Bribery And Corruption In Australia: What Does 2019 Hold?
Legal News & Analysis - Asia Pacific - Australia - Regulatory & Compliance
6 February, 2019
What you need to know
Significant anti-bribery reforms are expected in 2019, including a new offence of failing to prevent bribery and stronger whistle-blower protections.
The Federal Government proposes to establish a new anti-corruption enforcement agency. The Government has also allocated additional funding and resources to facilitate the prosecution of corporate crime and bribery offences.
The increasing focus on enforcement activity in Australia for bribery and corruption raises significant legal and reputational risks for companies.
What you need to do
Watch for expected legal developments in 2019, and start reviewing internal policies and procedures to prepare for new offences and increased enforcement activity.
Bribery and corruption continued to gain public attention in 2018, with high profile prosecutions and a strong policy focus at both state and federal levels of government. These developments demonstrate Australia's commitment to the fight against bribery and corruption in response to previous criticisms of its anti-corruption efforts.
Planned legislative reform and the expanding role of anti-corruption enforcement agencies creates significant exposure for companies and the need for increased vigilance. To mitigate the risk of criminal prosecution, it is essential for companies to keep abreast of anti-bribery and corruption developments and implement practical tools to ensure they are appropriately protected.
This publication examines the major anti-bribery and corruption developments from 2018 and highlights key areas to watch in 2019.
See our London office's publication for more information on recent developments and trends in the UK and globally.
Anti-bribery and corruption law reform endorsed by Senate Committee, but does it go far enough?
The Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (the Combatting Crime Bill) is currently before Parliament. The key features of the proposed new laws include:
- a new offence of failing to prevent bribery of foreign officials;
- amendments to the existing foreign bribery offence to remove potential impediments to a successful prosecution; and
- the introduction of a deferred prosecution agreement scheme.
In March 2018, the Senate Committee endorsed the Combatting Crime Bill, but was of the view that it does not go far enough. The Committee made further recommendations including additional funding for enforcement agencies, abolishing the facilitation payments defence, establishing a register of corporate beneficial ownership, and debarment from Government work for companies involved in bribery or corruption. Our previous publication on the report can be found here.
In April 2018, a second Senate Committee released a report recommending that Parliament pass the Combatting Crime Bill as currently drafted. The report also recommended that the Government engage in public consultation about: (a) what "adequate procedures" to prevent bribery should look like; and (b) what guidance should be given in relation to when prosecutors will offer deferred prosecution agreements. For more details, see our previous publication here.
Given the uncertain political climate in Australia, it appears unlikely that the Combatting Crime Bill will be passed in its current form before the next Federal election, which is expected in May 2019.
Nonetheless, both major parties appear to support anti-bribery reform, and so it seems likely that the Combatting Crime Bill will be passed in some form during 2019. It is important that companies stay abreast of these legislative developments, and ensure they have robust policies and procedures in place to prevent bribery and corruption, in anticipation of the new failing to prevent bribery offence.
Senate passes Whistleblower Protections Bill
On 6 December 2018, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (the Whistleblower Protections Bill) was passed by the Senate – the Bill now just needs to be debated and passed by the House of Representatives, which may happen when sitting resumes in February 2019. The key features of the proposed new laws include:
- consolidating the whistleblower protections and remedies for the corporate, financial and credit sectors under the Corporations Act 2001 (Cth);
- expanding the types of entities and conduct which may be the subject of, or individuals who are eligible to make, a protected disclosure; and
- increasing the level of protections afforded to whistleblowers by strengthening confidentiality requirements and rights to immunity and broadening the prohibition against victimisation.
Companies should keep an eye on the progress of the Whistleblower Protections Bill through Parliament. In particular, it is important that companies prepare to put in place whistleblower policies, or review existing policies to ensure compliance with the proposed legislation.
Push for a new federal anti-corruption watchdog
There has been a significant push over the last 12 months from groups such as Transparency International Australia and the Australia Institute to establish a federal anti-corruption watchdog, in order to enhance public confidence in the Australian Government.
On 13 December 2018, the Australian Government announced that it will establish a Commonwealth Integrity Commission (CIC). The Australian Government has released a consultation paper which provides an overview of its proposed framework for creating a CIC.
The proposed CIC will consist of two divisions: (1) a 'law enforcement integrity division', which will incorporate the existing structure, jurisdiction and powers of Australian Commission for Law Enforcement Integrity; and (2) a new 'public sector integrity division'. The law enforcement integrity division will have extended jurisdiction to cover several further agencies that exercise the most significant coercive powers (such as ACCC, APRA, ASIC and the ATO). The public sector division will cover the remaining public sector, including public service departments and agencies, parliamentary departments, statutory agencies, and Commonwealth corporations.
The consultation paper also contains proposed amendments to existing legislation. This includes the introduction of new aggravated offences (for repeated public sector corruption and corrupt conduct by a senior official), and a new offence for failing to report public sector corruption.
Although it may be seen as a step in the right direction, there have been significant criticisms of the proposed CIC, directed at the absence of proper investigatory powers, the lack of public hearings and the proposed separate divisions to investigate law enforcement and the public sector.
Separately, independent MP Cathy McGowan has introduced a private member's Bill to establish a National Integrity Commission. It remains to be seen what the Australian Labor Party will propose in response, but it is clear that there will continue to be developments in this area in 2019.
Foreign bribery prosecutions for 2018
Enforcement activity in Australia is steadily increasing, and it is anticipated that it will continue to rise in the next few years.
Most notably, in November 2018 suppression orders were lifted on the first prosecution brought under Australia's foreign bribery laws. The prosecution involved two subsidiaries of the RBA, Securency Pty Ltd (Securency), a producer of base plastic for bank notes, and Note Printing Australia Pty Ltd (NPA), a producer of banknotes, and a number of individuals. The following facts have come to light:
- In 2012, Securency and NPA pleaded guilty to, and paid record fines of $21.6 million for, bribing, or conspiring to bribe, foreign officials in Indonesia, Vietnam and Malaysia to secure banknote contracts.
- Guilty pleas to bribery or false accounting offences were entered by Securency's managing director, former sales executive, former CFO and Indonesian agent.
- No individuals have been sentenced to imprisonment.
In November, the High Court ordered a permanent stay on charges against four other former executives of NPA owing to the Australian Crime Commission examiner acting "unlawfully", and for unlawful purposes, when using its special coercive powers to help Australian Federal Police investigators question the executives.
What do these developments mean for you?
As laws become stronger and enforcement activity increases in Australia and globally, companies need to ensure they are aware of their anti-bribery and corruption obligations and are committed to combating the risk of bribery and corruption within their organisation.
When considering the adequacy of your anti-bribery and corruption policies and procedures (including whistleblower policies), it is important to remember that there is no "one size fits all" model, but there are some general principles that everyone should have in mind.
When implementing anti-bribery and corruption policies and procedures:
- Ensure senior management are visibly committed to the development and implementation of the policies and procedures, such that a culture is developed which encourages and enables staff to report suspected or actual bribery and/or other serious crimes.
- Include sufficient controls to ensure that internal financial reports are managed properly and recorded accurately.
- Ensure policies and procedures are effectively communicated to staff (eg through practical, regular and up-to-date training).
- Establish monitoring procedures to ensure internal compliance with implemented policies and procedures.
- Periodically review policies and procedures to ensure they are effective and compliant with any legislative developments or policy guidance.
- Document all steps undertaken to develop, implement, monitor and review policies and procedures.
For further information, please contact:
Alyssa Phillips, Partner, Ashurst