Australian businesses must develop and support a corporate culture and an effective system of compliance that meet the requirements of a variety of anti-corruption and bribery laws at home and abroad

We've looked at the five things an Australian business should do when the US Department of Justice makes contact as part of a Foreign Corrupt Practices Act ("FCPA") bribery investigation.

Two of our five pointers related to having a best practice due diligence system in place when it comes to new business and a best practice training system regarding bribery and corruption indicators. These two categories together can be best summed up as a best practice corporate compliance program.

Since clients have been asking for more information on this, as well as what payments are allowed under the FCPA, we thought it may be helpful to elaborate further on these points.

Where to make a start with a best practice anti-bribery and corruption compliance program

The first step is to undertake a review of existing internal controls, policies and procedures for your own business.

Once the review has been completed, it is important to consider the results against Australian legal requirements and accounting standards and more specifically, whether your business has:

  • a system of internal accounting controls designed to ensure the creation and retention of fair and accurate books, records and accounts; and
  • a rigorous anti-corruption compliance policy designed to detect and deter violations of Australian anti-corruption laws (that is, the Criminal Code Act 1995), FCPA and other applicable anti-corruption laws.

The ABCs of an ABC corporate compliance program

At a minimum, an ABC corporate compliance program should include, but not be limited to:

  • a plain language policy against violations of Australian anti-corruption laws, FCPA and other applicable anti-corruption laws (for example, in other jurisdictions where you do your business);
  • a system of accounting and financial procedures, including a system of internal accounting controls, designed to ensure the maintenance of fair and accurate books, records and accounts;
  • a system of compliance procedures and standards designed to detect and deter corruption which applies to all employees from the board level down and where necessary, outside parties acting on behalf of the company in other jurisdictions (agents, joint venture partners and the like);
  • the apportionment of responsibility, at the senior corporate level, for the implementation and/or oversight of compliance with internal policies, standards and procedures regarding Australian anti-corruption laws, FCPA and other applicable anti-corruption laws;
  • mechanisms designed to ensure that internal policies, standards and procedures regarding Australian anti-corruption laws, FCPA and other applicable anti-corruption laws are effectively communicated, such as periodic training to all employees from the board level down;
  • an effective system for reporting and supporting those who in good faith report suspected criminal conduct and/or violations of internal policies, standards and procedures regarding anti-bribery and corruption;
  • appropriate disciplinary procedures consistent with Australian law;
  • appropriate due diligence requirements regarding the retention and monitoring of agents and business partners;
  • standard clauses in contracts and renewals with all agents and business partners that are designed to prevent violations of Australian anti-corruption laws, FCPA and other applicable anti-corruption laws (such as rights to conduct audits of the books and records of an agent/business partner); and
  • periodic testing of compliance policies, standards and procedures to evaluate the effectiveness in detecting and reducing violations.

So what, if any, payments are allowed under the FCPA?

As we also touched on in our last update, the FCPA contains exceptions to the prohibition on bribery for what are often referred to as "facilitating payments" for the routine action of a foreign government official. If an Australian business is approached by the DOJ in relation to a facilitating payment, there are what are known as "affirmative defences" to an alleged breach of the FCPA.

There are a number of examples of facilitating payments covered, which include:

  • obtaining permits, licenses or official documents;
  • processing government papers, like a visa;
  • provision of police protection;
  • the collection and delivery of mail;
  • provision of power, water and telecommunications services;
  • loading and unloading of cargo or the protection of perishable materials; and
  • the transport of materials intra-state.

If an action comes under one of the above headings, or is similar in nature to any of the above categories, they should be covered by the exception, but if you have any inquiries about such payments, you should seek specialist advice. The routine actions of a government official do not include a decision to award a contract for a new project and the like, which would of course go against the spirit of the legislation. As we mentioned in our last article, facilitation payments are criminal under UK law so care should be taken where your business has a link to this jurisdiction.

An individual charged with offences relating to a breach of the FCPA may also assert that such a payment was lawful under the written laws of the country in which such payment was made or that the funds were outlaid as part of the demonstration of a product. Determining whether a payment was indeed lawful pursuant to the laws of the country in which payment was made may be a troublesome and costly exercise. Once again, an Australian business should seek specialist legal advice if faced with determining the nature of such payments.

Conclusion

Based on the above, it is clear that Australian businesses must develop and support a corporate culture and with that, an effective system of compliance, that meet the requirements of a variety of anti-corruption and bribery laws not only at home but also in various jurisdictions where business activities are conducted. The result of not meeting these legal requirements can take a terrible toll on the name of one's business and at the end of the day, the bottom line.