In brief: The OECD Working Group on Bribery has issued a follow-up report on the extent to which Australia is meeting its obligations under the OECD Anti-Bribery Convention. The OECD has recommended further law reform and other measures to boost enforcement of foreign bribery offences. Partner Rachel Nicolson (view CV), Senior Associate Tessa Meyrick and Lawyer Chadwick Wong discuss the implications of the report.
HOW DOES IT AFFECT YOU?
- The OECD report comes at a time of renewed focus on tackling corporate involvement in foreign bribery on the part of the Australian Federal Police (AFP), the Australian Securities and Investments Commission (ASIC), and the Federal Parliament.
- Australia has responded to OECD concerns about low rates of enforcement of foreign bribery offences by tightening legislation, introducing better whole-of-government information-sharing arrangements, and increasing the number of foreign bribery investigations. But there are signs of further reforms and other measures to come.
- Companies with foreign operations, particularly those conducting business in high-risk locations, should review their policies to ensure they conduct due diligence on all agents and suppliers, that training on anti-bribery laws is provided to domestic and overseas staff, and that self-reporting mechanisms are considered in order to limit the risks of exposure to penalties and reputational damage.
Australia is a member of the Organisation for Economic Co-operation and Development's (OECD) Working Group on Bribery (theWorking Group), and a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention). The purpose of the Working Group is to monitor implementation of the Anti-Bribery Convention by member states and promote awareness of global anti-corruption initiatives.
In October 2012, as part of the periodic review of Australia's implementation of the Anti-Bribery Convention, the Working Group delivered Australia its first report card, referred to as the 'Phase 3 Report'. The Phase 3 Report expressed serious concerns regarding low rates of enforcement of foreign bribery offences in Australia. It recommended, among other things, that Australia appropriately enforce corporate liability provisions, vigorously pursue false accounting cases, and improve investigations into foreign bribery allegations.
The Working Group has now issued a follow-up report, noting that, out of 33 recommendations in the Phase 3 Report, Australia has fully implemented 16, with a further nine partially implemented.
IMPROVEMENTS IN TACKLING FOREIGN BRIBERY
The report notes that the number of foreign bribery allegations in Australia has surged since the Phase 3 Report in 2012. While Australia's prosecution record remains extremely low, with only one criminal case reaching court so far and another soon to follow, 15 new foreign bribery allegations have surfaced since 2012. The number of foreign bribery investigations has also increased during this period from seven to 17.
The Working Group highlighted a number of other improvements in Australia's approach to anti-bribery enforcement, including:
- the establishment of the Fraud and Anti-Corruption Centre (the FAC Centre) in 2014, hosted by the AFP, with officials seconded from agencies including the Australian Taxation Office (ATO), ASIC, the Australian Crime Commission, and the Department of Foreign Affairs and Trade. The FAC Centre will facilitate a multi-agency approach to complex corruption matters, provide whole-of-government investigations training, ensure the ATO is informed of foreign bribery convictions, and facilitate confiscation of foreign bribery proceeds. We have previously reported on the FAC Centre in our Focus: A new tool in the fraud and anti-corruption kit;
- increased cooperation between the AFP and ASIC to ensure corporate liability provisions are considered in foreign bribery investigations;
- progress towards ensuring foreign bribery investigations are thoroughly investigated, although the Working Group continues to push for an increase in enforcement, particularly in relation to corporate liability and false accounting;
- a proposed amendment (currently before the House of Representatives) to clarify that intention to bribe a particular official is not a requirement of the foreign bribery offence, thus removing the potential defence of not knowing the identity of the foreign official;
- exploring options to introduce a new false accounting offence for the purposes of foreign bribery, with new legislation expected to be tabled in Parliament in the next few months; and
- actively considering whether to remove the 'facilitation payment' defence to the foreign bribery offence.
KEY AREAS OF CRITICISM
Notwithstanding these improvements, the Working Group remained critical of Australia's use of suppression orders in relation to current prosecutions, commenting that such orders were a serious obstacle to in-depth discussion and monitoring of Australia's implementation of the Anti-Bribery Convention. The Working Group also commented that:
- Australia is not doing enough to support other countries' enforcement of foreign bribery laws;
- Australia has yet to put in place transparent policies and guidelines on debarring companies or individuals convicted of foreign bribery from bidding for government work;
- more protections are needed for private sector whistleblowers – a Transparency International report entitled 'Whistleblower Protection Laws in G20 Countries: Priorities for Action' released in September 2014 found that Australia's private sector legislative protections for whistleblowers were considerably weaker than its public sector protections, with vague definitions of 'wrongdoing' and 'whistleblowers', lack of protection for anonymous complaints, lack of requirements for internal company procedures, and ill-defined compensation rights; and
- Australia's actions on self-reporting in relation to foreign bribery have fallen short of the framework recommended to address self-reporting and plea bargains.
The Working Group has invited Australia to report back in six months on the progress of its enforcement activities before the Working Group determines whether its enforcement recommendation has been fully implemented.
The release of the Working Group's follow-up report comes at a time of increased domestic focus on foreign bribery, with an uptick in AFP investigations and a possible federal Senate inquiry into foreign corrupt practices on the horizon. But while the OECD Working Group has commended Australia for the progress made so far in tackling Australian corporate involvement in foreign bribery, it is clear that there are a number of areas in which Australia continues to underperform.
In the wake of the 2012 Phase 3 Report, the Australian Government and the relevant enforcement authorities are likely to be sensitive to the criticisms in the follow-up report and will be working to ensure that Australia's report on enforcement activity – scheduled to be delivered to the Working Group in June 2015 – includes demonstrable improvements against the performance in the Phase 3 Report.
The recent (and anticipated) increase in Australia's anti-bribery efforts are a timely reminder that liability for foreign bribery offences under the Criminal Code 1985 (Cth) can be attributed to a body corporate that has failed to promote a culture of compliance or promoted a culture of non-compliance with the anti-bribery provisions. Australian companies, particularly those operating in high risk jurisdictions, should review their internal policies, and should ensure that training on anti-bribery laws is provided to domestic and overseas staff, in order to limit any risks of being exposed to foreign bribery allegations.