Despite positive developments in its anti-corruption investigative activity, Israel still has a long way to go when it comes to combating the bribery of foreign public officials involving Israeli companies and individuals, according to the Organization for Economic Cooperation and Development.
The Phase 3 report on Israel by the OECD Working Group on Bribery, released June 24, evaluates and makes recommendations on Israel’s implementation and enforcement of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and related instruments. The report considers country-specific issues arising from changes in Israel’s legislative and institutional framework, as well as progress made since Israel’s Phase 2 evaluation in 2009.
The Working Group said it is “seriously concerned by the limited investigative steps taken in Israel’s foreign bribery cases.” The report also pointed to the “insufficient level of foreign bribery enforcement in Israel, with no prosecutions in the seven years since the entry force of Israel’s foreign bribery offense.”
The OECD said it is “encouraged,” however, by Israeli authorities’ recent efforts to pursue foreign bribery more vigorously “and will pay close attention to how these efforts develop over the coming months.” Out of 14 foreign bribery allegations, four are the subject of a formal investigation—three of which were opened in the past six months—and four other allegations are the subject of ongoing preliminary examinations.
To improve Israel's fight against foreign bribery, the Working Group recommended that Israel “take all necessary steps to ensure that all foreign bribery allegations are thoroughly assessed and investigated, with a view to progressing cases to prosecution," the report stated. "Investigators should take advantage of the broad range of investigative tools available and seek mutual legal assistance more proactively in foreign bribery cases."
“Corporate liability should also be fully considered and investigated where appropriate,” the report stated. “To this end, the existing prosecution policies that emphasize consideration of legal person liability are encouraging.”
The OECD did note some positive elements in its review of Israel. For example, “the establishment of an Inter-Ministerial Team on foreign bribery is an encouraging step, which could contribute to increased enforcement,” the OECD stated.
Additionally, sanctions have been increased for foreign bribery, and confiscation has also been enhanced through the establishment of the confiscation forum within the State Attorney’s Office and a special forfeiture unit under the Ministry of Justice.
The OECD also praised Israel for actively encouraging Israeli companies to adopt anti-corruption compliance programs, and in raising public- and private-sector awareness of foreign bribery. More work could be achieved, however, by target accountants and auditors, as well as companies operating in high-risk sectors, the report stated.
On the positive side, however, Israel now explicitly prohibits the tax deductibility of bribes, the OECD said. Israel’s whistleblowing regime also has seen significant improvements, “though further efforts could be made to encourage this form of reporting,” the report stated.
The Working Group made a range of other recommendations, including that Israel should increase foreign bribery training and guidance for law enforcement authorities; enhance detection capacities by encouraging whistleblowing, and improving training and awareness of actors involved in the detection of foreign bribery; and continue raising awareness of foreign bribery, particularly amongst companies operating in high-risk industries.
Israel will submit a written follow-up report within one year on progress made in implementing certain recommendations and progress on its foreign bribery enforcement actions. Israel further will submit a written report within two years on steps it has taken to implement all of the recommendations and its enforcement efforts.