By Dr Felicity Gerry and Olivia Cameron
This blog accompanies our webinar here
The battle against bribery and corruption is an ongoing endeavour, and recent developments in Australia highlight the nation's commitment to root out foreign bribery and corrupt practices. In our recent CPD, we will delved into three significant aspects: the Combatting Foreign Bribery Bill, the newly established National Anti-Corruption Commission and ISO Standards. We also considered some of the issues that arise when preparing such cases at the Bar, especially for those, like Felicity, who are admitted both in Australia and the UK where bribery investigations may overlap supported by juniors like Olivia with relevant experience in a domestic setting.
Financial crime has always given rise to complexities. This might include identifying a pattern of conduct in fraud, expert evidence relating to the use of technology, the exploitation of clients in a criminal network and the recovery of assets. International compliance mechanisms which can affect corporate diligence and whistle-blower protection which is particularly relevant in a heightened fraud risk landscape for businesses. Gone are the days when the corporate and criminal lawyer fulfill different roles. Corporate regulation and business decisions often require serious examination of obligations under domestic and international law.
In criminal law, we are used to dealing with issues such as the jurisdiction for litigation over an international conspiracy, transnational commodity importation and excise duty fraud and the complexities of complicity law but we can now add to the lexicon due diligence issues such as modern slavery reporting and bribery and corruption.
The Combatting Foreign Bribery Bill
Recent high-profile cases
To underscore the need for amendments to Australia’s foreign bribery offence, we examined three recent high-profile foreign bribery investigations involving Australian companies. These cases highlight some of the challenges and complexities of prosecuting foreign bribery. Notably, all these investigations began after self-reporting by the involved companies.
* Jacobs Group Australia: This marked the first contested foreign bribery trial in Australia, resulting in a conviction. Jacobs Group Australia self-reported to the AFP in 2013, acknowledging illegitimate payments to foreign public officials. After a lengthy investigation, the company pleaded guilty in May 2021 and was fined $1.47 million. After the CDPP appealed the leniency of this decision, the High Court recently delivered a judgment clarifying that costs incurred in performing contracts should not be deducted when calculating the benefit gained from the bribery.
* Oz Minerals: In 2011, Oz Minerals self-reported potential foreign bribery related to mining rights in Cambodia. After Oz Minerals provided extensive cooperation and remediation, the CDPP decided it would not be in the public interest to initiate criminal proceedings. A settlement agreement in April 2023 saw the forfeiture of $9.36 million and a pecuniary penalty of $3.65 million.
* Leighton Holdings: Allegations of improper payments involving two contracts with Iraq Crude Oil in 2010 and 2011 led to a nine-year AFP investigation. Several former Leighton Holdings executives have been arrested and charged with foreign bribery offences. This matter remains ongoing, underlining the complexity of investigating and prosecuting such cases.
Features of the Combatting Foreign Bribery Bill
The Combatting Foreign Bribery Bill addresses key issues that have historically hindered the investigation and prosecution of foreign bribery cases in Australia. Notable features include:
* Expanded scope: The bill broadens the scope of foreign bribery by removing the requirement that the foreign official must be influenced in the exercise of their duties. It replaces the requirement a benefit or advantage must be "not legitimately due" and replaces this with the concept of "improperly influencing" a foreign public official. It also extends the offense to cover bribes aimed at obtaining a personal advantage or both a business and personal advantage.
* Absolute liability corporate offense: The bill introduces a new absolute liability corporate offense for failing to prevent foreign bribery. This is intended to better hold corporations to account for bribery committed by their associates. To establish a defense, corporations must prove they had adequate procedures in place to prevent bribery.
Notable omissions
While the Combatting Foreign Bribery Bill represents a significant step forward in combating corruption, there are two key reforms which the bill does not address:
* No deferred prosecution scheme: Unlike the lapsed Combatting Corporate Crime Bill, the new bill does not propose a deferred prosecution agreement (DPA) scheme. This highlights a controversial issue related to whether corporations should have the option to self-report and negotiate fines and conditions instead of facing criminal prosecution. Both the US and UK have DPA schemes which have been an attractive option for enforcing anti-foreign bribery legislation through increased self-reporting and companies pleading guilty to civil contraventions in order to settle.
* Facilitation payments defense: The bill does not remove the facilitation payments defense, despite wide criticism and recommendations for its abolition. Facilitation payments, although narrow in operation, continue to be a subject of debate.
The National Anti-Corruption Commission
The establishment of the National Anti-Corruption Commission is a significant step towards fostering integrity within the Commonwealth public sector.
* Broad definition of Commonwealth public official: The NACC Act includes a broad definition of Commonwealth public officials, encompassing staff members of Commonwealth agencies and contracted service providers. This expansive definition means that the NACC's jurisdiction extends deep into the supply chain, even overseas. It emphasises the need for clear contractual arrangements with the Commonwealth’s partner organisations abroad.
* NACC's Assessment of Corruption Issues Policy: The NACC's Assessment of Corruption Issues Policy (Assessment Policy) outlines its approach to investigating corruption. The threshold for investigation is whether the conduct involves serious or systemic corruption. The terms 'serious' and 'systemic' are not defined in the NACC Act. The Assessment Policy explains seriousness is determined based on the significance and potential consequences of the conduct, while systemic corruption is characterised by patterns or broad impacts on an organisation.
* High-profile referrals: The NACC has already received numerous high-profile referrals, including cases related to the Robodebt Royal Commission, procurement controversies, ministerial actions, leaks of sensitive Commonwealth information, and government grant programs. These referrals underline the Commission's potential to address a wide range of corruption issues within the public sector.
* Lessons from Robodebt: Commissioner Brereton recently addressed the 2023 Australian Dialogue on Bribery and Corruption. His speech noted that the Robodebt saga may have been avoided were it not for a common practice of both government and commercial lawyers expressing legal advice in terms of risk rather than in terms of what the law is. The Commissioner stated that the duty of a lawyer is to provide the client with the lawyer’s legal opinion, which is what a lawyer is qualified to provide, not a risk assessment which a lawyer is not ultimately qualified to give. The Robodebt Royal Commission’s Report also condemned the practice of providing a draft advice to the client which, if undesired by the client, is not finalised.
The Combatting Foreign Bribery Bill and the National Anti-Corruption Commission represent significant steps in Australia's ongoing fight against corruption. These measures are designed to remove obstacles to investigations and prosecutions of foreign bribery offences and to increase measures to hold the Commonwealth public sector to account. However, there are some notable issues which are worthy of discussion:
* Frameworks for international fact-finding missions, investment due diligence and the application of guiding principles on business and human rights may well provide material upon which there can be due diligence concerns but there are questions over methods of evidence collection for the purposes of a criminal trial.
* International activity such as sanctions or other geopolitical risks, modern slavery reporting and bribery and corruption allegations give rise to significant challenges in investigation with consequent duties of disclosure that may make a fair trial problematic, even if there are diligent enquiries.
* Divestment of schemes change the landscape of an investigation which may make historic allegations difficult to either prosecute or defend.
* The interaction of UK Bribery legislation that comes with deferred prosecution agreements, also used in the US remains untested where Australian law does not yet encompass this process.
* Finally, ISO37001 serves as the international standard for anti-bribery management systems. It becomes important when it is recalled that there is a defence to a corporate criminal allegation if the organisation can demonstrate that it had "adequate procedures" in place to prevent bribery and because it comes with electronic whistleblowing systems as set out in ISO37002:2021
All in all it is a complex compliance mesh which overlaps with general criminal law to the extent that such cases need a range of expertise.
