Foreign Bribery and International Criminal Law

Bribing or attempting to bribe a foreign public official to influence a business outcome is a serious crime. Australian companies or individuals engaging in this activity can be prosecuted not only under Australian law, but also under the laws of foreign countries.

We explore some key considerations presented in the Foreign Bribery factsheet provided by the Australian Government.

 

When does the offence apply?

The offence applies where the conduct constituting the offence occurs in Australia, or on board an Australian aircraft or an Australian ship.

The offence also applies to conduct outside Australia in three situations. This is where, at the time of the alleged offence, the person who is alleged to have committed it is:

  1. an Australian citizen
  2. a resident of Australia, or
  3. a body corporate incorporated by or under a law of the Commonwealth or of a State or Territory.

The offence applies regardless of the outcome or result of the bribe or the alleged necessity of the payment.

 

What are the penalties?

Domestically, the offences for foreign bribery carry significant penalties for individuals and companies. Individuals can face maximum penalties of 10 years imprisonment and fines of up to $1.8 million.

The maximum penalty for a company is the greater of an $18 million fine, three times the total benefit obtained from the bribe, or 10% of the company’s annual turnover.

 

Liability under foreign laws

Bribery by an Australian company or individual of an official in a foreign country may give rise to liability under the laws of that country.

However, Australian companies and businesses may also be liable under anti-corruption laws of third party countries. For example, the extended jurisdiction of the United States Foreign Corrupt Practices Act of 1977 includes businesses that issue registered securities under US law.

This extended jurisdiction has enabled the United States to prosecute non-US companies and individuals for actions outside the United States, including mobile phone manufacturer Siemens, which in 2008 was fined a record US$1.6 Billion in the United States for corrupt activity in Europe.

Companies and individuals considering whether or not a payment to a foreign official is lawful must therefore consider a wide range of potential liability, may face prosecution in multiple countries, and should take all appropriate steps to ensure neither they nor their employees or agents engage in bribery. It is recommended to seek independent legal advice.

Companies need to be aware that they may be liable for the actions of their employees and agents under Australian law and foreign law. People that engage in bribery while acting as an agent also may be individually liable and may be prosecuted under Australian or foreign law.

 

Potential defences to the Australian foreign bribery offence

There are two possible defences to the foreign bribery offence:

 

1. The advantage was permitted or required by the written laws that govern the foreign public official

This defence applies where a written law governing the foreign public official expressly permits or requires the benefit to be given. Subsection 70.3(1) of the Criminal Code lists the laws that govern different public officials.

 

2. The benefit provided constituted a ‘facilitation payment’

This defence can apply where:

  • the benefit is ‘of a minor value’
  • the benefit was offered ‘for the sole or dominant purpose of expediting or securing performance of a routine government action of a minor nature’, and
  • the person made a record of the payment as soon as practicable afterwards.

Individuals and companies must be aware that, even if a benefit constitutes a legitimate facilitation payment under Australian law, people making these payments may be liable for bribery under the laws that govern the foreign public official.

 

What are some examples of foreign bribery?

The Australian Government factsheet provides a number of examples of foreign bribery in action.

 

Australians overseas

An Australian businessman in country X wants to enter into a contract with the local provincial authority. He offers the provincial planning officer a payment in a bid to have his tender proposal considered favourably.

Even though all the activity took place in country X, the businessman can be prosecuted in Australia and could be imprisoned for up to 10 years and/or receive a fine of up to $1.8 million, regardless of whether the businessman secured the contract.

 

Payments through intermediaries

An Australian businesswoman wants to enter into a contract with the local provincial authority in country X. She instructs her accountant in country X to offer the provincial planning officer a payment in a bid to have her tender proposal considered favourably.

Even though the businesswoman did not offer the bribe herself, and the offer of the bribe occurred in country X, the businesswoman can be prosecuted in Australia and could be imprisoned for up to 10 years and/or receive a fine of up to $1.8 million, regardless of whether the businesswoman secured the contract.

Note: if the accountant was an Australian citizen or resident of Australia, the accountant may also be prosecuted in Australia.

 

Payments to third parties

An Australian businessman in country X has entered into a contract with the local provincial authority. Certain legislative obligations apply to the contract. In an attempt to have those legislative obligations waived, the Australian businessman provides expensive gifts to the wife of the provincial planning officer.

Even though all the activity took place in country X, and the bribe was not paid to the government official, this businessman can be prosecuted in Australia and could be imprisoned for up to 10 years and/or receive a fine of up to $1.8 million, regardless of whether the legislative obligations were waived.

 

Indirect benefit

An Australian businesswoman wants to win a tender in country X. The foreign official in country X arranges for the Australian businesswoman to purchase services at an inflated price and in return the foreign official will award the Australian businesswoman the government contract.

The purchase of services from the foreign official at an inflated price is a benefit not legitimately due and this businesswoman can be prosecuted in Australia, and could be imprisoned for up to 10 years and/or receive a fine of up to $1.8 million, regardless of whether the businesswoman secured the contract.

Nyman Gibson Miralis provide expert defence in cases involving corruption and bribery of foreign public officials, as well as assisting companies and individual to become compliant with anti-bribery and corruption legislation. Contact us if you require assistance.