Previous posts have explored varying attitudes to the “facilitation payments” defense across the globe. Even those countries that have signed the OECD and U.N. conventions differ in their approaches.
Australia has adopted a facilitation payment defense, but this looks set to change.
Australia’s laws currently contain a defense for providing minor benefits to foreign public officials in order to secure the performance of “routine government actions.”
Influenced perhaps by the U.K.’s recent statements concerning the harm caused by facilitation payments, the Australian government sought public consultation on a proposal to repeal the defense late in 2011.
The proposal met with some vociferous opposition, which claimed that removal of the defense could put billions of dollars of investment in projects at risk. This opposition surely overstated the practical significance of the defense, given that facilitation payments are by definition minor and relate only to non-discretionary matters.
Perhaps the opposition actually reflects a growing realization among Australian businesses of the reach of our anti-corruption laws, and that they can be held accountable for the actions of their employees, agents and intermediaries even in countries where bribery is officially tolerated.
In fact, the Australian government’s proposal to remove the defense may well be motivated by a desire to take a strong anti-corruption stance, coinciding with a marked increase in enforcement activity, rather than solely driven by concerns about facilitation payments themselves. The proposal is designed, at least in part, to send a message to would-be bribe payers that even low level corruption will not be tolerated.
The U.N. recently published summary review findings of Australia’s compliance with the U.N. Convention Against Corruption. The findings called for Australia to re-examine its current position on facilitation payments in order to effectively combat them. In the face of such an exhortation, even though the government has not yet released the results of its public consultation, it seems certain that the days of the facilitation payments defense are numbered.
Regardless of if and when the defense is removed, companies doing business here are certain to face heightened corruption scrutiny as a result of increased legislative interest and enforcement activity. The only effective antidote is an equivalent increase in anti-bribery governance measures.
Daniel Knight is a lawyer at Middletons, an Australian commercial law firm. He specializes in advising on bribery and corruption issues and the governance measures necessary to prevent them. He can be reached here.