Should a corporation that becomes aware that it has been paying bribes in foreign markets in order to win or retain work self-report that conduct to the Australian Federal Police and expose itself to potentially ruinous reputational damage, not to mention fines up to a maximum of 10% of annual turnover? Increased awareness of the consequences for a corporation of paying bribes and more sophisticated compliance regimes has lead to this dilemma being debated in boardrooms across the country. Recent legislation passed by the UK parliament is designed at incentivising companies to self-report potential breaches of anti-bribery legislation. Similar legislation should be enacted in Australia.
The dilemma of whether or not to self-report is driven by a number of factors, chief among them the fact that there is no obligation under Commonwealth Federal criminal legislation for a corporation to voluntarily report a potential criminal offence. If the offending conduct is stopped and adequate safeguards put in place to ensure it does not happen in the future, a director might ask why he or she should then expose the company to almost inevitable reputational harm, not to mention the prospect of a long drawn out investigation and prosecution of the company which might lead to a conviction and materially significant penalty. The fact of conviction for corruption offences alone might preclude the company from contracting with foreign governments in the future. So, while a company might take the position that self-reporting criminal conduct is ordinarily the right thing to do, countervailing considerations might persuade a board not to self-report.
Speaking at a recent conference on corruption, Detective Superintendent, Linda Champion, the Manager of the newly created Fraud and Anti-Corruption department of the AFP encouraged Australian companies to self-report any conduct that might amount to an offence. However, at the same time she noted that the AFP and DPP are unable to assure companies that self-report that they will receive favourable treatment. Simply put, if a company self-reports conduct that the AFP and subsequently, the DPP, considers amounts to an offence and there are reasonable prospects of securing a conviction, then in all likelihood the self-reporting company will be prosecuted for the criminal offence of bribing foreign government officials and potentially a host of other related offences. The only “cherry” for the company is that if it pleads guilty to the offences it may expect to receive a reduced penalty. The merits, therefore, of self-reporting are unclear and do not encourage a company to come forward.
The lack of certainty of process following self-reporting and limited options open to a prosecutor to resolve investigations, has recently been addressed by the UK parliament, which enacted legislation permitting the UK public prosecutor to enter into an agreement deferring the prosecution of a company which may have committed the criminal offence of bribery (and other economic crimes) so long as the company complies with certain conditions of the agreement. . This type of agreement, known as deferred prosecution agreements (DPA) is borrowed from the United States where the resolution of investigations by the Department of Justice is commonly resolved by a DPA, rather than a prosecution and ultimately conviction of a corporation. The key difference is that unlike in the US, where DPAs’ have been criticized as mandating the Department of Justice usurping the role of the courts in punishing corporate criminal conduct, the courts retain an important supervisory role in the DPA process.
The introduction into Australian law of an equivalent DPA system together with transparent prosecutorial guidelines, would provide Australian companies with greater assurance as to both the process and outcome if they determine to self-report potentially corrupt conduct. Incentivizing Australian Corporations to self-report is necessary and overdue in circumstances where Australian economic fortunes are linked to trade in high corruption risk jurisdictions, and where the Australian government is under increased international pressure to step up its enforcement of the crime of bribing foreign government officials.