The Australian Government is currently considering amendments to its foreign bribery laws. The proposed amendments include a new corporate offence of failing to prevent foreign bribery and a model for a deferred prosecution agreement scheme. In the wake of these proposed changes and the likely increase in the enforcement of foreign bribery laws in Australia, companies should carefully assess the adequacy of their compliance programs and the risks of doing business overseas.
The Australian Government has been consulting with the public and relevant stakeholders on two proposals concerning the foreign bribery offence (section 70.2 of the Criminal Code Act 1995 (Cth)). The proposals include amendments to the foreign bribery offence and a model for a deferred prosecution agreement (DPA) scheme. The aim of the proposals is to expand the arsenal available to law enforcement agencies, improve the effectiveness of the foreign bribery offence and remove impediments to successful prosecution. They are the latest and most aggressive push by the Government to address Australia’s obligations under the OECD Foreign Bribery Convention. If implemented, they would be the most significant developments to Australia’s foreign bribery offence since its introduction.
What is being proposed?
AMENDMENTS TO FOREIGN BRIBERY OFFENCE
The proposed amendments include the creation of a new corporate offence of failing to prevent foreign bribery. Under the proposals, companies would be automatically liable for foreign bribery committed by employees, contractors and agents (including those operating overseas), except where the company can prove it had adequate procedures in place at the relevant time to prevent foreign bribery. If implemented, this change would have a significant impact on Australian businesses, and would mean that companies operating in Australia would have to ensure they have adequate compliance policies in place. The UK has had in place a similar offence (and an accompanying adequate procedures defence akin to the Australian model).
In addition, the following amendments to the foreign bribery offence are proposed:
- creating a new foreign bribery offence based on the fault element of recklessness (as distinct from intentional conduct);
- removing the requirement of influencing a foreign public official in the exercise of their official capacity;
- clarifying that the offence does not require the accused to have a specific business or advantage in mind, that business or an advantage can be obtained for someone else;
- extending the offence to cover bribery to obtain a personal advantage;
- removing the requirements that the benefit/business advantage must be “not legitimately due” and replacing it with the concept of “improperly influencing” a foreign public official; and
- extending the definition of foreign public official to include candidates for office.
Importantly, there is no proposal at this stage to remove or amend the facilitation payment defence, which allows payments of minor value to expedite routine government actions.
MODEL FOR DEFERRED PROSECUTION AGREEMENT SCHEME
In parallel with the above legislative proposals, the Government has released a proposed model for a DPA scheme (akin to that implemented in the U.S. and UK) for public consultation. DPAs are a voluntary, negotiated settlement between a prosecutor (in this case, the Commonwealth Director of Public Prosecutions) and a defendant, which is designed to increase the range of tools available for investigators and prosecutors to deal with serious corporate crime, and encourage greater self-reporting by companies. Importantly, a company will not be prosecuted in relation to matters that were the subject of a DPA where the company fulfils its obligations under the agreement. Under the current proposals, DPAs will only be available to companies (not individuals).
The Government has not exhaustively prescribed the types of terms that may be included in a DPA, in part because DPAs are intended to be flexible and adapted to suit particular circumstances, and in part because it is still in the consultation stage. However, it is likely that DPAs would be available for a range of serious corporate crime offences including foreign bribery, fraud, false accounting, money laundering and others.
Lessons from the UK Bribery Act?
The developments in Australia mirror those seen in the UK in recent years. Since the commencement of the UK Bribery Act in 2011, the UK has seen a steady stream of investigations of corporations under the failure to prevent bribery offence in the Bribery Act, with many more in the pipeline. The introduction of DPAs in the UK in 2014 has allowed the Serious Fraud Office (SFO), the UK’s anti-bribery agency, to close out investigations and agree its first settlements in 2016. The change in regime has also made it possible for regulators to secure larger fines and settlements, a change that is likely to be reflected in the Australian model also if the proposals are approved.
Notably, the reforms to the UK’s criminal enforcement regime have meant that the SFO has been able to secure settlements and prosecutions more easily. The introduction of a failure to prevent bribery offence in the UK has done away with several prosecutorial hurdles and made it much less challenging for the prosecution to prove foreign bribery by a corporation. In particular, UK prosecutors no longer have to show that the “directing mind and will” of the company (or its most senior management) was responsible for the bribery to implicate a corporate in the offending behaviour and prosecute it successfully.
UK companies that were not prepared for the introduction of the new anti-bribery regime were more likely to be caught out. Where the only defence, as it is proposed in Australia, is showing adequate procedures to prevent bribery, corporates have had to learn quickly to adopt anti-bribery policies and programmes, and increase their oversight of agents and associated persons. The SFO has also insisted on companies self-reporting misconduct and extensively cooperating with them during a regulatory investigation to be considered for a settlement by way of DPA. This has meant that companies have had to develop policies allowing them to monitor and detect misconduct when it occurs, and, if necessary, report it.
How does it affect you?
These latest proposals by the Australian Government continue the global trend of heightened anti-corruption awareness and enforcement, and serve as a cautionary reminder to companies of the importance of a strong compliance culture. Whilst still at the consultation stage, every indication is that some or all of the proposed amendments to the foreign bribery offence, and a DPA scheme, will be implemented in the near future. If implemented, they will undoubtedly lead to increased enforcement of foreign bribery laws in Australia. Companies wanting to get ahead of the regulatory curve should ask themselves whether they have an adequate compliance program in place and assess the risks they face in overseas markets.