Penalty awarded in respect of foreign bribery offence may have wider consequences for “three-pronged” penalties under Australian law

Under the Commonwealth Criminal Code, the maximum pecuniary penalty applicable for the offence of foreign bribery is the greater of the following:

• 100,000 penalty units;
• three times the value of the benefit obtained that is reasonably attributable to the offending conduct; or
• if the court cannot determine the value of that benefit, 10% of the corporation’s annual turnover during the 12-month period ending at the end of the month in which the offending conduct occurred.

In King v Jacobs, Jacobs Group Pty Ltd (Jacobs) pled guilty to three charges of conspiracy to bribe a foreign public official. In determining the applicable maximum penalty, the High Court considered the second prong of the above test. The High Court held that, in the context of foreign bribery offences, the “value of the benefit” means the “gross benefit” (being total monies received for performance of the contract) rather than the “net benefit”, (being the gross benefit, minus expenses or other outgoings incurred in fulfilling the party’s obligations under the contract, other than those paid as part of the bribery).

Depending on the applicable contract values, calculating the value on the basis of the “gross benefit” as opposed to the “net benefit” may have a significant impact on penalty. In King v Jacobs, the difference between the gross benefit and the net benefit associated with the count of foreign bribery in issue was approximately AU$7.4 million (and AU$22.3 million when tripled for the purpose of the pecuniary penalty in accordance with the second prong above).

Similar ‘three-pronged’ maximum penalty formulations exist in various other statutes including in respect of:

• serious and repeated interferences with privacy under the Privacy Act 1988 (Cth);
• cartel offences under the Competition and Consumer Act 2010 (Cth);
• bribery of a Commonwealth public official under the Criminal Code Act 1995 (Cth);
• civil penalty offences under the Corporations Act 2001 (Cth); and
• civil penalty offences under the Australian Securities and Investments Commission Act 2001 (Cth).

Accordingly, the High Court’s decision could have far-reaching consequences if a consistent approach is taken to the calculation of penalties awarded under those provisions.

Authors: Jonathon Ellis, Emma Croft, Anika Talukder and Eleanor Clifton-Bligh