Giving it another go – Australia’s third attempt to introduce ‘failure to prevent’ foreign bribery offence

The Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023

Current Legal Landscape

Under Australia’s current anti-bribery framework regulators assert that they are faced with various barriers when it comes to detecting, investigating and successfully prosecuting instances of foreign bribery.

The Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 (Cth) (Bill) was Introduced on 22 June 2023. Overall, the amendments the Bill proposes aim to:

1. simplify the legal landscape; and
2. remove the existing barriers to effective prevention and accountability in respect of foreign bribery offences.

In terms of reform, this is not the first (or even the second) time that the Government has attempted to strengthen its foreign bribery laws, the most recent endeavour being the anticipated Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (Cth) which lapsed despite bipartisan support.

Businesses in Australia with operations out of the jurisdiction should keep an active watch on the passage of this bill and, in particular, review any draft guidance published by the Australian Government on what ‘adequate procedures’ are to allow existing internal policies, procedures and training to be quickly updated where necessary.

Proposed Amendments

In summary, the key proposed amendments to Australia’s existing foreign bribery laws include:

• a new indictable offence for corporations that fail to prevent foreign bribery. A company will contravene this offence where an associate (which has broad application and would include officers (meaning directors and senior management), employees, agents, contractors) has committed bribery offences for profit or gain of the company. A company will have a defence if it can show it had ‘adequate procedures’ in place to prevent the bribery offence;
• changes to make prosecution of foreign bribery more straight forward, including:
  • amending the definition of ‘foreign public official’ so that it includes candidates for public office;
  • removing the current requirement that a foreign public official be influenced while exercising official duties; and
  • replacing the current requirement that the prosecution demonstrate that a bribe or business advantage was not ‘legitimately due’, with the less onerous concept of ‘improperly influencing’ a foreign official;
  • broadening the scope of the foreign offence to include bribery to obtain a ‘personal advantage’ as opposed to a ‘business advantage’; and
  • clarifying that the accused need not have a particular business or advantage in mind when engaging in a foreign bribery offence.

What are the practical implications and what should your business be doing to prepare?

The removal of existing barriers to establish foreign bribery offences will allow prosecutors to pursue potential instances of foreign bribery and secure convictions more readily.

The new failure to prevent offence will hold corporations directly liable for the foreign bribery activities of their associates, unless they are able to demonstrate that they had adequate prevention measures in place. The proposed penalties are substantial with a corporation exposed to the greatest of the following:

• 100,000 penalty units ($27.5 million at the time of publication); or
• if the court can determine the value of the benefit obtained directly or indirectly by the associate from the conduct, three times that value; or
• if the court cannot determine the value of that benefit, 10% of the company's annual turnover for the 12 month period ending at the month in which the associate committed, or began committing, the bribery.

Practical steps that you can take now are to:

1. Keep a watching brief on the passage of this bill through parliament, add it to your risk register, and review the foreshadowed guidance on what ‘adequate procedures’ are; and
2. Once draft guidance is published conduct a thorough review of your internal policies, procedures, and training to ensure that they address matters. Businesses wishing to get a head start could look to the UK guidance for an indication of what may be included (but be sure to check back when Australia publishes its own).

Bird & Bird’s global team has extensive experience advising businesses on anti-bribery and corruption risk. Please feel free to get in touch for a discussion on these proposed reforms.

Contacts: Jonathon Ellis, Kristy Peacock-Smith, Jessica Laverty.