The OECD report card into Australia’s enforcement of foreign bribery laws is in, and the message is clear: Australia is ready to ramp up bribery prosecutions to an unprecedented degree, with tightened legislation, better co-operation and information sharing between enforcement agencies, and a number of investigations already under way. More than ever, Australian companies with overseas operations need to take immediate steps to protect themselves from being exposed to prosecution, by:
reviewing their policies and codes of conduct and ensuring that they have, and enforce, a corporate culture that does not tolerate bribery and corruption; and
investigating suspected instances of foreign bribery and corruption and considering the potential benefits of self-reporting such cases to enforcement authorities.
Pressure on regulators to take action will continue to increase in the coming months. The OECD has flagged it would like to see an increase in enforcement before it can conclude that its recommendations with respect to Australia’s record for investigating and prosecuting foreign bribery and false accounting have been implemented. It has invited Australia to report back on its progress on enforcement action in 6 months (June 2015). Meanwhile, in March 2015, the possibility was foreshadowed of a Senate Inquiry being held later this year to inquire into allegations of bribery by Australian corporations and the investigation of those allegations.
Earlier this month, the OECD Working Group on Bribery (Working Group) released a report into Australia’s progress in responding to recommendations identified by the Working Group in October 2012 on Australia’s implementation and enforcement of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the Report).1
The key areas that had been identified for improvement in October 2012 were:
- improving Australia’s enforcement framework;
- increasing co-operation between domestic and international regulators;
- introducing legislative changes; and
- increasing the number prosecutions under Australia’s foreign bribery laws.
The Report’s findings into Australia’s progress in each of these areas is outlined below.
In summary, the Working Group found that of the 33 recommendations it made in October 2012, Australia had fully implemented 16, partially implemented 9 and had not implemented 8 recommendations. It said Australia had made good progress on addressing a number of important recommendations, highlighting in particular the Australian Federal Police’s (AFP) improvement in its foreign bribery policy and operations.
Since 2012, a number of internal AFP and multi-agency groups have been established with the objective of strengthening the regulatory approach to enforcement by improving operational capabilities to investigations and prosecutions and improving coordination and knowledge sharing between multiple agencies. In particular:
- In April 2012, the AFP established an internal Foreign Bribery Panel of Experts (the Panel) made up of senior and experienced investigators to review intelligence on potential investigations, evaluate referrals and investigative data and provide expert advice on particular issues, such as the jurisdiction of legal persons and recovery of proceeds of crime;
- In February 2013, the AFP remodelled its team structure and established dedicated Fraud and Anti-Corruption teams in each of the key cities in Australia; and
- In July 2014, the AFP formally launched an inter-agency Fraud and Anti-Corruption Centre (FAC Centre), headed by the AFP and involving secondees from 8 federal agencies (such as the Australian Securities and Investments Commission (ASIC) and the Department of Foreign Affairs and Trade (DFAT)).2 One of the stated objectives of the FAC Centre is to ‘triage and evaluate’ serious and complex fraud and corruption referrals involving multiple or foreign jurisdictions to deliver an effective Commonwealth multi-agency.
Australia’s submission to the OECD foreshadowed the publication of a Foreign Bribery Investigators Reference Guide, due to be finalised by January 2015, to operate as an ‘integral tool’ for all investigators conducting foreign bribery investigations.
Co-operation between domestic and international regulators
The perceived weakness in 2012 of multi-agency cooperation, co-ordination and information sharing was addressed in Australia’s recent submission to the OECD. In addition to the establishment of the FAC Centre outlined above:
- A comprehensive framework is in place for dealing with mutual legal assistance requests with foreign regulators and prosecutors. There has been an increased number of Mutual Assistance Requests (MARs) relating to foreign bribery criminal investigations over recent years: 28 MARs (both incoming and outgoing) in the 2 year period since October 2012 (up from 38 MARs in the 6 year period from 2006 to 2012);
- In October 2013, the AFP and ASIC entered into a Memorandum of Understanding (MoU) to provide a mechanism for coordination of interagency information sharing and ensure that the AFP can take advantage of ASIC’s corporate economic crime expertise. ASIC has permanently seconded a lawyer to support the AFP’s investigative teams and appointed 2 senior members of its enforcement team to act as the principal operational contacts with the AFP in relation to foreign bribery matters;
- In June 2014, the AFP signed an information sharing protocol with DFAT. The stated purpose of the protocol is to support a whole-of-government approach to foreign bribery investigations and prosecutions and to outline procedures for the handling and protection of sensitive information that may arise during an investigation; and
- In July 2014, the AFP entered into another MoU, this time with the Australian Prudential Regulation Authority (APRA), to address information sharing between the agencies and provide a dedicated point of contact for foreign bribery matters.
Concerns about possible ambiguities or deficiencies in Australia’s foreign bribery laws have been, or are being, addressed:
- federal laws are being amended to clarify that a person or corporation offering or providing a benefit does not need to intend to influence a particular foreign public official in order to commit an offence.3 This addresses concerns that an accused could avoid liability by using intermediaries or agents to engage in foreign bribery.
- Australia is exploring options to introduce a new false accounting offence, with the aim of including a new law in 2015. In the interim, Australia’s submission to the OECD notes that existing legislation does enable a prosecution for engaging in false accounting. It highlights the conviction of a former CFO of a company of state-based false accounting provisions;
- Australia has had not made a decision whether to remove the ‘facilitation payment’ defence to the foreign bribery laws. This remains under active consideration. In the interim, the Australian submission to the Working Group highlights outreach activities addressing the difference between facilitation payments and bribes, and encouraging businesses to refuse requests for facilitation payments; and
- a review of Australia’s current framework for protecting corporate whistleblowers has been foreshadowed. The establishment by ASIC of an Office of the Whistleblower to monitor the handling of all whistleblower reports and relationships has been proposed.
Increasing regulatory action
Although Australia’s foreign bribery laws have been in place since 1999, until recently the prosecution of Securency International Pty Ltd and Note Printing Australia Limited was the sole example of a prosecution under Australia’s foreign bribery laws.
The Report identifies the following.
- 15 new foreign bribery allegations had surfaced since October 2012 and the number of foreign bribery investigations had increased from 7 to 17 in that period. One investigation had been transmitted to the Commonwealth Director of Public Prosecutions (CDPP) and the AFP expects more investigations will be transmitted in 2015.
- An increasing focus on corporate criminal liability, the use of the ‘corporate culture’ test in considering prosecutions against corporations, and the use of full asset confiscation action. The AFP is working closely with ASIC to ensure that corporate liability provisions are considered throughout the life cycle of all foreign bribery investigations.
- the CDPP and AFP have developed a joint presentation for industry highlighting the benefits of self-reporting and cooperating with authorities and the availability of plea negotiations. The benefit of self-reporting suspected instances of foreign bribery include the opportunity to be included in the investigation, the potential to limit corporate criminal responsibility and minimise reputational damage, the opportunity to identify and address wrongdoing within the corporation and the opportunity to assist enforcement agencies to detect and investigate serious criminal conduct. The CDPP may indemnify a witness against prosecution in certain circumstances. However, these initiatives fall short of the Working Group’s recommendation that Australia should develop a clear framework on plea bargaining and self-reporting such as is available in the United States.
In February 2015, the AFP launched proceedings against directors of a company called Lifese Pty Ltd alleging conspiracy to bribe a foreign public official. The directors are accused of paying a bribe of $1 million in order to secure a contract in Iraq valued at several hundred million dollars. This is now Australia’s second prosecution under foreign bribery laws.