The Australian Federal Parliament has enacted amendments to the Federal Criminal Code that are designed to address perceived deficiencies in Australia's legislative regime that prohibit Australians (individual and corporations) from bribing foreign government officials. Specifically, the amendments introduce new criminal offences that prohibit the intentional or reckless false dealing with accounting documents. The scope and penalties for breach of these offences go well beyond the current false or misleading accounting offences in the Corporations Act and, moreover, are not necessarily limited to false dealing with accounting documents associated with foreign bribery offences.
New Accounting Offences
On 23 February 2016, the Federal Parliament passed into law the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2016. The Act amends the federal Criminal Code to prohibit making, altering, destroying or concealing an accounting document (i) with the intention to facilitate, conceal or disguise the giving or receipt of a payment not legitimately due to a person; or (ii) reckless to the fact that doing so facilitates, conceals or disguises the giving or receipt of such a payment. Significant penalties follow from conviction—imprisonment for individuals, and fines that mirror the penalties for the offence of bribing foreign government officials—which can be as high as 10 percent of the annual turnover of the corporation in the 12-month period prior to the relevant conduct.
Government Responds to International Pressure
This is the latest response to international criticism of Australia's failure to enforce anti-corruption laws. Few convictions have followed from the 31 briefs of evidence referred to the Commonwealth prosecutor in the last five years. The Organisation for Economic Co-operation and Development ("OECD") has urged the Australian Federal Police to "vigorously pursue" false accounting cases. The encouragement to focus on false accounting cases was no doubt fuelled by the trend in the United States where violations for books-and-records offences under the Foreign Corrupt Practices Act are more commonly pursued than prosecutions for the bribery itself. By legislating that an offence under the new false accounting provisions may be established without the need to prove that a bribe was actually given or received—and that the Director of Public Prosecutions only need establish that a corporation was reckless—Australia is likely to follow the US trend of focusing upon the easier-to-prove false accounting offences. As a result, we can expect a significant increase in prosecutorial action against Australian corporations and individuals.
Significant Implications for Business
There can be no doubt that these amendments will have serious ramifications for Australian business. Justice Minister Michael Keenan said that the legislation puts all Australian businesses on notice that "the Government is committed to ensuring that Australia has tough laws against white-collar crime". While the legislation was originally intended to address the OECD concerns around enforcement of Australia's foreign corrupt practises laws, the new offences are not limited to breaches associated with bribing of foreign officials. Any accounting document (broadly defined) that either intentionally or recklessly facilitates, conceals or disguises payments not legitimately due to the recipient will trigger potential liability under the relevant provisions. The words "not legitimately due" are words found exclusively in the offence of bribing foreign government officials in Australia's Criminal Code, but the legislation does not purport to make the offence dependent upon the offence of bribing foreign government officials. This is a stand-alone offence and would cover, at least, accounting documents that facilitate, conceal or disguise commercial ("private") bribery or "kick-backs" in Australia and overseas (the offences have broad extraterritorial application). The offence might also apply to other corporate crimes including, for example, insider trading offences.
Going forward, any investigation of potential criminal conduct by an Australian corporation is likely to focus upon the treatment of that conduct in the books and records of the corporation. Measures which Australian corporations should consider undertaking in order to protect themselves from prosecution under the new offences include:
- Training those responsible for maintaining the books and records of the company as to the new offences;
- Reviewing the adequacy of the control and supervision of those responsible for maintaining the books and records of the company;
- Obtaining certificates of compliance from all employees who are responsible for providing the raw data inputs that feed into the accounting records of the company;
- Reviewing the adequacy of training and policy implementation designed to prevent illegitimate conduct within the corporation; and
- Undertaking random in-country audits in high-risk jurisdictions or industries.