Whatever happened to the Combatting Corporate Crime Bill? A recent OECD Report shows the Australian Government has not given up on anti-bribery law reform and police and prosecutors are actively pursuing foreign bribery matters.
The Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (Cth) promised to be the most significant shake up of Australia’s anti-corruption landscape for companies in two decades, since the foreign bribery offence was introduced in 1999. It contained a new ‘failure to prevent’ foreign bribery offence and the framework for a new corporate crime enforcement model in the form of a deferred prosecution agreement (DPA) scheme. In stark contrast to the interest surrounding the Bill’s introduction, it very quietly lapsed on 25 July 2022 after it failed to pass before Parliament was prorogued ahead of the 2022 Australian federal election.
So what now? What does the OECD Report and other developments signal about the future of reform and enforcement activity, and what should business and executives be considering now?
Foreign bribery law reform still on the table
The Combatting Corporate Crime Bill was part of Australia’s efforts to give effect to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the Convention). The Convention established legally binding standards to criminalise foreign bribery and the OECD Working Group on Bribery actively monitors the implementation and enforcement of the Convention. Australia has been a committed party to the Convention since 1999. The OECD has recently published its latest Report on Australia’s progress against the Working Group’s Recommendations for Action, since December 2021.
While the Bill may have lapsed, the OECD Report confirms that the Australian Government remains ‘strongly committed to combatting corporate crime and bribery of foreign public officials’ and ‘will consider reforms to the corporate criminal framework and foreign bribery offences, including reforming offences in the Criminal Code to remove undue impediments to the successful investigation and prosecution of foreign bribery’.
The Combatting Corporate Crime Bill included amendments to improve the effectiveness of the existing foreign bribery offence in section 70.2 of the Commonwealth Criminal Code, which can prove difficult to substantiate in typical cases of foreign bribery. Common features of foreign bribery cases such as the use of third party agents, questionable knowledge by senior management and limited written evidence, which is often only located offshore, make the primary offence challenging to prove. The proposed ‘failure to prevent’ offence, modelled on a similar provision in the UK Bribery Act 2010, would have rendered a company liable where an associate of the company committed bribery for the profit or gain of the company, and the company did not have adequate procedures in place to prevent the commission of foreign bribery offences by its associates.
What could future reform look like?
The Australian Law Reform Commission Final Report on Corporate Criminal Responsibility (April 2020) broadly supported the use of the ‘failure to prevent’ offence model for foreign bribery, but recommended enhanced judicial oversight for the DPA scheme. In light of this support, and positive experience with the UK provision, it seems likely that future reforms will echo the Combatting Corporate Crime Bill.
There is also a prospect that future reforms may go further and apply to other offences in addition to foreign bribery. The ALRC contemplated that a ‘failure to prevent’ model could be applied to other Commonwealth offences that might arise in the context of transnational business, including modern slavery and tax evasion. More expansive provisions are already in play overseas – the UK has enacted ‘failure to prevent’ tax evasion offences and is considering a proposed ‘failure to prevent’ fraud offence.
Enforcement activity alive and well
In the meantime, police and prosecutors continue to take action against individuals and companies for alleged foreign bribery, using the tools already in their kit. The OECD Report highlights current operations and ongoing proceedings relying on the existing foreign bribery offence and other enforcement measures. The Report notes that as at November 2022, the AFP had 21 ongoing foreign bribery investigations, including matters currently before the courts. Nine new investigations were opened since December 2021. Key ongoing cases include:
- In 2018, the AFP charged a company and six individuals with foreign bribery offences. In June 2021, the company was sentenced in relation to three charges for conspiracy to commit foreign bribery, with fines imposed totalling $1,471,500. An appeal by the Commonwealth Director of Public Prosecutions on grounds including the inadequacy of the sentences was dismissed in July 2022 and a further appeal is currently before the High Court.
- In 2020, an Australian property developer was charged with bribing a foreign official and four counts of false accounting, in relation to the sale of a property in Melbourne to a Malaysian Government entity. The AFP obtained restraining orders over assets valued at about A$1.6 million, including property owned by a related company. The criminal prosecution and civil proceedings under proceeds of crime legislation remain ongoing.
- In 2020, the AFP charged a company with conspiracy to commit foreign bribery in respect of Nauruan foreign public officials. The criminal prosecution remains ongoing.
What should you do now?
The lapsing of the Combatting Corporate Crime Bill is not a sign for complacency. The comments in the OECD Report suggest that we may still see foreign bribery law reform during the term of the current Government and show that enforcement agencies are actively pursuing individuals and companies accused of foreign bribery. The Labor Government clearly has appetite to tackle corruption issues. The Government has already acted on its commitment to tackling corrupt conduct in the domestic sphere, with the establishment of the National Anti-Corruption Commission. The ‘NACC’ is due to commence operations in mid-2023 and will have jurisdiction to investigate corruption issues that could include bribery of Commonwealth public officials.
Companies should remain vigilant and continue to invest in effective and proportionate procedures to prevent bribery, foreign and domestic. The draft Guidance published by the Commonwealth Attorney-General’s Department in preparation for the Combatting Corporate Crime Bill is still relevant in this regard, and provides useful guidance for companies seeking to uplift their anti-bribery compliance frameworks. There is no one size fits all approach, but appropriate measures could include:
- maintaining an up-to-date anti-bribery and corruption (ABC) risk assessment, that is appropriately resourced and proportionate to the scale of your business;
- ensuring effective due diligence procedures are applied to engaging third parties, in mergers and acquisitions and other relevant situations;
- regular and thorough assessments of whether existing ABC policies and procedures are effective and up-to-date; and
- providing updated ABC training and encouraging the reporting of concerns through whistleblower channels or other internal reporting lines.