Chapter 2 - Overview of the Bill
2.1
This chapter outlines the main provisions of the Bill.
Schedule 1 – Enforcing UN sanctions
2.2
Schedule 1 of the Bill contains amendments to the Charter of the
United Nations Act 1945 (Charter of the United Nations Act) and the Customs
Act 1901 (Customs Act).
Amendments to the Charter of the
United Nations Act 1945
2.3
In summary, the proposed amendments to the Charter of the United Nations
Act will:
- create new offences for individuals and corporations in relation
to conduct that contravenes a UN sanction in force in Australia, with increased
penalties for breaches;
- create a provision which invalidates any permission granted under
information that is false or misleading in a material particular;
- grant agencies responsible for administering UN sanctions the
required information-gathering powers to determine whether UN sanctions are
being complied with and improve information-sharing among government agencies; and
- require persons to retain, for five years, documentation in
connection with permit applications and compliance with permit conditions.[1]
2.4
The proposed amendments to the Charter of the United Nations Act are
explained in greater detail below.
Item 2
2.5
Item 2 of the Bill inserts a definition of 'UN sanction
enforcement law' for the purposes of the Charter of the United Nations
Act. It provides that the Minister may designate, by legislative
instrument, a Commonwealth entity as a 'designated Commonwealth entity', conferring
powers on that entity in relation to the administration of UN sanctions. DFAT
and the Department of Defence, which have permit-issuing functions, will be
specified as 'designated Commonwealth entities'.[2]
Item 4
2.6
Item 4 omits 'has made' from paragraph 6(a) and substitutes 'makes'. The
EM explains that this will enable the Governor-General to promulgate
regulations that apply to decisions by the UN Security Council as these are
made. Currently, amendments to regulations may be required to incorporate
minor changes to sanctions regimes, should the UN Security Council make a new
decision, or should sanctions committees designate individuals or entities as
being subject to previous decisions.
Item 5
2.7
Item 5 inserts proposed subsection 6(2) which provides a general
regulation-making power to give effect to decisions of the UN Security
Council. Item 5 also inserts proposed subsection 6(3) which provides for
incorporation by reference to capture UN Security Council decisions as they
exist from time-to-time. The EM explains that decisions to be
incorporated may be contained in documents such as UN Security Council
Resolutions and decisions published by sanctions committees. The documents
would be publicly available. The power to make legislative instruments
would facilitate the identification of certain matters in cases where it
is not possible, or not appropriate, to identify the matter by reference to UN
Security Council materials.[3]
Item 6
2.8
Item 6 inserts new subsection 13A which provides that a licence,
permission, consent, approval or authorisation granted under the regulations is
invalid and taken never to have been granted if it was granted on the basis of
an application that was false or misleading.
Item 16
2.9
Item 16 inserts new subsections to section 20 that provide penalties for
individuals convicted of an offence under subsection 20(1) (proposed
subsections 20(3A) and 20(3B)) and also provide an offence (proposed subsection
20(3C)) and new penalty for bodies corporate (proposed subsection 20(3F)).
2.10
The penalty for an individual is imprisonment for not more than 10 years
or a fine, or both. The fine for an individual is 2,500 penalty units or, if
the offence relates to transactions the value of which the court can determine,
2,500 penalty units or three times the value of the transactions, whichever is
the greater amount. The penalty for a body corporate is 10,000 penalty
units or, where the offence relates to transactions the value of which the
court can determine, 10,000 penalty units or three times the value of the
transactions, whichever is the greater amount.
2.11
The EM explains that the penalty accords with Recommendation 2 of the Cole
Inquiry Report; that is, penalties for acting in contravention of UN sanctions
should be severe and linked to the value of the offending transaction. Strict
liability applies to the offence for bodies corporate, also in accordance with
Recommendation 2 of the Cole Inquiry Report. Fault elements will be
retained for individuals.[4]
Item 22
2.12
Item 22 inserts new subsections that provide a new penalty for
individuals convicted under subsection 21(1) of an offence of giving an asset
to a proscribed person or entity (proposed subsections 21(2A) and 21(2B)) and
that provide a similar offence and new penalty for bodies corporate (proposed
subsections 21(2C) and (2F)).
2.13
The penalties for individuals and bodies corporate are the same as those
proposed by Item 16. Once again, strict liability will apply to bodies
corporate and fault elements will apply for individuals.[5]
Item 24
2.14
Item 24 inserts proposed section 22B, providing that any authorisation
issued under section 22 to deal with a freezable asset is taken never to have
been issued if the application for the authorisation contained information that
was false or misleading, or omitted information, without which the application
was false or misleading.
Item 26
2.15
Item 26 inserts several new Parts to the Charter of the United Nations
Act.
Part 5
2.16
Proposed section 27 provides an offence for engaging in conduct that
contravenes a Commonwealth law which enforces UN sanctions. Proposed
section 28 contains an offence for providing false or misleading information,
or omitting necessary information, in connection with the administration of a
Commonwealth law that enforces a UN sanction.
2.17
The penalties for individuals and bodies corporate under proposed
section 27 are the same as those provided for under Item 16. The penalty for an
individual under proposed section 28 is 2,500 penalty units; the penalty for a
body corporate under proposed section 28 is five times the penalty for an
individual, or 12,500 penalty units.
2.18
The offence under proposed section 27 will apply strict liability to
bodies corporate but retain fault elements for individuals. The EM
explains that the consistent application of strict liability to these offences
does not reflect a change in general government policy to the framing of
offences; rather it reflects the government's acceptance of the recommendations
in the Cole Inquiry Report and 'its determination to encourage high ethical
standards in the dealings of Australians and Australian companies with (UN)
sanction regimes'.[6]
Part 6
2.19
Proposed section 29 provides that the Chief Executive Officer (CEO) of a
Commonwealth entity may disclose information to the CEO of a designated
Commonwealth entity for a purpose in connection with the administration
of a UN sanction enforcement law.
2.20
Proposed section 30 introduces a new power for the heads of agencies
that administer UN sanctions to require a person to provide documents, for the
purposes of determining whether a UN sanction enforcement law is being complied
with.
2.21
Proposed section 31 provides that the CEO of a designated Commonwealth
entity may require information to be verified or given on oath or affirmation.
2.22
Proposed section 32 introduces an offence for failing to comply with a
notice to produce under proposed section 30.
2.23
Proposed section 33 provides that a person served with a notice under
proposed section 30 is not excused from providing the information required on
the grounds the information required might tend to incriminate the
person. However, the information required is not admissible in evidence
against the person in any criminal proceedings, or other proceedings that would
expose the person to a penalty, other than for an offence under proposed
section 28 or an offence under proposed section 32.
2.24
The EM states that the production power is necessary to ensure the
efficacy of sanctions regulatory functions and is consistent with the approach
to production orders issued by other Commonwealth bodies such as the Australian
Securities and Investments Commission (section 68 of the Australian
Securities and Investments Commission Act 2001) and the Australian
Competition and Consumer Commission (section 155 of the Trade Practices Act
1974). Proposed section 33 does not seek to override legal
professional privilege.[7]
2.25
Proposed section 37 introduces an obligation for a person who applies
for a licence or authorisation under a UN sanction enforcement law to retain
any records relating to that application for a period of 5 years. Proposed
section 37 also introduces an obligation for a person who is granted a licence
or authorisation to retain records relating to the person's compliance with any
conditions of that licence or authorisation for a period of five years.
Amendments to the Customs Act 1901
2.26
The Bill introduces new criminal offences for:
- importing or exporting goods sanctioned by the UN without valid
permission; and
- providing information that is false or misleading in a material
particular, or omits a material particular, in an application for a permission
to import or export UN-sanctioned goods.
Items 29 and 31
2.27
Item 29 inserts proposed section 52, which deems any
licence, permission, consent or approval to import UN-sanctioned goods
to never have been granted where application for it was made in an approved
form and the application is false or misleading in a material particular.
2.28
The EM explains that this means that a person who imports goods under a
licence, permission, consent or approval that is taken never to have been
granted may be liable under proposed section 233BABAB for importing
UN-sanctioned goods without the necessary approval, in addition to any
liability for providing false or misleading information under proposed section
233C.[8]
2.29
Item 31 inserts proposed section 112B, which makes equivalent provision
in relation to a licence, permission, consent or approval to export
UN-sanctioned goods.
Item 33
2.30
Item 33 amends paragraph 210(1)(b) to extend the arrest powers
exercisable by a Customs officer or police to the new offences of importing and
exporting UN-sanctioned goods.
Item 34
2.31
Item 34 inserts new sections 233BABAA, 233BABAB and 233BABAC.
2.32
Proposed section 233BABAA provides that the regulations may prescribe
specified goods as UN-sanctioned goods. The regulations must not specify that an
item is UN-sanctioned goods unless the item meets certain requirements:
- the importation or exportation of the item must be prohibited by
the Customs (Prohibited Imports) Regulations 1956 or the Customs
(Prohibited Exports) Regulations 1958; and
- the regulation prohibiting the importation or exportation must
give effect to a decision made by the Security Council under Chapter VII of the
Charter of the United Nations that Article 25 of the Charter requires Australia
to carry out, insofar as that decision requires Australia to apply measures not
involving the use of armed force.
2.33
Proposed section 233BABAB contains an offence in relation to the importation
of UN-sanctioned goods. An individual or a body corporate commits an
offence if they import UN-sanctioned goods and importation of the goods was
prohibited absolutely, or prohibited unless the approval of a particular person
had been obtained and, at the time of the importation, that approval had not
been obtained.
2.34
Proposed section 233BABAC contains an equivalent offence in relation to
the exportation of UN-sanctioned goods.
2.35
The offences in sections 233BABAB and 233BABAC carry the same penalties
as those provided for in Item 16 and outlined above. These offences will be
strict liability offences for bodies corporate. The EM explains that the government
considers that all offences relating to behaviour in breach of UN sanctions
should carry equal penalties. This is to encourage companies and individual
directors to ensure high ethical standards in all dealings in relation to UN
sanctions.[9]
2.36
The offences under sections 233BABAB and 233BABAC relate only to goods
whose importation or exportation is prohibited under the Customs Act either
absolutely or on the condition that approval of a particular person be obtained
prior to their importation or exportation. Absolute liability attaches to
the element that goods were prohibited under the Customs Act to ensure that
knowledge of the law is not a prerequisite to the offence (that is, the
prosecution does not have to prove that a person had knowledge that the goods
were prohibited from import or export). However, strict liability will
attach to the element that the approval had not been obtained.[10] The
EM explains that this approach is consistent with the existing criminal
offences in the Customs Act of importing and exporting Tier 1 and Tier 2 goods.[11]
Item 37
2.37
Item 37 inserts proposed section 233C which contains offences for giving
false or misleading information in relation to UN-sanctioned goods.
2.38
An individual commits an offence if they make and sign an application in
an approved form, under the Customs (Prohibited Imports)
Regulations 1956 or the Customs (Prohibited Exports) Regulations 1958 in
relation to the importation or exportation of UN-sanctioned goods, and the
application contains information that is false or misleading in a material
particular, or omits information, without which the application is misleading
in a material particular. Proposed section 233C also establishes an equivalent
offence in relation to bodies corporate. Once again, the penalties for these
offences are the same as those described in relation to Item 16.
Schedule 2 – Bribery of foreign officials
2.39
Schedule 2 of the Bill contains proposed amendments to the Criminal
Code Act 1995 (Criminal Code Act) and the Income Tax Assessment
Act 1997 (Income Tax Assessment Act).
Amendments to the Criminal Code Act
1995
Item 1
2.40
Item 1 inserts subsection 70.2(1A) which clarifies that a charge of
bribing a foreign public official does not rely on the outcome of the payment.
The EM explains that a benefit paid to a foreign public official may still be a
bribe notwithstanding that it failed to secure the business advantage desired.[12]
Item 2
2.41
Item 2 clarifies that, when considering whether a benefit paid to a
foreign public official was not legitimately due to that official, the court
may disregard the fact that the benefit is, or is perceived to be, customary,
necessary or required. The EM states that the government considers that the
only circumstance in which a benefit should be paid to a foreign public
official is where that benefit is required or permitted by written law.[13]
Item 3
2.42
Item 3 amends subsection 70.3(1) to clarify that the defence in that
subsection to a charge of bribing a foreign public official is only available
when the benefit paid is expressly required or permitted by the written law of
the country or place that governs the behaviour of the foreign public official,
regardless of the results of payment or the alleged necessity of payment. The
written law of a country or place is limited to the written legislation or
regulation of that country or place.[14]
Amendments to the Income Tax
Assessment Act 1997
2.43
In summary, the amendments to the Income Tax Assessment Act will:
- ensure that payments to foreign public officials are tax
deductible only where the benefit paid is expressly required or permitted by
written law, regardless of the results of payment or the alleged necessity of
payment; and
- align the definition of a facilitation payment ('bribe to a
foreign public official') with the definition in the Criminal Code Act.
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