Anti-Bribery Laws in Australia

Relevant connection with Australia required

There are defences under the Australian law for bribery of foreign officials where:

• a foreign or local written law required or permitted the provision of the benefit (s 70.3); or
• the benefit to the foreign public official was a facilitation payment (s 70.4).

A benefit is a facilitation payment where:

• the value of the benefit was of a minor nature;
• the payment was made for the sole or dominant purpose of expediting or securing the performance of a routine government action of a minor nature; and
• a record of the conduct was made as soon as practicable after it occurred.

A routine government action does not include decisions about awarding new business, continuing existing business with a particular person, or the terms of a new or existing business. Similar to the US defence for facilitation payments (on which the Australian defence is modelled), the Australian legislature has made clear that a facilitation payment must involve something to which a person is already entitled and not something which the public official has a discretion whether or not to grant.

This facilitation payments defence is controversial, and the OECD Working Group on Bribery in International Business Transactions has called for facilitation payments to be prohibited. Despite this recommendation, it still remains a defence under Australian law. In other jurisdictions (such as under the United Kingdom Bribery Act 2010), facilitation payments are illegal.

Penalties and enforcement

The penalty for an individual who is found guilty of bribing a foreign official is imprisonment for not more than 10 years and/or a fine of not more than 10,000 penalty units (currently $3.13 million).

For a corporation, the maximum fine is the greater of:

• 100,000 penalty units (currently $31.3 million);
• if the value of the benefit the body corporate directly or indirectly obtained can be determined – 3 times the value of that benefit; or
• if the court cannot determine the value of that benefit – 10% of the annual turnover of the corporation and related bodies corporate during the 12 months ending at the end of the month in which the conduct constituting the offence occurred.

The High Court of Australia in The King v Jacobs Group (Australia) Pty Ltd [2023] HCA 23 clarified that the "value of the benefit" is the gross benefit obtained from the conduct, not the net benefit. See Ashurst's publication on this decision, here.

Corporate offence of 'failure to prevent' foreign bribery

'Failure to prevent' foreign bribery

From 8 September 2024, a company will be criminally liable where an 'associate' of the company (meaning its officers, employees, agents, contractors, other service providers, or others who perform services for or on behalf of the company) has committed bribery for the profit or gain of the company (s 70.5A of the Schedule to the Criminal Code). The company does not need to have been involved in or have authorised the offending conduct for it to be liable.

This offence is similar (but not identical) to the 'failure to prevent bribery' offence under section 7 of the UK Bribery Act.

Defence – adequate procedures

A company will have a defence to the 'failure to prevent' offence, if it can show that if had 'adequate procedures' in place to prevent the commission of foreign bribery by its associates (s 70.5A(5)). The 'adequate procedures' defence is focused on a company's processes for seeking to prevent bribery (including whether they align with guidance on adequate procedures). The fact that foreign bribery occurs does not, of itself, mean that a company's procedures for prevention of bribery were inadequate.

Each piece of legislation is different and needs to be specifically considered. However, they have a number of similar features and the following situations are likely to give rise to serious concerns.

At the Commonwealth level, a person is guilty of an offence if the person:

• dishonestly offers or provides a benefit, with the intention of influencing a Commonwealth public official in the exercise of their duties as a Commonwealth public official (Division 141.1), or
• dishonestly offers or provides a benefit to another person and the receipt or expectation of the receipt of the benefit would tend to include a [Commonwealth] public official in the exercise of the official's duties as a public official (Division 142.1).

As with foreign bribery, custom and practice are no defence, though there is generally a requirement that the benefit must be given or accepted dishonestly or corruptly. The courts have interpreted “dishonestly” or “corruptly” as meaning “with intention to influence”. So even where the legislation refers to payments which “tend to influence” (which suggests it is not necessary to have a particular intention), the need for dishonesty or corruption means that there must be an intention to influence.

While it is necessary for there to be an intention to influence, providing a benefit may be a bribe even if there is no specific objective sought to be achieved eg a favourable outcome of licence application or the grant of a contract; it is enough if the benefit was given to encourage the other person to show favour generally at some point in the future or act in a way which is a departure from the proper exercise of their duties.

Courts infer an intention to influence from all the circumstances in which the benefit is given eg the size of the benefit(s), the frequency of benefit(s), the context (eg if there was an impending decision regarding eg the grant of a licence or award of a contract), and whether the benefit was recorded by either party and recorded accurately.

In many States, paying secret commissions for advice given to others about their business dealings is also an offence, even if the adviser is not an “agent”.

Companies may be criminally liable for bribery committed by their employees, officers or agents. The Australian Capital Territory and the Northern Territory have adopted the expansive Commonwealth model (described above in relation to foreign bribery). In other States, corporate liability is likely to arise only where a directing mind or will of the company – typically a director or senior manager – is involved in the offence.

As with foreign bribery, companies/directors may also be liable where they aid, abet, counsel or procure bribery – that is, if they intentionally participate in the offence, for example by requiring or encouraging bribery, or providing funds to allow employees or agents to commit offences.

The penalties for domestic bribery are also heavy: prison terms ranging from up to 7 years (NSW) to up to 21 years (Tasmania) may be imposed on individuals, and companies are liable to significant fines.

State commissions against corruption

In addition to criminal liability, all States have created statutory bodies (commissions) charged with investigating and reporting on corrupt conduct in relation to public sector agencies. The NSW Independent Commission against Corruption has conducted a number of high-profile investigations into political donations and alleged corrupt inducements over recent years, but all of the commissions are very active.

The commissions have broad powers to investigate, examine witnesses and call for documents. Hearings and reports are generally public, in the interests of transparency and public education. An investigation may also lead to a complaint being referred for criminal prosecution.

National Anti-Corruption Commission

The National Anti-Corruption Commission (NACC) commenced operation on 1 July 2023.

The NACC can investigate the conduct of Commonwealth "public officials" and private entities interacting with the Commonwealth (and their employees), including conduct that precedes the commencement of the NACC. This means that the conduct of private sector entities could be subject to investigation where the entity contracts or interacts with the Commonwealth.

The NACC can commence an investigation on its own motion, or on a referral from a Commonwealth agency head, a Public Interest Disclosure officer of an agency, or members of the public.

The NACC will only investigate "serious or systemic" corrupt conduct, as defined by sections 8(1) and 41(2) of the National Anti-Corruption Commission Act 2022 (Cth). This includes breaches of public trust, abuse of office, and misuse of information by public officials. It also includes conduct by any person (including non-public officials) that adversely affects the honest and impartial exercise of a public official's powers, functions or duties.

The legislation provides that hearings are to be held in private by default, and are only to be held publicly where the Commissioner is satisfied there are "exceptional circumstances" justifying a public hearing.

The Commissioner of the NACC is required to prepare a report at the conclusion of each investigation. They can make findings or express opinions on the corruption issue and make recommendations. If the Commissioner makes a finding of corrupt conduct, the matter may be referred for criminal prosecution.

Political donations

Political donations are seen as giving rise to particular risks of corruption or perceptions of corruption, and are accordingly subject to additional regulation by the Commonwealth, States and Territories. In all of the States and Territories except for Tasmania, there are requirements to file returns or make public disclosures of donations in some circumstances, with financial penalties for non-compliance. Under Commonwealth, South Australia, Queensland and Northern Territory laws, the donor (rather than the party or politician) is frequently required to file the return, depending on the amount of the donation. NSW, Victoria and Western Australia also cap or prohibit donations above certain amounts/from certain industry sectors.

The failure to properly disclose a donation may also be evidence from which a corrupt or dishonest intention could be inferred, for the purposes of domestic bribery offences, and may be of some interest to the commissions. Accordingly, ensuring strict compliance with the disclosure rules is critical to anti-bribery risk management around political donations.

The risk of donations being seen to affect planning decisions has given rise to particular concerns. For example in NSW, political donations from property developers are unlawful. Moreover, s 10.4 of the Environmental Planning and Assessment Act 1979 (NSW) requires a person who makes a planning application to disclose all reportable political donations under the Electoral Funding Act 2018 (NSW) made in the two years preceding the application by any person with a financial interest in the application or by the person or associate of the person making the submission.

Enforcement of contracts procured by bribery

Where contracts are entered into as a result of bribery of an agent, an innocent principal may be entitled to:

• rescind the contract and recover moneys paid over under it; and/or
• recover the amount of the bribe from the agent and seek damages for any losses suffered.

This means that the enforcement of contracts entered into following a bribe is far from certain, even if the bribe was small in nature and perhaps did not have any real impact on the principal’s entry of the contract. This is another reason why it is critical to supervise employees and agents properly: your company may find that, as a result of corrupt conduct of which it was not aware, it cannot enforce critical contracts.

In addition, contracts that have elements which relate to bribery (eg reimbursement of a foreign agent for their costs which might include some payments which are bribes) will be unenforceable either in whole or in part.

False accounting offences

Australian false accounting offences target both companies and individuals, and are intended to criminalise the falsification of books, documents, records, certificates and accounts. These offences exist at both Commonwealth level (under the Commonwealth Criminal Code) and State/Territory level (pursuant to the relevant criminal legislation in each State/Territory).

For example, under s 490.1 of the Commonwealth Criminal Code, an offence occurs where:

• a person makes, alters, destroys or conceals an accounting document; or
• a person fails to make or alter an accounting document that the person is under a duty to make or alter,

with the intention that the conduct would facilitate, conceal or disguise:

• the receipt or giving of a benefit that is not legitimately due; or
• a loss that is not legitimately incurred.

A 'person' includes corporate entities, government officials or an officer or employee of a corporate entity acting in the performance of their duties or functions.

A second offence, set out at s 490.2, applies in the same circumstances as the first, but where the person is reckless as to whether the benefit or loss would arise. In general terms, recklessness occurs where a person can foresee some probable or possible consequence, but nevertheless decides to continue with their actions with disregard to the consequences.

These false accounting offences make it much harder for companies to turn a blind eye to certain conduct and avoid prosecution. As a result, companies must ensure the process for financial reporting, invoicing and accounting is vigorous and transparent. The corporate culture must clarify that bribery and falsification of accounting documents will not be tolerated.

What 'accounting documents' do these offences apply to?

The Commonwealth law broadly applies to any account, record or document made or required for any accounting purposes or any register under the Corporations Act 2001 (Cth), or any financial report or financial record within the meaning of that Act.

This definition could capture many types of documents routinely used by most organisations, such as invoices for services or annual financial reports. The accounting documents do not need to be inside Australia and can apply to documents kept under or for the purposes of a law of the Commonwealth, or kept to record the receipt or use of Australian currency.

Easier to prosecute

In prosecuting a person for these Commonwealth false accounting offences, it is not necessary to prove that the accused received or gave a benefit, or that another person received or gave a benefit, or caused any loss to another person. Further, as mentioned above, it is also an offence to falsify documents where the person is reckless as to whether a benefit would be given or received, or loss incurred. In prosecuting this offence, it is not necessary to prove that the accused intended that a particular person receive or give a benefit, or incur a loss.

Not requiring proof that a benefit was given or received (i.e. that a bribe was paid or received) makes it easier to prosecute these offences. To establish a false accounting offence, the prosecutor is only required to show that the person intended, or was reckless in their conduct which allowed, the making, alteration, destruction or concealment of the document (or the failure to make or alter the document) to facilitate, conceal or disguise the corrupt conduct.

Companies, managers or employees who notice discrepancies in accounting documents and can foresee a probability or possibility that such discrepancy facilitates, conceals or disguises the giving or receiving a benefit that is not legitimately due, and approves the discrepancy or fails to correct that discrepancy, could fall foul of these false accounting provisions and be prosecuted.

Penalties and enforcement

The Commonwealth false accounting offences carry significant penalties. For an individual, an intentional breach is punishable by imprisonment for up to 10 years, a fine of up to $3.13 million or both.

For a corporation, an intentional breach is punishable by a fine of up to $31.3 million, up to three times the value of the benefit obtained from the conduct, or up to 10% of the annual turnover of the corporation during the 12 months prior to the conduct.

The maximum term of imprisonment and pecuniary penalties for an offence of recklessness are half of the penalties for an intentional offence.

Whistleblower laws

The Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth), which amended the Corporations Act, has been in effect since 1 July 2019. It provided a consolidated, strengthened protection regime for whistleblowers for proprietary and public companies in the corporate, financial and credit sectors.

The laws significantly expanded the scope of the protected disclosures under the Corporations Act, including by enabling whistleblowers to make anonymous disclosures, and removing the requirement that disclosures be made in "good faith".

It is important that companies and individuals are mindful of whistleblower protections, particularly confidentiality obligations, that might influence the way in which allegations of bribery and other forms of misconduct are investigated internally.

Whistleblower protections

What disclosures qualify for protection?

In order to qualify for protection under the whistleblower laws, the following requirements must be met: