This article was written by Sati Nagra and Daisy Mallett.
New anti-bribery and corruption legislation has been introduced into the Senate. If passed, the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (the Bill), will increase the obligations on Australian companies to mitigate the risks of anti-bribery and corruption.
Most significantly, the Bill introduces a new corporate offence of failing to prevent foreign bribery by an “associate”. An associate is defined as an officer, employee, agent, contractor, subsidiary or person within the control of a corporation (within the meaning of the Corporations Act 2001 (Cth)), or a person otherwise performing services on behalf of a corporation. The scope of the definition is broad and will capture the activities not only of persons within the company’s control, but also third parties beyond the company’s control, where they are performing services on behalf of the company.
The Bill is likely to have bipartisan support and will amend Australian anti-bribery and corruption laws in the following key ways: (i) introducing a corporate offence of failing to prevent foreign bribery by an associate, (ii) broadening the offence of bribery of a foreign public official, (iii) introducing a Deferred Prosecution Agreement (DPA) scheme to encourage corporate self-reporting, and (iv) amending the definition of “dishonesty” in the Criminal Code Act 1995 (Cth) (Criminal Code). The introduction of the Bill increases the expectations on Australian businesses to address anti-bribery and corruption risks, seeking to bring Australia’s regime into line with the anti-bribery and corruption regimes in the United States and the United Kingdom. This is another demonstration of the Federal Government’s heightened focus on corporate conduct and governance post-Financial Services Royal Commission.
The Attorney-General's Department has released detailed draft guidance on the steps a body corporate can take to prevent an associate from bribing foreign public officials (Draft Guidance) and invites submissions from industry stakeholders by 28 February 2020.
The Bill largely mirrors a former bill introduced in 2017, which lapsed with the change in government earlier this year. Our previous article provides an overview of the 2017 bill.
Key elements of the proposed legislation
The bill proposes the following:
1. New corporate offence of failing to prevent foreign bribery by an “associate”
- a new strict liability offence for corporations that fail to prevent the bribery of foreign public officials by their associates, even if the conduct occurs outside of Australia;
- an “associate” is defined as an officer, employee, agent, contractor, subsidiary or person within the control of a corporation (within the meaning of the Corporations Act 2001 (Cth)), or a person otherwise performing services on behalf of a corporation;
- the corporation can be convicted of this offence even if the associate is not convicted of the offence of foreign bribery;
- the offence will carry a maximum penalty of $21 million, 10% of annual turnover, or three times the benefit gained – whichever is greatest; and
- the offence would not apply if the corporate has adequate procedures in place to prevent the commission of foreign bribery by its associates.
2. Broadened offence of bribery of a foreign public official
- the definition of foreign public officials is extended to include candidates for office;
- the requirement that a foreign public official must be influenced in the exercise of the official’s duties is removed;
- the requirement that a benefit and business advantage must be “not legitimately due” is replaced with the concept of “improperly influencing” a foreign public official; and
- extends the offence to cover bribery to obtain a “personal” advantage, i.e. a non-business advantage such as the granting of visas or personal titles and honours.
3. New Deferred Prosecution Arrangement scheme
- a new regime where the Commonwealth Director of Public Prosecutions can invite a company that has engaged in serious corporate crime (including foreign bribery) to negotiate a DPA to comply with a range of specified conditions; and
- if the corporation complies with the DPA it will not subsequently be prosecuted in relation to the offences specified in that DPA, but will likely be required to admit to agreed facts, cooperate with related investigations, pay a financial penalty, and implement or improve its compliance programme or policies.
4. Amended definition of “dishonesty”
- there is an amendment to the definition of “dishonest” in the Criminal Code. Under the new definition, conduct is dishonest if it is “dishonest according to the standards of ordinary people”, such that a defendant’s subjective awareness of the dishonesty of their conduct is no longer necessary.
Notably, like the former bill introduced in 2017, the latest Bill does not prohibit facilitation payments, despite acknowledgment in the Draft Guidance on the risks that such payments pose.
Once the form of the legislation is settled, businesses should be reviewing their corporate governance policies to ensure that they comply with impending legislative change in the corporate governance sphere.
Issues for businesses to consider
- Whether the business has “adequate procedures” in place to prevent the bribery of foreign public officials by its associates (even if the conduct occurs outside of Australia), in light of the more onerous strict liability approach for this proposed offence;
- The new definition of dishonesty is an objective test that will assist prosecutors, as the subjective (and perhaps innocent or naïve) views of an individual will become irrelevant; and
- The DPA scheme will increase pressure on organisations to consider self-reporting. Businesses should consider how they intend to address the issues they might face by co-operating with authorities, e.g. by providing the result of internal investigations, even if privileged.
How we can help
- Assisting you to review and update your anti-bribery and corruption policies to ensure compliance with updated legislation;
- Conducting anti-bribery and corruption risk assessments of your business;
- Assisting you to develop a tailored compliance programme directed to a company’s associates and suppliers, including advising on anti-bribery and corruption warranties and indemnities in contractual arrangements;
- Preparing and delivering anti-bribery and corruption training programmes; and
- Conducting anti-bribery and corruption due diligence in relation to specific transactions and third-party dealings.
 Attorney General’s Department, Consultation Draft: Draft guidance on the steps a body corporate can take to prevent an associate from bribing foreign public officials (November 2019), page 4 and 8.