Since 2022, when Australia received its worst result in Transparency International's Corruption Perceptions Index (18th), the country has undertaken major reforms to its anti-corruption framework. Starting with the inception of the National Anti-Corruption Commission in 2023, Australia has now introduced a second major anti-corruption reform with the passing of the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 ("CFB Bill") on the 29th of February, 2024.
Coming into effect in the second half of 2024, the CFB Bill aims to broaden its reach and address criticism regarding the number of convictions for foreign bribery in Australia, which has seen three individuals and seven corporations convicted for foreign bribery in Australia since the enactment of foreign bribery laws in 1999.
Changes brought by the CFB Bill
The changes brought about by the CFB Bill in Australia are substantial. However, two changes stand out:
- Offence of “Failure to Prevent”: This new offence punishes failure to prevent bribery of a foreign official by an "associate." Corporations can defend this charge by demonstrating they had adequate procedures in place to prevent bribery of a foreign official. Failure to prevent is now an absolute liability offence, which shifts the burden of proof to them to demonstrate they had sufficient procedures in place.
- Definition of “Associate”: Defined broadly by the CFB Bill, an associate now encompasses corporate officers, employees, agents, contractors, and anyone rendering services on behalf of corporations, including its subsidiaries and controlled entities.
Other changes include that the definition of a foreign public official now includes candidates for office. The CFB Bill has also simplified the process of establishing wrongdoing by requiring proof of an "intention to improperly influence" a foreign official, rather than focusing on proving that a benefit was “not legitimately due”. Finally, the amendment now covers seeking personal advantages through bribery, not just business advantages.
The question remains on what constitutes “adequate procedures” to prevent bribery, with the CFB Bill providing that the Attorney-General must publish guidance on this matter. The Attorney-General´s guidance is expected to be heavily influenced by the UK Government's guidance that accompanies its "failure to prevent" offence under section 7 of the UK Bribery Act, which is composed of six key principles: Proportionate procedures, Top-level commitment, Risk assessment, Due diligence, Communication, Monitoring and Review.
Impact on Australian Companies
Australian companies doing business overseas can expect increased scrutiny by the Australian authorities on their activities in other jurisdictions. Kroll foresees an increased number of prosecutions after the CFB Bill has broadened certain definitions to expand its reach and captured an increased number of behaviours and scenarios that constitute bribery of a foreign official.
Companies will be subject to increased penalties, consisting of the greatest of $31.3m, three times the value of the benefit obtained by the company or 10% of the company’s annual turnover.
Preparing for Change
The CFB Bill will come into effect in the second half of 2024, giving companies 6 months to prepare for its enactment. Kroll´s subject matter experts can assist you preparing for this new risk environment with:
- Refreshing Risk assessments: Kroll has 70 offices in 34 countries with local experts who can provide expert insight to deliver a risk assessment tailored to the operational reality of your organization.
- Update of Anti-bribery & Corruption (“ABC”) Compliance Policies and Procedures: Recently ranked Best Regulatory and Compliance firm of the year by Private Equity Wire, Kroll has global ABC subject matter experts with significant hands-on experience in design and implementation of ABC policies, procedures and controls.
- Designing and Implementing Third Party Risk Management and ABC Due Diligence: Kroll’s Forensic Investigations and Intelligence practice has experience delivering bespoke risk-based third-party risk management programs as well as all levels of due diligence on vendors, partners and other counterparts.
- Investigating Bribery and Corruption: Specialist support with complex and sensitive internal investigations involving bribery and corruption and other types of wrongdoing, including fraud, whistleblower disclosures and workplace misconduct.
