International foreign bribery developments affecting Australian business

Articles Written by Robert Wyld (Consultant)

Australia signs up to International Foreign Bribery Taskforce

During May 2013, the Australian Federal Police, the United States Federal Bureau of Investigations, the Royal Canadian Mounted Police and the United Kingdom City of London Police Overseas Anti-Corruption Unit all signed a Memorandum of Understanding setting up a new International Foreign Bribery Taskforce (to be known as IFBT).

The IFBT signifies a new relationship between the Australian, United States, Canadian and United Kingdom agencies to combat foreign bribery. The purpose of the taskforce enables the agencies and the countries they represent to work collaboratively to strengthen investigations into foreign bribery offences and to support the relevant OECD and United Nations Anti-Bribery Conventions.

It is expected that the IFBT will:

  • enhance local law enforcement responses to foreign bribery on an international scale;
  • allow police experts in the participating countries to share knowledge, skills, methodologies and case studies;
  • meet annually to discuss trends and challenges in each of their jurisdictions; and
  • share investigative techniques, exchange information and good practice initiatives which can then be applied in international investigations.

The creation of the IFBT goes some way towards addressing the criticisms Australia received from the OECD in the October 2012 Phase 3 Review in relation to compliance with the OECD Anti-Bribery Convention.

Australia considers reforms to anti-money laundering and counter terrorism financing laws

Where improper payments occur involving foreign public officials, there is always a risk that Australia's anti-money laundering and counter terrorism financing laws (AML-CTF laws) may be invoked.

In June 2013, the Government released a discussion paper which looked at possible areas of reform, including:

  • the disclosure of the identity of beneficial owners and controllers in a corporate structure;
  • the identity of trust settlors;
  • the level of due diligence required in high risk jurisdictions and circumstances;
  • understanding a customer's business or occupation; and
  • the extent of record-keeping that is required.

All of these issues impact on the extent to which Australian and overseas regulators require corporations to understand the risk profile in each jurisdiction in which they do business, with who do you do business and to proactively manage those risks. Any contravention of the AML-CTF laws can give rise to significant fines and lengthy terms of imprisonment upon any conviction.

Canada approves enhanced foreign bribery laws

On 18 June 2013, the Canadian Parliament passed amendments to its Corruption of Foreign Public Officials Act.

The changes are important for any Australian business dealing with Canadian corporations or individuals. The important changes include:

  • an increase in the maximum penalty for an individual convicted of a foreign bribery offence from 5 to 14 years;
  • the creation of a new books and records offence, similar to the US FCPA books and records provision, with penalties on a conviction being a maximum of 14 years imprisonment and unlimited fines;
  • the planned banning of facilitation payments, with the banning being phased in on a date to be proclaimed;
  • expansion of the jurisdictional reach of the Canadian authorities, so as to make it easier for Canadato prosecute international bribery regardless of where the alleged bribery occurred.

In light of these changes, any Australian company which has business operations in Canada or who deals with Canadian parties should review its policies and procedures, particularly dealing with the business books and records to ensure compliance with the new Canadian laws and to take steps to abolish or ban outright all facilitation payments.

Importance of constant risk reviews

All Australian businesses operating internationally, and particularly in or subject to the jurisdiction of the United States, Canada or the United Kingdom, should be under no illusion that regulatory agencies in those countries will co-operate closely with each other and will investigate allegations of foreign bribery involving residents, citizens or corporations of those countries whenever credible allegations of foreign bribery arise, often in the media and whether or not the actual bribery may have taken place in a relevant country or an independent third party country.

For these reasons, it is critical for all Australian corporations doing business overseas to:

  • know and understand their risk profile in all jurisdictions in which they operate;
  • understand the legal framework of local and extraterritorial laws in all of those jurisdictions;
  • proactively address all risk issues that they face in challenging jurisdictions, including dealing with foreign bribery and corruption; and
  • to proactively promote a culture of zero tolerance and compliance with all corporate policies and procedures and the law in all countries in which the business operates.
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