Australia's updated anti-bribery laws – will the bite match the bark?

The Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 (Bill) passed the Senate on 29 February 2024. The Bill will take effect 6 months after it receives Royal Assent, which has not happened yet but is expected imminently (ordinarily within 7-10 business days of being passed by the Senate).

The Bill makes various amendments to Australia’s existing bribery offences, in particular:

• the existing offence for bribing foreign public officials is widened so:
• the advantage sought may be of a personal or business nature; and
• candidates for public office will be treated as foreign public officials;

• a new absolute liability offence for corporates for “ failure to prevent bribery of a foreign public official by an associate” has been created; and
• the definition of an “ associate” will include anyone who performs services on behalf of the company. This is much wider than the existing laws which only provide that a company will be liable for its officers, employees, and agents.

Companies should be aware that, once in effect, the new legislation will make it easier for enforcement agencies to prosecute, and harder for companies to avoid prosecution. It does this by:

• the new corporate offence imposing “absolute liability” on the company. This means that the prosecutor will not need to prove that the company knew what was happening or was reckless about the associate’s conduct;
• expanding a company’s responsibility from its employees and agents to anyone who performs services on its behalf; and
• the new offence being an “indicatable offence” (prosecutions of indictable offences are heard in superior courts and enforcement agencies can seek orders under the Proceeds of Crime Act 2002, including certain types of restraining orders, forfeiture orders and pecuniary penalty orders).

 

Liability for acts by associates

The most significant change is the new offence for failure to prevent bribery of a foreign public official by an associate. This has been modelled off the similar offence contained in the United Kingdom’s Bribery Act 2010.

As foreshadowed above, a person will be considered an associate of a company if, among others:

• they are an officer, employee, agent or contractor of the company; or
• otherwise performs services for or on behalf of the company.

The new offence applies where an associate of a company commits an offence of bribing a foreign public official (as that offence is formulated under the Bill) for the profit or gain of the company. Importantly, a company may be convicted of this offence simply by the associate having committed the offence of bribing a foreign public official. It is not necessary for the associate to have been convicted of the offence (although the prosecutor will still need to prove the elements of the offence where the associate has not been convicted).

The penalties for the new offence are the same as the offence for bribing a foreign public official. This is the greater of:

• 100,000 penalty units (currently equal to AUD31.3 milion);
• if the court can determine the value of the benefit has been directly or indirectly obtained from the conduct, 3 times that value; or
• if the value cannot be determined, 10% of the annual turnover of the company for the 12 months ending at the end of the month in which the offence occurred.

A company will have a defence to the offence if it can prove it had adequate procedures in place designed to prevent:

• the commission of an offence by any associate of bribing a foreign public official; and
• any associate engaging in conduct outside Australia that, if engaged in in Australia, would constitute an offence of bribing a foreign public official.

The determination of what will be adequate will be critical for this defence. The explanatory materials state the adequacy of the steps taken by a company will be assessed on a case-by-case basis. The Bill requires the Minister to publish guidance about what steps a company can take to prevent an associate from bribing a foreign public official. Until that guidance is published, companies can look to the guidance published in the UK in relation to the Bribery Act 2010 (UK).

 

Deferred Prosecution Agreements

As compared to previous failed attempts to amend Australia’s bribery laws, the Bill does not include an ability for self-reporting entities to negotiate a deferred prosecution agreement (DPA) with enforcement agencies. The use of DPAs is seen as being an important tool to incentivise self-reporting and were supported by numerous organisations that gave public comment on the draft legislation.

The Bill does not go as far as the Bribery Act 2010 (UK) in this regard. However, the Bill does include a provision requiring the Minister to review the operation of the amendments made by the Bill as soon as practicable after 18 months of receiving Royal Assent. This provision was added in response to calls to include a DPA regime and, while not expressly stated, is intended to look at the need for a DPA regime.

Inevitably, this 18-month period will likely pass by before any meaningful data has been collected that would support making amendments to include DPA regime. It remains to be seen if a DPA regime will be established.

 

What you should do

The Bill has not yet received Royal Assent and so the 6-month waiting period has not commenced. In any case, companies, particularly those operating in higher risk jurisdictions, should make use of the lead time to ensure:

1. policies and procedures are interrogated to identify any weaknesses and opportunities for improvement including importantly an assessment of how well implemented within the organisation they are;
2. the appropriateness of policies and procedures for the environment in which the company operates are critically assessed (as best can be determined at this stage);
3. training records and processes are up to date;
4. all “associates” are identified and adequate due diligence is carried on the associates to assess their respective bribery and corruption risk profiles;
5. “associates” who may be considered as being a high risk to the company are actively managed or terminated;
6. appropriate systems are in place for the company to monitor activity by “associates”; and
7. contracts are reviewed for inclusion of the company’s policies and procedures (and any restrictions on their ability to act are clear).

Six months to complete these tasks may only just be enough.

If nothing else, an update about these changes should be on the agenda for the next board meeting.