Anti-Corruption 2019 Comparisons

Last Updated December 14, 2018

Contributed By Barnea

Law and Practice

Authors



Barnea is one of Israel’s leading commercial law firms, which has earned an esteemed reputation for its extensive legal knowledge of international activities. The range of expertise extends to corporate law, M&A, infrastructure and project finance, litigation, capital markets, white-collar, technology, tax, internet, banking, employment, real estate and private clients. The firm regularly accompanies leading corporations and private clients in a broad range of criminal charges and before enforcement agencies in connection with investigations and administrative proceedings. Barnea’s practice helps clients, both corporate and individual, to manage every stage preventatively, before any rules have been breached. In addition, it provides legal services in the aftermath of a breach and resolves issues concerning insider trading, compliance, internal investigations (including recovery), criminal and corporate law proceedings, fraud and anti-corruption legislation, and anti-money-laundering legislation.

Israel is a party to the Organisation for Economic Co-operation and Development (OECD) Convention on Combating the Bribery of Foreign Public Officials in International Business Transactions (2008) and to the UN Convention Against Corruption (2009). Furthermore, Israel is an observer member of the Foreign Account Tax Compliance Act.

Israel has a robust set of laws against corruption and bribery, which are prosecuted as criminal offences in Israel, and has recently been increasing efforts to enforce against perceived infringements. For its increased efforts at enforcement, Israel was recognised in October 2018 by Transparency International as being in its highest category for enforcement against bribery offences.

Bribery: Statutory Sources and Maximum Sentences

The Penal Law, 1977 (the Penal Law) is the main statutory source of laws against bribery, breach of the public trust and corruption. The detailed offences and their corresponding maximum sentences are specified in Sections 284, 290 to 297 and 425. In addition, the Public Service Law (Gifts), 1979 (the Public Service Law (Gifts)) together with the Mandatory Tenders Law, 1992 (the Mandatory Tenders Law) and the Political Parties Financing Law, 1973 (the Political Parties Financing Law) frame the broader scope of rules designed to address bribery and corruption by assuring transparency, equality and safeguarding the public interest through administrative and civil laws.

This information is not available.

There are two Knesset Bills that have been published in recent years that focus on anti-corruption legislation. One was published in 2014 and was intended to remove the discretion the court has in Section 297 of the Penal Law and make it obligatory for the proceeds of a bribery crime to be subject to confiscation proceedings. The second was published in 2014 as well, entitled Corporate Criminal Liability (Amendment – Corporations Criminal Liability), and sought to impose a legal obligation of supervision and control upon legal entities to prevent any criminal activity of the company and the associated parties. The bill puts great weight on the requirement to prevent any form of corruption, bribery, money laundering, securities fraud, etc. This bill is similar to the change made in UK law that criminalises a "failure to prevent", which was made as a result of difficulties in securing corporate convictions because of the need to prove the criminal intent of the company. The new Israeli bill asks to enact a presumption of negligence that shifts the burden of proof to the defendant, to rebut the presumption by proving the existence of proper compliance procedures, monitoring and active measures of prevention in the ordinary line of business. The bill has not become a law yet.

There is no direct definition of bribery in the Law; however, Section 293 of the Law instructs that a bribe could be given in various ways:

  • whether it was money, money equivalent, service or other benefit;
  • whether it was in favour of committing or for delaying or expediting, or for cessation, or for the purpose of discriminating;
  • whether it was in favour of a particular action or to cause bias;
  • whether it was in favour of an act of the offender himself or of his influence on the act of another person;
  • whether it was given by the grantor or by another person, whether it is given to the person who took it or to another person for the person who took it, whether ex post facto or retrospectively, and whether the beneficiary of the bribe was the receiver or another person;
  • whether the duty of the grantee was of power or of service, whether fixed or temporary or general or for a specific matter, whether he was paid or unpaid, whether voluntarily or in compliance; and
  • whether it was taken to deviate from the line in carrying out his duties or for an action that the public employee had to perform according to his position.

In addition, Sections 290-1 of the Law instruct that a bribe is taken or given to a public servant for an action that relates to the public servant's duties. Therefore, a bribe cannot be granted to a person who is not performing in a public capacity.

The definition of a public servant is found at Section 34(24) of the Law, as follows:

  • a government employee, including a soldier as defined in the Military Jurisdiction Law, 5715-1955;
  • a local authority or local education authority employee;
  • a religious council employee;
  • a National Insurance Institute employee;
  • a Bank of Israel employee;
  • an employee of the World Zionist Organization, The Jewish Agency for the Land of Israel, Keren Kayemet L’Israel, Keren Hayesod – The United Israel Appeal, including a committee member, or member of management in these institutions;
  • a Job Centre employee;
  • an employee in a factory, institute, fund or other body where the government has a management share, including a committee member or manager in these entities;
  • an arbitrator;
  • an office holder by virtue of statute, appointment, whether elected or by agreement, even if falling outside any of the categories above; and
  • a government-appointed director in a government company, a government subsidiary or a mixed company, as defined in the Government Corporations Law, 5735-1975, and an employee or contractor to such a company.

This definition is expanded in Section 290(a), for that specific Section, to include "an employee of a corporation providing a service to the public".

The granting and receipt of bribes is prohibited under Sections 290 and 291. The receipt of bribes attracts ten years' imprisonment or a fine, in the sum that is the higher of the detailed sums in Section 290(a) (for an individual ILS1,130,000 and for a corporation ILS2,260,000, or four times the benefit received through the bribe). The granting of bribes attracts seven years' imprisonment or a fine as detailed in Section 290(a) (as described above for the receipt of a bribe).

Bribing a foreign public official is prohibited under Section 291A, but before a prosecution can be brought under that Section, the written approval of the Attorney General must be obtained. Moreover, the Attorney General produced its own protocol on Section 291A of the Law for Public Servants, namely The Attorney General’s Protocol 4.1110: 'The prohibition on bribing a foreign public official – Section 291a of the Criminal Penalties Law'. The protocol initially states that in recent years there is an increasing need to address and fight the global phenomenon of corruption and bribery in international transactions; establishing criminal prohibitions on bribing foreign public officials and assuring effective enforcement are an essential layer in the fight for creating a corruption-free international environment.

In Section 291A, a "foreign public servant" is any of the following:

  • a foreign state employee and any person who holds a public office or performs a public function on behalf of a foreign state, including a person who holds an office or serves in the legislative, executive or judicial branches of a foreign state, whether by choice, appointment or agreement;
  • a public office holder or public office holder on behalf of a public body established under the enactment of a foreign State or of an entity directly or indirectly controlled by a foreign State;
  • an employee of an international public organisation and any person who holds a public office or performs a public function on behalf of such an organisation; for this purpose, "international public organisation" means an organisation founded by two or more States or by organisations founded by two or more States.

Israel views the enforcement of Section 291A with great significance, which is reflected in the Attorney General’s Protocol 4.1110, emphasising that when considering to indict for bribing a foreign official, the prosecution shall not consider national financial interests of the State of Israel nor potential influence on Israel's relations with any foreign country. 

Bribery in relation to a sporting event, or other event that attracts public interest, is prohibited under Section 292 of the Law and the giver and recipient of the bribe can be imprisoned for up to three years.

Section 294 of the Law states explicitly that an offer, promise, or attempt to pay or receive a bribe is punishable in the same way as if the bribe had been given and received, and the Section also applies the Law to anyone who is a candidate for public office, even if they have not yet been selected or begun to fulfil his duties.

Under Section 297 of the Penal Law, the court has discretion to seize the proceeds of the crime and may require the payer of the bribe to transfer to the State the value of the benefit derived from the bribe.

In addition, under Section 2 of the Prohibition on Money Laundering Law, 2000 (the Money Laundering Law), each of the above offences of bribery will constitute a 'core' offence under the Money Laundering Law, such that the property gained from the bribe becomes ‘prohibited’ and any transaction made with those funds also becomes a money laundering offence. The Prosecutor’s Instructions encourages an assessment of whether money laundering crimes have also been committed and can be prosecuted.

There is no offence of bribery in Israel as between two private individuals who have no connection to public office or public employment.

Influence-peddling, or, in other words, brokering a bribe, is an offence under Section 295; this is defined as "receiving money, or money’s worth, or any other in order to offer a bribe or motivate a public official to discriminate or act with bias". This also attracts ten years' imprisonment or a fine, in the sum that is the higher of the detailed sums in Section 290(a) above.

See above, 1.2.1 Bribery.

Unlawful Donations

As a derivative to bribery, the Israeli law criminalises certain political donations and undue attempts to influence public servants and representatives by facilitating money to promote certain ends and affairs.

Under Sections 24A(d)(3)(a)-(f) and 28D of the Political Parties Law, political parties and political candidates may not accept:

  • donations from people who do not have the right to vote in Israel, or from any corporation, in Israel or abroad;
  • a contribution from a minor;
  • anonymous donations; or
  • a contribution in money notes of a value exceeding ILS200.

Any person who facilitates a donation in violation of the prohibitions of this Law is subject to six months' imprisonment or a fine up to ILS29,200 (Section 61(a)(2) of the Penal Law).

Any candidate who receives a donation in violation of the prohibitions of this Law is subject to three years' imprisonment or a fine up to ILS226,000 (Section 61(a)(4) of the Penalties Law 1977).

Section 28(a)(8) of the Political Parties Law, 1992 prohibits any person from giving or offering a bribe for the purpose of influencing a voter to vote or abstain from voting. A violation of the Section may constitute one year's imprisonment.

Under Section 8(7) of the Political Parties Financing Law, 1973, a contribution received in contravention of Section 8 or in an amount exceeding the maximum permitted amount prescribed in the Political Parties Law, 1973 is prohibited. This contribution shall be refunded and, if possible, through the State Comptroller.

Under Section 9A(3)-(4) to the Political Parties Financing Law, 1973, any person who receives or contributes a donation in violation of the provisions of this Law is subject to one year's imprisonment.

Section 295(b1) of the Penal Law states that any person who has significant influence on the election of a candidate for Prime Minister, Minister, Deputy Minister, Knesset member or head of a local authority (in this subsection, a candidate) who receives money, money's worth, service or other benefit to motivate, by himself or by others, a candidate to perform an act with regards to his position is subject to three years' imprisonment; any person who received as aforesaid to motivate a candidate for favouritism or discrimination shall be deemed to have taken a bribe.

Public Tenders

Under Section 2(a) of the Mandatory Tenders Law, 1992, the State, any governmental entity, religious council, public health insurance services provider or any institution of higher education may not contract for purchasing any property, or for the performance of any service by any provider, before conducting a public tender giving any person an equal opportunity to participate in it.

Any attempt to influence the outcome of a public tender by way of gifts or other benefits to the principals of the tendering entity is considered unlawful, as it infringes on the principles of transparency, equality and fair opportunity.

Furthermore, in certain cases, it may even constitute an attempt to offer an undue benefit or bribe. Remedies in civil or administrative procedures may be voiding the contract, fines or monetary compensation.

If bribery is used to influence a tender, criminal penalties may apply subject to the same penalties detailed for offences under Chapter 9, Articles 4-5, of the Penal Law.

Embezzlement, Fraud, Breach of Fiduciary Duty, Breach of the Public Trust: Statutory Sources

Exploiting a public sector position for a personal interest is prohibited under Section 278 of the Penal Law, which relates to a public sector employee who exploits his position of administrative authority over factories, or business, and abuses his position to derive a personal benefit from them, whether directly or indirectly. This offence carries a maximum sentence of three years' imprisonment.

Falsifying the content of a report or notice by a public sector employee, where the document falls within the ambit of his role and is used for access to money or goods, is prohibited under Section 279 of the Penal Law; where a material piece of information is knowingly falsified by the employee, this carries a maximum sentence of three years' imprisonment.

Under Section 281 of the Penal Law, a public sector employee is prohibited from issuing documents for which he is responsible, in which he knowingly falsifies a material piece of information, where the document may have an influence on the rights or entitlements of other persons. The maximum penalty is five years' imprisonment.

Section 284 of the Penal Law prohibits a public sector employee from "committing a fraudulent act or a breach of fiduciary duty which damages the public, even where the act would not be an offence if done to a private person". The maximum penalty is three years' imprisonment.

Section 415 of the Penal Law prohibits fraudulent receipt and is not restricted to public sector employees and applies to all: "Any person receiving an asset under fraudulent pretences, the sentence is three years; if the offence was committed in an egregious fashion, the sentence is five years."

Sections 418 to 421 of the Penal Law deal with offences connected to forgery of documents. The basic offence is found in Section 418 and carries a sentence of one, three, or five years depending on the way the offence was committed. Section 420 applies the same penalties to someone who knowingly uses a forged document.

Section 421 of the Penal Law prohibits a public sector employee from forging a document over which he has control or for which he is responsible, or has access to. The basic offence carries a sentence of three years' imprisonment. If he forged the document with the intention of receiving something, the sentence is five years and if he in fact received an asset on the basis of the forged document, the sentence is seven years’ imprisonment. In each case the prison sentence can be in addition to or without a fine. 

Section 422 of the Penal Law prohibits inciting another to sign or create a document falsely, or to destroy a document. The penalty is the same as for the main offence.

Section 423 relates to the creation of false entries in the books of a corporation, by a founder, executive, member or official, whether by act or omission; where this was done with the intention to mislead, the penalty is five years' imprisonment.

Prohibitions and Limitations on Gifts to Public Servants

The Public Service Law (Gifts)

Under the Public Service Law (Gifts), a public sector employee is required to report any gift he receives in accordance with the procedures laid down in regulations. The Law provides at Section 2 that public sector employees may not take ownership of gifts received during the time of their employment if the items have some value to the State that goes beyond their economic value, or if their acquisition by the employee would pose an ethical conflict. If acquisition by the employee is approved, it is based upon payment being made to the State Treasury. This obligation does not apply to a gift of relatively low economic value that was reasonable and customary in the specific circumstances, or a gift received from fellow employees, or a prize that the public servant was awarded.

Under Section 3(b) of the Law, an intentional breach of these requirements will attract a fine of three times the value of the gift, either as at the date the gift was received or as at the date of conviction, whichever is higher.

The Public Service Regulations (Gifts), 1980

Section 1 and Section 7 of the Public Service Regulations (Gifts) defines the conditions under which a permit to accept a gift can be granted to a public servant. Unless public servants are given a permit, they may not keep any gift.

A permit can be for types of gifts or for a specific gift and can be given in advance or immediately after receipt of the gift.

If public servants breach the instructions under the regulations, they can be fined upon a decision of the General Administrator (from the Ministry of Justice). 

The State Service Rules (last updated 28 August 2018)

Section 42.7 of The State Service Regulations entails provisions on awards, gifts and benefits, according to which public servants must refuse to accept any gift that may be viewed as a benefit likely to have an influence on the fulfilment of their duties. Public servants may not indirectly receive any gift that they are not permitted to receive directly. According to Section 42.724, this provision applies similarly to the public servant’s relatives.

Under Section 42.761 (a), civil servants must enquire with the Committee whether the gift received is small and reasonable, and was given as customary under the circumstances.

All rules described above for gifts in the public sector also apply to employees, officers or agents in statutory corporations and governmental companies.

With respect to the appearance of a public servant or employee at an event, the Attorney General Instructions provide that public servants or employees may attend a special event as a guest of honour, if such an event is related to their position and provided that it is not likely to affect or be considered as potentially affecting their judgment.

This information is not available.

The Penal Law applies to Israeli residents and non-Israeli residents, including companies, where it can be shown that they engaged in an act that took place within the territory of the State of Israel or was intended to be committed in Israel. Specifically, the offence needs to be (i) one committed wholly or in part in the territory of Israel, or (ii) a preparatory act, an attempt, inciting another, or conspiracy to commit the offence, carried out outside the territory of Israel, provided the offence, in whole or in part, was intended to be committed in the territory of Israel.

The Penal Law could also apply, in special circumstances that are described under Sections 13-7 of the Penal Law, to acts that were not intended to be committed in the territory of the State of Israel ("extra-territorial offence"). For example, when the offence is committed against the State of Israel or against the Jewish people; or when the offence is perpetrated against or by Israeli citizens or residents.

In most cases of extra-territorial offences, there is a precondition of dual criminality (ie, the act constitutes an offence in the State where it was committed as well as in Israel). However, in the case of bribery of a foreign public official, there is no requirement of dual criminality and such an act will constitute an offence in Israel even if it is not an offence where committed. 

Both individuals and corporations can be prosecuted for bribery or the breach of the public trust. Under Section 23 of the Penal Law, a corporation can be subject to strict liability offences and crimes requiring mens rea, where the intention is imputed to the guiding mind of the corporation; eg, the chief executive or the person in charge of the relevant function.

The Limitation Period Law, 1958 provides that the limitation period, for an offence where the statutory prison sentence exceeds three years, is ten years. Because the bribery and breach of trust by a public or corporate official offences under Sections 290 to 297 and 284 of the Penal Law all attract three years or more of imprisonment on a finding of guilt, the limitation period for these offences will be ten years.

However, under The Statute of Limitations, there are certain circumstances in which this period is 'frozen'. For example, during the time that the alleged offender is in a country where the legal proceedings could not have taken place due to the international relations between Israel and this country or due to the conditions the alleged offender was under.

In addition, under Section 9(c) of the Criminal Procedure Law, 1982, where an investigation has been conducted, or an indictment has been filed, or if a proceeding has been conducted on behalf of the court, the count of the limitation period shall begin from the date of the last proceeding with an investigation or from the date of filing the indictment or from the date of the last proceeding in court, according to the latest.

Israeli law does not entail special criminal defences for bribery, embezzlement, breach of public trust, etc. The general Penal Law defences apply as to all other offences.

However, Section 6 of the Money Laundering Law provides that a person who reports to the police before or just after commencing an act in forbidden funds that are the fruits of an offence shall not be guilty of money laundering.

See above, 2.1 Defences.

See above, 2.1 Defences.

See above, 2.1 Defences.

See above, 2.1 Defences.

The most recent developments in the sentencing in cases of corruption and bribery are described in the State Prosecutor’s Instructions, instruction No 9.15, titled ‘Sentencing Policy for Bribery Offences’ (The State Prosecutor’s Instructions). The instructions note that sentencing policy has become stricter, in response to amendments to the Penal Law that elevated the maximum imprisonment time for the receipt or bribes from seven to ten years, and for the granting of bribes from 3½ years to seven years. In addition, the fines for these offences were heightened. Accordingly, the courts in Israel have also demonstrated a stricter approach towards the receipt and granting of bribes in recent cases. In Criminal Case 16512-08-17 the State of Israel v Godovski (published on 27 June 2018), the court sentenced the defendant, a former officer in the Israel Beytenu party, to seven years' imprisonment for, amongst other charges, the receipt of bribes based on Section 290 of the Penal Law.

Additionally, the statutory fine under Section 290(a) can be imposed even where the bribe did not change hands. The current level of fines is intended to be an effective deterrent and to reduce the economic attractiveness of bribery.

Section 284 of the Penal Law states that a public servant who commits an act of fraud or breach of the public trust shall be imprisoned for three years. The courts have demonstrated a strict sentencing approach here as well, as can be seen in numerous judgments, such as in Criminal Appeal 8080/12 The State of Israel v Olmert (published on 28 September 2016). The defendant, former Prime Minister of Israel Ehud Olmert, was indicted and convicted of fraud and breach of the public trust for receiving envelopes of cash money from a private businessman for the purpose of promoting his private business affairs, while in office as the Minister of Commerce. The Israel Supreme Court added eight months' imprisonment to the six months' imprisonment imposed by the District Court.

See above, 3.1 Penalties on Conviction.

The Ministry of National Defence requires certain corporations to have an anti-corruption compliance programme in place, as a precondition for the execution of export or import licences (the General Principal of the Ministry of Defence message to the public regarding the Convention for the Prevention of Bribery of Foreign Officials, dated 27 April 2017). Accordingly, the Ministry of Economy encourages corporations, entrepreneurs, exporters and importers to implement a Business Code of Ethics and monitoring and compliance programmes within their business, designed to spot and prevent any unlawful conduct involving bribery or the like of (http://economy.gov.il/InternationalAffairs/TradePolicyAndAgreements/OECD/NCP/Pages/Preventingbriberyandcorruption.aspx).

In the framework of the prevention of money laundering legislation, financial institutions are required under regulations issued pursuant to Section 8B of the Money Laundering Law to have in place robust 'Know Your Client' policies and to report any suspicious activity to the Israeli Anti-Money Laundering and Terror Funding Prevention Authority.

Credit for Co-operation and Compliance

In The Tel Aviv District Prosecution (Fiscal and Financial Department) v NIP Global Ltd (Criminal Case 57177-11-16‏), the court took into consideration at the sentencing stage the existence of a compliance programme on bribery and prevention of corruption that the defendant company had in place and the defendant's co-operation with the foreign authorities' investigation. These two factors served as mitigating circumstances in the sentence.

However, there is no official 'Credits Plan' yet in Israel designed to encourage compliance and prevention efforts in these fields, by way of providing 'credit points' to a defendant charged with the offences discussed in this chapter. 

See above, 4.1 National Legislation and Duties to Prevent Corruption.

The Employee Protection Law (Reporting crimes and damage to proper conduct and competent management), 1997 (Employee Protection Law) provides at Section 2(a) that an employee cannot be fired for making a complaint against his employer or a fellow employee. Section 2(b) prohibits an employer from victimising an employee for having made such a complaint; eg, by worsening his work environment.

Section 8 of the Employee Protection Law states that for the purpose of this law, the State is to be treated like any other employer. Section 5(A1)(2) provides that the Officer for Complaints from the Public can award special compensation to the employee under Section 45C(b) of the State Comptroller Law, 5718-1958.

The effect of this is that if an employee of a public sector employer whistle-blows on, for example, suspected bribery-related offences, he cannot be maltreated as a result and if he is, he can seek remedies from the Office for Complaints from the Public.

Under Section 45C of the State Comptroller Law, the Complaints Office can issue an order reinstating a public sector employee removed illegally, or can award them special damages, or can give the employee other entitlements, or transfer him to a different position within his employer.

Under Section 45F, an employer must prominently display a summary of the provisions under Section 45A to G of the State Comptroller Law for the benefit of employees so that they are aware of their recourse against any unfair termination or victimisation on the basis of their whistle-blowing.

This information is not available.

See above, 4.1 National Legislation and Duties to Prevent Corruption.

The offences described in this chapter are criminally prosecuted by the State Prosecution. Nevertheless, in the case of the Mandatory Tenders Law and the prohibitions on gifts to public servants, there are certain administrative and civil enforcement tools.

As described above, an attempt to influence the outcome of a public tender by way of gifts or other benefits to the principals of the tendering entity is considered unlawful and may raise a civil or administrative claim against the tender holder and the winner thereof. Damages and voidance of the contract are the main available remedies in such claims.

In addition, disciplinary procedures are used against public employees in the proper cases to address improper receipt of gifts. 

The Lahav 433 Police Unit was established in 2008 to take the lead on white-collar crime investigations in Israel (focusing mainly on fraud, bribery, breach of the public trust and anti-money laundering). Usually, a prosecutor from the State Attorney’s office will be involved in the investigation. Where a case involves a suspected money laundering offence, input can also be provided by IMPA, the Israeli authority for combating the finance of terror and money laundering. Once the investigation is complete, the police will recommend whether to file charges. The recommendation will be considered by the State Prosecution, which will decide whether to file an indictment.

In addition, the Attorney General has produced his own protocol on Section 291A of the Law for civil servants: The Attorney General’s Protocol 4.1110, which states that in recent years there has been an increasing need to heighten the enforcement against corruption and bribery in international transactions. Therefore, the Attorney General instructs that greater co-operation with foreign enforcement authorities must be accomplished and requires the Attorney General's prosecutors to make efforts to achieve that goal.

This information is not available.

This information is not available.

This information is not available.

Recent Cases That Have Reached Final Judgments

The Tel Aviv District Prosecution (Fiscal and Financial Department) v NIP Global Ltd (Criminal Case 57177-11-16)

This was the first indictment to be brought by the Israeli prosecution for bribing authorities abroad for the purpose of promoting business interests. NIP Global Ltd was charged with promoting its business in Lesotho by paying a bribe of over USD500,000. In this case, under Section 291A, the district attorney notified the court that it had reached a plea bargain with the company, which admitted the charges and the prosecution sought a ILS4.5 million proceeds of the crime confiscation order and a fine, as well as additional penalties. The company undertook to revise its internal policies and procedures to prevent future cases of corruption and bribery. The magistrate court approved the bargain while noting that the fine and confiscation order were substantially lower than the value of the ill-gotten gains and accepted the plea agreement because this was the first indictment of this offence in Israel. The court noted that in the future, penalties will increase gradually until they reach the appropriate sentencing range.

The State of Israel v Siemens Israel Ltd and others (Criminal Case 4368-05-16)

The Tel Aviv District Court convicted five former senior employees of the Israel Electric Company (IEC) who pled guilty to taking millions of shekels of bribes from the German engineering company Siemens. The five were convicted of taking bribes, fraud, breach of trust and money laundering, and were sentenced to terms ranging from 28 to 49 months in a plea agreement. Siemens admitted to giving bribes to ensure the engineering company would win IEC tenders to supply turbines. Siemens agreed to pay the Israeli State treasury ILS160 million and to have its business in Israel monitored. The five convicted included an IEC senior deputy director general, a former senior deputy CEO and a former engineering and planning department director. The court said the case highlighted “a culture of deep corruption that permeated the electricity company at the highest levels... decisions concerning tenders worth hundreds of millions of dollars, which have significant public and social implications, were received in the shadow of large bribes paid by Siemens systematically to senior IEC officials.”

The State of Israel v Olmert (Criminal Appeal 8080/12)

The defendant, former Prime Minister of Israel Ehud Olmert, was indicted and convicted of fraud and breach of the public trust for receiving envelopes of cash money from a private businessman for the purpose of promoting his private business affairs, while in office as the Minister of Commerce. The Court determined that the offence was committed under aggravating circumstances: the persistence of false reports regarding the receipt of the money over several years; Olmert's senior status when he committed the offence; and other circumstances surrounding his conduct when receiving, holding and hiding the money. The Israel Supreme Court increased the sentence by adding eight months' imprisonment to the six months' imprisonment imposed by the District Court.

Yona Yehiel Metzger v The State of Israel (Criminal Appeal 2021/17)

Rabbi Metzger was convicted of bribery taken while he was The Official State Rabbi, after reaching a plea agreement. As part of the deal, he was sentenced to 3½ years in prison, the charges against him were reduced and he was required to pay ILS5 million, including confiscation of a Jerusalem apartment, a fine and back taxes. The evidence that strengthened the case was a single person who turned state witness to testify against Metzger. The State sought a lengthy prison term and heavy fine because Metzger had served in “such a senior position and was to have served as an example to many,” but instead had “used his position and high status to put money into his own pocket.”

The State of Israel v MK Tzachi Hanegbi (Criminal Case 4065/06)

Minister Tzachi Hanegbi was indicted for criminal charges of fraud and breach of the public trust, election bribery, providing false evidence and lying under oath, all relating to a political appointments scandal at the time he was Minister of the Environment. In July 2010, the Jerusalem Magistrate's Court acquitted Hanegbi on the election bribery, fraud and breach of trust charges. He was, however, found guilty of perjury, as he provided false information in a signed affidavit submitted to the chairman of the Central Election Committee and subsequently lied to the Election Committee. The penalty for perjury is three years' imprisonment; however, in November 2010, the Jerusalem court fined Hanegbi ILS10,000 and added moral turpitude to the list of offences.

The State of Israel v Zaken (Criminal Case 10291-01-12)

Former Prime Minister Ehud Olmert's former personal assistant, Shula Zaken, was sentenced to 11 months in prison after being convicted of money laundering and taking ILS150,000 and gifts as a bribe from state witness Shmuel Dechner in the Holyland real estate project (the accusations were of bribes given for the purpose of obtaining building licences for a major luxurious project). Zaken gave the prosecution recordings that led the police to a new investigation into former Prime Minister Olmert as part of a plea agreement. Zaken served approximately six months of her sentence after her early release was approved by Israel's Prison Service.

The State of Israel v MK Binyamin (Fu'ad) Ben-Eliezer (Criminal Case 0000-12-15)

In December 2015, former Minister of Defence Binyamin Ben-Eliezer was indicted on charges of bribery, money laundering, fraud and breach of trust, and tax violations. Ben-Eliezer died in August 2016 so the matter could not proceed to trial. Regarding the bribery charges, Ben-Eliezer allegedly received a 'loan' in the amount of USD400,000, in return for allegedly promoting the interests of Shemen Oil and Gas Resources Ltd. This relates to Ben-Eliezer, as Minister of Industry and Trade, pressuring the Israeli Petroleum Council to promote Shemen's chances of receiving a drilling permit for a particular site. There are also allegations that Ben-Eliezer pressured a person to give him between ILS1.2 million and ILS1.3 million towards purchasing a luxury apartment.

Current Investigations That Have Not Yet Reached the Courts

A Local Bus Company

According to publications in the media, four members of the family that owns the bus company and a senior official in the Transportation Ministry were arrested and questioned in October 2018 for alleged acts of bribery concerning preferential treatment in the allocation of franchises over profitable bus routes. Those arrested are accused of bribery, receiving illicit gifts, fraud and breach of trust. It is alleged that the official in the Transportation Ministry received benefits from the owners of the bus company, including personal loans, in return for helping the company to obtain the rights to run their buses on lucrative routes.

A Major Construction and Infrastructure Company

According to publications in the media, police are investigating possible corruption in one of Israel's largest construction and infrastructure companies. The company is responsible for projects around the world and has allegedly paid bribes to African officials and representatives of foreign governments to obtain construction contracts worth hundreds of millions of dollars. A number of senior officers and shareholders in the company have been questioned under oath.

See above, 5.1 Enforcement of Anti-bribery and Anti-corruption Laws and 5.6 Recent Landmark Investigations or Decisions Involving Bribery or Corruption.

In June 2015 the OECD published a report on implementing the OECD anti-bribery convention in Israel, which stated some concerns with the limited investigative steps taken in Israel’s foreign bribery cases. It also noted the insufficient level of foreign bribery enforcement in Israel, with no prosecutions in the seven years since the legislation of Section 291A – bribery of a foreign official (the report was published before the conviction of NIP Global Ltd as described in 5.3 Recent Landmark Investigations or Decisions Involving Bribery or Corruption).

The report 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 further noted positive developments. Israel’s foreign bribery offence is compliant with the Convention. With respect to the sanctioning regime, 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.

Generally, Israel has been active in encouraging its companies to adopt anti-corruption compliance programmes and in raising public and private sector awareness of foreign bribery. Israel’s whistle-blowing regime has also significantly improved, through further efforts made to encourage this form of reporting.

In the last decade, Israel has had a sound policy of fighting public corruption through prosecution and conviction of the most senior public officials in various cases, with a robust approach towards indicting for bribery, anti-money laundering and breach of the public trust in general. Moreover, during these very recent days, with the conviction of NIP Global Ltd and the investigation of the major construction and infrastructure company, there has been a clear and sound message from the enforcement agencies and the courts as to the heightened enforcement efforts and zero tolerance towards corruption in the business sector within the State and abroad.

See above, 6.1 Assessment of the Applicable Enforced Legislation.

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Law and Practice in Israel

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Barnea is one of Israel’s leading commercial law firms, which has earned an esteemed reputation for its extensive legal knowledge of international activities. The range of expertise extends to corporate law, M&A, infrastructure and project finance, litigation, capital markets, white-collar, technology, tax, internet, banking, employment, real estate and private clients. The firm regularly accompanies leading corporations and private clients in a broad range of criminal charges and before enforcement agencies in connection with investigations and administrative proceedings. Barnea’s practice helps clients, both corporate and individual, to manage every stage preventatively, before any rules have been breached. In addition, it provides legal services in the aftermath of a breach and resolves issues concerning insider trading, compliance, internal investigations (including recovery), criminal and corporate law proceedings, fraud and anti-corruption legislation, and anti-money-laundering legislation.