INSIGHT

Take Two: anti-bribery reforms revived and long-awaited draft regulatory guidance released

By Rachel Nicolson, Andrew Wilcock, Lewis Winter
Anti-bribery & AML Banking Corporate Governance Industrials International Business Obligations Risk & Compliance

In brief 7 min read

The Australian Government has tabled the Crimes Amendment (Combatting Corporate Crime) Bill 2019 (the 2019 Bill) in the Senate, and the Attorney-General's Department has released Draft Guidance on the steps a body corporate can take to prevent an associate from bribing foreign public officials for public consultation (the Draft Guidance). Like the 2017 version of the Bill that lapsed earlier this year (the 2017 Bill), if passed, the 2019 Bill will strengthen Australia's foreign bribery laws, including by introducing a new corporate offence of failure to prevent bribery by an associate, and will introduce a Deferred Prosecution Agreement (DPA) scheme for resolving serious corporate criminal matters.

Partner Rachel Nicolson, Senior Associate Andrew Wilcock and Associate Lewis Winter report on the key differences between the 2017 and 2019 Bills, and the content of the Draft Guidance.

Key takeways

  • The 2019 Bill is substantially similar to the 2017 Bill, but contains some notable differences. Like the 2017 Bill, the 2019 Bill would create an offence of failing to prevent foreign bribery, and introduce a deferred prosecution agreement (DPA) scheme. Unlike the 2017 Bill, the 2019 Bill updates the definition of 'dishonesty' used by most offences in the Criminal Code 1995 (Cth) (the Code) that have it as an element, by removing the subjective limb of the test and aligning it with the Corporations Act 2001 (Cth) dishonesty test.
  • The Draft Guidance is broadly consistent with the United Kingdom Ministry of Justice's equivalent Guidance. It sets out a principles-based approach to anti-bribery compliance, as well as several 'fundamental elements' for inclusion in every corporation's anti-bribery policy.
  • The 2019 Bill will be considered in detail by the Senate early next year, and submissions responding to the Draft Guidance close on 28 February 2020. We will keep you updated as the 2019 Bill progresses through the Parliamentary process.
  • In the interim, corporations should consider whether their anti-bribery policies and procedures meet the standards set out in the Draft Guidance and consider strengthening their policies and procedures in anticipation of the passage of the 2019 Bill if they do not.

How do the 2017 and 2019 Bills differ?

In 2017, the Australian Government introduced the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017. As we reported at the time, the 2017 Bill would have significantly strengthened Australia's foreign bribery laws, however it lapsed when Parliament was dissolved in advance of this year's election.

On 2 December 2019, the Government introduced the Crimes Amendment (Combatting Corporate Crime) Bill 2019, which retains the key features of the 2017 Bill (which are described in our 2017 report), but contains some notable differences. Like the 2017 Bill, the 2019 Bill:

  • Creates an offence of failing to prevent foreign bribery, under which companies will face absolute liability for bribery by 'associates' (including subsidiaries) if they do not have adequate procedures in place designed to prevent bribery of foreign public officials by their associates; and 
  • Introduces a deferred prosecution agreement scheme to incentivise companies to self-report and cooperate with enforcement agencies in relation to serious corporate crime investigations, which will be available for conduct occurring before and after the passing of the 2019 Bill.

Unlike the 2017 Bill, the 2019 Bill contains the following features.

  • It introduces a new definition of 'dishonesty' into the Code, which will apply to most Code offences that have it as an element, including offences relating to the bribery of Commonwealth public officials, and to dishonest dealing with personal financial information.1 Under this new test, conduct is dishonest if it is 'dishonest according to the standards of ordinary people', and enforcement agencies need no longer prove that a defendant was subjectively aware that their conduct was dishonest. This amendment mirrors a recent amendment to the Corporations Act 2001 (Cth) (which we reported on in February 2019), and will make it easier for enforcement agencies to prove dishonesty.
  • To avoid any ambiguity, the 2019 Bill clarifies that the foreign bribery offence applies where a person seeks personal advantage, such as the granting of visas or other residency benefits. The 2017 Bill provided that the foreign bribery offence applied where a person sought to obtain or retain 'an advantage' through a bribe. The 2019 Bill incorporates a recommendation contained in the 2018 Senate Economics References Committee Report on Foreign Bribery, and provides that 'the foreign bribery offence appl[ies] in circumstances where a bribe of a foreign public official was to obtain or retain business or a business or personal advantage' (emphasis added).2

Adequate Procedures Guidance

The 2017 and 2019 Bills require the Attorney-General to publish guidance on the steps a corporation can take to prevent an associate from bribing foreign public officials. The Government did not publish guidance accompanying the 2017 Bill before it lapsed, however, on 3 December 2019 the Attorney General's Department published the Draft Guidance as an accompaniment to the 2019 Bill.

The Draft Guidance is principles-based, and provides that '[c]ompanies of all sizes should put in place effective and proportionate procedures to prevent bribery from occurring within their business'.3 'Proportionate' procedures are procedures that are tailored to a corporation's circumstances, including its foreign bribery risk, size and activities. 'Effective' procedures are procedures that are operationalised effectually, including through the development of a robust culture of integrity, a clear pro-compliance tone from the top, a strong anti-bribery compliance function, effective risk assessment and due diligence procedures, and careful and proper use of third parties.

In addition to setting out the principles on which anti-bribery policies and procedures should be based, the Draft Guidance sets out 'fundamental elements for which inclusion in any corporation's bribery prevention policy is generally considered necessary'.4 The elements intentionally are 'broadly consistent' with the United Kingdom Ministry of Justice's equivalent Guidance, 'to enable Australian companies that have already framed their anti-bribery policies on international guidelines to easily incorporate additional policies relevant to the Australian context'.5

The 'fundamental elements' for inclusion in every corporation's anti-bribery policy
  • Risk assessment. Corporations should conduct anti anti-bribery risk assessments to assess their bribery risk profile. Those that face significant bribery risk should adopt more extensive anti-bribery policies and procedures than those that face lower risk. Corporations should reassess their bribery risk profile as their circumstances change, eg when they enter a new market.
  • Management dedication. Senior personnel (including the board) should play a critical role in developing, implementing and promoting a corporation's anti-bribery policies.

    Corporations should apply anti-bribery due diligence procedures before entering into new business relationships.

  • Due diligence. Corporations should apply anti-bribery due diligence procedures before entering into new business relationships. In higher risk situations, due diligence should be more comprehensive, and may involve requesting details on the background, expertise and experience of relevant individuals, and verifying information through independent research and by contacting referees.
  • Communication and training. Bribery prevention policies should be communicated and made accessible to all employees and associates. Through communication and training, employees and other associates whose functions expose them to greater bribery risk should be made aware of the consequences of engaging in foreign bribery, how they are expected to respond to bribe solicitation and where to report bribery concerns.
  • Confidential reporting and investigation. Corporations should adopt an effective reporting mechanism that allows internal and external stakeholders to raise concerns about bribery risks. This should be accompanied by an effective response system that gives appropriate consideration to, and investigation of, reported allegations.
  • Monitoring and review. Corporations should regularly monitor, review and adjust their anti-bribery policies and procedures.

Actions you can take now

  • If your company wishes to respond to the Draft Guidance, it has until 28 February 2019 to do so.
  • In the interim, corporations should assess whether their anti-bribery policies and procedures satisfy the Draft Guidance and consider strengthening their policies and procedures in anticipation of the passage of the 2019 Bill if they do not.
  • If the 2019 Bill is passed, it will alter how foreign bribery offences are prosecuted, and once the DPA scheme comes into force, enforcement agencies may be open to expediting some ongoing investigations (in the foreign bribery space or elsewhere) to resolution via a DPA. Corporations that have engaged with enforcement agencies in relation to foreign bribery issues should consider how the introduction of a DPA scheme might affect their enforcement agency engagement strategy.

Footnotes

  1. 2019 Bill, sch 3.

  2. Explanatory Memorandum, Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019, 14 [75].

  3. Draft Guidance, 12 [69].

  4.  Draft Guidance, 18 [86].

  5. Draft Guidance, 12 [72].