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Criminal Code (Bribery of Foreign Public
Officials) Bill 1999
Date Introduced: 10 March 1999
Portfolio: Justice and Customs
Commencement: Six months and one day after Royal Assent unless
commenced earlier by Proclamation.
To amend the
Criminal Code Act 1995 (Cwlth) to criminalise the bribery
of foreign public officials.
United Nations Declaration
against Corruption and Bribery in International Commercial
On 16 December 1996 the United Nations General
Assembly adopted the United Nations Declaration against Corruption
and Bribery in International Commercial Transactions. Under this
Declaration, Member States pledge to prevent individuals or private
or public corporations claiming tax deductions for bribes paid to
public officials. Member States also agreed to criminalise the
bribery of foreign public officials in an effective and coordinated
OECD Convention on Combating
Bribery of Foreign Public Officials
As well as being a member of the United Nations,
Australia is also a member of the Organisation for Economic
Co-operation and Development (OECD).(2) The OECD Convention on
Combating Bribery of Foreign Public Officials in International
Business Transactions (the Convention) was opened for signature in
December 1997. Participation in the Convention is not limited to
nations who are members of the OECD.(3) All 29 OECD members have
signed the Convention and 12 signatories have deposited instruments
of ratification or acceptance. Additionally, there are five
non-member signatories-Argentina, Brazil, Bulgaria, Chile and the
Slovak Republic. Some OECD members have already changed their laws
in accordance with the Convention.(4) The Convention came into
effect in February 1999.
The Convention requires Parties to take the
measures necessary to establish domestic legislation criminalising
the bribery of foreign public officials in the performance of their
official duties. The Convention focuses on the 'supply side' of
bribery. According to the OECD this is because 'As the largest
exporters of trade and investment in the world, our multinationals
represent, by far, the greatest potential source of bribe
money.'(5) Further, the Convention targets 'large-scale'
bribery-that is, '...bribery for the purpose of obtaining or
retaining international business'(6)-rather than 'grease' or
facilitation payments which are made to induce public officials to
perform functions which are part of their routine duties.(7)
The World Bank estimates that bribes and
'pay-offs' amount to about $US80 billion per year and that this is
the 'tip of the iceberg.'(8)
In December 1997, the Government announced its
intention to prepare a consultation draft bill implementing the
Convention. In February 1998, a copy of the Government's
consultation draft was forwarded to the Joint Standing Committee on
Treaties (JSCOT). Other consultative measures taken by the
Government are outlined in the Explanatory Memorandum.(9) The
Convention itself and its National Interest Analysis (NIA) were
tabled in Parliament in March 1998.
JSCOT supported Australian ratification of the
OECD Convention and recommended that a Bill modified in accordance
with its recommendations be introduced into the Parliament as soon
as possible. Its recommendations about changes to the public
consultation draft are found in its 16th Report.(10) The
Government accepted some of these recommendations and rejected
JSCOT's recommendations and the
Some of the recommendations made by JSCOT and
the Government's responses to them are briefly outlined below.
Fault elements of offences
JSCOT recommended that the fault elements
necessary to ground an offence under the legislation be broadened
to include recklessness.(12) The consultation draft bill required
intention to be the fault element of an offence.
Under the Criminal Code, conduct is intentional
if, for example, the person means to engage in that conduct. A
person has an intention in relation to a result if he or she means
to bring that result about.(13)
An example of recklessness under the Code is
where a person is aware that there is a substantial risk that a
circumstance or result will occur and taking the risk is
unjustifiable.(14) JSCOT was concerned that situations where a
principal pays an inflated amount of money to an agent or
consultant and turns a blind eye to the use by the agent of part of
the money for bribes would not be caught if intention to influence
a foreign public official in the conduct of his or her public duty
The Government rejected JSCOT's
recommendation.(15) The Bill as introduced into the Senate confines
the fault elements of an offence under the legislation to conduct
which is intentional. It is the view of the Government that if
fault elements were expanded to include recklessness, the
legislation would travel beyond the requirements of the OECD
Convention and also beyond the parameters of domestic bribery
offences proposed for the Model Criminal Code.(16) The Government
also noted that tacit approval of bribery is covered by the general
principles of criminal responsibility in Part 2.5 of the Criminal
Jurisdictional basis of the
The exposure draft bill provided that some of
the relevant conduct must occur inside Australia before conduct
would be caught by the legislation. JSCOT recommended that the
jurisdictional basis of the legislation be extended to include any
of territoriality, nationality, residence, place of incorporation
or business operation.(17) JSCOT said:
Once it is accepted that the conduct sought to
be proscribed is essentially international criminal activity that
is likely to take place wholly outside Australia, the question is
whether imposing a territorial nexus as a precondition to the
exercise of jurisdiction over such an offence will render the
legislation ineffective and unenforceable.
We have concluded that, to ensure that the
objectives and intent of the Bills and met, it is necessary that
the focus of the legislation be reflected in the exercise of
We have also concluded that the objectives of
the Bill would be more readily achieved if jurisdiction for the
offence of bribery was based on nationality, and that this basis
should be defined as widely as possible to include any of
territoriality, nationality, residence, place of incorporation or
An example given to the Committee of the
application of the nationality principle is Part IIIA of the
Crimes Act 1914 (Cwlth) which deals with child sex
tourism. Part IIIA criminalises some offences on the basis of
Australian nationality or residence even though the relevant
conduct takes place wholly overseas.
The Government accepted JSCOT's recommendation
about jurisdiction in part. It agreed that the legislation should
be extended to conduct occurring outside Australia if the
perpetrator is an Australian citizen or a corporation incorporated
in Australia. It rejected the recommendation in relation to
residency or business operations in relation to corrupt conduct
occurring outside Australia.
The Government responded in part:
[JSCOT] considered that jurisdiction was the
central issue on which the effectiveness of the Bill would be
judged. It concluded that the conduct sought to be proscribed is
essentially international criminal activity likely to take place
wholly outside Australia and that the objectives and intent of the
Bill will not be met unless jurisdiction for the offence is
The Government accepts the JSCOT recommendation
insofar as it agrees to extended jurisdiction on the basis of
nationality and place of incorporation but not on the basis of
residency or business operations where the conduct is outside
Australia. The Government considers that foreign businesses which
conduct operations in Australia and residents who are citizens of
other countries should be the responsibility of their home
jurisdiction in relation to corrupt conduct which occurs outside
Facilitation benefits are small payments made to
induce public officials to perform official functions like issuing
licences and permits.(20) They are generally illegal in the country
JSCOT considered that there were considerable
difficulties involved addressing the subject of facilitation
benefits. For example, it conceded that some foreign public
officials are dependent on facilitation benefits to supplement
their income and that such benefits need to be provided by
Australian firms in order to do business in some foreign countries.
The Committee also pointed out that the OECD Convention is designed
to address large-scale corruption aimed at obtaining an improper
advantage rather than small-scale payments for non-discretionary
When JSCOT was examining the legislation in
exposure draft form, the draft bill provided options for defences
to a charge of bribery. These defences were that the benefit
received was less than a threshold amount or that it was of 'small'
value. JSCOT recommended that the legislation adopt a purposive
approach to the provision of facilitation benefits, that anyone
paying a facilitation benefit should be required to record the
transaction, and that a 'facilitation benefit' defence along the
lines of that in the US Foreign Corrupt Practices Act 1997 should
be available.(21) It also suggested that there should be a penalty
for non-compliance with the recording requirement.(22)
The Government accepted these recommendations
with some changes.(23) In particular, it agreed that a facilitation
benefit defence based on the US legislation-with some
modifications-should be provided.(24) Further, it agreed that a
'facilitation benefit' defence should only be available if the
transaction is recorded as soon as possible and identified as a
facilitation benefit. However, failure to record the transaction is
not an offence.(25)
JSCOT recommended that penalties should be
increased and be of similar magnitude to those set out in section
76 of the Trade Practices Act 1974.(26)
The penalty for bribing a foreign public
official in both the exposure draft and in the Bill before the
Parliament is 10 years imprisonment. Under section 4B of the
Crimes Act 1914 this penalty can be converted into a
monetary figure by a court-a maximum fine of $66,000 for an
individual and $330,000 for a corporation. Maximum fines in section
76 of the Trade Practices Act are $500,000 for an individual and
$750,000 to $10,000,000 for a corporation. JSCOT took the view that
the penalties contained in the draft bill were too low in view of
the seriousness of the offence.
The Government rejected JSCOT's recommendation
on the grounds that the penalties in the Trade Practices Act are
civil penalties and are therefore a 'soft option' compared to the
Bill's provisions which criminalise conduct and provide for
imprisonment and/or a fine.(27)
Item 2 of Schedule 1 inserts
new Chapter 4 into the Criminal Code. New Division 70 of that
Chapter deals with the bribery of foreign public officials.
Clause 70.1 is a definitions
section. 'Benefit' is defined to include any advantage and is not
confined to property. 'Business advantage' means advantage in the
conduct of business. 'Foreign public official' is also defined. The
expression includes employees, officials or contractors of foreign
governments, persons appointed under foreign law, those serving in
foreign governments (including the military and police), members of
the executive, legislature or judiciary of a foreign country,
employees and contactors of public international organisations.
Clause 70.2 creates an offence
of bribing a foreign public official. Subclause 70.2(1) provides
that it is an offence to provide, offer to provide or arrange for a
benefit to be offered to a person if the benefit is not
legitimately due to that person and the offer is made to
influence a foreign public official obtain or retain business. The
penalty is a maximum of 10 years imprisonment.
In determining whether a benefit is not
legitimately due, the fact that the benefit is customary or is
officially tolerated is to be disregarded. So, too, is the value of
the benefit [Sub-clause 70.2(2)].
In determining whether a business advantage is
not legitimately due, the fact that the benefit is customary or
officially tolerated are to be disregarded [sub-clause
Defences are set out in clauses
70.3 and 70.4. In clause
70.3, the defences relate to the situation where the
conduct complained of is lawful in the foreign public official's
country. For example, where a person is charged with the bribery of
a foreign public official who is an employee of a foreign
government body, that person will have a defence if it is assumed
that their conduct occurred wholly in the central administration of
that body and the conduct would not have been unlawful in that
Clause 70.4 relates to
facilitation payments. Under clause 70.4 a person
has a defence against a charge of bribing a foreign public official
if the person's conduct was solely or mainly to expedite or secure
the performance of a routine and minor government action and the
person made a record of the conduct in accordance with
subclause 70.4(3). Additionally, for the defence
to be relied upon successfully, the defendant must have kept the
record, or the record must have been lost or destroyed for reasons
beyond the defendant's control or the prosecution must be
stale.(28) Subclause 70.4(3) provides that a
record complies with the subsection if it contains the listed
matters. These include the value of the benefit conferred, the date
of the conduct, the identity of the foreign public official, the
nature of the routine government action that was sought to be
facilitated and the person's signature.
A 'routine government action' is defined in
subclause 70.4(2) and is an action by a foreign
public official that is ordinarily performed by that official and
includes such things as granting a permit to conduct business,
processing a visa or work permit or providing police protection.
Certain matters are not encompassed by the definition of 'routine
government action.' For example, the expression does not include
decisions about awarding new business [subparagraph
70.4(c)(i)]. Nor does it involve encouraging a decision
about whether to award new business [subparagraph
Paragraph 70.5(1)(a) provides
that a person does not commit an offence of bribing a foreign
public official unless the conduct occurs wholly or partly within
Australia or on board an Australian ship or aircraft. If the
proscribed conduct occurs wholly outside Australia then the
legislation will operate only if the perpetrator is an Australian
citizen or a company incorporated in Australia. The terms
'Australian aircraft' and 'Australian ship' are defined in
Clause 70.6 provides that
new Division 70 does not exclude or limit the
operation of Commonwealth, State or Territory laws.
- United Nations, Press Release GA/9206, 'General
Assembly endorses outcome of UNCTAD IX, adopts anti-corruption
declaration, stresses challenges of global financial integration,'
16 December 1996.
- There are 29 OECD members. The original 20 members were Western
European and North American nations. Australia joined OECD in 1971.
Other member nations are Austria, Belgium, Canada, Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, Iceland,
Ireland, Italy, Japan, Korea, Luxembourg, Mexico, The Netherlands,
New Zealand, Norway, Poland, Portugal, Spain, Sweden, Switzerland,
Turkey, United Kingdom, United States.
- Joint Standing Committee on Treaties, OECD Convention on
Combating Bribery and Draft Implementing Legislation,
16th Report, June 1998.
- Among them are Belgium, Canada, Germany, Japan, Korea and the
United States. See http://www.oecd.org//daf/nocorruption/. For a
table of information about the steps that participating countries
have taken or plan to take to implement the Convention (as at 19
April 1999) see http://www.oecd.org//daf/nocorruption/annex2.htm.
- Page 8.
- JSCOT, op.cit.
- Government Response to the Joint Standing Committee on Treaties
Report, 'OECD Convention on Combating Bribery and Draft
- JSCOT, op.cit., p.38.
- Criminal Code, section 5.2.
- Criminal Code, section 5.4.
- Government Response, op.cit., p.5.
- JSCOT, op.cit., p.59.
- Ibid., p.58.
- Government Response, op.cit, p.9.
- JSCOT, op.cit., p.67.
- Ibid., p.85.
- Government Response, op.cit., pp.11-14.
- Ibid., p.13.
- Ibid., p.18.
- JSCOT, op.cit., p.89.
- Government Response, op.cit., p.15.
- Stale, in this case, means that the prosecution was instituted
more than 7 years after the alleged offence [subparagraph
11 May 1999
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