by Steven Jacob, Foreign Associate
Looking at my list of potential blog topics, I found the issue of bribery remaining from a time before I began to focus primarily on tech-related issues. When I was in Laos we were very aware of this issue. As a foreign-invested endeavor, everything that might involve our home government–which would be in support of efforts to enforce contracts against the Laos government–was reliant on the fact that we weren’t found guilty of bribing local officials. They didn’t want to support an enterprise that was acting in violation of their own laws against corruption, let alone what might be on the books in the local country. It was vital, therefore, to understand the regulations regarding corruption, and specifically bribery, to avoid violating them and losing the support of our Western government.
The same is true in Vietnam. While European and American anti-corruption regulations apply to investors from those countries investing in foreign jurisdictions, local laws also apply. And violation of local laws is something that most Western governments frown upon. So understanding Vietnam’s anti-bribery laws is important to avoid doing something that might land you, as a foreign investor, in trouble. Especially American investors who are allowed an exception for facilitation payments by the FCPA, something that is not allowed under Vietnamese laws.
Any person who benefits from their position or authority who directly or indirectly benefits from any of payments given to them by a person or organization to do or not do something for the benefit or at the request of that person or organization is guilty of receiving a bribe. The list of what counts as payment includes money, property, other material benefits from 2 to 100 million VND or less than 2 million if the act was a repeated act of corruption, and non-material benefits.
It is important to note that this definition is not limited to public officials but also includes corporate officers and anyone else who might benefit from their position or authority.
If found guilty of receiving a bribe, the punishments are severe. For the violations listed above, the punishment is imprisonment from two to seven years, and that’s the base penalty. After that, the numbers only go up. Imprisonment from seven to 15 years applies for bribes that are organized, abuse position or authority, the bribe is from 100 to 500 million VND, causes damage from one to three billion VND, is the second offense, the bribe constitutes the property of the government, or involves harassment or coercion.
The punishment rises even further, from 15 to 20 years for bribes of from 500 million to one billion VND or bribes that cause from three to five billion VND worth of damage. And the ultimate punishment of from 20 years to life imprisonment, or the death penalty, for bribes above one billion VND or that cause damage of more than five billion VND. In addition, the perpetrator may be banned from office for from one to five years, fined from 30 to 100 million VND, and forced to forfeit some or all property.
The crime of giving bribes mirrors that of receiving bribes. Anyone who gives, or tries to give, a person in a position or with authority, or another person or organization, money, property, other material benefits from two to 100 million VND, or non-material benefits in order to cause the recipient to do or not do something for the benefit or at the request of the person giving the bribe, is guilty of bribery.
The penalties for giving bribes are somewhat different and do not include the death penalty. They range from fines of from 20 to 200 million VND, non-custodial imprisonment for up to three years, or imprisonment from six months to three years for minimal offenses. Beyond that, they ratchet up in similar steps to those for receiving bribes with a maximum penalty of up to 20 years imprisonment and 50 million VND fines.
Parties who are coerced to give a bribe and who report the bribe will not be deemed guilty of bribery and will have their money or property returned to them. Parties who are not coerced to give a bribe but who report the bribe before they are caught will be relieved of criminal liability and have some or all of their property returned.
Gifts are a potentially sticky subset of material benefits and are sometimes prohibited by law. A gift can be cash, ‘valuable papers’ (such as shares, bonds, certificate of deposits or promissory notes), goods, properties, tourism benefits, medical services, or education and training, among other things. Gifts to “staff, officials, and public officials” are prohibited if they meet the minimum criteria of giving and receiving bribes. They are also prohibited if the individual receiving the gift has power or authority over the activities of the gift giver and the gift is not otherwise justified by a clear and legitimate purpose.
There are some instances where gift-giving is allowed. Public officials may receive gifts if they are sick or on the occasion of a wedding, funeral, traditional ceremony or Lunar New Year and the value of the gift is less than 500,000 VND. Any gift in excess of 500,000 VND must be reported by a government official to his superiors. Non-public officials or staff may receive gifts unrelated to their duties without reporting them so long as they sign a receipt for the gift.
But what about corporations? While companies can be found guilty of some crimes, bribery is not one of them. Bribery applies only to individuals. If the company is deemed to have given a bribe they may be subject to administrative penalties. Sometimes a company will put in place mechanisms for monitoring corruption and to prevent bribes. In some countries, this is seen as a defense against being found guilty for the acts of one of their employees. There is no express provision similar to this in Vietnam. Such mechanisms can be used, however, as evidence submitted for the purposes of mitigating the severity of fines and may result in a less harsh administrative penalty for a corporation found guilty of bribery.
This does not excuse individual officers and managers of a company from criminal liability for giving a bribe, however. If the CEO of a company bribes a government official, that CEO may still be held criminally liable for the bribe. Nor does this require companies from monitoring the behavior of subsidiary corporations. Under Vietnamese law, a company is only responsible for its own corporate acts and its liability as a shareholder of a subsidiary does not extend liability beyond the potential loss of its capital contributed to that subsidiary.
Corruption, and specifically, bribery, is one of the few instances where foreign laws and local laws both apply to foreign investors acting in a given country. In Vietnam, the local laws are clear as to the penalties for violating their provisions. By giving a bribe, an investor not only becomes subject to the local penalty of imprisonment and fines but also largely forfeits any protection or support from his home government. Neither the United States nor the European Union is going to step in to pressure Vietnam’s government to go lightly on one of their citizens who is guilty of giving a bribe. Quite the contrary, they are likely to wait until he has served his punishment in Vietnam and then impose their own penalties on that citizen when he returns home. It’s a double whammy and getting caught giving a bribe in Vietnam has serious consequences for both parties involved. While it may be tempting to grease the wheels, the penalties are too real, don’t do it.