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Anti-bribery and corruption

Regulators around the world, including Australia, are becoming more aggressive and cooperative in investigating and enforcing anti-bribery and anti-corruption laws.

Last updated: October 2018

Introduction

Regulators around the world, including Australia, are becoming more aggressive and cooperative in investigating and enforcing anti-bribery and anti-corruption laws. Severe penalties – including fines and even terms of imprisonment – can be imposed on individuals and corporations for being involved in bribery and corruption; breaching relevant legislation; and failing to implement robust compliance programs that mitigate risks. Even more extensive consequences include reputational damage as well as a loss of confidence among 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 as is evidenced by the creation of an OECD Global Network for investigators and prosecutors. 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 United States and the United Kingdom have particularly onerous provisions coupled with strong cultures of enforcement and prosecution.

Corruption risks in Australia

Although its index ranking dropped eight points over the last six years, Australia remained the thirteenth least corrupt country in the world on the Transparency International 2017 Corruption Perceptions Index, a position it has held since 2015. While this ranking gives the impression that Australia is a comparatively low-risk environment, there has been a recent focus on anti-bribery and anti-corruption in Australia.

  • In March 2018, the Australian Senate Economic References Committee released its report into the effectiveness of Australia’s foreign bribery laws (the Senate Report), which included recommendations for improvements to the laws. The proposed broadening of anti-bribery and anti-corruption investigations to include foreign bribery as a predicate offence for serious money laundering offences, would enable government authorities to use more intrusive and covert investigative powers than would otherwise be lawfully permitted.
  • The Australian Parliament passed new false accounting offence provisions in the Criminal Code, criminalising intentional and reckless conduct when dealing with accounting documents.
  • The Commonwealth Director of Public Prosecutions (DPP) criminally prosecuted the Reserve Bank of Australia’s subsidiary companies, Securency International Pty Ltd and Note Printing Australia Pty Ltd. In May 2018, a former senior employee of Securency, Clifford Gerathy, plead guilty to a false accounting offence.
  • In July 2017, former directors of Lifese Engineering Pty Ltd plead guilty to charges of conspiring to bribe a foreign public official, which resulted in each director being sentenced to four years’ imprisonment and a A$250,000 fine.
  • Under a Ministerial Direction, the investigation of foreign bribery has become one of the AFP’s strategic priorities.
  • The Australian Federal Police (AFP) has established a Fraud and Anti-Corruption Centre within its multi-agency Serious Financial Crime Taskforce (SFCT). The AFP has 19 ongoing investigations into foreign bribery and corruption offences, including publically known investigations into Leighton Holdings (now known as CIMIC Group Limited), OZ Minerals Ltd, Tabcorp Holdings Limited, SMEC Holdings Limited, Iluka Resources, Rio Tinto, Getax Australia Pty Ltd and Sundance Resources Limited.
  • In May 2018, the Northern Territory Commissioner of Police was convicted of perverting the course of justice, in a case arising out of an AFP investigation.

Australia is a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the OECD Anti-Bribery Convention), which provides the international framework for laws dealing with transnational bribery. As such, Australia is subject to ongoing progress reports, and the OECD is still pressing for Australia to work harder in the area of enforcing foreign bribery and corruption laws. As a consequence of the matters listed above, local and international stakeholders – including the legislature, non-government organisations and the media – are paying closer attention to Australia’s level of commitment to the war on bribery and corruption.

Law enforcement

Australia’s federal system of government means there is no single government anti-corruption policy. Each jurisdiction has different laws – in statute and common law – for dealing with bribery and corruption.

The investigation of bribery and corruption offences is divided between the AFP, the Australian Securities and Investment Commission (ASIC), and the state and territory police forces. Investigations are referred to the relevant federal, state or territory DPP, who then decides whether to commence a prosecution.

A number of independent commissions also investigate possible corruption of public officials, including politicians and members of the police force. These are:

  • the NSW Independent Commission Against Corruption (ICAC)
  • Victoria’s Independent Broad-Based Anti-Corruption Commission
  • the Corruption and Crime Commissions in Queensland and Victoria
  • South Australia’s Independent Commissioner Against Corruption
  • the Australian Commission for Law Enforcement Integrity.

Although these commissions cannot charge individuals or corporations with substantive bribery and corruption offences, they have extraordinary investigative and inquisitorial powers. For example, reports following an investigation can be given to the police for further investigation; submitted to federal or state parliament; or in some circumstances released publicly to expose corruption. In New South Wales significant public debate and legal reviews have examined ICAC’s powers, including in relation to public hearings involving witnesses whose common law right to silence has been abrogated.

The NSW Parliament passed reforms in November 2016 making significant changes to ICAC’s structure and procedural fairness obligations. The changes, which came into effect on 7 August 2017, restructured ICAC so that authorisation of two of its three Commissioners is required to conduct a public inquiry. The amendments also require that a person be given an opportunity to respond before an adverse finding or opinion about them is included in an ICAC investigation report, which must also include a summary of the substance of any response from the person if they so request. The reforms do not diminish ICAC’s extensive investigatory powers.

Domestic bribery

It is an offence under the Criminal Code 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 exercising their duties.

‘Benefit’ in this sense is broadly defined as including any advantage; it is not limited to money or property. The term ‘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$2.1 million.

For companies, the penalty is the greater of a fine of up to A$21 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 per cent of the annual turnover of the corporate group.

Similar offences exist for Commonwealth public officials who receive such bribes or benefits of corruption, or who abuse their public office. In cases involving such bribery and corruption, persons who aid, abet, counsel or procure the commission of an offence by another person are taken to have committed the offence. In addition, conviction for bribery offences could lead to possible penalties or forfeiture of profit under relevant proceeds of crime legislation.

State and territory laws make it an offence to corruptly give or offer 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 21 years’ imprisonment.

Some Australian jurisdictions still criminalise bribery and misconduct in public office through the common law, rather than codifying it under statute. It is also an offence at common law to offer or receive any undue reward to or from any person in public office, in order to influence that person’s behaviour in that office.

Generally speaking, the state and territory laws that prohibit the giving or receiving 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 in doing so face a pecuniary penalty of up to A$200,000, a disqualification order or a compensation order.

Foreign bribery

Australia implemented the OECD Anti-Bribery Convention in 1999 by enacting anti-bribery and anti-corruption provisions in the Criminal Code.

Under the Criminal Code, it is an offence to directly or indirectly provide or offer someone 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. The maximum penalties under the Criminal Code for foreign bribery offences mirror the domestic bribery offences for bribery of a Commonwealth public official. A 2015 amendment to the foreign bribery provision clarifies that intention to bribe a particular foreign official is not necessary to establish an offence.

In this context, ‘foreign public official’ includes any employee, contractor or official of a foreign government department or agency, a foreign controlled company or a 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 Australia and the entity under investigation. 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 also applies if the conduct is committed wholly outside Australia, but at the time of the offence the person who is alleged to have committed it was 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
  • 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 awarding 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 in place that require the company to adequately record the value, date, recipient and purpose of any transaction with a foreign public official. Although the Senate Report recommended removing this ‘facilitation payment’ defence, the position remains unsettled, and although the Federal Government has indicated its opposition to facilitation payments it has not directly considered doing so. In the meantime, companies must be cautious and vigilant in relying on facilitation payments as a defence to the foreign bribery offence.

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 – can help minimise risk in this area.

 

False accounting

In 2016, Australia added false accounting offences to the Criminal Code. These offences criminalise intentional or reckless acts or omissions in respect of accounting documents, and are also capable of applying to offences that occur wholly outside Australia.

The provisions apply to conduct involving an intentional or reckless making, altering, destruction or concealment of accounting documents – or the failure to make or alter the document – to facilitate, conceal or disguise the receiving or giving of an illegitimate benefit or loss to another person that has not been legitimately incurred by the other person.

The maximum penalties under the Criminal Code for intentional false accounting offences mirror the foreign and domestic bribery offences mentioned above. The maximum penalties for reckless accounting offences represent 50 per cent of those for intentional false accounting offences.

Corporate liability

Under the Criminal Code, corporations can be held criminally responsible for conducting 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 and hospitality to Australian public officials

Greater care must be taken when providing gifts and hospitality to Australian public officials than when providing the same to private sector employees.

Australian public officials are usually subject to compliance with additional guidelines. For example, each Commonwealth, state and territory government has its own public service with its own code of conduct, often in addition to agency-specific codes.

There are no generally allowable limits for such gifts or hospitality, 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 and excessive hospitality should be avoided
  • it is usually inappropriate to pay for transport or accommodation for a public official without prior approval from the relevant agency.

What's next for Australia?

There is growing pressure on the AFP from within and outside Australia to increase its anti-bribery and anti-corruption efforts. This should lead the AFP to make significant efforts to hold persons and corporations accountable under the criminal law.

As more Australian businesses continue to expand into offshore markets, and with the AFP declaring foreign bribery a key strategic priority, it is likely that there will be more prosecutions of foreign bribery and other bribery and corruption offences such as false accounting offences and money laundering.

Australia continues to look for ways to enhance its ability to bring about enforcement outcomes. The Federal Government recently launched a series of reforms to strengthen Australia’s anti-bribery and anti-corruption regime, highlighting the need for companies to take a considered and proactive approach to bribery and corruption issues.

These reforms include the following.

Increasing whistleblower protections

The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 was introduced into the Commonwealth Parliament in December 2017, and is currently before the Senate. If passed, it will amend the Corporations Act, consolidating and strengthening existing whistleblower protections in the corporate and financial sectors, and creating a specific protection regime for whistleblowers who disclose breaches of tax laws. The Whistleblowers Bill will also require all public companies and large proprietary companies to have a whistleblower policy covering certain prescribed matters, and to make that policy available to officers and employees.


Expanding the foreign public official bribery offence

The Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 was introduced into the Australian Parliament in December 2017, and is currently before the Senate.

The Crimes Bill proposes a number of amendments to the offence of bribery of a foreign public official under the Criminal Code. The changes are designed to simplify and broaden the scope of the offence, and to remove practical and evidential barriers to successfully investigating and prosecuting individuals and corporations engaged in foreign bribery.

The main changes include:

  • extending the definition of ‘foreign public official’ to include a person formally or informally standing or nominated as a candidate to be a foreign public official (as currently defined in the Criminal Code)
  • removing the requirement that the foreign public official be influenced in the exercise of their duties as a foreign public official
  • replacing the requirement that a benefit or business advantage be ‘not legitimately due’ with the concept of ‘improperly influencing’ a foreign public official to obtain or retain business or an advantage
  • expanding the offence to cover bribery of a foreign public official to obtain a personal advantage rather than a business advantage, and to include conduct that was not intended to gain any particular advantage
  • creating a new offence that would allow a corporation to be held strictly liable for foreign bribery committed by its associates for the profit or gain of the corporation.

Introducing a deferred prosecution agreement scheme

If enacted, the Crimes Bill will also introduce a Commonwealth deferred prosecution agreement (DPA) scheme. The DPA scheme will enable the Commonwealth DPP to enter into a DPA with a corporation that has engaged in certain serious corporate crimes, including foreign and domestic bribery offences.

Under the terms of the DPA, the corporation will be required to comply with a range of conditions in exchange for the Commonwealth DPP agreeing to not initiate proceedings against the corporation for the offences specified in the DPA. Entry into a DPA will be voluntary and will not require the corporation to admit guilt.

The proposed DPA scheme contains a variety of safeguards to prevent it from becoming a ‘free pass’ to corporate offenders. The Attorney-General's Department has developed a draft code of practice to provide practical guidance on the intended operation and implementation of the DPA scheme. 

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