Ethics and anti-corruption rules for defence contractors in Australia

Ethics and anti-corruption

When and how may former government employees take up appointments in the private sector and vice versa?

Former federal government employees are not usually prevented from taking up appointments in the private sector or vice versa. Former government employees are under ongoing duties of confidentiality to protect government information (disclosure of information protected under legislation can be subject to a fine or imprisonment). The former government employees may also agree specific commitments with their former employer to address conflict of interest concerns. Defence has a policy addressing post-separation employment giving guidance to the departing government employee and his or her new employer. It is not uncommon for a former Defence employee to agree for a period not to be involved in specified projects for his or her new employer where the employee was involved in that project while employed by Defence. The new employer might also be asked to make corresponding commitments. Typically, the period is one year. Government procurement terms usually state that compiling a bid with the improper assistance of a former government employee is a breach of the procurement terms and can lead to exclusion from the procurement.

How is domestic and foreign corruption addressed and what requirements are placed on contractors?

The federal Criminal Code contains offences for bribing a public official and for accepting a bribe. There are separate offences for bribing domestic (Commonwealth) and foreign public officials. Penalties include fines, imprisonment or both. The Code makes it an offence to offer or provide to a person an inducement that is not legitimately due with the intention of influencing a public official in his or her official duties to retain business or obtain a business advantage not properly due to the recipient of the benefit. The definition of ‘Commonwealth public official’ includes an officer or employee of a contracted service provider for a ‘Commonwealth contract’ and who provides services for the purposes (whether direct or indirect) of the Commonwealth contract. As part of their employment terms, Australian government officials are also subject to obligations to avoid conflicts of interest and comply with relevant policies. There are government policies addressing the limited extent to which government officials may accept gifts and hospitality and disclosure requirements. Defence has a detailed policy on gifts and hospitality.

Separately, Parliament recently passed the Foreign Influence Transparency Scheme Act 2018 (FITS Act), which will come into effect on 29 June 2019, unless proclaimed earlier. The FITS Act is aimed at providing more transparency regarding persons who undertake certain activities on behalf of ‘foreign principals’ (defined as foreign governments and related entities and individuals, as well as foreign political organisations). Under the FITS Act, a person who carries out specified types of activities on behalf of a foreign principal for the purpose of political or government influence must register with the Foreign Influence Transparency Scheme. Registrants must provide up-to-date information about their activities to the Secretary of the Department, in this case Defence, particularly during voting periods for federal elections. While certain exemptions apply, the FITS Act contains criminal offences for failure to comply with its requirements.

What are the registration requirements for lobbyists or commercial agents?

Aside from the Foreign Influence Transparency Scheme described above, there is no legislation regulating lobbying. The federal Department of the Prime Minister and Cabinet administers a lobbying policy that includes a requirement for persons conducting lobbying activities on behalf of a third-party client to register themselves and their clients on the publicly available lobbyist register. Government officials should not meet with a person who fails to meet a requirement to register on the lobbyist register. There are listed exceptions to ‘lobbying activities’ and ‘lobbyist’. A person does not engage in lobbying activities when he or she makes communications to the government about a tender.

Are there limitations on the use of agents or representatives that earn a commission on the transaction?

As long as it does not breach secret commission laws, there is no prohibition on the use in Australian government procurement of agents or representatives that earn a commission. However, the procurement terms may require disclosure of use of such agents or representatives and any commissions paid. Such a disclosure requirement is contained in some of the Defence template procurement terms. Secret commission laws could be relevant, for example, if the agent was acting for both the bidder and the customer and this fact was not properly disclosed or otherwise dealt with.