Business ethics and anti-corruption laws: Taiwan

Contributed by Eiger

Taiwan is ranked 30 out of 167 on the TI CPI 2015.

Taiwan is a member of the APG under the name ‘Chinese Taipei’.

In Taiwan, the key anti-corruption laws can be found in the:

• Anti-Corruption Act;
• Criminal Code; and
• Organic Statute for Anti-Corruption Administration.

Bribery is not expressly defined under Taiwan statutes, but is still considered an offence as a benefit gained under illegal circumstances. A definition of bribery has been provided by the courts, and cases involving bribery can be punished under the Criminal Code and other laws such as the Banking Act and Securities Exchange Act. The penalties under the latter two acts are heavier than those provided in the Criminal Code, and are applied first.

Attempting to bribe, or the acceptance of a bribe by a public official, is a criminal offence and is punishable under the Organic Statute for Anti-Corruption Administration and/or the Criminal Code. A public official has been defined to mean persons who are:

• empowered with legal function and power, serve an organization of the state or a local autonomous body; and are engaged in public affairs in accordance with laws; or
• entrusted by an organ of the state or a local autonomous body to engage in public affairs within the authority of the entrusting organization.

Bribing a foreign official is also a crime. A person is guilty of a bribery offence if he or she pays or promises to pay a bribe, i.e., anything of value, to a foreign official in return for that official:

• performing or omitting to perform his or her official duties;
• making unlawful demands;
• promising or taking bribes; or
• engaging in other malpractices for unjust gains in trade, investment or other business activities.

The Agency Against Corruption (the “AAC”), constituted under the Organic Statute for Anti-Corruption Administration, has published a set of ethics guidelines for employees who fall within the scope of the Civil Servants Act – namely, civil servants, military personnel and employees of public enterprises such as public hospitals and public schools.

Both the Anti-Corruption Act and Criminal Code have extraterritorial reach. Officials who receive bribes within or outside Taiwan are subject to the Anti-Corruption Act. Taiwan has no jurisdiction over the bribing of local officials outside of Taiwan.

Bribery in the private sector is prohibited by sector-specific law. The main statutes are the Banking Act and Securities Exchange Act. The Banking Act prohibits responsible persons and staff members of a bank from accepting, under any pretense, commissions, rebates and the amount of other unwarranted benefits from depositors, borrowers or other customers. The Securities Exchange Act prohibits directors, supervisors and employees of stock exchanges from demanding, agreeing to accept, or accepting any improper benefit in connection with the performance of his or her duties.

While Taiwanese legislation does not provide for any form of compliance defence and mitigation, having proper rules and procedures in place to prevent corruption may be viewed in a positive light by prosecutors.

The AAC’s ethics guidelines outline acceptable low-level gratuities. However, they are not expressly called ‘facilitation payments’. Any facilitation payment may therefore be viewed as a bribe by the courts. Facilitation payments made by private individuals or corporations are considered on a case-by-case basis by the courts.

The AAC’s ethics guidelines set limits on the gifts and entertainment that can be given to public officials:

• Public officials are not allowed to receive gifts from people or organisations who have a vested interest in that official’s performance of his or her duties unless the gift is not a benefit from the official’s performance of his or her duty and of a value less than: TWD 500 (approximately US$15) for an individual official; TWD 1,000 (approximately US$30.50) for an official entity; or TWD 3,000 (approximately US$91) for attending engagement ceremonies, weddings, baptisms, etc. If the giver has no such vested interest, a gift may not exceed the amount customarily given under such circumstances. Gifts that are not from relatives or close friends and exceed a market value of TWD 3,000 (approximately US$91) must be reported. Gifts from relatives or friends with no vested interest in an official’s duties may be accepted without the need to make a declaration.
• Officials are not allowed to accept invitations to attend dinner parties or other entertainment activities from persons who have a vested interest in that official’s performance of his or her duties. Exceptions to such prohibitions include public festivals (such as Lunar New Year banquets), weddings, baptisms, housewarming parties and job promotion festivities. Even if the host of a party has no vested interest in a civil servant’s official duties, officials are advised to be cautious about the events they attend.
• Government officials are not allowed to be paid more than TWD 5,000 (approximately US$152) an hour for any private speaking, judging or panellist events. Compensation for the preparation of manuscripts associated with private events must not be more than TWD 2,000 (approximately US$61) per 1,000 Chinese characters.

Companies will not be responsible for the independent corrupt acts of their agents or employees. However, a company may face fines where it directs its employees or agents to commit an act of bribery. Companies themselves are not treated as criminal defendants under Taiwan law as corruption in Taiwan is based on individual criminal responsibility./p>

As bribery and other forms of corruption are criminal offences, individual directors and officers would only be liable if they actually participated in or help someone else to commit a crime. Under strict criminal scrutiny and depending on the degree of their individual participation, the person in question might be deemed as an accomplice or accessory even if he or she was not personally involved in the actual bribe. Having knowledge of a matter but not intervening can often involve moral issues, but not necessarily criminal responsibilities.

Penalties for bribery include fines of up to TWD 100,000,000 (approximately US$3,048,333) under the Anti-Corruption Act or TWD 5 million (approximately US$152,420) under the Banking Act.

Penalties for public officials receiving bribes can reach a maximum of life imprisonment and TWD 100,000,000 (approximately US$3,048,333) in fines.

Penalties for offering or giving a bribe to a public official can reach a maximum of 7 years’ imprisonment and TWD 3 million (approximately US$91,450) in fines.

The AAC was established in 2011 as the Taiwan Government’s first-ever agency dedicated to fighting corruption. The AAC’s main purposes are to strengthen existing mechanisms against corruption, increase conviction rates in corruption cases, and further protect human rights in Taiwan. Its headquarters are in Taipei. It also has offices in both central and southern Taiwan.

The Special Investigation Division, set up by the Supreme Court Prosecutors Office, is in charge of investigating corruption issues involving the president, vice presidents, heads of the five yuans (legislative bodies), ministers, and military officials holding the rank of general and above. It is also in charge of investigating corruption involving elections. The Supreme Court Prosecutors Office also has the authority to investigate other types of corruption, as seen fit by the prosecutor general of the Supreme Court Prosecutors Office.

Taiwan’s Money Laundering Control Act and its accompanying Regulations Governing Cash Transaction Reports and Suspicious Transaction Reports by Financial Institutions apply to financial institutions and retail jewellery businesses. The Act currently defines 17 types of financial institution and gives the competent authorities the discretion of designating additional types of institution in the future. Taiwan banks holding accounts for customers paying out of Taiwan would be subject to the Act and its Regulations.

The Money Laundering Control Act imposes obligations on financial institutions to establish money laundering prevention guidelines and procedures and to submit those guidelines and procedures to the competent authorities and the Ministry of Finance for review. The Act also imposes obligations on financial institutions to report certain transactions over a certain amount (TWD 500,000 (approximately US$15,250)) to the competent authorities as well as to know the identities of their customers. The Regulations Governing Cash Transaction Reports and Suspicious Transaction Reports by Financial Institutions also impose additional obligations upon financial institutions to report suspicious transactions as set out in the Regulations.

Taiwan has continued to strengthen its anti-money laundering regime and is under pressure to make further amendments to its current regime so as to bring all types of designated non-financial businesses and professions listed in the international anti-money laundering standards into its regime.

The Anti-Corruption Informant Rewards and Protection Regulations were introduced in July 2011. Article 10 of the regulations guarantees that the name, gender, date of birth, identification numbers and address of a whistleblower must be kept confidential. Any statements, affidavits or other related information on a whistleblower must be stored separately and kept away from investigation files unless absolutely needed. Any violations against a whistleblower will be dealt with according to the Criminal Code and other related laws.

Taiwan’s Personal Information Protection Act (the "PIPA") came into force in October 2012. It replaced the Computer Processed Personal Data Protection Act that only applied to computer-processed data by government entities and designated industries. The PIPA applies to all collection, processing, and use of personal information by government and non-government entities and individuals in Taiwan.

The PIPA should not impede a lawful investigation by a government entity, nor prevent a non-governmental entity from complying with lawful requests made by authorities. It should also not hinder an investigation by a non-governmental entity investigating internal corruption or related issues. Nevertheless, the latter would obviously depend on the facts of the matter as well as the conduct of the investigation. Other laws and protections that apply to employees in the workplace could also have an effect on internal investigations.

The procedure stipulated in the Criminal Code provides that a lawyer may refuse to testify when being questioned as a witness for a client’s confidential matters unless permission from that client is obtained. In addition, mail or other correspondence between a defendant and his or her defence lawyer could be seized provided that they are deemed to be criminal evidence, or it is discovered that the sender or receiver may destroy, forge, or alter evidence or conspire with a co-offender or witness, or the defendant has absconded.

To protect the relationship between a lawyer and client in the course of their communication, confidential matters such as the written documents of a defendant’s confession of a crime to the lawyer is not allowed to be seized. However, this privilege does not extend to allowing the lawyer to cover up, destroy or forge criminal evidence. In other words, criminal evidence could be seized even if it is in the custody of the lawyer.

Contacts

John Eastwood, Partner
Eiger
john.eastwood@eigerlaw.com

Jeffrey Lien, Associate
Eiger
jeffrey.lien@eigerlaw.com