Foreign Bribery and White Collar Crime: Public Consultation Papers Released

Wednesday 19 April 2017 @ 11.22 a.m. | Corporate & Regulatory | Crime | Legal Research | Trade & Commerce

Recently, on 4 April 2017, the Minister for Justice, Michael Keenan, released a public consultation paper, seeking feedback on proposed reforms to Australia's current foreign bribery regime. The reforms are aimed at assisting law enforcement agencies with their fight against corruption - the paper is entitled Combatting Bribery of Foreign Public Officials; Proposed Amendments to the Foreign Bribery Offence in the Criminal Code Act 1995. In his Media Release, the Minister describes the proposed changes as:

" . . . tough new laws that will help uncover bribes to foreign officials and ensure perpetrators face the full force of the law." and goes on to say: "These changes will ensure the white-collar criminals who attempt to bribe foreign public official will have nowhere to hide, . . ."

Background to the Foreign Bribery Issue

For more than 16 years, Australia has been seriously committed to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (know as the Anti-Bribery Convention), having first become involved in 1999. The Anti-Bribery Convention obliges States (the parties to the convention) to make criminal the bribery of foreign public officials and implement a range of related measures to make such criminalisation effective. To this end, Australia has put these obligations into effect in the Criminal Code Act 1995 (Cth) (the Criminal Code) in the "foreign bribery offence" contained in section 70.2 of the Criminal Code and which carries significant penalties for individuals and companies.

Key Changes Proposed in the Consultation Paper

The key proposed changes outlined in the consultation paper are:

  • Extending the definition of foreign public official to include candidates for office: Experience indicates that companies not  only target existing officials, but also candidates for public office with the intent of gaining advantages once the candidate takes office.
  • Extending the offence to cover bribery to obtain a personal advantage: Experience shows that foreign bribery can occur where  the advantage sought is personal, and not connected with business, such as personal titles, or visa and immigration requests.
  • Creating a new corporate offence for failing to prevent foreign bribery: Companies would be automatically liable for foreign bribery committed by employees, contractors and agents, except where the company can show they had adequate procedures designed to prevent foreign bribery.

The changes flow from the view that the offence in its current form poses challenges for law enforcement in typical cases of foreign bribery, which may involve, for example:

  • the use of third party agents or intermediaries;
  • instances of willful blindness by senior management to activities occurring within their companies; and
  • a lack of readily available written evidence. 

Why Foreign Bribery is Also a Local Issue

The bribery of foreign public officials (known as "foreign bribery") carried out in the course of international business dealings is, in the view of government and law enforcement around the world, a serious problem. It is a crime harming those who play by the rules, redirecting money away from communities and economies, and undermining the rule of law. Such bribery when carried out by Australians and Australian businesses can have damaging effects on international standing and adversely affect global markets for Australian exports.

The cost of this form of corruption to Australia is reported to be an estimated $8.5 billion every year, and, in the Ministers words:

"Foreign bribery is a serious offence. It harms those who play by the rules, siphons money away from local communities and undermines the rule of law, . . ."

However, while the effects are clear, foreign bribery is also said to be "very difficult to detect and prosecute". The offence is often committed offshore making evidence hard to identify and easy to conceal as a legitimate transaction. This is why the foreign bribery reforms are also intended to complement the proposed Deferred Prosecution Agreement Scheme, also recently released as model for public consultation last (see Proposed Model for a Deferred Prosecution Agreement (DPA) Scheme in Australia - released March 2017). The DPA is a new mechanism proposed by the government to enable law enforcement agencies to crack down on white collar crimes, under the DPA, prosecutors could agree to defer a prosecution for corporate wrongdoing if the company concerned complied with a series of conditions to rectify the harm caused and prevent further offending. Combined with a DPA model, the strengthened foreign bribery measures see the Minister and the government claiming that Australian law enforcement agencies have greater power to pursue and catch white collar criminals.

Next Steps

The foreign bribery consultation paper is now in the submissions phase, with submission due to the Attorney-General's Department by close of business Monday, 1 May 2017. The DPA paper is also open to comment until 1 May 2017.

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