The main anti-bribery and corruption legislation enacted thus far in Israel is the Penal Law, 5737-1977 ("the Penal Law") and the Prohibition on Money Laundering Law, 5760-2000.

On July 14, 2008, the Knesset (the Israeli parliament) approved Amendment No. 99 to the Penal Law. As a consequence, a new Section 291A regulating the offense of bribing a foreign public official was duly incorporated into the Penal Law.

Additionally, on January 25, 2010, the Knesset approved Amendment No. 103 to the Penal Law. Amendment No. 103 changed the penalty for accepting a bribe under Section 290 from seven to ten years' imprisonment, and the penalty for giving a bribe under Section 291 from 3.5 years to seven years' imprisonment.

Beginning from 2010, several orders that were amended on the strength of the Anti-Money Laundering Law were published, in which there were imposed on various entities active in the private sector, for example, banks, credit card companies, currency service providers, insurance companies, investment houses, stock exchange members, precious stone dealers, etc., an array of duties principally aimed at preventing money laundering including, inter alia: "Know Your Customer" procedures, the recordal of identification details, verification and identification duties, reporting, record-keeping, ongoing control, the determination of anti-money laundering policies and the like.

In March 2021, there was published an amendment to the Prohibition on Money Laundering (Banking Corporations' Requirement regarding Identification, Reporting and Record-Keeping for the Prevention of Money Laundering and the Financing of Terrorism) (Amendment) Order, 5781-2021, concerning the provision of financial asset services (in addition to the provision of credit card services as included in previous orders). In this amendment, adjustments were made with respect to individual requirements in the field of cryptocurrency and electronic transfers. Thus, for example, there was defined for the first time in the Israeli legislation the terms "virtual currency", "a wallet address for virtual currency", as well as "an operational sum" in virtual currency.

Yes.  The bribing of domestic public officials constitutes a criminal offense under Section 291 of the Penal Law.

A "public official" is defined in Section 290(b) to include an employee of a corporation that provides a service to the public.

In addition, Section 292(a) of the Penal Law specifically prohibits the giving of a bribe with the intention of influencing the conduct, progress or outcome of a sports contest or any other contest, in which the public has an interest in the conduct or outcome thereof.

Under Section 293(5), it is immaterial whether the bribe was given by the giver himself or through another person; whether the bribe was given directly to the person who took it or to another for him; whether in advance or after the event; and whether it is enjoyed by the person who took it or by another.

Section 294(b) clarifies that a person who offered to give, or promised to give something by way of, a bribe, even if such offer or promise was not met with a response, will be considered as someone who gave a bribe.

Under Section 295(c) of the Penal Law, it is prohibited to give consideration to an intermediary so that the intermediary will give a bribe, or with the view that the intermediary will induce a public official to give preferential treatment or practice discrimination.

Yes.  As noted in the response to "Has there been a specific anti-bribery and corruption law enacted in your jurisdiction in the last ten years?", bribing of a foreign public official constitutes a criminal offense under Section 291A of the Penal Law. (Said provision was enacted into the Penal Law in 2008.)

Under Section 295, it is also prohibited to give consideration to an intermediary so that the intermediary will give a bribe to a foreign public official, or with the view that the intermediary will induce a foreign public official to give preferential treatment or practice discrimination.

Section 295 also prohibits accepting such consideration by the intermediary.

Yes.  Under Section 290 of the Penal Law, a public official who accepts a bribe for an act connected with his position commits a criminal offense.

Section 292(b) of the Penal Law prohibits accepting a bribe specifically in the context of a sports contest or any other contest, in which the public has an interest in the conduct or outcome thereof.

According to Section 293(6), it is immaterial whether the function of the person who took the bribe was one of authority or service, permanent or temporary, general or specific, and whether its performance was with or without remuneration, voluntarily or in the discharge of an obligation.

Under Section 293(7), it is immaterial whether the bribe was taken for a deviation from the performance of the receiver's obligation or for an act which the public servant must perform by virtue of his position.
See also our answer to "Is a bribe payment to domestic government officials prohibited by the legislation?" with respect to Section 293(5).

Section 294(a) of the Penal Law clarifies that a person who solicited or stipulated that a bribe be given, even if such solicitation or stipulation was not met with a response, will be considered as someone who accepted a bribe.

Section 294(c) clarifies that if a person is a candidate for any position, even though he was not yet assigned to it, and if any function was assigned to a person, but he has not yet begun to perform it, he shall be treated like a person who performs that function.

Section 294(d) states that in a bribery trial, the Courts shall not entertain any argument (1) that there was a defect or invalidating circumstance in the assignment of the function to, or the appointment or election of the person who took the bribe; (2) that the person who took the bribe did not perform or did not even intend to perform the act, or that he was not competent or authorized to perform it.

In addition, under Section 295(a) a person shall be considered as having accepted a bribe if he received consideration in order to give a bribe. According to the said section, it is immaterial whether any consideration was given to such person or to any other person for acting as an intermediary, or whether such person intended to give a bribe [from the outset].

Under Section 295(b), a person shall be considered as having accepted a bribe if he received consideration in order to induce – whether by himself or through any other person – a public official or a foreign public official, to give undue preference or to practice discrimination.

Finally, under Section 295(b1)(1), a person with significant influence on the election of a candidate for the position of Prime Minister, Minister, Member of Knesset (the Israeli Parliament), Deputy Minister or head of a local authority ("candidate"), shall be considered as having accepted a bribe, if he receives consideration in order to influence a candidate to give undue preference or to discriminate.

Israel's penal laws apply both territorially and, in some cases, extraterritorially.

Section 12 of the Penal Law expressly states that Israel's penal laws shall apply to "domestic offenses".

The term “domestic offense” is defined in Section 7(a) of the Penal Law to mean: (i) an offense, all or part of which was committed within the territory of Israel; or (ii) an act in preparation for the commission of an offence, an attempt [to commit an offense], an attempt to induce another to commit an offence, or a conspiracy to commit an offence that was committed abroad, on condition that all or part of the offense was intended to be committed within the Israeli territory.
Sections 13, 14 and 15 deal with "foreign offense", which is defined in Section 7(b) as "an offense which is not a domestic offense."

Sections 13 and 14 of the Penal Law provide that Israel's penal laws shall also apply, inter alia, to foreign offenses committed against the State of Israel (e.g., foreign offenses committed against Israel's national security or foreign relations) or against Israeli citizens or residents.

According to Section 14(b), if an offense was committed on a territory that is subject to the jurisdiction of another state, then Israel's penal laws shall apply to it only if all the following conditions are met: (1) it is an offense also under the Laws of that state; (2) no restriction on criminal liability applies to the offense under the Laws of that state; (3) the person was not already found innocent of it in that state, or – if he was found guilty – he did not serve the penalty imposed on him for it.

Section 15(a) of the Penal Law provides that Israel's penal laws shall apply to foreign offenses by a person who – at the time the offense was committed or thereafter – was an Israeli citizen or resident.

However, according to Section 15(b)(2a), the restriction in Section14(b)(1) shall not apply if the offense is bribing a foreign public official under Section 291A.

Yes.  Section 23(a)(2) of the Penal Law sets out the scope of corporate criminal liability for offenses committed with criminal intent or with negligence (bribery of public officials is an offense that requires proof of criminal intent).
Section 23(a)(2) anchors the “Theory of Organs”, which attributes the thoughts and actions of the corporation's organs to the corporation itself.

Under Section 23(a)(2), criminal liability can be imposed directly on corporations, if, under the circumstances, the perpetrator's actions and criminal intent or his negligence, while committing the offense, can be regarded as the actions and criminal intent or negligence of the corporation, in light of the perpetrator's position, authority and responsibilities in managing the corporation's business.

The Israeli case law has established two alternative tests in order to determine whether a person is to be considered a corporate organ: the organizational test and the functional test.

Additionally, after establishing that the perpetrator is the corporation's organ, according to Israeli case law, the court must find, as a matter of legal policy, that it is appropriate for the corporation to be held criminally liable for the actions of its organ ((1) Did the legislation intend to exclude corporate criminal liability from its scope; (2) Was the organ’s action taken in the course of fulfilling its duties; and (3) Was the action of the organ for the benefit of the corporation, or at the very least not aimed against it).

Thus, if a person who pays or accepts a bribe is considered an organ of the corporation on the basis of either the organizational or functional tests, and if the court holds that it is appropriate for the corporation to be held liable for the actions of the organ, then the corporation is criminally liable for its organs bribery offense.

We note that, while we are not familiar with a case in which criminal liability was imposed on a corporation for accepting a bribe (as opposed to cases in which corporations were found guilty for giving a bribe), such possibility exists by virtue of Section 23(a)(2) that anchors the Theory of Organs, and by Section 290(a)(1) which deals with accepting a bribe and refers not only to individuals but also to corporations.

The penalty for taking a bribe under Section 290, Section 295(a) or Section 295(b), is up to ten years' imprisonment, or the higher of either a fine five times greater than the fine specified in Section 61(a)(4) of the Penal Law (i.e., NIS 1,130,000, equal to approximately USD $364,500) or a fine four times greater than the value of the benefit the perpetrator gained or intended to gain by committing the offense.

We note that the prescribed fines are maximum fines. According to the State Attorney's Guidelines on Bribery Punishment Policy (Guideline No. 9.15, last updated on December 16, 2019), to the extent a defendant benefited substantially from the bribery-related offense, the prosecution must ask the court to impose the maximum fine permissible under law.

The penalty for bribing a public official under Section 291 is up to seven years' imprisonment or a fine as prescribed in Section 290(a) of the Penal Law.

The penalty under Section 292 is up to three years' imprisonment.

Under Section 295(b1)(1), the penalty for accepting consideration in order to influence –a candidate to perform an act connected to his position is three years' imprisonment. Where the consideration was accepted in order to influence a candidate to give undue preference or to discriminate, the penalty is ten years' imprisonment or a fine as prescribed in Section 290(a) of the Penal Law.

The penalty under Section 295(c) for giving consideration to an intermediary so that the intermediary will give a bribe or that the intermediary will induce a public official to give preferential treatment or practice discrimination – is giving a seven years' imprisonment.

The penalty under Section 295(c) for giving a bribe to an intermediary in order to influence a candidate to perform an act connected to his position – is up to one year and a half imprisonment. Where the consideration was given in order to influence a candidate to give undue preference or to discriminate, the penalty is five years' imprisonment or half of the fine prescribed in Section 290(a) of the Penal Law.

Finally, when a person has been convicted of giving or taking a bribe, in addition to the imposed penalty, the court may, under Section 297, order the forfeiture of what was given as a bribe. The court may also order the person who gave the bribe to pay to the state treasury the value of the benefit he derived from the bribe.

Moreover, pursuant to section 297(b) of the Penal Law, the mere act of forfeiture does not negate the possibility of the state filing a civil claim against any person who has been convicted of having committed a bribery offense, in order to return the bribe money that was received. As of recent, it may be seen that the tendency of the Israeli Supreme Court has been to encourage the state to initiate proceedings in order to exercise its right to money that was transferred within the ambit of a bribery offense "at the expense" of the State. Thus, for example, in Civ. App. 6266/19 The State of Israel The Civil Administration in Judea and Samaria v. Zvi Avnon (25.8.2021), there was deliberated a claim filed by the state for the return of bribe money that a civil servant had received, in which the Supreme Court held that the state is entitled to receive such bribe money because they constitute part of the resources that were unlawfully taken from the state as a consequence of the offense.

We note that, according to Section 4 of the Interpretation Law, 5741-1981, the term "a person", includes a corporation.

Under Section 290(a)(1), the penalty for corporations for bribing a public official is a fine ten times greater than the fine specified in Section 61(a)(4) of the Penal Law (i.e., NIS 2,260,000, equal to approximately USD $729,000).

The penalties for violating other bribery offenses are outlined in our answer to "What is the penalty for individuals violating the law?".

Implementing a compliance program has not been recognized yet in the Israeli case law as a defense to corporations' criminal liability, in the context of bribery offenses.

Nevertheless, implementing a compliance program before the organ committed an offense may certainly be a consideration in deciding not to file charges against the corporation. Thus, for example, the Israeli Securities Authority ("ISA") has stated that when a corporation implemented an effective compliance program prior to the occurrence of the offense, it will consider recommending the prosecution not to file criminal charges against the corporation and instead to initiate an administrative proceeding against it.  Such consideration could potentially be recognized in the context of bribery offenses.

Recently, the Israeli State Attorney laid down standards for the prosecution and punishing of a corporation, in Guideline No. 1.14, published on October 2, 2019. One of the criteria for prosecuting a corporation is the degree of failure in the culture of compliance within the organization, and the existence or absence of an effective compliance program. Should the circumstances of the offense indicate a widespread failure on the part of a corporation, then the public interest in prosecuting the corporation will naturally be stronger.

According to the Guidelines, when considering the extent and scope of the failure, the prosecution must consider, inter alia: the number of employees and office holders involved in the commission of the offense; whether the corporation has committed other offenses or violations of law in the past; the extent to which the offenses formed part of accepted practice within the corporation; and whether the failure is local, despite the existence of a culture of compliance within the organization, or is widespread. According to the Guidelines, a key manifestation of a culture of compliance within an organization is the existence of a compliance program.

The Guidelines further provide that the existence of a compliance program does not exempt the corporation from criminal liability, and does not, in and of itself, constitute a consideration that would prevent a corporation from being prosecuted. However, the existence of an internal compliance program would be considered a mitigating factor when it can be demonstrated that the program is effective and, in practice, is accompanied by an organizational culture that encourages compliance. 

Under the guidance of the State Attorney, no uniform definition has been ascribed to the content of the internal compliance program, and it should be tailored to suit the individual and specific needs of each corporation, based on its inherent characteristics. However, the Guidelines specify the number of components that should largely be included in an effective compliance program, namely that: 

• The compliance program is based on an assessment of the major risk factors of the corporation, according to its characteristics. 
• The compliance program establishes principles of action and procedures for the prevention and detection of offenses in areas identified as risk factors of the corporation.
• The senior echelons in the corporation are familiar with the content of the compliance program and are working to implement it.
• An employee within the corporation has been appointed and tasked with responsibility for the compliance program.
• The corporation maintains training and updating mechanisms regarding the principles of the compliance program for its employees and related entities.
• The corporation exercises reasonable control and supervision measures to ensure the implementation of the compliance program.
• The corporation makes periodic assessments regarding the effectiveness of the program, re-assesses risks and adjusts the enforcement mechanisms accordingly.
• The corporation has in place mechanisms that allow employees and other individuals to report on corporate violations and that also facilitates anonymous reporting mechanisms.
• The compliance program is enforceable in practice by taking proper disciplinary measures against employees in the organization who violate the law or against those responsible for the corporate compliance failures.

It is important to note that the burden for demonstrating that an organization has in place an effective compliance program vest on the corporation and, therefore, it is imperative to document all processes related to the establishment and implementation of an appropriate and effective compliance program within the organization.

In addition, implementing a compliance program may also be a factor in the court's decision to authorize a plea bargain. In the Siemens Israel case (in which Siemens AG transferred through Siemens Israel Ltd. USD 2.5 million in bribes to top executives at Israeli power utility Israel Electric Corporation in return for favoring Siemens in bids valued at hundreds of millions of Euros) ("the Siemens Case"), the District Court of Tel Aviv noted that the compliance programs that Siemens Israel Ltd. implemented before the criminal investigation against it was initiated in Israel – is a major consideration in its decision to approve the plea agreement.

Finally, we note that theoretically speaking, the argument of compliance program constituting a defense to corporations' criminal liability may be raised in the context of the question regarding the "appropriateness" of imposing criminal liability on the corporation.

In particular, a corporation could argue – as part of the third test which examines whether the action of the organ was to the benefit of the corporation – that by acting in contrast to the corporation's compliance program, the organ acted against the benefit of the corporation, and therefore it is inappropriate to impose criminal liability on it.

Deferred Prosecution Agreements

Section 67 of the Criminal Procedure Law (consolidated version), 5742-1982 ("the Criminal Procedure Law") gives the prosecution the authority to refrain from filing an indictment against a suspect, and to close the case against him, if the suspect agrees to confess to committing the offenses attributed to him and to fulfill the conditions specified in the deferred prosecution agreement.

According to Attorney General Directive 4.3042, a deferred prosecution agreement can be reached not only when the suspect is an individual, but also when the suspect is a corporation. A deferred prosecution agreement may only be signed with respect to misdemeanors or infractions, i.e., offenses for which the maximum penalty is no more than three years' imprisonment.

Nevertheless, we note that in 2016, the German conglomerate Siemens AG reached a deferred prosecution agreement with the Israeli prosecution in the Siemens Case. According to the agreement, in return for not filing an indictment against it, Siemens AG agreed to pay a fine of NIS 160 million and to admit to transferring, through Siemens Israel Ltd., USD 2.5 million in bribes to top executives at Israel Electric Corporation.

Another example is the deferred prosecution agreement signed in 2018 with one of the major pharmaceutical corporations in Israel, Teva Pharmaceutical Industries Ltd. ("Teva"). In this case, Teva agreed to pay a NIS 75 million fine and admitting to bribing foreign public officials in Russia, Ukraine, and Mexico. In exchange, the prosecution agreed not to file criminal charges against Teva.

Leniency Agreements

"Leniency agreement" or "plea agreements" are a common practice in Israel, also with respect to corporations.
For example, in the Siemens Case, Siemens Israel Ltd. reached a plea agreement with the prosecution in 2017, according to which, Siemens Israel Ltd. admitted to conspiracy to commit a crime (instead of the more severe original indictment, which attributed to Siemens Israel Ltd. bribery, fraud, and breach of trust, and money laundering offenses) and agreed to pay a NIS 63 million fine to the State of Israel. The plea agreement was authorized by the District Court of Tel Aviv.

In another case, the Magistrate Court of Tel Aviv authorized a plea agreement between the prosecution and Nip Global Ltd. As part of the plea agreement, Nip Global Ltd. admitted to bribing foreign public officials in Lesotho through a local agent and agreed to pay NIS 4,500,000.