Government Contracts: A Recipe for Corruption

Strengthening Regulations on Government Contracts

A recent amendment to the Omani Penal Code has introduced stricter regulations on government contracts, aiming to curb corruption and ensure transparency in public procurement processes.

According to Article 221 of the Penal Code, any individual who commits fraud in the performance of a government contract shall face imprisonment for three to five years. The code also makes restitution a legal obligation, requiring the offender to compensate the government entity for losses incurred as a result of the offense.

Combating Bribery

Corruption is a pervasive issue that can have far-reaching consequences, including the concentration of funds within organized crime and the undermining of legitimate businesses. In Oman, the new Penal Code has introduced anti-corruption provisions, criminalizing:

• The seeking and acceptance of bribes by public officials
• The offering of bribes

Consequences for Companies

In addition to individual liability, the Omani Penal Code also imposes corporate liability provisions, allowing companies to be held criminally liable for offenses committed by their representatives or agents. This means that companies can face:

• Fines
• Dissolution if found guilty of corruption

To mitigate this risk, it is essential for companies to:

• Conduct due diligence on external representatives and sub-contractors
• Extend compliance policies beyond employees to cover all parties involved in business operations

Focus on Transnational Organized Crime

The new Penal Code also includes a dedicated chapter on transnational organized crime, aiming to prevent the establishment of criminal groups in Oman. According to Article 146, an organized criminal group is defined as a group of at least three participants, and participation or assistance with regard to such activities can result in severe criminal penalties.

Significance for International Business

As international businesses operate in Oman, it is crucial to understand the risks associated with transnational organized crime. To prevent corporate crime and maintain a reputation for transparency and integrity:

• Implement proper compliance policies
• Conduct regular audits
• Extend compliance obligations to contracting parties

With the new Penal Code in place, it is an opportune time for businesses operating in Oman to:

• Review and update their compliance policies
• Conduct training sessions
• Review third-party agreements to prevent and detect any financial crime or non-compliance related issues.