CDR Updates

Earlier this year, Australia enacted the Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2024 (the Act) in an attempt to strengthen the country’s anti-bribery and corruption regime. The Act, which overhauls previous longstanding bribery legislation, received Royal Assent on 29 February 2024 and will come into effect on 8 September 2024. 

The Act makes numerous reforms to the previous regime, but most notably, it introduces a new corporate offence, namely the offence of failing to prevent foreign bribery – ie bribery of foreign officials – for the profit or gain of the corporation. This new offence places liability on businesses where they fail to prevent an “associate” from engaging in such corruption. 

An “associate” includes employees, agents, contractors and subsidiaries of the company, and any other persons carrying out services on the company’s behalf. This is a notable change to the previous law under which a company could only be held liable for the acts of employees, agents and company officers. The definition of “foreign public officials” has similarly been expanded under the new Act, encompassing not only persons currently in office (as under the previous regime), but also persons standing for or nominated for an official role. 

Where a business is found guilty of failing to prevent foreign bribery, the penalty imposed will be the greater of (1) 100,000 penalty units; (2) three times the total benefit received as a result of the offence; or (3) if the value of the benefit cannot be determined, 10% of the annual turnover of the corporation.

A defence is available to companies where they can show that they had “adequate procedures” in place to prevent the company or its associates from engaging in bribery. However, under the new legislation in Australia, it will not be enough for a company simply to point to the existence of good policies. In order to be eligible for the adequate procedures defence, a company will need to demonstrate that its anti-bribery procedures are proportionate to the company’s operational circumstances, including its foreign bribery risks, and that the procedures are effective. 

In that regard, some of the specific factors that would need to be considered by a company could include:

• The extent to which a company sells products or services to foreign governments or foreign public sector entities;
• The bribery and corruption profile of those countries;
• Whether a company engages with external consultants or agents (“associates”) in those countries;
• The extent of the due diligence conducted on those associates;
• The extent to which the activities of the company and its associates in those countries are reported, monitored and, where appropriate, investigated; 
• The extent to which the company’s staff and associates have been trained in anti-bribery processes; 
• The skills and experience of the compliance staff who have the responsibility to oversee the anti-bribery processes; and
• Accessibility and robustness of internal or external whistle blowing processes.

It is true that what amounts to an “adequate procedure” is ultimately a matter for the courts and will depend on the specific circumstances of the case. However, the media reporting of bribery investigations and prosecutions can create significant stakeholder challenges for companies and their staff, and the value of constructing effective barriers to the risk of bribery appears self-evident.

The new Australian law is remarkably similar to the UK Bribery Act 2010 (UK Act), which also encompasses a “failure to prevent offence” imposing absolute liability on companies which fail to prevent bribery on behalf of “associated persons.” Both regimes include a practically identical “adequate procedures” defence, and recent guidance issued from the Australian Attorney-General’s Department appears to be similar to the UK Government's guidance that accompanies the “failure to prevent” offence under the UK Act. Both regimes also envisage self-reporting (in the United Kingdom, the relevant body to report to is the Serious Fraud Office, while in Australia, it is the Australian Federal Police), involve potentially hefty financial penalties (fines under the UK regime are unlimited) and have extraterritorial application, meaning that they can extend to conduct both within and outside their borders.

K&L Gates has extensive experience in anti-bribery and corruption compliance and internal investigations, helping companies to navigate legal, financial, operational and often reputational risks that may arise in this area. Our UK team has extensive experience dealing with bribery and corruption matters, having worked on a number of high-profile cases in the United Kingdom, while our Australian team has relevant skills and experience on the ground in Sydney, Melbourne, Brisbane and Perth. With our experienced teams, we are well positioned to provide advice to both UK and Australian businesses on steps they can take to ensure they don’t fall foul of anti-bribery laws and what to do if they suspect or know that a bribery offence has occurred. For more information, please do not hesitate to get in contact.