In addition to the US’ Foreign Corrupt Practices Act and other non-Iraqi legislation that governs anti-corruption issues, foreign corporations active in Iraq must adhere to Iraqi legislation regulating such issues.

The Iraqi Penal Code (Law No. 111 of 1969) governs issues of corruption and bribery in the country. Put simply, it prohibits conferring gifts or benefits to Iraqi public officials. The Penal Code punishes any public official or agent who seeks or accepts, for himself or for another, a gift, benefit, honour or promise thereof to carry out any duty of his employment or to refrain from doing any such duty. This provision extends to such acts that are outside of the authority of the public official, and the penalty is applicable whether or not the public official or agent intended to carry out or refrain from carrying out the specified act.

The Penal Code criminalises the activity of the offeror, the offeree and any intermediary to the same extent. Under the Penal Code, any person who gives or offers a public official a gift, benefit, privilege or promise is considered to be offering a bribe, and this person, or any intermediary on their behalf, is subject to the same penalty as the person who accepts such bribes. Though not defining a ‘bribe’ as such, the law demonstrates that bribes are gifts, benefits, honours or promises thereof to public officials or agents, regardless of value, provided they are made with an intent to induce the public official or agent to carry out or refrain from an act, whether or not such an act is within their jurisdiction. Under the Penal Code, bribes are considered only in the public context.

The application of the above noted provisions of the Penal Code extends to situations where the public official or agent accepts the gift, benefit, honour or promise thereof for himself, or for someone else, thus criminalising the situation where a relative, or any third person, is the beneficiary of the bribe.

In applying the terms of the Penal Code, the term ‘public official’ is broadly defined, and generally includes any person who works in the public service, either paid or unpaid. As such, employees of government-controlled enterprises may be considered public officials, so long as the government has some financial interest in the entity. It is possible that the employees, directors, etc, of any mixed corporation (a corporation that has joint private and public ownership), could be considered public officials, in terms of the Penal Code. Hence, the ownership and management of a corporation must be closely scrutinised when determining whether it is a government entity or a private entity, and whether certain gifts or benefits may be conferred.

The Penal Code does not specify a value when considering what constitutes a bribe. However, the more valuable the gift or advantage, the more likely it is to raise scrutiny and be considered a bribe. Given the current state of the Iraqi economy and considering prevailing government salaries, even benefits or advantages of $30 or less may be deemed valuable enough to attract scrutiny as a bribe. As such, there is very little that can be considered socially acceptable and legally unproblematic in this regard, and even minor gifts, such as business courtesies, will be scrutinised and may lead to prosecution.

Corruption regulations in the Penal Code apply to both domestic and foreign business entities. In addition to acts committed on Iraqi territory, the law also includes, as “offences committed in Iraq”, acts that have consequences that are realised, or intended to be realised, in Iraq. Consequently, corruption regulations apply both to domestic and foreign business entities, and acts undertaken outside Iraq, if intended to have an effect in Iraq, such as improperly influencing an Iraqi government official, may be prosecuted in Iraq.

Under the Penal Code, corporate entities may be held criminally liable. Sanctions may include fines, confiscation or precautionary measures, such as closure of the business premises or the suspension and winding up of a corporate body. There is also the potential that managers or directors of a company may be held vicariously liable for the criminal actions of their employees, as the courts may presume manager/director involvement in the bribery, as the likely beneficiary of the bribes will be the company and/or its directors, and not the employee himself. Beyond the liability of corporate bodies for the acts of their employees, however, vicarious liability is not fully addressed in regards to this issue in the Penal Code.

Foreign entities conducting business in Iraq must adhere to the provisions set forth in the Iraqi Penal Code concerning anti-corruption. Failure to follow these regulations could lead to prosecution and/or the winding down of their operations in Iraq.