Eran Elharar

The trend of tightening enforcement measures against corruption crimes has intensified over the past year, and increasing the punishment of these criminals has become a global effort. Israeli courts and the State Attorney General’s Office have also adopted this trend. However, the latest legislative initiatives of the Israeli government could adversely affect Israel’s ranking in the Corruption Perceptions Index (CPI). This could prompt foreign countries to increase their law enforcement efforts against Israeli companies and individuals.

Israel

1. Israeli legislation that restricts law enforcement and control capabilities against elected officials

During the brief period since its election, the Israeli government has initiated a legislative blitz whose main goal is to protect elected officials from law enforcement or control measures against them. Among other draft bills on the government’s agenda are the following:

• An amendment to the Gifts Law, which will allow civil servants to raise funds for themselves or for their relatives to finance legal or medical proceedings.
• An amendment to the Basic Law: The Government, whereby declaring the prime minister unfit for office will only be possible on the grounds of the prime minister’s physical or mental incapacity to perform his role.1.3
• An amendment to the Basic Law: The Government, so that a person with a criminal record may serve as a minister in the government (also known as the “Deri 2 Law”).
• A draft proposal of the “French Law,” which prohibits the investigation of an incumbent prime minister. Additionally, a draft bill that would subordinate the department for the investigation of police officers directly to the Ministry of Justice and give it powers to investigate prosecutors from the State Attorney General’s Office.
• A draft bill that will grant immunity from arrest to heads of authorities and to heads of regional councils, unless they are caught in the act of committing a crime involving the use of force, disturbing the peace, or treason.

The government is advancing these legislative proposals, despite the strong objection of Israel’s Attorney General, Adv. Gali Baharav-Miara.

2. Transparency International’s Corruption Perceptions Index

Transparency International’s Corruption Perceptions Index ranks 180 countries and territories around the world by their perceived levels of public sector corruption, ranking them on a scale of 0 (highly corrupt) to 100 (very clean).

The latest index, published in January 2023, gave Israel a score of 63 points for 2022, a four-point increase from its score in 2021. Thus, Israel’s rank rose from 29th place to 31st place in 2022.

However, Transparency International issued an alert that it has identified a downtrend in the number of investigations and indictments of corruption cases in Israel. As a result, it lowered Israel’s ranking in enforcement measures against corruption from “active enforcement” to “moderate enforcement.” This is an important warning, since a downtrend in Israel’s ranking could have repercussions on its legal and political relations in the international arena.

3. Consideration of criminal record as a precondition for participation in tenders

The Finance and Economy Directive, published by the Ministry of Finance’s Accountant General at the end of 2022, prescribes that government ministries must examine criminal information during their procurement processes through tenders. The directive states that bidders must submit an affidavit attesting to no criminal record. Additionally, bidders must issue their consent to the disclosure of information from the Criminal Register (which was prohibited until the directive came into effect). Tender committees may consider refusing an engagement based on criminal information issued to it.

4. Supreme Court: the punishment for crimes of bribery will be incarceration

The Supreme Court recently increased the punishment of Natan Foreman, a former executive of Egged Transportation (the largest public bus company in Israel), who was convicted of soliciting a bribe totaling EUR 1 million. The district court sentenced Foreman to nine months of community service, considering his age (73) and the time that elapsed since he committed the crime (18 years). The Supreme Court overturned the district court’s ruling and sentenced him to incarceration. This decision issued a clear message that, notwithstanding the significant extenuating circumstances, the price for corruption and bribery is imprisonment behind bars.

5. The filing of a derivative civil lawsuit against former minister Faina Kirschenbaum

After former minister Faina Kirschenbaum was convicted of accepting bribes, the State filed a civil suit demanding the return of ILS 6 million it claims Kirschenbaum and other defendants unlawfully took from the State’s coffers. The filing of this lawsuit constitutes another significant demonstration of the State Attorney General Office’s policy in recent years. This policy aims to enforce punishment for corruption crimes through economic means and nullify any economic benefit a convicted person may still retain.

6. Covert investigation of bribery and corruption and of rigging Ministry of Defense tenders at an alleged value of ILS 1 billion led to arrests

Dozens of suspects were detained for questioning last month on suspicion of grave economic corruption. The Israel Police and the Director of Security of the Defense Establishment arrested the suspects, including contractors and employees of the Engineering and Construction Division of the Ministry of Defense. They were arrested on suspicion of operating a massive cartel of dozens of companies and of rigging hundreds of tenders estimated to total ILS 1 billion. The suspicion is that the cartel has been operating for quite some time and bribed officials inside the Ministry of Defense and in the IDF.

USA

7. US Deputy Attorney General’s memo orders prosecution of cross-border corporate crimes when the foreign country where the crime was committed does not take adequate and effective law enforcement measures

US Deputy Attorney General Lisa Monaco issued a memo instructing US prosecutors to take action against crimes by international corporations that occur in foreign countries in instances where the foreign law enforcement officials procrastinate in domestic law enforcement. This is a dramatic change in US policy. As a result, greater intervention by US law enforcement authorities in relation to foreign corporations is likely, even in cases where the main crime scene is not in the United States.

8. Lenient enforcement against corporations cooperating with the authorities

The US Department of Justice has adopted lenient law enforcement policies in relation to cooperating corporations, particularly in instances where the corporation issues voluntary disclosure at its own initiative. Accordingly, the US Criminal Division published an update of its law enforcement policy. The update includes an expansion of the leniency policy in relation to all offenses under its purview (and not only for violations of the Foreign Corrupt Practices Act). The update also specifies the criteria for various leniencies in law enforcement. Similarly, the US Attorney’s Office published a policy document instructing prosecutors to take into account corporations’ voluntary and immediate disclosures of various violations.

9. US Department of Justice’s decision not to prosecute Safran for bribery in light of its voluntary disclosure and proactive cooperation

The US Department of Justice decided not to prosecute the French aerospace corporation Safran in respect of bribes given by employees of its American and German subsidiaries. This was despite findings that officers of the corporation’s subsidiaries paid bribes to Chinese government officials. The DOJ made this decision in light of the fact that Safran proactively cooperated with the investigation, issued disclosures to the authorities, and agreed to forfeit about USD 17 million.

Europe

10. Summary of anti-corruption activities in first year of European Public Prosecutor’s Office (EPPO)

The EPPO recently published a summary report of its activities in 2022. Established in June 2021, this independent body has been granted powers to investigate and prosecute cross-border crimes (particularly organized crime) against the European Union’s economic interests. The report states that during 2022, the EPPO opened about 865 investigations of suspected acts of corruption by public figures throughout the European Union.

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Barnea Jaffe Landa and Advs. Hadar Israeli, Anat Shubat, Eran Elharer and Shir Rosenzweig are at your disposal for any question in the areas of white collar, enforcement and compliance.

The counter-reaction against the constitutional revolution comes from diverse sources, from both within the legal system and outside it. This is part of a wider shift in Israeli public opinion, as also reflected in the emerging preference to appoint judges with a conservative agenda. One of the main casualties of this counter-reaction is the abuse of process defense doctrine, imported by Israeli courts from English law in the 1990s. For Israel, a country with no constitution, this was a major boost for individual rights, especially the basic human rights to due process. According to the doctrine, if administering a criminal proceeding substantially infringes on the sense of equity and fairness, even if a defendant committed the crime attributed to him, the court may revoke the indictment against the defendant without convicting him.

The abuse of process defense doctrine was not adopted in a void; it follows in the spirit of the constitutional revolution the Supreme Court started in the 1990s. In essence, it limits the state’s power over the individual.Yet, in recent years, following the counter-reaction to the constitutional revolution, it appears the abuse of process defense doctrine has fallen out of favor with the courts. At the same time, the state is attempting to recover the power it has lost through the constitutional revolution, under the banner of “governance,” even if this means prejudicing civil rights.

Role Reversal

Recently, the Supreme Court (Justice Amit) went so far as to criticize the excessive use defendants and their advocates have been making of the abuse of process defense in recent years. According to Justice Amit, abuse of process claims divert criminal proceedings from the correct path and from the purpose of investigating the truth, make the criminal process even more cumbersome and protracted, and effectively create a reversal of roles, as “the defendant becomes the prosecutor, and the prosecution must now prove it has acted lawfully.”

However, the doctrine has recently received inadvertent support from an unexpected source, as adopting the “aggregation theory” has become common practice among defense counsel.

Adoption of the “Aggregation Theory”

The “Nisso Shaham affair” caused a major stir in the Israel Police. In what was nicknamed the “commissioners affair,” over a short period of 16 months, seven commissioners retired or were dismissed from the police, after the Israel Police’s internal affairs unit investigated them on suspicions of sexual harassment and other sex crimes.

Only a few of these cases were prosecuted. In the Shaham case, the prosecution was able to prove that despite a conflict of interest (because of his consensual intimate relationships with female junior police officers), former Jerusalem District Police Commander Shaham handled various requests these officers made in a professional capacity (change units, staff a position, take leave to study, and so on).

However, the legal difficulty in the Shaham case was that even though the overall pattern arising from his conduct was wrongful, none of the acts crossed the line to criminal by themselves. This gave rise to the legal issue: might the defendant, a public servant, be convicted of fraud and breach of trust because of a recurring pattern, even if each specific act is not, by itself, an offense? This question led to a dispute among the courts, and eventually arrived before the Supreme Court.

The Supreme Court answered affirmatively in its majority opinion. It set the legal precedent that the “aggregation theory,” with the underlying legal ideology that “a broad view is required, as opposed to breaking the conduct down to smaller particles and analyzing each particle individually,” ought to be adopted. Thus, a conviction of breach of trust may be established based on aggregated actions that do not comprise an offense by themselves.

Aggregated Defaults

However, the aggregation theory’s implementation has recently taken a surprising turn in a new decision by the Tel Aviv District Court. In an obiter opinion, Judge O. Maor asserted that the aggregation thesis ought also to be applied to abuse of process claims. According to Judge Maor, revoking an indictment against a defendant ought to beexamined considering the authorities’ aggregated defaults. Thus, even if each individual default does not cross the line to violating the principles of justice and fairness, adding up all the defaults could establish a “total” that crosses the line to substantial infringement of the principle of justice.

Applying the “aggregation theory” to abuse of process claims substantially lowers the burden on the defendant. Nowadays, the defendant must point at a serious flaw in the authorities’ conduct, a flaw that severely violates the principles of justice. Statistics reveal that this burden of proof is very heavy, even impossible. On the other hand, pointing out multiple small defaults (which are very common) is much more easily done, and it would allow the defendant to clearly point out aggregated defaults that amount to a “material violation of the principles of justice and legal fairness,” establishing the abuse of process defense.

Obiter Opinion or Trend?

This is admittedly only an obiter opinion of the court, but as the saying goes, a gun appearing in act one will fire in act three. Once the legal basis for applying the “aggregation theory” to the abuse of process defense has been laid, this gives the defendant a very powerful tool, and defense attorneys are likely to use it extensively. According to some estimates, this claim might be former Prime Minister Benjamin Netanyahu’s main line of defense in his various legal cases.