exercising his or her powers;
  • illegal inaction means lack of actions that the person should perform while exercising his or her powers.

 

Regardless of whether the person performs legal or illegal actions, if he or she receives a reward, agrees upon a reward or accepts a promise of reward in the future, or such reward is demanded or provoked, such actions shall be deemed bribery.

The classification of legal and illegal actions aims to differentiate criminal liability, with illegal actions as a qualifying characteristics (aggravating circumstance) stressing the hazards of illegal actions. For example, bribery, being a negative social phenomenon in itself, becomes even more harmful if a person accepts a bribe in exchange for performing illegal actions.

Therefore, the actions of, for example, a civil servant of the Gaming Control Authority in case of accepting a bribe from a gambling agent in return for permission to open a new slot hall, shall be viewed as less dangerous and, accordingly, punished less severely if the newly opened slot hall shall comply with the requirements defined by the legal acts, than in case, when such permission is issued for a slot hall without proper equipment, where visitors may be exposed to the gambling agent's possible fraud.

 

The subject of bribery

 

The bribe includes any kind of illegal benefits:

  • e.g., material valuables such as money, securities, shares, jewels, antiques, works of art, furniture, clothes, food, expensive drinks, throwing a feast, etc.;
  • material services such as free medical treatment, interest-free loan, selection of a better land parcel for the construction of a house, free car or apartment repair, free house or villa construction, free rent, or disclosure of trade secrets;
  • The bribe may be accepted for one's own advantage or for the advantage of other natural  or legal persons;
  • The bribe may be open (direct) or masked (indirect). For example, a bribe may be gifted, purposefully lost out to a person, lent without intent to repay, paid as bonuses not earned or payment for work not performed, paid for the alleged “consultations”, gifted to the offender's relatives in the form of valuables or free services;
  • The bribe may be given before or after certain actions have been performed for the benefit of the briber. The fact that a person satisfied another person's interest simply by fulfilling his or her obligations, without any prior intentions of receiving a bribe, but after that did accept an undue reward, does not exclude the signs of bribery and incurs criminal liability.

 

Example of bribery between the representatives of the public and private sectors

 

When conducting technical maintenance of an object under construction, the authorized construction technical supervisor discovered serious technical and safety deficiencies of the building. He notified the contractor, but also pointed out that for a bribe of EUR 2,000 he may be willing to overlook the deficiencies, not demand to eliminate them, and allow the contractor to conceal these deficiencies.

 

Example of bribery between the representatives of the private sector

 

Due to the company's weak internal control and a wide range of discretion granted to him/her, the manager under the instruction by the Director of the company to select best possible suppliers for the company[140] chooses not the supplier that would be most beneficial to the company, but the supplier that offers and pays him the highest bribe.

Three private companies (suppliers) participate in a public procurement tender organized by the municipality, but one of them, in exchange for a certain undue benefit (bribe), agrees with the other two companies that they will withdraw their proposals or submit proposals failing to meet the public procurement requirements.

 

GRAFT

 

Graft means a direct or indirect bribe offer, promise or giving to a civil servant or another equivalent person in return for a desired legal action or inaction in the course of conduct of the civil servant's or another equivalent person's powers, or to an intermediary to achieve the same results.

 

The graft may occur in four forms:

  • offering a bribe;
  • promise to give a bribe;
  • giving a bribe;
  • offering a bribe, promise to give a bribe, or giving a bribe to an intermediary.

 

Offering bribe[141]

 

Offering a bribe means informing a civil servant or another equivalent person that he or she will receive a bribe after agreeing to satisfy the grafter's interest. The bribe may be offered verbally or in writing, as well as by action, from which one may understand that a bribe is being offered to him or her.

For example, in order to avoid the issuance of a protocol of a violation of administrative law, a person caught in the act of committing an administrative offence offers the officer authorized to impose the penalty “to agree” and, after the latter warns the offender that such offer incurs criminal liability, puts EUR 200 into the officer's pocket.

In this case, the illegal offer is verbal at first; however, after the authorized person refuses, the same illegal offer is expressed through the action, i.e. by putting the money into the authorized person's pocket.

It should be noted that offering a bribe is deemed a complete offence immediately after notification (i.e. after introducing information), regardless of whether or not it is followed by the bribe, also regardless of whether or not the person has agreed to take the bribe.

 

Promise[142] to give bribe

 

Promise to give a bribe means a consent to give a bribe to an authorized person with a condition that the briber's interest will be satisfied.

The grafter's promise may be given without specifying the nature and size of the bribe, or indicating activities, for which the bribe will be given. For example, making an abstract promise of generous reward to an investigation officer for discontinuing the initiated preliminary investigation. Thus, the concept of promise, unlike that of offer or agreement, allows to believe in a lesser level of compatibility of wills of persons involved in a corruption-related offence.

 

Giving bribe[143]

 

Giving a bribe means unlawfully granting material benefits to an authorized person. It may occur as both action or inaction resulting in material benefits for other person.

 

The bribe giving may occur as transfer of money or items, signing of an agreement or contract, transfer of money to a bank account, refraining from certain material actions unfavourable to the person bribed, and so on.

 

In some cases, the bribe is given before performing certain actions beneficial to the briber, while in others, after performing such actions. When the bribe is given after performing the briber's desired actions or refraining from actions, it is often referred to as a gift bribe or a gratitude bribe. On the other hand, in accordance with the Lithuanian Criminal Code the bribe-giving moment does not affect the emergence of criminal liability and both activities are equally punishable.

 

Example of graft between the representatives of the public and private sectors

 

The environmental inspector discovered within the company's territory a large amount of inappropriately stored dangerous waste subject to a substantial administrative penalty. In order to avoid the impending heavy fines, the Director of the company paid the inspector a bribe of EUR 200 for naming the discovered waste non-hazardous in a protocol of a violation of administrative law, thus incurring a significantly smaller criminal liability.

 

Example of graft between the representatives of the private sector

 

A company’s manager, being aware that the information technology employee of the competing company, which also prepares the tender proposal documents for the public procurement tender, was planning to change his workplace soon, agreed to pay that employee a bribe of EUR 1,000 for a copy of the public procurement proposal prepared by him for the competing company.

 

TRADING IN INFLUENCE

 

Often persons seeking favourable decisions for themselves do not have direct access to officials authorized to perform the desired actions. Therefore, they invoke the help of third parties (also known as intermediaries) who might influence such officials. Bribing and grafting such intermediaries should also be treated as independent corruption offences.

 

Trading in influence is defined as intentional actions if:

  • any undue reward is directly or indirectly promised, given or offered to any person who asserts or confirms that he or she could, in exchange for an undue reward, wrongly influence decisions of certain persons or entities, regardless of whether the undue reward is intended for him- or herself or any another person or entity;
  • an offer or promise of such reward is sought, received or accepted in exchange for the influence, regardless of whether or not the effect occurs and whether the desired result is achieved through the alleged effect.

 

The essence of trading in influence is that it focuses on the person's specific situation (e.g., social status, office or powers) or connections (e.g., family relations or acquaintances), which give the said person a real opportunity to unlawfully influence certain authorized persons, and the said person declares such opportunity to gain illegal benefits for him or herself or others.

 

Thus, trading in influence consists of two elements:

  • a promise to a certain person to influence a certain institution, facility, organisation, civil servant or another equivalent person in exchange for a bribe, so that the said institution, facility, organisation, civil servant or another equivalent person would serve the briber's interests (i.e. lawfully or unlawfully act for the briber's benefit, or refrain from actions);
  • the promise is given by means of one's likely influence on the institution, facility, organisation, or a person holding an official office. Social status, office, powers, family relations, acquaintances, etc. may serve as the basis for the influence.

 

When incriminating, it does not matter whether the offender promises to pass the bribe to the appropriate official or collect all of it him or herself.

The promise itself may be categorical (promising success) or cautious (promising only to try to do it).

Trading in influence may be incriminated if the offender him or herself sought out the potential briber with an offer, or the potential briber him or herself sought out the intermediary.

Here we should note that trading in influence as criminal offence should be separated from lobbying that is legal from a legal perspective, but is also aimed at influencing the decisions of the Government representatives (i.e. changing, amending or invalidating legal acts, passing or rejecting new legal acts), and is carried out by legal means established by the Lobbying Law[144], by getting listed as a lobbyist and submitting lobbying reports.

 

As in cases concerning bribery and graft, criminal liability for trading in influence effects is differentiated depending on the bribe value.

 

Example of trading in influence between the representatives of the public and private sectors

 

A company financed the organisation of the rally of one  political party, thus, in return, the Chairman of the party would influence a minister delegated by this party to create favourable conditions for the company to win the public procurement tender organized by a ministry.

 

Example of trading in influence between the representatives of the private sector

 

The Director of the company that buys-up forests and produces raw wood granted as a gift to his former classmate a free visit for two persons to Druskininkai SPA-Centre for the latter persuaded his son-in-law, who is the biofuel boiler house manager (i.e. produces heat for residential buildings), to extend the biomass fuel supply contract signed with the Director's company for one more year.

 

ABUSE OF OFFICE

 

Abuse of office is using one's official position for the benefit contrary to one's office or related business.

The abuse of office manifests through an authorised person outwardly performing his or her assigned duties and exercising his or her rights and obligations, but, in fact, violating by his or her action or lack thereof the principles and objectives of his or her office as well as the principles and objectives of conduct established by the employer, the person's activities being dominated by a personal or selfish interest instead of that of the public or represented organisation.

The abuse of office occurs through active actions (i.e. not using property valuables according to their purpose; entering into illegal, unjustified and restrictive transactions; exploiting work of one's subordinates for one's own benefits; using property of other persons and entities for one's purposes; illegally granting oneself or other persons and entities benefits or privileges, and so on) or lack thereof, i.e. through non-performance of actions that are necessary to adequately perform one's duties and obligations.

The necessary characteristics of abuse of office is significant damage. Without it, this offence may only be punished as the disciplinary offence.

 

The damage covers both damage to property and personal injury:

  • The damage to property is the loss or injury, incurred costs (direct losses) as well as the loss of benefits or revenue, which would be received in the absence of illegal actions (or lack of action);
  • Other kinds of damage include physical, organisational, or personal injury or damage to immaterial valuables (such as person's health, honour or dignity, reputation of a legal entity's reputation, authority of the civil service, etc.) defended and protected by law.

 

The sign of significant injury, necessary to give rise to criminal liability, is the assessee. Therefore, in each case the significant injury is determined by taking into account the specific circumstances of the case, that is: the nature of the injury, interests protected by what laws are violated, number of victims, time and duration of the offence, importance of the offender's office, and so on.

When deciding whether the damage to property is significant, both the size of monetary value and the damage significance to the victim (for example, if the victim experiences financial hardships, even the damage with low monetary value will be deemed significant) are taken into consideration.

 

Example of abuse of office in the public sector

 

The Director of the public institution founded by the municipality entitled his good friend, without tendering or notifying of that the aforementioned municipality, to use free of charge and be engaged in commercial activities in the premises that the municipality provided to the public institution on the lending rights. Thus a significant damage was caused to the municipality, as the municipality lost the funds that it might have received if the premises were leased in accordance with the procedure prescribed by laws.

 

Example of abuse of office in the private sector

 

To expand the business and build a new waste disposal and recycling plant, the Director of the company, who has shareholders' confidence, purchased a plot of land sold by a relative at a price higher than the average market price, thus causing damage both to the company and its shareholders.

 

FAILURE TO PERFORM OFFICIAL DUTIES

 

This offence occurs in two forms:

  • Failure to perform duties, when a person fails to perform his or her duties that fall within his or her field of competence and are necessary to ensure the interests of the person's office or employer;
  • Inappropriate performance of duties, when a person performs his or her duties negligently, carelessly, offhandedly, poorly, or insufficiently.

 

The failure to perform official duties or inappropriate performance of official duties usually manifests in the long-term, systematic failure to perform official duties or inappropriate performance of official duties, in a single event.

If a civil servant or another equivalent person fails to perform his or her official duties or inappropriately performs his or her official duties due to objective reasons beyond his or her control (for example, no adequate funding is provided, required to fulfil the task, an unreasonably short term is set, necessary means and tools are not secured, and so on), Article 229 of the Criminal Code does not apply.

As in the case of abuse of office, criminal liability for failure to perform duties only arises if such failure causes significant damage to the State, the European Union, public organisation, natural legal person.

 

Example of failure to perform official duties in the public sector

 

The police officer, after the receipt of information on the imminent danger to a person's health, delayed taking necessary actions to prevent the crime. This resulted in a significant damage (severe bodily injury) to the person who applied for help.

 

Example of failure to perform official duties in the private sector

 

The company's lawyer responsible for the company's representation in courts and the preparation of all necessary procedural documents, having regard to an informal request of the Director of the debtor company, failed to prepare and submit to the court in due terms the action of substantial debt and interest against the debtor company. As a result, the deadline limit for filing a statement of claim passed, and the company lost its opportunity for debt repayment.

____________________


[122] In international legislation “bribing” (giving a bribe) is often called “active corruption” or “active bribery”, and “bribery” (receiving a bribe) – “passive corruption” or “passive bribery”.

[123] http://www3.lrs.lt/pls/inter2/dokpaieska.showdoc_l?p_id=289015&p_query=&p_tr2=l?p_id=289015&p_query=&p_tr2= 
[124] http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=161366&p_query=&p_tr2= 
[125] http://www3.lrs.lt/pls/inter2/dokpaieska.showdoc_l?p_id=197963&p_query=&p_tr2= 
[126] http://www.oecd.org/corruption/oecdantibriberyconvention.htm (in English);

http://www.stt.lt/files/103_doc_file_1_094520.pdf (in Lithuanian).
[127] Full name: The Organisation for Economic Co-operation and Development available here: http://www.oecd.org/about/ 
[129] Article 230(2) of the CC considers to be equivalent to a civil servant the persons who perform the functions of a government representative, hold administrative powers or otherwise ensure the implementation of the public interest while working or performing official duties on other grounds at a foreign state or European Union institution or body, international public organisation or international or European Union judicial institution, or a legal entity or other organisation that are controlled by a foreign state, also official candidates for such office.
[130] Part B of Annex I to the OECD Recommendations for Further Combating Bribery of Foreign Public Officials in International Business Transactions 2009.
[131] Link: http://www.delfi.lt/verslas/energetika/generaline-prokuratura-tirs-kaltinimus-jav-imonei-davus-kysius-uzsakymams-ignalinos-ae-gauti.d?id=58948963 
[132] Chapter XXXIII “Crimes and Misdemeanours against Civil Service and Public Interest” of the Criminal Code of the Republic of Lithuania. 
[133] Article 20 of the CC establishes that:

  1. A legal entity shall be held liable solely for the criminal acts the commission whereof is subject to liability of a legal entity as provided for in the Special Part of this Code.
  2. A legal entity shall be held liable for the criminal acts committed by a natural person solely where a criminal act was committed for the benefit or in the interests of the legal entity by a natural person acting independently or on behalf of the legal entity, provided that he, while occupying an executive position in the legal entity, was entitled: 1) to represent the legal entity or 2)  to take decisions on behalf of the legal entity or 3) to control activities of the legal entity.
  3. A legal entity may be held liable for criminal acts also in such case, when, for the benefit of a legal entity, they have been committed by an employee or authorised representative of the legal entity upon the instruction or permission by the person indicated in Article 2 of this Article or as a result of insufficient supervision or control.
  4. A legal entity may be held liable for criminal acts committed by other legal entity controlled by or representing it in the conditions referred to in paragraphs 2 and 3 of this Article, when they are committed for the benefit of the aforementioned legal entity upon the instruction or permission by the person occupying an executive position in the legal entity or his authorised person or as a result of insufficient supervision or control.
  5. Criminal liability of a legal entity shall not release from criminal liability a natural person who has committed, organised, instigated or assisted in commission of the criminal act. Criminal liability of a natural person shall not release from criminal liability a legal entity where a criminal act was committed for the benefit or in the interests of the legal entity by a natural person who has committed, organised, instigated or assisted in commission of the criminal act, as well as the fact that the natural person shall be released from criminal liability for this act or that he shall not be subject to criminal liability due to other reasons.

 

[134] Issuer means a private company or a state institution (Ministry of Finance, Central Bank), which issues money or securities.
[135] http://www.reuters.com/article/us-ptc-settlement-corruption-idUSKCN0VP23P 
[136] https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf 
[137] The latency of criminal offenses is determined by the fact that only insignificant part of all bribery cases is registered.
[138] According to the Dictionary of Contemporary Lithuanian (http://www.autoinfa.lt/webd/) the term “promise” (in Lithuanian: “pažadas”) is defined as to give one's word to do something (in Lithuanian: “davimas žodžio ką padaryti”), to promise (in Lithuanian: “pažadėti”), to make a promise (in Lithuanian: “duoti pažadą”), and agreement (in Lithuanian: “susitarimas”) as establishing relations (in Lithuanian: “santykių nustatymas”), reconciliation (in Lithuanian: “suderinimas”).
[139] The Dictionary of Contemporary Lithuanian defines the term “provocation” (in Lithuanian: “provokavimas”) as to cause intentionally (in Lithuanian: “tyčia kelti”), to incite performance of certain actions (in Lithuanian: “kurstytis atlikti tam tikrus veiksmus”).
[140] Implicative actions – a person's behaviour that shows his or her desire to enter into a transaction.
[141] The term “discretion” (in Lithuanian: “diskrecija”) means the right to act, behave, make decisions as one sees fit.
[142] The term “to offer” (in Lithuanian: “siūlyti”) means to flog, recommend something.
[143] The term “to promise” (in Lithuanian: “žadėti”) means to consider or prepare to do something; to intend, want, inform about one's future action; to talk about giving or doing something, or making something happen; to provide hope through promises; to let someone believe that he or she will receive something.
[144] The term “to give” (in Lithuanian: “duoti”) means making that someone could receive, take, hand in; making that someone could have, possess.
[145] For more information about lobbying, see Chapter 6.2 of the Handbook.