Anti-Corruption 2021

Last Updated December 08, 2020

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, and 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 team's experience includes advising on Australian Federal Police investigations into alleged bribery of foreign officials; being retained in relation to US investigations into alleged breaches of the US Foreign Corrupt Practices Act within Australia, by subsidiaries; and acting for a British multinational whose employees allegedly conspired to defraud tax authorities.

Australia ratified the Organisation for Economic Co-operation and Development (OECD) 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 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) and the Proceeds of Crime Act 2002 (Cth).

All of Australia's six states and two territories have 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, they generally make it 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 to or by any person in public office in order to influence that person's behaviour in that office. 

Unlike the United States and the United Kingdom, 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, relevant laws, and their application. 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 published material online to provide general guidance to businesses operating overseas, including practical guidance on implementing an anti-bribery and corruption compliance programme, and proportionate anti-bribery procedures. The Australian Tax Office (ATO) has also published guidelines on 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, the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (Cth) (Corporate Crime Bill) was re-introduced to parliament by the Australian government on 2 December 2019, following the lapsing of an earlier bill in July 2019.

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 are often easier to prove than 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 prohibiting private sector bribery. 

Foreign Bribery

The foreign bribery offence is contained 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 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, those 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 is considered "corrupt" only if it is 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:
    1. 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; or
    2. if it 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. 
  • Corresponding offences of giving or offering such benefits to an agent are imposed by Section 249B(2). 
  • Section 249D prohibits a person from corruptly giving (or receiving) a benefit to (or from) another person by providing secret advice to a third party, with the intention of influencing the third party to either:
    1. enter into a contract with the person giving the benefit; or 
    2. appoint the person giving the benefit to any office.

The definition of "agent" is wide and includes employees, while “benefit” includes money and any contingent benefit.

Failure to Prevent Bribery

Failure to prevent bribery is not currently an offence in Australia. However, it is proposed in the Corporate Crime Bill, modelled on Section 7 of the UK Bribery Act 2010. If that Bill is 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 the 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 improperly influencing a public official.

In Australia there is close scrutiny of the provision of gifts, entertainment and 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.

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

The new false accounting offences mentioned in 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 dealing with accounting documents.

Section 286 the Corporations Act 2001 (Cth) (Corporations Act) also puts an obligation on companies to keep written financial records for seven years that correctly record and explain its transactions and financial position and performance. 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 have 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.

Domestic public officials also commit an offence by engaging in corrupt practices. For example, as referred to in 2.1 Bribery, 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 conduct is dealt with under provisions relating to fraud, theft or other property offences.

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 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. That is because under the Crimes Act 1914 (Cth) (Crimes Act), there is no limitations 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 AUD33,300.

The Criminal Code offences referred to in 2.1 Bribery, 2.3 Financial Record-Keeping and 2.4 Public Officials have broad extraterritorial 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 the 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 (a) wholly or partly in the state; or (b) 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 extraterritorial 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 his or her 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 proposed 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 offences referred to in 2.1 Bribery, 2.3 Financial Record-Keeping and 2.4 Public Officials

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 Australian Federal Police's (AFP) guidance on self-reporting in 7.4 Discretion for Mitigation.

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

  • for an individual:
    1. 10 years' imprisonment; or
    2. a fine of AUD2.22 million, or both; or
  • for a company, a fine being the greatest of:
    1. AUD22.2 million; 
    2. three times the value of any benefit that can be reasonably 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 of half that of those offences.

In addition to criminal penalties, any benefits obtained from foreign bribery may be forfeited to the Australian government under the Proceeds of Crime Act 2002 (Cth) (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 of the NSW Crimes Act 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 the corporate criminal responsibility provisions are structured encourages companies to have sound compliance programmes. This 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

"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, to 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 has an appropriate risk management framework in place, including to manage bribery risk.

Corporate Crime Bill

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 as currently drafted, 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. 

Adequate procedures guidance

The Australian government has developed a principles-based draft adequate procedures guidance. Public submissions on this draft were received in February 2020. It draws upon existing guidance published by various entities and government bodies, including the Australian Trade Commission, US Department of Justice, and the OECD. The draft guidance clarifies that:

  • all companies (regardless of size) require effective and proportionate procedures to prevent bribery, tailored to a corporation's circumstances; and
  • (indicators of an effective compliance programme include a robust culture of integrity, a clear pro-compliance tone from the top, a strong anti-bribery compliance function, effective risk assessment and due diligence procedures, and careful and proper use of contractors and other parties.

The draft guidance, which is broadly consistent with the UK guidance, suggests that companies adopt the following fundamental elements in prevention policies:

  • risk assessment;
  • management dedication;
  • due diligence;
  • communication and training;
  • confidential reporting and investigation; and
  • monitoring and review.       

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.

Protection under the Corporations Act

The new regime, contained 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 in relation to 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 AUD11.1 million, three times the benefit derived from the contravention, or 10% of annual turnover (up to a maximum of AUD555 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.

Protection under the Public Interest Disclosure Act

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 any reprisals. There is equivalent legislation covering public servants in each state and territory.

Protection under the Fair Work (Registered Organisations) Amendment Act

There are also specific protections against 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 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).

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 one single bribery and corruption enforcement agency. Instead, the country has adopted a multi-agency approach to combating corruption. At the Commonwealth level, Australia’s main criminal law enforcement agencies in bribery cases are the AFP and the Commonwealth Director of Public Prosecutions (CDPP). State-based investigations are generally conducted by the fraud squad of the particular state police department, with the state directors of public prosecutions conducting prosecutions.

While allegations of corruption 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;
  • 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 ATO. The AFP also established an internal Foreign Bribery Panel of Experts, comprised 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 Commonwealth'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 state level which investigate possible corruption of public officials (including politicians) and the police. At a federal level, the Australian Commission for Law Enforcement Integrity is an independent body whose primary role is to investigate law enforcement-related corruption issues, giving priority to serious and systemic corruption. Each state also has independent commissions which investigate possible corruption of public officials and police at a state level (eg, the Independent Commission Against Corruption in New South Wales (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. 

Powers of Regulatory and Law Enforcement Agencies

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.

ASIC and the AFP, and certain other law enforcement agencies (such as 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, including telephone intercepts.

ASIC's powers may only be used for the performance of its functions or 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 cause, 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.

However, search warrant powers 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.

Collaboration with Overseas Law Enforcement Agencies

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 Attorney-General, 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) (MA Act). 

Subpoenas

In addition to the above, if criminal proceedings are instituted, courts still have their ordinary 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.

Relevant 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 the offender's 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. This includes 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 of Foreign Bribery

While the AFP encourages self-reporting of foreign bribery, 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. However, this policy does not offer much certainty or comfort for those who may be considering self-reporting.

Prosecution Policies and Guidelines

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

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.

Pre-trial Diversion Process

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 (DPA) 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 8.2 Likely Future Changes to the Applicable Legislation of 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 a sufficient jurisdictional nexus based on the requirements referred to in 3.2 Geographical Reach of Applicable Legislation.

In circumstances where an offence such as foreign bribery typically involves conduct occurring overseas, evidence of which must be properly obtained to support a prosecution, Australian enforcement agencies may seek mutual assistance from overseas authorities under the MA Act, as outlined in 7.3 Process of Application for Documentation.

According to the OECD's Phase 4 Two-Year Follow-Up Report on Australia (discussed in 8.1 Assessment of the Applicable Enforced Legislation), the AFP had eight foreign bribery investigations underway as at December 2019, a significant decline from the 19 recorded in December 2017. The majority of the prosecutions commenced in Australia under foreign anti-bribery laws and have been prosecutions of individuals, rather than companies. It is expected that this trend will continue. Frequently, associated false accounting charges have been brought in parallel to the bribery prosecutions, against individuals who sought to disguise or conceal the true nature of the bribes. 

While it is difficult to obtain reliable data on the ongoing bribery and corruption investigations in Australia, the most 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 the offences of bribery of foreign public officials, 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, were fined AUD480,000 and AUD450,000 respectively, and were separately the subject of pecuniary penalty orders under POCA in the amount of AUD22m;
    2. convictions were obtained against various 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 examination, to the prejudice of the accused (see Strickland v Commonwealth Director of Public Prosecutions 93 ALJR 1).
  • 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).
  • In a series of cases running between 2012 and 2017, ASIC successfully prosecuted a number of officers and directors of AWB Ltd, Australia's largest wheat exporter (at the time), for their involvement in a scheme between 1999 and 2003 by which AWB Ltd rorted the UN's Oil-for-Food Programme in Iraq. Civil penalties and disqualification orders were imposed on the board's chair and the 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) (2017) 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, its former chief executive and other individuals, with conspiring to bribe foreign officials in the Philippines (between 2000 and mid-2005) and Vietnam (between 2006 and 2011) to secure various infrastructure projects.
  • 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. The trial is currently in progress, and is expected to run until early 2021.
  • Recently, ASIC 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 to UAE's Asian Global Projects and Trading FZE in 2011, 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. On 30 September 2020, the guilty verdicts were quashed on appeal, and Gregg was acquitted on each count.
  • In August 2020, Mozammil Bhojani, the director of Radiance International, pleaded guilty and was convicted for conspiring to bribe two Nauru government officials between January 2015 and 2018 with more than AUD100,000 in kickbacks. The bribes were in exchange for favourable phosphate shipments. Bhojani was sentenced to an intensive correction order for two-and-a-half years of intensive correction in the community and 400 hours of community work.
  • In July 2020, the AFP charged Melbourne man Dennis Teen, for bribing Malaysian government officials by paying AUD4.75 million for the sale of a student accommodation block to a Malaysian government-owned entity in 2013. It was alleged that the bribes were paid to the officials in return for arranging the purchase of the property at an inflated rate. In September 2020, the AFP subsequently restrained property worth AUD1.6 million held by the accused, the accused's wife and their associated companies.
  • The NSW ICAC is currently holding a public inquiry into allegations that the then-NSW member of parliament for Wagga Wagga, Daryl Maguire, misused his public position for financial gain. It is alleged he and a business colleague earned kickbacks by falsely employing Chinese nationals so they could obtain a visa.

Although there has been a steady increase in the level of enforcement action for 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 the AFP will assist, as will the reforms proposed by the Corporate Crime Bill.

As 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.

OECD Working Group

2017 Report

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 1.4 Recent Key Amendments to National Legislation), the establishment of the FAC, 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. 

2019 Report

In the OECD's two-year follow-up report in December 2019, Australia was commended for its implementation of a number of the Phase 4 Report recommendations, most notably its detection of foreign bribery, aided by its enhanced protections for private sector whistle-blowers. However, there was continued concern about Australia's low level of foreign bribery enforcement, given the size of Australia's economy and the high-risk regions and sectors in which Australian companies operate. The OECD raised concerns and doubts about Australia's ability to impose effective, proportionate and dissuasive criminal penalties, noting that the fines in the Securency and NPA case were not proportionate to the estimated bribes paid, nor the value of the contract.

Senate Economics References Committee Report

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 the framework of laws and policies designed to criminalise foreign bribery being in place, Australia'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, lack of sufficient expertise, delays in investigative procedures, 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.

Royal Commission into Trade Union Governance and Corruption Report

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.

Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry Report

More broadly, Australia's enforcement environment has intensified following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the final report of which was delivered on 1 February 2019. Following the commissioner's critique of ASIC's failure to take tougher action against companies and individuals, ASIC announced a stronger enforcement approach and established a new "Office of Enforcement" in July 2019 to lead its enforcement function. In the past year, this has led to a significant increase in the number of enforcement actions being brought by ASIC. ASIC recently advised that there has been a 10% increase in its enforcement investigations generally from January 2019 to January 2020, and a 52% increase in enforcement actions, many involving Australia's pre-eminent financial services companies.

The Corporate Crime Bill was introduced in 2017 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 Bill lapsed on 1 July 2019 as a consequence of the May 2019 federal election, but was re-introduced to parliament in December 2019.

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 2.1 Bribery, 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 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 to 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 Australian Law Reform Commission (ALRC) also recently considered the current corporate criminal responsibility regime in Australia and identified key recommendations to improve the regime in a report published in April 2020. In particular, it recommended standardising attribution of criminal responsibility to corporations and simplifying Part 2.5 of the Criminal Code to make it easier for the prosecution, while still allowing corporations to avoid liability by demonstrating that they took reasonable precautions to prevent misconduct. In relation to foreign bribery liability, the ALRC supported the proposed "failure to prevent" offence in the Corporate Crime Bill, and also recommended that the Commonwealth government introduce a debarment regime along with the states and territories, to prevent companies that have been found guilty of foreign bribery from obtaining contracts. The Australian government is currently considering these recommendations.

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, and 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 team's experience includes advising on Australian Federal Police investigations into alleged bribery of foreign officials; being retained in relation to US investigations into alleged breaches of the US Foreign Corrupt Practices Act within Australia, by subsidiaries; and acting for a British multinational whose employees allegedly conspired to defraud tax authorities.

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