Australia is one step closer to having new stricter laws to prevent Foreign Bribery, after a Senate Committee endorsed the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 earlier this week.
As with the introduction of last year’s modern slavery legislation, the proposed new federal laws are intended to make companies take the risk of foreign bribery in their supply chain and operations more seriously. It will be relevant to any company that sources goods or has operations outside Australia.
“Australia has previously been criticised internationally for not doing enough to tackle corruption. These new laws are an important part of the Australian Government’s response” says Michael Milnes, a supply chain lawyer at Supplied Legal.
The new laws, if now passed, will introduce a criminal offence for companies that fail to prevent foreign bribery. The offence would apply where an “associate” of the company commits foreign bribery for the profit or gain of the company.
As the definition of “associate” is very broad, this would apply to any employee, contractor, agent or any other person acting on behalf of the company. It will be a defence if companies can show they had “adequate procedures” in place to guard against the risk.
The Bill would also make it easier to investigate and prosecute foreign bribery offences and introduce a “deferred prosecution agreement” (or “DPA”) scheme, offering a quicker and more lenient outcome for companies that report themselves. It would also make changes to the legal definition of “dishonesty” for various other corporate criminal offences.
Amendments politically controversial
The draft laws have now attracted political controversy though, with Labor Senators on the committee accusing the Government of either “rank incompetence” or “wilful deceit”.
In a dissenting report, the Labor Senators have attacked two of the Government’s proposals as “not sensible”, nor “supported by a clear and considered rationale”. They have called on the Government to amend the Bill, by dropping the DPA scheme and the definition changes. However, they are supportive of the new foreign bribery offence being passed into law.
The Bill will now be debated further, but it is clear there is cross-party political support for the new foreign bribery offence.
Stricter compliance requirements for all companies
Once the Bill is passed, there will be a six-month commencement period to allow businesses to get ready. The Government has already issued draft guidance about what will be expected of companies to show they had adequate procedures in place. Compliance
measures will include financial controls, staff training and putting suitable corporate policies and processes in place.
“This will be a change that companies will have to take seriously”, says Michael Milnes, “because the onus will be on the company to prove that the measures taken are adequate. This means companies will have to do the risk assessment. They’ll need to work out what foreign bribery risk they face – and put in place measures that are suitable to address that risk”.
The penalties for committing the offence are going to be substantial. Fines for companies convicted of foreign bribery can be up to $21 million, or three times the benefit gained, or ten times the company’s annual turnover – whichever is the highest. Individuals can face up to ten years in jail. “With these new laws on the horizon”, says Michael Milnes, “we’ll soon be hearing a lot more from companies about the steps they’re taking to address this risk”.