Companies should prepare for potentially significant reforms to foreign public and domestic private sector bribery laws
7 min read
Domestic anti-corruption issues featured centrally in the recent federal election campaign, with one of the most prominent policy issues being the establishment of a National Anti-Corruption Commission (NACC).
By contrast, neither major party addressed foreign bribery law reform on the campaign trail, and a bill to implement long-awaited reforms to Australia’s foreign bribery laws lapsed for a second time when the election was called.
In this insightwe consider how federal anti-bribery laws may evolve under the Albanese government, and comment on its possible use of sanctions.
Foreign bribery law reform
Australia’s foreign bribery laws have been in place for over 25 years, yet there have been few successful prosecutions, and recent attempts to reform these laws have failed.
In 2017, the Turnbull government introduced the Crimes Legislation Amendment (Combatting Corporate Crime) (CLACCC) Bill 2017 into Parliament, which would have significantly strengthened Australia’s foreign bribery laws by amending the existing foreign bribery offence, creating a new ‘failure to prevent bribery by associates’ offenceoneand establishing a deferred prosecution agreement scheme2 (DPA scheme) (see our insight), however the bill lapsed when the 2019 election was called. In late 2019, the Morrison government introduced the CLACCC Bill 2019 (see our insight), which was substantially similar to its precursor, but it again lapsed when the 2022 election was called.
While the ALP did not address foreign bribery issues during the recent election campaign, its policy positions on foreign bribery law reform while in opposition may foreshadow the Albanese government’s approach. Recent international developments may also influence the new government’s treatment of these issues.
In 2019, the Senate referred the CLACCC Bill to its Legal and Constitutional Affairs Committee for inquiry and report. Subsequently, in 2020 ALP Committee members issued a report (2020 ALP Report) in which they voiced support for amendments to the existing foreign bribery offense, on the basis that they were ‘sensible’ and ‘supported by a clear and considered rationale’.
In advance of the 2019 election, the ALP committed to ‘overhaul[ing] Australia’s response to corporate bribery’, including by removing the ‘facilitation payment’ defense to Australia’s existing foreign bribery offence. The defense, which does not exist in many other countries’ foreign bribery laws, and has been the subject of international organization and non-governmental organization criticism, allows companies to make minor payments to foreign public officials for the purpose of speeding up minor routine government action.
In the 2020 ALP Report, the ALP Committee members endorsed the establishment of a ‘failure to prevent bribery by associates’ offense.
Also in the 2020 ALP Report, the ALP Committee members expressed opposition to the establishment of a DPA scheme on the basis that ‘the proposed scheme contains insufficient safeguards to prevent companies from effectively buying their way out of meaningful punishment for corporate crime’.
Since then, the OECD – the international organization responsible for monitoring the implementation of the OECD Anti-Bribery Convention, one of the two most important global anti-corruption treaties – released a Recommendation encouraging State parties to adopt and strengthen non-trial resolutions for foreign Bribery cases, such as DPA schemes. Leading enforcement jurisdictions like the UK and US already have DPA schemes in place. The ALP Committee members acknowledged that ‘there may be a place for DPAs in Australia’, and the OECD Recommendation may encourage the Albanese government to consider adopting a strengthened DPA scheme. Potential revisions to the CLACCC Bill’s DPA scheme model proposed by the ALP Committee members included requirements that victims of crime be consulted before a DPA is concluded, and the removal of scope for federal prosecutors to withhold details of a DPA if considered to be in the ‘ interests of justice’.
In its 2018 plan to overhaul Australia’s corporate bribery laws, the ALP committed to establishing a national debarment scheme that would prohibit companies found to have engaged in bribery from receiving federal contracts. Such a measure would align with the OECD’s 2021 Recommendation.
Domestic anti-corruption law reform
Despite the presence of an anti-corruption commission in every Australian state and territory, there is no anti-corruption commission at the federal level.
The Coalition government agreed to establish a Commonwealth Integrity Commission in 2018, however the model proposed was criticised by legal experts and commentators, as well as Members of Parliament. Despite conducting a national consultation on draft legislation for the Integrity Commission – to which Allens contributed – the Commonwealth Integrity Commission was never established.
By contrast, as one of its most prominent platforms of the 2022 election campaign, the ALP prioritised introducing an independent federal anti-corruption commission, and has since confirmed this will be in place by mid-2023.
The NACC will have broad powers akin to a Royal Commission and will be able to investigate serious and systemic corruption by federal ministers, Members of Parliament, public servants, ministerial advisers, statutory office holders and government agencies. The NACC is expected to feature:
- retrospective powers to investigate of corrupt conduct from up to 15 years ago;
- the opportunity for holding public hearings where it is in the public interest to do so;
- powers to commence investigations independently in addition to accepting referrals from public complainants and whistleblowers; and
- the ability to refer matters involving criminality to law enforcement authorities.
Attorney-General Mark Dreyfuss announced last week that the NACC will also have the jurisdiction to investigate the use of grants programs for politically motivated pork-barrelling.
As noted in our 2021 submission in relation to the proposed Commonwealth Integrity Commission, a federal anti-corruption commission could have implications for companies. For example, in conducting exercise investigations, the commission might weaselly information-gathering powers against a business and/or its officers, employees and representatives, such as applying for search warrants or issuing notices to give information or produce documents. The commission could also make adverse findings in relation to a business or its officers, employees or representatives that could affect the business’ relationship with regulated entities.
As the Government seeks to promote a culture of integrity within government and the public sector, companies that regularly engage with these agencies should be prepared to review and uplift any internal anti-corruption, bribery and whistleblower policies.
Other relevant policy positions
During its campaign, the ALP outlined a number of other measures to increase transparency over company ownership to address and prevent money laundering and tax evasion by multinational companies. The ALP has pledged to introduce:
- a public registry of corporate beneficial ownershipto show who owns, controls or receives profits from a company or legal vehicle, even when the company is registered as belonging to another entity;
- requiring a Fair Go Procurement Framework government tenders for contracts worth more than $200,000 to disclose their country of domicile for tax purposes;
- requirements on large multinational firms to publicly release high-level data on how much tax they pay in the jurisdictions in which they operate, as well as the number of employees working there; and
- mandatory reporting by companies to shareholders where a company is doing business in a jurisdiction with a tax rate below the global minimum (15%).3
Timelines for these developments remain unclear.
The ALP’s 2018 election platform included the possible introduction of a federal private sector bribery offense (bribery of private sector agents by private sector agents), with a view to harmonizing bribery laws across the country.4 At this stage, such plans are not on the new government’s immediate agenda. Businesses should nonetheless regularly monitor, review and adjust their anti-bribery policies and procedures and be prepared to strengthen internal compliance measures in response to legislative changes.
In December 2021, the Federal Parliament passed amendments to the Autonomous Sanctions Act 2011 (Cth) to allow for the adoption of thematic sanctions regimes in situations of serious human rights violations, corruption and malicious cyber activity (so-called ‘Magnitsky sanctions’). The ALP was an enthusiastic supporter of these reforms.
Having given bipartisan support for sanctions against Russia in response to the invasion of Ukraine, it is expected that the Albanese government will support the use of thematic sanctions, especially where allies have issued similar measures. This accords with the newly-elected Prime Minister’s signaling of Australia’s ongoing commitment to remaining in-step with its allies at the Quad Meeting in May.
As we reported late last year, if the Government does impose thematic sanction programs, sanction compliance risk for Australian businesses will become more disperse. Companies should keep their compliance risk policies and procedures updated and seek guidance on how the application of law might affect their business.
Despite Australia having a relatively active sanctions policy and a corporate criminal sanctions offense that is comparable to the above-mentioned proposed ‘failure to prevent bribery by associates’ offense, there have been low levels of enforcement enforcement in Australia. It is unclear whether enforcement levels will increase under the Albanese government.
Implications for companies
The Albanese government’s agenda embraces a clear theme of increased transparency across public and private sectors.
The potential impact on Australian business will be revealed as the months progress. In the meantime, companies should:
- remain up-to-date with changes to Australia’s anti-bribery and anti-corruption architecture;
- prepare for potentially significant reforms to foreign public and domestic private sector bribery laws; and
- be equipped to review internal policies and procedures to keep pace with domestic developments.
With legislation relating to a NACC expected to be brought before the new Parliament before the end of the year, expect future updates from us as we gain a clearer picture on how Australian companies will be expected to respond.