Advancing foreign bribery reform in Australia

In brief - On 22 June 2023, the Federal Government introduced the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 (Bill) seeking to amend s 70.2 of the Criminal Code Act 1995 (Cth) (Criminal Code) and the Income Tax Assessment Act 1997 (Cth) to strengthen the legal framework for investigating and prosecuting cases of foreign bribery in Australia. 

Failure to prevent bribery of foreign public officials 

The Bill introduces a new offence of failing to prevent foreign bribery. A body corporate will be taken to have committed this offence if: 

• an associate (being an officer, employees, agents, contractors, or a person who performs services) of a body corporate commits bribery of a foreign public official; or 
• engages in conduct outside Australia that would constitute bribery of a foreign official; and 
• does so for the profit or gain of the body corporate. 

Significantly, the offence will apply to attempts to bribe someone running for public office. 

Strict liability is imposed on the body corporate, and the offence can attract penalties of the greater of $27.5 million; three times the value of the benefit obtained by the offence; or 10% annual turnover during the 12 month period ending after the month the offence was committed.

'Adequate procedures' defence 

The only defence available is that the body corporate had 'adequate procedures' designed to prevent bribery of foreign public officials. Such a test is objective and will ultimately fall to the court to determine, on a case by case basis, whether the procedures were in fact adequate. 

The Bill requires that the Attorney General publish guidance on steps that a body corporate can take to prevent an associate from bribing foreign public officials. Such guidance may well be modelled on the UK Serious Fraud Office's 2020 guidance for 'adequate procedures' which accompanies section 7 of the UK Bribery Act 2010 that deals with a commercial organisation's failure to prevent bribery (UK Guidance). 

The UK Guidance sets out the following principles that may form a component of 'adequate procedures': 

• Proportionate procedures - Procedures should be proportionate to the bribery risks that an organisation faces. 

In R v Skansen Interiors Ltd (unreported), Skansen Interiors Ltd (SIL) a small refurbishment company comprised of roughly 30 employees, raised a 'adequate procedures' defence. SIL had won two tenders for office refurbishment from another company, DTZ. Following the tender award, the managing director of SIL paid £10,000 to a project manager at DTZ with a further £29,000 to be paid on completion (with the further payment not paid following intervention by a new CEO of SIL). SIL argued that no specific anti-bribery program was required due to the scale of the business and that the procedures were proportionate for a small company operating in the UK. The prosecution argued that there were no adequate procedures due to a lack of anti-bribery policies and lack of staff training. SIL was ultimately found guilty.

• Top-level commitment - Should include internal and external communication of the commitment and draw to people's attention on a periodic basis. 
• Risk assessment - Conduct a periodic, informed and documented risk assessment of the nature and extent of exposure to potential internal and external risks of bribery. 
• Due diligence - Should adequately inform the application of proportionate measures designed to prevent persons associated with them from engaging in bribery. 
• Communication (including training) - Internal communication of policies, procedures and implications for employees. External communication of statements and codes of conduct. Education and awareness should be continuous, regularly monitored and evaluated.
• Monitoring and review - Procedures should be regularly monitored and reviewed for their effectiveness and adapted where necessary. 

In R v Sweett Group PLC (Unreported, see Sweett Group PLC sentenced and ordered to pay £2.25 million after Bribery Act conviction - Serious Fraud Office (sfo.gov.uk), an employee of Sweett Group's subsidiary, Cyril Sweett International Limited (CSI) was found to have made a bribe to secure a contract with the Al Ain Ahlia Insurance Company for the building of a hotel in Abu Dhabi. Sweett had anti-bribery statements, ethics policies and online training on anti-bribery provided to its employees. However, Sweett Group admitted it did not have adequate procedures in place. A review in 2010 (before the offence occurred) and in 2014 by accountants found that there were failings in CSI's financial controls and made recommendations to management. 

Differences between the proposed Australian approach and the UK approach - Deferred Prosecution Agreement scheme is absent

Disappointingly the Bill does not propose to include a Deferred Prosecution Agreements (DPA) scheme as found in the UK Crime and Courts Act 2013. 

In the UK, a DPA can be entered which allows the prosecution to be suspended for a period of time provided the organisation meets certain specified conditions. The terms of a DPA may include a financial penalty, payment of compensation and cooperation with future prosecutions of individuals. 

Key takeaways if the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 is passed

• Australian corporations of any size must ensure they have adequate procedures in place to prevent foreign bribery of public officials by an associate of the company (including its officers, employees, agents or contractors, or a person performing services on or behalf of the company). 

• The offence is one of strict liability. 

• Companies who trade internationally should immediately take steps to prepare, using the UK guidance as an indicator of what constitutes 'adequate procedures'. 

• Contact Colin Biggers & Paisley for assistance in assessing the adequacy of your companies measures in light of the recent changes, and in the event of any prosecution by authorities.