Jasmine Forde, Emma Lawrence, Michelle Mizutani and Sati Nagra explain the implications of the stringent new corporate offence for failing to prevent bribery of foreign public officials – and how businesses can prepare in order to avoid heavy penalties.
A landmark legislative change in Australia, effective from 8 September 2024, imposes an absolute liability on corporations for foreign public official bribery conducted by their ‘associates’ — a term encompassing a broad range of parties acting on the corporation’s behalf. With potential penalties reaching the greater of AU$31.5 million, triple the benefit gained, or 10% of annual turnover, the stakes have never been higher.
The new laws incentivise businesses to critically evaluate and enhance their anti-bribery controls because the only defence to liability is demonstrating that the company has ‘adequate procedures’ in place to prevent bribery. Companies must act swiftly to reassess their risk profiles and fortify their compliance programs to navigate this new legal framework successfully.
The message is clear: proactive engagement in robust anti-bribery measures is a fundamental business imperative. Read on for more.
The new anti-corruption measures
On 8 September 2024, the Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2023 (the Act) came into force ushering in significant changes to the Criminal Code Act 1995’s foreign public official bribery laws.
The most significant change is a new corporate offence of failure to prevent bribery of a foreign public official by an ‘associate’ (the Corporate Offence).
The Corporate Offence is modelled on the corporate bribery offence introduced by the UK Bribery Act in 2011 that has influenced a shift to more advanced anti-corruption measures in corporates around the world.
Five things to know about the Corporate Offence
- It focuses on Corporate Criminal liability: The Corporate Offence provides that a corporation is guilty of a crime if an associate bribes a foreign public official with the intention of improperly influencing the foreign public official for the profit or gain of the corporation.
- It does not matter if the corporate didn’t know: It is an absolute liability offence, meaning that the prosecution will not be required to prove fault on the part of the corporate (such as proving that the corporate knew about, or was reckless as to, the associate’s conduct).
- It makes a corporate liable for the actions of a wide net of actors: The definition of ‘associate’ is broad, and includes any party that performs services for or on behalf of the corporation.
- Potential fines are significant: The greater of 100,000 penalty units (presently equivalent to AU$31.5 million), three times the benefit received or 10% of the corporate group’s annual turnover when the court cannot determine the benefit.
- Preventative measures are critical: The only defence that a corporate has to conviction (and a significant fine) is being able to prove that it had ‘adequate procedures’ in place designed to prevent an associate from bribing foreign public officials.
What should corporates do?
The Australian Government has published guidance on ‘adequate procedures’ focusing on six key principles with practical examples (the Guidance) but what constitutes ‘adequate procedures’ will be determined by the courts on a case-by-case basis.
The key point for corporations is:
- they need to put in place anti-bribery controls scaled to the level and nature of bribery risk the particular corporation faces, and
- that risk assessment is the basis for designing an adequate compliance program.
Bearing in mind the limited defence available to the Corporate Offence, corporates should:
- revisit their anti-bribery compliance programs in light of the Guidance
- assess their risks, and
- make adjustments to their anti-bribery compliance measures so that they meet the bribery risks they face.
The recent entering into force of the new laws is also a good opportunity for top-level management to promote anti-bribery compliance to their workforce and associates.
Want to know more?
Meet our team and reach out if you need assistance. And check out our recent insight on the National Anti-Corruption Commission, Anti-corruption insight series: One year of the NACC – KWM.
