Reforms to Australia’s Foreign Bribery Laws: Important Lessons for Australian Business

The Australian Government has finally re-enacted a Bill to reform important parts of Australia’s foreign bribery laws, many years after the Australian Senate and numerous parliamentary committees called for reform. Historically, Australia has had a poor record of investigation and enforcement of these laws, and has been regularly criticised by the OECD under the country reviews performed on Australia’s compliance with its obligations under the OECD Anti-Bribery Convention. It is hoped these reforms will go some way to address long-standing concerns and facilitate a better process for the investigation and prosecution of foreign bribery.

Introduction

On 22 June 2023, the Australian Attorney General introduced the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 (the Bill) into the Australian Parliament (see Bill). The Bill seeks to enact various reforms to the Criminal Code Act 1995 (Cth) (Code) that have been dormant for many years under the former, conservative government and languished at least twice, with no apparent political will to enact them.

While these reforms are commendable, they lack the one reform that will make a real difference to business, a legislative deferred prosecution agreement (DPA) scheme to provide much needed certainty for a business that wishes to voluntarily disclose potential criminal conduct. Regrettably the DPA scheme, included in earlier draft bills, has not been included despite widespread bipartisan legislative support. This is likely to mean Australian businesses will still think twice about engaging with the investigative agency (the Australian Federal Police, AFP) and prosecution agency (the Commonwealth Director of Public Prosecutions, CDPP) and instead, subject the company to the unpredictable criminal justice system.

The Bill’s Key Features

The Bill’s key features include the following:

• Extends the foreign bribery offence to include the bribery of candidates for public office (not just current holders of public office);
• Extends the foreign bribery offence to include bribery conducted to obtain a personal advantage (the current offence is restricted to bribery conducted to obtain or retain a business advantage);
• Removes the existing requirement that the benefit or business advantage be ‘not legitimately due’ and replaces it with the concept of ‘improperly influencing’ a foreign public official;
• Removes the existing requirement that the foreign public official be influenced in the exercise of their official duties;
• Makes it clear that the foreign bribery offence does not require the prosecution to prove that the accused had a specific business, or business or personal advantage, in mind, and that the business, or business or personal advantage, can be obtained for someone else; and
• Critically for corporations, creates a new indictable corporate offence of failing to prevent foreign bribery.

Analysis of the Proposed Amendments

The broad changes to the Code (section 70.2 where the offence of bribery of a foreign public official lies) are welcomed. They seek to simplify the complex elements of an offence that has proved notoriously difficult for the AFP to investigate and for the CDPP to prosecute.

The most important of these changes is to change the key threshold test of a benefit that is “not legitimately due” to a test of whether the conduct constitutes the “improperly influencing” of a foreign public official (presently defined very broadly). It remains to be seen how Australian authorities and the courts will interpret “improper” in the context of “improperly influencing” a relevant official. Misconduct generally means wrongful, improper or unlawful conduct motivated by a premeditated, obstinate or intentional purpose. This will have to be considered in the context of the physical and mental elements prescribed in the Code for determining criminal liability and the Bill’s requirement that what constitutes “improperly influencing” is a matter of fact for the jury (as Commonwealth criminal offences must only be tried before a jury, not a judge sitting alone, as can occur with various State criminal offences) where certain factors are set out to be or not to be taken into account.

New Indictable Office for Failing to Prevent Foreign Bribery

The new offence, directed to Australian corporations, is in substance, that a corporation commits an offence if an associate of the corporation engages in conduct that would constitute an offence under s 70.2 of the Code and the conduct is undertaken for the profit or gain of the corporation.

Key features of the new offence are as follows:

• Strict liability is imposed on the corporation in relation to the conduct of its associate;
• An associate is defined broadly to include an officer, employee, contractor, subsidiary, a controlled entity or critically, otherwise performs services for or on behalf of the corporation;
• The only defence for the corporation is that it had “adequate procedures” in place to prevent the offending conduct (with the onus on the corporation to prove the existence and application of such procedures);
• The corporation commits the offence irrespective of whether the associate is investigated or prosecuted;
• The penalties are substantial, the same for the primary foreign bribery offence: namely, upon a criminal conviction, a fine per offence of up to 100,000 penalty units (currently AU$27,500,000); and
• The offence is extra-territorial in reach, under the extended definition of jurisdiction in the Code.

This offence is drawn from the corporate foreign bribery offence in the UK, known as the section 7 Bribery Act 2010 offence. Unfortunately, unlike the UK, the Australian Government has decided to introduce these offences without the key feature to really encourage corporations to voluntarily self-disclose misconduct: a statutory DPA scheme. Such a scheme existed in earlier iterations of the Bill under the former government. It exists in the UK and has proved a great weapon for the Serious Fraud Office to tackle foreign bribery and provide a degree of certainty that now, a decade later with substantial fines and numerous DPAs in place, is well-known by corporations and their legal advisors. Yet Australia chooses to ignore these obvious tools and rely on the good sense of the business community to avoid, where possible, the traditional criminal justice system. This is unlikely to generate the results that the AFP and the CDPP might be hoping for (notwithstanding the CDPP’s Best Practice Guidelines to self-reporting foreign bribery offences, see Guidelines), as defence counsel will necessarily think long and hard about whether to roll the dice.

What are the “adequate procedures” that a corporation should have in place? The Bill is silent on them. In late 2019, the former government issued a consultation paper on what the procedures might be and a draft guidance (see Draft Guidance). Nothing further has occurred. Until the Australian Government publishes a guidance applicable to the Bill, corporations should consider the draft guidance from 2019 and the well-established Guidance under the UK Bribery Act 2010 published by the UK Ministry of Justice (see UK Guidance).

An example of why the lack of a DPA scheme can prove troubling is found in the Jacobs foreign bribery prosecution.

• In 2012 when Jacobs, on discovering certain suspicious conduct, described as bribery by one of its business units operating on aid-funded projects in the Philippines and Vietnam, reported the conduct to the AFP.
• In 2016, the AFP charged the company and several individuals with two separate conspiracies to commit foreign bribery in each of the Philippines and Vietnam. In 2020, as part of the committal process, Jacobs pleaded guilty to three offences (articulated separately due to different time periods and different penalties).
• On 9 June 2021, Jacobs was convicted and fined AU$1,471,500 on the basis of a substantial reduction in penalty due to cooperation and the Court determining that the relevant “benefit” the subject of the offending conduct was determined on a “net” not a “gross” basis (see Trial Judgment). The CDPP was unhappy with the determination on penalty.
• On 16 February 2022, the NSW Court of Criminal Appeal upheld the trial judge’s analysis, particularly on the benefit point (see Appeal Judgment). The CDPP remained unhappy.
• On 10 November 2022, the High Court of Australia, having granted special leaved to appeal, heard argument, for the third time, on the correct interpretation of benefit in light of the earlier ruling going against the CDPP (see High Court Transcript). Judgment remains reserved.

This shows that despite an early disclosure by Jacobs, it spent the next decade engaged in dialogue and then contested court hearings with the CDPP.

As a side note, the CDPP had 5 individuals to prosecute. In the end:

• The case against one individual was abandoned before trial (JWS represented that individual);
• The Philippines conspiracy case proceeded and as a result of the trial, judge’s ruling on evidence and the reliability of the Crown witnesses, the jury acquitted all individuals; and
• The CDPP then abandoned the Vietnam conspiracy case.

This raises some interesting issues where Jacobs, for its own reasons and considering certain different legal tests pleaded guilty to the very conduct for which a jury not only acquitted the individuals but the CDPP abandoned all other cases. Hardly a ringing endorsement of the process.

Conclusion – An Opportunity Missed?

Whether a DPA might have avoided the difficulties the authorities experienced in the Jacobs case, and indeed, the defendants with over a decade of investigation and prosecution, remains to be seen. Unfortunately, a traditionally aggressive criminal law approach to corporate crime can prove costly on all sides. This is what DPAs were designed to avoid and to provide a clear pathway for corporations to voluntarily report potential illegal conduct. Sadly, the Bill has not given corporations or the regulatory agencies the tools so well used overseas, to really tackle foreign bribery.

Overall, the objects of the Bill are long overdue and may provide assistance to the AFP and CDPP in their quest to investigate and prosecute Australian businesses where foreign bribery is suspected. It is disappointing that the Australian Government lost an opportunity to introduce a DPA scheme. This means Australian business continues to have to navigate the complex world of plea deals and a prosecutorial mentality that says once you are charged, that is it, just plead guilty and put your mitigating circumstances to the Court. Experiences in the US, the UK and more recently France, are demonstrating the value of DPAs. Hopefully, the DPA reforms will be introduced in the near future.

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