On 18 October 1999, Australia ratified the Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention). As a result of Australia adopting the Anti-Bribery Convention, the Criminal Code Act 1995 (Cth) (the Criminal Code) was amended to prohibit bribery of a foreign public official.2 Domestic bribery against the Commonwealth and foreign bribery offences are both contained in the Criminal Code.3
Since 1999, Australia has taken numerous steps towards meeting its obligations under the Anti-Bribery Convention by:
- criminalising the bribery and corruption of foreign public officials;
- enacting specific legislation4 arising out of the inquiry into certain Australian companies in relation to the UN Oil-for-Food Programme in 2006;5
- adopting other United Nations conventions against corruption,6 money laundering7 and organised criminal activity;8 and
- streamlining and enhancing inter-agency investigation and prosecution procedures for foreign bribery and corruption matters.
- enacting enhanced whistle-blower protection laws in 2019.
Australia is an active participant in the Asia-Pacific region, encouraging and funding anti-corruption initiatives.9 Despite these initiatives, however, there are lingering concerns that Australia remains a country that reacts to pressure on its foreign bribery record rather than being proactive. Criticism remains that Australia's record is patchy and promising reforms get lost without a real political will to enact them.
In October 2012, the OECD Working Group released its Phase 3 report on Australia's implementation of the Anti-Bribery Convention. The OECD considered Australia's enforcement of its foreign bribery laws to be 'extremely low', with just one investigation leading to criminal prosecutions despite there being 28 foreign bribery referrals to the Australian Federal Police (AFP) over 13 years (21 of which were closed without charge).
In April 2015, the OECD published a follow-up report on Australia's response to the Phase 3 report.10 The OECD highlighted specific areas where Australia had made progress in its efforts to combat foreign bribery, including:
- establishing an interagency National Fraud and Anti-Corruption Centre (FAC) led by the AFP with involvement from the Australian Tax Office (ATO), Australian Securities and Investments Commission (ASIC), Australian Criminal Intelligence Commission (ACIC),11 Australian Customs and Border Protection Service, and the Department of Foreign Affairs and Trade (DFAT), among others;
- closer involvement of the AFP Asset Confiscation Taskforce in foreign bribery investigations to target proceeds of crime;
- a restructuring of the Office of the Commonwealth Director of Public Prosecutions (CDPP) to allocate more resources to prosecute foreign bribery offences;
- improved public sector whistle-blower protections; and
- heightened awareness being promoted by Australia that foreign bribery will not be tolerated and all suspicious conduct will be thoroughly investigated.12
In December 2017, the OECD published its Phase 4 Report on Australia under the Anti-Bribery Convention.13 The OECD noted that Australia had 19 ongoing foreign bribery investigations and 13 foreign bribery referrals under evaluation for investigation. While the OCED was generally positive in terms of Australia's overall performance and, noting the proposed legislative reforms (see below), the OECD identified a number of areas where Australia's activity could be improved, including:
- focusing on money laundering risks in Australia's real estate sector;
- improving private sector whistle-blower protections;
- ensuring adequate resources are allocated to the AFP and the CDPP to investigate and enforce Australia's foreign bribery laws;
- proactively charging companies with criminal offences for foreign bribery, false accounting, money laundering and tax offences; and
- encouraging small to medium-sized businesses to develop adequate internal controls and robust compliance programmes to prevent and detect foreign bribery.
Throughout late 2017 to 2019, there have been significant proposals for legislative reform in the area of foreign bribery in Australia, yet only one of these reforms has come to fruition. These proposed reforms include the following:
- in December 2017, the CDPP published its Best Practice Guidelines for the Self-Reporting by Companies of Serious Crimes and the factors to be considered by the Director in determining whether to offer a deferred prosecution agreement (DPA) to a company, yet the underlying proposed DPA scheme has disappeared;14
- in March 2018, the Australian Senate supported various amendments to the Criminal Code (set out in the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017) to streamline the foreign bribery offence together with the introduction of a strict liability corporate offence of failing to prevent foreign bribery and the introduction of a DPA scheme for certain Commonwealth serious offences, again these reforms have yet to be enacted;15
- in March 2018, the Senate published its Report on Australia's Foreign Bribery Laws (the Foreign Bribery Report), which made it clear that it was of critical importance to ensure Australia has an effective system to combat foreign bribery whereby individuals and companies are held to account for their actions (as Australia had, for a number of years, been 'missing in action'),16 and yet again the Report and its recommendations have not been enacted;
- in early 2019, the Australian government, then a minority government, reluctantly agreed to consider a Commonwealth Integrity Commission to address widespread concern that corruption was not being adequately addressed at the Commonwealth level, only to lose interest in the idea after the May 2019 election when it was returned (albeit with a modest working majority); and
- commencing 1 July 2019, Australia enacted substantial reforms to its private-sector whistle-blower protection laws, set out in the Corporations Act 2001 (Cth).17
Regrettably because of a lack of policy will or direction and a singular focus on terrorism, national security and immigration, these reforms appear to have languished. It is hoped the Australian government will regain a proactive focus on foreign bribery and implement these proposed reforms without delay.
II DOMESTIC BRIBERY: LEGAL FRAMEWORK
i Domestic bribery law and its elements
Domestic bribery laws in Australia can be classified as follows:
- laws prohibiting bribery involving Commonwealth and foreign public officials;
- laws prohibiting bribery involving state government public officials; and
- laws prohibiting bribery involving local government public officials.
There are no specific commercial bribery laws in Australia, although various state laws are wide enough to capture bribery conduct.
Sections 141 and 142 of the Criminal Code deal with offences relating to domestic bribery of a Commonwealth public official. These divisions deal with the offences of giving a bribe18 or corrupting benefit,19 receiving a bribe20 or corrupting benefit21 and abuse of public office.22 For the offences of giving or receiving a corrupting benefit, it is immaterial whether the benefit is in the nature of a reward.23
ii Prohibitions on paying and receiving bribes
Each of the five states and two territories in Australia has a Crimes Act, a Criminal Code or local government legislation that regulates the conduct of state and local government public officials. All jurisdictions (including the Commonwealth) prohibit the direct and indirect payment or offer of a bribe to a public official and the receipt or acceptance of a bribe by a public official. The Criminal Code contains the criminal offences relevant to Commonwealth public officials.24
iii Definition of public official
Australian law defines various public officials. The Criminal Code widely defines 'Commonwealth public official' and 'public official', and is wide enough to encompass Commonwealth government-owned or controlled companies.
iv Public officials' participation in commercial activities
Public officials are able to participate in commercial activities while serving as a public official provided that their involvement in those commercial activities does not adversely affect the honest and independent exercise of their official functions.25
Public officials will usually be required to disclose their personal interests. For instance, members of the Commonwealth and state parliaments are required to provide to the Registrar of Members' Interests a statement of their registrable interests. This includes the interests of a spouse and any dependent children.
v Gifts and gratuities, travel, meals and entertainment restrictions
It is legally permissible to provide gifts and gratuities to public officials that do not breach the law or the Australian Public Service Code of Conduct. However, the provision of a gift or gratuity may in some circumstances amount to a bribe where it relates to a decision requiring the exercise of a discretion26 that gives rise to a perceived or an actual conflict of interest.
Each parliament has a system of public registers where assets and liabilities, gifts and gratuities over a nominated value must be declared.27
vi Political contributions
It is legal for foreign citizens and foreign companies to make political contributions to a political candidate or a political party in Australia.
There has been considerable discussion at the federal level in Australia about reforming the political donation process. The reform proposals have, in particular, focused on 'foreign' donations. In November 2011 the Australian government introduced a Political Donations Bill28 into the Senate, which proposed to make unlawful the receipt of a donation of foreign property by political parties and candidates.29 It also proposed to make it unlawful, in some situations, for associated entities and people incurring political expenditure to receive a donation of foreign property.30 This Bill lapsed on 13 November 2013, with no current political interest evident in resuscitating it.
In 2018, the Australian parliament enacted the Foreign Influence Transparency Scheme Act 2018 (Cth).31 The Foreign Influence Transparency Scheme introduces registration obligations for persons or entities who have arrangements with, or undertake certain activities on behalf of, foreign principals. It is intended to provide transparency for the Australian government and the Australian public about the forms and sources of foreign influence in Australia. While foreign actors are free to promote their interests in Australia's free and open society, the government considers that it must be done in a lawful, open and transparent way. While the government has been publicly coy about which foreign entity the scheme is directed at, in public commentary it is clear it is directed towards China and the role of Chinese influence in Australia (apparently irrespective of the influence that a range of other countries also seek to exercise).
Some states have already moved to ban political donations from foreign sources.32 In New South Wales (NSW) it is unlawful for a party, elected member, group and candidate or third-party campaigner to accept a political donation from an individual who is not enrolled to vote in local government, state or Commonwealth elections or indeed from a property developer.33
vii Private commercial bribery
Australian Commonwealth laws do not expressly prohibit the payment or receipt of bribes in private commercial arrangements. The Criminal Code only applies to conduct involving domestic Commonwealth public officials or foreign public officials. If, however, a bribe or other improper behaviour occurs that is directed towards securing a commercial benefit, various domestic criminal and civil laws may give rise to a liability on the company and individuals engaged in the conduct. For domestic laws, the New South Wales Crimes Act 1900 contains relevant offences.34
If a person is found guilty of the offence of giving or receiving a bribe involving a Commonwealth public official, the maximum penalty is five years' imprisonment.35 Offences for bribery under state laws, using NSW as an example, are in respect of corrupt commissions or rewards, making them offences as against the payer and the payee, with sentences up to a maximum of seven years' imprisonment.36 Local government officials may face the sanction of dismissal if the NSW Independent Commission against Corruption (ICAC) makes a finding of 'serious corrupt conduct' against a council officer.37 If such a finding is made, the ICAC may refer their conduct to the NSW Director of Public Prosecutions (DPP) for consideration of criminal prosecution.
III ENFORCEMENT: DOMESTIC BRIBERY
Each Australian state has a form of independent anti-corruption commission. The remit of these commissions is to investigate corruption as it concerns state or local government officials and public assets or money relevant to the state. There is, however, no Commonwealth anti-corruption commission. Commonwealth politicians of all persuasions see no need for an inquisitorial body to investigate them; perhaps hardly surprising, yet this attitude reflects poorly on reality. Rather, the Commonwealth has a patchwork of regulatory or supervisory agencies. In the first instance, the relevant entity conducts its own investigation. If the incident is more serious, the AFP is called in pursuant to a referral and if charges arise, they are conducted by the CDPP. More broadly, the Commonwealth Integrity Commissioner, supported by the Australian Commission for Law Enforcement Integrity, is responsible for preventing, detecting and investigating serious and systemic corruption issues in a limited number of prescribed Australian government law enforcement agencies.38
In early 2019, the Australian government proposed to establish a Commonwealth Integrity Commission to address increasing calls for there to be a formal Commonwealth anti-corruption commission. The model proposed by the government was widely criticised as being too weak and leaving many individuals, including politicians and their staff, outside the scope of the proposed Commission. At present, government interest in the proposal appears minimal. Both major parties seem to have little real interest in establishing a truly independent Commonwealth body to investigate systemic or serious corrupt conduct. This hardly reflects well on the principles of integrity, transparency and accountability.
As an example of state-based anti-corruption work, the NSW ICAC is an independent anti-corruption agency that was established by the NSW government in 1988.39 The ICAC's jurisdiction extends to all NSW public sector agencies (except for the NSW Police Force) and to those performing public official functions. While the ICAC investigates public sector corruption, it has no power to prosecute. That power lies with the NSW DPP for state offences and the CDPP for Commonwealth offences. While the ICAC might make findings of corruption or other criminality, its findings are based on evidence secured under compulsive powers and such evidence is inadmissible against the witness giving the evidence in any subsequent civil or criminal proceeding. Thus, the DPP has to establish its own admissible evidence to proceed with any prosecution.
One of the ICAC's functions is to investigate and expose corrupt conduct in the NSW public sector. During 2015, the ICAC made headlines when various public officials that were the subject of investigations challenged the scope of the ICAC's powers.
In August 2015, the NSW government announced its response to an independent review of the function and powers of the ICAC as a result of the ICAC's ultimately unsuccessful and aborted investigation into the conduct of a serving senior Crown Prosecutor and rulings by the High Court of Australia40 where the Court held that the ICAC could not investigate cases in which a private citizen adversely affected the functions of an honest public official.
The NSW government has amended the ICAC Act to:
- limit the ICAC's jurisdiction to making findings 'only in the case of serious corrupt conduct';
- permit the ICAC to investigate the conduct of non-public officials in limited circumstances (such as collusive tendering, fraud in relation to applications for mining licences and dishonestly benefiting from the payment of public funds); and
- permit the ICAC to examine breaches of donation and lobbying laws.
In July 2016, the NSW DPP successfully prosecuted a former NSW politician for the common law offence of wilful misconduct in public office, as a result of corruption findings made by the ICAC. The Supreme Court sentenced the offender to imprisonment for a term of five years with a non-parole period of three years, upheld on appeal.41 Other politicians and individuals have been charged as the result of similar investigations conducted by ICAC.42 After successful appeals, each of the defendants were acquitted. It remains difficult to prosecute high-profile individuals for corrupt conduct in Australia.43
IV FOREIGN BRIBERY: LEGAL FRAMEWORK
The primary source of criminal liability for foreign bribery is set out in the Criminal Code. Secondary grounds of liability are founded in the Criminal Code (for Commonwealth offences) and in domestic Australian criminal law, assuming some conduct occurs within Australia or there otherwise exists a jurisdictional basis to prosecute an individual or a corporation in Australia. For each criminal offence, the Criminal Code requires a prosecutor to establish a physical element (action or conduct) and a fault element (intention, knowledge, recklessness or negligence) for an offence, otherwise a default physical and fault element will apply.
The following statutes create potential secondary liability:
- dealing in proceeds or instruments of crime is an offence giving rise to proceedings under the Proceeds of Crime Act 2002 (Cth);
- obstruction of justice under the Crimes Act 1914 (Cth);
- where public funds are used for bribery or corruption, offences for improperly dealing with public money are covered by the Financial Management and Accountability Act 1997 (Cth) and the Commonwealth Authorities and Companies Act 1997 (Cth);
- liability for a breach of duty by a director or officer of a corporation is contained in the Corporations Act 2001 (Cth) (the Corporations Act); and
- general Commonwealth and state criminal law for domestic criminal offences.
ii Foreign bribery law and its elements
The offence of bribing a foreign public official is contained in Part 4, Section 70 of the Criminal Code.
Section 70.2 states that a person is guilty of the offence of bribing a foreign public official if the person:
- provides, or causes to be provided, a benefit to another person;
- offers or promises to provide a benefit to another person; or
- causes an offer or a promise of the provision of a benefit to be made to another person and:
- the benefit is not legitimately due to the other person; and
- the person does so with the intention of influencing a foreign public official in the exercise of the official's duties as a foreign public official to obtain or retain business or obtain or retain a business advantage that is not legitimately due to the recipient, or intended recipient, of the business advantage.
A benefit is broadly interpreted and includes any advantage. It is not limited to property or money and can be a non-tangible inducement.
The prosecutor is not required to establish the intention (on the part of an accused person) to influence a 'particular' foreign official. As many bribery cases involve payments through intermediaries and third parties, this provision assists the prosecutor.
Section 11.2 of the Criminal Code (which extends criminal liability) has been amended to insert 'knowingly concerned' as an additional form of liability. A number of criminal appellate judgments have highlighted the vacuum in the criminal law that courts believe Parliament did not intend by the absence of 'knowingly concerned' as a ground of secondary criminal liability. It means that persons who are knowingly and intentionally involved in the commission of an offence (against any Commonwealth laws where offences traditionally involve other or secondary persons) will be liable for the primary offence.
In December 2017, the Attorney General published the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017, reflecting substantial proposed reforms to the foreign bribery offence. While these reforms have widespread support, at the time of writing they have yet to be enacted. The key parts of the reforms are as follows:
- repeal the existing Section 70.2 foreign bribery offence as enacted;
- create a new foreign bribery offence covering intentional conduct constituting the bribing of a foreign public official;
- replacing the concept of 'not legitimately due' in the foreign bribery offence with the concept of 'improperly influencing' a foreign public official (although some commentators consider that the concept of 'dishonesty' should be used rather than 'improperly influencing');
- making it clear that the prosecution need not establish the improper influence of a particular official to obtain or retain business or that the business or advantage was in fact obtained or retained.
iii Definition of foreign public official
The term 'foreign public official' is defined to capture a wide range of public officials, including those persons officially employed by a foreign government and those persons who perform work for a foreign government body, or who hold themselves out to be an authorised intermediary of an official or who are part of a 'foreign public enterprise' that acts (formally or informally) in accordance with the directions, instructions or wishes of a government of a foreign country.
iv Gifts and gratuities, travel, meals and entertainment restrictions
The Criminal Code does not prohibit or regulate the provision of gifts, gratuities, travel, hospitality or entertainment. However, the definition of a benefit under Section 70.1 of the Criminal Code includes any advantage, which may mean that the provision of excessive gifts, gratuities, travel, meals or entertainment could amount to a bribe. There is no guidance in Australia on what constitutes an acceptable gift or level of corporate hospitality.
The key considerations for assessing whether a gift, travel and other corporate hospitality are likely to constitute a benefit under the Criminal Code and potentially amount to a bribe will involve a number of factors:
- whether the payment is reasonable in all the circumstances;
- whether the payment was proportionate to and for a clearly identified business purpose;
- how the payment was documented;
- the amount and frequency of the payment; and
- the motive in connection with the payment, gift or offer of hospitality.
v Facilitating payments
Australian law permits facilitation payments to 'expedite or secure' the 'performance of a routine government action'.44 This is despite the OECD's view that Australia should actively discourage all facilitation payments.
A payment is a facilitation payment so long as the following conditions are satisfied:45
- the value of the benefit is of a minor nature;
- the person's conduct is undertaken for the sole or dominant purpose of expediting or securing the performance of a routine government action of a minor nature; and
- as soon as practicable after the conduct, the person makes and signs a record of the conduct, and any of the following subparagraphs applies:
- the person has retained that record at all relevant times;
- that record has been lost or destroyed because of the actions of another person over whom the first-mentioned person had no control, or because of a non-human act or event over which the first-mentioned person had no control, and the first-mentioned person could not reasonably be expected to have guarded against the bringing about of that loss or that destruction; and
- a prosecution for the offence is instituted more than seven years after the conduct occurred.
In November 2011, the Australian government published a Public Consultation Paper seeking submissions on a number of aspects of Australia's anti-bribery laws.46 In particular, the Paper sought to review whether the facilitation payments defence should be abolished. The consultation was conducted between November 2011 and February 2012. The Attorney General's website states that the 'government will take into consideration all the submissions received when determining the next steps to be taken in relation to the issues raised in the consultation paper'.47 In the Foreign Bribery Report, the Senate considered and rejected all the arguments advanced in support of facilitation payments and made the following recommendations:48
A facilitation payment is not materially different from a small bribe and therefore should not be recognised as a defence to a foreign bribery offence in Australia. It is apparent to the committee that there is a need for a clear distinction between bribery and corruption on the one hand, and ethical conduct on the other. The committee considers that removal of the defence will make clear that all forms of bribery and corruption are wrong. The committee believes that retaining the facilitation payment defence is inconsistent with Australia's wider anti-bribery efforts and accepts that allowing facilitation payments muddies the waters and risks encouraging a culture of expediency to achieve results. In the committee's opinion, abolishing the facilitation payments defence will convey a strong and consistent policy message that corporations should not stimulate markets for bribery, irrespective of their size, and whether or not such payments to foreign public officials are considered to be mandatory. In this context, it is apparent to the committee that removing the facilitation payment defence will better position Australian companies in the international market.
The international tide is moving against facilitation payments and, while Australia has been slow to grapple with this issue, the views of the Senate carry considerable weight and the Australian government should take prompt steps to abolish the facilitation payment defence to the foreign bribery offence. Further, many companies have acted independently of legislative requirements to do so, in particular those that have been the subject of foreign bribery-related allegations and investigations in recent years. For example, CIMIC Group Limited (CIMIC) (formerly Leighton Holdings, which has long been subject to a foreign bribery investigation by the AFP) issued a revised Code of Conduct in August 2015, which provides:
The Group prohibits, and has zero tolerance for, all forms of bribery and corruption. You must obey all relevant laws and regulations, and must not participate in any arrangement which gives any person an improper benefit in return for an unfair advantage to any party, directly or through an intermediary. This includes facilitation payments . . . even if allowed under local laws or customs.
vi Payments through third parties or intermediaries
The foreign bribery offence established in Section 70.2 of the Criminal Code can capture payments of bribes made through third parties, such as agents, consultants, joint venture partners and intermediaries. An intermediary or third party may be liable for the primary foreign bribery offence under the Criminal Code or for secondary liability if his or her conduct amounted to a conspiracy or the third party or intermediary otherwise aided, abetted, counselled or procured the commission of the offence. A person may be found guilty even if the principal offender has not been prosecuted or found guilty.
vii Individual and corporate liability
The Criminal Code applies liability to individuals and attributes liability to corporations for bribery of a foreign public official.
To establish corporate liability for offences committed prior to 14 December 2001, the prosecution must prove that full discretion had been delegated to an individual to act independently of the board or any superiors with respect to the subject matter that included the relevant act that constituted the offence in a manner that binds the company.49 A prosecutor must establish that at the time the relevant act occurred, an officer or officers of the corporation whose knowledge may be attributed to the company possessed the knowledge or information giving rise to the offence.
For offences that took place after 14 December 2001, Part 2.5 of the Criminal Code applies, setting out a statutory regime for the attribution of knowledge of individual officers to a corporation. Under the Criminal Code, physical elements are attributed to a company in circumstances in which an employee, agent or officer of a company commits the physical element when acting within the actual or apparent scope of his or her employment or authority. Fault elements are attributed to a company that 'expressly, tacitly or impliedly authorised or permitted the commission of the offence'.50 The corporation may be found guilty of any offence, including one punishable by imprisonment. Since 2001, no company has been prosecuted under these provisions for any bribery offence.51
The terms of corporate criminal responsibility are contained in Sections 12.1 to 12.6 of the Criminal Code. In summary, these provisions:
- set out important definitions of 'board of directors', 'corporate culture' and 'high managerial agent';
- establish criminal liability on a corporation by attributing the knowledge and conduct of a person to the corporation;
- attribute negligence to a corporation by reference to the corporation's conduct as a whole;
- provide a mistake-of-fact defence of limited application; and
- establish criminal liability for a bad corporate culture (one that condones or tolerates breaches of the law).
A corporation has an available defence to the question of whether any relevant knowledge or intention possessed by a high managerial agent (as opposed to the board of directors) is to be imputed to it, if the corporation had itself exercised due diligence to prevent the conduct occurring that constituted the offence.52 There have been no prosecutions for offences under these provisions in Australia.
As stated in Section IV.ii, in December 2017, in the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017, the Attorney General proposed the creation of a new corporate offence of failing to prevent foreign bribery. This is largely modelled on the Section 7 offence under the UK Bribery Act but with some differences. The key features of the proposed new offence are as follows:
- a company commits an offence if an 'associate' undertakes conduct in or out of Australia that constitutes an offence of intentional bribery of a foreign public official (as proposed under the Criminal Code);
- the associate acts for the profit or gain of the company; and
- absolute liability applies unless the company can prove that it had 'adequate procedures' in place to prevent such conduct occurring.
The definition of an associate is broad. It includes any employee, agent or contractor of a company or an entity that is a subsidiary of or is controlled by the company (within the meaning defined in the Corporations Act) and who otherwise 'performs services for or on behalf of the company'. The proposed new offence requires the Minister of Justice to publish a guidance on what will be regarded as adequate procedures. While nothing has yet been published, it is hoped that the guidance will reflect the UK guidance under the Bribery Act or be otherwise included as factors the CDPP takes into account under the Commonwealth Prosecution Policy (and the CDPP Best Practice Guidance on Corporate Self-Reporting)53 in determining whether to commence or continue a prosecution. The effect of this proposed offence cannot be underestimated in Australia. It will have the effect of piercing the corporate veil and making a company that might have regarded itself as immune from offshore conduct directly and strictly liable if the statutory test is satisfied, and if someone acting on its behalf, for its gain, acted in a manner that constituted the offence of bribery of a foreign public official.
viii Civil and criminal enforcement
The Criminal Code does not give rise to any civil enforcement of Australia's foreign bribery laws.
The secondary grounds of liability that might arise include the following:
- civil penalty prosecutions commenced by ASIC under the Corporations Act for conduct in contravention of common law or statutory duties owed by a director or officer to the corporation;
- prosecutions by ASIC against individuals and corporations for failing to comply with record-keeping rules or by the Commonwealth or state DPPs for having, creating or using false or misleading records or false or reckless use of an accounting document; and
- prosecutions by the ATO for contraventions of the taxation laws in relation to the misstatement of income (and non-statement of monies that may have been paid or received illegally).
A corporation may face a class action claim by shareholders, although class action claims are currently by no means certain in their outcome in Australia, where any drop in shareholder value may depend upon a variety of factors (not necessarily any alleged improper or illegal conduct).54 Complicating any civil class action claims arising out of foreign bribery is the complexity of identifying the correct victim and giving standing for the 'victim' to seek to recover losses. Nonetheless, class action claims have been filed. For example, a shareholders' class action has been filed against CIMIC in respect of its alleged failure to disclose material allegations of foreign bribery in Iraq in accordance with continuous disclosure laws, and a consequent decline in CIMIC's share price when those allegations were subsequently revealed.
ASIC can also bring criminal proceedings against a director or officer of a corporation under Section 184 of the Corporations Act where it alleges that the director or officer acted recklessly or intentionally dishonestly in failing to discharge their powers and duties, or otherwise did not act in good faith in the best interests of the corporation or acted for an improper purpose. Liability on a criminal basis for having acted dishonestly is hard to prove.55 Any foreign bribery or corruption is likely to be inconsistent with a director's common law and statutory duties.56
The state criminal law can also be used to prosecute individuals, particularly where corporate records are falsified. In The Queen v. Ellery,57 the former chief financial officer of Securency (as part of the now concluded Securency banknote-printing bribery prosecutions) pleaded guilty and was sentenced on one count of false accounting contrary to Section 83(1)(a) of the Crimes Act 1958 (Vic). In passing sentence, the Court made the following important observations, in the context of Mr Ellery's circumstances:
Unlike most cases of false accounting, you did not offend for the personal financial gain of yourself or a closely-related person or company . . . and the primary motive behind your offending was to assist your employer in its commercial activities, by assisting it to gain the benefit of future contracts . . . I also accept that you were acting within the culture which seems to have developed within Securency, whereby staff were discouraged from examining too closely the use of, and payment arrangements for, overseas agents. Secrecy, and a denial of responsibility for wrongdoing, also seems to have been a part of the corporate culture at Securency at that time.
The fact remains that you were Securency's chief financial officer, responsible for authorising and making payments. You were also a company secretary. You occupied positions of importance within a subsidiary of Australia's central bank. Your offending involved a serious and dishonest breach of trust. It was done in order to disguise the true nature of the transaction from the board and the owners of Securency. Notwithstanding the lack of personal financial gain, and the relatively modest amount involved, I assess your offending as being in the mid-range of false-accounting offences.
ix Agency enforcement
Australia's approach to the enforcement of foreign bribery laws relies on the joint efforts of various enforcement, administrative and prosecution agencies. The investigation of criminal offences against Commonwealth laws, including foreign bribery offences, is carried out by the AFP. The CDPP is the statutory prosecutorial agency, which does not investigate but independently prosecutes criminal offences against the Commonwealth. ASIC will focus on civil (and to a lesser extent, criminal) investigations and prosecutions, working collaboratively with the AFP.58 The ACIC is a statutory authority with secret, inquisitorial and compulsive powers to combat serious and organised crime (which includes conduct amounting to bribery or corrupting a foreign public official).59 The AFP and the CDPP can often both be involved in assessing the evidence to determine if a prosecution can or should be undertaken. However, there are limits to how far the ACIC can use its compulsive statutory powers where seeking to investigate and compulsorily examine a target to be charged with offences, and in sharing information so gathered with police forces.60
The National Fraud and Anti-Corruption Centre (FAC) established and hosted by the AFP draws upon multi-agency skills and experience. The FAC is designed to review serious and complex fraud and corruption referrals to ensure they are directed to the relevant law enforcement agency for action and are investigated with all the resources available to the Commonwealth agencies.
In determining whether to pursue (or continue) a prosecution for foreign bribery, the CDPP must satisfy itself of a dual threshold test:
- that there is sufficient evidence to prosecute the case (and there are reasonable prospects of securing a conviction); and
- it is evident from the facts of the case, and all the surrounding circumstances, that the prosecution would be in the public interest.61
The Prosecution Policy of the Commonwealth (Prosecution Policy) also provides guidelines to assist the CDPP in deciding whether to prosecute a person for foreign bribery offences.62 While the Prosecution Policy applies for all Commonwealth criminal prosecutions, in foreign bribery cases, the CDPP has directed that the prosecutor must not be influenced by considerations of national economic interest, the potential effect upon relations with another state, or the identity of the natural or legal persons involved. This is consistent with Article 5 of the Anti-Bribery Convention, although there is no Australian law to this effect.
The implementation of these principles has been the subject of certain, now well-publicised, orders made by the Supreme Court of Victoria in the Securency banknote printing bribery prosecution.
In June 2014, the Australian government, through DFAT, obtained suppression orders seeking to protect the identity of various Asian political figures from being named as alleged participants in the Securency bribery scandal in circumstances where those individuals were not charged with any offence. The DFAT notice informing the Court of its application for a suppression order stated that its purpose was 'to prevent damage to Australia's international relations that may be caused by the publication of material that may damage the reputation of specified individuals who are not the subject of charges in these proceedings'. The individuals concerned did not themselves seek to apply for any orders from the Court.
In June 2015, the Court revisited its initial orders on the application of the Australian media. After hearing argument, the Court discharged the initial suppression orders.63 While the Court was critical of WikiLeaks for publishing the June 2014 orders and the media for inaccurate reporting of the effect of those orders, the Court was not persuaded to maintain the suppression orders. The Court made it clear that the strong public interest in the public knowing about the Securency case and what did or did not happen had to be balanced with the countervailing public interest considerations concerning protecting the administration of justice and Australia's national security – matters that DFAT bore the onus of establishing, which it failed to do.
In late January and February 2017, two former officers of Leighton Holdings were charged after a long-standing investigation into the conduct of the company in relation to purported centralised steel procurement contracts. Peter Gregg, a former Leighton chief financial officer, was charged with two counts of contravening Section 1307(1) of the Corporations Act 2001, with ASIC alleging that Mr Gregg, as an officer of Leighton Holdings Ltd, engaged in conduct that resulted in the falsification of the company's books. Russell John Waugh was also been charged in relation to his alleged role in aiding and abetting one of the alleged contraventions of Mr Gregg. In December 2018, a district court jury convicted Mr Gregg of the offences as alleged. In July 2019, Mr Gregg was sentenced to a 24-month intensive corrections order and 12 months of home detention (to be served concurrently), so avoiding imprisonment.
In July 2017, Mamdouh Elomar, 62, his brother Ibrahim, 60, and businessman John Jousif, 46, pleaded guilty in the New South Wales Supreme Court to certain foreign bribery conduct that occurred between July 2014 and February 2015. At a previous hearing during 2016, the men faced allegations that they paid a US$1 million bribe to a foreign official to win contracts for their construction company Lifese in Iraq. Each individual was convicted and sentenced, after appeals, to up to three years' imprisonment and fines of $250,000.64 In May 2018, Sinclair Knight Merz (now Jacobs Australia) and several individuals were charged with an alleged conspiracy to offer bribes to foreign public officials in the Philippines and Vietnam so that aid-funded project contracts would be awarded to the company.65 The prosecution continues.
In September 2018, Mozammuil G Bhojani, a director of Radiance International Pty Ltd, was charged with an alleged conspiracy to bribe foreign public officials in Nauru in relation to an Australian government contract to build housing for refugees on Nauru, with payments allegedly made to obtain phosphate at certain prices for export.66 The prosecution continues.
In December 2018, the Securency banknote printing bribery and corruption cases finally concluded and Australia-wide non-publication or suppression orders were lifted. As a result of the High Court ruling permanently staying the prosecutions against four individuals and the last remaining individual pleading guilty, the various judgments and court rulings became public. Between 2011 and 2018, the two then subsidiaries of the Reserve Bank of Australia engaged agents in Indonesia, Malaysia, Vietnam and Nepal to help secure valuable bank note printing contracts and in the process, paid bribes to public officials in those countries. The companies pleaded guilty to criminal conduct67 together with five individuals who received criminal convictions, but upon sentencing they were released as a result of their sentences of imprisonment being suspended.68 While the Reserve Bank of Australia was at pains to point out that the boards of its two subsidiaries had no involvement in or knowledge of the offending conduct69 and the AFP regarded the case as a singular success, the Australian courts were less than impressed. While the High Court of Australia regarded the AFP's and ACIC's conduct (and indirectly the independent CDPP) as egregious and illegal (in the manner the pre-prosecution investigation and compulsory interviews were conducted) in staying four prosecutions, the trial judge managing the prosecutions in Victoria made some interesting observations. First, the trial judge had some reservations about the accuracy of the alleged fact (agreed to between the companies and the CDPP) that the boards of directors (of the two Reserve Bank subsidiary entities) had no knowledge of the conduct, contrary to the public statements made by the Reserve Bank.70 Second, the trial judge gave credit to the two whistle-blowers, who, throughout the saga, attempted to report their concerns and misgivings and who were met with a culture of hostility and resistance. The Court said that each whistle-blower had shown tremendous courage in speaking out with the consequence that their careers had suffered because 'of their attempts to do the right thing'.71
The other principal government agencies that may be involved in conduct giving rise to potential foreign bribery offences include:
- ASIC, which is an independent government body that regulates Australia's corporate markets and financial services to protect investors and consumers;
- the ATO, which ensures proper compliance with Australia's Commonwealth revenue laws;
- the Australian Competition and Consumer Commission, which regulates compliance with Australia's competition, fair trading and consumer protection legislation, including its criminal cartel laws; and
- AUSTRAC, which works with Australian industries and businesses to ensure compliance with anti-money laundering and counterterrorism financing laws.72
There are essentially three defences to a prosecution under Section 70.2 of the Criminal Code. First, if the conduct occurs wholly in a foreign country, the conduct is lawful in that foreign country and permitted by a written law of that foreign country.73 Second, if a payment is a facilitation payment.74 Third, corporate criminal liability may not be imposed on a corporation if it can demonstrate that it exercised due diligence to prevent the conduct, authorisation or permission created or given by a board or a high managerial agent.75 There is no judicial authority in Australia considering these defences.
In Australia, there is no transparent regime to encourage self-reporting of potential foreign bribery or other criminal offences. There is no legal obligation in Australia to report a crime, save for in NSW.76
There are certain factors to take into account in deciding whether to self-report a case of foreign bribery to the AFP. These include the following:
- the AFP has a discretion whether to charge a potential offender;
- the CDPP may grant an undertaking (letters of comfort or, more rarely, an indemnity) to a person not to use voluntary evidence against person A to secure testimony from person A to convict person B, and the grounds upon which an undertaking might be given are set out in the Director of Public Prosecutions Act 1983 (Cth)77 and the Prosecution Policy;
- the AFP and the CDPP may offer and accept an 'induced statement' from an individual on the basis that the individual is not a target but a witness of fact and what the witness says in the induced statement cannot be used against him or her in any subsequent civil or criminal proceedings;
- if a corporation voluntarily discloses potential offences and cooperates and can demonstrate the 'right culture', the AFP and the CDPP may be persuaded to accept a plea of guilty to lesser charges; and
- if an offender offers voluntary cooperation in the absence of an undertaking, the extent of the cooperation can operate as a material discount on sentence upon any conviction being recorded by a court.78
Companies are encouraged by the AFP to self-report potential offences to it. Once the AFP has conducted an investigation and referred the matter to the CDPP, the CDPP will then determine, with regard to the Prosecution Policy, whether to pursue a prosecution. However, if the AFP and CDPP form the opinion that offences have been committed, any resolution is usually predicated upon a guilty plea (to one or more agreed offences) and sentencing by the court. At the end of the day, it is the corporation's decision whether to 'roll the dice' and report or not report. The consequences of self-reporting, or not doing so, can be unpredictable. In December 2017, the CDPP published its guidance on corporate self-reporting that sets out how the director will exercise a statutory discretion in terms of whether to offer to negotiate a DPA and the factors to be considered in that process.
There are no procedures in Australia similar to the formal self-reporting or plea regime in the United States or in the United Kingdom. There is no process or policy guidance to resolve investigations through court-approved settlement agreements (deferred or non-prosecution agreements) or for the authorities to pursue civil rather than criminal penalties against companies or individuals.
The difficulty with plea-bargaining in Australia is that the High Court of Australia has ruled that it is impermissible for a prosecutor to engage in a process of agreeing to sentences and supporting them before the Court. In Barbaro v. The Queen; Zirilli v. The Queen,79 the High Court limited the prosecutor's role in terms of recommendations as to the sentencing of an offender, in these terms:
Even in a case where the judge does give some preliminary indication of the proposed sentence, the role and duty of the prosecution remains the duty which has been indicated earlier in these reasons: to draw to the attention of the judge what are submitted to be the facts that should be found, the relevant principles that should be applied and what has been done in other (more or less) comparable cases. It is neither the role nor the duty of the prosecution to proffer some statement of the specific result which counsel then appearing for the prosecution (or the Director of Public Prosecutions or the Office of Public Prosecutions) considers should be reached or a statement of the bounds within which that result should fall.
The High Court has made it clear, as have other appellate courts, that the sentencing task remains that of the sentencing judge and that judge alone.80 A prosecutor can do no more than opine on sentencing principles, not on what a sentence or a range of sentences should be. This is not conducive to encouraging corporations to self-report a potentially serious criminal offence, with the result that it, in effect, flips a coin and leaves its unknown and uncertain fate in the hands of first the AFP, second the CDPP and, ultimately, the court. Certainty, or at least a clearly structured and transparent procedure, is likely to be a greater incentive for corporations to voluntarily self-report potential offences.
In March 2016, the Attorney General issued a consultation paper seeking comment on whether a form of a Commonwealth DPA scheme should be introduced into Australia and if so, to what offences it should apply. The vast majority of submissions called for a scheme to be introduced, modelled on the UK scheme,81 applying to a range of financial crime offences. In December 2017, the Attorney General published a model DPA scheme. Key features of the scheme included the following:
- it will apply to nominated serious Commonwealth criminal offences, with these to be assessed after two years;82
- a decision whether to offer to negotiate a DPA will be at the discretion of the CDPP, following guidance published on the factors for the prosecutor to take into account in exercising the discretion (see the CDPP's Best Practice Guidelines for the Self-Reporting by Companies of Serious Crimes, in Section I above);
- a DPA will contain various mandatory terms, including a potential 'admission of criminal liability' and a wide variety of orders covering fines, disgorgement of profit and compensation;
- a DPA will, if agreed to, be reviewed by a 'retired judge', with the courts playing no role in the DPA scheme (for constitutional reasons) and if approved, will be published with the supporting reasons;
- monitors might be appointed to provide independent oversight of a DPA; and
- breaches of a DPA are likely, if material, to trigger the commencement of criminal proceedings.
There was widespread support for the introduction of the proposed DPA scheme, particularly in light of the proposed new corporate offence of failing to prevent foreign bribery. It is anticipated these reforms, if and when they are passed, will make the voluntary disclosure of potential criminal conduct more likely and, for companies, will provide them with added (but not guaranteed) certainty in how a matter might progress. However, in two recent high-profile cases in the United Kingdom, DPAs were accepted by the SFO and the courts (with findings of bribery and corruption), yet later courts, in assessing individual liability cases, threw them out (based on the same facts) as failing to justify a case to be answered by the individuals. This willingness of companies to admit to allegations of criminal conduct that cannot later be substantiated against individuals may call into question the nature and success of DPAs. While a DPA might be financially attractive to a company and the correct decision to maintain its reputation and shareholder value, individuals allegedly involved in unlawful conduct often have a very different view in seeking to defend their own liberty and in doing so, putting the Crown to proof in lengthy and complex cases.
xiii Prosecution of foreign companies
The jurisdiction of all Australia's laws is territorial. If any extraterritorial operation of legislation is to apply, it must be clearly stated and, insofar as Commonwealth law is concerned, constitutionally valid.
To establish jurisdiction over conduct constituting the offence of bribing or corrupting a foreign public official (assuming the elements of Section 70.2 can be established and subject to any defence), the following must exist:
- the conduct giving rise to the alleged offence occurred wholly or partly in Australia or on board an Australian aircraft or an Australian ship;
- where the conduct occurred wholly outside Australia, at the time of the alleged offence, the person was an Australian citizen or a resident of Australia, or was a corporation incorporated pursuant to the laws of Australia; and
- if the conduct occurred wholly outside Australia and the relevant person is a resident but not a citizen of Australia, the Commonwealth Attorney General must provide written consent for any proceeding.
While Australia's foreign bribery laws in Section 70.2 of the Criminal Code must in a general sense have a territorial or jurisdictional link to Australia, Australia's criminal law of conspiracy can extend to foreigners even if those foreigners have no apparent presence in or association with Australia. The crime of conspiracy is a crime of duration, a continuing offence that lasts as long as it is being performed as against parties to the conspiracy wherever they may be located.83 It is enough that certain conspirators are present in the jurisdiction (Australia) and the conduct was wholly or partly performed in the jurisdiction (Australia) even though others are not present and engaged in no conduct in the jurisdiction.84
On 4 February 2010, the Australian Parliament passed the Crimes Legislation Amendment (Serious and Organised Crime) Act (No. 2) 2010, which amended the Criminal Code by substantially increasing the financial penalties for foreign bribery offences. This was amended in late December 2012 by increasing the value of penalty units by which the amount of a fine is calculated for a contravention of a Commonwealth offence. The most recent increase is effective from 31 July 2015 and, from July 2018, the increase in penalty units will occur every three years, indexed to increases in the Australian Consumer Price Index.
For a foreign bribery offence committed after 1 July 2017,85 the maximum penalties that may be imposed upon a conviction include:
- for an individual:
- imprisonment of up to 10 years;
- a fine of up to 10,000 penalty units (the value of one penalty unit is currently A$210, therefore the maximum fine is currently A$2.1 million); or
- both imprisonment and a fine; and
- for a corporation, the greatest of the following:
- a fine up to 100,000 penalty units (or A$21 million);
- if the court can determine the value of the benefit obtained directly or indirectly and that is reasonably attributable to the offending conduct, three times the value of the benefit; or
- if the court cannot determine the value of the benefit, then 10 per cent of the annual turnover of the corporation during the 12-month period ending at the end of the month in which the conduct constituting the offence occurred (which is described in the legislation as the turnover period).
Where a person acquires profit from illegal or criminal conduct, that profit, or other assets obtained as a result of the illegal conduct, can be subject to restraint and forfeiture pursuant to the Proceeds of Crime Act 2002 (Cth). The AFP Asset Confiscation Taskforce has responsibility for proceeds-of-crime proceedings independently of the CDPP.
In March 2014, ASIC published its Report No. 387 entitled 'Penalties for corporate wrongdoing', which considered the penalties available to ASIC and whether they were proportionate and consistent with those for comparable wrongdoing in selected overseas jurisdictions. The key findings of the Report were as follows:
- ASIC rated effective enforcement as critical to achieving its strategic priorities of fair and efficient financial markets with a range of penalties designed to deter contravention and promote greater compliance; and
- in relation to imprisonment and fines open to ASIC to seek through litigation:
- the maximum fines are broadly consistent with other comparable jurisdictions save for the United States;
- other jurisdictions have greater flexibility to impose higher non-criminal fines;
- other jurisdictions can seek the disgorgement of profit generated by the wrongdoing; and
- within Australian legislation, there are examples where non-criminal fines can be imposed at a much higher amount than those available to ASIC.
In October 2017, the ASIC Enforcement Review Taskforce published a consultation paper entitled 'Strengthening Penalties for Corporate and Financial Sector Misconduct', which proposes substantially greater penalties to be available to it for corporate wrongdoing, including much larger fines and imprisonment for serious offences for up to 10 years. While ASIC made it clear that it will pursue the sanctions and remedies best suited to each case on its merits, ASIC will continue to target individuals as it was only through 'scaring the hell out of people' faced with imprisonment that ASIC believed commercial behaviour might, in fact, change. As a result of a Royal Commission held throughout 2018 into Australia's banking, finance, insurance and superannuation sectors, the Australian government announced a substantial increase in various corporate penalties for entities breaching existing financial sector laws, particularly where reporting obligations on breaches of the law were concerned. These new offences include imprisonment of up to 10 years for individuals. While the current Australian government long resisted the need for such a commission, adopting the finance sector view of 'We're OK – it's just a few bad apples,' the Commission's interim report put paid to that argument, identifying serious and systemic misconduct driven by greed and profit at the expense of customers and consumers across the board.86
As a result of the Royal Commission, in February 2019, ASIC published an Update on Implementation of Royal Commission Recommendations.87 As part of the update and in response to widespread criticism that ASIC had failed to be a proactive conduct regulator and was too prepared to negotiate settlements with companies, it announced its approach going forward would reflect the philosophy of a 'why not litigate?' approach to investigations and enforcement. This resulted in the creation of a newly focused ASIC Office of Enforcement and a clearer divide between the regulatory and the investigative and litigation functions of ASIC.
V ASSOCIATED OFFENCES: FINANCIAL Record-keeping AND MONEY LAUNDERING
i Financial record-keeping laws and regulations
Until March 2016, there were no specific Commonwealth laws regulating record-keeping entries concerning corrupt conduct or bribery, except for the requirements to keep certain records of facilitation payments.
From 1 March 2016, Section 490 of the Criminal Code introduced the offences of false88 or reckless89 dealings with accounting documents. While these offences are complicated in their structure, a person commits an offence if:
- he or she makes alters, destroys or conceals an 'accounting document'90 or fails to make or alter such a document that a person is under a duty, under a law of Australia, to make or alter; or
- he or she intended (or was reckless as to the consequences) that the conduct facilitated, concealed or disguised the occurrence of one or more of the following:
- the person receiving a benefit that is not legitimately due to the person;
- the person giving a benefit that is not legitimately due to the recipient or intended recipient of the benefit;
- another person receiving or giving such a benefit; or
- loss to another person that is not legitimately incurred by the other person; and
- certain factual threshold criteria exist.91
The penalties per offence for an intentional dealing with an accounting document are as follows, distinguishing between the intentional and reckless offences:
- for the intentional offence:
- for an individual, imprisonment of not more than 10 years or a fine of not more than 10,000 penalty units (currently A$2.1 million) or both; and
- for a corporation, a fine of not more than the greatest of (1) 100,000 penalty units (currently A$21 million); (2) three times the value of the benefit attributable to the conduct; or (3) if the value of the benefit cannot be determined by the court, 10 per cent of the annual turnover of the corporation; and
- for the reckless offence:
- for an individual, imprisonment of not more than five years or a fine of not more than 5,000 penalty units (currently A$1.05 million) or both; and
- for a corporation, a fine of not more than the greatest of (1) 50,000 penalty units (currently A$10.5 million); (2) three times the value of the benefit attributable to the conduct; or (3) if the value of the benefit cannot be determined by the court, 10 per cent of the annual turnover of the corporation.
While these offences use the terminology of the foreign bribery offence (in Section 70.2 of the Criminal Code), they are not limited to foreign bribery offences or transactions involving foreign bribery. They apply to any offence involving the intentional or reckless use (or misuse) of an accounting document in any financial transaction. When Parliament enacted these offences, it made it clear that they should apply generally and indeed, ASIC and the AFP have indicated they will consider them as general offences to be assessed whenever circumstances warrant it.
There remain various Australian laws and regulations that impose general obligations on corporations to maintain true and accurate books and records, and financial statement disclosures, and otherwise to ensure that the books and records are not false or misleading in any material way. The laws and regulations include:
- the Criminal Code;
- the Corporations Act (see Sections 286, 1307 and 1309);
- the Australian Securities and Investment Commission Act 2001 (Cth);
- the Australian Securities Exchange (ASX) Listing Rules (the Listing Rules); and
- state criminal law legislation.
ii Disclosure of violations or irregularities
Under the continuous disclosure obligation in the Listing Rules, once a listed or public entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of its securities, the entity must immediately disclose that information to inform the market.92 The Listing Rules also impose obligations on listed entities to make periodic disclosures, including, for an annual report, the extent to which the corporation has followed the best-practice recommendations set by the ASX Corporate Governance Council.93
If a corporation engages in foreign bribery and that conduct is sufficiently widespread or serious so that it materially affects the share price, the corporation and directors may be exposed to potential investigation and prosecution by ASIC and class action securities litigation by aggrieved investors.94
iii Prosecution under financial record-keeping legislation
There is the potential for prosecutions for foreign bribery or other commercial fraud prosecutions to flow from financial and record-keeping legislation, particularly under the offences of false or reckless dealing with accounting documents in Section 490 of the Criminal Code (see above). Companies are required to maintain accurate records that oblige them to account for and explain payments made by the company. In the event of an accounting irregularity, an auditor would be required to report the irregularity to the board. To date, save for the ongoing Leighton Holdings prosecutions against Messrs Gregg and Waugh (see Section IV.ix), there has been no prosecution for any record-keeping offences relating to foreign bribery.
iv Sanctions for record-keeping violations
Penalties for record-keeping violations are civil and criminal in nature and include pecuniary penalties (fines), imprisonment and disqualification.
v Tax deductibility of domestic or foreign bribes
As part of its compliance activities, the ATO focuses on bribes and facilitation payments to ensure that only legitimate business expenses are claimed as deductions.95
The Income Tax Assessment Act 1997 (Cth) (ITAA) denies taxpayers a deduction for bribes paid to domestic or foreign public officials.96 A facilitation payment made to a foreign public official may be tax deductible.97 The ITAA requires that records be kept for all transactions and that those records are adequate to explain the transactions.98 If inaccurate, false or misleading statements are made in an income tax return (concerning the taxpayer's entitlements), serious fines and potential imprisonment exist under the tax laws and the Criminal Code.
vi Money laundering laws and regulations
Australia has enacted laws to prohibit money laundering and the use of the proceeds of crime to finance terrorism.99 These laws cover financial services, gambling services and bullion dealing, and other professionals or businesses that provide 'designated services' (described as 'reporting entities').100 Obligations are imposed on such entities to undertake appropriate customer due diligence, report suspicious transactions, keep certain records and establish and maintain anti-money laundering programmes. In addition, Part 10.2 of the Criminal Code creates criminal offences for money laundering (where a person deals with money or other property that is the proceeds of or an instrument of crime).101
During 2017, amendments came into effect to the Anti-Money Laundering and Counter Terrorism Financing Rules Instrument 2007 (No. 1).102 The Rules imposed new know-your-customer and customer due-diligence obligations on relevant reporting entities. The impact of these changes can be summarised as follows:
- risk assessment procedures should be amended to include details of the purpose of a transaction and of who is ultimately funding or benefitting from the transaction and the source of the funds;
- enhanced due diligence on all parties, direct and indirect, to a transaction, understanding a customer and its management structure and the role of customer managers and representatives;
- new criteria for the identification of 'politically exposed persons', including classifying them as domestic or foreign, high or low risk and applying enhanced criteria to existing due diligence processes; and
- a greater focus on reviewing and updating customer records.
While AUSTRAC has traditionally been reluctant to prosecute companies for civil penalty proceedings for breaches of Australia's anti-money laundering laws, the recent settlements of civil penalty proceedings against Tabcorp Ltd (for an agreed penalty of AU$49 million)103 and the Commonwealth Bank of Australia (for an agreed penalty of AU$700 million),104 with the prospect of substantial fines, may signal a more robust approach by the regulator to anti-money laundering offences.
During April 2015, the Financial Action Task Force released its Mutual Evaluation Report of Australia. It noted that Australia was perceived as an attractive destination for foreign proceeds of crime, and the real estate sector was seen as high-risk (highlighted by the OECD Phase 4 Report on Australia). This is an area of increasing focus for the AFP's Criminal Assets Confiscation Taskforce, working together with international investigation agencies to track the flow of the proceeds of crime and restrain and obtain forfeiture of such proceeds or property to the Commonwealth under the Proceeds of Crime Act 2002 (Cth).
vii Prosecution under money laundering laws
Payments made as bribes or for the purpose of corrupting foreign public officials may constitute money laundering by, in effect, disguising the illegal origin of criminal profits, so allowing criminals access to and the use of the proceeds of crime. No prosecutions have occurred to date for money laundering relating to foreign bribery.
viii Sanctions for money laundering violations
Penalties for money laundering offences range, per offence, from fines of 10 penalty units (A$1,700) and six months' imprisonment to fines of 1,500 penalty units (A$255,000) and 25 years' imprisonment. In conjunction with the Commonwealth revenue laws, outstanding or avoided tax may also become due with serious penalties (up to 75 per cent of the primary tax) and interest.
ix Disclosure of suspicious transactions
Businesses that are a reporting entity or are otherwise providing a designated service or that involve a transfer of cash or an international funds transfer (such as the provision of financial or loan services) under Australia's anti-money laundering and counter-terrorism financing laws are obliged to report the suspicious matter within either 24 hours or three days, depending on the nature of the matter, to the regulatory authority, AUSTRAC.105 Serious penalties can be imposed for the non-reporting of suspicious transactions.
VI ENFORCEMENT: FOREIGN BRIBERY AND ASSOCIATED OFFENCES
Australia has still had very few criminal prosecutions for foreign bribery since 1999. The first was commenced in 2011 in connection with the two subsidiaries of Australia's central bank, the Reserve Bank of Australia (RBA).
In July 2011, subsidiaries of the RBA, Securency International Pty Ltd (Securency),106 a provider of polymer banknotes, and Note Printing Australia Pty Ltd (NPA),107 a printer of polymer banknotes, and several senior executives paid or conspired to have paid bribes through local intermediaries to foreign public officials in Indonesia, Malaysia, Vietnam and Nepal to secure valuable polymer banknote printing contracts. The AFP charged the companies and various individuals with foreign bribery, conspiracy and false accounting offences as part of the Securency investigation.108 The investigation and prosecutions concluded in December 2018 with a number of guilty pleas and convictions recorded, although no individual served a term of imprisonment (see Section IX.iv above).
The second case commenced in February 2015 against three principals of a construction company, Lifese Pty Ltd, which specialised in construction projects in the Middle East.
The charges were for the offence of conspiracy to bribe a foreign public official to win construction contracts in Iraq. The sum of A$1,035,000 was given to an intermediary to facilitate the award of lucrative construction contracts for the company, which was under considerable financial pressure with very little work.
In June 2017, the accused pleaded guilty and, on 27 September 2017, each of the accused was sentenced to four years' imprisonment (with parole after two years), with fines for two of the accused of A$250,000 each109.
In sentencing, the court made it clear that the victim was the nation state (Iraq) whose public officials were to receive a private benefit.
The court also was strongly of the view that the sentence should include an element of denunciation and that bribery of an official 'can never be excused, much less justified, on the basis of a business imperative'.
In the last case in December 2018, CDPP v. Boillot, the Court said the following:110
Although there is no evidence before the court as to the prevalence of foreign bribery offences, general deterrence and denunciation are usually very important sentencing considerations in all cases involving 'white collar' crime. Such offences are usually hard to detect. They have often been committed by persons who had been regarded as being of good character and reputation. Because such offenders generally have good prospects of rehabilitation, specific deterrence is often not a very relevant consideration. In such cases, courts generally place great weight on the need to deter others from engaging in similar conduct.
VII INTERNATIONAL ORGANISATIONS AND AGREEMENTS
Australia is a signatory to numerous international anti-corruption conventions.
In 1997 Australia became a signatory to the Anti-Bribery Convention, which precipitated the amendments to the Criminal Code prohibiting the bribing of a foreign public official.
Since then, Australia has become a party to:
- the United Nations Convention against Corruption (the UN Convention), which was signed in 2003 and ratified in 2005. Australia has sought to implement the mandatory requirements contained in the UN Convention and additionally some of the non-mandatory requirements prescribed in the articles of the UN Convention;111 and
- the United Nations Convention against Transnational Organized Crime, signed in 2000 and ratified in 2004.
Additionally, Australia has had significant involvement in local Asia-Pacific initiatives, including the Asia-Pacific Economic Cooperation (APEC) Anti-Corruption Working Group. Australia led the development of the APEC Code of Conduct for Business, a guide to help combat corruption in the region.112 Australia is also an active member of the OECD Working Group on Bribery in International Business Transactions.
In May 2013, the AFP, along with the US Federal Bureau of Investigation, the Royal Canadian Mounted Police and the UK City of London Police Overseas Anti-Corruption Unit, signed a memorandum of understanding establishing an International Foreign Bribery Taskforce to combat foreign bribery. It is expected that the Taskforce will enable these countries to work collaboratively to strengthen investigations into foreign bribery crimes; share knowledge, skills methodology and investigative techniques; and exchange information and best-practice techniques.
It is likely that the Taskforce assisted in generating the evidentiary foundation for charges laid by Britain's Serious Fraud Office in May 2018 against Ziad Akle and Basil al-Jarah in connection with an alleged 'conspiracy to give corrupt payments to secure the award of a contract worth US$733 million to Leighton Contractors Singapore PTE Ltd [a CIMIC Group entity] for a project to build two oil pipelines in southern Iraq'. In July 2019, al-Jarah, described by the SFO as a former partner of Unaoil in Iraq, pleaded guilty to five charges that related to conduct between 2005 and 2013 concerning the award of contracts to supply and install single-point moorings and oil pipelines in southern Iraq. Three other individuals have pleaded not guilty and will face trial in 2020.113 In addition, it was reported in the media in March 2019 that CIMIC had entered into an 'investigation agreement' with the US Department of Justice following a long-running investigation by the AFP into allegations that the construction group formerly known as Leighton Holdings paid bribes to win contracts. The AFP has been investigating former senior staff over allegations the company's subsidiaries paid bribes in the Middle East and Asia before 2012 but has not prosecuted any former or existing employees. It remains to be seen whether these ongoing investigations in the United States, the United Kingdom and Australia will ultimately result in any charges in Australia.
VIII LEGISLATIVE DEVELOPMENTS
In December 2014, the Commonwealth Attorney General's Department published an online learning module on foreign bribery. The module provides advice to government and industry on Australia's anti-bribery policy, the relevant laws and their application and steps that can be taken to encourage compliance.
On 1 March 2016, the new false and reckless dealing with accounting documents offences were enacted and became law.
On 9 September 2016, the government published a revised Commonwealth Fraud Control Policy to apply to all non-corporate Commonwealth entities.114
In March 2018, the Australian Senate supported proposed reforms to Australia's foreign bribery offences (noted above) and the introduction of a Commonwealth DPA scheme.
In March 2018, the Australian Senate published its much-anticipated Foreign Bribery Report on Australia's foreign bribery laws. The Report supported the proposed legislative reforms and also called for adequate resources to be ensured for authorities to investigate and prosecute offenders, and for the abolition of the facilitation payment defence to a foreign bribery charge.
In July 2019, substantial reforms to private sector whistle-blower protections became law. It is hoped that, despite the apparent lack of political will in the Australian government, these reforms will be followed through and introduced without further delay.
IX OTHER LAWS AFFECTING THE RESPONSE TO CORRUPTION
Other laws in Australia that, although not directly dealing with foreign bribery and corruption, are relevant to this area include the following.
Legal professional privilege is a substantive legal right and protects confidential communications between a lawyer and a client (or a third party) created for the dominant purpose of seeking or giving legal advice, or that were created in connection with anticipated or actual litigation. Communications that facilitate a crime or fraud are not protected by this privilege.115 Legal professional privilege is respected by authorities and can be properly maintained by a client unless the client's conduct has waived the privilege, expressly or by conduct inconsistent with the confidence inherent in a privileged communication.116
ii Privacy or data protection
Privacy of information and data, particularly data concerning 'personal information' of or concerning an individual, are subject to protection under the Privacy Act 1988 (Cth) and the Australian Privacy Principles (APPs). The APPs outline how most Australian and Norfolk Island government agencies, all private sector and not-for-profit organisations with an annual turnover of more than A$3 million, all private health service providers and some small businesses (collectively, APP entities) must handle, use and manage personal information. The APPs cover:117
- the open and transparent management of personal information;
- an individual having the option of transacting anonymously or using a pseudonym where practicable;
- the collection of solicited personal information and receipt of unsolicited personal information, including giving notice about collection;
- how personal information can be used and disclosed (including overseas);
- maintaining the quality of personal information;
- keeping personal information secure; and
- the right of individuals to access and correct their personal information.
In terms of general data protection, increasing inroads are being made to permit government agencies increased access to data in the name of 'national security'. In July 2014, the National Security Legislation Amendment Act (No. 1) 2014 was passed. The Act updates the powers of the Australian Security Intelligence Organisation (ASIO) to access data on computer networks.
The Act sets out a raft of changes to the manner in which Australia's intelligence organisations can search and access computer-related data. The Act contains an expanded definition of what constitutes a computer, so that it now captures all or part of one or more computers, computer systems or computer networks. This allows access to a network or series of computers under, for example, one warrant to enhance surveillance processes.
Other changes focus on responding to technological advances, for example, allowing ASIO to deal with encrypted computers and to disrupt technology designed to alert a target of any covert monitoring, to grant immunity to ASIO officers involved in special operations and punishing any publication about any facts concerning a terrorism investigation. For private companies, Schedule 4 to the Act provides a mandate for 'cooperation' between ASIO and the private sector, said to reflect existing practices used by ASIO in gathering covert evidence. The Act requires telecommunication companies to retain metadata information on calls and internet use, and reverses the onus of proof if persons travel to certain countries or regions declared by the government to be 'terror-related war zones'.
The retention of metadata is not new and, indeed, a legislative scheme for its retention already exists. Chapter 3 of the Telecommunications (Interception and Access) Act 1979 (Cth) allows agencies to ask communications companies to preserve data or retain it on an ongoing basis, without having to store the data of every Australian. An agency does not even need a warrant to issue a preservation notice. We are left to assume that there may be practical difficulties as to why this mechanism is not good enough for our law enforcement agencies. Perhaps the answer lies in the fact that crimes may go undetected for months or years and agencies want the opportunity to trawl through historical electronic data.
iii Official or state secrets
There is no official secrets statute in Australia in the form adopted in the United Kingdom. There are criminal offences applying to any present or former Commonwealth officer (a public servant) who publishes or communicates, except to some person to whom he or she is authorised to publish or communicate it, any fact or document that comes to his or her knowledge, or into his or her possession, by virtue of being a Commonwealth officer, and that it is his or her duty not to disclose.118 Other Commonwealth and state statutes create specific regimes for non-disclosure in certain circumstances.
There are currently some high-profile investigations and prosecutions in Australia. The most prominent is that of a lawyer Bernard Collaery and an individual known as Witness K. In conduct seemingly at odds with the integrity expected of a developed nation, while Australia was seeking to negotiate a treaty with the fledgling government of Timor-Leste for access to underwater oil and gas reserves, the Australian government used ASIS (the Australian Secret Intelligence Service) to bug the offices of the Timor-Leste government to learn its confidential views during the treaty negotiations. A treaty was struck that was incredibly beneficial to Australia and certain Australian public companies. Australia's actions would have been buried in perpetuity, had it not been for one ASIS operative, known only as Witness K, who approached the intelligence watchdog, the Inspector General of Intelligence and Security (IGIS) and obtained permission to talk to an approved lawyer, Bernard Collaery, a barrister and one-time attorney general for the ACT. Collaery helped the Timor-Leste government build a case against Australia at The Hague, alleging the bugging had rendered the treaty void. The revelations were splashed across mainstream media, first through The Australian (owned by News Corp), then the ABC. The conduct and subsequent refusal by all governments in Australia to address the issue has been startling. After many years, Witness K and Collaery were prosecuted under the Crimes Act for breaching secrecy laws, with Witness K agreeing to plead guilty under Section 39 of the Intelligence Services Act 2001 (Cth) for communicating secret information in the course of his duties as an ASIS agent (with a potential sentence of up to 10 years' imprisonment).119 Collaery waived his rights to a committal and his trial will continue, while the Australian government is attempting to smother any publication of the trial or its own conduct on the grounds of national security. Whether there is any real national security concern or whether it is rather old-fashioned embarrassment at officials having been caught acting, as it might be alleged, illegally, remains to be seen.
This paranoia by the Australian government against transparency reared its head most dramatically during 2019 when after the recent federal election in May 20129, the AFP enforced search warrants against a Canberra-based News Corp journalist (for publishing details of an alleged departmental plan to allow the government to spy on Australians in the name of national security) and the public Australian Broadcasting Commission (ABC) (for publishing a story known as The Afghan Files, which was based on leaked Department of Defence documents containing allegations of unlawful killings and misconduct by Australian soldiers in Afghanistan). The ABC has moved to challenge the actions taken by the AFP.120 As a result of these raids, the Australian media, to the left and the right, has been up in arms about the intrusive use of search warrants and the targeting of journalists and whistle-blowers. The Australian government, while promoting whistle-blower protections in the private sector, seems rather less keen to protect whistle-blowers when its own conduct comes under close scrutiny. And in a twist of irony, while The Australian had been championing the war on terror, security issues and increasing intrusive laws affecting individuals in Australia, it suddenly changed its position when its own journalists became the target of a government attempt to find and prosecute whistle-blowers disclosing government ineptitude or worse, illegal conduct. It remains to be seen how these matters will develop over time but it is a depressing reminder to those who learn of misconduct that those who blow the whistle are the ones who pay the price.
iv Whistle-blowing protection
In Australia, there has been no national scheme to promote or encourage whistle-blowers to come forward and report wrongdoing. Most whistle-blowing protections are specific to Commonwealth and state government departments, private organisations and statutes limited to certain types of offences and officials.121 While some private and many public sector organisations require employees to report illegal conduct, failing which they may face disciplinary sanctions ranging from a caution to dismissal, there is no mandatory reporting obligation to promote a culture of reporting illegal or improper conduct as there is in the United States.122
The Public Interest Disclosure Act 2013 created a public interest disclosure scheme that is designed to promote the integrity and accountability of the Commonwealth public sector, encourage and facilitate the making of public interest disclosures by public officials, ensure that public officials who make disclosures are supported and protected from adverse consequences relating to the disclosure, and that disclosures are properly investigated and dealt with.123 While the Act has been criticised for limiting its reach to the Australian public sector, it is a positive acknowledgment that more is required to proactively protect those who report potentially serious crime.
On 26 June 2014, the Senate Economics References Committee released its report into the ongoing review of ASIC. The Committee made a number of key recommendations:
- that ASIC establish an 'Office of the Whistle-Blower';
- that existing laws should be extended to cover anonymous disclosures;
- that the good-faith requirement for protected disclosures under the Corporations Act 2001 (Cth) be repealed; and
- that the government explore options to incentivise whistle-blowers through a reward-based system (as currently exists in the United States under the Securities Exchange Act).
In the past, while the former chairman of ASIC has publicly stated that he does not favour a scheme that rewards whistle-blowers, believing that a reward will in some way corrupt the value of the evidence and undermine a whistle-blower's credibility, he changed his views to accept that 'compensating' whistle-blowers for any losses they suffer by reason of blowing the whistle should be seriously considered.
As of 1 July 2019, the Australian government enacted enhanced private-sector whistle-blower protections. These new laws included the following:
- a broad coverage of protections across the private sector in one statute;
- a broad definition of 'disclosable conduct' to include a breach or potential breach, of any Commonwealth, state or territory law;
- a broad definition of a whistle-blower, to include former and current contractors and employees (including certain family members) or those providing services to an entity;
- a tiered approach to reporting, involving internal, regulatory and, in appropriate circumstances, external disclosure (e.g., to members of the Australian Parliament or the media);
- the provision for anonymous disclosures and protections to maintain the secrecy of the informant's identity and criminal sanctions if the whistle-blower's identity is disclosed;
- removal of the threshold criteria that a whistle-blower has to act in good faith and rather, simply that the whistle-blower had reasonable grounds to suspect that a contravention of a law had or might occur;
- enhanced provisions for compensation and victimisation remedies to be available to whistle-blowers, supervised by a court; and
- the requirement for a public, listed entity and a 'large proprietary company'124 to have in place a whistle-blower policy consistent with the new laws.
v Blocking statutes
There are no blocking statutes in Australia that are designed to prevent the flow of information to a foreign entity. Where an Australian regulator seeks access to or the exchange of information with foreign regulators, then, subject to the regulator's underlying statutory powers, it usually enters into a memorandum of understanding to permit inter-agency exchanges of information. Australia also has mutual assistance statutes to facilitate the formal exchange of information.125
Australia's privacy laws play a role if information that is personal information protected from disclosure within Australia should be or is disclosed outside Australia. The APP 8 and Section 16C of the Privacy Act 1998 (Cth) create a framework for the cross-border disclosure of personal information. The framework generally requires an APP entity126 to ensure that an overseas recipient will handle an individual's personal information in accordance with the APPs, and makes the APP entity accountable if the overseas recipient mishandles the information. This reflects a central objective of the Privacy Act, of facilitating the free flow of information across national borders while ensuring that the privacy of individuals is respected.127
vi Public procurement
One of the areas where the OECD expressed concern in its April 2015 follow-up report on Australia's efforts to combat foreign bribery was in relation to the lack of action by the Australian government in relation to transparent debarment policies for all Commonwealth procurement agencies where a tendering party has been suspected of, charged with or convicted of a foreign bribery offence.
In Australia, there are procurement policies for the Commonwealth and each state government. The Commonwealth Procurement Rules 2014 deal primarily with the process of securing and issuing procurement contracts. It is silent on any sanctions save to note that non-compliance with the 'resources management framework, including in relation to procurement' may attract criminal, civil or administrative remedies under the Public Service Act 1999 (Cth) and the Crimes Act 1914 (Cth).
An effective debarment regime applying to all Commonwealth and state government agencies and contracts for all public procurement works, with meaningful sanctions, is necessary to bring Australia into line with the extensive debarment procedures operated by the United States and multilateral agencies such as the World Bank and, regionally, the Asian Development Bank.
Compliance plans or policies designed to combat bribery and corruption are entirely a matter for private and public organisations. The existence of a compliance plan may amount to a defence to foreign bribery depending on the circumstances.
If a person is convicted of a federal offence, Section 16A of the Crimes Act 1914 (Cth) sets out factors that a court would take into account in sentencing a person. The existence of a compliance plan is not a factor that the court must take into account, but it is within a court's overall sentencing discretion.
There is no official guidance in Australia on what constitutes an effective anti-corruption compliance programme. Useful unofficial guides include the Standards Australia 'Australian Standard: Compliance programs, AS3806–2006', the Transparency International 'Business Principles for Countering Bribery' (2009), the UK Ministry of Justice's 'The Bribery Act 2010: Guidance', the OECD 'Good Practice Guidance on Internal Controls, Ethics, and Compliance' (2010), the OECD report 'Corporate Governance: Risk Management and Corporate Governance' (2014), the Transparency International (UK) report 'Countering Small Bribes' (June 2014) and the ISO37001 Anti-Bribery Management Systems standard, establishing a template for a culture of corporate integrity, transparency and compliance (2016).
XI OUTLOOK AND CONCLUSIONS
Australia appears to be demonstrating significant and material changes over the past few years, following the severe criticisms made by the OECD in October 2012. Initiatives for reform significantly increased over late 2017 and throughout 2018 but seems to have dropped off in 2019. The AFP, ASIC and other agencies now operate in a much more streamlined and focused manner. While real budgets for investigating serious financial crime remain limited compared with, for example, resources available to the ATO to target companies for not paying the tax the ATO believes they should be paying or intelligence agencies involved in the never-ending 'war on terror', complex foreign bribery cases are still taking a long time – some say too long – to investigate or prosecute. This is no doubt owing to the complexity of the conduct, the criminal offences and finite resources. Australia has tended to adopt a reactive response to foreign bribery efforts and adopted knee-jerk reactions when criticised by international organisations for its tardy efforts. However, its past behaviour should not diminish the significant level of positive reforms that have emerged from the government and Parliament more generally over the past 12 to 18 months. The test, of course, remains to enact the reforms and then to proactively enforce them with proper resources allocated to the investigators and prosecutors.
Some topics remain to be addressed in Australia in relation to domestic and foreign bribery. These include:
- implementation of the Foreign Bribery Report on Australia's foreign bribery laws;
- ongoing material resourcing for the AFP to investigate, and the CDPP to prosecute, serious financial crime, including foreign bribery;
- enacting the proposed reforms to Section 70 of the Criminal Code, including the introduction of the corporate offence of failing to prevent foreign bribery;
- abolishing the facilitation payment defence in Section 70.4 of the Criminal Code;
- introducing the model Commonwealth DPA scheme for serious Commonwealth financial offences;
- giving effect to changes to the Commonwealth Prosecution Policy to reflect the amended offences and the model DPA scheme to promote self-reporting of potential criminal conduct; and
- from a domestic perspective, the establishment of a robust, independent anti-corruption commission to cover the entirety of the Commonwealth Government, its direct and indirect agencies and any entity or person who uses or spends Commonwealth money (provided in any manner, grant, donation or funding arrangement).
Whether these reforms achieve the desired effect of changing corporate and individual conduct remains to be seen. All the reforms in the world will have little impact in the boardroom if they are not followed through with robust, public enforcement. That still remains the biggest challenge in Australia tackling bribery and corruption.
1 Robert R Wyld is a consultant and Andreas Piesiewicz is a partner at Johnson Winter & Slattery.
2 Chapter 4 Division 70 of the Criminal Code Act 1995 (Cth).
3 The domestic bribery provisions are found in Part 7.6 of the Criminal Code.
4 The International Trade Integrity Act 2007 (Cth).
5 The Cole Inquiry, as it is known, was a royal commission. Australian governments establish royal commissions to inquire into and report on matters of public concern.
6 Australia signed the UN Convention against Corruption on 9 December 2003 and ratified the Convention on 7 December 2005.
7 Australia is a founding member of the Financial Action Task Force on Anti-Money Laundering and Counter-Terrorist Financing.
8 Australia ratified the UN Convention against Transnational Organized Crime on 27 May 2004.
9 Australia has played an active role in the Asia Development Bank OECD Anti-Corruption Initiative for the Asia and Pacific region since October 2003, and in November 2004 endorsed the Asia-Pacific Economic Cooperation (APEC) Santiago Commitment to Fight Corruption and Ensure Transparency and the APEC Course of Action on Fighting Corruption and Ensuring Transparency.
10 This was subject to a further oral update to the OECD, outlined in the Attorney General's inter-agency submission to the Senate Economics References Committee dated September 2015.
11 On 1 July 2016, the Australian Crime Commission Amendment (National Policing Information) Act 2016 amended the Australian Crime Commission Act to merge the CrimTrac functions into the ACIC, so there is a nationally coordinated police information and criminal intelligence agency.
14 See https://www.cdpp.gov.au/publications/best-practice-guideline-self-reporting-foreign-bribery-
18 Section 141.1(1) of the Criminal Code.
19 Section 142.1(1) of the Criminal Code.
20 Section 141.1(3) of the Criminal Code.
21 Section 142.1(3) of the Criminal Code.
22 Section 142.2 of the Criminal Code.
23 Section 142.1(4) of the Criminal Code.
24 Sections 141 and 142 of the Criminal Code.
25 See for example, Section 8 of the Independent Commission against Corruption Act 1988 (NSW).
26 See Australian Public Service Code of Conduct, Section 4.12 – Gifts and Benefits.
27 The details are set out in the Commonwealth Parliament Register of Members' Interests, applicable to each politician and family members (spouse or partner and children).
28 Electoral Amendment (Political Dnations and Other Measures) Bill 2010 (Cth).
29 This Bill has not passed the Senate.
30 Australian government, 'Electoral Reform Green Paper – Donations, Funding and Expenditure', December 2008, p. 14.
31 This is subject to amendment by the Foreign Influence Transparency Scheme Amendment Bill 2019, which changes what constitutes a 'communication activity' under the Act to disclose the role of a foreign principal and other procedural matters.
32 The Queensland Parliament passed legislation in 2008 that bans donations of foreign property.
33 Section 96D of the Election Funding, Expenditure and Disclosures Act 1981 (NSW).
34 See Sections 249A to 249J, Crimes Act 1900 (NSW).
35 Sections 142.1 and 142.2 create offences against the bribe payer and the bribe giver.
36 Section 249B Crimes Act 1900 (NSW).
37 Chapter 14, Local Government Act 1993 (NSW).
38 These agencies are the Australian Border Force; the ACIC; the AFP (including ACT Policing); the Australian Transaction Reports and Analysis Centre (AUSTRAC); the ACIC; prescribed aspects of the Department of Agriculture; the Department of Immigration and Border Protection; and the former National Crime Authority.
39 Independent Commission against Corruption Act 1988 (NSW).
40 Independent Commission against Corruption v. Cunneen  HCA 14 and Duncan v. Independent Commission against Corruption  HCA 32 upholding the constitutional validity of the laws.
41 R v. Obeid (No. 12)  NSWSC 1815; upheld on appeal at Obeid v. R  NSWCCA 221.
42 R v. Macdonald; R v. Maitland  NSWSC 337 with the sentencing judgment at  NSWSC 638 where defendant Macdonald was imprisoned for 10 years with a non-parole period of seven years, and defendant Maitland was imprisoned for six years with a non-parole period of four years.
43 See Maitland v. R; Macdonald v. R  NSWCCA 32.
44 Section 70.4 of the Criminal Code.
45 Section 70.4(1) of the Criminal Code.
46 A copy of the paper is no longer accessible on the government website; however, a copy can be sourced by performing a Google search for 'Facilitation Payment Australia Public Consultation Paper'.
48 Foreign Bribery Report sat clauses 7.101 and 7.102.
49 In Krakowski v. Eurolnyx Properties Pty Ltd  HCA 68 at  the High Court of Australia held that you accumulate the knowledge of all 'attributable' persons of the corporation to ascertain the knowledge of the company. To focus simply on the knowledge of one person as being the knowledge of a corporation is artificial and does not reflect the combined knowledge of a range of individuals within a corporation.
50 Sections 12.1 to 12.6, Criminal Code.
51 In the Securency banknote-printing prosecution, it was reported in the media that the companies involved in the conduct were to plead guilty. Details of their pleas and sentences are suppressed by reason of non-publication orders made by the Supreme Court of Victoria.
52 Section 12.3(3) of the Criminal Code.
54 Greg Houston, Svetlana Starykh et al., 'Trends in Australian Securities Class Actions: 1 January 1993–
31 December 2009' (May 2010), NERA Economic Consulting; and King & Wood Mallesons, 'The Review – Class Actions in Australia 2015/2016' (August 2016).
55 See ASIC v. Hellicar  HCA 17 and Shafron v. ASIC  HCA 18 as examples; and on criminal liability see ASIC v. Fortescue Metals Group Ltd (No. 5)  FCA 1586 and the High Court of Australia in Forrest v. ASIC  HCA 39.
56 ASIC v. Lindberg  VSC 332 – the Supreme Court of Victoria banned the former Australian Wheat Board Ltd (AWB Ltd) managing director from managing a corporation until 14 September 2014 for breaching his duties by failing to inform the AWB Ltd board about certain matters. In ASIC v. Flugge & Geary  VSC 779, the Supreme Court of Victoria found the former AWB Ltd chairman acted in breach of his duties (with knowledge of the kickback scheme funnelling funds to the former Iraq government in breach of UN sanctions) and in the sentencing judgment, ASIC v. Flugge  VSC 117, disqualified him from managing a company for five years and fined him A$50,000.
57 The Queen v. David John Ellery  VSC 349 at  to .
58 See the memorandum of understanding between the AFP and ASIC on collaborative working arrangements at https://download.asic.gov.au/media/1310383/AFP-MOU-Oct%202013.pdf.
59 Section 4(1) defines 'serious and organised crime' broadly and is likely to capture conduct that constitutes the bribery or corruption of foreign public officials (as 'similar conduct' to the bribery and corruption of Commonwealth officials specifically referred to in Section 4(1)).
60 The High Court of Australia has cautioned the ACIC (and State Crime Commissions) about how its statutory powers can be exercised and about the disclosure of information obtained by it under compulsive powers to police agencies, in circumstances where a target is to be or in fact has been charged with offences that are the subject of an investigation and that may impact on the accused receiving a fair trial; see X7 v. Australian Crime Commission  HCA 29 and Lee v. The Queen  20. This was reinforced in Strickland (a Pseudonym) & Ors v. Commonwealth DPP  HCA 53, where the High Court unanimously held, on 8 November 2018, that the AFP and the ACIC had acted unlawfully in examining defendants under its statutory powers, while a majority held that the dissemination of the illegally obtained information to the AFP and the CDPP created a substantial and incurable forensic disadvantage and prejudice to the fair trials of the accuseds with the Court permanently staying the prosecutions.
61 'Prosecution Policy of the Commonwealth: Guidelines for the making of decisions in the prosecution process', available at www.cdpp.gov.au/sites/g/files/net2061/f/Prosecution-Policy-of-the-Commonwealth_0.pdf.
62 Annexure A to the 'Prosecution Policy of the Commonwealth: Guidelines for the making of decisions in the prosecution process.
63 First instance judgment, Commonwealth DPP v. Barry Thomas Brady 19 June 2014 (published at www.wikileaks.org on 29 June 2014) and the second judgment discharging the suppression orders, Commonwealth DPP v. Barry Thomas Brady  VSC 246 at .
64 R v. Jousif; Elomar v. R; R v. M Elomar  NSWSC 1299 and on appeal for Elomar, see Elomar v. R; Elomar v. R  NSWCCA 224.
67 CDPP v. Note Printing Australia Pty Ltd and Securency International Pty Ltd  VSC 302 that were fined a total amount of A$480,000 reduced on the undertaking to provide future cooperation.
68 Queen v. Ellery  VSC 349; CDPP v. Radius Christanto  VSC 521; CDPP v. Curtis  VSC 613; CDPP v. Gerathy  VSC 289 and CDPP v. Boillot  VSC 739.
70 See CDPP v. Boillet  VSC 739 at , footnote 2.
71 ibid at  to .
72 AUSTRAC has not brought any proceedings concerning foreign bribery. However, in early 2017 it prosecuted Tabcorp Ltd for breaches of Australia's anti-money laundering laws and secured an agreed settlement of A$49 million. In August 2017, AUSTRAC commenced highly publicised civil penalty proceedings against the Commonwealth Bank of Australia, alleging systemic breaches of anti-money laundering laws over several years by the Bank associated with the use of smart automated teller machines and the non-reporting of suspicious transactions. The Bank is facing investigation by a number of foreign agencies and the matter is continuing before the Federal Court of Australia. In June 2018, the Bank settled the prosecution for civil penalties for the sum of AU$700 million.
73 Section 70.3, Criminal Code.
74 Section 70.4, Criminal Code.
75 Section 12.3(3), Criminal Code.
76 Section 316 of the Crimes Act 1900 (NSW) provides that if a person has committed a serious indictable offence, and another person who knows or believes that the offence has been committed and that he or she has information that might be of material assistance in securing the apprehension of the offender or the prosecution or conviction of the offender, and fails without reasonable excuse to bring that information to the attention of a member of the police force or other appropriate authority, that other person is liable to imprisonment for two years.
77 Sections 9(6), 9(6B) and 9(6D) of the Director of Public Prosecutions Act 1983 (Cth).
78 Section 21E of the Crimes Act 1914 (Cth).
79  HCA 2 at .
80 Wong v. The Queen (2001) 207 CLR 584 at 611;  HCA 64 at ; Barbaro at ; R v. MacNeil-Brown (2008) 20 VR 677 at 711  per Buchanan JA, 716  per Kellam JA; CMB v. Attorney-General for NSW (2015) 89 ALJR 407, where the prosecution may submit that an identified sentence (by the trial judge) is manifestly inadequate, so avoiding appealable error by the trial judge. In Commonwealth of Australia, Director, Fair Work Building Inspectorate v. CFMEU, the High Court of Australia again made it clear that the principles set out in Barbaro continue to apply and that, in a criminal prosecution (in contrast to a civil penalty prosecution), a court should have no regard to penalties agreed between the parties.
81 Courts and Crime Act 2013, Schedule 17.
82 The offences are those identified in the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 and are contraventions of identified criminal offences under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), the Autonomous Sanctions Act 2011 (Cth), the Charter of the United Nations Act 1945 (Cth), the Criminal Code and the Corporations Act.
83 See Section 11.5 of the Criminal Code; Truong v. R  HCA 10 at ; Savvas v. The Queen  HCA 29; applied in Agius v. R  NSWCCA 119 at , upheld on appeal by Johnson JA at ; the prosecution need not prove the exact time of the formation of the conspiracy agreement or the act that marked its inception, see Saffron v. R (1988) 17 NSWLR 395 at 436–437 and R v. Horty Mokbel (Ruling No. 2)  VSC 547 at , approved in R v. Agius at . In Gerakileys v. R  HCA, the High Court of Australia made it clear that all parties to an agreement need to be aware of its scope, based on their knowledge and awareness of the overall objective of the (unlawful conspiracy) agreement.
84 R v. Doot  AC 807; see also Lipohar v. R  HCA 65 at  per Gleeson CJ and at  per Gaudron, Gummow & Hayne JJ.
85 The value of penalty units will be automatically increased every three years based on the consumer price index. This will start from 1 July 2020.
88 Section 490.1, Criminal Code.
89 Section 490.2, Criminal Code.
90 Defined in the Criminal Code Dictionary to mean (1) any account; (2) any record or document made or required for any accounting purpose; or (3) any register under the Corporations Act 2001, or any financial report or financial records within the meaning of that Act.
91 Section 490.1(2), Criminal Code.
92 Listing Rule 3.1, and on continuous disclosure obligations, see Grant-Taylor v. Babcock & Brown Ltd (in liquidation)  FCAFC 60 at .
93 In addition to the disclosure obligations in Chapters 3 and 4 of the Listing Rules, mining entities also have additional reporting requirements under Chapter 5.
94 There are an increasing number of securities class actions in Australia, but none as yet have proceeded to judgment. The most recent cases are Camping Warehouse Australia Pty Ltd v. Downer EDI Limited  VSC 357 and Caason Investments Pty Ltd v. Cao  FCA 1410 where the courts noted that a plea of fraud on the market for reliance and damages cannot be said to have no reasonable prospects of success. These cases are often concerned with the complexity of damages and the recoverability of direct or indirect losses, and how investors or classes of investors have to prove their losses (individually or collectively, applying the 'fraud on the market' concept).
95 'ATO Bribes and facilitation payments: A guide to managing your tax obligations'.
96 See Section 26.52 (foreign public officials) and 26.53 (public officials).
97 Section 26.52(4) and (5).
98 Section 262A of the ITAA.
99 Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) and the AML/CTF Rules.
100 Section 6 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).
101 Sections 400.3 (amounts over A$1 million), 400.4 (amounts over A$100,000), 400.5 (amounts over A$50,000), 400.6 (amounts over A$10,000), 400.7 (amounts over A$1,000), 400.8 (money or property of any value) and 400.9 (dealing with property reasonably suspected of being proceeds of crime) of the Criminal Code create the offences depending upon the monetary value of the offending transaction.
102 The updated Rules can be found at www.austrac.gov.au/businesses/legislation/registered-amlctf-rules.
103 Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v. Tabcorp Limited  FCA 1296.
104 Chief Executive Officer of the Australian Transaction Reports and Analysis Centre v. Commonwealth Bank of Australia Limited  FCA 930.
105 Section 41 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).
106 Securency is a joint venture between the RBA and Innovia Films, a UK-based supplier of polypropylene films. The RBA has now sold its interest in Securency to Innovia and is no longer a shareholder in Securency.
107 NPA is wholly owned by the RBA.
108 AFP, 'Media Release: Further charges laid in foreign bribery investigation', 14 March 2013.
109 See footnote 68.
110 CDPP v. Boillot  VSC 739 at .
112 OECD, 'Steps Taken to Implement and Enforce the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions', 9 June 2011.
114 The Fraud Control Policy exists to ensure non-corporate Commonwealth entities discharge their responsibilities under the Public Governance, Performance and Accountability Act 2013 (Cth).
115 AWB Limited v. Cole (No. 5)  FCA 1234 at 211.
116 See Mann v. Carnell  HCA 66; 201 CLR 1; 168 ALR 86; 74 ALJR 378.
118 Section 70 Crimes Act 1914 (Cth) with the penalty fixed at two years' imprisonment.
120 See Australian Broadcasting Commission v. Kane  FCA 1312 as an example.
121 See, for example, Part 9.4AAA Corporations Act 2001 (Cth), which provides protection to an employee disclosing a possible contravention of the Corporations Act; state disclosure laws, for example the Public Interest Disclosure Act 1994 (NSW), which applies only to public officials; and the Independent Commission Against Corruption Act 1988 (NSW), which allows the Commission to investigate public and private corruption so long as it is connected with the exercise of a public office or function or the misuse of information acquired by the official in his or her capacity that results in a benefit to any person.
122 See the report of Professor A J Brown to the Australian Parliamentary Joint Committee on the Australian Commission for Law Enforcement Integrity, 4 October 2012 at pp. 4 and 5 at www.aph.gov.au/hansard.
123 Section 6.
124 Defined in Section 45A Corporations Act 2001 (Cth) as a company (and controlled entities) that in a financial year satisfies two of the following – first, has consolidated gross operating revenue for a financial year of A$10 million or more; second, the value of consolidated gross assets at the end of the financial year is A$5 million or more; and third, has 50 or more employees at the end of the financial year.
125 Mutual Assistance in Criminal Matters Act 1987 (Cth).
126 An APP entity can be an agency or organisation that as part of its business collects or handles personal information concerning individuals,
127 Section 2A(f) Privacy Act 1988 (Cth).