Australia: Anti-corruption and foreign corrupt practices

There has been further progress in the United Kingdom regarding the proposed anti-bribery legislation and the ongoing investigation into BAE Systems by the Serious Fraud Office.

The UK Justice Secretary, Jack Straw MP, has announced the launch of the government's foreign bribery strategy. It builds upon the government's anti corruption work over the past 3 years and aims to help strengthen its reputation as one of the least corrupt countries in the world.

The strategy aims to:

  • modernise and strengthen the UK law on bribery by enacting a new Bribery Act
  • encourage and support UK companies to establish and apply appropriate standards of ethical business conduct to combat foreign bribery
  • support effective law enforcement against foreign bribery and take proportionate action against those benefiting from foreign bribery
  • reduce the demand for foreign bribery by strengthening international anti-corruption efforts

The announcement by the UK Justice Secretary confirms that, as is the case in the United States of America, anti corruption has become a strong priority for the UK government and the strategy announced will assist in overcoming past criticisms of its perceived weak response to bribery and corruption.

Of major significance to Australian Corporations is that if they conduct any part of their business (which is undefined) in the UK then they will be subject to UK jurisdiction and potential criminal prosecution, even if the bribe and related matters have no connection with the UK or the business which is operated in the UK.

The Bribery Bill passed through the House of Lords for its first reading speech earlier last week and it is thought that it may become law at about the end of April. The latest version of the Bribery Bill can be accessed here.

The foreign bribery strategy can be accessed here (80 KB pdf).

There have also been further developments in relation to the investigation of BAE Systems by the Serious Fraud Office (SFO) in the UK and by the US Department of Justice (DoJ).

On 5 February 2010 the SFO issued a news release in which it announced that the SFO and the DoJ have reached a global agreement with BAE Systems. The agreement with the SFO relates to BAE Systems' operations in Tanzania whilst the agreement with the DoJ relates to BAE Systems' business dealings in a number of countries.

The agreement between SFO and BAE Systems is that BAE Systems will plead guilty in the Crown Court to an offence under section 221 of the Companies Act 1985 for failing to keep reasonably accurate accounting records of its activities in Tanzania. BAE Systems will pay Ł30 million comprising a financial order to be determined by a Crown Court judge with the balance being an ex gratia payment paid for the benefit of the people of Tanzania. In reaching this agreement the SFO has taken into account the substantial ethical compliance reforms implemented by BAE Systems and the company's agreement with the DoJ.

The DoJ has announced that it has filed a criminal charge in the US District Court for the District of Columbia against BAE Systems in which it has alleged that BAE Systems conspired to impede the lawful functions of the Department of Defence and made false statements about establishing an effective anti corruption compliance program in conformance with the Foreign Corrupt Practices Act. BAE Systems has announced that it will plead guilty to that charge and that the total fines which it will pay to the SFO and the DoJ will be more than $400 million.

Whilst BAE Systems has stated that the agreements which it has reached do not relate to accusations of corruption or bribery, what these agreements do indicate is that the SFO and the DoJ are taking a much more firm and diligent approach. That will no doubt continue. It can also be expected that the focus of the SFO and the DoJ will not only be on corporations but also on individuals and that prosecutions will be launched against both if contraventions are found to exist.

If you have any queries about the strategy which has been announced or other issues relating to business ethics and anti corruption, please do not hesitate to contact Lindsay Houghton, Jason Noakes or Peter Cash. More information about our capabilities in this area, particularly outside Australia, can be found here.

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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