Australia has a zero-tolerance approach to corruption, and this policy knows no border or nationality. Bribery or attempts to bribe foreign public officials are considered severe crimes, as mentioned in division 70 of the Criminal Code Act 1995, which regroups all the criminal offenses and principles of criminal responsibility throughout the country.
The latest version of the Criminal Code took effect in September 2024 and features new sections and updates to existing ones per the 2021 Convention on Combating Bribery of Foreign Public Officials in International Business Transactions from the Organizations for Economic Co-operation and Development (OECD).
These modifications are known as the Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2024 and introduce the concept of “failure to prevent” foreign corruption. In this article, we’ll explore the law and its impact on compliance enforcement.
What’s new?
Added to section 70.5 of the Criminal Code, the amendment is aimed at corporations or persons who could not demonstrate they had “adequate procedures” to stop foreign bribery. Beyond the act of corruption, it’s the lack of control strategy that violates the Australian anti-bribery compliance program.
The amendment also significantly expands the definition of ‘associate,’ which now includes anyone who works for or with a corporation as an employee, officer, agent, contractor or subsidiary.
If an associate bribes a foreign official to benefit the corporation, the corporation itself is liable for the crime. This is considered an absolute liability offense, meaning the corporation is responsible, even if it didn’t know about or approve of the bribe.
A corporation can also be convicted for failing to prevent bribery, even if the associate involved isn’t found guilty. This means companies must have strong systems in place to detect and stop bribery.
The adequate procedures
An effective anti-bribery compliance program is based on five indicators:
Robust culture of integrity
- The organization conducts regular and comprehensive evaluations of bribery prevention controls and maintains oversight of their implementation
- It also takes disciplinary action against associates, including contractors and consultants, who breach contractual terms related to bribery prevention
Pro-compliance conduct
- Comprehensive accounting controls must be recognized as an essential component of foreign bribery prevention
Anti-bribery compliance function
- Guaranteeing the compliance function has adequate resources to fulfill its duties, including addressing requests for additional resources necessary to counter foreign bribery
Risk assessment and due diligence procedures
- Implementation of bribery prevention measures by the associate that are aligned with the risk associated with the transaction between itself and the corporation
Third-party oversight
- Cautious and official use of third parties like agents when dealing with foreign officials
Organizations that fail to comply with part or all of this non-exhaustive list can lead to prosecutions.
Who can be prosecuted?
The “failure to prevent” aspect of this law can apply to:
Corporations
- Financial or trading constitutional corporation (domestic or foreign)
- Located in an Australian Territory
- Registered in a Territory under the Corporations Act 2001
Associates (term added in the Combatting Foreign Bribery amendment)
- Officer, employee, agent or contractor of the first-mentioned person
- Subsidiary of the first-mentioned person
- Controlled by the first-mentioned person
- Performs services for or on behalf of the first-mentioned person
Foreign public officials
- A person who performs official duties under a foreign law
- An employee of a foreign public company
- An employee or official of a public foreign organization
- An employee or official of a foreign government
- An authorized intermediary of a public official
- A member of one of the three branches of a foreign government
- A person occupying an official post following a local custom
- A standing or nominated candidate to a foreign election
- A person providing a public service as per the foreign country‘s domestic law
Where does it apply?
Australian laws are not limited to the borders of the country. It can impact any Australian resident, citizen or company regardless of the location.
Application to Australian organizations if the wrongdoing happened
- Inside Australia by an associate (regardless of nationality)
- Outside Australia by an associate (regardless of nationality) and if it constitutes an offence against the Criminal Code in case it had been engaged in Australia
Application to foreign corporations if the wrongdoing occurred
- Inside Australia by an associate (regardless of citizenship) if it represents an offence against the Criminal Code
Penalties
A penalty unit (PU) is a standard unit of measurement used to determine fines for various legal violations in Australia. The fine for an offense is calculated by multiplying the number of penalty units specified for that offense by the current value of a penalty unit. This system ensures consistency and fairness in the calculation of fines across different jurisdictions. The value of a PU varies across federal, state and territory levels. The standard current value of a PU is AU $313.
For an individual (one or multiple) the penalty can be up to 10 years of imprisonment and up to 10,000 penalty units. 10,000 PU is currently worth U.S. $2.1 million.
For a company, 100,000 penalty units (U.S. $21 million), or if the value of the benefit can be determined by the court. The penalty can be three times the value of the benefit received; or if it cannot be determined, the penalty would be 10% of the organization’s annual turnover (whichever is the greater).
How to comply?
The “failing to prevent” offense aims to hold corporations accountable for bribery and corruption committed by their employees and associates. To potentially avoid liability, corporations can demonstrate they have implemented effective measures to prevent such wrongdoings. These measures should include a strong anti-bribery culture within the company, led by senior management.
To prepare for the updated law, corporations should conduct a thorough assessment of their bribery and corruption risks, evaluate the effectiveness of their existing anti-bribery programs, and implement measures to monitor and review their compliance efforts. Additionally, senior management should be adequately informed about the new requirements and their role in promoting a pro-compliance culture.
By taking these steps, corporations can mitigate their risk of liability and demonstrate their commitment to ethical business practices.
One of the core elements of complying with Australia’s anti-bribery and corruption laws (and many others around the world) is training. If you’re looking for solutions to help train your workforce and business partners, preview our anti-bribery and corruption courses.
