Third time lucky? Bill to strengthen Australia’s foreign bribery laws (re)tabled in Parliament

Introduction

In June 2023, the Crimes Amendment (Combatting Foreign Bribery) Bill 2023 (Bill) was tabled in Parliament. The Bill proposes to strengthen Australia’s foreign bribery laws by: (1) introducing a new absolute liability offence against body corporates for “failing to prevent bribery of a foreign public official” by an “associate”; and (2) simplifying the elements required to prove, and extending the ambit of, the existing foreign bribery offence. The Bill is substantially the same as Bills introduced in 2017 and 2019 (both of which lapsed), albeit with a significant carve-out. Unlike its predecessors, the Bill does not propose the introduction of a Deferred Prosecution Agreement (DPA) scheme for resolving corporate criminal misconduct.

Background

Division 70 of the Criminal Code 1995 (Cth) (Code) provides that if an individual or body corporate bribes, or conspires to bribe, a foreign public official they commit a criminal offence and may be sentenced to up to 10 years’ imprisonment and/or a substantial monetary penalty.

Since foreign bribery laws were introduced in 1999, there have only been 10 successful foreign bribery prosecutions. There are a number of reasons for this, including:

• The Australian Federal Police (AFP) has experienced difficulties and lengthy delays in obtaining evidence located outside of Australia.
• Foreign governments and law enforcement institutions have been unwilling to cooperate with foreign bribery investigations, particularly if they are involved in the alleged corrupt conduct.
• Bribery and corrupt practices are covert and largely undocumented. Paper-trails are generally disparate and ambiguous.
• Corrupt payments are often disguised as legitimate expenses (eg, a ‘marketing’ or ‘consulting’ fee).
• The elements of the current foreign bribery offence are difficult to prove beyond reasonable doubt (in particular the benefit intended for a public official and the business advantage were “not legitimately due”).

Proposed amendments to foreign bribery laws

In June 2023, the Bill was introduced to Parliament. Other than the absence of a DPA scheme, it is substantially the same as the Crimes Amendment (Combatting Corporate Crime) Bill 2017 (2017 Bill) and Crimes Amendment (Combatting Corporate Crime) Bill 2019 (2019 Bill). The Bill is intended to strengthen Australia’s foreign bribery enforcement regime and bring our laws up to speed with other jurisdictions, notably the United Kingdom’s Bribery Act 2010 and the United States’ Foreign Corrupt Practices Act 1977.

Absolute liability offence of “failing to prevent foreign bribery”

The Bill proposes the introduction of a new absolute liability offence of “failing to prevent bribery of a foreign public official”. The offence replicates the UK offence of “failure to prevent bribery” and is intended to provide law enforcement agencies with a mechanism to prosecute companies for foreign bribery additional to the cumbersome corporate attribution method outlined in Part 2.5 (Division 12) of the Code. If passed into law, the offence will have the same penalties as the substantive foreign bribery offence.

The following elements must be established to prove the offence:

• An “associate” of a corporation commits an offence against section 70.2 or engages in conduct which would constitute an offence against section 70.2; and
• The associate does so for the profit or gain of the corporation.

“Associate” is broadly defined as any person who is:

• an officer, employee, agent or contractor of the corporation;
• a subsidiary of the corporation;
• controlled by the corporation; or
• otherwise performs services for or on behalf of the corporation.

A complete defence is available if the company can establish, on the balance of probabilities, that they had “adequate procedures” to prevent foreign bribery. “Adequate procedures” is not defined. However, the Attorney General has indicated that guidance will be published when the Bill passes into law which will be modelled on the UK government’s guidance that accompanies the “failure to prevent” offence, which refers to matters such as the company’s anti-bribery and corruption policies, employee training and due diligence on third parties (Second Reading Speech of the Honourable Mark Dreyfus MP, 8 August 2023, p 6).

Simplified foreign bribery laws:

The Bill also intends to expand the reach of and simplify the elements required to prove the current foreign bribery offence.

The Bill proposes to expand the definition of “foreign public official” to include candidates for office. It also provides that an offence will be committed where a benefit is provided to obtain a “personal advantage”. The requirement that the prosecution establish that a benefit or business advantage was “not legitimately due” will be replaced by a test of whether a person intended to “improperly influence” a foreign public official.

Under the proposed amendments, to prove a foreign bribery charge, the following elements must be established:

• a person provides, offers or promises to provide a benefit to another person or causes a benefit to be provided, offered or promised to another person; and
• the person does so with the intention of improperly influencing a foreign public official in order to obtain or retain business or a business or personal advantage.

Whether influence is improper will be a factual issue for the jury who may have regard to matters such as the nature of the benefit and the record keeping associated with the benefit.

The introduction of the “improperly influencing” test will shift the jury’s focus to the circumstances of the provision (or offer/promise) of the benefit rather than whether the recipient had some kind of entitlement to that benefit (ie whether the benefit was legitimately due). This should make proving a foreign bribery charge against an individual or corporation easier, and potentially lead to more criminal prosecutions.

No introduction of a DPA scheme

Unlike its 2017 and 2019 predecessors, the Bill does not introduce a DPA scheme. DPAs are a voluntary, negotiated agreement under which a defendant corporation must comply with specified terms for a designated period, in return for which prosecution is deferred and, upon satisfaction of the terms (such as the payment of a financial penalty), discontinued. An admission of guilt is not a requirement for a DPA.

The rationale for the introduction of DPAs is that they incentivise corporations to self-report criminal misconduct in return for not being prosecuted. Opponents to DPAs argue that they are a mechanism for corporates to shirk criminal responsibility and do not adequately deter criminal offending.

The DPA scheme proposed by the 2017 and 2019 Bills applied to foreign bribery offending, other offences under the Code (including proceeds of crime offences), certain market manipulation offences and anti-money laundering offences.

DPAs have been in operation in the US and the UK for a number of years and have been utilised to great effect (eg, the UK Serious Fraud Office has entered into 12 DPAs since their introduction in 2014). While the Bill does not introduce a DPA scheme, the Attorney General has indicated that such a scheme could be revisited “after the measures in the Bill have been enacted and given time to work” (Second Reading Speech of the Honourable Mark Dreyfus MP, 8 August 2023, p 6).

What’s next?

• It is expected that the Bill will pass into law as soon as reforms to foreign bribery laws have bipartisan support.

Corporations operating in bribery and corruption risk areas should review their anti-bribery and corruption frameworks to ensure that they have adequate procedures in place should they face allegations they have failed to prevent foreign bribery from occurring.