Chapter 2Views on the bill
2.1Submitters were broadly supportive of the proposed amendments in the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 (bill). The Australian Federal Police (AFP), for example, argued that the provisions of the bill would strengthen the existing foreign bribery provisions by:
enhancing the protection of Australian businesses, foreign governments, and civil society from corruption;
promoting corporate cultures of integrity; and
assisting the AFP to more effectively and efficiently progress investigations in this area by removing some of the impediments encountered when investigating and prosecuting foreign bribery offences.
2.2Submitters expressed views on specific provisions of the bill, including:
the expanded definition of a foreign public official to include political candidates;
making it an offence to obtain either a personal or a business advantage through bribery of a foreign public official;
the introduction of the concept of 'improper influence' to replace the concept of a benefit that was 'not legitimately due'; and
the introduction of a new offence for Australian companies of failing to prevent foreign bribery and the associated 'adequate procedures' defence.
2.3Submitters also discussed the omission of a Deferred Prosecution Agreement (DPA) scheme (which was a feature of legislative reforms proposed in previous parliaments, as discussed in Chapter 1), and other matters.
2.4Each is detailed below.
The definition of foreign public official
2.5The AFP 'strongly' supported the provisions of the bill that would expand the definition of a 'foreign public official' to include political candidates. The AFP noted:
Under existing provisions, it would not be an offence for an Australia corporation to pay a bribe to an individual running for office in a foreign country, even if the bribe was paid on the assumption that the individual would act in a corporation's business interests once elected.
2.6The Law Council of Australia (Law Council) also supported this amendment, stating that, while legitimate donations to candidates should be permissible, subject to existing local laws, foreign bribery provisions should apply to both office holders and those who are standing or nominated for office.
2.7Both the Uniting Church and Transparency International Australia (TIA) welcomed the extended definition of a foreign public official to include candidates for office.
Obtaining a personal advantage
2.8Several submitters supported the expansion of the provisions of the bill that would extend a foreign bribery offence to a situation in which a bribe is paid to obtain a personal advantage, rather than confining the offence to a business advantage, as is currently the case. The AFP submitted:
…foreign public officials can be bribed to obtain a broad range of beneficial outcomes for corporations or other persons, not all of which are immediately apparent as a 'business advantage'.
2.9Some possible scenarios suggested by the AFP which may constitute a bribery offence that constitutes personal advantage under the proposed bill but would likely not be covered by the current legislation could include bribery to receive a visa or foreign citizenship, bribery to release an individual from custody, or bribery to obtain a favourable court outcome.
2.10The Australian Trade and Investment Commission (Austrade) noted that the expanded definition of a personal and business advantage would 'hopefully make it easier to secure the evidence necessary to support domestic prosecutions'.
2.11The Law Council also supported this provision, describing it as a 'sensible extension of liability'.
Improper influence
2.12Submitters were broadly supportive of the introduction in the proposed bill of the concept of 'improper influence' of a foreign public official, replacing the existing concept of a benefit that is 'not legitimately due'. The AFP, for example, submitted that bribes may be 'built into legitimate contractual arrangements, or disguised as contractual obligations'. As such, it can be difficult to satisfy this element of a foreign bribery offence, the AFP claimed, stating also that the change to 'improper influence' would more adequately capture 'the different ways that bribes can be made to foreign public officials'.
2.13Both the Uniting Church and TIA welcomed the introduction of the concept of 'improper influence' with the Uniting Church also recommending that the bill be amended to include a fault element of recklessness in the payment of bribes, so as to lower the bar on the level of evidence needed for prosecution.
2.14However, the Law Council recommended that the fault element of the offence be accompanied with a requirement that the person be acting with dishonesty—a concept that the Law Council submitted was well-understood in Australian criminal law.
Preventing bribery of foreign officials
2.15Submitters largely supported the introduction in the proposed bill of an offence of failing to prevent the bribery of a foreign public official. For example, the AFP submitted that the change would likely create 'incentives for corporations to implement measures to prevent foreign bribery', and would overcome the challenge of establishing liabilities for corporations with complex corporate structures that may operate with 'wilful blindness' as to the activities of their officers, employees, or agents.
2.16Under the provisions of the proposed bill, the AFP noted that Australian parent companies would become liable for the conduct of their overseas subsidiaries, likely encouraging closer monitoring, due diligence, and the promotion of a corporate culture of integrity and compliance.
2.17The AFP proposed that the committee consider specifying the offence of failing to prevent bribery of a foreign public official as a 'serious' offence in the Proceeds of Crime Regulations 2019. This, the AFP submitted, would allow the Criminal Assets Confiscation Taskforce (an AFP-led Commonwealth initiative that was launched in 2011 to target potential criminals and their assets) to take action to 'deprive offenders of any benefits obtained'.
2.18The changes proposed in the bill would place the onus on business to take 'adequate procedures', submitted Austrade, and would 'have a significant impact on the way business considers their supply chain practices and corporate responsibility'. Austrade also submitted that local agents—which are often used by Australian entities to facilitate their foreign business activities—are a 'prime out-source for business to conduct bribery'. Austrade therefore supported the inclusion of such agents as 'associates' under the proposed bill, for whose conduct Australian corporations could be held accountable under the provisions of the proposed bill.
2.19Austrade also noted that business would benefit from clear standards and guidance on expectations and adequate procedures with respect to preventing the bribery of a foreign official—particularly for small and medium-sized businesses.
2.20TIA voiced support for the new offence of failing to prevent the bribery of a foreign public official, submitting that the change would encourage companies to take proactive measures and foster a culture of compliance to prevent foreign bribery. It recommended that the approach to adequate procedures be proportional, taking into account the size and complexity of the Australian companies involved in future cases.
2.21The Uniting Church described the provisions of proposed subsection 70.5A as 'imperative' and 'vital' to attaining the objections of the legislation, submitting:
These provisions of the Bill will help deter those businesses that set up intermediaries to make business arrangements through which bribes are paid.
2.22However, Ashurst cautioned that 'adequate procedures' could be interpreted in a way that is outcomes-focused, meaning that juries may incorrectly conclude that procedures were inadequate if bribery took place. Ashurst instead recommended that the adequate procedures defence be amended as taking steps that were 'reasonable in all the circumstances' to prevent foreign bribery.
2.23The Law Council supported the objectives of the adequate procedures provisions, but raised two concerns. First, the Law Council questioned whether the definition of an 'associate' (as an officer, employee, agent, contractor, or subsidiary) was too broad and may cover any corruption in a company's supply chain, even if not directly benefiting the company itself. The Law Council proposed that it may be more appropriate to focus on the substantive nature of the relationship to capture also anyone intending to obtain or retain business for the relevant company.
2.24Second, the Law Council questioned the proposed reversal of the burden of proof, in which the onus to prove the adequacy of a company's procedures to prevent foreign bribery would lie with the company itself.
2.25In relation to these concerns, the Attorney-General's Department (AGD) submitted that, '[t]he imposition of a legal burden on the body corporate creates a strong positive incentive to adopt measures to prevent foreign bribery'. AGD also submitted that the proposed bill would require the minister to publish guidance on the 'adequate procedures' that Australian businesses can take to prevent foreign bribery, noting that a company would be required to implement such procedures if it was to avoid liability.
Deferred Prosecution Agreements
2.26Numerous submitters expressed support for the inclusion of a DPA scheme. No such scheme is included in the bill and AGD submitted that the introduction of a DPA scheme 'should only be entertained after the measures in this Bill have been enacted and given time to work'.
Other matters
2.27As noted in Chapter 1, the proposed bill would remove the requirement that for a bribery offence to occur, a foreign official must be actually influenced in the exercise of their official duties. This amendment is intended to reduce reliance on time-consuming and challenging international investigations. The Law Council acknowledged the merits of removing this requirement, but proposed the alternative of defining influence of a foreign public official in their capacity as a foreign public official to include 'any omission to exercise those functions and any use of the foreign public official's position as such an official, even if not within their authority'. This definitional change, according to the LawCouncil, would sidestep the need for evidence from the relevant jurisdiction relating to the duties of the official concerned.
2.28Austrade and TIA both submitted that the proposed legislation fails to outlaw 'facilitation payments'—that is, facilitation payments that may be a common feature of everyday commerce in the respective overseas jurisdiction (yet are illegal under Australian law), and may be hard to distinguish from an illegal bribe.
2.29The Uniting Church supported the provisions of the bill with respect to penalties for failing to prevent foreign bribery, submitting that such penalties 'will act as a deterrent'. However, the Law Council cautioned that the value of a benefit obtained through foreign bribery may frequently be difficult to determine. Courts may therefore tend to apply a penalty of 10 per cent of the annual turnover of the body corporate, in keeping with proposed paragraph 70.5A(6)(c), which 'may result in significant penalties for entities, for actions, which…may well be beyond their control', according to the Law Council.
2.30Both the Uniting Church and TIA raised concerns that the bill, in its current form would not make it an offence to pay bribes to a third party to win government contracts in foreign jurisdictions. Both pointed to a scenario in which an Australian company may bribe a competitor to lodge an uncompetitive bid for a government contract so as to improve their own prospects of securing the contract.
2.31TIA made a number of recommendations for enhancing Australia's efforts to tackle foreign bribery that are not covered above, including that the government:
publish statistics on foreign bribery investigations, prosecutions, and case outcomes;
develop a database of foreign bribery investigations and enforcement outcomes; and
introduce a debarment regime to grant agencies the power to preclude companies found guilty of foreign bribery offences from being awarded contracts.
Committee view
2.32The committee considers foreign bribery to be a serious problem that damages communities, undermines the rule of law, distorts markets, and has significant reputational consequences for Australia. As such, the committee welcomes efforts to tackle foreign bribery, such as the reforms proposed in this bill.
2.33The committee acknowledges the concern raised by Ashurst with respect to the adequate procedures provisions and considers that the minor drafting amendment suggested by Ashurst is something the government should consider. The committee also notes the concerns raised by the Law Council around the complex nature of corporate relationships and the reversal of the burden of proof, but considers it appropriate that the trier of fact consider the nature of the association between corporate entities. The committee also considers that the reversal of the burden of proof that requires a company to prove the adequacy of their procedures provides an important incentive for companies to adopt adequate provisions, in keeping with the relevant guidance issued under proposed section 70.5B.
2.34With respect to the need for guidance to assist companies in understanding adequate procedures, the committee notes the draft Adequate Procedures Guidance produced by the Attorney-General's Department in 2019. The committee also welcomes the department's proposal that it conduct further consultations on the topic with a view to finalising the revised guidance. In finalising the Adequate Procedures Guidance, the committee encourages the department to consider the matters raised by Allens in its submission to this inquiry, as well as the views of other stakeholders.
2.35The committee recommends that the Commonwealth government considers amending the bill or the bill's explanatory memorandum with respect to the proposed section 70.5A exemption to clarify that the fact that foreign bribery has occurred does not, in itself, mean that adequate procedures were not implemented by the respective body corporate.
2.36The committee notes that the Australian Federal Police has submitted that specifying the offence of failing to prevent bribery of a foreign public official as a 'serious' offence in the Proceeds of Crime Regulations 2019 would expand the range of responses to foreign bribery available to Commonwealth agencies.
2.37The committee also notes that numerous submitters have referred to other measures that the government could consider in order to address the issue of foreign bribery, including in relation to so-called 'facilitation payments' and the introduction of a Deferred Prosecution Agreement scheme.
2.38In relation to a Deferred Prosecution Agreement scheme, the committee echoes the views of the Attorney-General that the establishment of Deferred Prosecution Agreement scheme is currently premature in Australia, and considers it appropriate that the reforms proposed in this bill be enacted and given time to have an impact, prior to implementing such a scheme.
2.39The committee recommends that the Commonwealth government considers the introduction of further measures to address foreign bribery, including after the reforms proposed in this bill have been given time to have an impact.
2.40The committee recommends that the bill be passed.
Senator Nita Green
Chair
Labor Senator for Queensland