CLICK TO EDIT MASTER TITLE STYLE. Myanmar Compliance Update James Finch, Partner Shanghai, China: September,

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1 CLICK TO EDIT MASTER TITLE STYLE Myanmar Compliance Update James Finch, Partner Shanghai, China: September,

2 Introduction to Myanmar How often asked about democracy? Location Size, population, landmass Recent history. 18 months constitution, Parliament rapid development of laws Government crossover, president, MIC head opposition to law. Aung San Suu Kyi my view has changed. President Thein Sein. The man in the street mitzone dam Minister information, Dawei coal plant Going back, our diplomats ask? Everything changing. Change is essence of life. Sanction update relevance to compliance. Blacklists, SDN, compliance nightmare story my employee.

3 Relevant Laws Quite a simple legal scheme Note: use full presentation later ask me for copy The National Drug Law of 1992 (the National Drug Law ) : Main Law The Control of Imports and Exports (Temporary) Act of 1947 (the Control of Imports and Exports Act ) The Public Health Law of 1972 (the Public Health Law ) The Penal Code of 1861 (the Penal Code ) The Narcotic Drug and Psychotropic Substances Law of 1993 (the Narcotic Drug and Psychotropic Substances Law ) The Suppression of Corruption Act of 1948 ("the Suppression of Corruption Act") Context of Parliament and new draft anti corruption law no gazetted draft. UN Convention Against Corruption No precedent. 3

4 Regulatory Authority The Myanmar Food and Drug Board of Authority ("the Board") was formed under the National Drug Law. The chairman of the Board is the Minister for Health. The Board has wide ranging authorities and responsibilities. laying down the national policies relating to registration of drugs; determining the qualifications of persons entitled to apply for licenses and the terms and conditions for the manufacture, storage, distribution and sale of pharmaceutical raw materials or registered drugs; stipulating terms and conditions for the manufacture, import, export, storage, distribution and sale of pharmaceutical raw materials or registered drugs; determining good practices for assurance of quality in respect of manufacture, clinical tests and laboratory analyses of pharmaceutical raw materials or registered drugs and all matters relating to drugs; permitting, refusing, temporary revocation and cancellation of registration of drug; granting, refusing, temporary revocation and cancellation of a license; stipulating terms and conditions relating to labeling of drugs, and advertising; determining and canceling any type of substance as a drug; prescribing primary laboratories and appellate laboratories and stipulating terms and conditions relating to food. 4

5 Regulatory Authority continued The Board has the power to delegate to any organization or any person its functions and duties. Central Food and Drug Supervisory Committee and Food and Drug Supervisory Committees ( the Supervisory Committees ) in every Myanmar State, Region, District and Township were formed. The Food and Drug Administration ( FDA") was formed under the Depart of Health ( DOH ) under the MOH to administer all food and drug matters. FDA plays a major role in monitoring food and drug registration. Those who wish to manufacture, import, export, store, distribute and sell pharmaceutical raw materials or drugs must register the relevant these with the FDA. 5

6 Representatives Representatives, such as sales reps must be registered Unlike finished drug registrations, the applicant for active raw materials must be a registered business representative. Only a person who has been granted registration under the Registration of Business Representatives Order No. 2/89 issued by the Ministry of Commerce can carry on business as a business representative in the country. Simple procedure, submit contract. Government policy against trading. History foreign companies eliminated from business. Practical solution [captive local importer with service contracts can act as unregistered agent] gives rise to anti corruption issues. 6

7 Penalties specific to Drug laws None related to corruption but foreign compliance specialists often ask about these. The National Law prohibits the manufacture, importation, exportation, storing, distribution or sale of the following: a drug which has not been registered; a drug whose registration has been revoked temporarily or cancelled; fake drug, drug differing from standards, deteriorated drug, adulterated drug; a drug which has been manufactured with harmful substances; a dangerous drug which is determined by notification as not fit for utilization by the MOH. The National Drug Law prohibits the manufacture, storing, distribution or sale of a pharmaceutical raw material or drug without a license. In instituting legal proceedings under the National Drug Law, prior approval of the MOH or the organization or person delegated with powers for this purpose must be obtained by the prosecutor. 7

8 Particular Criminal Penalties Under ND Law Fake Drug is defined by section 2 (d) of the ND Law as a drug the whole or part of the label of which is an imitation or resemblance by various means or is written similarly to that of a licensed drug, as a drug with respect to which the expiration date or manufacturer or distributor or place of manufacture or country of manufacture is fraudulently shown a registered drug with respect to which it is fraudulently claimed that the drug was manufactured according to the formula mentioned at the time of registration of the drug when this is not the case. Section 2 of the ND Law defines a Drug Differing from Standards as a drug which is not in conformity with the specifications of a relevant drug or a drug which is lower or higher than the minimum or maximum standards prescribed by the Board of Authority in respect of the standard of drugs. Deteriorated is defined by section 2 (g) of the ND Law as a drug the expiration date of which has been reached or is past or a drug which has so denatured in any manner that it has become a drug differing from required standards. 8

9 Penalties Adulterated Drug is defined by section 2 (h) of the ND Law as a drug which contains, wholly or partly, a deteriorated drug, other drugs or substances. Any alteration of the name and address of the license holder must be submitted thereto. 9

10 The Penal Code continued Section 274: states whoever adulterates any drug or medical preparation in such a manner as to lessen the efficacy or change the operation of such drug or medical preparation, or to make it noxious, intending that it shall be sold or used for, or knowing it to be likely that it will be sold or used for, any medicinal purpose as if it had not undergone such adulteration, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand kyats, or with both. Section 275 : states whoever, knowing any drug or medical preparation to have been adulterated in such a manner as to lessen its efficacy, to change its operation, or to render it noxious, sells the same, or offers or exposes it for sale, or issues it from any dispensary for medicinal purposes as unadulterated, or causes it to be used for medicinal purposes by any person not knowing of the adulteration, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand kyats, or with both. 10

11 Section 276: states whoever knowingly sells, or offers or exposes for sale, or issues from a dispensary for medicinal purposes, any drug or medical preparation as a different drug or medical preparation shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

12 Bribery definitions and basic law The two laws run parallel as described later. Neither the Penal Code nor the Suppression of Corruption Act give a specific definition of bribery. Both the Penal Code and the Suppression of Corruption Act use the expression "taking gratification". Section.161 of the Penal Code provides that "the word "gratification" is not restricted to pecuniary gratifications, or to gratifications estimable in money". Includes hospitality but not charitable or political donations to licensed party. Both Sections 161 to 165 of the Penal Code and s. 2 of the Suppression of Corruption Act provide for an offence of receiving bribes by a public servant. These provisions focus on the receipt of such advantages by government officials and the penalties that would be imposed on such government officials if undue advantages are granted. A party granting a gratification determined to be illegal under these provisions would also be guilty of a crime pursuant to ss. 109 and 116 of the Penal Code. These provide that a person making a payment or making an offer to pay or making promises to pay would, if the payment itself were considered wrongful, be considered an abettor. The abettor would be exposed to the same penalty as that which would apply to the official if such an official were to accept the payment. An offer to make an illegal payment to a public official is an offence even if the public official refuses to take it.

13 Specific criminal issues Private person or company no crime to bribe unless public function. Attempted bribery incoatecrime Can a company commit bribery? Mens rea issue better modern view; Indian cases. Vicarious liability (employer for employee). In Myanmar applies to negligence, no cases in crimes but modern view is yes. No personal liability for board members or senior executives for employees bribery, unless involved.

14 Intermediaries, facilitating payments What about if bribery committed through intermediary? 5 (4) of the Interpretation of Expressions Law of 1973 the general offences under the Penal Code can be committed through an intermediary or third party.[accessory before fact common law] The Penal Code makes no exemptions for de minimis amounts. However, under the Suppression of Corruption Act, judges may exercise their discretion in assessing whether a small payment is considered to be corruption. The Suppression of Corruption Act does not, however, define what constitutes a small payment.

15 Statutes of limitation, penalties No statutes of limitation Under the Penal Code, the penalties are imprisonment of up to three years and/or a fine. The Penal Code makes no mention of the amount of fine for corruption. The offender is therefore liable to an unlimited fine, but it cannot be excessive (s. 63 of the Penal Code.) Under the Suppression of Corruption Act, the penalties are imprisonment of up to seven years. Also all benefits proven to have been acquired by the accused in committing the crime may be confiscated.

16 Personal jurisdiction, enforcement; transparency Personal jurisdiction. A person can be liable for an offence under ss. 2 and 3 of the Penal Code and s. 3 of the Suppression of Corruption Act if the relevant act or omission either: (a) took place in Myanmar; or (b) took place outside Myanmar and the person concerned is a citizen of Myanmar. Enforcement agency. The Myanmar Police Force is responsible for investigating corruption and Law Offices Prosecutors (whether at the Union, State, Region, District or Township level) are responsible for prosecuting corruption.. The Myanmar Police Force is a department under the Ministry of Home Affairs. Law offices are accountable to the Attorney General. Accordingly, neither of the agencies are independent of the government. Transparency International ranks Myanmar as 180 th out of 182 in its 2011 Corruption Perception Index, with a score of 1.5. [History English history.]

17 Self reporting, plea bargaining, books, reporting No statutory obligation to self report. No statutory mechanism for plea bargaining but it s done in practice. No recent or pending corruption cases. Precedent ranges from the 40s to the 80s. No specific penalty for maintaining books and records in a way that hides bribery. A company can mitigate a bribery charge by demonstrating procedures against are in place. No reporting requirements in law for government private sector or party officials to report political donations. Unpublished government regulation may require. Reporting doesn t exonerate corruption.

18 In Practice main question, quo vadis Most often asked compliance question trip to show something how resolved. Quo vadis. Is all change good? Violation human rights v. dishonesty. Traditional government official bad form issue. Now changing. Hospital tax case.

19 CLICK TO EDIT MASTER TITLE STYLE Excellence Creativity Trust Since