In the 25 years since the introduction of foreign bribery offences in Australia in 1999, only a mere handful of cases have been successfully prosecuted. This has garnered much criticism from international organisations, such as the Organisation for Economic Co-operation and Development (OECD) and United Nations, which have consistently pleaded for tougher enforcement of foreign bribery controls in Australia.

Against this backdrop and following several failed attempts to introduce similar amendments in the last decade, the Federal Parliament has 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 failing to prevent foreign bribery

Most notably, the Act introduces a new indictable offence for organisations that fail to prevent foreign bribery by their associates, including in certain circumstances where organisations and/or their associates are foreign corporations and otherwise operating outside Australia. The offence is an absolute liability offence, meaning that the organisation will be liable for the offence even where it did not know it occurred, let alone approved or condoned the actions of its associate, and even where the associate has not itself been convicted of a foreign bribery offence.

Editor note

Generally speaking, an organisation will be captured if it is a corporation which is a foreign corporation, or a trading or financial corporation formed within the limits of the Commonwealth, within the meaning of s. 51(xx) of the Constitution, or a corporation incorporated in an Australian Territory.

This measure is an attempt to hold organisations 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 offence is modelled on a similar offence in the United Kingdom (UK), which was introduced in 2011, and which successfully prompted UK organisations to adopt more effective corporate compliance programs to prevent bribery. Its introduction in the UK also saw an increase in enforcement by the UK regulators and prosecuting agencies. The approach to enforcement of the new offence by Australian regulators and prosecuting agencies remains to be seen.

'Improperly influencing' a foreign public official

The Act 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 was previously 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 (and not just a business 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 expands the existing foreign bribery offence by:

• 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.

'Adequate procedures' defence

Organisations have a statutory defence to a charge of failing to prevent foreign bribery, which will be available where the organisation is able to demonstrate that it had adequate procedures in place to prevent foreign bribery.

In August 2024, the Attorney-General published 'Guidance on adequate procedures to prevent the commission of foreign bribery' (Guidance) which sets out steps that organisations can take to ensure that their anti-bribery controls are adequate. The Guidance is not binding and adopts a principles-based framework (as opposed to an exhaustive list of procedures) to support organisations to establish their own 'adequate procedures'. Accordingly, organisations will not be absolved 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 its business.

Broadly, the Guidance suggests that organisations design their anti-bribery procedures around the following six principles as summarised below:

1. Fostering a control environment to prevent foreign bribery

An organisation will more readily foster an environment of compliance and robust controls where its anti-bribery procedures are proportionate to its circumstances and effective.

Proportionality will be assessed by reference to an individual organisation's operational circumstances, including its foreign bribery risks and the nature of its activities. Organisations should complete a risk assessment that considers specific foreign bribery risks, and the resourcing for anti-bribery compliance should reflect the organisation's scale and specific level of risk.

An effective anti-bribery program is one which embodies a robust culture of integrity, demonstrates pro-compliance conduct by top-level management, has a strong anti-bribery compliance function, effective risk assessment and due diligence procedures, and properly scrutinises the use of third parties and non-controlled entities.

2. Responsibilities of top-level management

Top-level management (including the executive team and peak governing body) are required to play a critical role in the development, implementation, promotion and review of a organisation's anti-bribery procedures, and top-level management has the responsibility for fostering an anti-bribery culture within the organisation.

The Guidance does not prescribe an exhaustive list of activities that should be undertaken by top-level management, but it does provide suggestions, including providing leadership on anti-bribery policies and insisting on 'thorough and effective' compliance measures, providing oversight and assurance of the corruption risk assessment, publishing visible and easy-to-read statements of senior leadership's dedication to preventing bribery and corruption, overseeing the development of a code of conduct that reflects the anti-bribery compliance, overseeing responses to breaches of policies, declaring personal bribery risks and other conflicts of interest and seeking reciprocal anti-bribery compliance commitments from business partners.

3. Risk assessment

Organisations should take positive steps to undertake bribery risk assessments to form a systemic view of where bribery risks lie within their organisations, in order to design appropriate controls that address the identified risks.

The risk assessments should consider the countries and regulatory environments in which the organisation operates (including by reference to Transparency International's Corruption Perception Index), the sectors in which the organisation undertakes business, common types of transactions in which the organisation engages, the controls the organisation has in place and the use of third parties (including agents and business partners).

After a risk assessment is undertaken, the organisation should perform due diligence in relation to its business relationships, and allocate each risk a perceived 'risk rating' based on the likelihood and magnitude of that risk occurring. Relevant considerations include the organisation's common transactions (including with foreign governments, state-owned enterprises or third parties) and feedback and advice received from external stakeholders (e.g. industries bodies, foreign regulators or peer corporations).

Risk assessments should be carefully documented and periodically reviewed, and the organisation's anti-bribery procedures should be developed in direct response to the risks identified.

4. Communication and training

Organisations should train their employees and associates on how the organisation's anti-bribery procedures are applied in practice and develop practical skills within the organisation to minimise the risk of bribery arising during the organisation's day-to-day operations. Relevant training topics may include how to recognise bribery risks and resist solicitations of bribes.

While training materials may take many forms (e.g. staff handbooks, training modules or focus groups), the training must, at a minimum, be made available to all of the organisation's associates (particularly in respect of third parties and non-controlled associates) and be continuously provided and periodically reviewed.

5. Reporting foreign bribery

Organisations should establish a mechanism that encourages and facilitates reporting of actual or suspected instances of bribery or bribery facilitation, and they must comply with relevant whistleblower provisions.

In developing its reporting mechanisms, the organisation should ensure that all reporting procedures are visible, secure, confidential, accessible by all of the organisation's employees at any time, and provide adequate protections for anyone who makes a report.

Reporting mechanisms should be accompanied by a system that is equipped to conduct objective, timely and properly documented investigations of allegations of suspected bribery. Appropriate actions must be taken to address any potential wrongdoing identified by those investigations, including by escalating matters or self-reporting to a relevant regulator or agency where required.

6. Monitoring and review

Organisations should regularly monitor, review and adjust their anti-bribery procedures to improve their effectiveness and suitability to the organisation's operations over time. Particular instances that may prompt a review include where the organisation enters into a new market or jurisdiction, an actual or suspected bribery or non-compliance with the existing procedures is identified, or on receipt of feedback from the organisation's employees and associates.

Application to Australia's Tertiary Education Sector

Australia's tertiary education sector is constantly evolving in response to shifting demands in Australia's workforce and skills needs, growing global competitiveness, and a tightening of Australian immigration policy. Australian tertiary education providers are increasingly turning to opportunities to expand into overseas markets, including:

• increasing transnational education capabilities, such as the creation of international campuses to provide offshore in-country Australian education to foreign students and engaging third-party educators to teach and deliver courses on behalf on their behalf;
• forming international research collaborations with foreign universities or industry bodies to facilitate access to funding, facilities and expertise, and expand research capabilities; and
• engaging third-party 'education agents' to provide student recruitment and marking services.

These growth practices introduce significant foreign bribery risks for the Australian tertiary sector and it is critical for Australia's tertiary education organisations to ensure that they have robust protections in place to protect against foreign bribery.

In this context, in addition to considering what might constitute 'adequate measures' more generally, tertiary education organisations should:

Conduct thorough due diligence on prospective third-party contractors, third-party research collaborators and non-controlled entities, including making enquiries through business contacts, relevant industry bodies and regulatory agencies. In the context of foreign universities, this may also require organisations to identify the ultimate beneficial owner (or controlling entity) of the foreign university to determine whether the university is owned by, or otherwise affiliated with, a foreign government.

Ensure that appropriate anti-bribery provisions are included in all of its contracts with third-parties or non-controlled associates (as may be the case where international campuses are established in collaboration with a foreign university or research is undertaken in collaboration with a foreign university). Appropriate contractual regimes should require third-party providers, education agents and research collaborators to comply with the organisation's anti-bribery procedures and be sufficiently flexible so as to enable organisations to periodically review contract compliance and terminate engagement where the risk of foreign bribery arises.

Ensure that the scope of services to be performed by third-party providers, education agents and research collaborators is strictly and unambiguously defined, and that any remuneration for those services is proportionate to the work to be done.

Implement clear policies and guidelines controlling the approval and auditing of payments, hospitality, gifts, sponsorships and donations.

This will be particularly relevant in the context of negotiating and establishing agreements with foreign entities or governments regarding international campuses (for example, where the customary giving of gifts to foreign public officials, or making of donations to foreign charities, may inadvertently lead an organisation to fall foul of the Act).

It will also be relevant in the context of undertaking collaborative research with third parties where a tertiary education organisation makes funds (whether its owns funds or government grant funding) available for the purposes of the research collaboration. In such a case, the tertiary education organisation should ensure that it has clear oversight as to how such funds are used for the purposes of the collaboration and should ensure contractual provisions are included in the agreement which give the tertiary education organisation sufficient audit rights.

Provide anti-bribery training sessions and communications in the native languages of the jurisdictions in which the organisation operates.

To find out more about the obligations these laws place on organisations, 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.