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Amendments to the Foreign Influence Transparency Scheme

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This article was written by Stephen Mason, Caitlin Rodgers and Malcolm Brennan.

The widely criticised Foreign Influence Transparency Scheme Bill 2017 (FITS Bill) is to be substantially narrowed in its scope. This development is welcome, although there are still concerns with the new transparency notice scheme.

The FITS Bill was originally introduced to Federal Parliament in December 2017, along with the National Security Legislation (Espionage and Foreign Interference) Bill 2017.

The FITS Bill will establish the Foreign Influence Transparency Scheme (Scheme). Under the Scheme, anyone who acts on behalf of "foreign principals" in connection with activities to influence Federal Government-decision making, or the Federal political process, will need to register with the Attorney-General's Department. A link to our previous alert on the FITS Bill can be found here.

Since its introduction the FITS Bill has received substantial and widespread criticism. Last Friday night (8 June 2018) a series of amendments to the FITS Bill were provided to the Parliamentary Joint Committee on Intelligence and Security, which is holding an inquiry into the FITS Bill, and the Committee has released those amendments for comment.

Thankfully, the amendments will limit the application of the Scheme and widen a number of exemptions. The initial approach was far too wide and could have had many unintended consequences.

The FITS Bill and the amendments apply to foreign government-related entities and individuals no matter what the overseas country they are related to. The FITS Bill is non-discriminatory and does not seek to target entities or individuals from any specific foreign country or government.

Summary of key amendments and observations

The key amendments to the FITS Bill are:

  • Narrowing the cases in which a person will be considered to be undertaking activity on behalf of a foreign principal. Originally, you were considered to be undertaken activity on behalf of a foreign principal if you were acting under its general control, or received funding from or were under the supervision of, or in collaboration with, the foreign principal. All of these tests will be removed.

    One result of this will be that making donations to a political candidate or party during a fundraising campaign will no longer require registration under the Scheme (which would have been the case under the original Bill). This change is expected to be of benefit to, for example, charities and universities.
  • Companies under foreign ownership will also be pleased with an express provision to be added into the FITS Bill to say that foreign ownership by itself does not mean that the company is acting on behalf of the foreign parent. As a result, the company and its officers will generally no longer need to register.
  • Limiting who will be considered a 'foreign principal' under the Scheme to foreign governments, foreign government related entities, foreign political organisations and foreign government-related individuals. This is a substantial reduction in the scope of the proposed registration requirement and takes a degree of the heat out of the debate. Many companies and institutions would have been adversely impacted otherwise.
  • Limiting the definition of "activity for the purpose of political or government influence" to instances where the purpose is a "sole or primary purpose, or a substantial purpose", rather than just "a" purpose.
  • Introducing a ''transparency notice scheme." This will give the Secretary of the Attorney-General's Department a new power to issue a notice declaring that a named entity or individual is a foreign government related entity or individual. The effect of this notice will be that anyone who is undertaking registrable activities on behalf of that entity or individual will have to register, even if it is not otherwise clear that the entity or individual qualifies as a foreign principal.

    Importantly, the Secretary will not be subject to procedural fairness obligations, but any decision will be reviewable by the Administrative Appeals Tribunal.

    However there are a number of significant concerns with the transparency notice scheme. One difficulty is that the issue of a notice will effectively reverse the burden of proof in a criminal prosecution for an offence under the Act – it will be for the defendant to establish that the certificate is wrong.

    There are also difficulties with the potential for the Secretary to issue such a notice during the course of a prosecution. Fundamental Rule of Law concepts are again challenged.
  • Providing a wider exemption for broadcasters, carriage service providers and publishers so they are not caught by the legislation when they are undertaking their ordinary business such as broadcasting, transmitting or publishing content on behalf of foreign principals. Freedom of speech is less threatened by the FITS Bill.
  • Broadening existing exemptions including those relating to:
    • legal advice and legal representation;
    • legal representation in relation to federal administrative processes such responding to tenders, incorporating companies, seeking "no objection notifications" under the Foreign Acquisitions and Takeovers Act 1975); and
    • a range of government, commercial or business pursuits.
    The general effect of these exemptions is to further limit the range of people who will be required to register under the Scheme.
  • Introducing further exemptions relating to industry representative bodies and representation in relation to administrative processes.
  • Clarifying that the Scheme does not affect the application of either parliamentary privilege or legal professional privilege.

Some thoughts

The majority of amendments are welcome changes that have taken into account submissions made to the Parliamentary Joint Committee on Intelligence and Security. Despite this, there are still some significant difficulties with the Bill and it is expected that stakeholders will be calling for further amendments, particularly in relation to the transparency notice scheme.

Given that the Attorney General is pushing for the FITS Bill to be passed in the next two sitting weeks, you should be considering now the extent to which you and your activities fall within the Scheme and the extent of your involvement with individuals that may be considered foreign principals.

The Parliamentary Joint Committee on Intelligence and Security has yet to report on the FITS Bill. It reported on the National Security Legislation (Espionage and Foreign Interference) Bill 2017 on 7 June 2018. That report can be found here.

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