Foreign Bribery

Author: Nyman Gibson Miralis

Subject: Foreign Bribery      

Keywords: Foreign bribery, solicit bribery, attempt to bribe, conspiracy to bribe foreign officials

 

Bribing a foreign official is a crime. It is an offence contrary to section 70.2(1) of the Criminal Code Act 1995 (Cth) (‘Code’). The maximum penalty is ten years imprisonment, a fine of 10,000 penalty units, or both.

Conspiracy to bribe a foreign official is punishable as if the offence of bribing the foreign public official had been committed, pursuant to s 11.5 of the Code.

 

Case of R v Jousif; R v I Elomar; R v M Elomar [2017] NSWSC 1299

The Supreme Court of NSW recently handed down a sentencing judgment dealing with the offence of conspiring to bribe a foreign official, namely an Iraqi official, contrary to sections 11.5(1) and 70.2(1) of the Code.

The substance of the charge was that the accused conspired with each other and Mr Al Zubaidi to provide a benefit to another person with the intention of influencing a foreign public official in the exercise of the official’s duties as a foreign public official, in order to obtain business.

All three of the accused plead guilty to the offence charged.

 

Facts of the case

Mr I Elomar and Mr M Elomar (‘the Elomar brothers’) were directors and equal shareholders of Lifese Pty Ltd (‘Lifese’), a company specialising in engineering, infrastructure and construction projects both in Australia and overseas.

Around 2013, Lifese’s turnover dropped significantly as they could not secure many  projects. This is when Mr Jousif approached the Elomar brothers to introduce to Mr Al Zubaidi the proposal to tender to secure business contracts with the Iraqi government.

It was known to Mr Jousif and the two associates, Ms Abraham and Mr Al Zubaidi, that to secure government contracts, the Elomar brothers had to bribe the relevant Ministry officials in Iraq.

The Elomar brothers only became aware of the need to bribe the foreign public official and the plan to do so, around 17 August 2014. They initially objected to paying a bribe but eventually provided Mr Jousif with US$980,000.

The money was transferred by Mr Jousif to Mr Al Zubaidi in Iraq as a charity fund “to help the Christina people of North Iraq”. Unbeknown to them, the Australian Federal Police had already intercepted telephone calls and they were under surveillance.

Following the payment, the Elomar brothers and Mr Jouisf were arrested and charged on 15 February 2015.

No contracts were ever allocated to Lifese by the Iraqi government.

 

Approach of the Court in sentencing

In this sentencing judgment, the court made important remarks which indicated the court’s approach to foreign bribery offence.

It is a crime that is rarely prosecuted but not rarely committed
It was submitted on behalf of the offenders that the offence of bribing a foreign public official was ‘rare’. Accordingly, the general deterrence was said to be not as significant and leniency could be afforded on that basis.

Adamson J stated that it is unclear whether the argument by the defence was that the offence was ‘rarely’ committed or ‘rarely’ prosecuted. Her Honour resolved the matter by concluding that the crime is rarely prosecuted as it is difficult to detect but not rarely committed.

As such, Her Honour rejected the submission to exercise leniency on the basis that general deterrence was not significant. In fact, Her Honour found it to be the contrary at [270]:

It is important that the sentence includes an element of denunciation so that those Australians who carry on business overseas appreciate that bribery of foreign officials is as serious and as criminal as bribery of local officials and can never be excused, much less justified, on the basis of a business imperative.

 

Common practice of business to bribe cannot be a mitigating factor

The defence counsel each put forward an argument that the conspiracy to bribe a foreign public official, namely Iraq, ought to be regarded as considerably less serious than conspiracy to bribe a Commonwealth public official in Australia.

A reason for this submission was that the “unofficial system of benefits was a pervasive part of business with Iraq”.

On the other hand, the Crown submitted that to account for such a system in Iraq to lessen the seriousness of the offence was inconsistent with the object of the legislation.

Adamson J accepted Crown’s submission and stated at [226]:

The evident parliamentary intention when implementing Australia’s obligations under the Convention by enacting Division 70 of the Code was to make laws criminalising bribery of foreign public officials correspond to local laws criminalising bribery of local public officials. In these circumstances, it is not to the point whether corruption is thought to be more common in the nation where the foreign public official is located than in the jurisdiction which conducts the prosecution. (Emphasis added)

 

Does bribery cause damage?

The counsel for the offenders submitted that as no government contract was secured by Lifese, no damage was caused as it did not have any ‘anti-competitive effect’ on other bidders.

Adamson J found that “bribery by its very nature tends to distort markets by giving a competitive advantage to the person who makes the most substantial bribe and tends to impede the assessment of tenders on any rational basis” (at [260]).

The approach taken by the court indicates that the loss or damage is incurred from the moment a person engages with conduct consistent with bribery. Consequently, a mere fact that the anticipated benefit was not received by the offenders cannot indicate an absence of damage or loss.

 

Sentence

All three offenders were sentenced to a non-parole period of 2 years and head term of 4 years.

In addition, the Elomar brothers were fined $250,000.

 

Conclusion

The offence of bribery results in inefficient allocation of resources and undermines the economic system. It is treated by the government as a threat to democracy and an impediment to economic development.

As evidenced from the recent case, this offence is treated as a serious offence with a need  for significant general deterrence due to  the innate damage bribery  has on the economic system.

 

Nyman Gibson Miralis are experts in foreign bribery matters that involve multiple jurisdictional investigations. If you require assistance, contact one of our expert criminal defence lawyers