Chapter 1Introduction
Referral and conduct of the inquiry
1.1On 22 June 2023, the Senate referred the provisions of the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 (bill) to the Senate Legal and Constitutional Affairs Legislation Committee (committee) for inquiry and report by 26 July 2023.
1.2The committee advertised the inquiry on its website and wrote to organisations and individuals inviting submissions by 14 July 2023. The committee received and published eight submissions, which are listed at Appendix 1.
1.3The committee agreed not to hold a public hearing and to report on the papers.
Structure of the report
1.4This report comprises two chapters:
Chapter 1 provides a background to Australia's anti-bribery laws, details the purpose and key provisions of the bill, and provides an overview of previous bills and consideration of this bill by other parliamentary committees; and
Chapter 2 examines key issues raised by submitters and sets out the committee's views and recommendations in relation to the bill.
Purpose of the bill
1.5The bill would strengthen the legal framework for investigating and prosecuting foreign bribery in fulfillment of aspects of Australia's international obligations in accordance with the Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Anti-Bribery Convention, see box below).
1.6In introducing the bill, the Attorney-General, the Hon Mark Dreyfus KC, MP, noted:
The bill demonstrates the government's commitment to combatting foreign bribery and ensuring our laws are effective in detecting, investigating and prosecuting foreign bribery.
1.7The Attorney-General's Department (AGD) submitted that the proposed bill would 'overcome the limitations of the current foreign bribery offence which contain unnecessary impediments to prosecution', and would 'keep pace with the evolving nature of foreign bribery offending'.
1.8AGD noted that it had consulted closely with key agencies working in the space in developing the reforms, and submitted that the bill would deliver improvements that are consistent with recommendations from the Australian Law Reform Commission.
OECD Anti-Bribery Convention The OECD Anti-Bribery Convention was first signed in December 1997. It establishes legally binding standards to criminalise the bribery of foreign public officials in connection with international business transactions. The OECD Anti-Bribery Convention was the first international instrument focused on the 'supply-side' of bribery transactions (that is, on the person or entity offering, promising, or giving undue advantage to obtain an improper advantage in the conduct of international business), and was ratified by Australia in 1999. |
Outline of the bill
1.9Principally, the bill would amendDivision 70 the Criminal Code Act 1995 (Criminal Code), which contains the offence of bribing a foreign public official. The bill consists of one schedule with two parts, as detailed below.
Part 1
1.10Part 1 comprises the bill's main amendments to six key areas, including:
expanding the definition of a foreign public official to include candidates for office;
extending a foreign bribery offence to include obtaining a personal advantage;
specifying the penalties for individuals or body corporates convicted of bribing a foreign official;
the introduction of the concept of 'improper influence' to replace the concept of a benefit that was 'not legitimately due' within the current legislation;
introducing a new offence for Australian businesses of failing to implement adequate procedures to prevent the bribery of a foreign official; and
the requirement for the Minister to provide guidance on preventative steps that should be taken by a body corporate.
1.11Each area is discussed further in the following sections.
The definition of a foreign public official
1.12The proposed bill would broaden the definition of a 'foreign public official' to extend to candidates for public office, rather than applying only to current holders of a public office, as is currently the case.
1.13AGD observed that the expanded definition was recommended by the Senate Economics References Committee in 2018.
Obtaining a personal advantage
1.14Proposed section 70.2 would amend the definition of bribing a foreign public official to include both personal and business advantage, and would remove the requirement that the foreign official must be actually influenced. These changes seek to address challenges faced by authorities in investigating and prosecuting foreign bribery offences.
1.15Proposed section 70.2 would also provide that a person commits an offence if they provide, offer, or promise a benefit (or cause the benefit to be provided, offered, or promised) to another person, with the intention of improperly influencing a foreign public official to obtain a business and/or personal advantage.
1.16AGD highlighted that the extension of foreign bribery offences to include a personal advantage was recommended by the Senate Economics References Committee in 2018.
Penalties
1.17The bill would provide for a maximum penalty of 10 years imprisonment or a fine of up to 10000 penalty units (or both) for an individual, and for a body corporate, a fine of not more than the greatest of: 100000 penalty units; a quantum three-times the value of the benefit obtained; or ten per cent of the annual turnover of the company.
Improper influence
1.18The proposed bill would establish the concept of 'improper influence' to replace the concept within the current legislation of an advantage that is 'not legitimately due'. AGD submitted that the threshold of 'not legitimately due' may present unnecessary challenges as bribes can be concealed as contractual obligations, making it difficult to prove that a payment constitutes a bribe.
1.19The bill provides matters to be disregarded and a non-exhaustive list of matters to which regard may be had in making a determination of whether 'improper influence' has taken place—noting that subsection 70.2A(3) does not limit the matters to which the trier of fact may have regard.
1.20The bill would extend a defence of lawful conduct to situations in which a benefit was provided to a candidate for a political office in a country in which the written law in force permits the provision of the benefit to the relevant official.
Adequate procedures
1.21Proposed section 70.5A would introduce a new offence for a body corporate (as constituted under the Corporations Act 2001), or an associate of the body corporate, of failing to prevent the bribery of a foreign official. The section would also introduce a notional offence, whereby it would be an offence for an associate of a body corporate to engage in conduct outside Australia that, if engaged in in Australia, would constitute an offence. These provisions are intended to capture instances in which a company may seek to distance itself from paying a foreign bribe by engaging others to do so, and are intended to incentivise companies to take active steps to prevent foreign bribery.
1.22AGD submitted that this amendment would mean that bribery by an associate that benefits an Australian business would 'automatically trigger corporate liability'.
1.23Section 70.5A would provide an exemption for a body corporate if they had in place 'adequate procedures' (as determined by the courts) to prevent the commission of an offence by the body corporate itself or its associate. Subsection 70.5(A)(6) provides that the maximum penalty of not more than the greatest of: 100000 penalty units; a quantum three-times the value of the benefit obtained; or ten per cent of the annual turnover of the company. Subsection 70.5A(7) provides that an offence would occur even where the conduct constituting the offence occurs wholly overseas. Subsection 70.5A(8) would provide that the offence of failing to prevent the bribery of a foreign official would be an indictable offence.
1.24In his second reading speech, the Attorney-General summarised the impact of these provisions, as follows:
This measure holds companies directly liable for the foreign bribery activities of their employees, external contractors, agents and subsidiaries, unless the business can demonstrate that they had adequate procedures in place.
1.25AGD submitted that the introduction of a corporate offence for failing to prevent foreign bribery would be consistent with the relevant standards within the OECD Anti-Bribery Convention, and noted that the changes were recommended by the Senate Economics References Committee in 2018.
Guidance
1.26The proposed bill would require the minister to publish (non-legislative) guidance on steps that a body corporate must take to prevent an associate from bribing foreign public officials. The Attorney-General stated that this work had begun under the previous government, and would be completed by drawing on guidance published by the Australian Trade Commission, the OECD, and other international organisations.
Part 2
1.27Part 2 of Schedule 1 of the bill comprises amendments to the Income Tax Assessment Act 1997 (ITA Act). Specifically, it would amend the ITA Act to ensure the concept of bribery of a foreign official is consistent with the proposed amendments to the Criminal Code contained in Part 1 of the bill. The effect of these amendments would be to prohibit a person from claiming a deduction for a loss or outgoing incurred through the payment of a bribe to a foreign official.
Previous bills
1.28On 7 December 2017, the Senate referred the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (2017 bill) to the committee for inquiry and report. The bill aimed to improve Australia's efficiency in addressing foreign bribery, and enhance corporate accountability and encourage self-reporting by companies. Schedule 2 from the 2017 bill would have introduced a Deferred Prosecution Agreement (DPA) scheme. A draft code of practice subsequently prepared by the Attorney-General's Department summarised the DPA scheme as follows:
Under the proposed DPA scheme, the Commonwealth Director of Public Prosecutions (CDPP) would have the option to invite a corporation that is alleged to have engaged in serious corporate crime to negotiate an agreement to comply with a range of specified conditions. To obtain a DPA, a corporation may be required to cooperate with law enforcement, provide evidence against culpable individuals, admit to agreed facts and agree to pay a financial penalty. Where a corporation fulfils its obligations under a DPA, it would not be prosecuted for the offences specified in the DPA.
The aim of an Australian DPA scheme is to enhance the ability of investigators and prosecutors to identify and address serious corporate crime by encouraging corporations to self-report misconduct and cooperate with law enforcement. In appropriate cases, DPAs would provide a more effective and efficient way of holding offending corporations to account without the cost and uncertainty of a criminal trial.
1.29The committee's report on the 2017 bill included four recommendations, including that the bill be passed.
1.30The 2017 bill lapsed at the end of the 45th Parliament on 1 July 2019.
1.31On 5 December 2019, the Senate referred the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (2019 bill) to the committee for inquiry and report. The committee noted in its report that schedules 1 and 2 of the bill were almost identical to the 2017 bill, and its report on the 2019 bill contained a single recommendation that the bill be passed.
1.32The 2019 bill lapsed at the end of the 46th Parliament.
1.33The Attorney-General, the Hon Mark Dreyfus MP, noted that the measures in schedule 1 of the current bill are substantially 'the same form' as schedule 1 of the 2019 bill and the 2017 bill. Notably, however, schedule 2 has been omitted from the current bill, including the provisions relating to the DPA. The Attorney-General explained the omission as being due to the introduction of a DPA scheme being 'premature':
The purpose of a deferred prosecution scheme is to strike a balance between encouraging companies to self-report serious offending and holding companies to account for serious corporate crime. However, given that there is universal agreement that the existing foreign bribery offences in the Criminal Code are grossly inadequate, it is premature to entertain the introduction of a deferred prosecution scheme.
The introduction of such a scheme should only be entertained after the measures in this bill have been enacted and given time to work.
Consideration by other parliamentary committees
1.34When examining a bill, the committee takes into account any relevant comments published by the Senate Standing Committee for the Scrutiny of Bills and the Parliamentary Joint Committee on Human Rights. However, at the time of tabling this report, neither committee had commented on the bill.
1.35The committee notes that the bill's Explanatory Memorandum recognises that the bill engages several human rights, but concludes that the bill is compatible with human rights, and argues that any measures within the bill that limit human rights are 'reasonable, necessary and proportionate' to achieving the intended outcomes of the bill.
Acknowledgements
1.36The committee thanks the submitters to this inquiry.