The Australian Senate has given the green light to an inquiry into foreign corrupt practices by Australian companies, voting in favour of the proposal yesterday. The motion, which was moved by Senator Xenophon (with the support of Senator Wang), follows on from the high profile FIFA corruption scandal which may extend to Australia’s soccer world cup bid.

The Senate will consider why prosecutions of foreign bribery offences under the Criminal Code appear difficult to bring and so rarely result in conviction.  The inquiry will also provide an opportunity to examine whether Australian authorities should have more latitude to negotiate plea bargains with offenders, in addition to conventional criminal prosecutions.

The Economics References Committee is required to report by 1 July 2016 on the effectiveness of, and possible improvements to, existing Commonwealth legislation that prohibits foreign bribery.  Among other things, the committee will consider:

  • the jurisdictional reach of existing legislation;
  • how Commonwealth agencies and statutory bodies currently investigate and prosecute offences;
  • the range of penalties currently available to the courts and options for expansion, including potential debarment from government contracts and programs;
  • whether the range of existing offences should be expanded in a manner similar to the US Foreign Corrupt Practices Act (for example, the FCPA’s books and records provisions that require companies to keep accurate books, records and accounts and which have proved fruitful for US prosecutors pursuing companies for non-compliance when improper payments have been made);
  • the liability of directors and senior managerial staff for failing to implement a corporate culture of compliance (it is possible that the committee may recommend an approach similar to the UK Bribery Act’s strict liability provisions for corporates); and
  • measures to encourage corporate self-reporting, including deferred prosecution agreements.

The Senate inquiry will extend beyond foreign bribery involving public officials; it will encompass bribery between companies and bribery between companies and international sporting bodies.  The committee’s report will address how guidance ought to be provided to corporations about establishing a culture of compliance and developing robust anti-bribery compliance programs.

The inquiry will be chaired by Senator Sam Dastyari, who has previously raised the issue of foreign corrupt practices in the Senate.  In March this year, Senator Dastyari expressed his concerns about the scope of this issue and the vast number of related concerns.  His concerns have now been vindicated by the Senate’s vote yesterday.

What you need to know

  • The Australian Senate has voted in favour of an inquiry into foreign bribery and corruption involving Australian companies.
  • The inquiry will be held over the coming months ahead of a report back to Parliament in a year’s time.
  • The terms of reference are broad and will likely provide the impetus for legislative reform in this area.

What do you need to do

  • You should consider whether you would like to make a submission to the inquiry containing any opinions, arguments or recommendations that you would like the Senate to consider.  Your submission need not address all terms of reference and can be limited to the issues that specifically interest you.
  • The inquiry will not be concluded until 1 July 2016.  In the meantime, you need to ensure strict compliance with the current Australian laws prohibiting domestic and foreign bribery.
  • The progress of the inquiry should be closely monitored and any implications for your business should be promptly managed.