Foreign bribery impedes economic development, corrodes good
governance and undermines the rule of law. Appropriately addressing foreign
bribery is essential to cultivating integrity in all areas of government,
business and the community.
Australia’s historically poor record in investigating and
prosecuting foreign bribery matters has affected its international reputation.
International bodies, such as the Organisation for Economic Co-operation and
Development (OECD), as well as Australian commentators, have consistently
criticised Australia's foreign bribery legislation as being too narrow in scope
and inadequately enforced.
This report underlines the critical importance of ensuring
Australia has an effective system to combat foreign bribery where individuals
and companies are held to account for their actions. It examines Australia's
international foreign bribery obligations and the way in which they have been
implemented through domestic law. In general, Australia's implementation, though
improving over time, remains incomplete.
While the committee endorses the interagency approach which
has been adopted in more recent times, and acknowledges the work and role of
the Fraud and
Anti-Corruption Centre in improving collaboration, specialised interagency
training and early engagement across relevant agencies in foreign bribery
matters—more needs to be done.
Evidence presented to the committee established that foreign
bribery cases are complex, lengthy and resource intensive. In addition to legislative
challenges and poor corporate culture, other factors that potentially
contribute to the lack of enforcement of foreign bribery cases in Australia
include: a deficiency of sufficient expertise, delays, a lack of domestic and
international cooperation and limited resources. The committee is of the view
that options should be explored to develop a contingency mechanism that
explicitly provides for additional one-off funding to appropriate agencies for
large and complex investigations of foreign bribery offences to ensure any
allegations are thoroughly investigated, and where appropriate, fully
The committee's report recognises the government's earlier
consultations on proposed amendments to the foreign bribery offence and the
whistleblower protection regime for the corporate and financial sectors, including
the subsequent bills which are currently before the Parliament. While
supportive of the introduction of a new corporate offence of failing to prevent
foreign bribery, the committee is concerned that the details of the 'adequate
procedures' defence to this offence will be provided for in ministerial
guidance that is not yet available. In this regard, the committee considers it
essential that the minister's guidance be principles-based, include the
existence of internal corporate whistleblowing systems, and be subject to
thorough public consultation.
Under the current legal framework in Australia, there are
limited tangible legal incentives for companies to proactively report any
potential instances of foreign bribery identified internally, and a lack of
certainty as to whether any meaningful benefit will flow from cooperation
during a criminal investigation.
Since March 2016, the government has been considering
whether to introduce a deferred prosecution agreement (DPA) scheme in Australia
and, in December 2017, it introduced legislation which is currently before the
Parliament that includes a proposed DPA scheme.
To be successful in engaging corporates and incentivising
voluntary reporting in the foreign bribery space, the committee is of the view
that any DPA scheme must be supported by robust enforcement of the foreign
bribery offence and a suite of government guidance. In addition, the committee
considers that in order to enhance the integrity of the DPA process, other than
in exceptional circumstances, DPAs should be published together with details on
how a company has complied with its terms and conditions. With this in mind,
the roles and appointment of independent monitors which are to be set out in
the DPA Code of Practice are critically important to ensuring strict
compliance. As such, the committee recommends that, as part of the public
consultation on the draft DPA Code of Practice, the government publish an
exposure draft and allow a period of no less than four weeks for stakeholders
to provide comment.
Information about foreign bribery is difficult to source and
often relies on 'inside information' and investigative journalism for exposure.
Whistleblowers therefore play an important role in exposing foreign bribery and
corruption—be it alerting authorities or the general public to potential
offences. Australia's whistleblower protection regime in the context of foreign
bribery is insufficient, particularly for employees of private companies.
The committee acknowledges the significant work of the
Parliamentary Joint Committee on Corporations and Financial Services in
delivering a bipartisan
report on whistleblowing reform—Whistleblower Protections—and endorses
the recommendations made in that report. While the committee suggests that
these recommendations be implemented, it also believes that the government
should work with the expert advisory panel on whistleblower protections to consider
whether the scope of Australia's whistleblower protections provides sufficient
coverage in foreign bribery cases.
Facilitation payments are one of the more conceptually
complex issues arising from Australia's anti-foreign bribery legislation. Despite
the lack of legislative action in this area, Australian companies are
increasingly taking matters into their own hands by choosing to prohibit such
payments in their internal company policies. Many submitters to this inquiry
argued for the removal of the facilitation payments defence, emphasising the difficulties
faced in drawing a distinction between a bribe and a facilitation payment, and how
removing the defence would assist in creating a strong culture of compliance.
The committee is focussed on eradicating corruption and
considers that allowing facilitation payments perpetuates a culture of bribery.
The committee considers it essential that Australia convey a strong and
consistent policy message that corporations should not stimulate markets for bribes,
irrespective of their size and whether or not such payments to foreign public
officials are considered to be mandatory. Therefore, the committee makes a
recommendation to abolish the facilitation payment defence over a transition
period, to enable companies and individuals to adjust their business practices
and procedures to comply with the law as amended.
In this report, the committee also evaluates other reform
options to strengthen Australia's foreign bribery framework and examines the
relevant experience in other jurisdictions. It assesses the need for increased
transparency around beneficial ownership and the benefits of introducing a
debarment framework in Australia.
Further, in light of the challenges of investigating and
prosecuting foreign bribery claims, and the weak enforcement record in
Australia, the report also considers ways in which Australia can: develop a
corporate culture of awareness and compliance; and foster a willingness on the
part of companies and individuals to self-report in the situation of foreign
Overall, and as highlighted in the strong and resounding
messages drawn from the bulk of evidence received, the committee is of the firm
view that the time has come for Australia to improve its anti-foreign bribery
compliance and enforcement response to match its international comparators by: strengthening
its legal framework against foreign bribery; and building a culture of
integrity and compliance.
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