Speed read: Anita Clifford distils Australia’s proposed new anti-bribery architecture, drawing out the differences with the UK framework and implications for British companies doing business in Australia.
On 6 December 2017, the Australian government revealed proposed new legislation targeting corporate and financial crime. The Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 seeks to expand Australia’s existing bribery offences and create a new corporate offence of ‘failure to prevent’ bribery. Aspects of the proposed legislation will be familiar to businesses and legal practitioners in the United Kingdom. Key points of difference, however, exist between the Australian proposals and the UK’s existing anti-bribery framework under the Bribery Act 2010. This piece draws out the distinctions as well as the implications for UK companies with a commercial interest in Australia.
Bribery of foreign public officials
In its present form, the Australian Bill proposes to expand the existing offence of bribing a foreign public official, located in section 70.2 of the Criminal Code 1995 (Cth), by making it an offence to offer or provide a ‘benefit’ to another person with the intention of ‘improperly influencing’ ‘a foreign public official’. The Bill expressly clarifies that to establish the requisite intent, the bribe-giver need not intend to influence a particular foreign public official. Drafted in this way, the proposed expanded offence is noticeably wider than section 6 of the Bribery Act 2010 which similarly prohibits bribery of foreign public officials either by a person directly or through a third party. In certain aspects it also offers greater clarity. Section 6(1) of the Bribery Act, for instance, refers to the briber possessing the “intention…to influence F in F’s capacity as a foreign public official.” Distinct from the proposed Australian offence, the language employed by the UK legislature and, specifically, the identification of ‘F’ as opposed to ‘a foreign public official’ indicates an intention to influence a particular person in his or her official capacity is required. The Explanatory Notes to the Bribery Act and, at present, the Guidance produced by the Ministry of Justice on the Act, are silent on this point. In due course, the courts may be called upon to provide clarity over the requisite mental state.
Includes political candidates
The definition of a foreign public official as currently proposed in Australia is also set to be broader than that in the UK. Nominated officials and candidates for public office are to be included. The underlying rationale, reflected in the Explanatory Notes to the Australian Bill, is that law enforcement experience indicates that attempts to influence political candidates with the intent of obtaining an advantage once they take office is an issue. With this in mind, expanding the scope of foreign public officials beyond appointed or elected persons could well attract renewed consideration in the UK.
Improper influence
For conduct to amount to a bribe of a foreign public official under the Bribery Act, a person must intend to influence the official in the performance of their official functions with a view to gaining an advantage in business. In practice, this can be difficult to discern. For example, if a company were to host a visit to their operation sites followed by a lavish dinner and overnight stay for a handful of foreign public officials, assessing whether the surrounding circumstances support a bribe may be challenging for the trier of fact. Although the issue of hospitality is helpfully addressed in the Ministry of Justice Guidance, the dominant message in relation to a section 6 offence is that it will depend on the totality of the evidence.
Factors for consideration
The Australian approach is set to be slightly different. In its current form, the Australian Bill attempts to offer greater clarity and ameliorate the potential difficulty of assessing whether or not a foreign public official was improperly influenced by providing a list of non-exhaustive factors for consideration. Unlike in the UK, the factors are to appear in legislation rather than supplementary Guidance not subject to the same scrutiny. Matters which may be relevant to establishing whether a foreign public official has been improperly influenced are to include the accurate documentation of the giving of the benefit, the performance of due diligence in relation to the giving of the benefit, the nature and proportionality of the benefit and whether any business subsequently awarded was on a competitive or commercial basis.
Failure to prevent
Proposed section 70.5A of the Criminal Code 1995 (Cth) is set to introduce a new offence of failing to prevent bribery of a foreign public official into Australia’s anti-bribery architecture. Like section 7 of the Bribery Act 2010 upon which it was modeled, the proposed new provision would hold a company criminally liable for an act of bribery committed by an ‘associate’ unless the company had adequate procedures designed to prevent the bribery. As in the UK, the Australian Minister of Justice will produce Guidance to assist business in understanding the preventative strategies that can be employed.
The proposed offence differs from its UK counterpart in two striking respects. First, the proposed new offence in Australia relates only to a failure to prevent the bribery of foreign public officials rather than all forms of bribery as it does in the UK.
Secondly, the Australian provisions, as drafted, do not convey broad extraterritoriality. In the UK, section 7 of the Bribery Act, being the offence of ‘failure of commercial organisations to prevent bribery’, applies not just to companies or partnerships registered in the UK but any corporate or partnership wherever registered which carries on a business or part of a business in the UK. The Australian provisions are narrower in scope. Importantly, for UK businesses, the proposed new Australian ‘failure to prevent’ offence does not extend to partnerships and only applies to a body corporate that is a ‘constitutional corporation’ or that is incorporated in a Territory of Australia.
Broadly, a ‘constitutional corporation’ is a company carrying on business within the meaning of section 51(xx) of the Australian Constitution. This encompasses companies incorporated in Australia but foreign companies are also capable of being ‘constitutional corporations’ if they engage in ‘significant’ trading or financial activities in Australia. Practically, the foreign company would likely be registered under the Corporations Act 2001 (Cth) to carry on business in Australia.
Nexus
The proposed Australian offence also will require an Australian nexus. The draft provisions contain a degree of extraterritoriality as the conduct could occur outside of Australia. To be captured, however, the company must either be an Australian-incorporated company or at least some of the conduct or the result of the conduct must occur in Australia. [1] This is unlike section 7 of the Bribery Act which is sufficiently broad to be used against a foreign company carrying on some business in the UK for failure to prevent a bribery which has occurred anywhere in the world even if the result of that bribery is not ultimately felt in the UK.
Looking ahead
The proposed Australian provisions expand existing bribery offences and introduce a new corporate offence which, for UK business, will affect subsidiaries or associated companies in Australia and depending on the scale of financial and trading activities, can capture foreign companies. In this way, the proposed provisions represent a significant bolstering of Australia’s anti-bribery architecture in the wake of criticisms by the OECD Working Group on Bribery in 2012. The Bill has been referred to the Legal and Constitutional Affairs Legislation Committee, with a report due by 20 April 2018. As the Bill progresses through the parliamentary process, it will be necessary for UK companies doing business in Australia to monitor developments closely.
[1] See proposed section 70.2(8) read with 15.1 of the Criminal Code 1995 (Cth).
