On 28 March 2018, the Senate Economics References Committee released its report into foreign bribery. Businesses should take note of the potential changes in this space, as the report contains numerous recommendations which could have significant compliance consequences for individuals and corporations.
The inquiry was referred by the Senate to the Senate Economics References Committee on 24 June 2015 to examine Australia’s historically poor record in investigating and prosecuting foreign bribery and make recommendations to strengthen Australia's foreign bribery framework, and improve its anti-foreign bribery compliance and enforcement response to match its international comparators by strengthening its legal framework against foreign bribery and building a culture of integrity and compliance.
In addition to a number of recommendations suggesting further consideration of and investigation into strengthening the foreign bribery regime by various agencies, including for the government to provide guidance regarding compliance, the report recommends amendments to the legislative and compliance framework regarding foreign bribery, facilitation payments, whistleblowing and deferred prosecution.
One major change recommended by the report was to support the introduction of a new foreign bribery offence where a corporation fails to prevent foreign bribery, currently before Parliament in the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017. The offence would have serious consequences for risk management and compliance procedures for businesses.
As a consequence, the report also recommended that the government publish guidelines regarding the best practice procedures a corporation should have in place to prevent foreign bribery, including in relation to internal corporate whistleblowing systems companies should have in place. In addition, the report recommends the expert advisory panel on whistleblowers consider whether the scope of Australia's whistleblower protections provides sufficient coverage in foreign bribery cases.
Other expansions of foreign bribery offences
The report made two recommendations which would broaden the scope of foreign bribery offences. Firstly, it recommended that ‘foreign public official’ be amended to include candidates for office. Secondly, it recommended that the offence should be expanded to include bribes made in order to obtain or retain a personal advantage.
The report also recommended that the existing foreign bribery offences be clarified to apply to situations where:
- a bribe is made to obtain a business advantage for someone else; and
- a bribe in which the payer does not intend to obtain or retain any specific business or business advantage.
The foreign bribery offences would also be tightened by the report’s recommendation that the facilitation payment defence be removed. The defence currently applies where the value of the benefit associated with a bribe was minor, the conduct occurred for the sole or dominant purpose of expediting or securing the performance of a minor routine government action, and a written record was kept of the conduct.
New disclosure requirements for businesses
The report’s recommendations included the establishment of two new disclosure requirements for businesses:
- the disclosure by corporations of information regarding their beneficial ownership, which would be publicly available on a register maintained by ASIC; and
- the disclosure of any findings of guilt in regards to foreign bribery offences.
Deferred prosecution scheme
The report recommended introducing a deferred prosecution agreement scheme for corporations. This scheme would allow for the voluntary negotiated settlement of bribery offences. The report stated that such agreements should be publicly available, except in exceptional circumstances, and that independent external monitors should be appointed at the company’s expense to monitor compliance with a deferred prosecution agreement.
What to do next
In preparing for any changes and to ensure compliance with the current laws, companies should now review internal practices, procedures and systems regarding foreign bribery and whistleblowers. While enforcement actions in relation to foreign bribery offences in Australia have not been widespread, the current offences under the Corporations Act 2001 (Cth) and the Criminal Code Act 1995 (Cth) have serious consequences for individuals and companies (including liability for the actions of agents, contractors and subsidiaries of corporations, and for officers of foreign companies operating in Australia). Getting ahead of the game now is critical.