Financial Crime World

Title: Croatia’s Sanctions for Foreign Bribery: Effectiveness and Deterrence

Overview

The Croatian government’s capability to impose effective, proportional, and dissuasive sanctions against natural and legal persons for foreign bribery is under evaluation by the Organization for Economic Cooperation and Development (OECD). This assessment forms part of the third Accession Criterion, which evaluates the framework for fighting foreign bribery.

OECD’s Expectations

According to Convention Article 3 of the OECD Anti-Bribery Convention, effective, proportionate, and dissuasive criminal penalties must be imposed on natural persons, with imprisonment being a comparative option. Legal persons, when criminal responsibility is not enforceable, should be subject to non-criminal sanctions with comparable effect. seizure and confiscation or monetary sanctions aimed at property corresponding to proceeds of bribery are also necessary provisions.

Evaluation of Sanctions

Sanctions under OECD Standards

The OECD Working Group on Bribery assesses countries based on these standards concerning foreign bribery sanctions. They inspect both the legal framework for sanctions and practical enforcement.

Natural Persons

Natural persons in Croatia can face:

  • Imprisonment for one to eight years for bribery in breach of duty.
  • Imprisonment for six months to five years for bribery to perform a duty.

Courts must consider multiple factors when imposing fines, including motive, consequences, and degree of violation. Available fines for offenses committed out of greed range from 30 to 500 daily units, depending on income, property, and average expenses of the offender. For criminal conduct involving foreign officials, this monetary limit is EUR 80-660,000.

The OECD Working Group deems these fines insufficient for deterring multimillion-euro foreign bribery cases.

Sanctions against legal persons include fines between HRK 15,000 to 10 million (EUR 2,000-1.3 million) and suspension for non-compliance within a specific period. Legal persons convicted of multiple offenses cannot face fines exceeding the limit of individual fines or the maximum fine.

The maximum fines for legal persons involved in foreign bribery have been questioned for their effectiveness and proportionality, particularly in large-scale cases involving substantial sums worth millions.

Seizure and Confiscation

Convention Article 3 mandates the seizure and confiscation or equivalent monetary sanctions against the bribe and proceeds of foreign bribery. However, the specific implementation and utilization of seizure and confiscation measures by the authorities have not been explored. The text does mention examples of relatively low sanctions and fines levied against both natural and legal persons for domestic corruption cases.

This article provides an overview of the current sanctions framework and its application to foreign bribery cases in Croatia. The OECD Working Group’s assessment of the effectiveness, proportionality, and dissuasiveness of these sanctions remains ongoing.