Australia: Bribery & Corruption

On a federal level, the Criminal Code set out at Schedule 1 of the Criminal Code Act 1995 (Cth) (the ‘Criminal Code’) contains numerous offences falling within the classification of bribery and corruption. Other offences are contained within state and territory criminal legislation, such as the:

• Crimes Act 1900 (NSW).
• Crimes Act 1958 (VIC).
• Criminal Code Act 1899 (QLD).
• Criminal Code Compilation Act 1913 (WA).

Australia is also party to numerous anti-corruption conventions, including the:

• UN Convention against Corruption 2003.
• OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 1997.
• UN Convention Against Transnational Organized Crime 2000.

Upon ratification, Australia acceded to implementing domestic measures in accordance with that mandated by the treaties. Therefore, whilst the treaties do not have direct force of law in Australia, their content is in numerous respects incorporated into Australian legislation, for example through the enactment of criminal offences of bribery with respect to national public officials, foreign public officials and officials of public international organizations, as called for under Chapter III of the UN Convention against Corruption.

Public Prosecutors – Commonwealth and State

The Australian public prosecutors are the Commonwealth Director of Public Prosecutions (‘CDPP’). The CDPP is responsible for criminal prosecutions of offences in breach of Commonwealth laws. The CDPP works collaboratively with government agencies who may refer matters to the CDPP for prosecution following investigations. There are also State and Territory Directors of Public Prosecutions (‘DPP’). The State and Territory DPPs pursue prosecutions for offences under State and Territory laws.

Australian Federal Police

The Australian Federal Police (‘AFP’) is responsible for the investigation of offences under the Criminal Code. As part of their investigations, the AFP can undertake duly executed search warrants to obtain evidence in criminal investigations. The AFP also have the power to make arrests where persons are charged with a criminal offence.

State and Territory Police Forces

State and Territory police forces have the authority to investigate and lay charges in respect of bribery occurring within their respective jurisdictions (except foreign bribery and bribery of Commonwealth officials). Their powers are generally the same as the AFP.

State and Territory Corruption Commissions

Various State and Territory anti-corruption standing commissions of inquiry exist to investigate corrupt conduct in the public sector, including: NSW Independent Commission Against Corruption, VIC Independent Broad-based Anti-Corruption Commission, QLD Crime and Corruption Commission, and the WA Crime and Corruption Commission. Whilst these Commissions do not have the power to make arrests or bring criminal charges, there is a capacity to make referrals to the prosecutors.

Pursuant to the bribery offence provisions under the Criminal Code, the giving of a bribe can be broadly defined as providing a “benefit” to another person and the benefit is not legitimately due to the other person and is undertaken with the intention to influence that other person in their official duties in order to obtain business or a business advantage.

A “benefit” is defined as an advantage that is not limited to property. A “business advantage” an advantage in the conduct of business.

Part 4A of the Crimes Act 1900 (NSW) deals with corruption in the private sector and also criminalises a range of bribery offences, both public and private. Under section 249B, concerning the offence of corrupt commissions or rewards, it is a crime for an agent to receive or solicit, or for a person to give or offer, any benefit in the following circumstances:

• As an inducement or reward for doing something or showing favour to any person in relation to the agent’s affairs or business, or
• Where the receipt of the benefit would “tend to influence” the agent to show favour to any person in relation to the agent’s affairs or business.

The term “agent” includes but is not limited to:

• Any person employed by or acting on behalf of another person,
• Any person serving under the Crown,
• A police officer, or
• A councillor under the Local Government Act 1993 (NSW).

The maximum penalty is seven years imprisonment. Other States and Territories have similar offences.

On a federal level, the Criminal Code creates offences for the offering, giving or receipt of a bribe to or by a Commonwealth public official or foreign public official where the benefit is intended to influence the official in the exercise of his or her duties as an official.

The definitions of “foreign public official” and “Commonwealth public official” found in the Criminal Code are broad. The definitions encompass an employee of a public international organisation or an individual who is a contracted service provider for a Commonwealth contract.

Bribery is a criminal offence. Private parties cannot directly bring civil suits for cases of bribery.

Foreign Public Officials

The offence of bribing a foreign public official under section 70.2 of the Criminal Code requires that:

• A person provides or offers a benefit to another person.
• That benefit is not legitimately due to the other person.
• The intention of the first person is to influence a foreign public official in the exercise of their official duties in order to obtain/retain business or illegitimately obtain/retain a business advantage.

Individuals are liable to a maximum penalty of ten years’ imprisonment or 10,000 penalty units (AUD2.2 million) or both.

Corporations are liable to maximum penalty that is the greatest of 100,000 penalty units (AUD22 million), three times the value of a benefit obtained from the offending conduct, or 10% of the corporation’s annual turnover.

Domestic Public Officials

The offence of bribery of a Commonwealth public official under section 141.1 of the Criminal Code.

The offence of bribery of a Commonwealth public official requires that a person:

• Dishonestly provides or offers a benefit to another person.
• Does so with the intention of influencing the second person in the exercise of their duties as a public official.
• That second person is a Commonwealth public official.

It is also an offence for a Commonwealth public official to ask for or receive a bribe.

Individuals are liable to a maximum penalty of ten years’ imprisonment or 10,000 penalty units (AUD2.2 million), or both.

Corporations are liable to a maximum penalty that is the greatest of 100,000 penalty units (AUD22 million), three times the value of a benefit obtained from the offending conduct, or 10% of the corporation’s annual turnover.

The Criminal Code makes no specific reference to hospitality, travel and entertainment expenses in relation to either domestic or foreign bribery. However, these types of expenses could be caught within the concept of a “benefit” under the definition of both offences. Whether such expenses were caught by the offence, would depend on whether the other elements of the offence were also met.

The Australian Trade Commission (‘Austrade’), in its Anti-Bribery & Corruption Guide for Australians doing business offshore (‘ABC Corruption Guide’) notes that these types of expenses, particularly when “extravagant”, can be a common red flag. Austrade recommends that small to medium businesses include in their anti-bribery and corruption programs, policies on hospitality, gift giving, sponsored travel and entertainment to help identify and reduce risk.

At the federal level, contributions to political parties or associated entities are regulated under Part XX of the Commonwealth Electoral Act 1918 (Cth). Political contributions are permitted; however, both the donors and receivers must adhere to the legislated funding and disclosure requirements.

Registered political parties, their state and territory branches, associated entities, third parties, members of the House of Representatives, Senators and donors are required to lodge an annual return with the Australian Electoral Commission (‘AEC’), which is the independent government agency responsible for organising, conducting, and supervising federal Australian elections. Donors who meet the threshold must lodge a Donor Election Disclosure Return with the AEC within 15 weeks of the election polling day. The threshold for 1 July 2021 to 30 June 2022 is more than $14,500.

States and Territories also have their own laws regulating donations, which can be more restrictive. The NSW Electoral Commission, for example, entirely prohibits donations above a specified limit. For 1 July 2021 to 30 June 2022, the yearly limit for a political donations or indirect campaign contributions to “a registered party or group of candidates”, is $6,700.

While, in respect to foreign bribery the Australia Government recommends that, “that individuals and companies make every effort to resist making facilitation payments”, facilitation payments are recognised in Australia as a complete defence to the core foreign bribery offences in the Criminal Code. Under Section 70.4, the “facilitation payment defence” is applicable where:

• the value of the benefit was of a minor nature;
• the benefit was offered “for the sole or dominant purpose of expediting or securing performance of a routine government action of a minor nature”; and
• as soon as practicable, the person made a record of the payment.

Other than the facilitation payment defence, it is also a defence to foreign bribery if, at the time of the offence, there existed a written law governing the foreign public official which expressly permits or requires the benefit to be given. This defence is contained in section 70.3 of the Criminal Code, and subsection 70.3(1) details the differing elements of the defence that govern different types of public officials.

Domestic bribery and corruption offences do not have equivalent defences.

Australian legislation does not presently mandate compliance programs. However, an offence under the Criminal Code can be attributed to a body corporate if the physical element is committed by an employee, agent or officer of a body corporate acting within the actual or apparent scope of his or her employment, or within his or her actual or apparent authority. The fault element can be attributed, if the body corporate expressly, tacitly or impliedly authorised or permitted the commission of the offence. This can be established through proof of a corporate culture that tolerated or led to non-compliance with the relevant provision, or the failure to maintain a corporate culture that required compliance with the relevant provision. In these circumstances, the existence and effectiveness of the company’s anti-bribery compliance program can provide a defence to an allegation of foreign bribery.

In addition, the Crimes Legislation Amendment (Combatting Corporate Crimes) Bill 2019 (Cth) is likely to be passed by the Australian Senate within the next year and will introduce a new corporate offence for failure to prevent a foreign bribery offence under Section 70.5A of the Criminal Code. A corporation will have a defence if it can prove that it had adequate procedure in place designed to prevent foreign bribery. An effective compliance program, although not determinative, will be relevant to any determination as to the existence of adequate procedures.

Refer Q11.

There is limited guidance published by the Australian government concerning compliance with anti-corruption and bribery laws. There is presently only draft guidance published in November 2019 by the Attorney-General’s Department concerning adequate procedures to prevent the commission of foreign bribery. It is expected that a final version of the guidance will be published before the new corporate offence for foreign bribery commences (see Qs 11 and 18).

A comprehensive protection regime exists for the public sector under the Public Interest Disclosure Act 2013 (Cth), which aims to create a framework to facilitate the reporting of suspected wrongdoing including for bribery and other corruption and to provide protections for persons who make public interest disclosures.

With respect to the corporate sector, the whistleblower protection regime under Part 9.4AAA of the Corporations Act 2001 (Cth) was expanded from 1 July 2019, to provide greater protection, introduced by the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019, which requires certain companies (public, large proprietary, registrable superannuation entities) to implement clear and accessible whistleblower policies.

In NSW, government authority investigations into allegations of bribery and corruption are common. The Independent Commission Against Corruption (‘ICAC’), which was established in 1988 specifically to “protect the public interest, prevent breaches of public trust and guide the conduct of public officials in the NSW public sector”, regularly investigates this type of conduct and, not infrequently, the result of their investigation is a recommendation that matters be referred to the state public prosecutorial department for further investigation and prosecution. Notably, in October 2021, ICAC announced that it was investigating whether the sitting NSW Premier had engaged in conduct that constituted or involved a breach of public trust by exercising public functions in circumstances where she was in a position of conflict between her public duties and her private interest. In addition, are investigating whether she assisted another Member of Parliament in using parliamentary resources to improperly gain a benefit for himself.

However, as at the federal level there is no independent government authority with the mandate of investigation corruption and bribery in the public sector, such investigations are far less frequent.

Australia is increasingly moving towards comprehensive regulation and aggressive criminalisation of corporate conduct which has included a growing expectation of corporate self-regulation and management. This stemmed, in part, from the 2017 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry which shed light on inadequacies in the management, investigative and reporting practices adopted by some of Australia’s largest corporate entities.

The potential new corporate offence of failure to prevent foreign bribery is indicative of this shift. However even while the offence remains before parliament, there is a notable push towards corporate compliance in the realm of bribery from Australian agencies and regulators. In particular, Austrade heavily promotes the obligations on companies to enact effective Anti-Bribery and Corruption policies.

In addition, in 2017, the AFP and the CDPP released joint guidelines clarifying the principles and processes that apply to corporations who self-report conduct involving a suspected breach of Division 70. While there is no obligation to do so, a corporate may report to the AFP suspected bribery by the corporation, its officers, employees or agents. A corporation may self-report conduct by its officers or employees without admitting criminal responsibility on the part of the corporation. There are, as the guidelines suggest, many reasons why a corporate would choose to self-report wrongdoing, including reducing reputational damage and maximising any potential sentencing discount. The corporation is subsequently expected to provide full and frank disclosure and assistance to investigating authorities. Assistance has its clear benefits; the corporation can be given an indemnity from prosecution, and/or an undertaking that evidence given by the corporation as a witness is not admissible, whether directly or derivatively, against the corporation in any civil or criminal proceedings.

Administrative decisions can be the subject of judicial review under both the common law or through specific legislation such as the Administrative Decisions (Judicial Review) Act 1977 (Cth) and relevant State or Territory judicial review acts.

The Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019

The Combatting Corporate Crime Bill was introduced into Parliament on 2 December 2019 and puts forth various reforms concerning amendments to the offences of bribery and corruption including:

• Broadening the existing offence of bribery of foreign public official offence (under section 70.2 of the Criminal Code);
• Creating a new offence of failure of a body corporate to prevent foreign bribery; and
• Implementing a Commonwealth Deferred Prosecution Agreement scheme to enable the Commonwealth Director of Public Prosecutions to invite a person that has engaged in serious corporate crime to negotiate an agreement to suspend criminal proceedings in exchange for compliance with specified conditions.

Australian Law Reform Commission Report on Corporate Criminal Responsibility

On 10 April 2019, the Australian government commissioned the Australian Law Reform Commission (‘ALRC’) to undertake a comprehensive review of the corporate criminal responsibility regime. The ALRC published its report, Corporate Criminal Responsibility in April 2020, and the Attorney-General tabled it for Parliament on 31 August 2020.

The report made 20 recommendations following review of existing federal criminal laws against corporations.

The Attorney-General indicated that the Australian Government would carefully consider the recommendations with a view to seeking opportunities for future law reform, though any statutory reform may take years to be enacted. The recommendations have the potential to prompt radical legislative transformation of Australia’s existing criminal liability regime for corporate bodies.

Refer to Q.1

Australia recognises client legal privilege (‘CLP’), or legal professional privilege (‘LPP’), as at common law. Broadly, it protects legal advice given by a lawyer to their client, and communications between the lawyer and their client relating to contemplated litigation or court proceedings. The privilege belongs to the client, and only they can waive the privilege.

In some state and territory jurisdictions the privilege has been legislated. In NSW, LPP is derived from sections 118 and 119 of the Evidence Act 1995 (NSW). It applies to communications or documents, brought into existence for the “dominant purpose” of either:

• enabling the client to obtain, or the lawyer to give legal advice or provide legal services, or
• for use in existing or anticipated litigation.

In Australia, LPP applies to lawyer-led investigations, provided those investigations are being conducted for the primary purpose of legal advice or for existing or anticipated litigation.

Australia is moving towards enforcing a strong stance against bribery and other forms of corruption. The offences for bribery carry significant penalties for both individuals and companies. In the last five years the federal government has increased resources and funding to the CDPP and AFP to allow them to effectively investigate and prosecute these offences.

Australia’s approach to anti-bribery and corruption is of a comparable international standard. Australia is a signatory to the Organisation for Economic Co-operation and Development’s (OECD) Anti-Bribery Convention. The Phase 4 review of Australia’s implementation of the Anti-Bribery Convention was completed in December 2017, and the Phase 4 follow-up in 2019. In the 2021 addendum, the OCED noted that Australia has continued to progress its recommendations, with only a handful still considered unimplemented. In addition, once Australia enacts the proposed offences for failure to prevent foreign bribery, it’s laws will be in line with the legislative standards enforced by the United Kingdom and United States, which is considered to be some of the strictest anti-corruption legislation in the world.

Despite this, Australia still has significant scope to improve its performance in tackling bribery and corruption. While Australian government agencies have the tools required to act, there has been limited results in effectively carrying out prosecutions. As the OECD notes in their most recent report, since the entry into force of Australia’s foreign bribery legislation 20 years ago, only two corporate entities and six individuals have been sanctioned. The OECD considers this a low enforcement rate, particularly given the size of Australia’s economy and the high-risk sectors in which Australian companies operate.

The main federal organisations tasked with investigating and prosecuting bribery have been resourced to enable them to effectively respond to this crime typology.

The AFP’s received $25.9 million over four years (ceasing in June 2023) for its Fraud and Anti-Corruption Centre specifically to investigate foreign bribery. This allowed them to retain, 19 investigators, four forensic accountants and six criminal assets litigator as part of Operation Integra which focuses on preventing, detecting, disrupting and investigating foreign bribery allegations. Similarly in November 2018, the federal government committed an additional $41.6 million to the CDPP over eight years to support them in undertaking prosecutions against corporate crime. As of 2021, the CDPP, had advised that it had been able to commit dedicated resources to the prosecution of foreign bribery and related matters. As of December 2021, the CDPP had thirteen foreign bribery matters at various stages of proceeding. However, as mentioned above, the OCED finds overall that Australia has low level of cases against legal persons despite the funding and resource increases.

One of the most significant challenges enforcement agencies/regulators face are the long-standing difficulties in attributing criminal wrongdoing to corporate actors.

In the ALRC report on Corporate Criminal Responsibility (refer Q18), the ALRC noted that corporations are most often prosecuted for minor regulatory offences, smaller corporations are more likely to be prosecuted than larger corporations, and prosecutors withdraw a significantly higher number of charges against corporations than against individuals for corporate crimes. The report found that the complex mechanisms for attributing criminal responsibility to corporations under federal law pose real difficulties for prosecution. While these concerns were not specific to the issue of bribery and corruption, these same complexities limit the Australian enforcement agencies to effectively investigate and prosecute these crimes when corporate actors are involved.

There are several challenges businesses face when investigating bribery and corruption issues within their corporate structure. An absence of resources or internal infrastructure will impact a company’s ability undertake the required due diligence, particularly in respect of monitoring and investigating the conduct of third parties. Ultimately, an absence of appropriate structures will limit an organisation’s ability to detect violations of anti-corruption laws by those third parties, for which the Australian entity may ultimately be held accountable.

In addition, depending on the size of the entity and the issues, the business must have the capacity to properly resource the investigation. External assistance may be required; independent counsel and legal advice can be advisable to ensure the impartiality of the investigation and, depending on the complexity of the money flows, forensic accountants may be beneficial.

Other challenges can include the diverse laws and language of the region in which the conduct took place, and the potential cross-border consequences of the conduct. It is crucial that entities undertaking an investigation understand where liability might arise in other jurisdictions and appropriately manage the risks.

The Combatting Corporate Crime Bill will likely be introduced within the next 18 months, once it comes into force companies will be required to have in place comprehensive and effective procedures to prevent bribery within their corporation. This is likely to be one of the most significant challenges businesses will face in the coming months, particularly in circumstances where they may lack the necessary resources to implement the required internal procedures, which requires sufficient guidance from the federal government as to how to navigate the new anti-bribery and corruption laws.

In light of the limited prosecutions for bribery to date, and noting that much of the federal government’s commitment to increased funding for the AFP and CDPP ends next year, we consider that this funding increase should be extended past 2023 and new technologies should be provided to the various prosecutorial and investigative agencies that deal with these crime typologies. In addition, the ALRC’s recommendations in their 2020 report regarding the simplification of the laws attributing misconduct to corporate actors should be adopted in full.