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Oman Introduces Tougher Penalties for Government Contracts Fraud
The Omani government has recently introduced stricter penalties for those found guilty of fraud in government contracts, aimed at combating corruption and transnational organized crime.
New Penal Code Provisions
According to Article 221 of the new Penal Code, individuals or companies that commit fraud in the performance of a government contract can face imprisonment for up to five years. Additionally, they will be required to make restitution to the government entity affected by their actions.
The code also criminalizes bribery and corruption, with penalties ranging from imprisonment to fines and even dissolution of companies found guilty of participating in organized criminal activities.
Risks for International Businesses
Experts warn that the new regulations pose significant risks for international businesses operating in Oman. Companies must ensure that they have robust compliance policies in place to prevent corporate crime and avoid conflicts of interest.
- A high level of transparency
- Diligent documentation
- Regular audits are essential in order to maintain a culture of compliance.
- Extending certain compliance obligations to contracting parties is also highly recommended.
Corporate Liability Provisions
The amended Penal Code introduces corporate liability provisions, which mean that companies can be held criminally liable for the actions of their representatives or agents.
Consequences for Companies
The introduction of corporate liability provisions means that companies must now take greater care in selecting external representatives, sub-contractors, and agents. Companies must:
- Conduct due diligence on these third parties
- Ensure that they meet certain criteria before engaging their services
In addition, companies must also be aware of the risk of involvement in transnational organized crime through employees or external representatives.
Transnational Organized Crime
The new code includes a separate chapter dedicated to transnational organized crime, which aims to prevent organized criminal groups from establishing themselves in Oman. The code defines an organized criminal group as a group of at least three participants that aim to commit transnational crimes.
Participating in the activities of such a group can result in imprisonment of up to ten years, while legal persons found guilty of participating in these activities can face fines and even dissolution.
Significance for International Business
The introduction of the new Penal Code marks a significant shift in Oman’s approach to combating corruption and organized crime. For international businesses operating in the country, it is essential to pay attention to implementing proper compliance policies and procedures to prevent corporate crime and avoid conflicts of interest.
- Review and update compliance policies
- Conduct training sessions
- Review third-party agreements
The recently upgraded Penal Code provides an excellent opportunity for all businesses with operations in Oman to review and update their compliance policies, conduct training sessions, and review their third-party agreements in order to prevent and detect any financial crime or non-compliance related issues.