Legislative changes to shake up corporate crime regime
A bill has been introduced in Parliament to strengthen Australia’s corporate crime laws and create a deferred prosecution agreement scheme.
The Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 was introduced in the Senate on 6 December.
The bill seeks to toughen the Australian corporate crime regime and introduce a deferred prosecution agreement (DPA) scheme to encourage self-reporting.
Herbert Smith Freehills disputes partners Jacqui Wootton and Tania Gray and senior associate Christine Wong, who work in the firm's corporate crime and investigations team, issued a briefing on the changes.
One of the key measures in the bill is the proposed changes to foreign bribery offences. The bill would create a new strict liability corporate offence of failing to prevent foreign bribery, similar to the existing offence in the UK, according to HSF.
This would make companies automatically liable for foreign bribery by associates, including officers, employees, contractors and subsidiaries, unless they can prove that it had adequate procedures in place to prevent bribery. A company can be convicted under this provision even if the associate has not been convicted of a foreign bribery offence.
"These reforms are significant and have the potential to shift the dial in Australia’s enforcement of foreign bribery and other corporate crime laws," the HSF lawyers said.
"The explanatory memorandum to the bill states that the measures seek to address current challenges associated with detecting and addressing serious corporate crime, which tends to be opaque and sophisticated and therefore difficult to identify."
The bill would also lower and clarify the bar for what must be established in the current foreign bribery offence.
Lawyers Weekly caught up with Ms Wootton, Ms Gray and Ms Wong earlier this year to discuss the proposed changes. Ms Wong described the foreign bribery changes as the "stick" side of the reforms, while the DPA scheme is the "carrot".
She said the DPA scheme would give companies the option to self-report to the Australian Federal Police or regulators such as ASIC when they identify an issue, with the potential to enter negotiations on the settlement or obtain a reduced penalty.
"It's designed to incentivise self-reporting by companies, which would mean the detection of the issue comes to light earlier but also prosecution, because the idea is that companies would actually be more cooperative with the regulators in sharing information: potentially, if they've done an investigation, the outcomes of that investigation and things like that," said Ms Wong.
Ms Wootton said the DPA scheme aims to make foreign bribery easier to detect, similarly to jurisdictions such as the US, which have achieved greater enforcement outcomes.
"The government's perception, and I think there's some truth in this, is that one of the reasons why it's so hard for them to get runs on the board with enforcement outcomes is because it's really hard for them to detect instances of foreign bribery," she said.
"It's hard to investigate it, but the detection piece is thought to be one issue, and so moves which encourage companies to come forward and self-report are thought to help authorities better respond."
The HSF lawyers noted in their briefing that, in addition to foreign bribery and money laundering offences, the bill would make DPAs available for sanctions, domestic bribery and various other offences under the Commonwealth Criminal Code and Corporations Act. It would exclude other crimes including tax, environmental, cartel and workplace health and safety offences.
"DPAs have been transformative overseas, particularly in the US and increasingly the UK, in the way authorities tackle corporate misconduct," the lawyers said.
"The DPA scheme reflected in the bill aims to make it easier for authorities to detect corporate misconduct and encourage companies to come forward and report issues they detect internally. These new mechanisms give Australian prosecutors more flexibility in how they can resolve allegations and seek to hold companies to account.
"Combined with the new corporate offence of failing to prevent bribery, DPAs have the potential to shift the dial in Australia’s enforcement of foreign bribery laws."