Gross v Net: What is the “value of the benefit” obtained from foreign bribery?

The King v Jacobs Group (Australia) Pty Ltd (formerly known as Sinclair Knight Merz) [2023] HCA 23


On 2 August 2023, the High Court of Australia unanimously allowed an appeal from the Commonwealth Director of Public Prosecutions (CDPP) and ruled that the meaning of the “value of the benefit” obtained from conduct that constitutes foreign bribery is the gross benefit (as opposed to the net benefit) obtained from the offending. The judgment overturns the decisions of the trial judge and the New South Wales Court of Criminal Appeal (who both ruled that the “value of the benefit” obtained was the net benefit) and, as such, increases the maximum penalty for the corporate defendant from A$11 million to A$30.3 million. The Court’s reasoning may also inform future calculations of maximum penalties for individuals and companies who commit other corporate offences or contravene civil penalty provisions that have an equivalent penalty regime to the foreign bribery offence.


Division 70 of the Criminal Code 1995 (Cth) (Code) provides that if an individual or corporation bribes, or conspires to bribe, a foreign public official, they commit a criminal offence. Section 70.2(5) of the Code states that, for offences committed after 2009, in the case of a corporation, the maximum penalty is a fine not more than the greatest of the following:

  1. 100,000 penalty units;
  2. if the court can determine the value of the benefit that the corporate obtained – 3 times the value of that benefit; and
  3. if the court cannot determine the value of that benefit – 10% of the annual turnover of the corporation during the 12-month period ending at the end of the month in which the offence occurred.

In 2021, Jacobs Group (Australia) Pty Ltd (the Respondent) pleaded guilty to three counts of conspiracy to bribe public officials in the Philippines and Vietnam to secure construction projects between 2000 and 2012. The first two counts occurred prior to 2009, and therefore only the third count was subject to the penalty regime provided by section 70.2(5).

The CDPP and Respondent agreed that the benefit obtained by the Respondent in relation to the third count was the money received for performing its contractual obligations. However, the Respondent argued that the “value of the benefit” was A$2,680,816, which was the amount it received for performing its obligations under the contracts, less the costs it paid to third parties to enable that performance (net benefit approach). The CDPP, on the other hand, contended that the “value of the benefit” was A$10,130,354, comprising the total gross amount that the Respondent received under the contracts (gross benefit approach). The primary judge and Court of Criminal Appeal of New South Wales preferred the net benefit approach, which resulted in the maximum penalty for the third count being 100,000 penalty units (then A$11 million).

The Appeal

The issue before the High Court was whether the net benefit approach or gross benefit approach should be preferred in the construction of section 70.2(5) of the Code. The full bench of the High Court unanimously allowed the appeal and held that the gross benefit approach should be adopted. As a consequence, the maximum penalty for the third count was three times the value of the benefit obtained as a result of the offending (A$30,391.062).

The Court relied upon the following matters in support of its reasoning:

  • Consistent with international law obligations: Section 70.2(5) of the Code was introduced in 2009, following criticism from the OECD that the penalties for foreign bribery offences were inadequate, having regard to Article 3.1 of the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions (OECD Convention). This article provides that “the bribery of a foreign public official shall be punishable by effective, proportionate and dissuasive criminal penalties”. The Court held (at [24]) that the net benefit approach is uncertain and inconsistent and would not result in a maximum penalty that is “effective” or “dissuasive”. Additionally, “proportionality” is not focused on the relationship between the benefit obtained by the offender and the size of the penalty. It is linked to “to the gravity of the infringement”, of which the benefit to the offender may be one aspect.
  • Consistent with other provisions in Division 70 of the Code: The Court analysed the words “benefit” and “value of the benefit” in other provisions of Division 70 and held that they take the same meaning. That is the value of the advantage as provided or as received — no more and no less. In the case of money received to perform a contact secured by bribery, no deduction for costs and expenses of any kind, nor for risk, forms part of the value of the relevant “benefit” obtained.
  • Consistent with the broader context of Division 70 of the Code: The Court also analysed the broader context of the introduction of section 70.2(5) and reiterated that the provision was introduced as part of Australia’s response to complying with its obligations under the OECD Convention. The Court found that the context of the introduction of the laws (ie. to increase penalties for foreign bribery to align with the objectives of the OECD Convention) supported the gross benefit approach.
  • Harmonious and coherent scheme: The Court said (at [49]) that the provisions of Division 70 of the Code would not form a harmonious and coherent scheme if the net benefit approach was adopted. If this approach was preferred, determining the “value of the benefit” would introduce a “new highly contested field of battle” between the parties in valuing the benefit. The Court’s view was that this would undermine the purpose of ensuring “effective, proportionate and dissuasive” penalties for foreign bribery offences.

Implications of the judgment

Aside from tripling the maximum penalty which may be imposed against the Respondent, the Court’s findings may have broader application to the determination of maximum penalties for other criminal offences and civil penalty provisions which have the same penalty regime as the foreign bribery offence. Those laws are administered by a range of regulators and law enforcement agencies and include: cartel conduct, unfair contract terms, breaches of directors’ duties, market manipulation, dishonest conduct, and serious and repeated interference with the privacy of an individual.

Accordingly, the judgment should not only serve as a further deterrent to corporations at risk of committing foreign bribery, but may also result in individuals and corporations who commit other forms of corporate crime and/or misconduct being subjected to increased financial penalties.

What’s next?

The proceeding has been remitted to the New South Wales Court of Criminal Appeal to resentence the Respondent for count 3. The original sentence for that charge (a fine of A$1.35 million with a conviction) will likely be increased. Once the respondent has been resentenced, it will mark the conclusion of a foreign bribery investigation and prosecution that has taken over 11 years.

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