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Update: The bill passed the Senate on March 19, and goes to the King for signature before becoming law.

The Anti-Corruption Law is the hot topic of debate these days, as anyone who has opened a newspaper knows. After various drafts over the past 15 years, last Friday the National Assembly passed the bill, some say with too little debate. The draft now goes to the Senate for debate, and then to the King to sign before becoming law. The draft is available here in Khmer and English. This law doesn’t actually define or prohibit corruption – that was done in the new Criminal Code, passed late last year, but not fully implemented until November 2010.

What it does is set up two anti-corruption agencies – the National Council Against Corruption and the Anti-Corruption Unit appointed by the Prime Minister. Why two? Well, the law spells out different functions for each – the Council is more of an oversight body, and the Unit implements and investigates cases. But the list of their respective duties seems to overlap to a fair degree, so it remains to be seen how it plays out in practice. Two enforcement agencies is not necessarily a bad thing, inter-agency competition works well in antitrust enforcement in the US, and conceivably one body can keep the other in check.

Cambodia has been criticized for corruption, and hopefully this law will mark a turning point.

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Yesterday I attended a conference on the Foreign Corrupt Practices Act, put on by the American Chamber of Commerce. If you engage in business in Cambodia and you’re not already familiar with the FCPA, you really should be. The law bans any corrupt payment to a foreign government official to obtain or retain business.

Though it’s an American law, it applies anywhere in the world to a shockingly broad range of companies and individuals. Of course US citizens and companies are subject to the law, but also any company listed on a US stock exchange. One lesson from yesterday was that if the corrupt payment is made in US dollars, even through a foreign bank, it likely was cleared through a US bank and therefore would be subject to the law.

If somehow you’re not subject to the FCPA, there are equivalent extra-territorial laws in many other countries, not to mention the recent Cambodian Anti-Corruption Law. The take-home message was that a foreign company or individual is most likely subject to such laws, and even if you’re not – bribery is a terrible risk to your business reputation.

A recurring issue at the conference was the question of facilitation payments. There seems to be an exception to the FCPA which allows for payments to facilitate or expedite performance of “routine governmental action”. This is a recognition that in certain countries such payments are standard practice, and if you do not pay them, absolutely nothing will get done. The line between acceptable facilitation payments and illegal bribes is a fine one, and you’ll often hear outright bribes described as “facilitation fees”. Don’t be tricked by funny language – if it smells rotten, it probably is. In general, a facilitation fee should be a relatively small amount, which almost everyone else is paying, and the government official who receives it should not have too much discretion over your matter. Also the payment cannot be giving you an advantage over your competitors. Obtaining government papers, routine licenses, phone service, and police protection are a few examples. But again, there’s a lot of gray area, and so it’s best to get an experienced lawyer’s advice if you’re unsure.

The conference was entitled “FCPA: Ignorance is No Excuse”, I would add that neither is “but-everyone-else-is-doing-it”. To date there have been no prosecutions in Cambodia, though there have been in Vietnam and Thailand. The Obama Department of Justice has made FCPA prosecutions a priority, with a number of high-profile investigations. It’s only a matter of time before an investigation hits Cambodia – don’t let it be you.

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The work of a handful of attorneys at BNG Legal, this blog's mission is to keep the world up-to-date on legal issues in the Kingdom of Cambodia.

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