New CIA Director Has Hawkish History on Israel and Iran

Israeli Firms Are Clamping Down on Bribery Abroad to Comply With OECD Rules

Attorney Asher Miller, of Cycurity Vision, says that the West is trying to expand norms of proper business behavior, which are finally reaching Israel’s shores.

Attorney Asher Miller.
Attorney Asher Miller. Eyal Toueg

Attorney Asher Miller is the business development manager at Cycurity Vision, which specializes in business intelligence and risk management. He was assistant general counsel at Elta and advocate and compliance department manager at IMI Systems. He holds a B.A. from Bar-Ilan University and lives in the Tel Aviv suburb of Givatayim.

TheMarker had a wide-ranging conversation with him on the changing norms regarding corporate bribery.

Why should we care if Israeli companies pay a little bribery abroad and win good contracts?

Firstly, it is a serious crime. It has been illegal [in Israel] since 2008 to bribe a foreign public official. Bribing abroad today is like bribing in Petah Tikva or Lod. It is clearly de facto over in Israel.

How is it clear?

Several weeks ago, [the Israeli firm] NIP Global was convicted in Israel, based on a confession that it had paid over $500,000 in bribes to advance its businesses in Lesotho [in southern Africa]. Some days later, [Israeli] businessman Beny Steinmetz was questioned on suspicion of being involved in a bribery case in Guinea [in West Africa]. Countries collaborate to enforce the law fully and to reach plea bargains.

Why is it happening now in Israel? Israel joined the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transaction seven years ago.

After joining the OECD convention, companies started preparing so the danger would not touch them, but there were many companies that still thought it was far away. Israel was accepted in 2016 as an observer in the Financial Action Task Force, which sets mandatory international standards on outlawing money laundering and funding terrorism. Israel, which is interested in being a member state, is working hard to stop having the status of a problematic state.

And can we say it has succeeded?

We have seen in recent weeks serious statements coming out of the state prosecutor’s office on Israel’s intent to help enforce the prevention of international corruption. In NIP Global’s case, it was fined 4.5 million shekels ($1.2 million) after admitting it had paid a bribe to a senior Lesotho Interior Ministry official.

Two Ferrari sports cars are being towed off the freight zone by the police at Geneva Airport, in Geneva, Switzerland, on Thursday, Nov.3  2016. Geneva authorities have confiscated 11 luxury vehicles and sports cars Monday,  belonging to Teodorin Obiang Nguema,, the son of Equatorial Guinea's president as part of a preliminary investigation into alleged corruption.  (Laurent Gillieron/Keystone via AP)
Laurent Gillieron/AP

How is such a thing discovered? Is the Israel Police interested in what happens in Africa?

Actually, it does interest them. You hear it mainly from the deputy attorney general for financial enforcement, Yehuda Shaffer, who was the director of the Money-Laundering and Terror Financing Prohibition Authority. Some years ago, joint task forces of the police and the state prosecutor were formed. They deal in surveillance of Israeli companies abroad. They work with other state authorities to collect evidence.

These are expensive investigations?

I gather that it is more expensive than trying to locate drug dealers in Ramle [in central Israel], but it pays off.

Because of the high fines these companies must pay?

Yes.

How serious do the bribery suspicions against Steinmetz, one of Israel’s biggest billionaires, look?

It seems serious according to reports, but I have no information, and matters have to be clarified.

Will he go to jail if bribery was involved?

I can’t say for sure, but currently, except for very exceptional cases, such as when security issues are involved, it ends in substantial compromises. There is really a price list in the United States – which fine will be levied for each violation in line with company size, its turnover, attempts to prevent giving the bribe and who was involved.

It used to be said that bribery was okay as long as it didn’t happen here.

Just as no one considers it a good thing for a man to rob a bank and redistribute the money, they view bribery abroad the same way these days. Moreover, the world seeks to be cleaner as part of globalization, and as part of that, the West is striving to expand norms of proper behavior around the world. The assumption is that something corrupt that happens in another country is a bad thing because in the end the bridge and the turbines are built less well. The laws are very clear, and it is an international norm.

It’s a bit funny because until fairly recently people and companies sought to force the Income Tax Authority to recognize their bribes abroad for tax purposes [as a deductible expense].

That was acceptable in past, like other things that the world has moved on from. The world is also completely different regarding money laundering. Seventy percent of what was permissible and possible is now forbidden and problematic, based on the understanding that black capital destroys the world. If we want to be in this club, preventing bribery transactions is part of the deal.

When did this change?

The Siemens scandal was an international watershed. The company hired local representatives in many countries who used illegal means to win local contract bids. When everything was revealed a decade ago, and Siemens faced criminal charges, it understood that if it didn’t make a radical change and reach a deal with the authorities, they would actually break it up.

So what did it do?

It used hundreds of lawyers and accountants to clean house, clean up its worldwide act and reach a settlement with the authorities for $1.6 billion, which was divided between the United States and Germany. It was one of the opening shots in the global effort to combat corruption.

Why is bribery so widespread?

It is in man’s nature often to act against his interests and the interests of his company.

And how are you involved?

I have worked seven years in the world of compliance, a fascinating world that deals with preventing bribery, corruption and money laundering by companies on the international scene. It is very relevant to Israeli companies.

What does “compliance” mean?

There are laws that forbid theft or murder and it is clear you don’t need to tell people that they have to obey them, but there are laws that are harder to enforce. In my field, it is preventing bribery payments, corruption and improper payments and preventing money laundering – and it is perhaps the broadest field in the world that has gained great momentum in recent years.

How has it gained momentum?

Companies understand they cannot operate without someone preventing them from getting mixed up in improper deals around the world. Everyone now has compliance officers and compliance systems. Also, every bank branch has a compliance staffer. Enter a bank and try to deposit $50,000, and see what happens. The banks are very cautious in the war on money laundering.

What has happened since the Siemens scandal?

Nowadays there is a court case and a settlement every week in the United States. Major corporations are receiving large fines. For example, last year Brazilian airplane manufacturer Embraer paid $205 million to the U.S. Department of Justice and the U.S. Securities and Exchange Commission because it was caught bribing public officials in Saudi Arabia, Zambia and the Dominican Republic.

Israel’s Teva Pharmaceuticals, too.

Teva recently paid a $519 million fine to U.S. authorities after admitting to bribing former workers. It is even liable to enter the top 10 list of corporate fines, the top third of which is still occupied by Siemens.

Teva Pharmaceutical Industries Ltd.'s headquarters in Jerusalem.
דהמרקר/Bloomberg

It is strange that the United States fines companies that paid bribes in, say, Africa.

If they also operate on its territory or are traded on its stock exchange, it can move against them.

But it can’t do much against a minister in the Zambian government?

The United States and other Western countries can seize property on its territory, and they really do this. Every few weeks, for example, European officials seize the property of the son of the president of Equatorial Guinea, who was accused of corruption and money laundering. Last month, they seized his collection of luxury cars. In the United States, they seized his estate in Malibu.

Is the United States considered the standard bearer in this campaign?

Yes. When I approach a person who is a candidate to represent an Israeli company in Asia or South America, in most cases he already has a list of 100 demands the Americans have of him. And if he wants to work with American firms and banks, he has to meet them.

Is there any possibility of working in a third-world country like in Africa without bribery?

Yes, albeit it’s very difficult in those areas.

Companies can claim they work through agents and have no way of knowing exactly what their agents do. Even if a company employs an agent or other intermediary, it needs to check that they are working legally.

Working through an agent is always the easiest route to corruption. In the submarine scandal, for example, German ThyssenKrupp took Miki Ganor as its agent in Israel and he took the prime minister’s lawyer [David Shimron]. That doesn’t reek of an international bribery attempt?

A company that wants to work in another country can work with an agent, producer or local company, depending on its resources. It can also work with lobbyists.

What’s the reason for taking the agent closest to the king? Is it not clear the king will want to give his close associate preference?

The bottom line is I believe that companies won’t pay bribes because the companies paid substantial fines in all the major scandals that were exposed.

That makes bribery unprofitable?

It makes it painful.

And that’s enough to alter companies’ behavior?

Totally.

Bribery is not just envelopes but rather hosting at the highest level and perks.

True, the heady part is the world of hosting and gifts, showing executives a “good time” rather than giving money. There is also a line here between what is permitted and what is forbidden.

Senior members of the Israeli arms procurement delegation in New York are said to be dining at the expense of the arms companies.

I don’t have information on this, and there is the question where and what they are eating. I also know companies that require their workers to report, for example, ordering three desserts for two people.

And if we told you that they are eating in gourmet restaurants in New York and are ordering the most expensive meals on the menu?

The Defense Ministry has rules determining what is allowed, and the acquisition representatives must obey these rules. There is nothing forbidden about eating two schnitzels. The Defense Ministry sets the norms.

In general, there is an impression that people are easily drawn into bribery

Therefore, we often need to help them to be protected. Everyone will say that they would not want to hurt themselves or others. There are some who at 1 A.M. after three beers will sit behind the wheel and weave across the highway. It’s the same thing when it comes to bribery. No one will say he would want to bribe a country, and still companies give bribes. Sometimes it also involves one branch of a large company in which the norms are broken. I have made dozens of deals, and in the vast majority there was an issue with fair people who do not easily stray. In my opinion, the bribery phenomenon is marginal.

You say it’s on the margins, but defense companies that operate in third-world countries always claimed that it was the only way to do business there.

What once was is simply over.

You sound optimistic about compliance by Israeli companies.

I see what happens. You can always do more, but compared to in the past, things are being addressed. The world corruption organization once complained that no one was being brought to justice. Today, authorities in the world and Israel are giving a strong signal that[bribery] is no longer economical.