On 24 June 2015, the Senate referred the matter of the measures
governing the activities of Australian corporations, entities, organisations,
individuals, government and related parties with respect to foreign bribery, to
the Economics References Committee for inquiry and report by 1 July 2016. The inquiry
lapsed following the double dissolution of the 44th Parliament, but
was re-referred in the 45th Parliament with the same terms of
reference and a reporting date of 30 June 2017.
The committee has been granted a number of extensions to report,
and on 5 February 2018 the Senate agreed for the committee to report
by 28 March 2018.
The terms of reference are as follows:
- the measures governing the activities of Australian corporations,
entities, organisations, individuals, government and related parties with
respect to foreign bribery, with specific reference to the effectiveness of,
and any possible improvements to, Australia's implementation of its obligations
the OECD [Organisation for Economic Co-operation and Development] Convention
on Combating Bribery of Foreign Public Officials in International Business
Transactions (OECD Convention), and
the United Nations Convention against Corruption (UNCAC); and
as part of, or in addition to, paragraph (a), the effectiveness of, and
any possible improvements to, existing Commonwealth legislation governing
foreign bribery, including:
Commonwealth treaties, agreements, jurisdictional reach, and other
measures for gathering information and evidence,
the resourcing, effectiveness and structure of Commonwealth agencies and
statutory bodies to investigate and, where appropriate, prosecute under the
legislation, including cooperation between bodies,
standards of admissible evidence,
the range of penalties available to the courts, including debarment from
government contracts and programs,
the statute of limitations,
the range of offences, for example:
accounting along the lines of the books and records head in the US
Foreign Corrupt Practices Act,
focus on the offence of failure to create a corporate culture of compliance,
of directors and senior managers who do not implement a corporate culture of
of parent companies for subsidiaries and intermediaries, including joint
measures to encourage self-reporting, including but not limited to,
civil resolutions, settlements, negotiations, plea bargains, enforceable
undertakings and deferred prosecution agreements,
- official guidance to corporations and others as to what is a 'culture of
compliance' and a good anti-bribery compliance program,
private sector whistleblower protection and other incentives to report
facilitation payment defence,
use of suppression orders in prosecutions,
foreign bribery not involving foreign public officials, for example,
company to company or international sporting bodies,
- the economic impact, including compliance and reporting costs, of
foreign bribery, and
any other related matters.
Conduct of inquiry
The committee advertised the inquiry on its website and through
social media. It also wrote to relevant stakeholders and interested parties
inviting submissions. The committee received 46 submissions. Submissions and
answers to questions on notice are listed at Appendix 2.
The committee held three public hearings on the dates and at the
locations listed below:
Sydney—22 April 2016;
Sydney—7 August 2017; and
Melbourne—31 October 2017.
A list of witnesses is at Appendix 3.
The committee thanks all those who assisted with the inquiry.
What is foreign bribery?
According to the OECD Convention, the offence of foreign bribery
...intentionally to offer, promise or give any undue pecuniary
or other advantage, whether directly or through intermediaries, to a foreign
public official, for that official or for a third party, in order that the
official act or refrain from acting in relation to the performance of official
duties, in order to obtain or retain business or other improper advantage in
the conduct of international business.
In Australia, the foreign bribery offence is contained in section
70 of the Criminal Code Act 1995 (Criminal Code). A person (including a
corporation) is guilty of an offence if:
- the person provides a benefit to another person, offers or
promises a benefit to another person, or causes a benefit to be provided,
offered or promised to another person;
the benefit is not legitimately due to the other person; and
there was the intention of influencing a foreign public official
(who may or may not be the other person) in the exercise of the official's
duties as a foreign public official in order to obtain or retain business, or
obtain or retain a business advantage which is not legitimately due.
Corporations may also be liable for the actions of their
employees and agents. Provisions covering imputing of knowledge to corporations
are set out in Part 2.5 of the Criminal Code.
The significant impacts of foreign
Foreign bribery impedes economic development, corrodes good
governance and undermines the rule of law. The Attorney-General's Department considers
Foreign bribery and other types of corruption can impede
economic development by skewing competition and causing inefficient allocation
of resources. It corrodes good governance and undermines the rule of law. In
terms of the effect on business, foreign bribery by Australians and Australian
businesses can damage our international standing and shrink the global market
for Australian exports and investment.
Similarly, Engineers Australia contended that:
...bribery is a widespread phenomenon, raising serious moral
and political concerns, undermining good governance, hindering economic
development, and distorting competition. It jeopardises loyalties, erodes
justice, undermines human rights, is an obstacle to the relief of poverty,
destroys trust in institutions and interferes with the fair and efficient
operation of markets.
Investigative journalist, Mr Nick McKenzie, argued that
Australians should care about corporate corruption and bribery because:
There is near universal consensus among police, academics,
[Non-governmental organisations] and business leaders that corruption erodes
our society, undermining good governance here and abroad. Corruption promotes
anti-competitive business practices and leads to the squandering of foreign aid
and stalling of development in countries most in need of it.
Appropriately addressing foreign bribery is essential to
cultivating integrity in all areas of government, business and the community.
International cooperation to fight bribery is equally important.
Australia's efforts against foreign
The scourge of foreign bribery and corruption continues to affect
Australia's international reputation. Over the last few decades, a number of
Australian businesses and organisations have been regularly accused of engaging
in foreign bribery. The cases of the Australian Wheat Board, and Securency and
Note Printing Australia, were among the first to test Australia's foreign
Other allegations against Leighton Holdings Limited (now CIMIC
Group), the Football Federation of Australia, BHP Billiton, Getax, Sundance,
Tabcorp and the Snowy Mountains Engineering Company also appear to indicate
that foreign bribery remains an issue across a variety of industry sectors,
particularly mining and construction.
Despite these cases being widely reported, there have been only a
limited number of prosecutions for foreign bribery in Australia. This has been
the subject of concern for international bodies, such as the OECD, as well as
Australian commentators, who have consistently criticised Australia's foreign
bribery legislation as being too narrow in scope and inadequately enforced.
Scope and structure of the report
This inquiry into foreign bribery examines the legislative and
policy measures which shape the behaviour of Australian corporations, entities,
organisations, individuals, government and related parties, and the
effectiveness of Commonwealth legislation in identifying and prosecuting
Since this inquiry was referred, the government has:
proposed amendments to Australia's foreign bribery offence;
introduced to Parliament a proposed model for a deferred
prosecution agreement (DPA) scheme;
proposed amendments to the whistleblower protection regime for
the corporate and financial sectors.
In addition to evaluating these proposals, this report examines
Australia's poor record of effective investigation and prosecution of possible
foreign bribery offences, and explores other reform measures to strengthen
Australia's foreign bribery framework.
The report is divided into three parts and an Appendix.
Part 1 consists of three chapters which provide an overview of Australia's
anti-foreign bribery framework and where Australia is placed in relation to its
international obligations. It explains how Australia investigates foreign
bribery allegations and discusses the shortcomings of Australia's enforcement
record in this area. The part then examines the adequacy of the government's
recent initiatives to address the problem.
Chapter 2—Australia's anti-foreign
This chapter examines Australia's international foreign bribery
obligations and the way in which they have been implemented through domestic
law. It then outlines recent developments in anti-foreign bribery legislation
before looking at relevant reports examining the effectiveness of Australia's anti-foreign
Chapter 3—Investigation and
This chapter discusses the different roles of government
departments and agencies in identifying and investigating instances of foreign
bribery. It also examines the evidence relating to the enforcement of anti-foreign
bribery legislation, before exploring some of the criticisms raised by
stakeholders about what is perceived to be a lack of enforcement in this area,
and the relevant government initiatives taken since the establishment of this
Part 2—Strengthening Australia's
legal framework against foreign bribery
Part 2 consists of three chapters which concentrate on what
legislative reforms are required to overcome the current challenges of
establishing criminal liability for companies for the offence of foreign
bribery; identifying instances of foreign bribery; and protecting whistleblowers
who disclose foreign bribery. It assesses the current bills before
Parliament—the Crimes Legislation (Combatting Corporate Crime) Bill 2017 and the
Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017)—what
they seek to address and what they overlook.
Chapter 4—Reforming the foreign
In this chapter the committee evaluates the government's proposed
legislative amendments to the foreign bribery offence and how they correlate
with the government's earlier public consultation. It also considers how the
proposed reforms to the foreign bribery offence may assist Australia to combat
the bribery of foreign public officials and ensure individuals and companies
are held to account.
self-reporting—A proposed deferred prosecution agreement scheme
In this chapter the committee evaluates the government's proposed
model for a DPA scheme in Australia and how it correlates with the government's
earlier public consultations. It also considers the evidence received by the
committee in relation to the introduction of a DPA scheme in Australia,
including the use of such agreements internationally.
Chapter 6—Protecting whistleblowers
who expose foreign bribery
This chapter examines Australia's current whistleblower
protections and considers how they can be improved. It also considers the
government's proposed amendments to the whistleblower protection regime for the
corporate and financial sectors.
Part 3—Building a culture of
integrity and compliance
Part 3 consists of two chapters that identify further changes
that could be enacted to bring Australia up to date with systems in comparative
countries and, in doing so, signal that Australia is serious about combatting
foreign bribery (and other forms of corruption). It assesses the adequacy of
the government's proposed initiatives and what more needs to be done in light
of what has been examined and recommended in evidence to the inquiry and other
consultations, including the Phase 4 OECD Report. In particular, it looks
at ways that Australia can create a corporate culture of integrity and
Chapter 7—The facilitation payment
This chapter considers the facilitation payment defence in
Australia, scrutinises its prevalence internationally, and examines arguments
to retain or abolish the defence within Australia's anti-bribery legislative
Chapter 8—Other reform options
In this chapter the committee evaluates other possible options to
strengthen Australia's foreign bribery framework and the relevant experience in
other jurisdictions, including the expansion of the register of beneficial
ownership, a debarment model, and development of official guidance relating to
compliance with Australia's foreign bribery laws.
Appendix 1—Examples of foreign
To provide some context of the scale and magnitude of foreign
bribery, this appendix provides a brief outline of some of the most egregious case
examples of foreign bribery involving Australian entities.
During the course of the inquiry, the committee has benefitted
greatly from the participation of Australian corporations, entities,
organisations, individuals, government and related parties. The committee
thanks all those who assisted with the inquiry, especially the witnesses who
put in extra time and effort to answer written questions on notice and provide
valuable feedback to the committee as it gathered evidence.
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