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Trends and climate

Trends

Have there been any recent changes in the enforcement of anti-corruption regulations?

Although federal anti-bribery laws have been in place since 1999, there has been little activity until recently. The current focus on anti-bribery and corruption laws and enforcement in Australia developed due to two factors:

  • The Senate referred an inquiry regarding foreign bribery to the Senate Economics References Committee for report by July 1 2016.
  • Australia dropped to 13th place (out of 168) in the International Corruption Perception Index, placing it behind European countries such as Germany and the United Kingdom (http://www.transparency.org/cpi2015#results-table).

The government recently introduced changes to foreign bribery offences under Section 70.2 of the Criminal Code Act 1995 (Cth). The changes to indicate that it is no longer necessary to prove:

  • an intention to bribe a particular foreign public official; and
  • that any business or business advantage was actually obtained or retained as a result of the bribery.

Since February 29 2016 two new offences have come into force in relation to false dealings with accounting documents. It is now an offence intentionally or recklessly to facilitate, conceal or disguise an occurrence of bribery or corruption in accounting records. Importantly, the Criminal Code affects the liability of corporations in relation to bribery or corruption. It provides that if officers, employees or agents, commit the offences in the scope of their authority, the corporation can be held liable. Further, a corporation will also be liable if a high managerial agent intentionally, knowingly or recklessly authorises these action. Therefore, corporations should be wary of a corporate culture that either encourages, directs or tolerates these offences. Such a culture can be evidence of the intent required (www.hwlebsworth.com.au/latest-news-a-publications/publications/technology-media-and-communications/item/1986-anti-bribery_and_corruption_update.html).

Legislative activity

Are there plans for any changes to the law in this area?

On March 16 2016 Justice Minister Michael Keenan announced a discussion paper on the possible introduction of deferred prosecution agreements (DPAs). DPAs essentially operate like a US plea-bargain, where prosecutors have the option to invite a business under prosecution to negotiate an agreement in return for the prosecution being deferred.

Legal framework

Authorities

Which authorities are responsible for investigating bribery and corruption in your jurisdiction?

Australia has adopted a multi-agency approach to fighting corruption. In regard to bribery, Australia’s primary criminal law enforcement agencies are the Australian Federal Police and the Office of the Commonwealth Director of Public Prosecutions (DPP), which investigate and prosecute, respectively. At state level, investigations are generally conducted by the fraud squad of the state police department. Prosecutions are then carried out by the relevant state director of public prosecution.

Other agencies that investigate corruption are the Australian Commission for Law Enforcement Integrity, the Australian Criminal Intelligence Commission, the Inspector-General of Intelligence and Security and the Office of the Commonwealth Ombudsman. The DPP is responsible for prosecuting offenders under the anti-bribery provisions of the Criminal Code.

Corruption within the public sector (including state and local government authorities and members of Parliament) is further dealt with at state level through independent bodies such as the Independent Broad-based Anti-corruption Commission in Victoria and the Independent Commission Against Corruption in New South Wales. While these bodies often cannot charge individuals, they have broad powers to investigate corrupt conduct. Reports from these investigations can then be passed to Parliament or the police, or realised publicly.

Domestic law

What are the key legislative and regulatory provisions relating to bribery and corruption in your jurisdiction?

Australia consists of six state and two territory jurisdictions. The federal government also has the power to legislate under the Constitution. Each state or territory has criminalised public and private bribery, as follows:

  • New South Wales – Section 249B of the Crimes Act 1900;
  • Victoria – Section 176 of the Crimes Act 1958;
  • South Australia – Section 150 of the Criminal Law Consolidation Act 1935;
  • Queensland – Sections 442B-442BA of the Criminal Code Act 1899;
  • Western Australia – Sections 529-530 of the Criminal Code;
  • Tasmania – Section 266 of the Criminal Code Act 1924;
  • Australian Capital Territory – Sections 356-357 of the Criminal Code 2002; and
  • Northern Territory – Section 236 of the Criminal Code Act 1983.

The commonwealth also has laws which prohibit the bribery of domestic and foreign public officials (Part 7.6 of the Criminal Code).

International conventions

What international anti-corruption conventions apply in your jurisdiction?

In 1999 Australia ratified the Organisation for Economic Cooperation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Australia is also a party to the United Nations Convention against Corruption 2003.  Both of these treaties require Australia to criminalise bribery of domestic and foreign public officials.

Specific offences and restrictions

Offences

What are the key corruption and bribery offences in your jurisdiction?

Domestic Section 141.1(1) of the Criminal Code provides that it is an offence for a person to dishonestly provide, offer or cause a benefit to another person if done with the intention of influencing an Australian commonwealth public official. If a commonwealth official requests, receives or agrees to obtain a benefit with the intention of having his or her duties influenced, he or she will be criminally liable under Section 141.1(3).

Section 141.1 also has extraterritorial effect. An individual or corporation will be liable even if the conduct constituting an offence did not occur in Australia if it involved an Australian public official.

Each state or territory also has its own provisions which prohibit the bribery of public officials. These provisions are often the same as those which prohibit bribery within the private sector:

  • New South Wales – Section 249B of the Crimes Act 1900;
  • Victoria – Section 176 of the Crimes Act 1958;
  • South Australia – Section 150 of the Criminal Law Consolidation Act 1935;
  • Queensland – Sections 442B-442BA of the Criminal Code Act 1899;
  • Western Australia – Sections 529-530 of the Criminal Code;
  • Tasmania – Section 266 of the Criminal Code Act 1924;
  • Australian Capital Territory – Sections 356-357 of the Criminal Code 2002; and
  • Northern Territory – Section 236 of the Criminal Code Act 1983.

Foreign Section 70.2(1) of the code makes it an offence to provide, offer or promise to provide a benefit not legitimately due to another person, with the intention of influencing the exercise of a foreign public official’s duties in order to obtain business or a business advantage.

Section 70.1 defines ‘foreign public official’ broadly to include:

  • an employee or official of a foreign government body;
  • a member of the executive or judiciary of a foreign country;
  • a person who performs official duties under the law of a foreign country; or
  • an employee or official of a public international organisation (eg, the United Nations).

The term ‘benefit’ is also defined broadly by Section 70.1 to mean “any advantage” and is expressly not limited to property.

Direct and indirect bribery is dealt with by Section 70.2(1), which notes that even bribery via an agent, relative or business partner constitutes an offence under the Criminal Code.

Hospitality restrictions

Are specific restrictions in place regarding the provision of hospitality (eg, gifts, travel expenses, meals and entertainment)? If so, what are the details?

Australian legislation does not expressly refer to all the circumstances in which providing gifts or hospitality may amount to bribery. Giving such benefits will be illegal only if it is done with the intention of influencing a public official. There are a number of guidelines which set out relevant standards, such as:

Further, the state and territory governments have their own public services with their own codes of conduct, which may be supplemented by agency-specific codes.

Facilitation payments

What are the rules relating to facilitation payments?

Within Australia, criminal liability is excluded for facilitation payments under the Criminal Code. However, Section 70.4(3) of the code notes that detailed records must be kept in order to qualify a payment as a legitimate facilitation payment. Some of these details include:

  • the benefit concerned;
  • the identity of the foreign official;
  • the person receiving the benefit; and
  • the particulars of the routine government action sought.

Liability

Scope of liability

Can both individuals and companies be held liable under anti-corruption rules in your jurisdiction?

Liability arises for any party provided that he or she is an Australian citizen or resident, or a body corporate incorporated in Australia. However, in order to establish liability for a corporation, both a physical and mental element must be satisfied:

  • The physical element of the offence under Section 70.2(1) notes that an employee, agent or officer of the body corporate must be acting within the actual or apparent scope of that person’s employment or authority in order for the cooperation to be liable; and 
  • The mental element highlights that a corporation which “expressly, tacitly or impliedly authorised or permitted the commission of the offence” will be held liable.

Can agents or facilitating parties be held liable for bribery offences and if so, under what circumstances?

Not applicable.

Foreign companies

Can foreign companies be prosecuted for corruption in your jurisdiction?

All that is needed for a foreign company to be prosecuted is for the bribery to occur in Australia (http://transparency.org.au/wp-content/uploads/2014/09/FINAL__-Whistleblower-Protection-Laws-in-G20-Countries-Priorities-for__-Action.pdf).

Whistleblowing and self-reporting

Whistleblowing

Are whistleblowers protected in your jurisdiction?

At present, there is no general legislative protection for whistleblowers who report bribery. However, some specific legislation protection deals with whistleblowing, including the following:

  • The Public Interest Disclosure Act 2013 (Cth) offers protection for public officials.
  • If a person discloses information in good faith to the Australian Securities and Investments Commission (ASIC) or a senior company manager that an officer or employee has contravened the Corporations Act or the ASIC Act, that person may be offered protection.
  • The Life Insurance Act 1995 (Cth), the Insurance Act 1973 (Cth), the Superannuation Industry (Supervision) Act 1973 (Cth) and the Banking Act 1959 (Cth) all offer whistleblower protection in regard to reporting bribery.

Self-reporting

Is it common for leniency to be shown to organisations that self-report and/or cooperate with authorities? If so, what process must be followed?

No regulation covers the self-reporting of foreign bribery to the Australian Federal Police. When the Organisation for Economic Cooperation and Development Phase 3 Report was written, three companies had self-reported acts of bribery. In all three cases, the police proceeded with investigations.

Self-reporting is an increasing consideration for Australian corporations facing anti-bribery allegations. Australian companies are aware that an internal compliance investigation may then provide a basis for advice to a company’s director that such regulation would be beneficial in terms of mitigating prosecution. This should be considered by any company where minor or substantial allegations have been raised.

Dispute resolution and risk management

Pre-court settlements

Is it possible for anti-corruption cases to be settled before trial by means of plea bargaining or settlement agreements?

There are two forms of plea bargain:

  • The prosecution and defence may agree for the defendant to plead guilty to avoid more serious charges. This type of plea bargain is permitted in Australia. In addition to dropping certain charges, the Office of the Commonwealth Director of Public Prosecutions may agree to proceed with a charge summarily rather than on indictment, or may even agree not to oppose a defence in order for a lighter penalty to be imposed.
  • The second form of plea deal involves pleading guilty in order to receive a lighter sentence from the court. However, in Barbaro v the Queen ((2014) 253 CLR 58) the High Court of Australia held that prosecutors are not required, nor should they be permitted, to proffer a suggested sentence.

Defences

Are any types of payment procedure exempt from liability under the corruption regulations in your jurisdiction?

Two defences are provided under the Criminal Code:

  • the defence of facilitation payments; and
  • the defence that the conduct in question was lawful according to the written law of the place where that conduct occurred (Section 70.3 of the Criminal Code).

What other defences are available and who can qualify?

Not applicable.

Risk management

What compliance procedures and policies can a company put in place to assist in the creation of safe harbours?

Australian anti-bribery laws pose a serious management challenge to international companies and Australian companies that operate internationally. They apply extraterritorially and have the potential for imprisonment and expensive fines. Companies that operate across borders should be proactive in dealing with bribery and corruption risks. Measures should be taken to build a company culture which discourages committing any offence. Such measures may include:

  • conducting a risk assessment;
  • a review or implementation of an anti-bribery and corruption policy;
  • comprehensive codes of conduct which incorporate these policies to demonstrate that active preventive measures are being taken;
  • including anti-bribery clauses in contracts;
  • taking additional care to maintain books;
  • including anti-bribery and corruption schemes in staff induction and training sessions; and
  • examining corporate culture as part of due diligence in mergers and acquisitions.

Record keeping and reporting

Record keeping and accounting

What legislation governs the requirements for record keeping and accounting in your jurisdiction?

It recently became an offence for a person to conceal intentionally or recklessly an occurrence of bribery or corruption in their accounting records. Section 286(1)of the Corporations Act 2001 (Cth) states that a company must keep written financial records that:

  • correctly record and explain its transactions, financial position and performance; and
  • enable true and fair financial statements to be prepared and audited.

Section 9 of the act defines ‘financial records’ as including:

  • invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers;
  • documents of prime entry; and
  • working papers and other documents needed to explain:
    • the methods by which financial statements are made up; and
    • adjustments to be made in preparing financial statements.

What are the requirements for record keeping?

Not applicable.

Reporting

What are the requirements for companies regarding disclosure of potential violations of anti-corruption regulations?

Not applicable.

Penalties

Individuals

What penalties are available to the courts for violations of corruption laws by individuals?

Section 70.2 of the Criminal Code provides a maximum penalty of 10 years’ imprisonment, a fine of A$1.7 million or both. 

Companies or organisations

What penalties are available to the courts for violations of corruption laws by companies or organisations?

Section 70.2 of the code provides that a corporation can be fined the higher of:

  • A$1.7 million;
  • 10% of the corporation’s annual turnover within 12 months of the breach; or
  • three times the value of any benefit obtained directly or indirectly that can be reasonable attributed to the breach.