March 2016 has proven to be a milestone month in Australian Foreign Bribery law enforcement. There’s been news of a high profile U.S. and Australian foreign bribery investigation, and new offenses have come into law, signalling further reform to come.
Reports in mid March detailed Australian and U.S. investigations into the 2010 transfer of $200,000 to a U.S. account of a Cambodian consulting firm linked to the Cambodian Prime Minister. The payment was reportedly authorised by an Australian top 100 company, Tabcorp, a gaming company that was considering entry into the Cambodian betting market in time for the 2010 Football World Cup.
Tabcorp’s CEO at the time was Elmer Funke Kupper who went on become CEO at ASX Limited, the company that oversees the operation of the Australian Securities Exchange.
In the wake of the reports Funke Kupper resigned from his position, issuing a press release commenting that “this feels very much like trial by media, it feels very unfair.”
Despite being a signatory to the OECD Anti-Bribery Convention and enacting its own laws in 1999, there has been only one conviction for overseas bribery under Australian law. The law leaves an express loophole for faciliatation payments for expediting routine, minor government actions where proper records are kept. So far there is no jurisprudence or guidance to help companies or prosecutors understand the limits of the defense.
Out of the uncertainty created by the Australian approach, U.S. law enforcement agencies have stepped in, holding Australian companies accountable to U.S. standards.
In 2015, the SEC brought an FCPA enforcement action against one of Australia’s best known companies, BHP Billiton. It paid a $25 million penalty to settle the SEC’s charges. The SEC said the company BHP invited 176 government officials and employees of state-owned enterprises to the Games at the company’s expense, and ultimately paid for 60 guests and some spouses and others who joined them.
In public submissions to a 2015 Australian Senate Inquiry into Foreign Bribery, BHP Billiton acknowledged that “the controls we had in place at the time were insufficient to satisfy the civil books and records and internal accounting controls requirements of the Foreign Corrupt Practices Act 1977.”
BHP called for reform of Australian laws to “increase international consistency in line with the OECD Convention.”
BHP’s calls echoed a number of other submissions as well as earlier criticisms from the OECD itself, which in 2012 and 2015 raised “serious concerns” about the need for corporate liability standards and for false accounting offenses.
The Australian government responded.
In November 2015 it introduced new laws clarifying that intention is not an element of an offense of seeking to improperly influence a foreign official.
In March this year it created an offense of deliberately or recklessly falsifying accounting records to disguise the giving of a “benefit not legitimately due.” The accounting laws apply to both domestic and foreign transactions involving government officials or otherwise.
On March 16, the day after the Tabcorp investigations were first reported, the Australian Justice Minister signalled that the government intended to address gaps in Australian laws when compared to OECD standards.
Michael Keenan announced the publication of a discussion paper canvassing the introduction of deferred prosecution agreements for Australian corporate law offenses (including securities fraud, market manipulation, and foreign bribery).
Ted Williams is a partner in the Australian law firm Piper Alderman. He has practiced for 25 years in Australia and in Europe, advising companies internationally in the construction, infrastructure, mining and resources industries. He was most recently General Counsel of a large construction and mining services company with operations through the Asia Pacific region. He’s been named as one of Australia’s Best Lawyers in the areas of Alternative Dispute Resolution and Corporate Governance Practice. He can be contacted here.