The Federal Government has provided the Australia Federal Police with an additional $15 million of funding to investigate Australian companies and business executives which may have been involved in foreign bribery.

With the heightened focus on corporate regulatory compliance, companies in Australia should undertake a compliance ‘health’ check to identify any issues and put in place mitigation measures. Doing this successfully can avoid an investigation in the first place and will likely limit adverse consequences of any investigation.

What is the risk?

Bribery is a criminal offence. A failure to keep proper accounting records to ‘cover-up’ the payment of a bribe is included amongst the range of criminal offences. Individuals involved in paying or facilitating the payment of a bribe to a foreign official can be sentenced to 10 years imprisonment and a fine of up to $1,800,000.

Corporations can also be found criminally liable if the bribe was paid by a ‘high managerial agent’ and the company did not have in place adequate steps to prevent this, or the bribe was expressly, tacitly or impliedly authorised or permitted, including via a ‘corporate culture’. The use of subsidiaries or joint ventures to conduct business off-shore will not necessarily shield the parent entity from bribes paid in the conduct of the off-shore business. A corporation involved in bribery can be fined up to $18,000,000 or 10% of its annual turnover or 3 times the value of the benefit obtained.

Many other jurisdictions have similar provisions for example, the United States and the United Kingdom. Companies and individuals can be subject to these laws even if there is only an indirect connection with the jurisdiction.

If your company has given a benefit to another person for the award of a business opportunity, it is likely that a criminal offence has been committed in Australia or the United Kingdom and the United States. The so called ‘facilitation payments’ defence in Australian legislation does not permit bribery even if it is considered the local custom or way of doing business.

Corporate directors should also consider their directors’ duties and the risk of a class action should bribery be publicly uncovered.

What is the purpose?

It is great news for the company, its board and executive team if the ‘health’ check does not identify compliance issues. Undertaking the check will improve the compliance culture within the organisation and this should make future deviations less likely.

The ‘health’ check should assess the adequacy of your organisation’s compliance policies, as well as, how they are actually implemented. In our experience, issues arise even where an organisation has a market leading compliance policy as the most important step is policy implementation. This requires an understanding of how your compliance policy can practically be implemented in various jurisdictions around the world and how to monitor this.

If compliance issues are identified, they must be properly investigated and addressed. Our recent experience confirms this is the preferred approach to mitigate the risk from historical and ongoing non-compliant activity. And there are a range of possible solutions, from restructuring how business is being done in offshore jurisdictions to self-reporting to regulators to minimise the impact of an investigation, exercise an element of control over it and pave the way for a negotiated outcome.

Plan the audit

The health check should be tailored to your business structure and key risk areas. This will improve efficiency and effectiveness. During the planning process you can also consider the extent to which you involve legal counsel to maintain legal professional privilege and to provide specific jurisdictional expertise.