1 Legal and enforcement framework
1.1 Which legislative and regulatory provisions govern anti-corruption in your jurisdiction, from a regulatory (preventive) and enforcement (criminal) perspective?
In Australia, anti-corruption and anti-bribery laws are divided between commonwealth laws that apply territorially (within Australia), and to some extent extraterritorially (outside Australia), and state and territory laws which apply within each state and territory. This summary will focus on the commonwealth laws, with some references as an example to the laws of the State of New South Wales (as most other state and territory laws are similar).
The commonwealth provisions concerning anti-corruption and anti-bribery are contained in the Commonwealth Criminal Code Act 1995 (Cth). The laws of the State of New South Wales are contained in the Crimes Act 1900 (NSW).
The Criminal Code establishes the offence of foreign bribery. The offence applies to the bribery of a foreign public official outside Australia by an Australian incorporated entity, citizen or resident. A person commits an offence if:
- he or she:
- provides or causes to be provided a benefit to another person;
- offers or promises to provide a benefit to another person; or
- causes an offer or a promise of the provision of a benefit to be made to another person;
- the benefit is not legitimately due to the other person; and
- the person does so with the intention of influencing a foreign public official in the exercise of the official's duties as a foreign public official to obtain or retain business or to obtain or retain a business advantage that is not legitimately due to the recipient, or intended recipient, of the business advantage.
There are separate yet similar offences concerning the bribery or the giving of corrupting benefits to commonwealth public officials.
There are similar offences for the corrupting of state public officials which cover the corrupt receipt of commissions and other corrupt practices.
1.2 Which bilateral and multilateral instruments on anti-corruption have effect in your jurisdiction?
The primary instruments that influence anti-corruption laws in Australia are as follows:
- the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, published by the Organisation for Economic Co-operation and Development (OECD);
- the United Nations Convention against Corruption; and
- the United Nations Convention against Transnational Organised Crime.
These conventions have no legal effect in Australia unless and until their terms are incorporated into domestic law. The terms of the OECD Convention (which prohibits the bribery of foreign public officials) were incorporated into the Criminal Code and form the basis of the statutory foreign bribery offence.
1.3 Are there accessible directives or other guidance from enforcement authorities in your jurisdiction?
There are limited directives or guidance from enforcement authorities in Australia.
In relation to offences against the laws of the commonwealth, the Commonwealth Prosecution Policy, published and administered by the Office of the Commonwealth Director of Public Prosecutions (CDPP), is the most useful guidance from enforcement authorities.
1.4 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?
The bodies that are primarily responsible for enforcing anti-corruption laws in Australia are:
- the Australian Federal Police (AFP), as the investigator for all potential offences against commonwealth laws;
- the CDPP, as the independent statutory prosecutor (which prosecutes only and does not investigate); and
- insofar as state laws are concerned, the state police forces of each Australian state and territory and, where relevant, a state director of public prosecutions.
In addition to these bodies, the Australian Securities and Investment Commission, as the corporate regulator, works close with the AFP, the Australian Criminal Intelligence Commission (ACIC) (formerly the Australian Crime Commission) and AUSTRAC as the financial transaction reporting agency that enforces Australia's anti-money laundering and counter-terrorism financing laws.
The powers of the AFP and the police of each state and territory are the usual extensive powers of police authorities to investigate and lay charges in relation to potential criminal offences. The powers of the ACIC are extensive and secretive, and must be exercised subject to its statutory constraints.
The Fraud and Anti-corruption Centre (FACC), hosted by the AFP, coordinates the referral and investigation of bribery and corruption referrals. The FACC is made up of representatives from 10 participating agencies to present a united government response to serious and complex fraud and corruption. The FACC has a Foreign Bribery Panel of Experts that reviews each referral before it proceeds to an investigation. The FACC also liaises with the Criminal Assets Confiscation Taskforce, which deals with the confiscation of assets arising from fraud and corruption crimes.
1.5 What are the statistics regarding past and ongoing anti-corruption procedures in your jurisdiction?
There are limited statistics in relation to anti-corruption procedures in Australia. They are rarely published by Australian regulatory authorities. The most informative information has been published by the OECD in its Phase 1 to 4 Reports on Australia's compliance with its obligations under the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. In its Phase 4 Report published in December 2017, the OECD identified the investigation and prosecution statistics from the AFP as at August 2017 and made a number of key recommendations that Australia should address, including:
- a focus on the laundering of the proceeds of foreign bribery in the real estate sector; and
- adequate resourcing to enforce foreign bribery laws and proactively pursue criminal charges against companies for foreign bribery.
From 1999, when the foreign bribery offences were introduced into the Criminal Code, until 2011, no prosecutions were commenced under those provisions. The first prosecution commenced in July 2011 was the Securency banknote printing prosecution. The second prosecution concluded in 2017, when three individuals pleaded guilty and were imprisoned. In total, as at August 2019, eight individuals and two companies have pleaded guilty to either a foreign bribery offence, conspiracy to bribe a foreign public official or false accounting in relation to the payment of bribes to foreign public officials. Four other cases were permanently stayed by the High Court of Australia, finding that the ACIC and the AFP had engaged in egregious illegal conduct and an abuse of process against the relevant individuals.
1.6 What are the shortcomings identified in your jurisdiction's anti-corruption legislation (including recommendations of the Organisation for Economic Co-operation and Development, where applicable)?
A number of shortcomings in Australia's anti-corruption legislation have been highlighted over the last few years and form part of the Phase 4 Report published by the OECD, referred to above. These include the following:
- The existing foreign bribery offence is complex and hard for prosecutors to establish, with each offence requiring proof of default or nominated physical and fault elements;
- There is no strict liability corporate offence of failure to prevent foreign bribery, such as the UK Section 7 Bribery Act offence;
- There is no deferred prosecution agreement scheme, so voluntary corporate self-reporting is limited; and
- There is no single dedicated enforcement agency (with adequate experience, resources and funding) focused on addressing serious and organised financial crime.
2 Definitions and scope of application,
2.1 How is ‘public corruption' or ‘bribery of a public official' defined in the anti-corruption legislation?
Domestic bribery laws in Australia can be classified as:
- laws prohibiting bribery involving commonwealth and foreign public officials;
- laws prohibiting bribery involving state government public officials; and
- laws prohibiting bribery involving local government public officials.
The Criminal Code deals with offences relating to domestic bribery of a commonwealth public official. The offences include:
- the giving of a bribe or corrupting benefit;
- the receipt of a bribe or corruptive benefit; and
- abuse of public office.
For the offence of giving or receiving a corrupting benefit, it is immaterial whether the benefit is in the nature of a reward.
The New South Wales Crimes Act prohibits the giving or receipt of any benefit as an inducement or reward for the doing or not doing of something or the showing or not showing of a favour or disfavour in relation to the business affairs of a person (any person, in private or public). Other states and territories have similar offences.
2.2 How is a ‘public official' defined in the anti-corruption legislation? How is a ‘foreign public official' defined?
The definitions of ‘foreign public official', ‘business advantage', ‘foreign government body', ‘foreign public enterprise' and ‘public international organisation' in the Criminal Code are very broad. The definitions encompass government-owned or controlled entities, including persons officially employed by a government and those persons who perform work for a government body or hold themselves out to be authorised as an official or who may act formally or informally in accordance with the directions, instructions or wishes of a government.
2.3 How is ‘private corruption' or ‘bribery in the private sector' defined in the anti-corruption legislation?
There is no express offence of ‘private corruption' in Australia. The Criminal Code creates offences for the offering, giving or receipt of a bribe to or by a commonwealth public official where the benefit is intended to influence the public official in the exercise of his or her duties as a public official. In New South Wales, there are a range of fraud and corruption-related offences, which include corrupting conduct that apply irrespective of whether the persons involved are public officials.
2.4 How is ‘bribe' defined in the anti-corruption legislation?
The definition of what constitutes a ‘bribe' is broad. In the Criminal Code, the nature of what is or is not a bribe under the foreign bribery offence is defined as a ‘benefit" or "business advantage" that is not "legitimately due" to the person receiving the benefit or advantage. The nature of any benefit that might arise can include any advantage and is not limited to property. It can include any type of financial or non-financial benefit involving any amount of money or thing of value. A ‘business advantage' is defined as "an advantage in the conduct of business". Whether something is or is not legitimately due is problematic, as there is no definition of this phrase and it can often turn upon what is or is not legitimate in a foreign jurisdiction, which invariably complicates prosecutions.
2.5 What other criminal offences are identified and defined in the anti-corruption legislation?
The criminal offences that most commonly apply to bribery or corruption conduct include the following:
- bribery of a foreign public official;
- bribery of a domestic public official;
- the accessorial (or secondary) offences of conspiracy, aiding and abetting or complicity in the primary offence conduct;
- money laundering;
- false accounting or false or misleading documents under state criminal laws, or the false or reckless dealing with accounting documents under the Criminal Code; and
- breach of statutory director and officer duties.
2.6 Can both individuals and companies be prosecuted under the anti-corruption legislation?
Yes. Under Sections 12.1 to 12.6 of the Criminal Code, corporate criminal liability can be attributed to a company. Physical elements are attributed to a company in circumstances in which an employee, agent or officer of a company commits the physical element when acting within the actual or apparent scope of his or her employment or authority. Fault elements are attributed to a company that "expressly, tacitly or impliedly authorised or permitted the commission of the offence".
In the corruption prosecutions that have occurred in Australia to date, both companies and individuals have been prosecuted.
2.7 Can foreign companies be prosecuted under the anti-corruption legislation?
Yes, foreign companies can be prosecuted under Australia's anti-corruption legislation to the extent that a foreign company or directors, executives or officers of a foreign company engaged in conduct that had a geographic connection with Australia, or were otherwise part of conduct outside Australia that involved an Australian company, citizen or resident.
To the extent that a foreign company is to be prosecuted for conduct that took place wholly outside Australia, consent must be secured from the commonwealth attorney general. This consent is likely to be given absent special or exceptional circumstances.
2.8 Does the anti-corruption legislation have extraterritorial reach?
As a general default rule, Australian criminal laws are confined to Australia and do not operate with any extraterritorial effect, unless legislation permits an extraterritorial reach.
The Criminal Code sets out the extraterritorial effect of the foreign bribery offences. So long as the conduct occurs partly in Australia or partly on board an Australian aircraft or an Australian ship, charges can be brought. If conduct occurs wholly outside Australia and a person of interest is not an Australian company, citizen or resident, consent to prosecute must be obtained from the commonwealth attorney general.
3 Corruption and bribery
3.1 How are gifts, hospitality and expenses treated in your jurisdiction?
The giving of gifts, hospitality and other expenses is in itself not illegal under Australian law.
Whether a gift, hospitality or expense constitutes a bribe will depend on whether it amounts to a benefit or business advantage that is not legitimately due to the recipient intended to secure a business advantage that is prohibited by, for example, the foreign bribery offence.
Otherwise, so long as any gift, hospitality or expense payment is reasonable and proportionate to the business relationship between the parties, and is unconnected to any discretionary decisions such as the award of a licence or a contract sought by tender, such payments are legal.
3.2 How are facilitation payments treated in your jurisdiction?
Facilitation payments are permitted in very limited circumstances.
A facilitation payment involves conduct (offering or giving or receiving a benefit with a value of a minor nature) that is engaged in for the sole or dominant purpose of expediting or securing the performance of a routine government action of a minor nature.
The facilitation offence applies outside Australia only where there is a question of whether a person has bribed a foreign public official. If the bribe constitutes a facilitation payment and the statutory criteria for that payment are satisfied, then the person does not commit the primary foreign bribery offence.
There has been long-standing criticism in Australia and by the Organisation for Economic Co-operation and Development of Australia's retention of the facilitation payment defence. It remains in the Criminal Code.
3.3 How is bribery through intermediaries and other third parties treated in your jurisdiction? Can those third parties be held liable?
Bribery and corruption are prohibited both directly and indirectly. It does not matter whether a bribe is effected directly by a principal or through an intermediary or a third party. Third parties can be held liable under Australian law subject to the jurisdictional requirements of the Criminal Code being satisfied.
It is often the case that a third party will not be charged with the primary offence of bribing a foreign public official, but rather as a conspirator being party to an unlawful agreement to bribe a foreign public official. A third party may, in appropriate circumstances, be subject to extradition from a foreign country to Australia, to be prosecuted in Australia.
Reforms are pending to the Criminal Code which, if and when implemented, will streamline the existing foreign bribery offence, introduce a new strict liability offence of a company failing to prevent foreign bribery by an ‘associate' (defined broadly). This proposed offence is similar to the UK Section 7 Bribery Act offence, which has been successfully used on a number of occasions in the United Kingdom to give rise to deferred prosecution agreements in order to hold a company responsible for the conduct of subsidiaries or third parties acting for or on its behalf in bribing or corrupting foreign public officials.
3.4 Can a company be held liable for bribery committed by management or other employees?
3.5 Can a company be held liable for bribery committed by domestic or foreign subsidiaries?
Under Australian law, corporate entities are separate legal entities and, absent any effective management control or operative decision making by one company A over the affairs of another company B, company A is not responsible for the conduct of company B. Accordingly, a parent company will not automatically be held responsible for the conduct of its domestic or foreign subsidiaries. Liability will depend upon the conduct of the parent company and of any senior executives of the parent company involved in the day-to-day management or decision-making processes of the domestic or foreign subsidiary, and whether the statutory test for the attribution of corporate criminal liability is satisfied. If they are entirely separate and discrete, however, then the parent entity is unlikely to be liable as the corporate veil, under present Australian law, cannot be pierced.
3.6 Post-merger or acquisition, can a successor company be held liable for bribery committed by legacy companies?
For similar reasons to those outlined in question 3.5, a successor company cannot be held liable for the bribery committed by a legacy company, unless the successor company continues conduct undertaken by the legacy company and effectively itself through its management and officers commits the offending conduct, for which it can then be prosecuted. It is not, however, otherwise legally liable for the earlier conduct of any legacy company (although of course, it may have to foot the bill for any investigation and prosecution).
4.1 Is implementing an anti-corruption compliance programme a regulatory requirement in your jurisdiction?
Whether a company has an anti-corruption compliance programme is relevant, in a negative sense, to the question of determining corporate criminal liability. For example, the following factors may be taken as evidence of a company's intention or knowingly or reckless conduct in permitting contravening conduct to occur or as an express or implied authorisation or permission to commit conduct (constituting an offence) due to a failure to create or maintain a corporate culture that requires compliance with the law:
- The company has inadequate corporate management, control or supervision of its employees or fails to provide adequate systems for conveying relevant information within a company; or
- The company fails to create and maintain a corporate culture that requires compliance with the law.
4.2 What compliance best practices should a company implement to mitigate the risk of anti-corruption violations?
There are limited compliance best practices for a company published in Australia. A helpful one is published by the Australian Trade Commission, entitled "Anti-Bribery & Corruption: A guide for Australians doping business offshore".
A range of international guidelines for compliance best practices are available for a company to adopt. These include:
- the Australian Standards Compliance Programmes AS3806-2006;
- the ISO37001 Anti-Bribery Management Systems Standard (2016);
- the UK Ministry of Justice Bribery Act 2010 Guidance;
- the Organisation for Economic Co-operation and Development (OECD) Good Practice Guidance on Internal Controls, Ethics and Compliance (2010); and
- the OECD Corporate Governance; Risk Management and Corporate Governance (2014).
4.3 Which books and records requirements have relevance in the anti-corruption context?
A number of specific offence provisions can arise when a company's books and records are inaccurate, false or misleading, including:
- the false or reckless dealing with accounting document offences;
- the statutory offences of false accounting; and
- limited civil penalties and other criminal offences in the Corporations Act.
There are no positive Australian offences which reflect the US Foreign Corrupt Practices Act requirements for proper internal controls that a company must have in place, other than the provisions referred to above.
4.4 Are companies obliged to report financial irregularities or actual or potential anti-corruption violations?
Subject to continuous disclosure obligations on a listed company, there are no obligations in Australia to report financial irregularities or actual or potential anti-corruption law violations.
There are no obligations, save for in New South Wales, requiring a person (company or individual) to report or disclose the commission or potential commission of an offence. In New South Wales, if a person knows or believes that a serious indictable offence has been committed by another person, and has information that might assist in the apprehension of an offender or the prosecution or conviction of that person, but fails without reasonable excuse to report that information to a member of the New South Wales Police Force, that person is guilty of an offence for which terms of imprisonment of between two and five years may apply.
4.5 Does failure to implement an adequate anti-corruption programme constitute a regulatory and/or criminal violation in your jurisdiction?
In itself, failure to implement an adequate anti-corruption programme does not constitute a regulatory or criminal violation in Australia.
For the reasons set out above, the absence of an adequate anti-corruption programme is likely to significantly contribute to an investigator and prosecutor forming the view that, if the underlying conduct constitutes the offence of foreign bribery, corporate criminal liability should be attributed to a company for its failure to address and implement either a corporate culture of compliance with the law or otherwise a system of internal policies and procedures that require compliance with the law.
5.1 Can companies that voluntarily report anti-corruption violations or cooperate with investigations benefit from leniency in your jurisdiction?
Companies can benefit from leniency in Australia if they make an early report of potential illegal corrupt conduct or the payment of bribes and offer to cooperate with investigators.
The benefit, however, is not in the form of any agreed resolution. Cooperation may, at one level, result in the prosecutor determining not to lay charges. If charges are laid, however, then the only benefit from cooperation, in practice, is to admit guilt, often accept a conviction and seek to mitigate the sentence to be imposed by the court. The determination of the sentence cannot, under Australian criminal law, be the subject of agreement between a company or an individual and the prosecutor. The determination of sentence lies entirely within the discretion of the sentencing judge. There are extensive statutory matters that a sentencing judge must take into account in determining a sentence "that is of a severity appropriate in all the circumstances of the offence". An early plea can usually result in a substantial discount on sentence.
5.2 Can the existence of an anti-corruption compliance programme constitute a defence to charges of anti-corruption violations?
In itself, the existence of an anti-corruption compliance programme does not constitute a defence to any bribery offence, whether a foreign bribery offence or a domestic bribery offence.
As noted above, the existence of a compliance programme may assist a company in satisfying the investigator (the Australian Federal Police) and prosecutor that the company had a culture of compliance, and that its compliance programme should be taken into account and be accorded significant weight in a determination of whether to prosecute, and if so, the extent to which any conviction and sentence is to be imposed.
5.3 What other defences are available to companies charged with anti-corruption violations?
The two statutory defences to the foreign bribery offence are:
- whether the conduct was justified by a written law of the foreign country where the conduct took place; or
- whether the payment constituted a facilitation payment.
In defending any prosecution, a company, in order to assess whether corporate criminal liability should be attributed to it, must take into account the conduct of its directors, executors, managers and employees to determine the extent to which the threshold test for corporate criminal liability can be satisfied and, for example, whether an employee is a ‘high managerial agent' of the company sufficient to attribute his or her conduct to the company.
5.4 Can companies negotiate a pre-trial settlement through plea bargaining, settlement agreements or similar?
A company can seek to negotiate with the CDPP at an early stage with a view to seeking to persuade the CDPP not to prosecute or, if prosecuted, to agree to a resolution subject to the sentencing discretion of the court.
However, if a prosecution takes place, there is no statutory or other process to resolve the matter other than through the traditional forms of plea bargaining, rolled-up charges or reduced charges that might be agreed to with the CDPP. which then must be put to the sentencing judge to determine the appropriate sentence.
An accused can further seek to negotiate a resolution with the CDPP at any time (individuals often seek to avail themselves of this). The DPP Act grants the CDPP the power to offer levels of undertakings and/or immunities to a prospective accused person, subject to various conditions.
5.5 What penalties can be imposed for violations of the anti-corruption legislation? Can non-exhaustive penalties be imposed for such violations (eg, exclusion from public procurement, exclusion from entitlement to public benefits or aid, disqualification from the practice of certain commercial activities, judicial winding up)?
For a foreign bribery offence committed after 1 July 2017, the maximum penalties that may be imposed upon a conviction, for each offence, include:
- for an individual:
- imprisonment of up to 10 years;
- a fine of 10,000 penalty units (the value of one penalty unit is currently A$210, so the maximum fine is currently AU$2.1 million); or
- both imprisonment and a fine; and
- for a corporation, the greater of the following:
- a fine up to 100,000 penalty units (A$21 million); or
- if the court cannot determine the value of the benefit obtained directly or indirectly that is reasonably attributable to the offending conduct, three times the value of the benefit; or
- if the court cannot determine the value of the benefit, then 10% of the annual turnover of the corporation during the 12-month period ending at the end of the month in which the conduct constituting the offence occurred (which is described in the legislation as the turnover period).
There are a range of penalties under state legislation and other commonwealth domestic bribery offences, from substantial fines to imprisonment for between five and 10 years for individuals.
In Australia, there is no regime whereby a company convicted or corruption offences is necessarily excluded from public procurement or other public benefits or aid work, or is disqualified from the practice of certain commercial activities.
If civil penalty proceedings are commenced by the Australian Securities and Investment Commission against directors or officers of a company alleging breach of their statutory duties (relying upon the underlying conduct constituting the alleged corruption or bribery), the court may, upon the declaration of offending conduct, in breach of statutory duty, make orders disqualifying such individuals from holding office and/or managing a corporation for a nominated period of time.
5.6 What is the statute of limitations to prosecute anti-corruption violations in your jurisdiction?
There is no limitation period for the prosecution of anti-corruption offences, either domestically or outside Australia.
6 Trends and predictions
6.1 How would you describe the current anti-corruption enforcement landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
The landscape in Australia is likely to see a continued spike in anti-corruption and bribery investigations and prosecutions. While whistleblower protections have been substantially improved, the prevailing attitude of the government still appears to be to hunt down those who blow the whistle on improper or illegal government conduct. This sends a very contradictory message to whistleblowers, who are told they will be protected if they expose corporate misconduct; yet if they disclose public misconduct, they will be pursued, investigated, prosecuted and convicted.
However, companies are increasingly taking proactive measures, often prompted by foreign enforcement developments, to ensure that they have a robust, proactive culture of compliance, as the risks of not doing so are increasingly seen as unsustainable.
Legislative reform that is long overdue and should be introduced by the Australian government without delay includes:
- reforms to help simplify the foreign bribery offences;
- enactment of the strict liability corporate offence of failing to prevent foreign bribery; and
- enactment of the commonwealth DPA scheme.
7 Tips and traps
7.1 What are your top tips for the smooth implementation of a robust anti-corruption compliance programme and what potential sticking points would you highlight?
Top tips for a robust anti-corruption compliance programme include the following:
- Understand your business risks.
- Design a compliance programme to match the risks.
- Implement the programme from top to bottom with support from top, middle and every level of management, so it is seen to be believed by everyone from the CEO and CFO to the newly appointed administration clerk.
- Ensure the programme applies to all third parties in your supply chain.
- Train and educate everyone on a regular basis on the programme, monitor it, review it and update it as business risks change.
- Promote a culture of disclosing misconduct and protecting the discloser.
Potential sticking points for a robust anti-corruption compliance programme include the following:
- lack of robust internal leadership;
- lack of adequate resources for compliance training, education, monitoring and review of the programme;
- too great a focus on short-term financial goals over longer-term sustainable goals;
- a willingness to ‘get the job done' or to ‘do it the local way' to secure a contract or business advantage, turning a blind eye to the programme and ethical values of integrity; and
- a prevailing culture of ‘Don't dob in a mate', which helps to shroud misconduct.
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.