Australia’s new foreign bribery offence: What companies need to know

On 8 September 2024, major changes to Australia’s foreign bribery legislation came into force. The Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2024 (Cth), which passed in February, creates one new offence and makes several amendments to existing foreign bribery offences.

We will be taking a closer look at the new offence and the steps that companies may take going forward.

Foreign bribery under s 70.2

Section 70.2 of the Criminal Code Act 1995 (Cth) (‘Criminal Code’) sets out the offence of foreign bribery. The amendments have made some changes to the provision to widen the range of conduct that it captures. Offences under section 70.2 will first require a person to provide or offer a benefit or cause a benefit to be provided or offered. It then requires this to be with “the intention of improperly influencing a public official” to obtain or retain business or a business or personal advantage. The Australian Federal Police explains that bribes for the purposes of this provision can come in several forms: money, gifts, holidays, work for friends or relatives, and school fees. This provision is not intended to be restrictive.

New offence: failure to prevent foreign bribery

The amendments insert section 70.5A into the Criminal Code, which establishes an offence for failure to prevent bribery of a foreign public official. This makes companies liable when their “associates” commit the offence of foreign bribery under section 70.2 of the Criminal Code. For the purposes of these provisions, section 70.1 will now set out a broad definition of “associate” that includes all officers, employees, agents and contractors of the company, its subsidiaries and those “controlled” by it. It also includes those that otherwise perform services “for or on behalf of” the company.

Offences under this new provision are punishable by fines up to the greatest of the following:

(a) 100,000 penalty units (~A$31,300,000 at the date of this article).
(b) if it can be determined by a court, the value of benefit directly or indirectly obtained and reasonably attributable to the conduct.
(c) if the court cannot determine the value, 10% of the company’s annual turnover for the 12 months preceding the offence.

This new offence brings Australia more closely in-line with its obligations as a signatory to the OECD Convention on Combating Bribery of Foreign Public Officials in Business Transactions. The goal of this treaty is to combat foreign bribery through ‘functional equivalence’ in its criminalisation globally. The Attorney-General’s Department has acknowledged this and expressed concern over presently low levels of Australian enforcement, which these amendments seek to address.

What can companies do?

Subsection (5) of the new section 70.5A establishes an exception where companies can prove they had adequate procedures in place designed to prevent offences of foreign bribery under section 70.2. Given that this defence places the burden on companies, the Attorney-General’s Department reasons that there is a ‘strong positive incentive’ for companies to adopt measures proactively.

Australian companies operating in foreign jurisdictions should be more aware of issues related to foreign bribery at all levels of their operations and should begin to determine what steps they can take to prevent any risks here. This is particularly true given the broad definition of “associate” for the new offence. The primary goal of companies affected should be to develop a comprehensive framework to minimise the risk of foreign bribery offences.

The amendments also insert a section 70.5B into the Criminal Code, which requires the Commonwealth Attorney-General to publish guidance on steps that corporations can take to prevent their associates from bribing foreign officials. Therefore, while the existence of ‘adequate procedures’ will be determined by courts on a case-by-case basis, companies should be mindful of guidance that the Attorney-General will provide on the issue. The Attorney-General’s Department has released a draft guidance that can be viewed here

This may be useful for companies developing their foreign bribery frameworks. However, the draft is primarily for consulting and public commentary purposes and will be subject to change now the amendments have come into force.

Contributors - Rosemary Kanan Partner, Dispute Resolution & Litigation, Ben Watson, Associate, Dispute Resolution & Litigation and Isaac Whitford, Paralegal, Dispute Resolution & Litigation.

For more information in the first instance please contact: Rosemary Kanan at Deutsch Miller

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