Anti-bribery and corruption Australia

Australia has a robust legal framework to combat bribery and corruption, both domestically and internationally. As a director of an Australian company, it is a fundemental responsibility to understand these laws and ensure that you and your organisation complies with them. Failure to do so can result in severe legal and reputational consequences

Key Points:

• Australia has laws prohibiting bribery and corruption, including the Criminal Code Act 1995 and the Corporations Act 2001.
• These laws apply to both domestic and foreign bribery, and to individuals and corporations.

• Directors have a responsibility to ensure their company has adequate anti-bribery and corruption policies and procedures in place.

• Penalties for breaching anti-bribery and corruption laws can include significant fines and imprisonment.

• Strengthened laws aimed at combatting foreign bribery passed Federal Parliament in February 2024, introducing a new 'failure to prevent foreign bribery' offence for Australian organisations. The laws come into effect in September 2024 

What Are Australia's Anti-Bribery and Corruption Laws? 

Australia's primary anti-bribery and corruption laws are contained in the Criminal Code Act 1995 (Cth) and the Corporations Act 2001 (Cth). The Criminal Code prohibits both domestic and foreign bribery, making it an offence to:

• Provide, offer or promise to provide a benefit to another person with the intention of influencing a foreign public official in their official duties to obtain or retain business or a business advantage.

• Provide, offer or promise to provide a benefit to another person that is not legitimately due to that person, with the intention of influencing the exercise of a public duty or function in Australia. 

The Corporations Act also imposes liability on companies for bribery and corruption offences committed by their employees, agents or officers, unless the company can prove it had adequate procedures in place to prevent the conduct. 

The Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 (Cth), which passed Federal Parliament on 29 February 2024, introduces a new 'failure to prevent bribery of a foreign public official by an associate' offence. This will see organisations held directly liable for foreign bribery activities by employees, contractors, agents and subsidiaries, unless they can show they had adequate procedures in place to prevent the misconduct. The new offence will attract penalties upwards of $31.3 million and apply to organisations regardless of involvement in the conduct by an associate. 

What Are the Penalties for Breaching Anti-Bribery and Corruption Laws in Australia? 

The penalties for breaching Australia's anti-bribery and corruption laws are severe. For individuals, the maximum penalty for a foreign bribery offence is 10 years' imprisonment and/or a fine of up to $2.1 million. For a domestic bribery offence, the maximum penalty is 10 years' imprisonment and/or a fine of up to $1.1 million. 

Companies can face even higher penalties. For example, for a corporate offence of failing to prevent foreign bribery, a company can be fined the greatest of:

• $31.3 million•

• Three times the value of the benefit obtained from the bribe

• 10% of the company's annual turnover in the 12 months preceding the offence, if the value of the benefit cannot be determined. 

How Can Directors Ensure Compliance With Anti-Bribery and Corruption Laws? 

As a director, you have a responsibility to ensure that your company has adequate policies and procedures in place to prevent bribery and corruption. This includes:

• Conducting regular risk assessments to identify areas of the business that may be exposed to bribery and corruption risks.

• Developing and implementing anti-bribery and corruption policies that clearly prohibit any form of bribery or corruption.

• Providing regular training to employees on the company's anti-bribery and corruption policies and their obligations under the law.

• Establishing clear reporting channels for employees to raise concerns about potential bribery or corruption.

• Conducting due diligence on third parties such as agents, distributors and joint venture partners to ensure they also have adequate anti-bribery and corruption controls.

• Monitoring and reviewing the effectiveness of the company's anti-bribery and corruption program on an ongoing basis. 

With the introduction of the new failure to prevent foreign bribery offence, boards should critically review their organisation's current approach to detecting and preventing foreign bribery and corruption. Key considerations include risk management, due diligence, leadership focus, communication and training, confidential reporting and investigation, monitoring and review of compliance systems, and the role of contractors. 

What Should Directors Do if They Suspect Bribery or Corruption?

 If you become aware of any potential bribery or corruption within your company, it is crucial to act promptly. This may include:

• Reporting the matter through the appropriate internal channels, such as to the compliance or legal team.

• If necessary, reporting the matter to relevant external authorities such as the Australian Federal Police.

• Preserving any relevant documents or evidence.

• Cooperating with any internal or external investigations. 

Ignoring or covering up potential bribery or corruption can have severe consequences, including criminal liability for individual directors. This is illustrated by the recent case of R v Jacobs Group (Australia) Pty Ltd [2023] HCA 23, concerning the company formerly known as Sinclair Knight Merz Pty Ltd (SKM). In September 2020, SKM pleaded guilty to three counts of conspiring to bribe foreign officials in the Philippines and Vietnam between 2000-2012. 

When the bribery was uncovered through internal due diligence in 2012, SKM's board took immediate action. They commissioned an investigation, self-reported to authorities, and waived legal professional privilege on the investigation report. As noted by Justice Adamson, "Corporate offenders engaged in offences related to foreign bribery, including conspiracies, who need only be concerned that the AFP will detect their criminal conduct, are hardly likely to be deterred by the prospects of detection because of the features of the crime... which make it, absent inside knowledge, almost impossible to detect and very difficult to prosecute. But those who work for corporations with an ethic such as the company's in the present case, have every reason to fear detection since the gamekeeper, in that scenario, is in a position to monitor the poacher." 

The Importance of Preventing Bribery and Corruption

Preventing bribery and corruption is not just a legal obligation - it is also essential for maintaining public trust in business and upholding good corporate governance. Bribery and corruption can distort markets, undermine the rule of law and damage economic and social development. As leaders in the business community, directors have a critical role to play in setting the tone from the top and fostering a culture of integrity and compliance within their organisations. By understanding and complying with Australia's anti-bribery and corruption laws, directors can help to build a stronger business environment in Australia and internationally.