...but level of enforcement is still considered inadequate by anti-corruption watchdog Transparency International
A month after Transparency International ("TI") published its 2010 annual progress report on enforcement of the OECD Anti-Bribery Convention, the Australian Federal Police have charged two Reserve Bank of Australia subsidiaries, Securency and Note Printing Australia, with offences under the Criminal Code Amendment Act: Bribery of Foreign Public Officials.
In addition to charges against the two banknote printing companies, the AFP arrested and charged six of their former executives in a series of dawn raids in Melbourne last Friday. The charges relate to a scheme in which the executives paid bribes to senior politicians and officials across Asia in exchange for banknote printing contracts between 1999 and 2005.
Australian laws criminalizing the bribery of foreign public officials have been in force since 1999 but this is the first time they have resulted in a prosecution. For this reason, Australia is considered by TI to be a jurisdiction in which there is no deterrent whatsoever against bribery of foreign public officials by companies, their subsidiaries and overseas agents.
The prosecution of Securency, Note Printing Australia and their executives will help to qualify Australia for a "Moderate Enforcement" rating in TI's 2011 progress report. This rating requires a jurisdiction to be pursuing at least one "major case" as well as one active investigation in a given year. A major case is defined by TI to include a prosecution involving alleged bribery of senior public officials by major companies. The fact that the two companies being prosecuted are both 50% owned by the Reserve Bank of Australia probably qualifies them as "major companies", especially given that senior reserve bank officials served on their boards of directors, including during the time when the bribery offences were committed.
Although a "Moderate Enforcement" rating would be an improvement on Australia's current rating of "Little or No Enforcement", jurisdictions with a "Moderate Enforcement" rating are still considered by TI to have put in place an inadequate deterrent against foreign bribery.
In order to achieve the highest rating of "Active Enforcement", Australia would need to bring at least two further criminal prosecutions or civil actions involving alleged bribery of senior public officials by major companies in the next three years. Of these, at least one would need to be concluded with "substantial sanctions".
The charges against the two companies carry a maximum fine of $330,000 per offence. The charges against the individuals carry a maximum penalty of 10 years imprisonment and /or a fine of $1.1 million. TI does not define what a "substantial sanction" is in its report, but imprisonment of senior company executives ought to qualify.
If the companies themselves are convicted, it may address the concern which TI expressed in its 2010 progress report that the current Australian legal framework lacks an effective system for imposing criminal liability on corporations. This is because Australian prosecutors have said they must have concrete proof from relevant foreign authorities that a benefit derived by a foreign official was "not legitimately due" to him/her before they can mount a foreign bribery prosecution. In general, TI has also expressed doubt as to whether, under the Australian legal system, successful prosecution of foreign bribery cases is even feasible.
The present case may change that view, and is likely to draw attention to the need for more stringent compliance with anti-bribery laws among Australian corporations doing business in Asia. Those doing business in the PRC need to familiarize themselves with the laws against bribery and commercial bribery in the PRC Criminal Law, the PRC Law Against Unfair Competition and related laws and administrative regulations.
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