In the 25 years since the introduction of foreign bribery offences in Australia in 1999, only three cases have been successfully prosecuted. This has garnered much criticism from international organisations, such as the OECD and United Nations, which have consistently pleaded for tougher enforcement of foreign bribery in Australia.
Against this backdrop, and following several failed attempts to introduce similar amendments in the last decade, the Federal Parliament has recently passed the Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2024 (Cth) (the Act) which addresses key challenges associated with investigating and prosecuting cases of foreign bribery in Australia.
New indictable corporate offence for foreign bribery
Most notably, the Act introduces a new indictable offence for corporations that fail to prevent foreign bribery by their associates. This measure holds companies directly liable for the foreign bribery activities of its employees, external contractors, agents and subsidiaries, unless the business can demonstrate that it had 'adequate procedures' in place to prevent the commission of foreign bribery by its associates.
This is an absolute liability offence, meaning that the corporation will be liable for the offence even where it did not know it occurred, let alone approved or condoned the action of its associates.
This offence is modelled on a similar offence in the United Kingdom which has successfully prompted UK companies to adopt more effective corporate compliance programs to prevent bribery. Its introduction in the UK also saw an increase in enforcement measures taken by the UK regulator, which can also be expected to occur in Australia when the legislation comes into effect from September 2024.
'Adequate procedures' defence
The Attorney-General is required to publish guidance on the type of measures that are likely to constitute adequate procedures before the Act comes into effect in September 2024. However, the guidance will not be binding and likely will be provided at a level of abstraction that will not absolve corporations from having to determine for themselves that adequate procedures are in place within their organisation. What constitutes adequate procedures will be determined by Courts on a case by case basis, taking into account the size of an organisation and the specific risks that arise from the way it conducts business abroad.
The Attorney-General has indicated that the guidance will largely be modelled on equivalent guidance in the UK and will have regard to existing guidance published by the Australian Trade Commission, the OECD and other international organisations. This is intended to enable Australian companies that have already framed their antibribery policies on international guidelines to easily incorporate additional policies that are relevant to the Australian context. It also allows companies to begin to amend their policies and procedures, which they await the Attorney General's official guidance.
'Improperly influencing' a foreign public official
The Act also does away with the previous requirement that for foreign bribery to have occurred, both the bribe and the business advantage obtained had to be 'not legitimately due' to the foreign official. Previously, where bribes were concealed as legitimate payments, this had made it challenging to prove bribery had occurred. This requirement is now replaced with the requirement that the benefit is offered or provided to another person with the intent to 'improperly influence' a foreign public official.
In determining whether influence is improper, the Act provides a list of factors to be considered, including:
- the recipient or intended recipient of the benefit;
- the nature of the benefit;
- the matter of the provision of the benefit;
- whether the value of the benefit is disproportionate to the value of consideration provided;
- if the benefit was provided in the absence of any legal obligation to do so;
- the benefit was provided dishonestly; and
- whether the provision of the benefit is documented.
As had previously been the case, it is not relevant that the benefit may be, or be perceived to be customary, necessary or required in the situation.
Extending scope of foreign bribery offence to capture personal advantage
The Act broadens the scope of the foreign bribery offence to capture bribery for the purpose of obtaining a personal advantage, whether or not for the person committing the offence. Examples of personal advantage may include:
- bestowal of a personal honour;
- processing of a visa request; or
- reduction in an individual's personal tax liability.
Other amendments which expand the foreign bribery offence
The Act also expands the offence by making the following key amendments:
- expanding the definition of a foreign public official to include candidates to be a foreign public official (rather than current holders of public office);
- removing the requirement that the person committing the offence intends to influence a foreign public official in the exercise of their official duties; and
- amending the Income Tax Assessment Act 1997 (Cth) to ensure that persons cannot claim deductions for losses or outgoings that are connected to bribery of a foreign official.
Deferred foreign bribery prosecution scheme on hold
Previous iterations of this Act contemplated the introduction of a deferred prosecution scheme for the purpose of encouraging companies to self-report serious offending while still holding companies to account for serious corporate crimes. These measures are key features of foreign regulators' enforcement powers (and often utilised in jurisdictions such as the US and UK). However, the Attorney-General has indicated that such a scheme would only be introduced after measures in this Act have been enacted and given time to work.
Next steps for organisations with foreign interests
In circumstances where the offences carry maximum penalties of at least $33 million per contravention for corporations (or the value of the benefit, or 10% of annual turnover if higher), it is critical for organisations to ensure they have robust protections in place before the amendments come into effect on 8 September 2024. Companies should review their operations for key areas of concern (such as where agents are utilised in foreign jurisdictions) and ensure that contractual arrangements, policies and procedures are adequate. It is also an ideal time to ensure training programs and risk assessments are updated and occurring on a periodic basis.
To find out more about the obligations these laws place on corporations, and to help ensure your employees, contractors and other associates are aware of and compliant with Australia's new foreign bribery laws, please reach out to the relevant MinterEllison contacts below.
