Foreign Bribery (Part One): New Draft Bill 2017

This article is Part One in a two-part series on foreign bribery. Read Part Two here and click here for Part Three.

The draft Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017  (‘the new Bill’) is a welcome addition to the existing criminal offences legislation in Australia, in relation to the bribing of foreign officials. This is the first in a series of releases where we comment on, and analyse, the new Bill and its impact on Australian businesses.

In April 2017, the Federal Government commissioned a consultation paper to identify weaknesses within Australia’s anti-bribery legislation, in line with domestic and international standards and expectations.  

The outcome of the consultation paper was to expand, enhance and solidify the existing legislation to improve its effectiveness, and to remove possible impediments leading to successful prosecutions. The new draft Bill incorporates the consultation paper’s recommendations of:

  1. expanding the definition of foreign public official
  2. replacing the requirement that a benefit must be ‘not legitimately due’ with the concept of ‘improperly influencing’ a foreign public official
  3. removing the requirement that the bribe influenced the foreign official in the exercise of their official duties
  4. expanding the benefit sought to include benefits received by individuals i.e. personal advantage
  5. clarifying that the benefit sought could be for another person or business (not only the person who offered or provided the bribe)
  6. clarifying that the accused does not need to have a specific benefit in mind when offering or providing the bribe, and
  7. creating a new corporate offence of failing to prevent foreign bribery.

Snapshot of the new Bill

The new Bill seeks to close loopholes by providing updated definitions, new methods of deterrence, heavier penalties and clearer reparations. The Federal Government looked closely at the legislation in the United Kingdom and the United States of America when drafting the new Bill and has sought to bring Australia in line with international expectations and standards. Some of the main points are discussed below.

Creates a new corporate offence of failing to prevent foreign bribery

The UK and USA took a novel approach to the detection and prevention of bribery and corrupt practices, by holding companies accountable for failing to prevent an act of bribery. The new Bill follows suit by creating a new corporate offence of failing to prevent foreign bribery by a company’s associates (i.e. its employees, contractors, agents or persons performing services for, or on behalf of, the company). Like the UK and USA, ignorance of the bribery is not a defence under the new Bill. However, if the company can establish that it had adequate procedures in place to prevent the foreign bribery, it may be enough to avoid prosecution. The Minister is required to publish guidance on how companies may establish adequate procedures which will assist them to manage their obligations under the new Bill.

Introduces Deferred Prosecution Agreements

The new Bill provides a brand-new legal concept for Australia; the Deferred Prosecution Agreement (DPA). DPAs are successfully used in the UK as a method of encouraging the self-reporting of bribery or corrupt practices by companies to reduce their potential financial penalties and the consequences of prosecution. If a DPA is granted by the Commonwealth Department of Public Prosecution (CDPP), charges will be laid but proceedings will be stayed unless there is a material contravention of the agreed DPA terms or if misleading information has been knowingly provided in negotiating the DPA. DPAs provide a transparent process for companies to proactively respond to corporate bribery and corruption practices within their organisations. In practice, this will mean, for example, that if an Australian company becomes aware of one of its employees carrying out an act of bribery, and the company cannot demonstrate that it had adequate preventative procedures in place designed to prevent bribery, it could self-report the bribery activity with the view to entering in to a DPA to prevent prosecution.

Lowers the bar and clarifies what constitutes the offence

The definition of ‘foreign public official’, as currently contained in section 70.2 of the Criminal Code Act 1995 (Cth), is expanded to include candidates standing for election to a foreign public office. Law enforcement agencies have previously experienced bribes being offered to those persons standing, or nominated to stand, with the view to having influence over them after election.

There has been much debate over what conduct, and subsequent benefit, would or should constitute a bribe. The Federal Government has confirmed that a benefit received that is ‘not legitimately due’ is no longer an appropriate benchmark to determine whether a bribe is being given or offered, when compared to the legislation of the UK and USA. The new requirement for the benefit to have been obtained by an ‘improper influence’ encapsulates benefits conferred by illegitimate, unreasonable, disproportionate or otherwise conduct. The Federal Government has explained that ‘improper influence’ would capture instances where dishonesty was not involved, and where the bribe is considered, or perceived, by the foreign official recipient to be customary, necessary or required.

Effect on Australian businesses

Australian businesses should not be complacent in how they manage their legal obligations, especially those relating to the prevention of criminal activity. The Banking Royal Commission has shown that lawmakers, regulatory bodies and society, will step in and demand accountability if compliance with obligations, and risk reduction, is not forthcoming. The new Bill sets a realistic tone and has realistic expectations of businesses to conform by enhancing their internal procedures, systems and controls. Failure to take foreign bribery seriously or turning a blind eye on the basis that ‘it will not happen here’ may lead to criminal charges being laid against the business, with more than just a financial penalty at stake.

Poll: Does this affect you?

Do you believe that your organisation will need a written compliance program in order for you to comply with the new draft Foreign Bribery Bill? Fill out our poll on the right sidebar to have a say!

Financial Services Updates

Financial Services Updates