Author: Nyman Gibson Miralis

Subject: Foreign Bribery Law

Keywords: foreign anti-bribery, international law, domestic law, United Nations Convention against Corruption, Criminal Code Act 1995 (Cth)

 

Australia’s international law obligations play an important part in the development of domestic law. In the area of foreign anti-bribery, this is no different.

This article will shed light on the relationship between Australia and the international community, through which international policies and organisations may come to influence the development of Australian law.

It will then consider some of the proposed changes to the penalties which attach for a conviction of foreign anti-bribery, and explain why successfully stamping out foreign bribery cannot rely purely on punitive penalties without  a change of corporate culture towards compliance and an increase in the understanding of the law by managers and agents.

 

As a member of the international community, Australia has obligations under a number of treaties and conventions it is a signatory to, and has commitments to prescribe laws in order to satisfy these obligations.

An example of such an instrument is the United Nations Convention against Corruption, which came into force on 14 December 2005. As a result of these obligations, the Federal Parliament may prescribe laws to amend or create new powers dedicated to the enforcement of anti-bribery.

It is significant to appreciate the context of Australia’s commitments on an  international level as developments on that front could indicate future changes within domestic law.

 

What is foreign bribery and what are the maximum penalties?

Foreign bribery is committed when conduct alleged to be corrupt is committed wholly outside Australia, and the accused is an Australian citizen, is an Australian resident, or a body corporate incorporated under a law of the Commonwealth or State / Territory.

At the federal level, the offence of foreign bribery is embodied in section 70.2 of the Criminal Code Act 1995 (Cth). The maximum penalties attaching to the offence of foreign anti-bribery are harsh.

If convicted, the maximum penalty involves 10 years imprisonment, a maximum fine of $1.1 million, or both.

If liability for the offence arises in respect of conduct attributable to a corporation, the maximum penalty can reach $11 million.

The reality of these penalties becoming more punitive could soon materialise. Proposed changes are being considered, and if passed into law, will see an increase of fines for individual offenders reaching $1.8 million. Similarly, the punitive effect on corporations will also be heightened with the maximum under the proposed law being a fine of up to $18 million.

 

Will increasing the penalties lead to a reduction in foreign bribery?

Whether these proposed amendments will have an effect on corrupt conduct is a separate question. The issue is clearly a serious one, with the World Bank having estimated that up to $1 trillion is involved in transactions facilitating corruption.

If the increased penalties are passed into law, the government’s attitude towards companies and individuals who commit such offences would be very clear.

Nonetheless, this would still present itself as a paradox because an increase in the maximum punishment is only one aspect of the regime; it may be the arrow that misses the target.

A survey published by Deloitte in 2015 may shed some light because it found that many companies did not fully appreciate the risks which accompany the conduct and facilitation of business practices. The survey highlighted that  some companies operated under the belief that corrupt practices could not be a legitimate concern within their operating frameworks. The problem with bribery  may therefore lie with the compliance attitudes of companies which may believe that the  problem does not exist.

 

What is the history of foreign bribery prosecutions in Australia?

The picture of Australia’s anti-corruption performance is not a one dimensional one for many reasons. The compliance attitudes of companies may be myopic notwithstanding the already punitive penalties which exist under Commonwealth law. Ignorance of the specific laws in place is not an issue unique to Australia as surveys conducted in the United States of America and the United Kingdom have suggested that only a minority of companies are aware of the laws in those jurisdictions.

In the United States, only one third of those surveyed could point to the relevant legislation Foreign Corrupt Practices Act of 1977.

In reality, there has been critical discussion about the lack of reliance by law enforcement agencies on these laws.

An article by the Australian Broadcasting Corporation (ABC) notes that “the only foreign bribery investigation that has resulted in prosecutions in Australia is the highly publicised case involving the Reserve Bank Subsidiaries Securency and Note Printing Australia”. In other words, the actuality of a risk of prosecution – on top of the general trend of ignorance of many companies – may result in the weakening of a perception of the need to comply.

The problem that foreign bribery presents has raised a considerable challenge for the government. In June 2015, the Australian Senate referred an inquiry into foreign bribery to the Senate Economics Reference Committee to implement and recommend measures to provide official guidance to corporations as to a the appropriate culture of compliance, and ways to improve and consolidate the offences relating to foreign bribery.

This Report on Foreign Bribery is expected to be released an published on 1 July 2016.

 

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