Anti-Bribery and Corruption laws have been a hot topic of late. This is primarily due to the announcement of a Senate inquiry into foreign corrupt practices last year, and Australia’s deteriorating position in the International Corruption Perception Index, now ranked 13th out of 168 countries and falling behind countries such as Germany and Britain.
This is widely believed to be due to perception that the Australian Government has not been doing enough to implement legislation and address corruption. High profile foreign bribery scandals in recent years involving entities such as the Reserve Bank and Wilson Security have not helped. The resignation of ASX Chief Executive Elmer Funke Kupper last month over allegations of bribery during his time as CEO of TABCORP, once again brought anti-bribery and corruption laws into the spotlight.
The Foreign bribery is dealt with under s 70.2 of the Criminal Code 1995 (Cth) (‘Code‘). Under s 70.2(1), a person must not 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 a business advantage.
The law captures both companies and individuals, and the scope of the offence is wide. It applies to bribery occurring wholly or partly in Australia, or on an Australian ship or aircraft, and will also apply where the conduct occurs wholly outside Australia if the person alleged to have engaged in the conduct is an Australian citizen, resident or Australian corporation.
In February 2012, the penalties for bribery offences under the Code were significantly increased. For individuals, the maximum penalty is 10 years imprisonment or a fine of $1.8 million. For a body corporate, the maximum penalty is dependent on whether the value of the benefit can be ascertained. If the value can be determined, a fine of $1.8 million or 3 times the value of the benefit (whichever is greater) will be imposed. If the value is not able to be determined, the penalty is a fine of 10% of the ‘annual turnover’ of the body corporate.
Responding to international pressure and calls from companies such as BHP Billiton to bring laws into line with stricter international jurisdictions, the government has recently implemented changes to Australian law.
In November 2015, the above s 70.2 foreign bribery offence was strengthened to clarify that it is not necessary to prove:
- An intention to bribe a particular foreign public official; and
- Any business or business advantage was actually obtained or retained as a result of the bribery.
Two new offences have also been in force since 29 February 2016, regarding false dealing with accounting documents. Under a new Part 10.9 of the Code, it is now an offence for an individual or corporation to intentionally or recklessly facilitate, conceal or disguise in their accounting records an occurrence of bribery, corruption or loss to a person that was not legitimately incurred. The corresponding penalties for intentional false dealing with accounting documents are the same as those under s 70.2 above.
Importantly, the Code provides that a corporation will commit an offence if the concealment was intentionally, knowingly or recklessly undertaken by its officers, employees or agents, in the scope of their authority, and the corresponding mental element (ie intention or recklessness) is made out.
A corporation will also have the necessary intent if a high managerial agent intentionally, knowingly or recklessly engages in the conduct or authorises it. Companies should therefore be aware that if a corporate culture exists that encourages, directs or tolerates the offence, the necessary intent can be made out.
How to minimise risk
Given the extra-territorial reach of these laws, and the potential for imprisonment and expensive fines, companies that operate internationally should be proactive in managing any bribery and corruption risks. In particular, measures should be taken to ensure company culture actively discourages committing any such offence, which may include:
- Conducting a risk assessment;
- Reviewing any anti-bribery and corruption policies currently in place;
- Having comprehensive codes of conduct which incorporate these policies to demonstrate that active preventative measures are being taken;
- Drafting anti-bribery and corruption clauses to be inserted into any future contracts;
- Taking additional care to maintain the books (such as updating record keeping and auditing procedures); and
- Incorporating anti-bribery and corruption programs into staff training.
On 16 March 2016, the Justice Minister Michael Keenan announced a discussion paper canvassing the possible introduction of ‘Deferred Prosecution Agreements’ (DPAs) for Australian corporate law offences. DPAs essentially function like a US plea-bargain, where prosecutors have the option to invite the company to negotiate an agreement in return for the prosecution being deferred. Whilst DPAs are only being discussed, it has been noted that their introduction in the US in 2004 resulted in US bribery prosecutions and fines sky-rocketing.
The findings of the Senate inquiry are also due to be reported by 1 July 2016, potentially recommending further changes to the laws.
With increasing attention on the effectiveness of Australia’s anti-bribery and corruption laws, it is important for companies to ensure current policies and procedures are robust enough to comply with recent changes, and safeguard the company against any future risks.
If you require assistance or further information please contact a member of our team.
This article was written by Luke Dale and Mary Szumylo.