Second time lucky? The re-introduction of anti-bribery reforms.
The most significant changes to Australia’s foreign bribery offence since its introduction
On 2 December 2019, the Government introduced the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 to the Senate for a second time. Introduced for the first time in December 2017. The Bill lapsed when the government was dissolved in advance of the 2019 election.
The Bill includes a new absolute liability offence of “failure to prevent” bribery and a deferred prosecution agreement (DPA) scheme in Australia. The Government has also released draft guidance to accompany the Bill and provide guidelines on what anti-bribery policies Australian corporates should implement to comply with the proposed legislation.
If the Bill is successful, its implementation will reshape Australia’s bribery framework and ensure it is on par with those in both the UK and the United States. The Bill represents the latest commitment by the Government to address Australia’s obligations under the OECD Foreign Bribery Convention, and make it easier for Australian prosecutors to prosecute foreign bribery.
Set up for success
The introduction of the Bill and the publication of the draft guidance comes at a time of increased regulatory scrutiny of corporates, the introduction of additional whistleblower protections from January 2020 and a new proposal by the Australian Law Reform Commission, under which senior managers may be subject to civil penalties for failing to stop crimes committed by corporations.
The accountability bar is rising, for many years we have seen US regulators pursue companies not for a substantive bribery offence but for falsely recording the payment in their books and records. Australia introduced a similar law in 2016 and together with these proposed amendments it is definitely time for Boards and management to re-visit their anti-bribery programs if they want to avoid becoming the next headline.
With new funding to prosecute corporate crime available to the Australian Federal Police (‘AFP’) and Commonwealth Director of Public Prosecutions (‘CDPP’), the time is ripe for corporations to get their compliance policies in order and ensure they have adequate procedures in place to prevent bribery.
What does this mean for Australian companies?
The government has shared detailed guidelines on what constitutes “adequate procedures”. They align to those issued under the UK Bribery Act 2010 that include that procedures should be proportionate to the corporation’s level of foreign bribery risk, its size and the nature of its activities. The guidelines set out six essential elements of bribery prevention, including risk assessments, management dedication, due diligence, communication and training, confidential reporting and investigation, and monitoring and review of compliance systems.
Lessons learned from the introduction of the UK Bribery Act suggests that the Bill is likely to increase the number of corruption investigations and the likelihood of corporates of being prosecuted or entering a DPA. The reputational and financial impact for a violation of the proposed new foreign bribery offence is significant with a maximum penalty of $21 million, 10 percent of annual turnover, or three times the benefit gained – whichever is greatest. Accordingly, corporates should review their anti-bribery policies and ensure they have adequate procedures in place to detect and prevent bribery, particularly if operating in high risk jurisdictions.
With new funding to prosecute corporate crime available to the AFP and CDPP, the time is ripe for corporations to get their compliance policies in order and ensure they have adequate procedures in place to prevent bribery.
Doing nothing is not a defence.