More prosecution prospects in Saudi Arabia’s fight against corruption
The Saudi Council of Ministers approved a robust new legal framework in July 2024, aimed at addressing corruption among government employees. This legislation, known as the Saudi Oversight and Anti-Corruption Authority (Nazaha) Law, will take effect on November 7, 2024. This law, initially enacted by Prime Minister Decree No. 165 of 2011, was updated by Law No. M/25 of 2024. The New Nazaha Law aims to intensify these efforts.
Reverse Burden of Proof: A Key Change
The New Law introduces comprehensive procedures for prosecuting government officials whose wealth appears disproportionate to their declared income. As per Article 2, if a public official accumulates unexplained wealth linked to corruption, bribery, or abuse of power, they will bear the burden of proving the legitimacy of those assets. This obligation extends to immediate family members, including spouses, children, and parents. This illustrates the strict measures of The New Nazaha Law.
This shift in the legal burden represents a significant change from traditional prosecution methods. By reversing the burden of proof, the Nazaha Authority aims to enhance the likelihood of successful convictions in corruption cases. However, specifics regarding the type of evidence deemed sufficient by Nazaha remain unclear.
Increased Accountability for Public Employees
Under Article 19, if a public employee’s wealth increases disproportionately after taking office, and investigations uncover evidence of corruption, the individual will be required to justify the source of their wealth. Failure to do so will result in the case being escalated to a Nazaha investigative unit, potentially leading to severe penalties, including asset recovery or confiscation under The New Nazaha Law.
In circumstances where the accused either absconds or passes away prior to prosecution, Nazaha, in collaboration with relevant authorities (Article 20), will continue to gather evidence and pursue the recovery of any misappropriated funds. The agency will also coordinate with the Ministry of Justice to enforce rulings both domestically and internationally. Article 22 introduces a settlement process for accused individuals, details of which are yet to be disclosed.
Expanded Nazaha Mandate and Investigative Powers
Article 10 outlines a significant addition to Nazaha’s mandate, now including specialized units reporting directly to King Salman bin Abdulaziz Al Saud and the Crown Prince Mohamad Bin Salman. These units will focus on criminal investigations, prosecutions, integrity protection, transparency enhancement, anti-corruption initiatives, administrative oversight, and international collaboration. The statement “no one involved in any corruption case will be spared from accountability whether a prince or minister” explicitly underscores this commitment, as reiterated in The New Nazaha Law.
Furthermore, the definition of corruption has been expanded. Nazaha conducts investigations, receives complaints, and directly investigates all administrative and financial violations before a competent court. Under Article 5, the Authority has the right to request documentation from entities under its jurisdiction, which must comply within specified timeframes. The agency is also tasked with recovering assets gained through corruption and implementing measures to protect whistleblowers.
Impact on Businesses in Saudi Arabia
For companies operating within the Kingdom, the enactment of this New Law is particularly significant. Nazaha has recently conducted extensive operations, including the arrest of 155 government officials on corruption charges and 924 inspection raids in June 2024 alone. As of September 2024, there have been over 280 investigations with over 130 arrests from the Nazaha Criminal Investigation Unit (Article 14). Approximately 5,000 individuals have been arrested for corruption-related offenses from 2021 to 2023 due to the new measures in The New Nazaha Law.
Mitigating Corruption Risks for Businesses
As Saudi Arabia intensifies its anti-corruption efforts, businesses must proactively review their internal controls and compliance practices to mitigate corruption risks. This includes scrutinizing policies related to gifts and hospitality, facilitation payments, and third-party engagements. Organizations should also consider implementing comprehensive training programs for employees on anti-bribery regulations and internal policies to align with The New Nazaha Law.
Conclusion
The enactment of the Nazaha Law reflects Saudi Arabia’s determination to create a transparent and accountable governance framework. By enhancing the powers of Nazaha and redefining the legal landscape surrounding corruption, the Kingdom aims to safeguard public funds and build a more attractive environment for domestic and foreign investment. This legislative advancement aligns with the broader objectives of Vision 2030, demonstrating a commitment to integrity and the rule of law in the pursuit of national development. As The New Nazaha Law comes into effect, its practical implications will unfold, and both public officials and private entities will need to adapt to this new paradigm in governance and accountability.
