Australian Companies, Foreign Bribery: Government Strengthens Legislation

Thursday 26 March 2015 @ 12.15 p.m. | Corporate & Regulatory | Crime | Legal Research

Recently (19 March 2015), the Australian government's Minister for Justice Mr Michael Keenan (the Minister) introduced into the parliament the Crimes Legislation Amendment (Powers, Offences and Other Measures) Bill 2015 (Cth) (the Bill) which, among other measures, contained as the Minister said in his speech to the House of Representatives:

"Certain measures . . . designed to ensure that Australia meets its obligations under international laws."

In particular, the Bill seeks to:

".  .  . strengthen the offence of bribing a foreign public official to clarify that proof of intent to influence a particular foreign official is not required to establish the offence".

The changes are said by the Minister to reflects Australia's obligations under the OECD Anti-Bribery Convention to

" . . . send[s] a strong message that Australia takes a zero-tolerance approach to corruption".

Background - The Current Law

Under the Criminal Code Act 1995 (Cth), Chapter 4 deals with the ". . . integrity and security of the international community and foreign governments" and Division 70 deals with the "bribery of foreign public officials" and in particular section 70.2 of that Division makes it an offence to bribe a foreign public official.

The Division also provides defences to the section 70.2 charge in section 70.3 where the conduct is shown to be considered to be lawful in the foreign public official's country, or where, under section 70.4, the alleged bribery is trivial or capable of characterisation as a "facilitation payment". Finally, section 70.5 locates the offence by making requirements as to where and by whom the offence is committed. For example, among other matters, it provides that a person does not commit an offence against section 70.2 unless:

  • the conduct constituting the alleged offence occurs:
    •  wholly or partly in Australia; or
    •  wholly or partly on board an Australian aircraft or an Australian ship; or
  •  the conduct constituting the alleged offence occurs wholly outside Australia and:
    • at the time of the alleged offence, the person is an Australian citizen; or
    • at the time of the alleged offence, the person is a resident of Australia.

As an offence, foreign bribery can have serious consequences if proven, even for big corporations. Offences carry maximum penalties of 10 years imprisonment and fines of up to $1.7 million for individuals and $17 million for corporations.

What the Proposed Amendments Target

Schedule 2 of the Bill amends the Criminal Code to clarify the operation of the offence of bribing a foreign public official in section 70.2 by making it clear that proof of an intention to influence a particular foreign official is not required to establish the offence. This clarification of the offence it is claimed by the government:

". . . will ensure that a defendant in a foreign bribery matter is not able to argue that prosecution needs to establish an intention to bribe a particular foreign official".

The Minister's Media on the Matter

On the same day (19 March 2015) as the Bill was introduced into the parliament, the Minister in a media release stated that the measure was a new one:

". . . introduced to close a possible loophole that could allow a defendant to avoid prosecution by arguing they did not intend to bribe a foreign official, simply because they did not know the identity of that official, even though a bribe was in fact paid".

The Minister pointed out that foreign bribery is often committed through intermediaries, which means that an offender will often never meet or not know the identity of a bribed official. Hence the changes proposed seek to make it clear that the prosecution ".  .  . does not need to prove that the defendant intended to bribe a particular foreign public official in order to make out the offence of foreign bribery".

Speaking further on the matter the Minister restated the Government's commitment to ensuring the laws against foreign bribery were effective, saying:

"We take a zero tolerance approach to bribery and corruption. We also take our obligations under the OECD Anti-Bribery Convention seriously".

The Minister indicated that agencies, particularly the AFP, had taken significant steps to improve the enforcement of the foreign bribery offence and that the proposed laws were part of having the appropriate laws in place to ensure that enforcement agencies were equipped to bring offenders to justice.

Views on Efficacy of Laws Might Differ

A report in today's Sydney Morning Herald (SMH) (26 March 2015) might indicate that the Government's measures can't come soon enough and that views as to the efficacy of the current laws may differ. In a report that opens:

"Self-reporting to authorities of suspected foreign bribery and corruption by Australian companies is failing to occur, with top accounting firm Deloitte revealing it has investigated at least 100 potentially illegal acts involving local firms in the past two years".

It seems that only a small number of companies have reported to law enforcement agencies ". . . their suspicions that their own staff have engaged in foreign bribery or other criminal conduct".

The report goes on to indicate that such revelations are likely to add to the calls from the AFP to reform Australia's anti-bribery regime even further and to add fuel to anticipated Senate committee inquiry into foreign bribery by Australian companies.

Deloitte's survey of more than 250 senior executives from top Australian and New Zealand companies and public sector organisations, the subject of the SMH report found that:

". . . one-third of all companies operating in high-risk offshore destinations, including Asia, Africa and the Middle East, had uncovered a suspected bribery or corruption incident over the last five years. . . Almost a quarter of all executives surveyed said their firm had, during that same period, confronted corruption involving a staff member or contractor inside Australia."

Another interesting revelation reported was that 40 percent of executives interviewed from firms with an offshore operation ". . . don't have (or don't know if they have) a formal compliance program in place to manage corruption risk".

The Deloitte findings reported highlight the problems the government's changes as proposed in the Bill might be seeking to tackle, however, they also highlight the problems are established, ongoing and that more might need to be done with respect to the way Australia takes on white collar crime because as the SMH article quotes Delloite's report:

"We have heard a lot from the federal police about how they have ramped up their investigations of foreign bribery and that is no doubt true. But they are coming off a low base and there is still only two still unresolved prosecutions in the 15 years since foreign bribery laws were passed in Australia."

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

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