Mid-Year Update On Anti-Bribery And Corruption In Australia.
Legal News & Analysis - Asia Pacific - Australia - Regulatory & Compliance
16 August, 2019
Reforms and enforcement activity continues through 2019
What you need to know
- New Commonwealth whistleblower laws have taken effect from 1 July 2019. These laws expand the scope of protections afforded to whistleblowers and require large proprietary and public companies to have compliant whistleblower policies in place by 1 January 2020.
- Recent criticism of public sector whistleblower laws has prompted discussion of further reforms to the legal protections afforded to whistleblowers in the public service.
- Investigation of bribery and corruption and enforcement activity continues at a state level, while there is increased pressure on the new Government to establish a federal anti-corruption watchdog.
What you need to do
- Companies should seek advice on the adequacy of their whistleblower policies to ensure they are compliant with new laws.
- Companies should implement processes to ensure compliance with the mandatory, annual reporting obligations under the new modern slavery legislation.
Reforms to strengthen the transparency and accountability of Australia's public service was a hot topic at the recent federal election. The re-election of the Liberal National Party Coalition (now as a majority) has increased the pressure for the federal government to follow through with its integrity agenda and, in particular, the establishment of a federal anti-corruption agency.
In light of the new private sector whistleblower laws, the Liberal National Party Coalition's potential plans to overhaul public sector disclosure protections, and bribery and corruption investigations increasingly resulting in criminal charges, it is crucial that organisations are alive to corruption risks and ensure any such risks are adequately managed.
New whistleblower laws take effect
The Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth) (Whistleblower Act) took effect from 1 July 2019. The new laws provide a consolidated, strengthened protection regime for whistleblowers for proprietary and public companies in the corporate, financial and credit sectors.
Given the severe penalties that may be imposed for breaching the new whistleblower laws, including by failing to implement a compliant whistleblower policy, it is important that businesses take proactive steps to familiarise themselves with their new obligations. This should include preparing or reviewing whistleblower policies, providing training to employees generally on the existence of whistleblower protections, and providing additional training for those who may be considered "eligible recipients" of disclosures under the legislation.
For more information on the new laws, see our recent publication here.
Potential whistleblower reforms in the public sector
Following the commencement of the private sector whistleblower reforms and recent judicial criticism of the limited protections under the Public Interest Disclosure Act 2013 (Cth) (PID Act), the Government has now turned its focus to whistleblower protections for public servants.
The Federal Court has also recently criticised the protections provided under the PID Act. In Applicant ACD13/2019 v Stefanic  FCA 548, the Federal Court dismissed an injunction application by a security officer for the Department of Parliamentary Services to prevent a sanction being imposed on him for breach of the Department's Code of Conduct. The applicant alleged that the disciplinary action was "reprisal" action for the purposes of the PID Act, taken against him because he had made an earlier internal public interest disclosure.
The application was dismissed for the following reasons:
- an initial internal disclosure by the applicant did not consist of, or include, information that was subsequently disclosed externally;
- the applicant's attempted external disclosure under the PID Act was made before the Department's investigation of the initial internal disclosure was completed, and before 90 days had passed since the disclosure was allocated to the Department for investigation, and so was not a public interest disclosure for the purposes of the PID Act; and
- there was no evidence that the Department's determination that the applicant had breached the Parliamentary Services Code of Conduct constituted a "reprisal" against him within the meaning of the PID Act.
In the course of the judgment, Griffiths J described the PID Act as "technical, obtuse and intractable". His Honour noted that the multiple compromises which have been struck to weigh competing public and private interests has resulted in laws which are "largely impenetrable" for lawyers, let alone members of the public or a person employed by the Government.
More recently, the Attorney General (Christian Porter) announced the Government's intention to overhaul the public sector whistleblower protections as a result of police raids on media offices triggered by leaks from the public service, and a series of high profile cases concerning whistleblowers. Mr Porter has indicated that the reforms would take into account Griffith J's criticisms and the findings of the Moss Review of the PID Act in 2016, in order to make the regime more accessible to Government employees.
Federal and state anti-corruption watchdogs
Since our last anti-bribery and corruption update, the push for the Government to establish a federal anti-corruption watchdog has continued.
Last month, Mr Porter said he hoped to introduce legislation establishing a National Integrity Commission in early 2020. The body proposed by the Government will be "fundamentally investigatory" with briefs being passed to the Department of Public Prosecutions for a public court hearing. There is an ongoing debate about the powers of the proposed watchdog, including whether hearings should be held in public, whether investigations should operate retrospectively, and whether the judiciary should be subject to investigation. Despite constitutional concerns, in respect of which Mr Porter has indicated he will seek advice, the Law Council of Australia has renewed its calls for a federal judiciary commission to handle complaints and improve public confidence in the judiciary.
At a state level, the first half of 2019 has seen anti-corruption agencies conduct a large number of investigations, including into the activities of local councils, agricultural government corporations and construction contractors. Many of these investigations have resulted in enforcement action being taken, with individuals being charged or found guilty of crimes such as theft, fraud, abuse of public office and bribery or corruption of a public officer.
The Northern Territory ICAC, established on 30 November 2018, has been inundated with allegations of improper conduct. The First 100 Days report, released by Commissioner Ken Flemming in March 2019, indicates that the largest proportion of complaints relate to allegations of dishonestly, and are made against Territory government agencies and officers.
Combatting bribery in foreign jurisdictions
While the whistleblower reforms and investigations of anti-corruption agencies have largely focused on domestic misconduct, corruption risks abroad continue to pose a threat to Australian businesses. The Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (Cth), which sought to amend the existing foreign bribery offence and introduce a corporate offence for failing to prevent bribery, has lapsed following the dissolution of the 45th Parliament prior to the federal election. However, given the prominence of anti-bribery and corruption on the political agenda, we expect this Bill will be reintroduced and recommend that organisations keep an eye out for activity in this space.
In this regard, a report released by the Australian Commission for Law Enforcement Integrity in June 2019 has found that existing corruption prevention measures employed by law enforcement agencies (such as the Australian Federal Police, Border Force and Australian Security Intelligence Organisation) could be improved to respond to international corruption risks. The report made a number of recommendations such as:
- making explicit references to corruption risks and practical measures that can be used to maintain required integrity standards in international deployment documentation;
- emphasising personality traits and behavioural characteristics required for international deployment in recruitment documentation and expressly considering officer vulnerability to corruption in integrity assessments;
- considering whether pre-deployment preparation should incorporate information and/or briefings for accompanying partners and other dependents; and
- adopting practices to reduce corruption risks caused by high levels of autonomy and discretion for extended periods of time, including regularly rotating officers and varying duties.
The report also highlights the risks that law enforcement agents may be exposed to during international deployments, including adaptation challenges, detachment from their home agencies' domestic integrity framework and exposure to local cultures with strong group and social norms. These identified risks are also likely to be faced by corporate employees on international secondments. Therefore, the recommendations made in the report in response to these risks provide useful insights which may be incorporated into the anti-bribery and corruption policies and practices for businesses that deploy their employees to high risk jurisdictions to mitigate legal and reputational risks.
New modern slavery legislation
Businesses operating in Australia also need to be aware of modern slavery risks in their domestic and international supply chains. The Modern Slavery Act 2018 (Cth), which came into force this year, introduces a mandatory annual reporting requirement for corporations that carry on a business in Australia with a minimum annual consolidated revenue of $100 million. A parallel reporting regime has been established in New South Wales for businesses with a minimum consolidated revenue of $50 million. For Australian corporations, the first reporting year affected by the legislation commenced on 1 July 2019, with reports due to the responsible Minister by 31 December 2020 (however, entities with a different financial year may be required to submit reports earlier).
The reports, which will be published on a public register, must include details such as the risks of modern slavery practices in the operations and supply chains of the reporting entity, and any other entities that the reporting entity owns or controls, the actions taken to assess and address those risks and how the reporting entity assesses the effectiveness of those actions.
The definition of "modern slavery" under the legislation is broad, encompassing conduct such as slavery, servitude, child labour, forced labour, human trafficking and deceptive recruiting for labour or services.
At this stage, non-compliance will entitle the responsible Minister to request the reporting entity to provide an explanation for the failure or undertake specified remedial action, which poses significant reputational risk for businesses.
For further information, please contact:
James Clarke, Partner, Ashurst