Speed read: Anita Clifford examines Australia’s anti-bribery law reform proposals in the context of obligations under international law and the UK’s ‘failure to prevent’ bribery model which has been in force since 2011.
Close to twenty years after the OECD Convention on Combating Bribery of Foreign Public Officials entered into force, significant reform of Australia’s anti-bribery architecture is underway. Parliamentary debate over the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (Cth) is anticipated during the next half of 2018. With an anti-bribery focus, the Bill presents an opportunity for Australia to play a greater role in the global fight against corruption and its pernicious effect on fair business and basic human rights. Sentiments expressed by Kofi Annan on the adoption of the 2003 UN Convention against Corruption are no less pertinent today. Imploring all nations, prosperous and less prosperous, to cooperate against corruption, the then Secretary-General noted that it “hurts the poor disproportionately by diverting funds intended for development, undermining a government’s ability to provide basic services, feeding inequality and injustice, and discouraging foreign investment and aid.” Relatedly, bribery and corruption stagnates the rule of law and breeds distrust in government institutions.
But there is also a domestic motivation underlying Australia’s renewed focus on tackling bribery and corruption. In 2012, the OECD was highly critical of Australia for its lack of enforcement of foreign corruption laws. Whilst noting that Australia had made anti-bribery progress, the OECD renewed calls for increased enforcement activity in 2017. In 2018, for the fifth year in a row, Australia also slipped in the rankings of Transparency International’s Corruption Perception Index to 13 of 180 countries. According to Transparency International, factors include
“inadequate regulation of foreign political donations…inappropriate industry lobbying in large-scale projects such as mining, and the misuse of power by leading politicians”.
Proposed law reform
Introduced into Parliament on 6 December 2017, the anti-bribery features of the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (Cth) are set to significantly enhance the existing framework. The provisions aim to make the existing Commonwealth offence of bribing a foreign public official easier to prosecute and to introduce a new corporate criminal offence of failing to prevent the bribery of a foreign public official.
Currently, the former offence can only be committed where a benefit is offered to a person in order to improperly influence a foreign public official in the exercise of their duties to obtain a business advantage. That the benefit was ‘legitimately due’, an ambiguous concept vulnerable to being asserted in relation to large consultancy or agent fees, presents a line of defence. If passed, the proposed changes would see the end of any inquiry into whether the benefit was ‘legitimately due’ and instead focus on the intention to improperly influence. The proposed new provisions would also capture situations where benefits are extended to obtain a business orpersonal advantage via a foreign public official – irrespective of whether it requires the official to exercise their official duties – and see the definition of a foreign public official expanded to encompass candidates for public office.
Adding to the anti-bribery artillery, the proposed new corporate offence would see a company exposed to criminal liability where bribery occurs ‘on their watch’. Modelled on provisions that have been in force in the United Kingdom since 2010 when the Bribery Act 2010 (UK) was enacted, the offence would hold a company criminally responsible where a person who is ‘associated’ with it, such as an employee, subsidiary or agent, bribes a foreign public official for the benefit of the company. The company’s knowledge of the bribe is immaterial but a defence is available where it had reasonable anti-bribery prevention procedures in place. Encouraging good corporate practice and risk management is at the heart of the defence.
If the proposals are enacted, Australia will be the only country to follow the United Kingdom in introducing a corporate offence of failing to prevent bribery. That said, enhanced provisions for corporate liability for bribery are fundamental to the OECD Convention on Combating Bribery of Foreign Public Officials and the UN Convention Against Corruption – which Australia ratified in 1999 and 2005 respectively. Both of these instruments are central to efforts to combat bribery and corruption at international law.
Article 2 of the OECD Convention requires all Parties to establish the liability of ‘legal persons’ for foreign bribery. Article 3 requires Parties to review whether their basis for jurisdiction is sufficiently effective in the fight against bribery of foreign public officials. The genesis for the ‘failure to prevent bribery’ model, furthermore, is located in the OECD Convention’s Further Recommendation, released on 9 December 2009 on the marking of the tenth anniversary. IV of the Further Recommendation, read with Annex I, calls on Parties to adopt a model of corporate liability reflective of ‘the wide variety of decision-making systems’ in legal persons and which ensures that corporates cannot avoid responsibility by ‘using intermediaries’. It recommends that Parties consider taking one of a select few approaches, including triggering corporate liability where,
A person with the highest level managerial authority fails to prevent a lower level person from bribing a foreign public official, including through a failure to supervise him or her or through a failure to implement adequate internal controls, ethics and compliance programmes or measures.
XI of the Further Recommendation also calls on Parties to consider a debarement framework or public procurement sanctions against companies engaged in bribery to ensure that a conviction has adequate bite.
Against this backdrop, do Australia’s proposed anti-bribery reforms go far enough? The new framework represents an overdue step change in Australia’s anti-bribery efforts. However, there are potential weaknesses. For example, nowhere in the proposed new anti-bribery legislation is there reference to ‘debarement’ despite this being a key feature of the OECD’s Further Recommendation. This omission has recently been highlighted by the Senate Committee in its consideration of the Commonwealth Bill. Recommendation 20 of the Senate Committee report, published on 28 March 2018, calls for the introduction of a debarement framework where a company is found guilty of a foreign bribery offence.
Also notable is that although the new corporate offence proposal is very similar to legislation in the United Kingdom, there is a difference in scope. The corporate offence provisions under the Bribery Act 2010 (UK) capture any company that is incorporated or carries on business in the United Kingdom (and incorporated elsewhere) that ‘fails to prevent’ bribery. In this sense, the provisions have a clear extra-territorial feature and can capture any company that does business in the United Kingdom that has failed to prevent bribery. As a point of distinction, the provisions proposed in Australia focus on companies incorporated in Australia and may only apply to foreign companies that meet the involved requirements of a ‘constitutional’ corporation. The Australian approach to jurisdiction for foreign bribery offences is more conservative notwithstanding the requirement to review the basis for jurisdiction in Article 3 of the OECD Convention.
Finally, the provisions in the United Kingdom expose a company to criminal liability where an associate engages in any bribery – not necessarily of a foreign public official. The provisions go over and above the requirements of the OECD Convention and its Further Recommendation, which focus on foreign bribery. Under the United Kingdom’s legislation, a company could be exposed to criminal liability where an associate bribes a domestic public official or a private individual or company. Provisions of this kind may be seen as ‘gold plating’ but are sufficiently wide to capture the full spectrum of corrupt activity. As such, it is notable that in configuring its new anti-bribery laws, Australia is proposing to focus its new corporate offence on failing to prevent bribery of foreign officials rather than bribery generally. The question arises whether Australia is overlooking domestic bribery and corruption and bribery occurring wholly within the private sector.
This article first appeared in the ILA Reporter, the blog of the International Law Association (Australia branch).