Anti-Corruption 2019 Second Edition

Last Updated December 09, 2019

Australia

Law and Practice

Authors



Clayton Utz is a leading, independent full-service Australian law firm. Its commercial litigation team has 150 litigators operating across Sydney, Perth, Melbourne, Brisbane, Canberra and Darwin. The firm's anti-bribery and corruption and investigations specialists advise multinational and Australian companies on corporate fraud, bribery, corruption, facilitation payments, public and private corruption, antitrust, money laundering, and privileges and immunities. The team is experienced in assessing risk and exposure under domestic and international anti-corruption laws, including Australia's Criminal Code, the US Foreign Corrupt Practices Act, and the UK Bribery Act. It assists clients with investigations and remediation, advises on managing various collateral issues, including whistle-blower provisions, media management, defamation and reputational issues, ASX disclosure rules, directors' reputations and the risk of shareholder litigation. The firm's experience includes advising on Australian Federal Police investigations into alleged bribery of foreign officials, and related Australian Securities and Investments Commission investigations, and being retained in relation to US investigations into alleged breaches of the US Foreign Corrupt Practices Act within Australia, by subsidiaries.

Australia ratified the Organisation for Economic Co-operation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Convention) in 1999. Australia is also a signatory to the United Nations Convention against Corruption (UNCAC) of 2003. As a state party to both treaties, Australia is required to criminalise bribery of domestic and foreign public officials in the course of international business.

Australia gives effect to its treaty obligations primarily through the Criminal Code, which is a schedule to the Criminal Code Act 1995 (Cth) (Criminal Code). This is the federal legislation prohibiting the bribery of Commonwealth domestic and foreign public officials. Other relevant Commonwealth legislation includes the Corporations Act 2001 (Cth) (Corporations Act) and the Proceeds of Crime Act 2002 (Cth) (POCA).

Each of Australia's six states and two territories has also legislated against public sector and private sector bribery, typically in the relevant state or territory's crimes legislation. While the laws differ between each state and territory, it is generally an offence to corruptly give or offer an inducement or reward to an agent for doing or not doing something regarding the affairs of the agent's principal. It is also an offence to aid, abet, counsel, procure, solicit or incite the commission of these offences. 

In addition, bribery and misconduct in public office remain criminal offences under the common law of some states and territories, rather than being criminalised by statute (as occurs in the other states and territories). The bribery offence at common law is constituted by the offering or receiving of an undue reward by or to any person in public office in order to influence that person's behaviour in that office. 

Unlike in the USA and the UK, Australia is yet to produce detailed guidelines on the interpretation and enforcement of the various anti-bribery and corruption laws. However, various government agencies have produced online information for businesses and the public to access. In particular, the Attorney-General's Department (AGD) has developed an online learning module on foreign bribery, which provides guidance on Australia's anti-bribery policy and relevant laws, and how they apply. It has also published a Foreign Bribery Information and Awareness Pack, which provides key information on the foreign bribery offence.

The Australian Trade and Investment Commission (Austrade) has also published materials online to provide general guidance to businesses operating overseas, including practical guidance on implementing a bribery and corruption compliance programme, and proportionate anti-bribery procedures. The Australian Tax Office (ATO) has also published guidelines for understanding and dealing with the bribery of Australian and foreign public officials.

The Prosecution Policy of the Commonwealth (Prosecution Policy) provides guidance as to how prosecution decisions are to be made by the Office of the Director of Public Prosecutions in relation to Commonwealth offences, including bribery offences.

As discussed later in this chapter (specifically in 6.2 Likely Future Changes to the Applicable Legislation or the Enforcement Body), the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (Cth) (Corporate Crime Bill) was introduced to parliament by the Australian government on 2 December 2019 and proposes several significant amendments to Australia's foreign bribery and criminal law framework.

However, prior to this, there were several noteworthy amendments in 2015 and 2016. In particular:

  • in November 2015, Schedule 2 of the Crimes Legislation Amendment (Powers, Offences and Other Measures) Act 2015 (Cth) amended the offence of bribery of a foreign public official in the Criminal Code to clarify that it is not necessary to prove:
    1. an intention to bribe a particular foreign public official; or
    2. that any business or business advantage was actually obtained or retained as a result of the bribery; and
  • in February 2016, two important new offences were introduced into the Criminal Code in relation to false dealings with accounting documents, in direct response to criticism in the OECD Phase 3 report about Australia's inadequate books and records offences. It is expected that these offences, which may be easier to prove than the traditional bribery and corruption offences, will be increasingly relied upon by prosecutors to ensure that companies engaging in bribery and corrupt practices are prosecuted.

Domestic Bribery

Section 141.1(1) of the Criminal Code provides that it is an offence for a person to: dishonestly provide, offer or cause to be provided or offered, a benefit to another person, with the intention of influencing a Commonwealth public official in the exercise of their duties.

"Benefit" is broadly defined to include any advantage, and is not limited to money or property, and "Commonwealth public official" includes all employees of the Commonwealth and any Commonwealth authority. 

A similar but lesser offence applies to corrupting benefits given to a Commonwealth public official under section 142.1(1) of the Criminal Code.

Corresponding offences apply to the receipt by Commonwealth public officials of bribes or corrupting benefits: sections 141.1(3) and 142.1(3). 

It is also an offence under section 135.2(7) of the Criminal Code to conspire with another person with the intention of dishonestly influencing a Commonwealth public official in the exercise of their duties as a public official. 

There are also various state and territory provisions which prohibit bribery of state and territory public officials, which provisions are often the same as those which prohibit private sector bribery. 

Foreign Bribery

The foreign bribery offence is located in section 70.2(1) of the Criminal Code. That section provides that it is an offence to: provide, offer or cause to be provided or offered to another person, a benefit which is not legitimately due to the other person, with the intention of influencing a foreign public official in the exercise of their duties, in order to obtain or retain business or a business advantage. 

The offence captures bribes made to foreign public officials either directly or indirectly via an agent, relative or business partner. The key mental element is that the defendant must have intended to influence the foreign public official.

"Foreign public official" is broadly defined, and includes, but is not limited to, an employee, contractor or official of a foreign government department or agency, a foreign government-controlled company or a public international organisation. "Benefit" is also broadly defined to include any advantage.

Private Sector Bribery

Commercial, or private sector, bribery is criminalised by state and territory legislation, rather than by the Commonwealth. Generally speaking, these laws prohibit the corrupt giving or offering of inducements or secret commissions to, or receiving them from, employees or agents of private or public companies and individuals. Conduct will be "corrupt" only if engaged in with the intention of influencing the recipient to show favour. 

An example of the state and territory provisions are those contained in the Crimes Act 1900 (NSW) (NSW Crimes Act). Among other things:

  • section 249B(1) prohibits an agent from corruptly receiving or soliciting (or corruptly agreeing to receive or solicit) any benefit from another person as an inducement, a reward, or on account of doing or not doing something, or showing or not showing favour to any person in relation to the affairs or business of the agent's principal. It also prohibits the receipt of any expectation which would tend to influence the agent to show or not show favour to any person in relation to the affairs or business of the agent's principal. Section 249B(2) imposes corresponding offences on persons who give or offer an agent any such benefit; 
  • section 249D(1) prohibits a person from corruptly giving a benefit to another person for giving secret advice to a third party where the person giving the benefit intends the advice to influence the third party to enter into a contract with the person giving the benefit, or appointing the person who gives the benefit to any office. Section 249D(2) makes it an offence to corruptly receive such a benefit; and 
  • the definition of "agent" is wide and includes employees, while “benefit” is defined as money and any contingent benefit.

Failure to Prevent Bribery

Failure to prevent bribery is not currently an offence in Australia. However, the Corporate Crime Bill proposes introducing such an offence, modelled on section 7 of the UK Bribery Act 2010. Should that bill be passed, a body corporate would be liable where an associate commits foreign bribery for the profit or gain of the body corporate. The offence would not apply if the body corporate had in place adequate procedures designed to prevent the commission of a foreign bribery offence by its associates. 

It is expected that this proposed new offence will assist in facilitating responsibility for offending conduct being attributed to a company based in Australia in circumstances where a subsidiary company commits foreign bribery (whether within or outside of Australia), provided it does so for the profit or gain of the parent company. 

Gifts and Hospitality

Australian legislation does not expressly articulate the circumstances under which providing gifts and hospitality may amount to bribery. As the law currently stands, the giving of such benefits will only be unlawful if done with the intention of influencing a public official.

In Australia, there is close scrutiny of the provision of gifts, entertainment or hospitality involving the public sector. As such, Australian public officials are usually subject to guidelines on the receipt of gifts and hospitality. In particular, each Commonwealth, state and territory government has its own public service with its own code of conduct. These codes of conduct are often supplemented by agency-specific codes of conduct, which regulate the conduct of Australian civil servants or officials working for them.

While it will depend on the applicable guidelines, generally speaking, gifts of more than token value should be avoided. 

Influence-Peddling

Given that the substantive bribery offences are broad in scope, depending on the facts and circumstances of the particular case, the exchange of influence in respect of decision-making for an undue advantage may well constitute an offence. 

Financial Record-Keeping

The false accounting offences mentioned in 1.1.4 Recent Key Amendments to National Legislation are found in Part 10.9 of the Criminal Code, and came into effect in March 2016. The provisions criminalise intentional or reckless concealment of bribery by falsely dealing with accounting documents. 

Section 286 of the Corporations Act also places an obligation on companies to keep written financial records for seven years that correctly record and explain their transactions and financial position and performance. A failure to keep such financial records is a strict liability offence. In addition, it is an offence under section 1307 for an employee or former employee of a company to falsify any books relating to the affairs of the company.

The Crimes Acts of various states and territories also define similar false accounting offences, such as section 83(1)(a) of the Crimes Act 1958 (Cth) which makes it an offence to dishonestly falsify a document made for an accounting purpose.

Public Officials

Domestic public officials will also commit an offence if they engage in corrupt practices. For example, as referred to above, section 141.1(3) of the Criminal Code provides that it is an offence for a Commonwealth public official to: dishonestly ask, receive, obtain, or agree to receive or obtain a benefit for themselves or another person, with the intention that the exercise of their official duties will be influenced, or of inducing, fostering or sustaining such a belief. 

A similar but lesser offence applies if a Commonwealth public official receives a corrupting benefit: section 142.1(3).

A Commonwealth public official will also commit an offence against section 142.2 of the Criminal Code for the abuse of public office. This provision will be breached if the official exercises influence, engages in conduct, or uses information obtained in their capacity as an official with the intention of dishonestly obtaining a benefit for themselves or another person, or causing detriment to another person. 

The states and territories also legislate against public officers seeking or accepting bribes or other benefits to which they are not entitled.

New South Wales is the only Australian jurisdiction that retains a specific offence of embezzlement: Division 6, NSW Crimes Act. This offence criminalises conduct in which an employee intentionally misappropriates property entrusted to them by their employer. In other Australian jurisdictions, embezzlement is dealt with under provisions relating to fraud, theft or other property offences.

Intermediaries

There are no specific provisions concerning the commission of an offence through an intermediary. However, the offences under the Criminal Code are structured broadly so as to capture such offences. See also 1.3.3 Corporate Liability.

At general law, a prosecution for a criminal offence can be commenced at any time, unless a statute provides otherwise. However, criminal proceedings may be stayed to prevent injustice to the defendant caused by unreasonable delay.

There is no statute of limitations for prosecutions of the above-mentioned Commonwealth offences because under the Crimes Act 1914 (Cth) (Crimes Act), there is no limitation period for the prosecution of offences by individuals against a law of the Commonwealth where the maximum penalty exceeds six months' imprisonment or for the prosecution of offences by companies where the maximum penalty exceeds AUD31,500.

The Criminal Code offences referred to above have broad extra-territorial reach. 

In relation to the foreign bribery offence, either some part of the conduct constituting the alleged offence must have occurred in Australia or, if the conduct occurred wholly outside Australia, the person must be an Australian citizen or resident, or a body corporate incorporated in Australia. 

In relation to the offence of bribing a Commonwealth public official, it does not matter if the conduct constituting the alleged offence, or a result of that conduct, occurred entirely outside Australia. 

In relation to the state and territory-based offences, there must be some nexus between the state or territory and the offence. In NSW, that nexus will be held to exist where the offence is committed:

  • wholly or partly in the state; or
  • wholly outside the state, but the offence has an effect in the state. 

Liability for a breach of directors' duties under the Corporations Act will arise if the relevant person is a director or officer of an Australian-incorporated company. If the relevant person is a director or officer of a foreign company, the Corporations Act will only have extra-territorial reach over that individual in limited circumstances, including where the conduct occurred in connection with the foreign company carrying on business in Australia: section 186. 

Under Australian law, a corporation, as a separate legal entity, can be convicted of bribery offences. Companies and individuals can also be held liable for the same offence.

The Criminal Code has specific provisions which address corporate criminal responsibility. Under these provisions, for a company to be criminally responsible for an offence, the physical and mental (or "fault") elements must be attributed to the company as follows: 

  • the physical element is attributed if that element was committed by an employee, agent or officer of the company acting within the actual or apparent scope of that person's employment or within their actual or apparent authority; and
  • the key fault element (intention) is attributed if the company expressly, tacitly or impliedly authorised or permitted the commission of the offence. The means by which that may be established include proving that a "high managerial" agent intentionally engaged in the relevant conduct or proving that a corporate culture existed that directed, encouraged, tolerated, or led to non-compliance with the relevant provision.

In other Australian jurisdictions, generally speaking, a corporation may be found guilty of a criminal offence either on the grounds of vicarious liability or on the basis that the person who committed the acts and had the requisite mental state was the directing mind and will of the company.

In the M&A context, a successor entity will not be held liable for offences by the target entity that occurred prior to the merger or acquisition. However, if the transaction was effected by a share sale, the target entity will remain liable even after the acquisition. 

Two specific defences are available for the offence of foreign bribery under section 70.2(1) of the Criminal Code. Both are very narrow.

The first defence (section 70.3) is enlivened where the provision of the benefit is permitted or required by a written law of the place where the conduct occurred. 

The second defence (section 70.4) is in respect of facilitation payments. If the value of the benefit was of a minor nature, and made to expedite or secure the performance of a "routine government action" of a minor nature, and a record of the details of the conduct was created as soon as practicable, a defendant will have a good defence against liability. "Routine government action" excludes a decision about the awarding of new business, continuing existing business, or the terms of new or existing business. Rather, it is an action commonly performed by the foreign public official, such as granting permits or licences, processing government papers or providing access to utilities.

Australia has been considering removing the facilitation payment defence for some time. However, the Corporate Crime Bill proposes that the defence be retained. Nonetheless, Australian authorities recommend avoiding such payments, given that they are often difficult to distinguish from bribes. 

There are no exceptions to the above-mentioned defences, which are narrowly framed and only apply in specific situations.

The Commonwealth legislation does not provide any de minimis exceptions. However, such exceptions are found in some of the state and territory legislation.  For example, section 249I of the NSW Crimes Act enables the court to exercise its discretion to dismiss a case if the offence is of a trivial or merely technical nature. 

No sectors or industries are exempt from the above offences. 

There is no formal safe harbour or amnesty programme in Australia based on self-reporting or the existence of adequate compliance procedures and remediation efforts. However, see the discussion regarding the AFP's guidance on self-reporting in 5.4 Discretion for Mitigation.

The maximum penalties on conviction for foreign or domestic bribery offences are significant. They are:

  • for an individual: 
    1. 10 years' imprisonment; or 
    2. a fine of AUD2.1 million, or both; or 
  • for a company, a fine being the greatest of: 
    1. AUD21 million; 
    2. three times the value of any benefit that can reasonably be attributed to the bribe; or
    3. where the value of the benefit cannot be determined, 10% of the company's annual turnover for the 12 months up to the end of the month in which the conduct constituting the offence occurred. 

For the false accounting provisions, the maximum penalty for intentional conduct is the same as above, while reckless conduct attracts a maximum penalty equal to half that of those offences. 

In addition to criminal penalties, any benefits obtained from foreign bribery can be forfeited to the Australian government under POCA.

The maximum penalties that may be imposed for private sector bribery vary between the states and territories. By way of example, in NSW, the maximum period of imprisonment for a bribery offence under section 249B is seven years.

Australia has complex legislated sentencing regimes which require each judge, through the exercise of judicial discretion, to impose a sentence of severity appropriate to all the circumstances of the offence. This requires the sentencing court to take into consideration both aggravating and mitigating factors relevant to the specific facts. The same sentencing principles which apply to individuals will apply to a corporation. In particular, general deterrence is an important consideration for the sentencing court. There are no guidelines specific to bribery and corruption offences.

Australian law does not currently establish any specific duties to prevent corruption. 

However, the way that the corporate criminal responsibility provisions are structured encourages companies to have sound compliance programmes. That is because, if an employee, officer or agent engages in the relevant conduct, the company may potentially be held liable if, among other things:

  • it had a corporate culture that directed, encouraged, tolerated or led to non-compliance with the relevant provision; or
  • the employee, officer or agent was a "high managerial agent" and the company failed to exercise due diligence to prevent the conduct.

"Corporate culture" is yet to be judicially tested in this context, but is defined to mean "an attitude, policy, rule, course of conduct or practice existing within the body corporate generally or in the part of the body corporate in which the relevant activities take place". A key aspect of corporate culture is looking beyond what the company says in its policy literature, and looking at what it actually does in terms of managing the risk. The diligent implementation of an appropriate compliance regime is therefore a very important factor to take into account when assessing corporate culture. 

In addition, a director's duty to exercise reasonable care, skill and diligence would extend to taking reasonable care to ensure that the company had an appropriate risk management framework in place, including to manage the risk of bribery. 

The proposed offence of failing to prevent foreign bribery, which incorporates a defence of "adequate procedures", will further encourage action to prevent corruption. If the Corporate Crime Bill is passed, the minister for justice must publish guidance on the steps companies can take to help prevent their employees, agents and contractors from engaging in foreign bribery. In December 2019, a draft guidance paper was released by the AGD for public consultation. The paper contains both principles-based guidance and suggested procedures, with the two explicit guiding principles of the paper being "proportionality" and "effectiveness".   

Austrade has also published a guide to the meaning of "adequate procedures", to assist companies to understand and comply with the proposed new obligations. It relies heavily on the legislative framework and case law in the UK and USA to identify the following factors in a company relevant to determining whether or not the company has taken "adequate steps":

  • a "culture of compliance" and genuine engagement with anti-bribery obligations;
  • quality of policies and training;
  • dedicating a role to focus on compliance with anti-bribery obligations;
  • record keeping; 
  • recognition of higher risks in some jurisdictions;
  • subsidiary responsibility; and
  • independent reports.

As a general rule, there is no requirement for individuals and/or companies to disclose violations of Australia's anti-bribery and corruption laws. 

However, there are certain exceptions. For example, in NSW, it is an offence under section 316 of the NSW Crimes Act for a person, including a company, who knows or believes that another person has committed a serious indictable offence to fail without reasonable excuse to report that matter to the NSW Police. 

To strengthen the protection afforded to whistle-blowers in Australia, new private sector whistle-blower laws came into effect in July 2019. 

The new regime, which sits in Part 9.4AAA of the Corporations Act, has significantly expanded and strengthened private sector whistle-blower protections, increased applicable penalties and introduced a requirement for public companies and large proprietary companies to have a whistle-blower policy which addresses certain matters. 

Importantly, protected disclosures are no longer limited to potential contraventions of the corporations' legislation, but now extend to disclosures where the whistle-blower has reasonable grounds to suspect that the information concerns misconduct, or an improper state of affairs or circumstances, in relation to the relevant company or a related body corporate. This specifically includes conduct by the entity, or one of its employees or officers, that constitutes an offence against a law of the Commonwealth punishable by imprisonment for a period of 12 months or more, which would include the domestic and foreign bribery offences in the Criminal Code.

Where certain criteria are met, a whistle-blower will receive protections in relation to the confidentiality of their identity and victimisation. The penalties for breach of these protections have been significantly increased. The maximum civil penalty for companies, for example, is now the greater of AUD10.5 million, three times the benefit derived from the contravention, or 10% of the annual turnover (up to a maximum of AUD525 million). It is also now easier for victimised whistle-blowers to claim compensation and other remedies. 

Whistle-blowers are also protected against certain legal actions related to making a disclosure. This includes criminal prosecution (and the disclosure cannot be used against the whistle-blower in a prosecution, unless that disclosure is false), civil litigation (eg breach of employment contract) or administrative action (eg disciplinary action). Immunity is not given for any misconduct that the whistle-blower was involved in that is revealed in the disclosure. 

Public officials are protected under the Public Interest Disclosure Act 2013 (Cth) (PID Act). The PID Act seeks to encourage public officials to report suspected wrongdoing in the Australian public sector, while protecting those who make public interest disclosures from reprisals. There is equivalent legislation covering public servants in each state and territory.

There are also specific protections from reprisals for union whistle-blowers. These were introduced by the Fair Work (Registered Organisations) Amendment Act 2016 (Cth), which contained a range of measures intended to fight union corruption.

There are no financial rewards to incentivise whistle-blowing, as occurs in the USA. A reward system was recommended by the Parliamentary Joint Committee on Corporations and Financial Services to motivate whistle-blowers to come forward with high-quality information, however, that recommendation was not ultimately adopted.

The relevant provisions governing protections afforded to whistle-blowers are located in various pieces of legislation. The most important of these, at the Commonwealth level, are:

  • Part 9.4AAA of the Corporations Act; 
  • Part IVD of the Taxation Administration Act 1953 (Cth);
  • Part 2 of the PID Act; and
  • Fair Work (Registered Organisations) Amendment Act 2016 (Cth).

Various state and territory legislation also contains protections for whistle-blowers. 

Despite a slowly growing number of successful prosecutions, Australia is still in the relatively early stages of enforcing anti-bribery laws in relation to foreign public officials. Enforcement of domestic bribery offences is more established and has been steady.

Australia does not have a single bribery and corruption enforcement agency. Instead, Australia has adopted a multi-agency approach to combating corruption.  Australia’s main criminal law enforcement agencies, at the Commonwealth level, in bribery cases are the Australian Federal Police (AFP) and the Office of the Commonwealth Director of Public Prosecutions (CDPP). State-based investigations are generally conducted by the fraud squad of the particular state police department, with prosecutions being undertaken by State Directors of Public Prosecution.

While allegations of corruption in contravention of Commonwealth law will generally be referred to the AFP, other agencies that may become involved in investigation processes include: the Australian Securities and Investments Commission (ASIC); the Australian Commission for Law Enforcement Integrity (ACLEI); the Australian Criminal Intelligence Commission; the Inspector-General of Intelligence and Security; and the Office of the Commonwealth Ombudsman. The CDPP is largely responsible for prosecuting offenders under the anti-bribery provisions of the Criminal Code.

In 2013, the AFP established the Fraud and Anti-Corruption (FAC) business area, which has enhanced the AFP's response to, among other things, serious and complex fraud against the Commonwealth, corruption involving Australian government employees and foreign bribery. The FAC business area brings together multiple Commonwealth agencies, including the AFP, ASIC and the Australian Taxation Office (ATO). The AFP also established an internal Foreign Bribery Panel of Experts made up of senior investigators with experience in foreign bribery investigations.

In recent years, ASIC has taken a far more active interest in potential Corporations Act contraventions by directors and officers involved in foreign bribery investigations.

The ATO, as the Australian government's principal revenue collection agency, also refers information on suspected or actual bribe transactions to the AFP for potential investigation and/or prosecution and has established guidelines which require tax auditors to report any suspected foreign bribery.

In addition, there are a number of independent commissions at both the federal and the state level whose role it is to investigate possible corruption of public officials (including politicians) and police. At a federal level, the ACLEI is an independent body whose primary role is to investigate law enforcement-related corruption issues, giving priority to serious and systemic corruption. However, there is still no broad-based federal anti-corruption commission in Australia. Each state also has independent commissions which investigate possible corruption of public officials and police at a state level (for example, the Independent Commission Against Corruption in New South Wales – NSW ICAC). While these bodies cannot charge individuals or corporations with offences, they have wide-ranging investigative powers conferred by statute. Reports following an investigation can be given to the police for further investigation, to parliament, or released publicly.

If an investigating body (such as ASIC or the AFP) completes an investigation into a Commonwealth offence and concludes that there may be grounds to charge someone with a crime, it will refer the case to the relevant Director of Public Prosecutions, who will make an independent assessment on whether to prosecute the case. 

Regulatory and law enforcement agencies have significant information-gathering powers to assist them with their investigations. ASIC, for example, may issue notices compelling a person to produce documents, provide information and/or attend a compulsory hearing or examination to answer questions under oath. 

ASIC and the AFP, and certain other law enforcement agencies, such as NSW ICAC, also have the power to access premises to conduct searches and seize materials, usually after obtaining a search warrant. For some serious offences, law enforcement bodies will also have access to more intrusive covert powers, such as telephone intercepts. 

ASIC's powers may only be used for the performance of its functions, to ensure compliance with the corporations' legislation, in relation to an alleged or suspected contravention of the law, or for the purpose of a formal investigation. Failure to comply with a written notice, or to attend an examination, without reasonable excuse, is an offence for which penalties may be imposed. In practice, demands for documents are often broadly defined, and it is common practice for recipients of such notices to engage with ASIC to negotiate the scope of those demands before responding. 

Unlike ASIC, the AFP does not have the power to compel individuals to answer questions under oath.

Search warrant powers, however, are available to the AFP, ASIC and many other authorities, upon application to a magistrate, provided the relevant authority is able to establish that there are “reasonable grounds for suspecting” that there is or shortly will be relevant evidentiary material at the premises. 

Australian enforcement agencies are increasingly collaborating, and conducting parallel investigations, with other overseas law enforcement agencies. If relevant evidence is located in a foreign country, Australian enforcement agencies may, through the AGD, seek the assistance of the relevant overseas enforcement agency to serve various documents, obtain evidence (including the production of documents and taking evidence by video link), and execute search and seizures. Australia's mutual assistance system is governed by the Mutual Assistance in Criminal Matters Act 1987 (Cth) (Mutual Assistance Act). 

In addition to the above, if criminal proceedings are instituted, courts have their usual powers to issue subpoenas or summonses at the request of the prosecutor, compelling a person to give evidence prior to or at trial.

Unlike in the UK and the USA, Australian enforcement agencies have fairly limited discretion for mitigation in enforcing their powers. This is largely due to the fact that there is not, as yet, any equivalent deferred prosecution or non-prosecution agreement regime in Australia.

Mitigating Factors

As a general rule, an offender who discloses that they have engaged in criminal conduct will still be prosecuted subject to there being a prima facie case, reasonable prospects of conviction and that it is in the public interest to prosecute. Nonetheless, the accused can expect to receive a significantly moderated sentence because pleading guilty, providing assistance to law enforcement agencies and showing contrition or remorse (including by making reparation for any injury, loss or damage caused by their conduct) are all mitigating factors which a court must take into account in the sentencing process.

Various legal mechanisms can be found in published prosecution policies (such as the Prosecution Policy), guidelines and conventions, as well as statutes, which can apply to persons who voluntarily disclose their criminal conduct. These include the granting of immunity from prosecution in extraordinary circumstances, or the investigating authority accepting an induced witness statement which cannot be used against the deponent.

Self-Reporting

While self-reporting of foreign bribery to the AFP is encouraged, there are still no real incentives to do so. In 2017, the CDPP and the AFP jointly developed a Best Practice Guideline on Self-Reporting of Foreign Bribery and Related Offending by Corporations, in an effort to incentivise companies to self-report.  This guideline identifies public interest factors the CDPP will take into account when deciding whether or not to prosecute a self-reporting corporation, or how the self-report will be taken into account in any future prosecution. This policy does not, however, offer much certainty or comfort for those who may be considering self-reporting.

The formal decision as to whether or not relevant charges should be laid, whether against individuals or a company, will be made by the CDPP (or its state/territory counterparts where relevant) in accordance with its relevant prosecution policy, often following a referral by an Australian enforcement agency.

Sentencing

Prosecution policies and guidelines provide a foundation for the prosecution and the defendant to negotiate what charges should be proceeded with. However, agreements on sentence are not enforceable or binding upon a sentencing court, which ultimately has the discretion to determine the appropriate sentence. This places a significant constraint on a defendant's ability to plea-bargain. In Barbaro v the Queen (2014) 253 CLR 58, the High Court confirmed that the prosecution is not required, and should not be permitted, to proffer even a sentencing range to a sentencing judge. Charge bargaining, on the other hand, is common.

There are currently no legal mechanisms for a pre-trial diversion process or a deferred prosecution in Australia. If the Corporate Crime Bill is passed, it will make deferred prosecution agreements (DPAs) available for certain serious corporate crimes, including foreign bribery, and will no doubt incentivise more companies to self-report. For further details about the proposed amendments, see 6.2 Likely Future Changes to the Applicable Legislation or the Enforcement Body.

The AFP's decision to investigate potential offences under the Criminal Code or ASIC's decision to investigate potential breaches of directors' duties under the Corporations Act will be guided by, among other things, whether or not they can establish sufficient jurisdictional nexus based on the requirements referred to in 1.3.2 Geographical Reach of Applicable Legislation

In circumstances where offences such as foreign bribery typically involve conduct occurring overseas, evidence of which must be properly obtained to support a prosecution, Australian enforcement agencies will usually seek mutual assistance from overseas authorities under the Mutual Assistance Act, as outlined in 5.3 Process of Application for Documents

According to the OECD's Phase 4 Report on Australia (discussed further below), the AFP had 19 foreign bribery investigations underway as at October 2017.  To date, only a handful of foreign bribery prosecutions have been commenced in Australia, most of which have been prosecutions of individuals, rather than companies. Associated false accounting charges have also frequently been brought in parallel to the bribery prosecutions against individuals who sought to disguise or conceal the true nature of the bribes. 

Notable Australian enforcement actions in the anti-bribery and corruption space include the following: 

  • In 2011, in what were the first foreign bribery prosecutions in Australia, the AFP charged Securency International Pty Limited (Securency), Note Printing Australia Limited (NPA) and several of the companies’ former senior managers with offences of conspiracy to commit foreign bribery and false accounting offences connected with that conduct. The cases arose from allegations by a company insider that Securency had paid nearly AUD50 million to international sales agents to bribe central banking officials in Malaysia, Indonesia and Vietnam in order to secure banknote supply contracts. A series of hearings was run from 2011 to 2018, following which:
    1. each of the companies pleaded guilty to three charges of conspiracy to commit foreign bribery, the companies were fined AUD480,000 and AUD450,000 respectively, and they were separately the subject of pecuniary penalty orders under POCA in the amount of approximately AUD22 million;
    2. convictions were obtained against various former employees of Securency, including the former CEO, former CFO, the Indonesian sales agent, a former senior business development manager, and a former banknote specialist of Securency; and
    3. charges against four other individuals were permanently stayed on the grounds that their continued prosecution would bring the administration of justice into disrepute. Relevantly, the investigation against these individuals has been tainted by unlawful compulsory examinations, to the prejudice of the accused: see Strickland v Commonwealth Director of Public Prosecutions (2018) 361 ALR 23.
  • In 2015, the AFP charged two directors of an Australian construction company, Lifese, and a third individual, with conspiracy to bribe a foreign public official in connection with building contracts in Iraq. The three men pleaded guilty and were sentenced in September 2017, although the sentences were reduced on appeal in 2018. The directors were each ultimately sentenced to just over three years' imprisonment and fined AUD250,000, while the third man was sentenced to four years’ imprisonment: see R v Jousif; R v I Elomar; R v M Elomar (2017) 325 FLR 108; and Elomar v R (2018) NSWCCA 224.
  • ASIC successfully pursued a number of former officers and directors of AWB Ltd, Australia's largest wheat exporter (at the time), for their failure to exercise reasonable care and diligence in relation to AWB Ltd's involvement in a scheme between 1999 and 2003 by which AWB Ltd rorted the UN's Oil-for-Food Program in Iraq. Civil penalties and disqualification orders were imposed on, among others, the board's former chair and the former managing director on the basis that they had failed to make enquiries into the lawfulness of the scheme, despite the existence of certain red flags, and had thereby breached their duties to the company: ASIC v Flugge & Geary (2016) 342 ALR 1; ASIC v Flugge (No 2) 342 ALR 478 and ASIC v Lindberg (2012) 91 ACSR 640.
  • In May 2018, the AFP charged engineering consultancy Sinclair Knight Merz, now known as Jacobs Group Australia, and its former chief executive, with conspiring to bribe foreign officials in the Philippines and Vietnam to secure various infrastructure projects.
  • Disgraced former NSW government minister, Eddie Obeid, has been charged with conspiracy to commit misconduct in public office over his alleged involvement in the issue of a coal mining exploration licence. Obeid was previously found guilty of misconduct in public office in 2016 in relation to his family's business interests in Sydney café leases. His son and another former minister, Ian McDonald, have also been charged. Each has entered a not-guilty plea and the matter is expected to go to trial in 2020.
  • In March 2019, the former chief of staff at NAB, one of Australia's largest banks, Rosemary Rogers, was charged with corruptly receiving benefits as an agent. The charges relate to a scheme by which the executive allegedly approved inflated invoices issued by an events company to the bank, in return for cash, travel and other benefits totalling AUD5.4 million. The head of the events company has also been charged. 
  • Recently, ASIC also brought criminal charges against Peter Gregg, the former director and chief financial officer of Leighton Holdings Ltd (Leighton), for falsifying Leighton's books. The case centred on two payments totalling USD15 million made in 2011 to UAE's Asian Global Projects and Trading FZE, and a backdated agreement to buy and sell steel, executed by Gregg on behalf of Leighton. The Crown alleged that the agreement was not genuine, and was only signed in order to legitimise the payments in question. Gregg was found guilty of two counts of contravening section 1307(1) of the Corporations Act and was sentenced to terms of imprisonment of 12 months and two years respectively, to be served concurrently and by way of an intensive correction order. An appeal hearing is scheduled for 2020.

Although there has been a steady increase in the level of enforcement action against bribery and corruption offences in recent years, in particular foreign bribery, there is still some way to go. Bolstering the resources and abilities of the dedicated fraud and anti-corruption teams within AFP will assist, as will the reforms proposed by the Corporate Crime Bill. 

Due to the fact that Australia is a party to the OECD Anti-Bribery Convention, the adequacy and enforcement of Australia's anti-bribery legislation is subject to ongoing evaluation.

The OECD Working Group on Bribery published its Phase 4 Report for Australia in December 2017. The Working Group identified several achievements and positive developments, noting that Australia had stepped up its enforcement on foreign bribery since 2012 (when the Working Group had been critical of Australia's poor enforcement record). This improvement included reforms passed in 2015 and 2016 (as mentioned in 1.1.4 Recent Key Amendments to National Legislation), the establishment of the Fraud and Anti-Corruption Centre, the establishment of the Fintel Alliance (a public-private partnership aimed at combating money laundering, terrorist financing and organised crime), and the engagement of AFP liaison officers globally in foreign bribery investigations. 

The OECD Working Group also made a number of recommendations. Key recommendations included ensuring that the AFP and CDPP have adequate resources to effectively enforce the foreign bribery offence, proactively pursuing criminal charges against companies for foreign bribery and related offences and encouraging companies to develop and adopt adequate internal controls and compliance programmes. Australia's response to the Phase 4 Report is due to be submitted to the OECD in December 2019.

In March 2018, the Senate Economics References Committee released its report regarding the effectiveness of Australia's legislation governing foreign bribery. The report highlighted that, despite Australia's framework of laws and policies designed to criminalise foreign bribery, the country's poor enforcement record suggested that foreign bribery offences were not being adequately enforced. Factors contributing to this lack of enforcement included the complex nature of the cases, a lack of sufficient expertise, delays in investigative procedures, a lack of co-operation between companies and the authorities, and limited resources. The committee made several recommendations to improve the enforcement record, including increasing one-off funding to agencies for the large and complex investigation of foreign bribery offences, and to introduce a "failure to prevent" bribery offence and a DPA regime. 

Australia's anti-bribery legislation was also assessed by the Royal Commission into Trade Union Governance and Corruption which delivered its final report on 28 December 2015, as well as by the Western Australia Corruption and Crime Commission's inquiry into information technology companies' contracts with the Department of Health.

The Corporate Crime Bill proposes to significantly expand the scope of the foreign bribery offence, introduce a new corporate offence of failing to prevent foreign bribery, and to introduce a DPA scheme. The substance of the bill has been the subject of discussion since 2017, when a similar version of the bill was first introduced into parliament for consideration, but later lapsed. 

The bill proposes to amend the foreign bribery offence by: 

  • extending the definition of foreign public official to include a candidate for office;
  • removing the requirement that the foreign official must be influenced in the exercise of their duties;
  • removing the requirement that a benefit and business advantage must be "not legitimately due" and replacing it with the concept of "improperly influencing" a foreign public official; and 
  • extending the offence to cover bribery to obtain a personal advantage. 

As outlined in 1.2Classification and Constituent Elements, a new offence is also proposed to be included in Division 70 (to apply prospectively) which targets the failure of a company to prevent foreign bribery by an associate. 

Significantly, the Corporate Crime Bill proposes to introduce Australia's first-ever DPA scheme. The purpose of the proposed scheme is to develop an effective response to corporate crime by encouraging greater self-reporting by companies and to enhance the accountability of Australian business for serious corporate crime. The basis of the scheme is reparation, remediation, financial penalties and implementation of effective compliance programmes, and it is modelled on the equivalent scheme in the UK. 

The key features of the proposed DPA scheme are as follows:

  • the CDPP can invite a company (but not an individual) that has engaged in serious corporate crime, including foreign bribery, to negotiate a DPA and comply with a range of specified conditions;
  • if the company fulfils its obligations, it will not subsequently be prosecuted in relation to the offences specified in the DPA;
  • the DPA must, among other things, contain a statement of facts relating to each offence specified in the DPA, and specify the amount of any financial penalty to be paid to the Commonwealth and other requirements to be fulfilled by the company; 
  • the financial penalty must be of an appropriate severity having regard to all the circumstances; and
  • the DPA will be approved by a former judicial officer.

The Corporate Crime Bill also proposes to introduce a solely objective test for dishonesty offences under the Criminal Code, namely, "dishonest according to the standards of ordinary people". The current requirement that the defendant knew their conduct to be dishonest would be removed.

In parallel, the Australian Law Reform Commission (ALRC) is in the early stages of exploring broader reforms to Australia's corporate criminal attribution regime.  Its discussion paper released in November 2019 explores the potential for: automatic attribution of criminal responsibility to a corporation for the conduct of its associates (subject to a defence of due diligence); the introduction of penalties for individuals who were in a position to influence corporate misconduct unless they can prove they took reasonable measures to prevent the misconduct; and the imposition of a positive obligation on corporations to exercise due diligence to avoid the commission of crimes offshore. The ALRC is seeking submissions on its discussion paper by 30 January 2020.

On the domestic corruption front, the National Integrity Commission Bill 2019, which is currently before parliament, proposes to establish an Australian National Integrity Commission as an independent public sector anti-corruption commission for the Commonwealth. The stated objective is to create a nationally co-ordinated integrity framework, with an emphasis on prevention and strong investigative powers to enable criminal charges to be laid in response to corruption. However, the model so far proposed by the government has been heavily criticised as lacking teeth.

Clayton Utz

1 Bligh Street
Sydney NSW 2000
Australia

+61 2 9353 4000

+61 2 8220 6700

tmeagher@claytonutz.com www.claytonutz.com
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Law and Practice

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Clayton Utz is a leading, independent full-service Australian law firm. Its commercial litigation team has 150 litigators operating across Sydney, Perth, Melbourne, Brisbane, Canberra and Darwin. The firm's anti-bribery and corruption and investigations specialists advise multinational and Australian companies on corporate fraud, bribery, corruption, facilitation payments, public and private corruption, antitrust, money laundering, and privileges and immunities. The team is experienced in assessing risk and exposure under domestic and international anti-corruption laws, including Australia's Criminal Code, the US Foreign Corrupt Practices Act, and the UK Bribery Act. It assists clients with investigations and remediation, advises on managing various collateral issues, including whistle-blower provisions, media management, defamation and reputational issues, ASX disclosure rules, directors' reputations and the risk of shareholder litigation. The firm's experience includes advising on Australian Federal Police investigations into alleged bribery of foreign officials, and related Australian Securities and Investments Commission investigations, and being retained in relation to US investigations into alleged breaches of the US Foreign Corrupt Practices Act within Australia, by subsidiaries.

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