6 February, 2018
Anti-bribery and corruption law reforms raise the stakes
During 2017, substantial public attention on anti-bribery and corruption saw the introduction of draft legislation to Parliament in December, laying the groundwork for stronger foreign bribery laws, deferred prosecution agreements and reforms to whistle-blower protections in 2018. Enforcement activity is also on the rise, with the AFP reportedly being involved in 37 foreign bribery investigations in the first half of 2017 and individuals having been convicted under Australia's foreign bribery laws for the first time.
In short, Australia's anti-bribery and corruption laws are getting tougher, the incentives for whistle-blowers to come forward are increasing, and enforcement authorities are becoming more active. All this adds up to an escalating risk for businesses and individuals. Below we provide more details about some highlights from 2017.
Failure to prevent bribery: Australia to introduce tough new bribery laws
In December, the Australian Government introduced the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 which aims to significantly strengthen Australia's anti-bribery and corporate misconduct laws. Significantly, the proposed new laws include an offence of a company failing to prevent bribery of a foreign official by employees, agents, contractors, officers or other third party service providers. In our Regulatory Update dated 7 December 2017, we examined the Government's proposed amendments to Australia's foreign bribery laws and identified the key risk areas for companies and individuals.
Australian Government puts deferred prosecution agreements on the table
The Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 also proposes to introduce a deferred prosecution agreement (DPA) scheme. A DPA is a voluntary settlement between a prosecutor and a defendant, whereby the defendant agrees to comply with certain requirements in exchange for the prosecution of a serious criminal offence not being commenced or being discontinued.
In our Regulatory Update dated 3 April 2017, we examined the Government's proposed model for a DPA scheme as set out in its public consultation paper. This model has largely been adopted in the new Bill. In our Regulatory Update dated 7 December 2017, we considered the Government's proposed new laws relating to DPAs and identified the key risks that corporations will need to consider before deciding whether or not to seek a DPA.
Whistle-blower protections to be greatly enhanced
The Australian Government also tabled the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017, which proposes to strengthen Commonwealth whistleblower protections in a number of ways.
Some of the most notable features of the Bill include:
- greatly expanding the categories of people who will receive the benefit of protection and people to whom protected disclosures can be made;
- removing the requirement that a disclosure must be made in good faith; and
- requiring public companies and large proprietary companies to create, and make readily available, internal whistleblower policies.
The Government has committed to there being a Parliamentary vote on the whistleblower reforms by 30 June 2018. For further information, see our Regulatory Update dated 12 December 2017.
New federal anti-corruption watchdog under consideration
A Senate Committee report was released analysing the current federal multiagency anti-corruption framework and assessing the potential need for a single agency approach. The Senate Committee concluded that the current framework needs to be more coherent, comprehensible and accessible, and recommended that the Federal Government consider establishing a national integrity commission to combat bribery and corruption in the public sector.
Notwithstanding this recommendation, the Senate Committee also suggested that the Federal Government waits for research to be completed (which is due in March 2019) before reviewing the matter again. Malcolm Turnbull has indicated that although he is prepared to consider creating a federal anti-corruption watchdog, he is not yet persuaded that the case has been made out for such a body.
For more information about the Senate Committee report, see our Regulatory Update dated 25 September 2017.
Australia's first foreign bribery convictions
For the first time since the introduction of the foreign bribery offence in Australia, three individuals have been found guilty of committing this offence. The three individuals, John Jousif, Ibrahim Elomar and Mamdouh Elomar, were directors and shareholders of Lifese Pty Ltd and attempted to bribe an Iraqi official to obtain construction contracts. Each pleaded guilty to the offence of conspiring to bribe a foreign official, and were sentenced to four years imprisonment. Ibrahim Elomar and Mamdouh Elomar were also each fined $250,000.
Bribery-related claims will be before the courts again in 2018, with the trial of two former executives of Leighton Holdings, for alleged breaches of the Corporations Act 2001 (Cth) (arising from, amongst other things, alleged improper payments). Their trial is currently listed for mid-October 2018.
These prosecutions show an increasing focus by authorities not just on companies that engage in misconduct, but also on individuals either directly involved in the misconduct or with responsibility to ensure that misconduct does not occur. In addition, the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 aims to improve the effectiveness of the current foreign bribery offence by removing possible impediments to a successful prosecution. Once the amendments take effect, it is likely that we will see an increase in the number of successful prosecutions of individuals involved in serious corporate misconduct.
For further information, please contact:
Mark Elvy, Partner, Ashurst
mark.elvy@ashurst.com
