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White Collar Crime Laws and Regulations in Bosnia and Herzegovina

White Collar Crime Laws and Regulations in Bosnia and Herzegovina

White Collar Crime Comparative Guide: 2022
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Contributed by Baros, Bicakcic & Partners.

While reading the below please keep in mind that we had to take into consideration that Bosnia and Herzegovina consist of two separate legal entities: the Federation of Bosnia and Herzegovina and the Republic of Srpska, and additionally the Brcko District. Different legal regimes apply to these entities to the extent that, in principle, a small number of laws of Bosnia and Herzegovina applies to both entities and district. However, the legal framework is similar, so in cases where there are differences, in preparing the below, we have taken into consideration the regulations of the Federation of Bosnia and Herzegovina, Republic of Srpska, and the Brcko District.

1. Legal Framework 

1.1. What is the legal framework for bribery and corruption in your jurisdiction?

In Bosnia and Herzegovina, the following laws are adopted that contain provisions related to bribery and corruption:

  i. The Law on the Agency for the Prevention of Corruption and the Coordination of Fight against Corruption primarily defines the concept of corruption and governs the manner and forms of corruption prevention in Bosnia and Herzegovina. The law also regulates the legal status, competencies, and methods of the agency.

  ii. The Law on Protection of Persons Reporting Corruption in the Institutions of Bosnia and Herzegovina regulates the status of persons reporting corruption within institutions of Bosnia and Herzegovina, legal entities established by Bosnian and Herzegovinian institutions, procedures for reporting corruption, mandatory actions which must be undertaken by institutions to which corrupt acts are reported, as well as protection measures for persons who report acts of corruption.

  iii. The Criminal Law prescribes criminal offenses of corruption as well as criminal offenses against officials and other responsible duties.

For the prevention and fight against corruption, it is also important to emphasize the following laws: 

The Law on Conflict of Interest in Governmental Institutions of Bosnia and Herzegovina, Law on Criminal Procedure, the Law on Civil Service in the Institutions of Bosnia and Herzegovina, Law on Freedom of Information, the Law on Political Party Financing, the Law on Administration, the Law on Court of Bosnia And Herzegovina, the Law on Ministries and other Bodies of Administration of Bosnia And Herzegovina, the Law on The High Judicial and Prosecutorial Council, the Law on Public Procurement for Bosnia and Herzegovina, the Law on the Prevention of Money Laundering and Financing of Terrorist Activities, and the Election Law.

It is important to note that besides the above-stated laws at the level of Bosnia and Herzegovina, there are also laws of the entities (Federation of Bosnia and Herzegovina and the Republic of Srpska), Brcko district, and cantons that regulate ​​the prevention of, and fight against, corruption.

1.2. Which international anti-corruption conventions apply?

International anti-corruption conventions that apply in Bosnia and Herzegovina are:

  i. The United Nations Convention against Corruption (UNCAC) - the most important universal instrument in the fight against corruption, was signed by Bosnia and Herzegovina on October 26, 2006.

  ii. The Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime

  iii. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

  iv. The Civil Law Convention on Corruption

  v. The Criminal Law Convention on Corruption, with an Additional Protocol to the Criminal Law Convention on Corruption

1.3. What is the definition of bribery?

When it comes to defining the concept of bribery in Bosnia and Herzegovina, it retains no independent meaning, but it is closely correlated to the concept of corruption.

Given the number of laws that apply to the subject and the complexity of this phenomenon, these terms have many definitions. 

The Law on the Agency for the Prevention of Corruption and the Coordination of Fight against Corruption defines corruption as any abuse of power entrusted to a public servant or a person holding a political position at a state, entity, or cantonal level and the level of the Brcko District of Bosnia and Herzegovina, as well as city or municipal levels, which may result in a private gain. 

Corruption may, in particular, include:

  i. Direct or indirect solicitation,

  ii. Offering, giving, or accepting bribes or any other undue advantage or possibility which impairs the performance of any duty or conduct expected of the recipient of the bribe.

In terms of the Law on Protection of Persons Reporting Corruption in the Institutions of Bosnia and Herzegovina, corruption is an abuse of power entrusted to assigned duties, leading to private gain.

It is important to note that the area of ​​criminal legislation does not prescribe a specific definition of corruption. Still, the Criminal Law does prescribe individual acts that have the characteristics of corruption.

1.4. Is private sector bribery covered by the law? If yes, what is the relevant legislation?

The legal framework covers bribery and corruption in the private sector as well.

As the United Nations Convention against Corruption (UNCAC) in Article 12. prescribed the obligation to each state party to take measures, in accordance with the fundamental principles of its domestic law, to prevent corruption involving the private sector, enhance accounting and auditing standards in the private sector, and, where appropriate, provide effective, proportionate, and dissuasive civil, administrative, or criminal penalties for failure to comply with such measures. 

Accordingly, the Law on the Agency for the Prevention of Corruption and the Coordination of Fight against Corruption was adopted in Bosnia and Herzegovina, which determines the responsibility of the agency for preventive anti-corruption work and for coordinating the fight against corruption in public institutions as well as the private sector.

The law prescribes the obligation of the agency to prevent corruption in relation to the members of management, authorized and other persons in corporate entities, public enterprises, public institutions and private enterprises, the members of bodies and other authorized persons in political parties, cultural and sports institutions, foundations, associations and non-governmental organizations.

Also, Articles 21. and 22. of the United Nations Convention against Corruption (UNCAC) deal with bribery and embezzlement of property in the private sector and require each state party to consider adopting legal and other measures that may be necessary to establish it as a criminal offense when committed intentionally in the course of economic, financial, or commercial activities. Although the Criminal Law of Bosnia and Herzegovina prescribes acts of bribery and embezzlement, they cover only the official or responsible person, while bribery and embezzlement in the private sector are still not covered.

1.5. What is the definition of a public official and a foreign public official? Are employees at state-owned or state-controlled enterprises treated differently? Are there official lists of public officials, offices, or state-owned or state-controlled enterprises?

A public official according to the Law on the Agency for the Prevention of Corruption and the Coordination of Fight against Corruption is:

  i. any person holding a legislative, executive, administrative, prosecutorial, or judicial office, whether appointed or elected, whether the office is permanent or temporary, remunerated or non-remunerated, regardless of the person’s rank,

  ii. any person holding a public office, including an office in a public authority or a public company or performing public service,

  iii. any other person defined within the legal system of Bosnia and Herzegovina as a public office holder, public servant, or civil servant;

According to the Criminal Law, a foreign official person means a member of a legislative, executive, administrative, or judicial body of a foreign state, a public official person of an international organization or of its bodies, a judge or other official person of an international court, serving in Bosnia and Herzegovina.

Bosnia and Herzegovina has a Register of Public Office holders, which contains information on the mandates of elected and appointed officials at all levels of government. The register also contains data on government institutions, institutions, administrations and administrative organizations, state-owned and state-controlled enterprises, as well as data on political parties and coalitions in Bosnia and Herzegovina.

There are no differences in how employees of state-owned or state-controlled enterprises.

1.6. Are there any regulations on political donations?

In Bosnia and Herzegovina, the financing of political parties is regulated by the Law on Financing of Political Parties of Bosnia and Herzegovina, Law on Financing of Political Parties of Brcko District, Law on Political Party Financing from the Budget of the Republic, City, and Municipality of the Republic of Srpska, Election Law, the Law on Conflict of Interest in Governmental Institutions of Bosnia and Herzegovina, as well as acts adopted by the Central Election Commission of Bosnia and Herzegovina. 

These regulations established funding sources and the use of such funds and restrictions on the total amount of contributions donated to political parties. The laws also set the obligation to report donations to ensure transparency in receiving those donations.

The Law on Financing of Political Parties of Bosnia and Herzegovina which largely regulates political donations has established restrictions on natural and legal entities making voluntary donations to political parties. Therefore, the total amount of voluntary contributions of a natural entity to one political party cannot exceed the amount of BAM 10,000 (approximately EUR 5,000 EUR) during one calendar year, while for legal entities, the limit is established at BAM 50,000 (approximately EUR 25,000) during one calendar year. A political party member cannot pay an amount higher than BAM 15,000 (approximately EUR 7,500) during one calendar year, which also includes membership fees.

Any form of donation by unnamed, anonymous donors or intermediaries is prohibited.

The law also prohibits the financing of political parties by administrative bodies of Bosnia and Herzegovina, entities, cantons, and municipal and local community bodies. Financing is also prohibited by public institutions, public companies, humanitarian and religious organizations, trade unions, associations, and other non-profit organizations financed by public funds, legal entities in which the public capital is at least 25%, other states, foreign political parties, and foreign legal entities except for funding programs intended for education to promote democratic principles.

Political parties must keep books and submit financial reports to the Central Election Commission of Bosnia and Herzegovina. Such reports must include all benefits derived from activities related to or under the political party’s control.

1.7. Are there any defenses available?

Applicable regulations are not regulating any available defenses.

1.8. Is there an exemption for facilitation payments?

All forms of bribery including facilitation payments are prohibited. Elected officials, executive officeholders, and advisors must not receive money regardless of the amount.

1.9. What are the criminal sanctions for bribery? Are there any civil and administrative sanctions related to bribery cases?

When it comes to criminal sanctions for bribery and corruption in Bosnia and Herzegovina, they are different in the Federation of Bosnia and Herzegovina and the Brcko District from those prescribed in the Republic of Srpska. Each entity has adopted its own laws on this topic.

It is important to note that sanctions are imposed on a case-by-case basis, depending on the nature of the act, manner of execution, and person who committed it.

The criminal laws of the Federation of Bosnia and Herzegovina and the Brcko District prescribed the same penalties for bribery and corruption crimes. Therefore, for criminal offenses of bribery and offenses against official or other responsible duty, the following sanctions can be imposed:

For the criminal offense of accepting gifts and other forms of benefits, the court may impose prison sentences ranging from six months to 10 years depending on the severity of the criminal offense.

For the criminal offense of giving gifts and other forms of benefits, the court may impose a prison sentence ranging from six months to up to three years, depending on the severity of the criminal offense.

In addition, for the criminal offense of receiving a gift or other benefit for illegal interceding, the law prescribed a prison sentence of six months to eight years. In addition, the perpetrator of this criminal offense who requests, receives, or accepts a gift or any other benefit may be punished by imprisonment for between one and ten years.

Giving a gift or other benefit for illegal interceding, the law prescribes a penalty ranging from six months to five years.

The Criminal Law of the Republic of Srpska prescribes slightly different sanctions, so the crime of accepting a bribe is punishable by imprisonment from two to eight years depending on the severity of the criminal offense. 

Giving a bribe can be punishable by imprisonment from six months to three years depending on the severity of the criminal offense.

Illegal interceding in the Republic of Srpska is punishable by imprisonment from one to twelve years, depending on the nature of the act and the perpetrator.   

The law established sanctions for certain corruption violations regarding civil and administrative sanctions relating to bribery charges. The rest of the civil and administrative sanctions are specific to the criminal liability of corporate entities, so in addition to fines, property seizures, corporate entity dissolution, and a prohibition on engaging in a specific economic activity may be imposed.

1.10. Does the national bribery and corruption law apply beyond national boundaries?

Applicable laws do not regulate the possibility of applying them beyond national boundaries. 

1.11. What are the limitation periods for bribery offenses?

The limitation periods are prescribed according to the length of the sentence imposed, so in the Federation of Bosnia and Herzegovina and the Brcko District, it is determined that criminal prosecution is statute-barred for:

  i. 20 years for a criminal offense punishable by imprisonment for a term exceeding 10 years,

  ii. 15 years for a criminal offense punishable by imprisonment for a term exceeding five years,

  iii. 10 years for a criminal offense punishable by imprisonment for a term exceeding three years,

  iv. Five years for a criminal offense punishable by imprisonment for a term exceeding one year, and

  v. Three years for an offense punishable by imprisonment for a term not exceeding one year or a fine.

According to the law of the Republic of Srpska, criminal prosecution is statute-barred for:

  i. 25 years for a criminal offense punishable by imprisonment of more than 10 years,

  ii. 20 years for a criminal offense punishable by imprisonment of more than five years,

  iii. 15 years for a criminal offense punishable by imprisonment of more than three years,

  iv. 10 years for a criminal offense punishable by imprisonment of more than one year, and

  v. Five years for a criminal offense punishable by imprisonment of up to one year or a fine.

1.12. Are there any planned amendments or developments to the national bribery and corruption law?

Currently, proposals have been made to amend the Law on the Agency for the Prevention of Corruption and the Coordination of Fight against Corruption and the Law on Protection of Persons Reporting Corruption in the Institutions of Bosnia and Herzegovina, which should contribute to more effective work of the agency. However, until today, amendments to these laws have not been adopted.

2. Gifts and Hospitality

2.1. How are gifts and hospitality treated?

Gifts of small value given in some business relationships that may be deemed to foster a business connection, express gratitude, and are not meant to breach legal requirements, may be considered appropriate. However, gifts or hospitality whose nature or value can be regarded as a request for the fulfillment or non-fulfillment of any obligations or duties are strictly forbidden and considered bribery.

Any gift or hospitality may not be given or received if it implies an obligation on the part of the recipient to do or not do any of their duties and obligations.

2.2. Does the law give any specific guidance on gifts and hospitality in the public and private sectors?

When it comes to the public sector, the Law on Conflict of Interest in Governmental Institutions of Bosnia and Herzegovina as well as the Code of Civil Servants in the Institutions of Bosnia and Herzegovina regulates receiving gifts regarding the performance of public functions. Also, on the basis of current laws, state institutions have adopted their own regulations governing the rules on receiving gifts and hospitality.

For the private sector, it is common practice to adopt internal acts such as rulebooks, codes of ethics, etc., which will regulate the rules of receiving gifts and hospitality by employees.

2.3. Are there limitations on the value of benefits (gifts and hospitality) and/or any other benefit) that may be given to a government/public official? If so, please describe those limitations and their bases? 

According to the laws on conflict of interest, elected officials, executive officeholders, and advisors may keep a gift not exceeding the value of BAM 200 (approximately EUR 100) in the Federation of Bosnia and Herzegovina and Brcko District and BAM 300 KM (approximately EUR150) in the Republic of Srpska, and they do not have to report it.

Gifts in excess of the stated amount must be reported and turned over to the authority that elected or appointed the recipient. These individuals may not receive money, a check, or any other form of security, regardless of the amount.

2.4. Are there any defenses or exceptions to the limitations (e.g. reasonable promotional expenses)?

Please see Section 2.3.

3. Anti-corruption compliance

3.1. Are companies required to have anti-corruption compliance procedures in place?

The law does not prescribe an obligation for companies to adopt anti-corruption compliance procedures in the Federation of Bosnia and Herzegovina. Still, the practice of companies is to regulate the field of corruption with internal acts, which aim to improve and strengthen measures for more effective prevention and fight against corruption within companies. One of the standard practices of companies is to educate employees about the rules for corruption through various courses, seminars, etc.

In the Republic of Srpska, the Law on Protection of Persons Reporting Corruption of the Republic of Srpska prescribes the obligation for companies that employ more than fifteen employees, to adopt an instruction on handling corruption reporting and ensuring the protection of persons reporting corruption. The main goal of this instruction is to regulate the manner of submission and obtaining internal reports of corruption, dealing with reports, protecting the rights of whistleblowers, obligations of the responsible person in the company, and other issues relevant to reporting.

In the Brcko District, the Law on the Office for Corruption prevention and coordination of anti-corruption activities prescribes the obligation for public administrative bodies, institutions, public companies, public institutions, and other legal entities established by the Brcko District are obliged to determine the person in charge of communication and cooperation with the office. Other legal entities that are not established by the Brcko District shall assess the person for communication and collaboration with the office, only when the office acts according to a specific case relating to that entity.

Additionally, the Company law of the Federation of Bosnia and Herzegovina, Republic of Srpska, and Brcko District prescribes an obligation to all boards of directors and supervisory board members to act with the care and diligence of a prudent businessman. These laws also state that responsible bodies must avoid conflicts of interest, implying that corrupt behavior is prohibited. The law also requires companies that are victims of corruption to report it to the appropriate authorities.

3.2. Is there any official guidance on anti-corruption compliance?

See section 1.1. and section 3.1.

3.3. Does the law protect whistleblowers reporting bribery and corruption allegations?

Whistleblowers revealing bribery and corruption charges are protected by Bosnia and Herzegovina’s Law on Protection of Persons Reporting Corruption in Institutions of Bosnia and Herzegovina. Accordingly, the Agency for the Prevention of Corruption and the Coordination of Fight against Corruption shall decide whether to grant an employee a whistleblower status within 30 days following their request made to the agency, regardless of whether the employee claims that detrimental actions have been taken or only suspects that they could be taken. Suppose a person has information or physical evidence proving the existence of corruption, protected reporting/disclosure begins on the day the person reports a suspected act of corruption or circumstances of prospective corruption to the competent authorities. 

If a whistleblower reports an act of corruption to the competent authority, they are not subject to material, criminal, or disciplinary liability for disclosing an official secret.

Suppose it is determined that some harmful actions were committed against the whistleblower, which is related to the reporting of corruption, the agency shall issue instructions to the head of the institution to eliminate the consequences caused by such harmful actions. The institution director shall be required to take corrective action to remove the detrimental action within three days following the receipt of the instruction from the agency.

4. Corporate criminal liability

4.1. Can corporate entities be held liable for bribery and corruption? If so, what is the nature and scope of such liability?

Corporate entities can be held liable for bribery and corruption. A corporate entity is responsible when:

  i. The meaning of the act arises from the conclusion, order, or approval of the governing and supervisory bodies of the corporate entity, 

  ii. The governing or supervisory bodies of the corporate entity influenced the perpetrator or enabled him to commit a criminal offense,

  iii. A corporate entity disposes of illegally obtained property or uses objects created by a criminal offense, or

  iv. The governing or supervisory bodies of the corporate entity failed to supervise the legality of the employee’s work.

4.2. Can a company be liable for a bribery offense committed by an entity controlled or owned by it? Are there requirements for the parent to avoid liability in these situations?

Criminal proceedings on a corporate entity are initiated and conducted simultaneously with proceedings against the perpetrator for the same criminal offense. As stated in Section 4.1, among other mentioned reasons, the corporate entity is liable if its governing or supervisory bodies issued a conclusion, order, or approval for the commission of a specific act, as well as if they had any influence on the perpetrator for the act or enabled him to commit it.

As a result, if the governing or supervisory body commits the acts listed in Section 4.1, the company’s liability does not exempt natural or responsible persons from criminal liability. Therefore, both the legal entity and the perpetrator of the criminal offense are responsible for the offense (governing body or supervisory body, depending on who committed the offense).

4.3. Can a company be liable for corrupt actions of a third-party agent engaged to help it obtain or retain business or business advantage (such as government or regulatory actions or approvals)? If so, are there measures recognized in law, enforcement, or regulatory guidance to mitigate this liability?

In the context of engaging a third party to help the company to obtain or retain business or a business advantage, the company may be liable only in case when the third party performed such conduct on the order or approval of the company, as well as when the company influenced the third-party or enabled him in any way to commit such corrupt acts.

To mitigate the liability of any criminal act performed by the company, the Criminal Law provides less severe punishment for the company when its governing or supervisory body voluntarily reports the perpetrator after the crime has been committed. Also, suppose a company returns an illegally obtained benefit after the committed criminal offense, eliminates harmful consequences, or announces the merits of the liability of other legal entities, may be released from punishment.

The company’s liability does not exclude the criminal liability of natural or responsible persons for a committed criminal offense.

4.4. What are the sanctions for the corporate criminal entity?

Sanctions for corporate criminal entities can be:

  i. Fines, 

  ii. Confiscation of property, and

  iii. Termination of the corporate entity.

When it comes to fines, the Criminal Law stipulates that the fine imposed on a legal entity may not be less than BAM 5,000 (approximately EUR 2,500,00) or more than BAM 5 million (approximately EUR 2.5 million).

The penalty of confiscation of property is essentially imposed for those acts for which a sentence of imprisonment of five years or a heavier punishment may be charged. Legal entities may be deprived of at least half of the property, most of the property, or the entire property.

The penalty of termination of a legal entity shall be imposed if the legal entity’s activity is used in its entirety or predominantly for the commission of a criminal offense. 

Also, a penalty of confiscation of property may be imposed.

In addition, security measures are envisaged for the corporate entity, such as publication of a verdict and bans on conducting economic activity.

5. Criminal proceedings into bribery and corruption cases

5.1. What authorities can prosecute corruption crimes?

The anti-corruption bodies in Bosnia and Herzegovina are:

  i. The Prosecutor offices of Bosnia and Herzegovina, as well as the two entity-level Prosecutor’s Offices of the Federation of Bosnia and Herzegovina and of the Republic of Srpska, and the Public Prosecutor’s Office of the Brcko District – each being competent and supreme within their own area of jurisdiction.

  ii. The High Judicial and Prosecutorial Council, 

  iii. The Agency for the Prevention of Corruption and Coordination of the Fight against Corruption, 

  iv. The Central Election Commission, 

  v. The State Investigation and Protection Agency (SIPA), 

  vi. The competent courts in Bosnia and Herzegovina.

5.2. Is there a legal obligation to report bribery and corruption cases? If so, to whom does it apply and what are the sanctions for failing to meet such an obligation?

All officials and responsible persons in government bodies, public companies, and institutions, as well as all other individuals, are required to report bribery and corruption cases.

  i. If the above-mentioned individuals fail to disclose the preparation of a criminal offense punishable by imprisonment for three years or more in the Federation of Bosnia and Herzegovina and the Brcko District, they may be sentenced to up to one year in prison.

  ii. If the above-mentioned individuals fail to disclose the preparation of a criminal offense punishable by imprisonment for five years in the Republic of Srpska, they may be sentenced to up to one year in prison. Imposing a fine is an additional sanction.

  iii. An official or responsible person who fails to report a criminal offense punishable by five years in prison or a more severe penalty, which comes to knowledge in the discharge of the duty, shall be punished by a fine or imprisonment for a term not exceeding three years. 

5.3. Is there any civil or administrative enforcement against corruption crimes? 

Applicable laws do not regulate the possibility of civil or administrative enforcement against corruption crimes.

5.4. What powers do the authorities have generally to gather information when investigating corruption crimes?

When investigating corruption crimes in Bosnia and Herzegovina, the prosecutor or other authorized bodies conducting the investigation may take all investigative actions, including the running of necessary expertise, questioning the suspect, examining witnesses, and taking necessary measures to ensure the safety of all persons in the proceedings.

The prosecutor is competent to give orders to other authorized persons to collect information and evidence in a manner permitted by law during the investigation procedure.

When conducting an investigation, it is essential to exercise the protection of the fundamental human rights and freedoms of the suspect and make the investigation course as objective as possible.

5.5. Is there any form of leniency law in your jurisdiction, allowing a party to a bribery or corruption crime to voluntarily confess to the crime in exchange for a release from liability or reduction of the penalty?

In Bosnia and Herzegovina, there is an institute of Plea Agreements, which allows the prosecutor and the accused person to negotiate the terms of a plea agreement until a verdict is pronounced. If a plea agreement is signed, it will include a guilty plea, in exchange for the prosecutor offering the court a range of sentences agreed upon by the parties, which may be less than the statutory minimum for the offense.

5.6. Can a person plea bargain in corruption cases? If so, how is such a process conducted? 

A person can make a plea bargain in corruption cases. The process begins with negotiations on the conditions under which the suspect/accused would plead guilty.

If the suspect/accused agrees to plead guilty, the prosecutor may offer: 

  i. A sentence below the legal minimum, by applying mitigation provisions,

  ii. A milder type of punishment or a different type of criminal sanction.

When making such proposals, the prosecutor must compile the general rules for sentencing and mitigations, respecting the limits of mitigation prescribed by the Criminal Law.

After the plea agreement is signed, it is submitted to the court. The court may accordingly adopt or reject the agreement.

If the agreement is adopted, a hearing is scheduled for the imposition of the sentence. If the court rejects the agreement, the main trial is scheduled, and the court proceedings continue.

Guide Contributors For Bosnia and Herzegovina

Fedja Bicakcic

Partner

fedja.bicakcic@bblegal.ba 

+387 33 844 808

 

Asja Cehajic

Associate

asja.cehajic@bblegal.ba 

+387 33 844 808

 

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