Australia has finally, after two failed attempts, strengthened its laws for prosecuting foreign bribery by body corporates.
The legislation was introduced to the House of Representatives on 22 June 2023, and the Australian Parliament enacted the legislation on 29 February 2024.
The expanded regime aims to address a long-criticised absence of a foreign bribery offence of the type found in other developed nations like the United Kingdom and the USA for failing to prevent bribery.
So, what should Australian companies expect now that there is a corporate offence for failing to prevent bribery?
Primarily, Australian companies need to consider what changes may be required to their internal risk and compliance programmes to ensure that they have ‘adequate procedures’ in place to prevent the commission of bribery of foreign public officials by ‘associates’ of the company.
Below we set out what the changes mean, and most importantly what businesses operating in Australia should do over the next six months before these new laws come into operation.
What do these changes mean?
In our previous article we summarised the proposed changes.
The new offence
Importantly, under these new laws when they come into operation, Australian companies will be liable for failing to prevent foreign bribery by an associate (‘the Offence’).
The Offence is an absolute liability provision, so a company’s or individual’s intention in undertaking the bribery offence is irrelevant. The individual providing the benefit does not need to be an employee of the company, rather an associate, which is broadly defined to include officers, agents, contractors, corporate subsidiaries, and persons controlled by, or providing services on behalf of, a company.
The defence
The amendments give Australian companies a defence to the Offence if they can prove that they had adequate procedures in place to prevent it occurring.
Significant penalties
All Australian companies will face significant penalties if the Offence is committed, being:
- 100,000 penalty units ($31.3 million at time of writing);
- three times the benefit received; or
- if the court cannot determine the benefit, 10% of the corporation’s annual turnover.
Further, the laws did not introduce deferred prosecution agreements despite attempts to include them by opposition parliamentarians. Companies cannot self-report breaches and then be exempted from potential prosecution.
Six months to assess whether your company has ‘adequate procedures’ in place
The new laws will commence six months after royal assent. At the time of writing, royal assent has not been granted.
This means that Australian companies have at least a six-month period to ensure that they have ‘adequate procedures’ in place to prevent a foreign bribery offence from occurring.
Taking action now to establish adequate procedures will put your company in the best place to rely on the defence in the event of an allegation of contravention of the Offence.
So, what are adequate procedures, and what should we be doing?
The Australian Attorney-General’s Department (the Department) is required to publish guidance on what constitutes adequate procedures under the laws. That guidance has not been published, though 2019 draft guidance from the Department indicates adequate procedures could include:
- undertaking risk assessment and due diligence of business conduct as to bribery risk;
- management personnel developing, implementing and promoting anti-bribery policies;
- conducting training on anti-bribery policies;
- having internal reporting mechanisms as to bribery risks and instances; and
- constantly monitoring, reviewing and adjusting anti-bribery policies and procedures.
The 2019 draft guidance is similar to the guidance which accompanied the introduction of the UK Bribery Act 2010. For those looking to get a head start on reviewing your company’s position, the draft guidance and the UK guidance provide an indication of what we might expect here in Australia when the Department does publish the required guidance.
Our colleagues in London published a useful summary of the UK guidance, and set out subject matter which should be addressed by any compliance program looking to address foreign bribery risk.
Having a strong compliance programme, that addresses matters of the type set out in the table in the article, is a good starting point for Australian companies but it will still be up to the court dealing with any action for contravention of the laws to determine if the company’s procedures are sufficient to rely on the defence.
What’s next?
Companies should keep a close eye out for future updates from the Department and its publication of its guidance and take immediate steps to consider and implement appropriate parts of it into their risk and compliance framework.
We will also continue to publish updates on further changes to Australia’s foreign bribery laws introduced in this recent bill and on the Australian Government’s future legislative agenda.
Bird & Bird’s global team has extensive experience advising businesses on anti-bribery and corruption risk. Please feel free to get in touch for a discussion on these reforms, and what you can be doing now to put in place the best defence in the event of an allegation of contravention of these new laws.
For further information, please contact:
Jonathon Ellis, Partner, Bird & Bird
jonathon.ellis@twobirds.com
