The commodities, energy and resources sectors are consistently identified in the high-risk category for bribery and corruption. This should hardly come as a surprise given that these sectors:
- Are inherently international in nature
- Have a close association with other high-risk sectors
- Have a major presence in jurisdictions where bribery and corruption is rife
- Often rely upon local agents, intermediaries and sub-contractors
As a consequence, anti-bribery laws remain a top-tier priority for the global risk management of these sectors.
Australia’s foreign bribery offence and the facilitation payment defence
In Australia, bribing a foreign official is proscribed under Division 70 of the Criminal Code. This legislation ensures that a person can be prosecuted for offering or providing a bribe to foreign officials for the purpose of obtaining business or an undue business advantage. Like the UK Bribery Act and the US Foreign Corrupt Practices Act (FCPA),
Division 70 has extra-territorial effect and can apply to activities anywhere in the world. By retaining a facilitation payment defence, Australia is now well and truly out of step with the global ‘mainstream’.
Under Australia’s foreign bribery law a facilitation payment can be lawfully made where:
- The purpose of the payment is to expedite or secure the performance of a routine government action
- The payment does not relate to a decision to award new business or continue existing business
- The value of the benefit is of a minor nature and is accounted for in a record containing detailed information stipulated in the Criminal Code
Abolishing the facilitation payment defence – a global trend
Since 2009, there has been a global trend toward abolishing the facilitation payment defence from anti-bribery laws. This is demonstrated by:
- In its revised statement of policy regarding the Bribery Act, issued in October 2012, the UK Serious Fraud Office reiterated that facilitation payments are bribes and should be seen as such (the Bribery Act does not provide any facilitation exemption for payments)
- Although the FCPA still contains an express but limited facilitation payment exception, the US Department of Justice and the Securities and Exchange Commission have strongly disapproved of facilitation payments
- Over the past 12 months US courts have begun construing the facilitation payment defence in a far more restrictive manner than previously
- Over the past several years other OECD member nations have either removed the facilitation payment defence altogether (most notably Canada) or limited the scope of the defence (including Japan and South Korea)
- A number of developing nations in Asia and Africa have dramatically strengthened their anti-bribery laws
Against this background, the Australian facilitation payment defence continues to survive.
Australia is now well and truly out of step with the global ‘mainstream’.
Retention of the facilitation payment defence in Australia?
In November 2011 the Australian Government released a public consultation paper seeking views on whether the facilitation payment defence should be abolished. Robust submissions were made arguing for the retention of the defence.
However many submissions argued for its removal, noting that the defence:
- Is inconsistent with Australia’s international treaty obligations and international standards
- Is inconsistent with Australia’s domestic bribery laws and the domestic laws of most of Australia’s major trading partners
- Makes it very difficult to draw a clear distinction between a bribe and a facilitation payment; and
- Undermines attempts to develop a strong culture of compliance
It was also observed that many companies operating in Australia’s energy, resources and commodities sectors have strictly forbidden facilitation payments in their anti- bribery policies.
In October 2012 the Working Group released its report on Australia’s implementation of the OECD Anti-Bribery Convention. It noted the perception that facilitation payments appear to be equated with bribes of small value. However the Working Group recommended that Australia should continue to raise awareness of the distinction between bribes and facilitation payments and to encourage companies to prohibit them.
In March 2015 the Australian Government proposed amendments to Australia’s foreign bribery laws, as detailed in the Crimes Legislation Amendment Bill 2015. In light of the developments outlined above, it came as something of a surprise to find no reference in the Bill to the facilitation payment defence.
The way forward
On 24 June 2015 the Australian Parliament voted in favour of undertaking an inquiry into the adequacy of Australia’s anti-bribery legislation. The inquiry is due to table its report by 1 July 2016. Given the broad terms of reference of the inquiry, it would seem almost certain that the facilitation payment defence will be closely examined.
In the meantime, companies and individuals subject to Australia’s anti-bribery legislation need to carefully weigh- up the desirability of relying upon the facilitation payment defence when formulating their anti-bribery policies.
Although it remains to be seen whether the defence is repealed, it needs to be asked whether the possibility of facilitation payments can ever be consistent with a sound approach to anti-bribery compliance.
Be careful not to rely on the facilitation payment defence when formulating anti-bribery policies in Australia.