On 2 December, the government introduced the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 into the senate.
Broadly, the Bill proposes to introduce a new corporate offence for the failure to prevent the commission of a foreign bribery offence by an associate of a body corporate and to introduce a deferred prosecution agreement scheme (DPA scheme).
[Note: A similar Bill, Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (2017 Bill), was introduced in December 2017 and lapsed at the end of parliament on 1 July 2019.
Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (2019 Bill) differs from the 2017 Bill in that the 2019 Bill proposes to introduce a general definition of ‘dishonest’ into the Dictionary of the Criminal Code which will replace the two-limb test for dishonesty with the objective test for dishonesty endorsed by the High Court in Peters v The Queen (1998) 192 CLR 493. This was not included in the 2017 Bill.]
Snapshot
Broadening the offence of foreign bribery and the introduction of a new offence
Schedule 1 would amend the Criminal Code by amending Division 70 (bribery of foreign public officials). Schedule 1 of the Bill proposes to:
- Amend the offence of bribery of a foreign public official (section 70.2 of the Criminal Code) by 'broadening the offence, removing unnecessarily restrictive requirements and clarifying some requirements'. The explanatory memorandum identifies the main changes to the existing offence, as follows.
- Extension of the definition of foreign public official to include a candidate for office
- Removal of the existing requirement that, for the offence to be established, the foreign public official be influenced in the exercise of their official duties
- Replacement of the requirement that a benefit and business advantage must be ‘not legitimately due,’ with the concept of ‘improperly influencing’ a foreign public official
- Extension of the offence to apply to bribery to obtain a personal advantage
- Introduce a new offence of failure of a body corporate to prevent foreign bribery by an associate. The body corporate would be liable where the associate committed the bribery for the profit or gain of the body corporate. The offence would not apply if the body corporate had in place adequate procedures designed to prevent the commission of the foreign bribery offence by its associates.
[Note: The government has separately released draft guidance on the steps that a body corporate can take to prevent an associate from bribing a foreign official for consultation. This is outlined briefly at the end of this post.]
- Schedule 1 also makes consequential amendments to the Income Tax Assessment Act 1997 to ensure the continuation of the existing policy of prohibiting a person from claiming a deduction for a loss or outgoing the person incurs that is a bribe to a foreign public official.
Deferred Prosecution Agreement Scheme
Schedule 2 of the Bill would implement a Commonwealth Deferred Prosecution Agreement (DPA) scheme.
How would it work? Under the DPA scheme, the Commonwealth Director of Public Prosecutions (CDPP) would be able to invite a corporation that has engaged in serious corporate crime to negotiate an agreement to comply with a range of specified conditions. Subject to corporation fulling its obligations under the agreement (the DPA), the corporation would not be prosecuted in relation to the offences specified in the DPA. A breach of the terms of a DPA could result in the CDPP commencing prosecution or renegotiating the terms of the DPA with the corporation.
DPAs would only available with respect to a specific set of serious corporate criminal offences.
DPAs would only apply to corporations (not natural persons): The explanatory memorandum explains that the DPA scheme is intended to encourage corporations to self-report misconduct by offering greater certainty of outcome when compared to litigation, and an opportunity to avoid some of the reputational and financial costs associated with lengthy criminal investigations and trial processes. The explanatory memorandum adds that, for this reason, DPAs are not available to natural persons, and the scheme is designed to apply to corporations.
Admissions of misconduct, financial penalties and disgorgement of profits/benefits: The explanatory memorandum states that the scheme is aimed at enhancing business accountability and supporting improved corporate culture. On this basis, parties to a DPA would be required to admit to agreed facts detailing their misconduct, pay a financial penalty to the Commonwealth and disgorge profits and other benefits obtained through the misconduct. The explanatory memorandum adds that it is also likely that a DPA would typically require a corporation to implement or improve a compliance program or policies, and cooperate in any investigation relating to the matters specified in the DPA (including any investigation against individual company officers).
'No free passes': The Explanatory Memorandum notes that the Bill contains a number of safeguards to ensure that the DPA scheme does not represent a ‘free pass’ to corporations who have engaged in serious corporate crime. For example the Bill provides that: a DPA will not enter into force until it has been independently assessed by an ‘approving officer’ who is an appointed former judicial officer; the Director of the CDPP must be satisfied that entering into a DPA is in the public interest before submitting a DPA to an approving officer for consideration; and allows for the prosecution of a party who materially contravenes a DPA, or who provided inaccurate, misleading or incomplete information to a Commonwealth entity in connection with a DPA or a DPA negotiation.
[Note: On 15 November, The Australian Law Reform Commission released a discussion paper seeking feedback on 23 proposals to reform the Corporate Criminal Regime (for a summary see: Governance News 20/11/2019). Among other things, the ALRC seeks feedback on whether a deferred prosecution agreement (DPA) scheme for corporations should be introduced into Australia as proposed by the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (or with modifications). As flagged above, the 2019 Bill is largely similar to the 2017 Bill.]
New definitions of 'dishonest'
Schedule 3 of the Bill proposes to repeal the existing definitions of ‘dishonest’ in the Criminal Code and replace it with a new definition of ‘dishonest’ into the Code’s Dictionary.
Under the new definition, dishonest means ‘dishonest according to the standards of ordinary people’, consistent with the test for dishonesty endorsed by the High Court in Peters v The Queen (1998) 192 CLR 493.
The new definition of ‘dishonest’ would apply to conduct occurring wholly on or after the commencement of the Bill. Where a relevant offence involves ongoing criminal conduct which begins before and continues after the commencement of these amendments, the current test in the Criminal Code will apply.
The explanatory memorandum states that the new general definition of ‘dishonest’ is not intended to impliedly affect the meaning of ‘honest’ or ‘honestly’ when those words are used in the Criminal Code within their ordinary meanings.
[Sources: Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019; Explanatory Memorandum Senator Duniam, second reading speech: Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019]
Consultation on draft guidance
The government also released draft guidance on the steps that a body corporate can take to prevent an associate from bribing a foreign official for consultation.
Some Key Points
- Part 1 of the guidance sets out the foreign bribery offence and the proposed corporate offence of failing to prevent foreign bribery with examples to illustrate how the foreign bribery offences operate.
- Part 2 sets out draft guidance on the types of measures a body corporate could implement and suggested steps/procedures it could take to prevent an associate from bribing a foreign public official including: risk assessment; management dedication; due diligence; communication and training confidential whistleblowing reporting mechanisms, and monitoring and review of compliance programs. The guidance is principles-based, 'rather than a checklist for compliance and is designed to be of general application to corporations of all sizes and in all sectors' and as such it anticipates that the approaches taken by different firms will vary. For example, it's suggested that in general, small firms may need less extensive policies and implementation mechanisms than large organisations that face the same foreign bribery risk because larger organisations will need to implement the polices on larger scale (and usually have more complex reporting and managerial structures).
- Part 3 provides examples to demonstrate how policies and procedures to prevent foreign bribery could be applied in practice.
In his second reading speech, Senator Duniam said that the draft guidance is largely modelled on the UK government's guidance that accompanies the 'failure to prevent' offence under section 7 of the UK Bribery Act.
He added that in preparing the guidance, the government also had regard to existing guidance published by the Australian Trade Commission, the OECD and other international organisations with a view to enabling Australian companies that have already framed their anti-bribery policies on international guidelines to easily incorporate additional policies relevant to the Australian context.
Timeline: The deadline for submissions is 28 February 2020. The government plans to finalise the guidance before the new foreign bribery offences are operative, if the Bill is passed by Parliament.
[Sources: Attorney General's Department media release 02/02/2019; Draft guidance on adequate procedures to prevent the commission of foreign bribery; Senator Duniam, second reading speech: Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019]
