Foreign Bribery: Australia’s Enforcement of OECD Convention Subject to Further Criticism
In Short
The Situation: Transparency International has released its Progress Report 2020: Assessing enforcement of the OECD Anti-Bribery Convention which provides a critical assessment of Australia’s enforcement of its obligations as a signatory to the OECD Anti-Bribery Convention.
The Result: Despite recognising that there has been a significant increase to the budget allocated to the Australian Federal Police ("AFP") to investigate foreign bribery, Transparency International characterizes Australia’s enforcement system as "inadequate". The organisation also considers that Australian authorities have taken "no steps" to address concerns expressed in the OECD Phase 4 Report that the sanctions imposed are remarkably low and therefore the existing framework is insufficiently dissuasive.
Looking Ahead: This evaluation should be considered in the context of the significant legislative changes currently proposed in Australia. Most notably, these changes include the introduction of a strict liability offence for a failure to prevent foreign bribery and amendments to the corporate criminal responsibility provisions of the Criminal Code that would permit the acts and intentions of a broader range of employees and agents to be attributed to a company. Indeed, on top of these legislative developments, the continuing pressure on Australian authorities to identify and prosecute foreign bribery signals a heightened enforcement environment ahead for Australian corporations.
The Report
Transparency International’s Progress Report 2020: Assessing enforcement of the OECD Anti-Bribery Convention ("the Report") has grouped Australia with nine other countries (including Germany, France and Sweden) in the "moderate enforcement" category. Only the United States, UK, Switzerland and Israel reach the threshold of "active enforcement".
The main reproaches to Australia’s compliance with its OECD Convention obligations fall into two broad categories, inadequacies in enforcement and inadequacies of the legal framework.
In relation to the former, the Report notes that despite the AFP commencing 14 active investigations from 2016 to 2019, actual prosecutions remain low. For those prosecutions that have commenced in recent years, the Report laments the length of time it has taken the AFP to gather sufficient evidence for charges to be laid. In this respect, the Report identifies that one active investigation in Australia was started in 2012 and there is still no prosecution on foot.
The Report also notes that the OECD Phase 4 Report on Australia considered that the sanctions imposed on foreign bribery offenders to date have been "remarkably low" and concludes that "no steps" have been taken by the Australian authorities to address these concerns. There is further criticism of Australia’s failure to establish a framework through which mutual legal assistance can be provided by Australia to other Convention countries that apply civil or administrative (as opposed to criminal) liability.
In relation to the legal framework, the Report identifies that the Australian Parliament is currently considering the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 which would introduce, amongst other things, a deferred prosecution agreement ("DPA") regime and a new strict liability offence for corporations for failing to prevent bribery (unless "adequate procedures" were taken to prevent the commission of the offence). It also identifies the work recently undertaken by the Australian Law Reform Commission ("ALRC") in relation to an overhaul of the corporate criminal responsibility regime in Australia (for our detailed analysis of the ALRC Report see our recent White Paper).
However, despite these relatively significant changes on the horizon, the Report identifies various faults with Australia’s legal framework (both existing and proposed) including:
- The proposed DPA regime does not require a corporation to make a formal admission of guilt, and there is no express requirement to publish the approving officer’s reasons for determining that the terms of the DPA are in the interests of justice and are fair, reasonable and proportionate;
- There is no sign that the (much maligned) facilitation payments defence is to be abolished despite Transparency International’s view that the defence is incompatible with Australia’s UN Convention against Corruption ("UNCAC") commitments; and
- There continues to be no formal debarment regime in Australia to prevent companies convicted on bribery or corruption from contracting with the government.
Major Changes Ahead
Transparency International’s significant criticism of Australia’s OECD Convention compliance should be considered in the context of the significant legislative developments which appear to be imminent in Australia.
The proposed amendments to the Criminal Code to introduce a strict liability offence for foreign bribery, and the potential that crucial changes to Australia’s corporate criminal responsibility regime may soon be made, both indicate that Australian companies undertaking commercial activity in high risk jurisdictions (and foreign corporations with a presence in the Australian market) need to review their anti-bribery and corruption compliance programs in light of the evolving legislative requirements.
Although Transparency International does not address the proposed strict liability offence in great detail, the new offence, which is modelled on the UK’s Bribery Act, considered by many experts in the field to be the "gold standard", is of particular significance. In this respect, this further criticism may increase the Australian government’s desire to push through the proposed reforms.
This includes the ALRC’s recommendation to remove the requirement that the fault element of an offence requires the authorisation or permission of an employee of a certain level of seniority, currently referred to as a "high managerial agent", so that the intention of all employees or agents can be attributed to the company.
Of course, the provision of new tools that may be used in the investigation and enforcement of international corruption is no guarantee that those tools will be used. It remains to be seen whether the legislative appetite for increased enforcement, as reflected in the proposed measures, will be matched by actual enforcement and whether, going forward, Australia will be regarded as having come closer to satisfying its obligations as a signatory to the OECD Anti-Bribery Convention under any fair assessment. Still, there are clear indications that enforcement will indeed ramp up, and corporates that are within the reach of Australia’s anti-corruption efforts are well advised to prepare for a new enforcement environment.
Three Key Takeaways
- The criticism of Australia’s "inadequate" foreign bribery regime should be considered in the context of the various recent developments that suggest major changes to Australia’s foreign bribery and corporate criminal responsibility regimes are imminent.
- The introduction of a strict liability offence for failing to prevent foreign bribery is of particular significance, as are the proposed amendments to the corporate criminal responsibility provisions of the Criminal Code that would permit the acts and intentions of a broader range of employees and agents to be attributed to a company.
- Australian corporations need to consider very carefully whether their current policies and procedures would satisfy the threshold for the "adequate procedures" defence and to otherwise ensure that their compliance programs are designed and implemented consistent with the risks they face and with applicable regulatory standards.
