The Swedish Prosecution Authority is responsible for investigating and prosecuting alleged crimes committed by individuals in companies. In particular, the National Anti-Corruption Unit (the Unit) is responsible for investigating corporate conduct in respect of bribery crimes and closely related offences. The Unit consists of 10 specialist prosecutors and three economic accountants. Further, the Swedish Economic Crime Authority leads and coordinates the fight against organised crime, especially in respect of tax crimes, market abuse and accounting crimes. It consists of specially trained economic prosecutors, economic police officers, economic auditors and economic administrators.
The legislative framework governing the authorities' ability to investigate and prosecute corporate conduct consists primarily of the Swedish Penal Code and the Swedish Code of Judicial Procedure. In short, the Penal Code provides the substantive rules on criminal conduct and their consequences. The Code of Judicial Procedure provides, inter alia, the investigative measures available to the prosecutor during a preliminary investigation, such as seizure and search of premises.
In recent years, there has been a focus on strengthening the anti-bribery and money laundering legislation. On 1 June 2012, important changes were made in the Penal Code to provide clearer and more appropriate bribery legislation. An act ensuring the protection of whistle-blowers was adopted in January 2017. Furthermore, the focus in the European Union to provide tools to fight organised crime has resulted in the implementation of a fourth anti-money laundering directive, which applies to a larger number of operators than the previous directives and includes a few additional obligations for entities covered by the directive.
In other fields of law, the various Swedish authorities are empowered with different investigatory tools, such as dawn raids, frequently used by the Swedish Competition Authority and the Swedish Economic Crime Authority to investigate infringements of the Swedish Competition Act and crimes such as insider trading. High-profile cases in the past two years include dawn raids at the premises of several insurance companies and companies in the construction sector. In addition, the Swedish Economic Crime Authority conducted a raid at the headquarters of a bank following suspicions of unlawful disclosure of insider information in 2019. Further, the Swedish Tax Agency has many different tools to ensure compliance with tax rules, such as, inter alia, unannounced control visits.
The Environmental Code regulates criminal conduct against the environment, offences that are primarily committed in the course of company activities. Included in the listed 'penalty provisions' are different kinds of pollution, causing environmental disturbance, environmentally hazardous handling of chemicals, unauthorised environmental activity and obstruction of environmental control. The Environmental Code is supervised by several authorities, including the Swedish Environmental Protection Agency, the Surgeon General of the Swedish Armed Forces, county administrative boards, municipalities and other government agencies.
There is no general obligation under Swedish law to notify or self-report wrongdoings to the authorities; however, there are a few exceptions. Since 1999, chartered accountants have been obliged to report findings to the Swedish Prosecution Authority if they suspect that a crime has been committed by a company's management or board. External counsel is, according to EU legislation, obliged to report suspicions of money laundering or terrorist financing.
The Competition Act contains provisions on leniency and immunity from fines that may be offered to a company found to have infringed the Act if it is the first to notify the Swedish Competition Authority of an anticompetitive cooperation and the notification submitted by the company contains information that enables the Authority to carry out a targeted inspection. The discretion of the Authority to decide the extent of immunity and leniency is very broad. Further, when determining the reduction of fines, the Authority considers whether the evidence provided by the company represents significant added value to the investigation. Swedish legislation is based on the leniency programme applied by the European Commission.
ii Internal investigations
A company may conduct its own internal investigation at any time provided that it is made in accordance with relevant applicable legislation, such as labour protection and data protection legislation. Such investigations are often made within the scope of internal compliance programmes, but also if there are reasons to suspect that crimes have been committed in connection with the company's business activities. They are often conducted by external counsel, such as legal and information technology experts, and aim to discover malpractices by reviewing data and physical documents and interviewing relevant persons in the company. There are no general rules that oblige a company to disclose findings from an investigation to the authorities. However, as shown by the TeliaSonera case (see Section V.ii), it is often in the best interests of a company that has been accused of illegal conduct for it to disclose its findings to the general public in order to restore public trust.
The Swedish Corporate Governance Code (the Code) is a self-regulatory set of rules that apply to all Swedish companies whose shares are listed on a regulated market in Sweden; at present, there are two – Nasdaq Stockholm and NGM Equity. According to the Code, the board of directors is obliged to ensure that there is an effective system for follow-up and control of company operations and that there is a satisfactory process for monitoring companies' compliance with laws and other regulations relevant to company operations as well as companies' compliance with internal guidelines.
A new act aiming to ensure the protection of whistle-blowers was adopted in January 2017 – the Act on special protection for workers against reprisals for whistleblowing concerning serious irregularities (2016:749). According to this Act, employees who report a crime that may be sanctioned with imprisonment (including the crime of giving or receiving bribes), or thereby comparative misconduct in the course of company activities, may be awarded damages if the company imposes any kind of reprisal against the employee for reporting the misconduct. The Act applies to both monetary and social reprisals.
However, the Act does not grant a right for employees to report misconduct. Inter alia, an employee who reports serious misconduct may still be liable for damages pursuant to disclosure of trade secrets or breach of loyalty in employment agreements. The Swedish Corporate Governance Board promotes good corporate governance within listed companies. A major part of the Board's role is management of the Swedish Corporate Governance Code, which was introduced on 1 July 2005 and last amended on 1 December 2016. According to the Code, companies must have an internal audit function. If a company does not have a separate internal audit function, its board of directors must evaluate the need for such a function annually and justify its decision in its report on internal controls in the company's corporate governance report.
If a company introduces special reporting channels to enable employees to report suspected non-compliance with laws or internal codes of conduct, or similar activities, this must be done in accordance with the Swedish Personal Data Act, and since 25 May 2018, in accordance with the EU General Data Protection Regulation and the Swedish Data Protection Act. According to the Swedish Personal Data Act, and unless there are justifiable reasons, only public authorities may process personal data regarding crimes, judgments in criminal cases and coercive measures in criminal proceedings. Companies are generally obliged to obtain an authorisation from the Swedish Data Protection Board to be allowed to process such data, but there is an exemption from that requirement regarding whistle-blowing systems. However, companies must still comply with the basic requirements on whistle-blowing systems with respect to the processing of personal data. This requires, inter alia, that the data processing must only concern persons in key positions of the company or the company group, the information must be proportionate with regard to the purpose of the data processing and the suspicions must concern serious offences such as auditing crimes, corruption crimes, crimes in the financial sector, serious environmental crimes, serious safety deficiencies and very serious forms of discrimination or harassment. According to the Swedish Data Protection Board, the implementation of the EU General Data Protection Regulation does not require any changes in this regard.
i Corporate liability
Both natural and legal persons may be held liable for breaches of Swedish law. Specific corporate regulations in this respect may be found in many fields of law (e.g., competition, consumer protection, environment and employment). In addition, responsibility may be claimed through the application of general Swedish tort law. A Swedish tort claim requires intent or negligence in order to be granted. Needless to say, responsibility may also be claimed on the basis of contractual obligations.
Under Swedish law, only natural persons may be liable for criminal acts committed in the course of the activities of a company. The company itself cannot commit criminal acts. Of course, criminal acts may be committed in the course of the business activities of a company, and to this end, corporate fines may be imposed for criminal activities within a company (see Section III.ii). However, according to the Swedish Companies Act and principles derived from case law, criminal liability may be claimed from those in leading positions of a company. In principle this means that the board of directors and the chief executive officer, who are responsible for the management of the company, are liable for the company's conduct. There are examples in Swedish case law where all board members have been found guilty of criminal acts committed within a company.
Under Swedish tort law, a company is liable for the damage caused by it, unless a representative of the company acted beyond his or her competence. The representative may also be held criminally liable for conduct within the company's scope of business. Liability may in some cases be relevant for breaches of environmental and labour law. Furthermore, a representative may be held criminally liable for negligence, such as causing danger to employees or others.
In most cases, companies are also subject to civil liability caused by the actions of its employees. This includes civil liability caused by criminal acts of an employee, unless the employee acted for another company or for himself or herself as a private person. The liability is only relocated to the company if there are extraordinary reasons.
As stated above, companies cannot be subject to criminal liability under Swedish law. Therefore, a prosecution directed towards alleged criminal conduct in the activities of a company must be brought against a responsible individual. However, in addition to individual criminal liability, a company may be ordered to pay a corporate fine of between 5,000 kronor and 10 million kronor for crimes committed in the exercise of its business operations, if the corporation has not properly prevented the crime, or where the crime has been committed by persons supervising or controlling the business. It has recently been proposed to increase the maximum corporate fine from 10 million kronor to 100 million kronor for larger companies (with more than 50 employees and a minimum turnover of 80 million kronor).
It should be noted that corporate fines are not regarded as a criminal sanction. The imposition of a corporate fine requires that all the prerequisites in a criminal provision have been satisfied and that someone had criminal intent in respect of the prerequisites of that provision. Corporate fines have mainly been ordered in connection with environmental and occupational safety crimes. In relation to bribery, a corporate fine was imposed in about 15 per cent of cases in 2017 and the highest fine was 150,000 kronor.
For other infringements of Swedish law (e.g., in the fields of competition, consumer protection, environment and employment), the following sanctions may be applied, depending on the case at hand: an administrative fine, forfeiture, involuntary liquidation or limitation of business operations (the latter being applicable to companies active in the welfare sector).
In contrast to these corporate sanctions, the consequences of violations of competition rules may be far worse. Infringements of the Competition Act have led to administrative fines of tens of millions of euros and the European Commission has fined companies several hundred million euros for multi-jurisdictional infringements of the relevant provisions in the Treaty on the Functioning of the European Union.
In addition, a prohibition against carrying on a business may be imposed on a person who exercises control over an undertaking that participates in certain economic crimes, meaning that person will not be allowed to hold a leading position in a company in future.
iii Compliance programmes
Compliance programmes must be regarded primarily as preventing future misconduct and may go well beyond the legal requirements. However, it cannot be ruled out that well-implemented compliance programmes may, in some cases, mitigate the assessment of corporate sanctions, such as the amount of a corporate fine.
In contrast, poorly implemented compliance programmes or the absence of one may have an adverse effect in some cases. For example, when conducting business in high-risk areas, large enterprises are expected to have extensive compliance programmes and codes of conduct to prevent, inter alia, corruption crimes. A lack of such programmes may have an adverse effect in legal proceedings and shift some of the responsibility to managers, the board of directors or the enterprise itself. The effects of compliance programmes must therefore be assessed on a case-by-case basis.
Compliance programmes or similar instruments for the company's compliance with laws and regulations are mandatory for some companies. According to the Corporate Governance Code, which applies to all Swedish companies whose shares are listed on a regulated market in Sweden, the board of directors must ensure that there is a satisfactory process for monitoring the company's compliance with laws and other regulations relevant to company operations.
iv Prosecution of individuals
Not all breaches of the Penal Code result in dismissal of the employee. In fact, according to the legislature, the starting point is that crimes by employees outside their employment do not constitute a breach of the employment contract. However, crimes that may seriously harm the employer may be sufficient to motivate a dismissal.
The burden of proof in relation to dismissals and terminations of employment contracts on account of suspicions of criminal behaviour is set very high. In one case, the Swedish Labour Court held that the burden of proof for dismissal of an employee suspected of bribery is as high as it would be in a criminal proceeding.
In other cases, the employer and the employee who is suspected of a crime may have corresponding interests, for example if a high-level member of management is suspected of crimes in the performance and in the best interests of the company's business activities. Such cases often involve investigatory measures within the company's business premises and a risk of serious harm to the company's reputation. The company may then hire external counsels to undertake an internal investigation or to defend its employees in the court proceedings. Normally, however, a public defender is appointed to defendants and paid for by the state.
If the company pays for legal fees or damages for its employees, that payment shall be regarded as a taxable benefit.
i Extraterritorial jurisdiction
The main principle is that Swedish courts have jurisdiction in relation to crimes committed in Sweden or having its effects there. The courts also have jurisdiction in relation to crimes committed by Swedish citizens or individuals domiciled in Sweden, irrespective of where the crime was committed. Jurisdiction also exists where the crime was directed towards a Swedish legal or natural person. Note that, unlike many other states, Sweden has not been unwilling to prosecute crimes committed outside its territory.
Under the Penal Code, there are eight specific provisions giving courts jurisdiction for crimes committed outside Sweden. For example, one of these provisions ensures that Sweden has jurisdiction over crimes that can be regarded as committed against Sweden, such as tax and corruption crimes.
There are no particular rules regarding the geographical scope of corporate or directors' liability. However, if Swedish legislation affecting a company has extraterritorial application, the directors would need to ensure the company's compliance with that legislation to avoid the risk of enforcement of it by the Swedish prosecutor.
ii International cooperation
There is close cooperation between the Nordic countries (Iceland, Norway, Denmark, Finland and Sweden) regarding recognition and completion of judgments and penalties. The close similarity of the respective criminal laws of these states has enabled such cooperation, meaning, inter alia, that coercive actions ruled from a court of one of these states can be executed in another.
There are also a number of aspects related to membership of the European Union. One aspect is the effects of the Schengen Agreement, which applies to most EU Member States, Norway, Iceland, Liechtenstein and Switzerland. The Schengen rules provide for less internal border control within the European Union and harmonised rules for the crossing of an external border. Also, EU Member States have extensive police and judicial cooperation through Europol and Eurojust. Further, there is an EU convention that simplifies the extradition procedure between Member States. EU cooperation also governs the right to legal counselling, compensation to victims of crime, exchange of information in criminal registers, the protection of personal data, legal assistance in criminal matters and a strategy for criminality on the internet.
In addition, Sweden has numerous bilateral extradition treaties and multilateral conventions governing the mutual recognition of foreign rulings, etc.
iii Local law considerations
In general, the relevant Swedish authorities will provide assistance in criminal matters to another requesting state even if Sweden does not have an agreement on legal assistance with that state (i.e., there is no requirement for reciprocity). However, assistance is strictly limited and requires double criminality for the execution of some coercive measures (i.e., it is required that the act for which the request relates corresponds to a crime under Swedish law). However, exceptions are made from this requirement in cases of serious offences regarding requests from an EU Member State or from Iceland or Norway.
v YEAR IN REVIEW
i Changes in Swedish legislation
The Swedish legislative framework on corruption prevention was reviewed by the Council of Europe in 2013. In the subsequent report, the GRECO anti-corruption unit of the Council of Europe stated that Swedish legislation on the prevention of corruption works quite well in general. This was assumed to be a result of the Swedish principle of public access and the fact that Sweden has several state and private institutions that aim to control whether public authorities and market actors comply with laws and regulations. Nevertheless, the Council of Europe still considered that Swedish legislation on the prevention of corruption needed to be strengthened. It recommended Sweden should take measures regarding a number of areas and to introduce them during Spring 2015 at the latest.
Some of the changes recommended by the Council included new legislation that further ensures independence, impartiality and integrity of lay judges. The recommendations involved a system for proper guidance on ethical questions and training for the lay judges in matters regarding ethics and corruption. It was also suggested that a code of conduct directed at the members of Parliament be introduce to encourage a more proactive attitude concerning ethical questions and the identification of conflict of interests. For example, mandatory disclosure of potential conflicts of interest was recommended as well as clearer rules on gifts to members of Parliament.
The Council concluded in its second compliance report, adopted in October 2017, that Sweden has implemented satisfactorily or dealt with in a satisfactory manner six of eight recommendations in the evaluation report and that the two remaining recommendations have been partly implemented. Subsequent to the report, several measures have been taken to better ensure the independence, impartiality and integrity of lay judges, including legal amendments making it easier to dismiss lay judges who are not suited for the assignment, as well as obligatory training on topics such as ethical conduct and conflicts of interest. The government has also adopted a code of conduct for members of Parliament as suggested by the Council. The code contains a part dedicated to gifts and the requirement that members of Parliament must report gifts received in their official capacity to the Internal Service Department. A new act regulating the registration and processing of gifts received by members of Parliament has also been adopted, imposing an obligation on all members of Parliament to register gifts received in connection with their role.
However, mandatory disclosure of potential conflicts of interest has not been introduced and the Council thus finds that its recommendation in this regard is only partly implemented. Furthermore, the Council finds it regrettable that supervision of the code of conduct has not been entrusted to a mechanism capable of imposing sanctions to ensure its enforcement.
In October 2018, the Svea Court of Appeal found several people guilty of bribery in a case attracting much attention within the Swedish cultural sector. According to the court, bribes were given and received in conjunction with annual gala dinners arranged by two organisations in the cultural sector. The dinners had been arranged for many years and high-ranking officials from Swedish cultural authorities were often invited. During the events, guests were treated to a free three-course dinner with alcohol included. The court found that by inviting authority officials to the events in 2012, 2013 and 2014, the chairpersons of the two organisations had conducted bribery, and found the two chairpersons guilty of giving bribes. The court also found a number of authority officials guilty of receiving bribes after they had attended the dinners. The two chairpersons and the authority officials were sentenced to pay fines. In addition, the court imposed corporate fines on the two organisations that had arranged the dinners. The defendants have appealed to the Supreme Court, which has not yet decided if it will grant a leave to appeal.
After five years of investigation, three former members of the senior management of TeliaSonera, including the former chief executive officer (CEO), were prosecuted in September 2017 for gross bribery in relation to the 2012 TeliaSonera affair. The allegations involved corruption crimes in connection with telecommunications company TeliaSonera's establishment of business in Uzbekistan. The affair forced several members of the management team (including the CEO) and the board of directors to resign. Further, the former CEO was denied discharge from liability at the annual general meeting in April 2014, which is a very unusual measure with respect to a Swedish 'large cap' listed company. However, in February 2019, the Stockholm District Court acquitted the defendants, since the prosecutors had not proven that a person, who had connections to former Uzbek President Islam Karimov and who handled the transactions with TeliaSonera, held any official position or was a in a position of trust within the Uzbek telecommunications sector. As the events took place before 2012, the case was tried against the earlier wording of the Swedish Penal Code, according to which the definition of bribery was narrower than under the current legislation. This meant that fewer people were encompassed by the legislation at the time. The prosecutors have appealed the judgment to the Court of Appeal.
vi CONCLUSIONS AND OUTLOOK
Sweden is traditionally considered to be one of the least corrupt countries in Europe. In 2018, it was ranked the third-least corrupt country in the world, according to Transparency International's Corruption Perceptions Index, a result that indicates a comparatively low level of corruption. However, as illustrated by the cases described above, Swedish prosecutors keep investigating cases of suspected corruption and often request that companies and organisations should be subject to corporate fines.
1 Ulf Djurberg is a partner and Ronja Kleiser is an associate at Setterwalls Advokatbyrå AB.