The Australian government has tabled a series of new laws covering foreign bribery and other economic offenses. If these are passed into law, as we expect, they will make it much easier to prosecute companies for bribery offenses committed either at home or abroad.
Under the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (available here in pdf), the government plans to introduce a new offense of “failure to prevent bribery of foreign officials” on the same lines as the UK Bribery Act. As with the UK law, companies may defend themselves if they can demonstrate that they have instituted “adequate procedures” to prevent bribery.
The draft law applies both to Australian company employees and to their “associates,” including agents, contractors and subsidiaries, whether the offense takes place in Australia or abroad.
As explained in our earlier article, prosecutors have found it difficult to mount successful prosecutions under existing laws because they need to demonstrate the alleged offender’s “intention” to pay bribes. This can be difficult to prove in the absence of written evidence and if the bribe is paid via an intermediary.
The Australian government will issue guidance on “adequate procedures:” we expect it to be similar to the guidance already issued by the UK and U.S. authorities. Australian companies that are not already implementing such procedures need to review their policies urgently.
The proposed Criminal Code amendments also introduce a new deferred prosecution agreement (DPA) scheme for bribery and other economic crimes. Again, this draws on U.S. and UK models. The objective is to make it easier to resolve corporate corruption cases at less public cost but in a manner that is compatible with the public interest.
As the government explains in its accompanying memorandum, a company that takes the initiative to report bribery offences may be able to negotiate an agreement to avoid criminal prosecution. This will happen only if the company cooperates in any subsequent investigations and if the Commonwealth Director of Public Prosecutions (CDPP) decides that the DPA is indeed in the public interest. The company may be required to make reparations, for example by disgorging profits, paying compensation and introducing an enhanced compliance program. DPAs will be subject to the approval of a retired judge.
In a separate piece of draft legislation, the government proposes a sweeping review of existing laws to protect the rights of whistleblowers. The amendments will require public companies to introduce policies that explain how individuals may make a disclosure; how investigations will proceed; and how the company will ensure fair treatment of employees who are mentioned in whistleblower disclosures.
The impact of existing and future legislation will depend on how effectively it is enforced. To date, Australia has lagged behind its international peers, but the pace of enforcement is picking up.
In December, the Organisation for Economic Cooperation and Development (OECD) issued its Phase 4 review of Australia’s implementation of the OECD Anti-corruption Convention. The report noted that Australia had made “substantial steps” to improve its detection and investigation of foreign bribery cases.
As at August 2017, when the OECD conducted its site visit, the Australian Federal Police (AFP) had received a total of 87 foreign bribery allegations. By December 2017, two cases had resulted in seven foreign bribery convictions and one false accounting conviction. The Australian Federal Police had referred a further three cases to the CDPP, had 19 active investigations, and 13 allegations under evaluation.
In the next few months there will be several key indicators of the pace and direction of Australia’s anti-bribery enforcement:
- The most important indicator will be the outcome of the new legislative proposals: we anticipate them being passed into law this year.
- On 7 February the Senate Economics References Committee is due to issue a long-awaited report on its inquiry into foreign bribery. At this stage the overall direction of Australian policy appears to be set, but the report may influence the tone and intensity of policy implementation.
- A number of former executives of Note Printing Australia and Securency are due to face trial in Melbourne in connection with foreign bribery-related charges that first emerged in 2011. The timing of this trial perhaps illustrates some of the difficulties of bringing a successful prosecution under the existing law. The charges relate to bribes allegedly paid in relation to a banknote-printing contract in Malaysia. A conviction would send a strong signal that Australia is becoming more serious about enforcement.
Mark Pulvirenti, pictured above left, is a Control Risks Partner based in Sydney. He leads Control Risks’ Compliance, Forensics and Intelligence practice for the Australia Pacific region.
John Bray, right, is a Director at Control Risks’ Singapore office.