Australian companies with global operations have a short window to ensure that they have an adequate compliance program to mitigate any bribery or corruption risks, with new anti-bribery laws taking effect from 6 September 2024.
The changes to Australia's foreign bribery laws introduced by the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 will include a new failure to prevent foreign bribery offence for corporations, and will make it easier for Australian law enforcement agencies to prosecute companies that engage in foreign bribery and/or do not have adequate procedures in place to prevent foreign bribery. The changes bring Australia's regime closer to those in the UK and US, but notably do not contain a deferred prosecution agreement (DPA) scheme (which we discuss further below).
New offence for companies for failing to prevent foreign bribery
Maximum penalty: At least A$31.3 million
Similar to the "failure to prevent" offence in the UK Bribery Act, the new offence (section 70.5A) creates a presumption that a company is criminally liable for foreign bribery committed by its officers, employees, external contractors, agents and subsidiaries (ie. "associates"), unless it can demonstrate that it had adequate procedures in place to prevent the commission of foreign bribery.
The Government is expected to publish guidance on what adequate procedures would entail, which we expect will be similar to the draft guidance released in November 2019 and largely modelled on the guidance in the UK.
Simplification of the existing foreign bribery offence in section 70.2
Maximum penalty: At least A$31.3 million (for conduct since 1 July 2023)
The existing offence has historically been difficult for law enforcement to prosecute successfully. The amendments simplify the existing offence to address some of the difficulties that law enforcement agencies have identified in prosecuting a foreign bribery offence:
- Expansion of liability to actions of a corporation's "associates", not just officers, agents or employees. An associate is anybody that provides services for or on behalf of a company, and could include, for example, contractors, subsidiaries or joint venture partners.
- A revised test of paying a benefit with the intention of "improperly influencing" a foreign public official. The test will replace the current requirement that a benefit provided was "not legitimately due", which can be difficult to prove, particularly where payments are often disguised as having a legitimate rationale. The Bill offers various examples as to what may constitute improper influence, but the question will depend on all the circumstances.
- Expansion of liability to cases where bribes are paid to secure "personal advantage", not just business advantage. Personal advantages may include the granting of visas and the bestowing of scholarships, personal titles or other honours.
- Extending the foreign bribery offence to prohibit bribes of candidates for public office.
- Removal of the existing requirement that the foreign public official be influenced in the exercise of their official duties.
- Clarifies that it is not necessary to prove that there was a particular advantage in mind when engaging in foreign bribery.
Have we missed the opportunity for a DPA scheme in Australia?
In contrast to previous attempts to amend Australia's foreign bribery laws, the Bill does not contain a DPA regime. A DPA regime enables companies who committed serious corporate crime (not limited only to foreign bribery offences) to reach an agreement to defer any prosecution on the basis of a number of conditions, including the payment of a fine, taking remediation steps, disgorgement of any proceeds of crime and/or co-operating with any related investigation or prosecution.
The lack of a DPA regime in Australia is at odds with other jurisdictions such as the UK and the US, where DPA regimes provide an important incentive for companies to self-report conduct to law enforcement agencies and provide co-operation. The introduction of a DPA regime would have provided companies with some degree of certainty if they elected to self-report conduct, and an opportunity to avoid some of the adverse consequences associated with lengthy investigations and litigation. Without a DPA regime in Australia, a layer of complexity is added to cases being investigated in multiple jurisdictions, especially with some of Australia’s closest trading partners, as law enforcement authorities may not be able to come to co-ordinated settlements and resolutions as easily.
The Government has, however, left open the door for such a DPA regime to be introduced in the future, after the heightened measures contained in the Bill have been given time to work.