Seven years in the making: Australia’s Foreign Bribery Law amendments pass parliament

The passage of the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 (Foreign Bribery Bill) through Federal Parliament represents the most comprehensive amendment of Australia’s foreign bribery regime in almost 30 years.

The amendments were first proposed by the Turnbull Government in 2017 and lapsed during two parliaments, before being taken up and passed by the Albanese Government. This Insight discusses the amendments to Australia’s foreign bribery regime, how the new regime may impact Australian businesses and what steps they need to take to adapt to the new regime.

What has changed?

When introducing the Foreign Bribery Bill, Attorney-General Mark Dreyfus announced the Labor Government “is cracking down on foreign bribery by Australian companies by removing barriers to investigations and prosecutions”. The Bill does this in these key ways:

• introduces a new corporate offence for failing to prevent bribery of a foreign public official, along with an ‘adequate procedures’ defence; and
  
  
• simplifies existing offences and aligns Australia’s foreign bribery laws to concepts that are common in other jurisdictions (such as ‘improper influence’) including by:
  
  
  • expanding the offence to cover bribery to obtain a personal (i.e. non-business) advantage;
    
    
  • expanding the scope of “foreign public official” to include candidates for public office;
    
    
  • removing the requirement that a foreign public official must be influenced in the exercise of their duties; and
    
    
  • removing the requirement that a benefit and business advantage must be ‘not legitimately due’ and replaces it with the concept of ‘improperly influencing’ a foreign public official.

Australia’s foreign bribery regime is contained in division 70.2 of the Criminal Code Act 1995 (Cth) (Criminal Code) and the amendments will come into force on 9 September 2024 (six months after the bill received Royal Assent).

Failure to Prevent Foreign Bribery

Arguably the most significant amendment in the Foreign Bribery Bill is the introduction of a new corporate offence of a failure to prevent foreign bribery. Modelled on the UK Bribery Act 2010, a company is now liable for failing to prevent foreign bribery by an 'associate'. However, a company will have a defence if they can show they had adequate procedures in place to prevent the commission of the offence.

Strict liability

This is a strict liability offence, meaning that if an associate of the company commits bribery for the ‘profit or gain’ of the company, the company will be liable as if it had committed the bribery itself. This is regardless of whether or not the company has any fault or was otherwise involved in the illegal conduct by the associate.

Who is an associate?

An associate is defined broadly and will include all subsidiaries, controlled entities, officers, employees, agents, contractors of the corporation and any person who performs services for or on the corporation’s behalf.

Adequate procedures

A corporation will have a defence if it can prove it had ‘adequate procedures’ designed to prevent foreign bribery at the time the offence was committed.

‘Adequate procedures’ is not defined by the Foreign Bribery Bill, however, the Government has indicated that additional guidance for corporations will be published. Importantly, this guidance will not have legislative effect and ultimately what is adequate will be determined by a court based on the particular facts and circumstances of the case.

Organisations should look to previous guidance from the Attorney General’s Department, guidance on effective anti-corruption compliance from enforcement agencies in the US and UK, and material published by public interest groups such as Transparency International Australia and the Bribery Prevention Network.

Failure to Prevent Foreign Bribery is a significant amendment that increases both the risk of criminal liability for corporations and the responsibility of these organisations to take proactive steps to prevent foreign bribery in their operations.

Simplification of existing bribery offences

The test which determines whether foreign bribery occurred has been simplified so that an offence is committed when:

• a person gives a benefit to a foreign public official;
  
  
• that benefit is not legitimately due; and
  
  
• the person does so with the intention to influence the foreign public official to obtain or retain an advantage.

The requirements for prosecution are to show that the benefit was ‘not legitimately due’ to the person who received it and that the benefit was provided in the course of a public function have been removed. We expect that this will resolve some of the evidentiary challenges that have made prosecution of foreign bribery offences difficult.

The Foreign Bribery Bill now also provides that offering or giving a public official a personal advantage (for example, the granting of a visa, residency or even state honours) will be sufficient to make out the offence (as opposed to the position under the current regime, which requires that a business advantage be obtained).

Finally, it is notable that the definition of foreign public official also now includes a candidate for public office. This will make it easier to prosecute individuals who seek to secure an advantage by offering benefits before an individual is actually elected.

Penalties

If found guilty of the offence, a corporation will be liable for significant penalties. Specifically, the greater of:

• 100,000 penalty units (equivalent to $31,300,000 as at 1 July 2023);
  
  
• three times the value of the benefit directly or indirectly obtained that is reasonably attributable to the conduct constituting the offence; and
  
  
• if the value of the benefit obtained cannot be determined, 10% of annual turnover during a 12-month period.

What about the Deferred Prosecution Agreement Regime?

The Bill does not introduce a Deferred Prosecution Agreement (DPA) scheme. In a previous Insight, we considered the utility and effectiveness of such a scheme for foreign bribery law enforcement.

In short, a DPA scheme would have allowed the Commonwealth Director of Public Prosecutions to enter into a voluntary agreement with corporations to defer prosecutions in return for the organisation agreeing to a number of mandatory and optional sanctions and/or requirements.

The advantage of a DPA scheme is that it incentivises corporations to make a voluntary disclosure of potential criminal conduct in exchange for a degree of certainty of outcome and confidentiality during the discussions which lead to entry into the DPA (neither of which is possible in the course of a very public trial).

Opposition Senator Michaela Cash proposed amendments to the Bill to include a DPA regime, However, the amendments were ultimately rejected. The Senate did, however, agree to a statutory review of the operation of the amendments after 18 months.

This review will be tabled in both Houses of Parliament and will provide another opportunity to consider the introduction of a DPA regime.

Time will tell if such a scheme, which has reportedly functioned as an effective weapon to tackle foreign bribery in the UK (and its similar equivalent in the US), will be introduced in Australia.

What now?

Following similar amendments in the UK in 2010, there was a significant uptick in the number of prosecutions brought for foreign bribery. There is nothing to suggest that the same thing will not happen in Australia, indeed, one of the primary drivers for the amendments was the difficulty in securing prosecutions for foreign bribery offences under the previous regime.

To prepare, companies should undertake a review of their current approach to identifying, preventing and mitigating the risk of bribery and corruption in their operations. They should ensure they have assessed the risk of bribery by reference to the sector the entity is in and the jurisdictions where it has operations. They should ensure that they have an anti-bribery and corruption compliance program in place that is fit for purposes.

As noted above, the Government will release guidance on what constitutes adequate procedures. At a minimum, we would expect any anti-bribery and corruption program to include the following elements (and be made available to ‘associates’):

• risk assessments which are regularly conducted and reviewed as the organisation’s circumstances and the external environment changes;
  
  
• appropriate tone from the top;
  
  
• clear policies and procedures available to all;
  
  
• adequate training programs; and
  
  
• reporting and monitoring mechanisms which are fit for purpose and easily accessible