Combatting Foreign Bribery Risk: Australian Parliament Takes Steps To Combat Foreign Bribery

On 29 February 2024, the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 was passed through Parliament and the Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2024 (Act) comes into effect in September 2024. This Act was introduced after two previously unsuccessful attempts by the Australian Parliament to pass similar anti-foreign bribery legislation.

The Act aims to simplify the existing foreign bribery framework and to introduce a new offence, with significant penalties, applicable to corporations that fail to prevent the commission of foreign bribery. Companies can be found liable if they do not have “adequate procedures” in place to address and mitigate foreign bribery.

The offences under the Code also have extra-territorial effect and apply to conduct in Australia and outside of Australia, where the offence is committed by an Australian resident or by a corporation incorporated under Australian law.

The Act comes as a timely reminder to companies to review their internal policies, guidelines, and systems, to ensure they have “adequate procedures” in place to prevent breaches of foreign bribery offences and avoid the hefty penalties.

Background

As a member of the Organisation for Economic Development’s Convention on Combating Bribery of Foreign Public Official (Convention), Australia has experienced considerable pressure to strengthen laws and criminalise the bribery of foreign officials.

The offence of ‘foreign bribery’ was first introduced into the Criminal Code 1995 (Cth) (Code) in 1999. This offence, however, has been criticised for being overly prescriptive and difficult to rely on. The failures of this offence is evident by the low number of foreign bribery prosecutions in Australia.

To better address the crime of foreign bribery, parliament attempted to amend the Code in 2017 and 2019, but both bills lapsed before they could be passed.

Finally, in 2024, the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 passed and the Act came into effect. The amendments to the Code through the Act strengthens the anti-foreign bribery framework to meet the requirements under the Convention.

Effects of the Act

The Act simplifies the existing offence of “foreign bribery” in the Code by dispensing with the previous requirement that there be a bribe gained where the benefit was not “legitimately due”, and instead making the offence acting “with intention of improperly influencing a foreign public official”, thus lowering the threshold for what qualifies as an offence. 

Importantly, the Act also introduces a “failure to prevent offence” designed to:

• overcome the existing challenges in establishing liability with companies; and
• incentivise businesses to implement and maintain adequate procedures to prevent foreign bribery from occurring.

Amended Offence under the Code 

Section 70.2 of the Code provides the amended offence to foreign bribery. Under this section, a person is guilty of an offence under the Code if the person intentionally:

• provides, offers or promises a benefit to another person; or
• causes a benefit to be provided, offered or promised to another person,

• where the person must have acted with intention of improperly influencing a foreign public official in order to obtain or retain business or personal advantage (whether or not for the person).

A “foreign public official” is defined in section 70.1 of the Code to include:

• an employee or official of a foreign government body; or
• an individual who performs work for a foreign government body under a contract; or
• an individual who holds or performs the duties of an appointment, office or position under a law of a foreign country or of part of a foreign country

The Code will also provide further guidance in section 70.2A on what “matters may be given regard to” when considering where a person has acted with the intention of “improperly influencing”. These include:

• the recipient or intended recipient of the benefit;
• the nature of the benefit;
• the manner of the provision of the benefit;
• whether the value of the benefit is disproportionate to the value of any consideration;
• if the benefit was provided in the absence of an legal obligation to do so; and
• whether the benefit was provided dishonestly.

Under Division 12 of the Code, corporations may also be liable for Commonwealth offences. A corporation will be found to have contravened the Code where, for example, corporation’s top-level management or board of directors intentionally, knowingly, or recklessly, committed foreign bribery.

“Failure to Prevent” Offence

Offence

The Act also introduces a new offence for “failure to prevent” foreign bribery. This offence will be section 70.5A in the Code and will hold companies responsible where an “associate” of a corporation has:

• facilitated bribery; and
• the corporation does not have an adequate procedure in place to prevent the commission of bribery.

The term “associate” is defined in section 70.1 of the Act and means a person or entity who:

• is an officer, employee, agent or contractor of the other person;
• is a subsidiary (within the meaning of the Corporations Act 2001 (Cth) (Corporations Act) of the other person;
• is controlled (within the meaning of the Corporations Act) by the other person; or
• otherwise performs services for or on behalf of the other person.

As an absolute liability offence, the corporation does not need to have been involved with, or have authorised, the bribery by an associate to be held liable. Rather, it will hold companies accountable where they have inadequate procedures in place.

Defence

A corporation may have a statutory defence where they can prove they had “adequate procedures” in place to preventing the commission.

It is not yet clear what “adequate procedures” look like.  The Attorney-General has indicated that guidance materials on what the “adequate procedures” are to comprise will be published before the new offence comes into effect in September.

We note, however, that the Attorney-General guidance will only be a guide and what is deemed “adequate procedures” will be considered by the courts based on the merits of each case.

Penalties

Section 70.2 of the Code prescribes the penalties for the foreign bribery offences.  For an individual, the penalty is:

• a maximum of 10 years imprisonment; or
• a maximum fine of 10,000 penalty units; or
• both.

For a corporation, the maximum penalty is whatever greater of the following:

• 100,000 penalty units;
• if the value of the benefit can be determined – three times the value of the benefit obtained; or
• if the value of the benefit cannot be determined – 10% of the company’s annual turnover.

Lavan Comment

Corporations and individuals should ensure they have a sound understanding of the new offence and what “adequate procedures” might entail to mitigate risks of contravention and avoid the corresponding significant penalties.

“Adequate procedures”, as a starting point, is likely to include:

• the strengthening of a company’s internal policies, guidelines and practices in relation to foreign bribery;
• ongoing reviews of the policies, guidelines and practices;
• the training of associates to ensure they are aware of the policies and procedures; and
• ensuring response plans are in place in case of any contravention of these new offences.

If you require guidance on the Act and your obligations to mitigate foreign bribery, please contact Cinzia Donald, Partner, and Head of the Corporate Crime & Investigations Team at Lavan.