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The European, Middle Eastern and African Investigations Review 2018

Norway: Enforcer Overview

29 May 2018

ØKOKRIM

Norway’s National Authority for Investigation and Prosecution of Economic and Environmental Crime (ØKOKRIM) was established in 1989 with the purpose of handling the most serious and complex economic crime cases (eg, bribery and corruption, money laundering, tax, fraud) and environmental crime cases (eg, in the areas of nature, work environment, pollution). Our role is to investigate and, where appropriate, prosecute those cases that fall within that remit.

ØKOKRIM’s organisation is built up around specialised multidisciplinary teams, each holding primary responsibility for a specific crime area. Most teams are headed by a senior public prosecutor. Several special investigators are assigned to the teams, as well as additional public prosecutors – some senior and some junior. The senior public prosecutor follows the case through all stages; he or she is in charge of the investigation, decides whether to indict or not, and prosecutes the case in court. The case is handled by the prosecutor from ‘cradle to grave’. This concept is deemed crucial to successful investigation and prosecution of the most complicated white-collar crime cases.

Our investigators are professionals with either traditional law enforcement background, or with education and experience from auditing, accounting, etc. We take pride in having a highly competent staff with a wide range of skills and expertise.

ØKOKRIM takes on a small number of large economic and environmental crime cases. In considering whether to open a criminal investigation, the director of ØKOKRIM carefully applies the Prosecution Instructions section 35–4, which includes an assessment of the size and complexity of the investigation, whether an investigation requires cross-border actions and whether the financial loss is significant.

The vast majority of economic crime cases in Norway are investigated by the local police and prosecuted by local prosecuting authorities. ØKOKRIM has a specialised assistance team designated to providing assistance to local units in our fields of expertise.

ØKOKRIM receives a large number of requests for mutual legal assistance (MLA) from abroad. Thus, the agency assists foreign jurisdictions with their investigations into serious cases of economic and environmental crime. The agency is a contact point for MLA in corruption cases that fall within the scope of the 1997 Organisation for Economic Co-operation and Development (OECD) Anti-Bribery Convention.

ØKOKRIM is also heavily involved in international cooperation within the field of economic and environmental crime. ØKOKRIM is represented in a great number of international organisations, such as the OECD’s Working Group on Bribery, Interpol, the Camden Assets Recovery Inter-Agency Network and the Financial Action Task Force, just to mention a few.

Corruption and bribery

Although Norway is regarded as one of the countries in the world with the least corruption in society and business,1 there is no doubt that corruption poses a threat in our country too. A significant number of cases have been prosecuted in the past two decades concerning corruption in both the private and public sectors. A number of cases concerning bribery of foreign public officials have been investigated. Cases concerning corruption and bribery have been given high priority. Two teams at ØKOKRIM are now assigned to handle domestic and international corruption cases. In terms of results, we have a good track record over the years. However, by all probability, the number of convictions represents just the tip of a large iceberg.

ØKOKRIM’s Yara case has been described as a landmark international bribery case. It involved four former Yara International top executives (one of them engaged as a consultant) who were accused of bribing Libyan and Indian officials to obtain contracts. Yara is a world-leading company in the production and sale of fertilisers. In December 2016, the jury in the Borgarting Court of Appeals acquitted three of the defendants. However, the former chief legal officer was convicted by the jury on two counts of complicity to aggravated corruption. In a judgment delivered on 17 January 2017, the Court of Appeal sentenced him to seven years’ imprisonment.2

The former chief legal officer appealed against the judgment to the Norwegian Supreme Court. In September 2017, the Supreme Court unanimously dismissed his appeal. It is noteworthy that the Supreme Court stated that there is no basis for a reduced sentence when the corruption is committed towards a public official in a country with widespread corruption. In its reasoning, the Supreme Court stated, inter alia:

Once a criminal offence has been established, the purpose of the law indicates that otherwise similar cases must be assessed equally. In my view, relativisation of the protection under criminal law depending on the country affected by the corruption finds no support in sources of law.3

It should be added that the Yara case required a comprehensive international investigation, and ØKOKRIM received legal assistance from 14 different jurisdictions. Of particular significance was assistance provided by Swiss, French and US authorities.

ØKOKRIM last year secured a conviction in a corruption case involving the Norwegian Armed Forces.4 A former commander in the Royal Norwegian Navy was convicted by the Oslo District Court for gross corruption and embezzlement in his capacity as public officer in the Procurement Division of the Armed Forces’ Logistics Organisation. He was in charge of the sale of decommissioned vessels from the Norwegian Navy to a UK company. In the process leading up to the vessels being exported from Norway, the former commander was paid bribes by the UK company totalling (more than) US$155,000. The former commander was also convicted of contravention of the Norwegian Export Control Act. He ensured that the UK company was able to purchase the vessels by informing the Ministry of Foreign Affairs that the real end user of the vessels was the UK company, when in fact the real end user was a Nigerian company.

The case was investigated in cooperation with the City of London Police. The former commander was sentenced to four years, eight months’ imprisonment. In its judgment, the Oslo District Court, stated, inter alia, that it is a serious act of corruption when a public official misuses his position, that the bribes had given him significant economic advantage and that his actions posed a risk of significant loss of reputation for the Armed Forces. The conviction has been appealed.

A final international bribery case to be mentioned was decided by the Norwegian Supreme Court in autumn 2017.5 The chairman of the board of a listed Norwegian mining company was sentenced to four years’ imprisonment for bribes that provided the major shareholder of the company with sensitive information, as well as inside information about ongoing and crucial developments in the company, thus enabling the shareholder to sell a substantial number of shares at the best possible time and securing a substantial profit.

Tax crimes

According to ØKOKRIM’s threat assessment, tax crimes are likely to be the type of economic crime with the largest volume.6 Tax crimes remain an enforcement priority for ØKOKRIM.

One particular tax fraud case prosecuted by ØKOKRIM should be highlighted, as the case was brought all the way to the Grand Chamber of the European Court of Human Rights. On 15 November 2016 the Strasbourg court delivered an important judgment concerning the right not to be tried or punished twice.7

During a tax audit conducted by the tax authority it was revealed that the applicants, A and B, had failed to declare taxable income from the sale of shares. The profit from the transactions amounted to several million Norwegian kroner. The tax authority reported its findings to ØKOKRIM, where a criminal investigation was initiated. In the administrative proceedings the tax authority ordered the applicants to pay a 30 per cent tax penalty. In addition, the applicants were prosecuted and sentenced to terms of imprisonment in criminal proceedings for aggravated tax fraud. The applicants submitted that they had been punished twice for the same offence. However, the Grand Chamber found that there had been no violation of article 4 of Protocol No. 7 of the European Convention of Human Rights.8 The court observed that the administrative and criminal proceedings had been conducted in parallel and were interconnected, and that there had been sufficiently close connection between them, both in substance and in time. The Grand Chamber judgment is significant as it lays down the criteria for lawful parallel proceedings (administrative and criminal).

Securities crimes

Since 1999, ØKOKRIM has had a separate team investigating and prosecuting violations of the Norwegian Securities Trading Act. From its start, the team has focused on combating traditional market abuse, ie, insider trading and market manipulation. ØKOKRIM has paved the way for a new understanding in the national courts that certain violations of the Securities Trading Act have as grave consequences as other forms of serious economic crime. Today, Norwegian courts regularly hand out stiff penalties – several years’ imprisonment is not uncommon – for severe market abuse, thus contributing to a new level of general deterrence.

Although focusing on prosecuting the violations that could cause the greatest damage, ie, market abuse, including minor violations of this kind, ØKOKRIM has also worked hard to make people abide by other provisions of the Securities Trading Act, eg, provisions that aim at reducing the risk of insider trading taking place. The obligation to maintain correct insider lists is only one example. In general, ØKOKRIM puts much effort into assessing what additional violations to traditional market abuse should be prosecuted to achieve most deterrence compared to workload. Another element of this strategy has been through prosecution to convey that all parties involved in transactions that may constitute violations of the securities act can be held responsible, eg, brokers and fund managers. Also, ØKOKRIM has prosecuted and imposed fines on state bodies for violations of the Securities Trading Act.

Money laundering

Combating money laundering also falls within ØKOKRIM’s remit. Norway’s Financial Intelligence Unit (FIU) is a part of ØKOKRIM’s organisation. ØKOKRIM also has specialised teams assigned to investigation and prosecution of money laundering crimes. Money laundering is a huge topic; we limit ourselves here to mention that ØKOKRIM’s threat assessment report9 concludes that criminals increasingly seek the involvement of professionals, such as lawyers, estate agents, auditors, to assist in the laundering of the proceeds of crime and otherwise assist in criminal activities. In the past, ØKOKRIM has investigated several cases and secured convictions where lawyers contributed to the crimes, for example by misusing client accounts.

Environmental crimes

Since its establishment in 1989, ØKOKRIM has had a dedicated Environmental Crime Department focused on the areas of nature, pollution, work environment, animal welfare, art and culture. Investigation of these types of crimes can be challenging, and it requires high levels of specialist skills. Thus, the department has a multidisciplinary staff that includes biologists and chemists.

In the work against environmental crime in Norway, it has been a particular strength to have one central unit with the necessary experience and expertise that can assist the local police districts as well as run their own complex and principal cases. Outside Norway, the department cooperates with foreign police and prosecution authorities and is involved with Interpol and Europol in their different areas of expertise. Experience over the past 20 years shows that the department has contributed to putting a greater focus on environmental crime and thus raise the level of reaction to considerably stricter punishments throughout the field.

Among the cases prosecuted by the Environmental Crime Department, West Tank stands out as particularly important. It is the most serious environmental crime case ever adjudicated by Norwegian courts. The case concerned aggravated pollution crimes: tanks of a company in Norway containing waste from oil production exploded, causing immediate danger to the company’s employees because of exposure, and the spread of dangerous chemicals in a large surrounding area, which resulted in a number of people suffering serious health problems. The case was successfully prosecuted by ØKOKRIM, and resulted, inter alia, in the conviction of the company’s CEO. He was sentenced to two years’ imprisonment by the Norwegian Supreme Court.10

Corporate criminal liability

The concept of corporate criminal liability was introduced in Norwegian legislation several decades ago. In the Norwegian Penal Code (2005), section 27’s first subsection reads as follows:

When a penal provision is violated by a person who has acted on behalf of an enterprise, the enterprise is liable for punishment. This applies even if no single person has demonstrated guilt or meets the accountability requirement, see section 20.

Thus, strict corporate criminal liability is implemented in Norwegian criminal law. Corporate criminal liability applies to all forms of crimes,11 but it is particularly applied in corruption and bribery cases, as well as environmental crime cases.

The courts have a discretionary power to decide whether a penalty according to section 27 should be imposed or not. Section 28 of the Norwegian Penal Code (2005) includes a list of factors that are taken into account when determining whether an enterprise should be penalised under section 27, and in assessing the penalty. Section 28 (c) expressly mentions as a relevant factor ‘whether the enterprise could have prevented the offence by use of guidelines, instruction, training, control or other measures’.

It should be emphasised that it is not sufficient for a company to have adequate guidelines, etc, in order to avoid corporate liability. You have to abide by these guidelines in practice. A continuous and dynamic follow-up of guidelines and instructions is required.12

What about corporations who self-report? Indeed, we observe an increasing trend where companies wish to report their findings following an internal investigation.

As a starting point, we can confirm that ØKOKRIM has not issued specific guidelines concerning self-reporting in Norway. The director of Public Prosecution’s circular regarding penalty reduction applies.13 However, how much weight self-reporting should be given in corporate liability cases has yet to be tried by the Norwegian Supreme Court. From ØKOKRIM’s point of view, it should be emphasised that self-reporting is no guarantee that a prosecution will not follow. Nevertheless, self-reporting can be an important factor when determining what further action to take. It may have impact on the decision whether to institute a formal criminal investigation or not; it may have an impact on the types of measures that are employed in an investigation (eg, the use of coercive measures); or it may have impact on the indictment decision (whether to prosecute or not). Finally, if ØKOKRIM decides to hold the company liable, it will have an impact on the size of the fine. Voluntary disclosure and full cooperation will normally lead to sentence reduction. Self-reporting should be rewarded.

In the above-mentioned Yara case, Yara International agreed to pay 270 million kroner (fine) and 25 million kroner (confiscation) – totalling approximately US$37 million. It is the largest corporate fine to date in Norwegian criminal proceedings. The company was held accountable on three counts of aggravated corruption. In determining the size of the fine, ØKOKRIM, inter alia, took into consideration as a mitigating circumstance that Yara reported the case to ØKOKRIM, and that the agency had a good and constructive communication with the company and Yara’s investigators, and that Yara cooperated with ØKOKRIM, inter alia, by providing documents.14

Quality assurance work

ØKOKRIM puts great effort into securing due process at all stages of criminal proceedings. We spend considerable time and resources on teaching and training our staff in topics such as the requirement that officers should be objective and unbiased at all stages, the handling of documents protected by legal professional privilege (LPP), etc.

ØKOKRIM last year received strong criticism from a commission appointed by the director of Public Prosecutions with the task to evaluate the investigation of the so-called Transocean case – ØKOKRIM’s largest-ever tax evasion case – where all the defendants were acquitted in 2016.15 The director of ØKOKRIM has expressed very clearly that ØKOKRIM takes the criticism seriously and that the agency will take the findings and recommendations into account in its ongoing efforts to improve the quality of our work.

A government-appointed commission with a mandate to evaluate the remit and role of the specialised national law enforcement agencies, inter alia, ØKOKRIM, has made a proposal that ØKOKRIM be merged with the National Criminal Investigation Service.16 The commission’s report was circulated for consultation. The Minister of Justice has subsequently concluded that such a reform will not be implemented now.17

Although the commission presented a positive view of ØKOKRIM, the commission also criticised how the agency is organised; in particular it expressed concerns about insufficient separation between the investigatory and prosecutorial decision-making parties.

ØKOKRIM is attentive to this criticism. However, having practised as public prosecutors in the field of white-collar crime for many years, we strongly believe that a system in which the public prosecutor in charge of the investigation also makes the decision whether or not to prosecute (the indictment decision) as well as appear as an advocate before the court, secures accountability and high-quality results in these types of serious and complex criminal prosecutions. We fully agree that it is of utmost importance to have adequate systems in place for governance and quality assurance of cases. We acknowledge that being in a position of investigating and prosecuting our own cases, great emphasis on objectivity in decision-making is required. In 2011, a separate knowledge, management and innovation section was established within the agency, and significant progress has been made during recent years when it comes to in-house quality assurance work. Our work in this field has been greatly inspired by the activities of the UK Serious Fraud Office and our Nordic sister organisations, the Swedish Economic Crime Authority and the Danish State Prosecutor for Serious Economic and International Crime. However, we need to pay continuous attention to this topic.

Concluding remarks

ØKOKRIM has existed for almost 30 years. We are convinced that the agency has played an important part in combating economic and environmental crime over the years. Experience shows that it is essential to have a specialised agency dedicated to investigation and prosecution of the most sophisticated and complex white-collar crimes. There is certainly no shortage of work.

Notes

1 Transparency International’s Corruption Perceptions Index 2016.

2 Borgarting Court of Appeal’s Judgment 17 January 2017 (15-138815AST-BORG/01).

3 The Norwegian Supreme Court Judgment 15 September 2017 (HR-2017-1776-A) para. 26.

4 Oslo City Court Judgment 16 May 2017 (16-110357MED-OTIR/04).

5 The Norwegian Supreme Court decision 30. October 2017 (HR-2017-2063-U), not granting retrial of the judgment by Borgarting Appeals Court dated 2 May 2017 (LB-2016-19016).

6 ØKOKRIM Threat Assessment Report 2015-2016 www.okokrim.no/www/okokrim/resource.nsf/files/207516847-trusselvurdering_okokrim_15-16/$FILE/trusselvurdering_okokrim_15-16.pdf.

7 Case of A and B v Norway Grand Chamber Judgment 15 November 2016 http://hudoc.echr.coe.int/eng?i=001-168972.

8 The same conclusion was made by the Norwegian Supreme Court in its judgment of 27 September 2010 (Rt. 2010 s. 1121).

9 ØKOKRIM Threat Assessment Report 2015-2016, endnote 6.

10 See the Norwegian Supreme Court judgment of 19 January 2012 (Rt. 2012 s. 65). The two ØKOKRIM prosecutors were awarded the prestigious Prosecutor of the Year Award 2014 by the International Association of Prosecutors for their accomplishment.

11 An exception is violations of the Norwegian Competition Act; see the Norwegian Competition Act section 32 para. 5. However, the Norwegian Competition Authority has the authority to impose fines on companies.

12 See in this respect the Norwegian Supreme Court judgment 26 June 2006 (Rt. 2008 s. 996 para. 35-36), and the Norwegian Supreme Court Judgment 28 June 2013 (Rt. 2013 s. 1025).

13 The Director of Public Prosecution’s Circular 7 May 2007 - No. 3/2007 (penalty reduction).

14 ØKOKRIM’s press release on 15 January 2014 www.okokrim.no/artikler/wwww-9fdaqu.

15 ‘The Transocean case - Evaluation of ØKOKRIM’s investigation and prosecution’. Report submitted to the director of Public Prosecutions on 1 June 2017.

16 NOU 2017:11 Bedre bistand, bedre beredskap.

17 Press release from the Norwegian Ministry of Justice and Public Security dated 8 December 2017.

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