Hungary must enforce its foreign bribery offence against companies, including foreign subsidiaries

This article is brought to you in association with OECD.

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The Working Group is concerned that Hungary has not commenced any foreign bribery investigations or prosecutions in over nine years since the Phase 3 evaluation of implementation of the OECD Anti-Bribery Convention. However, the companies operating in the country have significant exposure to export-related risks of the bribery of foreign public officials. This includes foreign subsidiaries of multinational enterprises (MNEs) that use Hungary as a manufacturing base and re-export goods to other markets. To avoid Hungary becoming a safe harbour for MNEs with subsidiaries in Hungary that commit bribery abroad, the authorities must overcome their reluctance to enforce relevant criminal legal provisions and assign responsibility to detect and investigate such bribery. The OECD Working Group on Bribery has just completed its Phase 4 evaluation of Hungary’s implementation of the Convention. The resulting Report focuses on ways for Hungary to significantly enhance enforcement of its foreign bribery offence against corporate vehicles, including foreign subsidiaries, by taking steps including the following:

• Significantly increase the resources to manage the current and forecasted foreign bribery case load and utilise investigative tools;
• Improve the whistleblower system, and framework for detecting and reporting suspicions of foreign bribery by public officials, including the tax authorities;
• Adopt measures to safeguard foreign bribery investigations and prosecutions from potential disruption due to the use of immunities for specific office holders;
• Urgently extend the two-year investigation time-limit, due to the highly complex nature of foreign bribery cases;
• Urgently raise the awareness of Hungarian companies, including foreign subsidiaries, of their foreign bribery risks in export activities, and the need to adopt effective measures for managing those risks; and
• Strengthen its capacity to provide prompt and effective legal assistance to other Parties to the Convention that are investigating and prosecuting foreign bribery cases.

Furthermore, the Working Group will follow-up on the impact of recent reforms on the ability of the Hungarian media and civil society to play a role in detecting foreign bribery cases. The report also highlights that Hungary is in a transitional phase, having recently initiated important reforms that could impact on foreign bribery enforcement, such as a settlement procedure, a gradual system for encouraging confessions, and new covert investigative techniques. In addition, Hungary has successfully implemented a recommendation from its Phase 3 evaluation to compile statistics on investigative measures and reasons for discontinuing any foreign bribery investigations, and the Hungarian Export Promotion Agency has delivered a substantial number of trainings and courses to small and medium-sized enterprises. The Hungarian authorities welcomed insights from the Working Group on how to ensure that these reforms translate into more effective implementation of the Convention. The OECD Working Group on Bribery, which is composed of 44 countries, adopted the report on 27  June 2019, including recommendations made to Hungary on pages 53-56. In accordance with standard procedures, Hungary will be invited to submit a written report in two years (June 2021) to the Working Group on the steps taken to implement these recommendations. Additionally, Hungary will submit a written report to the Working Group in one year on specific recommendations on the detection and investigation of foreign bribery and use of corporate responsibility for such bribery. This report, available at http://www.oecd.org/corruption/anti-bribery/OECD-Hungary-Phase-4-Report-ENG.pdf, is part of the OECD Working Group on Bribery’s fourth phase of monitoring implementation of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and related instruments, which was launched in 2016.  Phase 4 examines the evaluated country’s particular challenges and positive achievements. It also explores issues such as detection, enforcement, corporate liability, and international cooperation, as well as unresolved issues from prior Working Group evaluations.