Overview

The Australian gambling industry has long been aware of laws prohibiting the offering of bribes to Australian government officials. However, Australian businesses should also be aware of their obligations under laws relating to the bribery of foreign government officials.

These laws are likely to be of increasing relevance to Australian gambling operators, particularly since the Australian gambling sector is, by global standards, a mature regulated market and Australian gambling businesses (or their foreign parents) may be seeking currently, or will seek in future, entry into emerging foreign markets. This may involve participation in bids to foreign governments for gambling licenses.

Additionally, Australian foreign bribery laws are likely to be the subject of increased enforcement in the future. We discuss this possibility in further detail in this paper.

We have set out below a brief overview of the relevant laws and five (5) pointers to assist Australian businesses in familiarising themselves with these laws.

Background

Australia is a member of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997) (Bribery Convention)1, which requires member states to enact anti-bribery legislation.

Pursuant to Australia’s obligations under the Bribery Convention, section 70.2 of the Criminal Code Act 1995 (Criminal Code) prohibits the bribery of a foreign official (Foreign Bribery Offence). The Foreign Bribery Offence applies extraterritorially2 and applies where the conduct constituting the offence occurs:

  • in whole or in part in Australia; or
  • wholly outside Australia by Australians nationals or residents, or a body corporate incorporated under Australian law.3
  1. What is the Foreign Bribery Offence?

In general terms, the Foreign Bribery Offence will apply where a person provides a benefit to another person where that benefit is not legitimately due and does so with the intention of influencing a foreign public official in the exercise of the official’s duties in order to obtain or retain  a business advantage that is not legitimately due to the recipient (whether or not such advantage was actually obtained).4

For the purposes of this offence, a corporation can be held responsible for the actions of an agent/employee within the scope of his or her employment or authority, in circumstances where the corporation either encourages or tolerates that conduct, or fails to create a culture of compliance with anti-bribery legislation.5  Where liability is established on these grounds, a corporation will face penalties of up to (the greater of):

  • $18 million6;
  • three times the value of the benefit obtained as a result of the conduct; or
  • 10% of the corporation’s annual turnover.

It is likely to also suffer reputational harm.

The Criminal Code provides two defences to the Foreign Bribery Offence where:

  • the conduct is lawful in the foreign official’s country; or
  • where the benefit is of a minor nature and:
    • the conduct was engaged in for the sole or dominant purpose of expediting or securing the performance of a routine government action of a minor nature; and
    • an appropriate record was made and retained (the Facilitation Payment Defence).7
  1. Your business may already have obligations under UK anti-bribery legislation (and maybe under US legislation!)

It is quite possible that the anti-foreign bribery laws of the UK may apply to the activities of an Australian entity simply because it carries out part of its business in the  UK.

The Bribery Act 2010 (UK) (UK Bribery Act) applies extraterritorially. Section 7 of the UK Bribery Act creates an offence in circumstances where a corporation has failed to prevent an act of bribery by a person associated with the corporation.8

This offence extends to any company that carries on a business or part of a business in the UK (wherever in the world it may be incorporated or formed). In other words, an Australian company that has clients or suppliers in the UK may be liable under this offence if it fails to prevent an act of bribery.

For the purposes of this offence, “associated person” includes employees, agents and subsidiaries.9

US foreign bribery laws have a similar reach. For example, BHP Billiton Limited and BHP Billiton Plc (BHP) were investigated by the US Securities and Exchanges Commission (SEC) in respect of alleged breaches of the “books and records” provisions of the US Foreign Corrupt Practices Act (FCPA).This matter was resolved by a settlement of US$25 million in May 2015.10

It is essential for Australian businesses to be aware of, and determine whether they have any obligations under, these foreign laws.

  1. Identity of the foreign official

The Crimes Legislation Amendment (Powers, Offences and Other Measures) Bill 2015 (Bill) is currently before the Australian House of Representatives. If passed, the Bill will have the effect that, in bribery offences, a prosecutor will not be required to establish an intention on the part of an accused person to influence a “particular” foreign official.

The Explanatory Memorandum to the Bill states:

It is not intended that the foreign bribery  offence require proof of an intention to bribe a specific foreign public official. Such a requirement would significantly reduce its effectiveness. As foreign bribery is often committed through intermediaries, a briber will often have not met or know the identity of the bribed official…. Clarifying the offence will ensure that a defendant in a foreign bribery matter is not able to argue that the prosecution needs to establish an intention to bribe a particular foreign official.

  1. Enforcement is on the rise

Historically, there has been limited enforcement of the Foreign Bribery Offence and only two prosecutions have been initiated since the Foreign Bribery Offence was introduced in 1999.

However, the OECD Working Group on Bribery has observed that the Australian Federal Police (AFP) received 15 new foreign bribery allegations and commenced 10 new foreign bribery investigations between 2012 and 2015.11  It remains to be seen whether this increase in investigations will lead to further prosecutions.

This heightened activity coincides with the establishment of the AFP’s Fraud and Anti-Corruption Centre (FAC Centre), which hopes to enhance Australia’s law enforcement capability by implementing a multi-agency approach to foreign bribery investigations. The FAC Centre will also focus on strengthening training, intelligence and coordination between key Government agencies, in addition to promoting legislative and policy reform in the area of financial crime.12

This increased enforcement activity may be seen as a response to concerns expressed by the OECD Working Group on Bribery that Australia is not doing enough to enforce the Foreign Bribery Offence.

The Bill and Senate Bribery Inquiry (see below) may also lead to further enforcement activity over the coming years.

  1. The Senate Bribery Inquiry

Australia’s bribery laws are the subject of an Inquiry being conducted by the Senate Standing Committee on Economics, which is due to report to the Senate by 1 July 2016 and may spur legislative reform in this area. The Terms of Reference13 will allow the Committee to consider the effectiveness of, and possible improvements to, the Foreign Bribery Offence, including the range of offences, for example:

  • the introduction of false accounting offences along the lines of the books and records offences in the FCPA;
  • liability of directors and senior managers who do not implement programmes of compliance with anti- bribery laws;
  • liability of parent companies for subsidiaries and intermediaries, including joint ventures; and
  • removal of the Facilitation Payment Defence. The Committee may consider that this Defence should be removed to bring Australian anti-bribery law in line with the UK Bribery Act.

Conclusion

Given the complexities of anti-bribery laws and increased enforcement action, Australian companies need to be aware of their potential exposure under the Foreign Bribery Offence and foreign anti-bribery laws.

If you have not started to do so already, you should establish sound internal procedures designed to prevent bribery and promote a corporate culture of compliance with anti-bribery laws globally.