Australia's anti-bribery and corruption laws are about to get their first real test in court with the arrest and charging of six people for alleged bribery of foreign officials, and the charging of Securency International Pty Ltd and Note Printing Australia Limited with the same offence.
The alleged bribery of foreign officials
Securency manufactures and sells the polymer banknote technology to other countries. Note Printing Australia does the printing.
For the last two years the Australian Federal Police has been investigating their activities in procuring banknote contracts for Malaysia, Indonesia and Vietnam. It's alleged the two companies used international sales agents to bribe officials in these three countries, with media reports suggesting the total sum could be nearly $50 million. The alleged conduct occurred prior to 2006.
Australia's anti-bribery and corruption laws
Under the Commonwealth Criminal Code a person is guilty of a bribery offence if:
- that person offers, offers to provide, provides, or causes to provide a benefit to another person; and
- the benefit is "not legitimately due" to the other person; and
- the person intends to influence a foreign public official (broadly defined) in the exercise of his or her official duty in order to obtain or retain business, or a business advantage, that is not legitimately due to the recipient of the business advantage.
The scope of the offence is wide – it applies to bribery occurring:
- wholly or partly in Australia, or on Australian ship or aircraft; or
- wholly outside Australia if done by an Australian citizen, Australian resident, or company incorporated in Australia.
The penalties are significant. The six individuals charged face a maximum of 10 years' gaol time and a fine of $66,000. The two companies each face a maximum fine of $330,000 per offence.
Increased penalties were introduced in early 2010. Individuals charged with similar offences for conduct occurring after that date now face a fine of $1.1 million in addition to the possible 10 years' gaol time. Companies face a penalty of whichever is the greater of:
- a fine of up to $11,000,000;
- three times the value of the benefit obtained as a result of the breach; or
- 10% of the body corporate's turnover during the 12 period in question.
What happens now?
The AFP has said that its investigations are ongoing; media reports suggest that further activity in other countries is being investigated.
This situation is a clear warning to companies engaged in business beyond our shores that Australian authorities are finally making good on their promise to vigorously investigate and prosecute these offences. To appropriately manage this risk it is critical that companies ensure they have a demonstrably strong and compliant internal anti-bribery and corruption culture. This requires a top-down approach. Important steps to consider include:
- obtaining privileged legal advice and risk assessment;
- putting in place corporate compliance programs and policies, including procedures for appropriate record keeping culture;
- implementation of targeted training of all staff and board members;
- incorporation of anti-corruption protocols in internal audit processes;
- adequate due diligence when engaging in any transaction with a third party, particularly acquisitions; and
- ensuring a demonstrable focus on identifying and assessing appropriate remedial actions if a potential breach is detected.