The Federal Government has asked industry and the public for
their views on changing Australia's anti-foreign bribery laws
to remove the "facilitation payments" defence. Australian
businesses and individuals who are engaged in international trade
or other business dealings overseas should think carefully about
responding to this proposed reform. Background – Anti
The Criminal Code Act 1995 (Cth) ("the Act") sets out
Australia's laws against bribery ("the offence.")
Under the Act, a person is guilty of the offence if:
they provide a benefit to another person, offer or promise to
provide a benefit to another person, or cause a benefit to be
provided, offered or promised to another person; and
the benefit is not legitimately due to the other person;
the act of providing, causing to be provided, offering or
promising was carried out with the intention of influencing a
foreign public official (who may or may not be the other person) in
the exercise of the official's duties as a foreign public
official in order to obtain or retain business or obtain or retain
a business advantage which is not legitimately due.
The Act applies when the offence is carried out wholly or partly
in Australia and when at the time of the alleged offence, the
person who is alleged to have committed it is an Australian
citizen, a resident of Australia, or a body corporate incorporated
by or under a law of the Commonwealth or of a State or
In simple terms, the Act has a wide reach and can catch
Australian individuals and companies even if they are acting in
breach of the Act overseas
Essentially, there are two defences under the Act –
the first is where the advantage was permitted or required by the
written laws that govern the foreign public official.
The second defence under the Act, which is now under review, is
where the benefit constituted a "facilitation
How the "facilitation payment" defence works
Under the Act, you can claim the defence of facilitation payment
the value of the benefit was of a minor nature; and
the conduct was engaged in for the sole or dominant purpose of
expediting or securing the performance of a routine government
action of a minor nature; and
as soon as practicable after the conduct occurred, the person
made a record of the conduct containing specified information;
the person has retained that record; the record is lost due to
an event outside of that persons control; or
a prosecution for the offence is instituted more than 7 years
after the conduct occurred.
For example, a freight forwarding company, already behind in
deadlines, may pay certain minor premiums at the port in order to
keep business moving and to avoid further delays. As is routine
practice at the overseas port, priority treatment is given to that
freight upon payment of the premium. Records are then made of this
transaction as required. Should a later issue regarding bribery
arise, the organisation will claim recourse under the
"facilitation payment" defence.
The Federal Government is now considering abolishing this
defence and is calling on large and small companies to provide
their views on the need or otherwise of this defence. If
successful, the abolition of the "facilitation payments"
would bring Australian law into line with the UK's Bribery Act,
which prohibits facilitation payments and which came into force on
1 July 2011. In the United States, the Foreign Corrupt Practices
Act still contains a similar defence, although the OECD has
recommended the US review that policy.
It is important to note that even if a benefit constitutes a
legitimate "facilitation payment" under the Act, people
and businesses making such payments still face the risk of
breaching domestic bribery laws that govern the foreign public
official in that country.
If you are doing international business and think that the
removal of this defence would place your business in a weaker
position, please contact us to discuss your position. Hunt &
Hunt Lawyers is well placed to advise on how the Act applies to
your business practices and has extensive experience in drafting
submissions to Government on legislative reforms
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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