Nature of the Foreign Bribery Bill
The Foreign Bribery Bill has been designed to strengthen Australia’s legal framework for investigating and prosecuting foreign bribery and seeks to overcome criticism of the existing foreign bribery law which has proven to be overly prescriptive and difficult to use. Under the existing regime, only seven people and three companies have been convicted, prompting concern from the OECD Working Group on Bribery given the high-risk regions and sectors in which Australian companies operate.
With the successful passage of the Foreign Bribery Bill, the Australian Government has sought to strengthen Australia’s implementation and enforcement of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions by strengthening the legal framework for investigating and prosecuting foreign bribery in Australia.
Specifically, the Foreign Bribery Bill aims to achieve this by:
- introducing a new indictable corporate offence for failure by a corporation to prevent foreign bribery by an 'associate’;
- extending the existing foreign bribery offence to include:
- bribery of candidates for public office; and
- bribery conducted to obtain a personal advantage (beyond just bribery conducted to obtain a business advantage under the existing regime); and
- bribery conducted to obtain a personal advantage (beyond just bribery conducted to obtain a business advantage under the existing regime); and
- removing the existing requirement that the benefit obtained by bribery need not be ‘legitimately due’, replacing this with the concept of ‘improperly influencing’ a foreign public official (noting that the foreign public official need not actually be influenced in the exercise of their official duties).
New corporate offence – failure to prevent foreign bribery by an associate
Perhaps the most consequential legislative amendment contained in the Foreign Bribery Bill is the introduction of a new corporate offence of failing to prevent foreign bribery by an associate.
The Foreign Bribery Bill provides an intentionally broad definition of an ‘associate’. The definition includes reference to the specific roles or positions relative to the body corporate (i.e. officers, employees, agents, contractors, subsidiaries and/or controlled entity (within the meaning of the Corporations Act 2001 (Cth)) and a broad ‘catch-all’ concept for any person who performs services for or on behalf of the body corporate.
Under the new offence, a corporation will commit the offence if an associate commits bribery for the ‘profit or gain’ of the corporation. The corporation will be liable for the offence regardless of whether or not it had actual knowledge of, authorised, or were otherwise involved in, the associate’s conduct. The company will however have a complete defense available to them if it can establish that it had adequate procedures in place to prevent the committing of foreign bribery by associates.
The Foreign Bribery Bill does not detail what constitutes ‘adequate procedures’. The Australian Government will, prior to implementation of the Foreign Bribery Bill, publish instructive (but not binding) guidance on the steps that a company can take to prevent associates from committing bribery of foreign public officials. The Attorney-General has indicated such guidance is likely to be analogous to the UK Government’s guidance that accompanies the ‘failure to prevent’ offence under section 7 of the Bribery Act 2010 (UK), namely that a corporation’s procedures should have regard to the following non-prescriptive and flexible principles:
- Proportionate Procedures: the procedures and policies a corporation has in place need to be proportionate to the risks it faces. Specifically, anti-bribery procedures should be aligned to the nature, scale and complexity of the corporation's activities.
- Top-level commitment: the corporation’s leadership should be demonstrably committed to preventing bribery and should take an active part in creating a culture within the corporation where bribery is unacceptable.
- Risk Assessment: a corporation must regularly assess and re-assess the nature and extent of its exposure to potential bribery.
- Due diligence: a corporation should ensure that it applies due diligence procedures with regard to individuals who provide services with or on behalf of the corporation.
- Communication: anti-bribery policies should be communicated and understood throughout the corporation. This includes training that is proportionate to the corporation’s bribery risk.
- Monitoring and review: corporations should review and monitor its anti-bribery procedures and make necessary improvements.
If a corporation fails to prevent foreign bribery by its associate(s) and does not have adequate procedures in place to prevent the committing of that offence, irrespective of its size, it may be liable for the maximum penalty of the greater of:
- 100,000 penalty units (equivalent to AU$31.3 million as at 1 July 2024);
- three times the value of the benefit directly or indirectly obtained by the company that is reasonably attributable to the conduct constituting the offence (the “value of the benefit” in this regard is an assessment of the gross benefit obtained from the conduct, not the net benefit, in accordance with the principles stated in the High Court of Australia’s recent decision in The King v Jacobs Group (Australia) Pty Ltd [2023] HCA 23); or
- if the value of the benefit obtained cannot be determined, 10% of the company’s annual turnover.
Amendments to the existing foreign bribery regime
The Foreign Bribery Bill also introduces amendments to the existing foreign bribery regime intended to simplify and broaden prosecution under that regime.
The Foreign Bribery Bill expands the existing foreign bribery offence to include bribery that is:
- directed towards candidates for public office, rather than simply current holders of public office; and
- conducted to obtain a personal advantage (beyond bribery conducted to obtain a business advantage).
Reframing of the current foreign bribery offence in this manner captures a broader range of benefits and actions within the scope of the offence. For example the giving of a personal honour such as a reduction in an individual’s tax liability or the processing of a visa request would now be captured under the offence given that it represents a personal advantage.
The Foreign Bribery Bill also removes the current requirements that the benefits obtained by bribery need not be “legitimately due”. Rather, a benefit will be captured if it is given with the intent of “improperly influencing” a foreign public official. It need not be shown whether the public official was actually influenced in the exercise of their public duties. The intention of the offender to do so will suffice for the purpose of the offence. This enables investigators to look behind a transaction to consider its true purpose, even if that purpose is disguised by a legitimate payment (for example, as a political or charitable donation, gifts, corporate hospitality and/or promotional expenses).
These amendments to the existing foreign bribery regime in Australia brings it broadly in line with akin regimes in the US and UK.
What companies need to do
To prepare for the introduction of Foreign Bribery Bill, corporations should undertake a review of their current anti-corruption and bribery programs. Although further clarity will be provided by the Australian Government in due course (which should be fulsomely considered when published), we expect that fit-for-purpose anti-bribery and corruption procedures will likely include at least:
- easily available and regularly implemented and reviewed policies and procedures;
- easily accessible monitoring and reporting mechanisms;
- adequate training programs;
- regularly conducted risk assessments which are reviewed when a company’s circumstances change;
- pro-compliance conduct from the ‘top’ of an organisation (i.e. by top-level management and the board of directors); and
- senior management oversight of and appropriate contractual controls governing the usage of third parties.
With the amendments introduced by the Foreign Bribery Bill set to take effect in September 2024, companies should use this time to undertake a review of their current anti-bribery and corruption procedures to address and reform any procedures to be properly informed by the jurisdictions and industry sector in which the company operates.
Authored by Scott Harris, Nick Williams, Zachary Forrai, and Paris Buti.
