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Domestic bribery: legal framework

i Domestic bribery law and its elements

There are no specific commercial or private bribery laws in Australia, although various state laws are wide enough to capture private bribery, often defined as corrupt conduct.

Sections 141 and 142 of the Criminal Code deal with offences relating to domestic bribery of a Commonwealth public official. These sections deal with the offences of giving a bribe5 or corrupting benefit,6 receiving a bribe7 or corrupting benefit8 and abuse of public office.9 For the offences of giving or receiving a corrupting benefit, it is immaterial whether the benefit is in the nature of a reward.10

ii Prohibitions on paying and receiving bribes

Each of the five states and two territories in Australia has a Crimes Act, a Criminal Code or local government legislation that regulates the conduct of state and local government public officials. All jurisdictions (including the Commonwealth) prohibit the direct and indirect payment or offer of a bribe to a public official and the receipt or acceptance of a bribe by a public official. The Criminal Code contains the criminal offences relevant to Commonwealth public officials.11

iii Definition of public official

Australian law defines the term 'public official' in various ways. The Criminal Code widely defines 'Commonwealth public official' and 'public official', and the definitions are wide enough to encompass Commonwealth government-owned or controlled companies.

iv Public officials' participation in commercial activities

Public officials are able to participate in commercial activities while in office provided that their involvement in those commercial activities does not adversely affect the honest and independent exercise of their official functions.12

Public officials will usually be required to disclose their personal interests. For instance, members of the Commonwealth and state parliaments are required to provide to the Registrar of Members' Interests a statement of their registrable interests. This includes the interests of a spouse and of any dependent children.

v Gifts and gratuities, travel, meals and entertainment restrictions

It is legally permissible to provide gifts and gratuities to public officials that do not breach the law or the Australian Public Service Code of Conduct. However, the provision of a gift or gratuity may in some circumstances amount to a bribe where it relates to a decision requiring the exercise of a discretion13 that gives rise to a perceived or an actual conflict of interest.

Each parliament has a system of public registers where assets and liabilities, gifts and gratuities over a nominated value must be declared.14

vi Political contributions

It is legal for foreign citizens and foreign companies to make political contributions to a political candidate or a political party in Australia.

In 2018, the Australian parliament enacted the Foreign Influence Transparency Scheme Act 2018 (Cth).15 The Foreign Influence Transparency Scheme introduces registration obligations for persons or entities who have arrangements with, or undertake certain activities on behalf of, foreign principals. It is intended to provide transparency for the Australian government and the Australian public about the forms and sources of foreign influence in Australia.

In late 2018, Australia also enacted the National Security Legislation Amendment (Espionage and Foreign Interference) Act 2018 (Cth) (the National Security Act). The National Security Act had the effect of introducing a range of amendments to the Criminal Code and related legislation to create a range of criminal offences to cover foreign interference. The offences include intentional16 and reckless foreign interference17 by or on behalf of a 'foreign principal'18 with the intent to 'influence a political or governmental process in Australia or an Australian democratic or political right or duty'.

Some Australian states have already moved to ban political donations from foreign sources.19 In New South Wales (NSW), it is unlawful for a party, elected member, group, candidate or third-party campaigner to accept a political donation from an individual who is not enrolled to vote in local government, state or Commonwealth elections or indeed from a property developer.20

vii Private commercial bribery

Australian Commonwealth laws do not expressly prohibit the payment or receipt of bribes in private commercial arrangements. The Criminal Code only applies to conduct involving domestic Commonwealth public officials or foreign public officials. If, however, a bribe or other improper behaviour occurs that is directed towards securing a commercial benefit, various domestic criminal and civil laws may give rise to a liability on the company and individuals engaged in the conduct. In New South Wales, for instance, the Crimes Act 1900 contains the relevant offence provisions.21

viii Penalties

If a person is found guilty of the offence of giving or receiving a bribe involving a Commonwealth public official, the maximum penalty is five years' imprisonment.22 Offences for bribery under state laws, using NSW as an example, are in respect of corrupt commissions or rewards, making them offences as against the payer and the payee, with sentences up to a maximum of seven years' imprisonment.23

Foreign bribery: legal framework

i Introduction

The primary source of criminal liability for foreign bribery is set out in the Criminal Code. Secondary grounds of liability are founded in the Criminal Code (for Commonwealth offences) and in domestic Australian criminal law, assuming some conduct occurs within Australia or there otherwise exists a jurisdictional basis to prosecute an individual or a corporation in Australia. For each criminal offence, the Criminal Code requires a prosecutor to establish a physical element (action or conduct) and a fault element (intention, knowledge, recklessness or negligence) for an offence, otherwise a default physical and fault element will apply. Secondary liability may arise under statute or under common law principles of agency.

ii Foreign bribery law and its elements

The offence of bribing a foreign public official is contained in Part 4, Section 70 of the Criminal Code.

Section 70.2 states that a person is guilty of the offence of bribing a foreign public official if the person:

  1. provides, or causes to be provided, a benefit to another person;
  2. offers or promises to provide a benefit to another person; or
  3. causes an offer or a promise of the provision of a benefit to be made to another person and:
    • the benefit is not legitimately due to the other person; and
    • the person does so with the intention of influencing a foreign public official in the exercise of the official's duties as a foreign public official to obtain or retain business or obtain or retain a business advantage that is not legitimately due to the recipient, or intended recipient, of the business advantage.

'Benefit' is broadly interpreted and includes any advantage. It is not limited to property or money and can be a non-tangible inducement. Recent appellate authority has confirmed that 'benefit' within the meaning of Section 70.2(5)(b) of the Criminal Code means a 'net' benefit subject to a final opinion from the High Court of Australia.

The prosecutor is not required to establish any intention (on the part of an accused person) to influence a 'particular' foreign official.

iii Definition of foreign public official

The term 'foreign public official' is defined to capture a wide range of public officials, including those persons officially employed by a foreign government and those persons who perform work for a foreign government body, or who hold themselves out to be an authorised intermediary of an official or who are part of a 'foreign public enterprise' that acts (formally or informally) in accordance with the directions, instructions or wishes of a government of a foreign country.

iv Gifts and gratuities, travel, meals and entertainment restrictions

The Criminal Code does not prohibit or regulate the provision of gifts, gratuities, travel, hospitality or entertainment. However, the definition of a benefit under Section 70.1 of the Criminal Code includes any advantage, which may mean that the provision of excessive gifts, gratuities, travel, meals or entertainment could amount to a bribe. There is no guidance in Australia on what constitutes an acceptable gift or level of corporate hospitality.

v Facilitation payments

Australian law permits facilitation payments to 'expedite or secure' the 'performance of a routine government action of a minor nature'.25 This is despite the OECD's view that Australia should actively discourage all facilitation payments.

A payment will be a facilitation payment where the following conditions are satisfied:

  1. the value of the benefit is of a minor nature;
  2. the person's conduct is undertaken for the sole or dominant purpose of expediting or securing the performance of a routine government action of a minor nature; and
  3. as soon as practicable after the conduct, the person makes and signs a record of the conduct, and any of the following subparagraphs applies:
    • the person has retained that record at all relevant times;
    • that record has been lost or destroyed because of the actions of another person over whom the first-mentioned person had no control, or because of a non-human act or event over which the first-mentioned person had no control, and the first-mentioned person could not reasonably be expected to have guarded against the bringing about of that loss or that destruction; and
    • a prosecution for the offence is instituted more than seven years after the conduct occurred.26
vi Payments through third parties or intermediaries

The foreign bribery offence established in Section 70.2 of the Criminal Code can capture payments of bribes made through third parties, such as agents, consultants, joint venture partners and intermediaries. An intermediary or third party may be liable for the primary foreign bribery offence under the Criminal Code or for secondary liability if his or her conduct amounted to a conspiracy or the third party or intermediary otherwise aided, abetted, counselled or procured the commission of the offence. A person may be found guilty even if the principal offender has not been prosecuted or found guilty.

vii Individual and corporate liability

The Criminal Code applies liability to individuals and attributes liability to corporations for bribery of a foreign public official.

Part 2.5 of the Criminal Code applies, setting out a statutory regime for the attribution of knowledge of individual officers to a corporation. Under the Criminal Code, physical elements are attributed to a company in circumstances in which an employee, agent or officer of a company commits the physical element when acting within the actual or apparent scope of his or her employment or authority. Fault elements are attributed to a company that 'expressly, tacitly or impliedly authorised or permitted the commission of the offence'.27 The corporation may be found guilty of any offence, including one punishable by imprisonment. Since 2001, very few companies have been prosecuted under these provisions for any bribery offence.

The terms of corporate criminal responsibility are contained in Sections 12.1 to 12.6 of the Criminal Code. In summary, these provisions:

  1. set out important definitions of 'board of directors', 'corporate culture' and 'high managerial agent';
  2. establish criminal liability on a corporation by attributing the knowledge and conduct of a person to the corporation;
  3. attribute negligence to a corporation by reference to the corporation's conduct as a whole;
  4. provide a mistake-of-fact defence of limited application; and
  5. establish criminal liability for a bad corporate culture (one that condones or tolerates breaches of the law).

A corporation has an available defence to the question of whether any relevant knowledge or intention possessed by a high managerial agent (as opposed to the board of directors) is to be imputed to it, if the corporation had itself exercised due diligence to prevent the conduct occurring that constituted the offence.28 There have been no prosecutions for offences under these provisions in Australia.

viii Civil and criminal enforcement

The Criminal Code does not give rise to any civil enforcement of Australia's foreign bribery laws.

The secondary grounds of civil or criminal liability (apart from Criminal Code offences) that might arise include the following:

  1. civil penalty prosecutions commenced by ASIC under the Corporations Act for conduct in contravention of common law or statutory duties owed by a director or officer to the corporation;
  2. prosecutions by ASIC against individuals and corporations for failing to comply with record-keeping rules or by the Commonwealth or state DPPs for having, creating or using false or misleading records or false or reckless use of an accounting document; and
  3. prosecutions by the ATO for contraventions of the taxation laws in relation to the misstatement of income (and non-statement of monies that may have been paid or received illegally).

State criminal law can also be used to prosecute individuals, particularly where corporate records are falsified. In The Queen v. Ellery,29 the former chief financial officer of Securency (as part of the now concluded Securency banknote-printing bribery prosecutions) pleaded guilty and was sentenced on one count of false accounting contrary to Section 83(1)(a) of the Crimes Act 1958 (Vic).

ix Agency enforcement

Australia's approach to the enforcement of foreign bribery laws relies on the joint efforts of various enforcement, administrative and prosecution agencies. The investigation of criminal offences against Commonwealth laws, including foreign bribery offences, is carried out by the AFP. The CDPP is the statutory prosecutorial agency. The Australian Criminal Intelligence Commission (ACIC) is a statutory authority with secret, inquisitorial and compulsive powers to combat serious and organised crime (which includes conduct amounting to bribery or corrupting a foreign public official).30

In determining whether to pursue (or continue) a prosecution for foreign bribery, the CDPP must satisfy itself of a dual threshold test:

  1. that there is sufficient evidence to prosecute the case (and there are reasonable prospects of securing a conviction); and
  2. it is evident from the facts of the case, and all the surrounding circumstances, that the prosecution would be in the public interest.31

In late January and February 2017, two former officers of Leighton Holdings were charged after a long-standing investigation into the conduct of the company in relation to purported centralised steel procurement contracts. Peter Gregg, a former Leighton chief financial officer, was charged with two counts of contravening Section 1307(1) of the Corporations Act 2001, with ASIC alleging that Mr Gregg, as an officer of Leighton Holdings Ltd, engaged in conduct that resulted in the falsification of the company's books. No foreign bribery charges were alleged by the prosecutor. Russell John Waugh was also charged in relation to his alleged role in aiding and abetting one of the alleged contraventions of Mr Gregg, but was later found not guilty. In December 2018, a district court jury convicted Mr Gregg of the offences as alleged. In July 2019, Mr Gregg was sentenced to a 24-month intensive corrections order and 12 months of home detention (to be served concurrently), so avoiding imprisonment. On 30 September 2020, the NSW Court of Criminal Appeal unanimously upheld Mr Gregg's appeal and quashed the verdicts of guilty and entered a verdict of acquittal on each charge.32

In July 2017, Mamdouh Elomar, 62, his brother Ibrahim, 60, and businessman John Jousif, 46, pleaded guilty in the New South Wales Supreme Court to certain foreign bribery conduct that occurred between July 2014 and February 2015. At a previous hearing during 2016, the men faced allegations that they paid a US$1 million bribe to a foreign official to win contracts for their construction company Lifese in Iraq. Each individual was convicted and sentenced, after appeals, to up to three years' imprisonment and fines of A$250,000.33

In May 2018, Sinclair Knight Merz (now Jacobs Australia) and several individuals were charged with an alleged conspiracy to offer bribes to foreign public officials in the Philippines and Vietnam so that aid-funded project contracts would be awarded to the company.34 On 3 September 2020, the corporate defendant pleaded guilty to the charge and was later convicted of each sequence and fined a total of A$1,471,500. A Crown appeal against the sentence imposed on Jacobs Group on the basis that the sentence was manifestly inadequate was dismissed by the Court of Criminal Appeal but is subject to a special leave application to the High Court of Australia.35 The CDPP discontinued its prosecution as against one of the parties to the Vietnam conspiracy prior to him standing trial. After each of the individuals facing trial in connection with the Philippines conspiracy were found not guilty by a jury in early 2022, the CDPP then discontinued the case against the individuals charged in connection with the Vietnam conspiracy (the two conspiracies having been heard separately after the indictment was severed).36

In September 2018, Mozammuil G Bhojani, a director of Radiance International Pty Ltd, was charged with an alleged conspiracy to bribe foreign public officials in Nauru in relation to an Australian government contract to build housing for refugees on Nauru, with payments allegedly made to obtain phosphate at certain prices for export.37 On 19 August 2020, following a sentencing hearing, the defendant was convicted and received a custodial sentence of two years and six months to be served by way of an Intensive Corrections Order, with an additional condition of 400 hours of community service. The judgment has not been published.

In December 2018, the Securency banknote printing bribery and corruption cases finally concluded (after having commenced in July 2011) and Australia-wide non-publication or suppression orders were lifted. As a result of the High Court ruling permanently staying the prosecutions against four individuals and the last remaining individual pleading guilty, the various judgments and court rulings became public. Between 2011 and 2018, the two then subsidiaries of the Reserve Bank of Australia engaged agents in Indonesia, Malaysia, Vietnam and Nepal to help secure valuable bank note printing contracts and in the process, paid bribes to public officials in those countries. The companies pleaded guilty to criminal conduct38 together with five individuals who received criminal convictions, but upon sentencing they were released as a result of their sentences of imprisonment being suspended.39

In September 2020, the AFP restrained A$1.6 million in assets as part of a criminal investigation into the alleged bribery of Malaysian officials by a Melbourne man. The 68-year-old man is accused of paying Malaysian government officials A$4.75 million dollars in bribes in exchange for the purchase of his property developments in Melbourne. In July 2020, the AFP charged Boon Lye (Dennis) Teen with foreign bribery and false accounting offences. The AFP commenced its investigations into the man, his associated companies and Melbourne property developments in February 2015.

x Defences

There are essentially three defences to a prosecution under Section 70.2 of the Criminal Code:

  1. if the conduct occurs wholly in a foreign country, the conduct is lawful in that foreign country and permitted by a written law of that foreign country;40
  2. if a payment is a facilitation payment;41 and
  3. corporate criminal liability may not be imposed on a corporation if it can demonstrate that it exercised due diligence to prevent the conduct, authorisation or permission created or given by a board or a high managerial agent.42

There is no judicial authority in Australia considering these defences.

xi Leniency

There is no legal obligation on persons in Australia to report a crime (including potential foreign bribery), save for in NSW.43

Companies are encouraged by the AFP to self-report potential offences to it. Once the AFP has conducted an investigation and referred the matter to the CDPP, the CDPP will then determine, with regard to the Prosecution Policy, whether to pursue a prosecution. However, if the AFP and CDPP form the opinion that offences have been committed, any resolution is usually predicated upon a guilty plea (to one or more agreed offences) and sentencing by the court. At the end of the day, it is the corporation's decision whether to 'roll the dice' and report or not report. The consequences of self-reporting, or not doing so, can be unpredictable.

In December 2017, the CDPP and the AFP jointly published their 'Best Practice Guideline: Self-reporting of foreign bribery and related offending by corporations' setting out how the director will exercise a statutory discretion in terms of whether to offer to negotiate a settlement agreement and the factors to be considered in that process.

xii Plea-bargaining

There are no procedures in Australia similar to the formal self-reporting or plea regime in the United States or in the United Kingdom. There is no process or policy guidance to resolve investigations through court-approved settlement agreements (deferred or non-prosecution agreements) or for the authorities to pursue civil rather than criminal penalties against companies or individuals.

The difficulty with plea-bargaining in Australia is that the High Court of Australia has ruled that it is impermissible for a prosecutor to engage in a process of agreeing to sentences and supporting them before the Court. In Barbaro v. The Queen; Zirilli v. The Queen,44 the High Court limited the prosecutor's role in terms of recommendations as to the sentencing of an offender, in these terms:

Even in a case where the judge does give some preliminary indication of the proposed sentence, the role and duty of the prosecution remains the duty which has been indicated earlier in these reasons: to draw to the attention of the judge what are submitted to be the facts that should be found, the relevant principles that should be applied and what has been done in other (more or less) comparable cases. It is neither the role nor the duty of the prosecution to proffer some statement of the specific result which counsel then appearing for the prosecution (or the Director of Public Prosecutions or the Office of Public Prosecutions) considers should be reached or a statement of the bounds within which that result should fall.

The High Court has made it clear, as have other appellate courts, that the sentencing task remains that of the sentencing judge and the judge alone.45 A prosecutor can do no more than opine on sentencing principles, not on what a sentence or a range of sentences should be.46

The current Prosecution Policy of the Commonwealth does, however, deal with charge negotiation as between the defence and prosecution, a process that can result in the defendant pleading guilty to fewer than all of the charges that he or she is facing, or to a lesser charge or charges, with the remaining charges either not being proceeded with or taken into account without proceeding to conviction.

On 26 November 2021, the OECD Working Group on Bribery made a number of recommendations to Australia in respect of its implementation of the Anti-Bribery Convention, including a recommendation encouraging Australia to consider a variety of forms of resolution, including non-trial resolutions (i.e., DPAs) when resolving criminal, administrative and civil cases involving both corporations and individuals.

xiii Prosecution of foreign companies

To establish jurisdiction over conduct constituting the offence of bribing or corrupting a foreign public official (assuming the elements of Section 70.2 can be established and subject to any defence), the following must exist:

  1. the conduct giving rise to the alleged offence occurred wholly or partly in Australia or on board an Australian aircraft or an Australian ship;
  2. where the conduct occurred wholly outside Australia, at the time of the alleged offence, the person was an Australian citizen or a resident of Australia, or was a corporation incorporated pursuant to the laws of Australia; and
  3. if the conduct occurred wholly outside Australia and the relevant person is a resident but not a citizen of Australia, the Commonwealth Attorney General must provide written consent for any proceeding.

While Australia's foreign bribery laws in Section 70.2 of the Criminal Code must in a general sense have a territorial or jurisdictional link to Australia, Australia's criminal law of conspiracy can extend to foreigners even if those foreigners have no apparent presence in or association with Australia. The crime of conspiracy is a crime of duration, a continuing offence that lasts as long as it is being performed as against parties to the conspiracy wherever they may be located.47 It is enough that certain conspirators are present in the jurisdiction (Australia) and the conduct was wholly or partly performed in the jurisdiction (Australia) even though others are not present and engaged in no conduct in the jurisdiction.48

xiv Penalties

For a foreign bribery offence committed after 1 July 2020,49 the maximum penalties, per offence, that may be imposed upon a conviction are as follows:

  1. for an individual:
    • imprisonment of up to 10 years;
    • a fine of up to 10,000 penalty units (the value of one penalty unit is currently A$222;50 therefore, the maximum fine is currently A$2.22 million); or
    • both imprisonment and a fine; and
  2. for a corporation, the greatest of the following:51
    • a fine up to 100,000 penalty units (or A$22.2 million);
    • if the court can determine the value of the benefit obtained directly or indirectly and that is reasonably attributable to the offending conduct, three times the value of the benefit; or
    • if the court cannot determine the value of the benefit, then 10 per cent of the annual turnover of the corporation during the 12-month period ending at the end of the month in which the conduct constituting the offence occurred (which is described in the legislation as the turnover period).

Where a person acquires profit from illegal or criminal conduct, that profit, or other assets obtained as a result of the illegal conduct, can be subject to restraint and forfeiture pursuant to the Proceeds of Crime Act 2002 (Cth). The AFP Asset Confiscation Taskforce has responsibility for proceeds-of-crime proceedings independently of the CDPP.

Sentencing of a company convicted of a criminal offence is traditionally no different to that of an individual. The sentencing judge applies the relevant sentencing principles for the offence. For Commonwealth offences, the criteria are set out in the Crimes Act 1914 (Cth).52 The penalty is imposed in the discretion of the court, taking into account a range of factors, each of which much be considered by a court. In the ALRC Report, recommendations were made to amend the Crimes Act to ensure certain factors are taken into account when a court sentences a company upon conviction for a criminal offence.53 These factors involve, for example, the company's culture of compliance, any voluntary reporting of the conduct, any compensation to victims, the effect of a sentence on third parties (such as employees, suppliers, shareholders) and measures taken by a company to reduce the likelihood of subsequent offending.