In brief
2016 looks to be a busy year for directors, executives and legal and compliance teams who need to be aware of developments in Australian anti-bribery law and compliance practice. Partner Rachel Nicolson, Senior Associate Dora Banyasz and Lawyer Tom Bland report.
How does it affect you?
Company directors, executives, and legal and compliance teams must be aware of three key developments in anti-bribery and corruption law and compliance heading into 2016:
- the Senate Committee inquiry into the current Commonwealth anti-bribery laws is due to report on 1 July 2016;
- new offences have come into effect, with substantial penalties, for false accounting with the aim of facilitating or concealing illegitimate benefits or losses; and
- the AFP will continue to increase its investigation and enforcement of suspected foreign bribery offences.
Focus of the Senate Committee into Commonwealth anti-bribery laws
On 24 June 2015, the Senate Economics References Committee commenced an inquiry into Australia's laws prohibiting bribery of foreign public officials.
The terms of reference are very wide-ranging, but are principally directed towards assessing Australia's implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. More than 40 written submissions were made to the committee, which suggests that the issues are of broad concern in business and the community. The committee has not held any public hearings for this inquiry, though has stated it will do so in the first half of 2016.
Four topics addressed by the inquiry will be of particular interest to company directors, executives, and legal and compliance teams:
- The first is a mooted expansion to the scope of corporate criminal liability for the offence of bribery of a foreign public official. The inquiry is considering whether directors and senior managers should be personally liable for failing to implement a corporate culture of compliance with anti-bribery laws. The inquiry is also considering whether Australian companies should be held liable for breaches of anti-bribery laws by foreign subsidiaries, agents or other related parties. The aim of such a change would be to encourage businesses to conduct anti-bribery due diligence on prospective overseas partners, and to ensure that compliance culture penetrates to overseas subsidiaries.
- The second is the prospect of Australian authorities publishing official guidance regarding corporate liability for a failure to implement a culture of compliance with anti-bribery laws. Regulators in the US and the UK publish equivalent guidance. While such guidance, if published, will not have the force of law, it will certainly provide useful parameters in which companies can consider and review their anti-bribery compliance program. Ultimately, however, it will be a company's responsibility to ensure that their anti-bribery compliance program is appropriately tailored to their business and supports a strong culture of compliance.
- Thirdly, the inquiry is considering whether to remove the exception for so-called 'small facilitation payments' from the scope of the anti-bribery laws, in order to bring the laws into step with international best practice. Many Australian companies already prohibit the making of facilitation payments, but for those that don't, this is an issue they should monitor.
- Finally, the inquiry is considering whether legislative measures could be introduced to encourage businesses to self-report breaches of anti-bribery law, akin to existing measures in Australian corporations and competition law.
For more detail on the inquiry, please read Allens' analysis.
New false records offences come into effect
The Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2016 (Cth), which substantially came into force on 1 March, introduced new offences for making false records in order to facilitate or conceal an illegitimate benefit or loss. The offences are very broad in their scope, in that they are not limited to bribery of foreign public officials, and apply outside Australia. It is important for directors, executives and legal teams to be aware of this new legislation because of the significant penalties that apply and because of its broad coverage.
For a detailed analysis of the new laws, read Allens' analysis.
Enforcement activity continues to increase
In the past, Australia has been criticised by the OECD and Transparency International for its lack of enforcement of anti-bribery laws. In response to these criticisms, the Federal Government established the Fraud and Anti-Corruption Centre (FAC) in mid-2014. The FAC is headed by the AFP, and is a partnership between several agencies, including the ATO, ASIC, AUSTRAC and DFAT. The FAC has AFP investigation teams in Melbourne, Sydney, Canberra and Brisbane. The AFP has recently claimed that the FAC has more than 30 active investigations involving Australian businesses.
In May last year, the Serious Financial Crime Taskforce was established as part of the FAC. It has a wide remit to investigate suspected serious financial crime, including foreign bribery offences.
We can expect the results of this increased investigative activity to emerge throughout the year.
Conclusion
It will be important for directors, executives and legal and compliance teams to remain abreast of these developments throughout 2016 and consider their potential impact on their business.
This may include conducting a review of the adequacy of their anti-bribery policies and compliance program to ensure it matches the company's risk profile and demonstrates a strong corporate compliance culture.