While corruption is typically associated with dishonest and fraudulent conduct in the public sector or by those who wield power, the fact remains that private sector corruption is also very much a reality and a lesser-known offence to the public.
The Financial Crimes Commission Act 2023 (the “Act”), whilst being the subject of recent controversial debates – albeit for other reasons - has introduced the offence of “corruption in private entities”. In that respect, section 32 of the Act provides as follows:
“ (1) Any employee or member of a private entity who solicits, accepts or obtains from another person for himself or for any other person, a gratification for doing or abstaining from doing an act in the discharge of his functions or duties or in relation to the private entity’s affairs or business, or for having done or abstained from doing such act, shall commit an offence and shall, on conviction, be liable to a fine not exceeding 20 million rupees and to penal servitude for a term not exceeding 10 years” and
(2) Any person who gives or agrees to give or offers, a gratification to an employee or a member of a private entity for doing or abstaining from doing an act in the discharge of his functions or duties or in relation to the private entity’s affairs or business or for having done or abstained from doing such act, shall commit an offence and shall, on conviction, be liable to a fine not exceeding 20 million rupees and to penal servitude for a term not exceeding 10 years”.
A private entity, as defined in the Act, includes an association, a company, a foundation, a limited liability partnership, a partnership, a société, a trust or such other private entity as may be prescribed, incorporated or registered in Mauritius.
A member of a private entity is defined as a director, a shareholder or secretary of the private entity.
What has changed?
The offence is not entirely novel in Mauritian legislation inasmuch as the now-repealed Prevention of Corruption Act 2002 (“POCA”) had already included as an act of corruption the abuse of a private office for private gain and conspiracy to act in violation of a person’s duties in the private sector for profit or gain.
Section 16 of the POCA provided inter alia that: “Any agent who, without the consent of his principal, solicits, accepts or obtains from any other person for himself or for any other person, a gratification for doing or abstaining from doing an act in the execution of his functions or duties or in relation to his principal's affairs or business, or for having done or abstained from doing such act, shall commit an offence and shall, on conviction, be liable to penal servitude for a term not exceeding 10 years”
What has changed mainly is the legislator’s intention to now treat private sector corruption on a par with public sector corruption. The maximum fine of 20 million rupees and the maximum penal servitude of 10 years imposed by section 32 of the Act are no different to the sentences imposed by the Act for corruption involving public officials.
In addition, an employee will no longer be able to use as a defence that he acted with the consent of his employer. The mere fact that he solicits or accepts a gratification for doing an act in the discharge of his functions as an employee would be sufficient to constitute an offence. It is also important to note that the Act has enlarged the offence to include the criminal liability of office bearers of a company, such as directors, shareholders and company secretaries.
Given the severity of the offence, it is important to understand what could practically constitute that offence.
According to the Act, “gratification”:
- means a gift, a reward, a discount, a premium or any other advantage, whether pecuniary or non-pecuniary, other than lawful remuneration; and
- includes –
- a loan, fee or commission consisting of money or of any valuable security or of other property or interest in property of any description;
- the offer of an office, employment or other contract;
- the payment, release or discharge of a loan, obligation or other liability;
- the payment of inadequate consideration for goods or services;
- the offer or promise, whether conditional or unconditional, of a gratification; and
- any favour or service.
In practice, the above could include:
- employees or members of a private entity soliciting, accepting and obtaining bribes and kickbacks in the discharge of their functions in order to favour a third party, an example being a bank manager accepting an expensive gift to release the payment of or discharge a loan or an employee accepting payments to make certain procurement choices or to conduct certain specific business-related tasks;
- Excessive gifts and hospitality, such as travel or luxury items, being given to employees to influence their decision-making;
- Agents and intermediaries being paid fees and commissions beyond what could be considered as normal, for the purpose of altering business decisions, or bribes disguised as fees and commissions;
- A trade union representative and company management colluding and exchanging favours to the detriment of employees’ interests; or
- Employees soliciting and receiving bribes in exchange for confidential corporate information that could for example lead to insider trading.
The above list is non-exhaustive and demonstrates that there are many grey areas, where business practices may be legal but are at risk of being misused, such as gifts and hospitality. Some other business practices, such as kickbacks or small “donations”, may be so common that they are perceived as normal and are no longer questioned.
There have been very few prosecutions for the offence of corruption by private agents under the POCA and it remains to be seen whether this will change under the Financial Crimes Commission Act. This may be because corruption is generally perceived to be associated with public officials only. The latter are entrusted with power to serve public interest, whereas employees in the private sector are entrusted with power to serve legitimate company interests. Complaints against acts of corruption in the private sector are rare because they lack the element of public importance and interest. Moreover, they are usually dealt with behind closed doors through disciplinary action. Nevertheless, the offence is a real one with huge consequences for both the employee and the private entity. It would therefore be appropriate for private entities to adopt efficient anti-corruption and anti-bribery policies which would minimise the risk of potential prosecution.