This is the title of an
article distributed by King & Wood Mallesons (KWM),
Brisbane. KWM's article is about the introduction of
'...two new criminal offences relating to "false dealing
with accounting documents" into the Commonwealth Criminal Code
as part of its efforts to strengthen its anti-bribery and
corruption enforcement framework.'
A books and records provision should be
incorporated into Australia's foreign bribery legislation so
that Australia's obligations (like those of Canada) under
Article 8 of the OECD Convention are also met. The offence should
also provide for sanctions that are equivalent to the bribe paying
offence in order to achieve deterrence and facilitate greater
Whilst not the same as the 'books and records'
provisions of the Foreign Corrupt Practices Act
(FCPA)2, which includes a requirement to maintain a
system of internal accounting controls, the penalties for the new
offence of falsely dealing with accounting documents mirror those
of our foreign bribery offence3. An individual who is
guilty of the new offence is liable to 10 years' imprisonment
or a fine of $1.8 million or both. Convicted corporations are
liable for the greater of:
Three times the value of the benefit obtained from the offence
by the corporation and any related corporations; or
10% of the annual turnover of the corporation during the
previous 12 months.
We lobbied for a books and records offence because investigating
foreign bribery is difficult. The days of companies openly
describing bribes in their books of account are gone. It's not
even a tax deduction anymore! Therefore, companies, or individuals
working for companies, that continue to pay bribes to win or retain
business will typically use descriptions (and there are many,
limited only by imagination) that mask the true nature of the
The new offences allow regulators to be proactive in
investigating foreign bribery. Cross-jurisdictional issues may make
it difficult to prove the foreign bribery itself. But a mismatch
between what is recorded in an entity's accounting records on
the one hand, and what is evident from its bank records, will often
tell the tale.
Closely monitoring company announcements for news of bids or
winning contracts overseas, particularly in jurisdictions known to
be of high risk, would be a good starting point in identifying
corporations whose books and records should be reviewed.
There are no provisions in the Commonwealth Criminal Code that
refer directly to internal controls. But the new offences create a
sensible motivation for companies to ensure that adequate controls
are in place, both to prevent bribery and to discourage falsifying
records to cover it up. The alternative would be to try and think
of more innovative ways to circumvent the legislation. In our view,
that would be a low-percentage strategy!
We look forward to seeing how the Regulators use the new
legislation and the reaction to it by corporate Australia.
1 Refer to Submission No. 22 on page
2 The Accounting provisions of the FCPA are
found at Section 13(b)(2)(A) of the Exchange Act (15
U.S.C. § 78m(b)(2)(A)), commonly referred to as 'the books
and records provisions' and Section 13(b)(2)(B) of the
Exchange Act (15 U.S.C. § 78m(b)(2)(B)), the
'internal control provisions'. The books and records
provisions require issuers to 'make and keep books, records,
and accounts, which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
issuer'. The internal control provisions require issuers to
'devise and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that transactions are
approved appropriately and assets are appropriately accounted
for'. (See FCPA Resources Guide, Chapter 3).
3Australian Criminal Code Act 1995, Chapter
4, Division 70, Section 70.2 – Bribery of foreign public
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