Strengthened by the enactment of new offences, increased penalties and larger budgets, regulators around the globe have been increasingly aggressive in the investigation and enforcement of anti-bribery and corruption laws. Australia is no exception.
The consequences of breaching these laws can be serious. In a number of cases overseas, severe penalties (including incarceration) and fines have been imposed on individuals and corporations for direct involvement in bribery and corruption, breaches of relevant legislation and/or failing to mitigate the risk of bribery and corruption by implementing a robust compliance program. Indeed, the consequences are more far-reaching and include reputational damage as well as a loss of confidence amongst employees and business counterparts.
As the global economy becomes increasingly integrated, regulators are also co-operating across international boundaries and focusing on high-risk regions. This means that as well as being subject to Australian anti-bribery and corruption legislation, Australian companies and directors (or companies doing business in Australia) must also understand legislation in other jurisdictions. The most relevant jurisdictions are the United States and the United Kingdom, which have particularly onerous provisions coupled with strong enforcement and prosecution cultures.
Both locally and globally, the potential for corporate liability has seen an increased focus on the development and implementation of compliance programs. Implementing an appropriate anti-bribery compliance regime is critical to demonstrate a culture of compliance.
Corruption risks in Australia
Transparency International's 2013 Corruption Perception Index lists Australia as the ninth least corrupt country in the world. While this ranking may give the perception that Australia is a comparatively low-risk environment, there has been a recent focus on anti-bribery and corruption following a series of high-profile cases, including:
- the New South Wales Independent Commission Against Corruption's (ICAC) investigations into Australian Water Holdings Pty Ltd which have resulted in the resignation of the Premier and several Ministers of the New South Wales State Government;
- the first criminal prosecution under Australia's laws prohibiting the bribery of foreign public officials of Securency International Pty Ltd and Note Printing Australia Pty Ltd;
- the Australian Securities and Investment Commission's (ASIC) civil actions against six former officers of AWB Ltd;
- the Australian Federal Police's (AFP) investigation into Leighton Holdings Ltd regarding alleged foreign bribery offences; and
- the Royal Commission into Trade Union Governance and Corruption.
Australia is a party to the OECD Anti-Bribery Convention (which provides the international framework for laws dealing with transnational bribery) and is therefore subject to ongoing progress reports. While the OECD's Phase 3 Report on Implementing the OECD Anti-Bribery Convention in Australia (October 2012) welcomed recent efforts, it clearly signalled that Australia must work harder through investigation and enforcement to stamp out foreign bribery.
As a consequence of these matters, local and international stakeholders (including the legislature, NGOs and the media) are paying closer attention to Australia's level of commitment to the war on bribery and corruption.
Given the federal nature of the Australian system of government, there is no single government anti-corruption policy. Each jurisdiction has different laws (statute and common law) to deal with bribery and corruption.
The investigation of bribery and corruption offences is divided between the AFP, ASIC and the State and Territory police forces. An investigation is referred to the relevant Director of Public Prosecutions who then decides whether to prosecute the matter.
In addition, there are a number of independent commissions at both the Federal and the State level to investigate possible corruption of public officials (including politicians) and police. The ICAC in New South Wales is an example of such a body. While these commissions cannot charge individuals or corporations with offences, they have wide-ranging investigative powers. Reports following an investigation can be given to the police for further investigation, Parliament, or released publicly.
Bribery of a Commonwealth public official
It is an offence under the Criminal Code Act 1995 (Cth) to dishonestly provide or offer to someone (directly or indirectly) a benefit with the intention of influencing a Commonwealth public official in the exercise of their duties or where the receipt of the benefit would tend to influence a Commonwealth public official in the exercise of their duties.
"Benefit" is broadly defined to include any advantage and is not limited to money or property.
"Commonwealth public official" covers all employees of the Commonwealth and any Commonwealth authority.
Individuals found guilty of bribing a Commonwealth public official face up to 10 years' imprisonment and/or a fine of up to A$1.7 m.
For companies, it's the greater of a fine of up to A$17 million, a disgorgement penalty of up to three times the value of the benefit reasonably attributable to the conduct or (where the value of the benefit cannot be determined) up to 10% of the annual turnover of the corporate group.
Similar offences exist for Commonwealth public officials who receive such bribes/corrupting benefits, or abuse their public office.
Persons who aid, abet, counsel or procure the commission of an offence by another person are taken to have committed the offence.
Finally, conviction for bribery offences could lead to possible penalties or forfeiture of profit under proceeds of crime legislation.
State/Territory public officials
There are offences in State and Territory laws for corruptly giving or offering an inducement or reward to an agent for doing or not doing something regarding the affairs of the agent's principal. It is also an offence to aid, abet, counsel, procure, solicit or incite the commission of these offences.
The penalties differ in each State and Territory but for individuals can include a fine and/or up to 10 years' imprisonment.
Bribery offence at common law
It is also an offence at common law to offer or receive any undue reward to or by any person in public office in order to influence that person's behaviour in that office.
Generally speaking, the above State and Territory laws prohibiting the giving or receipt of corrupt commissions or rewards also apply to rewards given to employees or agents of private or public companies and individuals.
An employee who receives a bribe will likely also contravene the Corporations Act 2001 (Cth) and faces a pecuniary penalty of up to $200,000, a disqualification order or a compensation order.
Australia implemented the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in 1999 by enacting the anti-bribery and corruption provisions in the Criminal Code.
Under the Criminal Code, it is an offence to provide or offer to someone (directly or indirectly) a benefit that is not legitimately due to that person with the intention of influencing a foreign public official in the exercise of their duties in order to obtain or retain business or a business advantage.
"Foreign Public Official" includes employees, contractors or officials of a foreign government department or agency, a foreign controlled company or public international organisation, members of a foreign military or police force or members of the executive, judiciary or magistracy of a foreign country.
Australian authorities can prosecute companies and individuals for such offences provided a sufficient connection can be established between the entity under investigation and Australia. More specifically, the conduct constituting the offence must occur wholly or partly within Australia, or wholly or partially on board an Australian aircraft or ship. The offence will also apply where the conduct is committed wholly outside Australia, but at the time of the offence, the person who is alleged to have committed it is an Australian citizen, a resident of Australia, or an Australian corporation.
Defences are available in two circumstances:
- where the conduct was lawful in the foreign public official's country (in the sense that it is permitted or required by written law); or
- where a payment is a facilitation payment made to expedite or secure the performance of a routine government action of a minor nature and the payment is of minor value.
"Routine government action" excludes a decision about the awarding of new business, continuing existing business, or the terms of new or existing business. To rely on this exception companies must demonstrate that they have appropriate recording keeping procedures which include adequately recording the value, date, recipient and the purpose of any transaction with a foreign public official. Australia is currently considering removing the "facilitation payment" defence from the statute book.
The foreign bribery offence gives rise to obvious compliance risks for companies doing business in high-risk environments – in particular where those activities are carried on by agents, or through joint venture vehicles. Thorough due diligence and ongoing monitoring (together with the existence of an anti-bribery compliance program) will help to minimise risk in this area.
Penalties under the Criminal Code for foreign bribery offences mirror the domestic bribery offences for bribery of a Commonwealth public official.
Under the Criminal Code, corporations can be held to be criminally responsible for the conduct of a corporate agent in a range of situations, in particular where the corporate culture directs, encourages, tolerates, or leads to breaches of the legislation, or where the company fails to create or maintain a corporate culture that requires compliance with the legislation.
Gifts/hospitality to Australian public officials
Greater care needs to be taken with provision of gifts/hospitality to Australian public officials than to private sector employees.
Australian public officials are usually subject to additional guidelines. For example, each Commonwealth, State and Territory Government has its own public service with its own code of conduct. These codes of conduct are often supplemented by agency-specific codes of conduct.
There are no "generally allowable limits" for gifts/hospitality to public officials, although some agency-specific codes of conduct may specify dollar limits. Although it will depend on the applicable guidelines, generally speaking:
- gifts of more than token value, or excessive hospitality, should be avoided; and
- it will usually be inappropriate to pay for transport or accommodation of a public official (without prior approval from the relevant agency).
What next for Australia?
In September 2011 the Commonwealth Government announced a commitment to developing a National Anti-Corruption Plan. Despite a public consultation process which concluded in 2012, a National Plan has yet to be released. Nevertheless, it is hoped that this will eventuate and that Australia will see a stronger and more cohesive approach to corruption.
As more and more Australian businesses continue to expand into offshore markets, and with the AFP declaring foreign bribery a key organisational priority, it is likely that there will be more foreign bribery prosecutions in Australia in coming years.
This article is taken from Clayton Utz's Doing Business in Australia, the essential guide for investors and business exploring commercial opportunities in Australia.