Why Bribing Foreign Officials is a Serious Crime

Author: Nyman Gibson Miralis

Subject: Bribing Foreign Public Officials

Keywords: bribery, foreign public officials, illegitimate payments

 

Bribery is recognised as a crime around the globe under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Australia has been a signatory to the convention since 1999, and the potential penalties indicate how seriously the Australian Government takes this offence.

The offence, as codified in Australia under section 70.2 of the Criminal Code Act 1995, involves a situation where an individual or a corporation provides, offers or promises to provide a benefit to a third person who is not entitled to the benefit.

The intention of the offer is to influence a foreign public official to utilise their position to provide a business advantage (including the provision of new business or the retention of old business) to which the individual or corporation is not legitimately entitled.

 

What are the penalties for bribing a foreign official?

Under the Criminal Code, the maximum penalty for an individual is 10 years’ imprisonment and/or a fine of $1.8 million.

By contrast, a corporation may be ordered to pay a fine calculated as follows:

  • If the monetary value of the bribery benefit can be calculated, $18 million or three times the value of the benefit obtained, whichever is the greater.
  • If the monetary value of the benefit can’t be ascertained, $18 million or 10% of the corporation’s annual turnover, whichever is greater.

Furthermore, any financial proceeds earned as a consequence of the bribery are eligible for forfeiture to the Australian Government under the Proceeds of Crime Act 2002 (Cth).

The potential penalties for being found guilty of the offence of bribing a foreign official are very high, particularly in comparison with the penalties imposed on other white collar crimes such as insider trading.

So why is the offence of bribing foreign officials considered to be such a serious crime?

 

The implications of foreign bribery

The potential consequences of foreign bribery of public officials can be multidimensional given the international element of the crime.

The convention is clear on the importance of preventing such crimes, noting that bribery “raises serious moral and political concerns, undermines good governance and economic development, and distorts international competitive conditions.”

In particular, financial resources can be inefficiently and inaccurately allocated, causing economic distortions. According to the Australian Transaction Reports and Analysis Centre (AUSTRAC), the World Bank estimates the annual cost to the global economy of bribery to total some $US 1trillion.

The International Monetary Fund (IMF) considers that good financial governance is best achieved by:

  • Supporting economic policies and structural reforms of member countries in order to reinforce macroeconomic stability.
  • Promoting transparency in financial transactions.

Both of these key goals are undermined by the bribery of foreign officials, especially having regard to the economic distortions referred to above.

On a more local front, a bribery offence has the capacity to embarrass Australia internationally and affect our trading relationships, reputation and international governance.

The federal Attorney-General’s Department considers that when Australian individuals or corporations engage in unethical business practices, including attempting to obtain a benefit illegitimately, it can tarnish Australia’s trading reputation and diminish foreign investment opportunities.

As set out in the explanatory memorandum to the Criminal Code Amendment (Bribery of Foreign Public Officials) Bill 1999, ensuring that bribery of foreign officials is stamped out will result in international trade purchasing decisions being made on their merits rather than on illegitimate bases.

 

What are the Proposed changes to foreign bribery legislation

The Australian Government is also considering changes to the Criminal Code, as detailed in the Attorney-General’s Department public consultation paper titled Combatting bribery of foreign public officials. If made, these changes would significantly expand the scope of activities that could be considered as bribery of foreign public officials and make these activities criminal offences.

For example, giving benefits to candidates for public office in exchange for business advantages could soon be a crime under the Criminal Code.

 

Conclusion

There are many significant economic, political and moral implications involved in the offence of bribery of foreign public officials, rendering it one of the more serious international white collar crimes, in significant part because it permits illegitimate payments to influence important decisions and actions.

Importantly, dealing with this crime is a high priority for the Australian Government, and will remain so for the foreseeable future.

 

Nyman Gibson Miralis specialise in all aspects of white collar crime and corporate crime law, including laws concerning money laundering, fraud, tax offences and bribery of foreign public officials. If you require assistance, contact one of our expert criminal defence lawyers