20 March 2024

It was only a matter of time



KordaMentha, an independent firm in Asia-Pacific, specializes in cybersecurity, financial crime, forensic, performance improvement, real estate, and restructuring services. With a diverse team of almost 400 specialists, they provide customised solutions to help clients grow, protect from financial loss, and recover value. Trusted since 2002, they deliver bold, impactful solutions for clients.
New anti-bribery legislation means Australia catches up to international standards.
Australia Criminal Law
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Some might say that Australia tends to run behind global leaders when it comes to better practice.

In respect of anti-bribery laws, Australia was 14 years behind the UK, and even further behind the US. But we're now set to leap ahead with passage of the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 on 29 February 2024. This comes as a welcome step following the release of the Corruption Perceptions Index ('CPI') report by Transparency International, which shows limited progress or regression in the fight against corruption for a number of countries across the world, and a drop in the rankings by Australia.

Despite this massive legislative catch-up, we are still well behind other jurisdictions in the application of these new stricter anti-bribery laws, which are aimed at enabling the Commonwealth to prosecute foreign bribery and corruption better.

The most important impact from the new anti-bribery laws for organisations, however, is the creation of a new offence - failure to prevent bribery – which mirrors a similar offence in the UK Bribery Act. The new offence is no trivial matter. There is no requirement for prosecutors to prove intent or awareness, with the option that criminal charges can be brought for actions that occurred outside Australia or for actions undertaken by 'associates', a broad term that extends beyond employees to agents, contractors, subsidiaries, or other persons acting on behalf of a company. Further still, the penalties can be stiff, with potential fines of AUD 31.3 million or more.

As an example of the implications of this new offence, if your organisation has foreign manufacturing or retail operations in countries where bribery and corruption are more rampant, your company could be held liable for the actions of a contractor, who while engaged to help secure goods locally, attempts to fast track the customs process. This applies even if that contractor was engaged by an overseas subsidiary, without the knowledge or oversight of anyone here in Australia.

Fortunately, the legislation allows an exemption from the offence if organisations have in place 'adequate procedures' aimed at preventing bribery. At this stage, the legislation does not define exactly what these entail, but we can expect official guidance will follow in the months to come.

Organisations can likely expect such guidance to cover the proportionality of the procedures; arrangements to guide organisational governance, culture and accountability; requirements for a risk-based approach to formally assess foreign bribery risk; and the policies, procedures and practices that should be applied to mitigate the assessed foreign bribery risk. For example, the US Foreign Corrupt Practices Act created a need for organisations with US ties to conduct regular and detailed corruption risk assessments and due diligence on any foreign-based operations, suppliers and contractors.

As Australian anti-bribery laws finally seem to be aligning with international standards, it is now only a matter of time until the new laws are tested. That means organisations need to ask: do we have adequate procedures in place to prevent bribery?

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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