Many of the report’s recommendations (such as amendments to the foreign bribery offence and shifting responsibility to corporations to prevent foreign bribery) were included in the December introduction of the Crimes Legislation Amendment (Combatting Corporate Crime) Bill, which, if passed, will strengthen Australia’s foreign bribery laws and increase the range of tools available for investigators and prosecutors to deal with serious corporate crime. At the same time, AFP and the Commonwealth Director of Public Prosecutions released self-reporting guidelines for Australian corporates seeking to proactively disclose suspected foreign bribery and related offences; and whistleblower reforms were proposed, which are expected to be effective from July this year.

These reforms and actions on foreign bribery have largely gone under the radar, but reflect the underlying eagerness of Australian regulators to address international and domestic criticism of Australia’s enforcement record on foreign bribery and corruption. Australia has gained an unenviable reputation for being a ‘soft touch’ in this space, in the words of Senator Chris Ketter at the inquiry last year. Judging by the pace of regulatory change and government scrutiny, it is a reputation the government is determined to leave behind.

While the government will now have many of the powers and laws it needs to more effectively combat bribery and corruption in Australia, it means little if they don’t have the boots on the ground to enforce them. The inquiry’s recommendation to increase investment in resources for the AFP, ASIC, and Commonwealth Director of Public Prosecutions to fight bribery and corruption will therefore be welcome. The recommendation to adopt contingency funding for major investigations (known as ‘blockbuster funding’ under a similar mechanism already in place in the UK) should provide at least a temporary boost to Australia’s enforcement track record. Blockbuster funding has been the subject of some criticism in the UK as there is a risk that it becomes the norm for an agency to request additional funding for a particular case rather than the exception. It will be important to ensure that blockbuster funding does not replace the need for increased permanent resources.

If the inquiry’s recommendation does result in increased resources for anti-corruption agencies, it couldn’t come a moment too soon. A rising trend of increasing international cooperation amongst law enforcement agencies on foreign bribery activities is driving leads and investigations in Australia. Joint global investigations have resulted in several high-profile cases in the last several years, such as the Unaoil bribes-for-contracts scandal. Our neighbours across Asia are also moving on the issue with China recently introducing a new anti-corruption agency. Australia must move quickly to ensure a leadership position in this space and increase the role it plays in ever-more global international investigations.

So, what does this mean for Australian corporate boards? The Crimes Legislation Amendment (Combatting Corporate Crime) Bill shifted the onus onto companies to prevent foreign bribery, bringing Australia’s laws in line with those in the UK. Australian corporations will be liable for foreign bribery by associates and employees, unless they can prove that the company had a strong anti-corruption program in place when the crime was committed. The Senate inquiry has also recommended that the government introduce a debarment framework that allows government agencies to exclude companies found guilty of foreign bribery from public tendering processes. Ensuring foreign bribery measures are in place and monitored for effectiveness should be front of mind for Australian board leaders, and the same applies to multinational corporations operating in Australia. As the pressure mounts, companies must demonstrate that they have stringent anti-corruption regimes in place and under rigorous enforcement.  

With tough new legislation, improved AFP guidelines, and more international co-operation, it is more likely than ever that bribery and corruption issues will be uncovered and prosecuted. As a result, Australian executives and boards should be taking a hard look at their internal anti-corruption frameworks, especially for activities located in high-risk jurisdictions and industries. Australia’s reputation as a soft touch jurisdiction for anti-bribery enforcement is coming to an end.

VIEW ALL

Jason Gray is an Allen & Overy partner specialising in white collar crime and government enforcement work, particularly anti-bribery and corruption law.