Encouraging self-reporting by corporations—A deferred prosecution agreement
Given the difficulties that law enforcement agencies have in
identifying instances of foreign bribery and corruption, measures that
encourage self‑reporting by corporations will greatly assist information
and evidence gathering. This is particularly evident given that, of the 57
foreign bribery allegations reported by Australia that proceeded to evaluation
or investigation, only eight came to the attention of law enforcement
authorities through self-reports by companies.
In considering options to encourage greater self-reporting by
companies, the government released a public consultation paper on a possible
scheme for deferred prosecution agreements (DPAs) in 2016 (2016 discussion
paper); and in March 2017, the government released a second public consultation seeking
views on a proposed DPA model (2017 DPA model).
The 2017 DPA model would give prosecutors the option to invite a
company to negotiate a DPA. The DPA's terms would typically require the company
to cooperate with any investigation; pay a financial penalty (the amount of
which could partly reflect the level of cooperation); and implement a program
to improve compliance through ongoing monitoring. In return, the prosecution
would be deferred. Under the 2017 DPA model, the final terms of a DPA would then
need to be approved by a retired judge and, upon fulfilment of the terms of the
DPA, the matter would be considered resolved without prosecution or conviction.
Following the above consultations, in December 2017, the
government introduced the Crimes Legislation (Combatting Corporate Crime) Bill
2017 (CCC bill) that, in addition to the reforms discussed in chapter 4, seeks
to introduce a DPA scheme which would apply to foreign bribery and other
specified serious corporate offences.
This chapter considers the evidence received by the committee in
relation to the introduction of a DPA or non-prosecution agreement (NPA) scheme
in Australia, including the use of such agreements in the United Kingdom (UK)
and the United States (US). It then examines the key features of the proposed
model for a DPA scheme contained in the CCC bill.
What are deferred and non-prosecution agreements?
Under a DPA, a company is charged with an offence, but
prosecution is deferred for a period of time agreed by the parties. Within that
timeframe, the company must meet certain conditions. For example, the payment
of a financial penalty, admission of material facts and establishment of
measures to prevent future offending. If the company meets these conditions,
the prosecutor will move to dismiss the charges.
NPAs represent a similar arrangement. However, no charges are
laid and the agreement is not filed with a court. Under an NPA, the company
must again meet certain conditions, such as waiving the statute of limitations,
agreeing to ongoing cooperation, meeting compliance and remediation obligations,
and paying a penalty. An NPA may also include an agreement to undertake some
form of corporate monitoring or self-reporting. Where any of these conditions
are breached, recourse to prosecution remains an option.
Use in United Kingdom and United
In February 2014, DPAs were introduced in the UK following a
consultation process led by the Ministry of Justice. The power to enter into a
DPA was introduced by amendment to the Crime and Courts Act 2013 (UK).
This power was first exercised on 30 November 2015 after Standard
Bank PLC, who had been charged with failure to prevent bribery under
section 7 of the UK's Bribery Act 2010, agreed to a DPA. Subsequently,
the charges were immediately suspended and Standard Bank PLC was ordered to pay
a US$25.2 million fine, as well as paying compensation of a further US$7
million to the Government of Tanzania. Standard Bank PLC also agreed to pay
£330,000 towards the UK's Serious Fraud Office's (SFO) costs in relation to the
investigation and subsequent resolution of the matter.
By contrast, there is no statutory basis for the use of such
agreements in the US. Rather, the source of authority is the general authority
and discretion of prosecutors. Guidance for the use of DPAs and NPAs was issued
in 2008 in the US Attorneys' Manual, Principles of Federal Prosecution
of Business Organisations, Titles 9 28.000 to 9 28.1300.
The US Securities and Exchange Commission (SEC) has entered into
a number of DPAs in relation to offences under the Foreign Corrupt Practices
Act of 1977 (FCPA). For example, a DPA was entered into in a case involving
an engineering firm, and one of its former executives, who were charged with
violating the FCPA by offering and authorising bribes and employment to foreign
officials to secure Qatari government contracts. The DPA together with the executive's
employer, PBSJ Corporation: deferred the charges for two years; required the
company to pay a US$3.4 million fine (which reflected the company's significant
cooperation with the authorities' investigation); and required the company to
comply with certain undertakings.
Some submitters commented on the impact of the US DPA scheme. Dr Mark
Zirnsak, Director, Justice and International Mission, Synod of Victoria and
Tasmania, Uniting Church in Australia, opined of the US model:
An environment was created in which we had much more
detection and it allowed us more prosecution, and hopefully there will be more
deterrents going into the future...[P]rosecutors were not to engage in deferred
prosecution agreements that gave immunity to individuals and...there should be
active pursuit of the individuals. At the end of the day, it's not the company
that pays the bribe; it's individuals within the company who made the decision,
authorised it and made the payment.
The International Bar Association Anti-Corruption Committee (IBAACC)
also commented that the US system has been criticised for 'allowing the
criminal justice system to be conducted by administrative fiat'. However, it argued that the system had been nonetheless effective in producing
settlements that are transparent, subject to oversight by the court and
ultimately publicly available.
Current situation in Australia
Australia does not have a DPA scheme for serious corporate crime,
including for the offence of foreign bribery. As such, 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. The Attorney-General's Department
(AGD) explained that:
The Australian Government faces challenges in detecting,
investigating and prosecuting serious corporate crime. New threats and
increasingly sophisticated offending make it difficult to prevent and police
this kind of criminal conduct. Identifying corporate wrong doing often depends
on companies cooperating or whistleblowers coming forward, but under current
arrangements, there is little incentive for companies to self-report misconduct.
Notwithstanding the above, Mr Neville Tiffen highlighted that
there is some flexibility in the manner in which a prosecution can be pursued
in Australia. He referred to the Prosecution Policy of the Commonwealth (the Prosecution Policy) and noted that the Commonwealth Director of Public
Prosecutions (CDPP) may enter into an agreement with a defendant to provide
immunity. While the Prosecution Policy does provide for such agreements, they are only
available in circumstances where the defendant is an accomplice or the charges
relate to cartel conduct under sections 44ZZRF and 44ZZRG of the Competition
and Consumer Act 2010.
There are no such provisions for foreign bribery. However, Mr
Tiffen noted that antitrust regulators in several countries have indicated the
self-reporting in the context of cartel behaviour. Mr Tiffen argued that there
is therefore no reason that similar arrangements cannot be made in the context
of foreign bribery.
Mr Tiffen also noted that the CDPP may enter into an agreement
whereby the defendant pleads guilty to some charges or to lesser charges. This is embodied in paragraphs 6.14 to 6.21 of the Prosecution Policy, which
provides for charge negotiation. There are a range of factors that must be considered before a charge
negotiation proposal can be agreed to, including whether the defendant is
willing to cooperate in the investigation or prosecution of others. These measures have a general application and could be applied in the context
of foreign bribery investigations.
Finally, Mr Tiffen referenced the discretion of the CDPP to
proceed with a charge summarily rather than by indictment, which may include an
agreement that the CDPP will not oppose a defence submission to the Court on
the appropriate sentence range.
Implementing a deferred prosecution agreement scheme in Australia
Since March 2016, the government has been considering whether to
introduce a DPA scheme in Australia. The AGD suggested that:
An Australian DPA scheme for serious corporate crime may
improve agencies' ability to detect and pursue crimes committed by companies
and help to compensate victims of corporate crime. It may help avoid lengthy
and costly investigations and prosecutions, and provide greater certainty for
companies seeking to report and resolve corporate misconduct. It would be
compatible with the Government's policy to tackle crime and ensure that our
communities are strong and prosperous.
This part of the chapter considers the views expressed by
stakeholders in relation to the proposed introduction of a DPA scheme in
Australia, before looking at the DPA scheme proposed in the CCC bill which
would apply to foreign bribery and other specified serious corporate offences.
Support for the introduction of a
The overwhelming majority of responses to the AGD consultation on
the 2017 DPA model (and the 2016 consultation), as well as submissions to this
inquiry, endorsed the introduction of DPAs in Australia. These submissions also cautioned the need to apply learnings from the existing
US and UK models, and ensure clear guidance accompanies any such legislative
Mr William Brind Zichy-Woinarski, Member of and Consultant to the
IBAACC, told the committee that the use of DPAs in Australia could lead to
...if you can have a deferred arrangement situation, it will in
many cases save the AFP, the CDPP, whoever the respective agency is that is
responsible, a lot of money also, so you have a better use of your resources.
We have touched upon it briefly, but one of the real problems, first of all, is
you have to find out where foreign bribery is occurring, but when you do it is
a very expensive thing to do and the demands on any of the agencies involved in
these are very high.
A number of submissions to the inquiry also advocated for the use
of DPAs or NPAs as a measure to encourage organisations to self-report any
foreign bribery offences. By encouraging self-reporting, it is possible that instances of foreign bribery
could be detected in higher numbers with a lower cost to the taxpayer. Further,
DPAs may lead to greater transparency in the prosecution of foreign bribery.
Mr Tiffen endorsed the adoption of a DPA system similar to that
of the UK, where a DPA must go before a judge before it can be adopted. Mr
Tiffen suggested that the Australian Competition and Consumer Commission and Australian
Securities and Investment Commission (ASIC) could be consulted with a view to
identifying how enforceable undertakings are used, and to see if the same
principles could be applied in the context of foreign bribery, particularly in
the context of DPAs.
Mr Tiffen stressed that DPAs should only be available if a
company fully cooperates with regulators, including disclosure of all relevant
facts (even where those facts may be covered by legal privilege).
In evidence before the committee, Mr Nick McKenzie explained that
companies and their legal advisers are reluctant to come forward because there
is a lack of certainty about what may happen. While cautioning that DPAs 'are
simply one tool in a toolbox', Mr McKenzie acknowledged that:
A deferred prosecution agreement where there is a more
certain process that can be adopted—and that companies are aware of and know
that there is a commitment by the regulators to working with corporations
through these issues—would lend itself to an environment which is more
inductive for companies to come forward. If there's more certainty about what
the process is and what might happen, then therein lies the incentive for
people to come forward.
Mr David Lehmann, Director, KordaMentha Forensic, also supported
the introduction of a DPA scheme in Australia, suggesting that such a regime would
...foster a willingness on the part of corporations to
appropriately and effectively investigate alleged bribery and self-report it to
regulators when there is evidence to support the alleged misconduct.
The need for clear guidance
The 2017 DPA model (and the 2016 discussion paper) contemplated that
detailed guidance would be issued outlining when a prosecutor is likely to
offer DPA negotiations. A number of stakeholders emphasised the importance of
the quality and clarity of this guidance in setting out when a company may be
invited to enter into DPA negotiations, and suggested that the range of
outcomes that they might expect would be particularly important.
For example, in recommending that clear guidance should be made
available on the benefits of entering into DPA negotiations and the factors the
prosecutor will take into account, King & Wood Mallesons suggested that:
In order to encourage companies to self-report actual or
suspected misconduct, the legislation or a supporting policy document should
contain clear criteria which will be considered when deciding whether to enter
into DPA negotiations.
In this context, King & Wood Mallesons suggested that the UK's
DPA Code of Practice would serve as a good example of the sort of criteria
which could be used as a starting point in Australia. The UK's DPA Code is issued by the Director of Public Prosecutions and the Director
of the SFO. It specifies matters prosecutors should have regard to when:
- negotiating DPAs with an organisation whom the prosecutor is
considering prosecuting for a relevant offence;
- applying to the court for the approval of a DPA; and
- overseeing DPAs after their approval by the court, in particular
in relation to variation, breach, termination and completion.
In contrast, Mr Tiffen recommended the US Department of Justice's
guidance on what it expects companies to do in order to receive beneficial
treatment as a good starting point for Australia. He explained:
The guidance has three main limbs—voluntary self reporting;
full cooperation with the regulators; and remediation inside the company to
ensure that the event is not repeated. I submit that, if a company does all of
the three elements, it should be entitled to a DPA along lines set out in clear
guidance. As the US guidance indicates, the self reporting must be prior to any
imminent threat of disclosure or government investigation and within a
reasonably prompt time of becoming aware of the conduct.
Norton Rose Fulbright explained that certainty is essential to
engage corporates, and suggested that the introduction of DPAs must therefore be
supported by a suite of government guidance, including guidance which explains:
- the weight of a corporate's decision to self-report to the regulator,
such as in circumstances in which the corporate is providing information which
is otherwise unknown to the regulator;
- the weight afforded to genuine co-operation and remediation; and
- the extent to which corporates will be afforded time to investigate
properly and effectively allegations or issues which arise before determining
whether any reporting is required.
Impact on foreign bribery
While commending the introduction of a DPA regime in Australia, some
stakeholders submitted that in order to be successful in incentivising
voluntary reporting in the foreign bribery space, the proposed scheme needed to
be supported by robust enforcement of the foreign bribery offence.
For example, Mr Mark Pulvirenti, Partner, Control Risks,
suggested that DPAs will not be a success in the current environment where
prosecutions are difficult and rare. Mr Pulvirenti stated:
...in order for DPAs to appear attractive to companies there
needs to be an otherwise very real risk of successful prosecution involving
greater penalties than would be available via a DPA.
Mr Tiffen agreed, arguing that the lack of successful foreign
bribery prosecutions has resulted in companies ignoring their legal
obligations. He stated:
I would think that at the moment, without clear guidance as
to what companies should be doing to really take advantage of a DPA, that a lot
of lawyers might be advising their companies to wait and see—perhaps to risk
the prosecution. But if we had a clear DPA process and clear guidance from the
regulators about what they expect to be an effective compliance program, there
would be a lot of companies that would see that as an incentive to actually
start an effective compliance program in the first place. I think it would be a
real incentive for companies to lift their performance so that they could take
advantage of a DPA mechanism. That would also encourage self-reporting, and
that would be much better for our investigators and prosecutors.
Transparency International Australia (TIA) also argued that
without appropriate constraints, DPAs may not achieve their desired result. In
particular, TIA suggested that DPAs should include:
...an admission of liability. It should not be just an
agreement on a set of facts without an admission at the conclusion and the
entry into a deferred prosecution agreement...
Key features of the DPA scheme proposed in the CCC bill
The CCC bill seeks to introduce a DPA scheme which would only be
available for companies (not individuals); and would only apply to a publicly available list of Commonwealth 'serious
corporate crime' offences, including foreign bribery.
Under the proposed scheme, the Director of the CDPP (Director) will
have discretion to negotiate and enter into a DPA on behalf of the Commonwealth.
The proposed scheme seeks to make the following terms and
features mandatory for all DPAs:
- a statement of facts relating to each offence specified in the
- the last day for which the DPA will be in force;
- the requirements to be fulfilled by the person under the DPA;
- the amount of financial penalty to be paid by the person to the
- the circumstances which constitute a material contravention of
the DPA; and
- consents to the Director instituting a prosecution of the person
on indictment for an offence specified in the DPA without the person having
been examined or committed for trial in circumstances where the party to the
DPA provided inaccurate, misleading or incomplete information to a Commonwealth
entity in connection with the agreement; and the party knew, or ought to have
known that the information was inaccurate, misleading or incomplete.
In addition, it provides a non-exhaustive list of terms and
features that may be included in a DPA.
It also outlines the process by which a DPA must be approved. This includes a process for the appointment of 'approving officers' by the minister
who must approve a DPA if they are satisfied that its terms are in the
interests of justice, and are fair, reasonable and proportionate. The process by which a DPA may be varied is also set out in the scheme.
Ultimately, after the company and the Director consent to a variation, the
varied DPA then follows a process that is similar to that by which a DPA must
be approved. Once it is approved the CDPP must publish a DPA unless it would not be in the
interests of justice to do so.
The DPA scheme limits the use of material generated or provided
to Commonwealth agencies during the course of DPA negotiations, and/or in
compliance with a DPA in subsequent criminal proceedings.
Should a DPA be breached, the CDPP may commence prosecution or
renegotiate the terms of the DPA. Absent a breach, the DPA would be concluded by fulfilment of its terms, and the
company will not subsequently be prosecuted in relation to the offences
specified in the DPA.
Content of DPAs
In their submission to the Legal and Constitutional Affairs Legislation
Committee's (L and C committee) inquiry into the CCC bill, the Justice and
International Mission Unit, Synod of Victoria and Tasmania, Uniting Church in Australia,
suggested that the following terms and features should be mandatory for all
Details of any financial gain or loss, with supporting
material, in the statement of facts relating to each offence specified in the
The company's formal admission of criminal liability for
specified offences, consistent with any relevant laws of evidence.
While the non-exhaustive list of terms that may be included in a
DPA in the CCC bill includes requiring a corporation to forfeit any likely
benefits (including profits) accrued as a result of the misconduct specified in
a DPA, there is no mandatory requirement for DPAs to include details of
financial gain or loss relating to the offence/s specified in a DPA.
The AGD argued that as the CCC bill requires the terms of a DPA
to be in the interests of justice, and to be fair, reasonable and
Information detailing any financial gain or loss incurred by
the corporation may often be highly relevant to determining whether the terms
of a DPA fulfil these criteria.
With respect to mandating that companies formally admit criminal
liability for specified offences in a DPA, the AGD cautioned that:
The success of the DPA scheme is contingent on the scheme
striking an appropriate balance between the need to encourage corporations to
self-report serious offending and the need to hold corporations accountable for
serious corporate crime.
The AGD explained that feedback to the government's 2017 DPA model
suggested that corporations would be deterred from seeking a DPA if they were
required to formally admit criminal liability to obtain a DPA. Therefore, the CCC bill 'does not require a corporation to formally admit to
criminal liability in order to obtain a DPA'.
Similar to the approach taken by the UK, the CCC bill requires a corporation to admit to agreed facts detailing the
nature and scope of their offending, which, if a company subsequently materially
contravenes the DPA, will be taken to be the agreed facts for the purposes of
the criminal proceeding.
The integrity of the DPA process
The consultation paper on the 2017 DPA model stated that
'approved DPAs would be made public' such that '[c]ompanies could draw on these
records as an additional source of guidance on the DPA scheme'. However, in its submission to the L and C committee's inquiry into the CCC
bill, the IBAACC raised concerns about whether the decision (or reasons) of the
'approving officer' are going to be published. IBAACC explained:
The Committee is concerned that all that will or may be
published is the terms of the DPA and the 'decision' whether or not a DPA will
or will not be approved, absent reasons. The Committee strongly believes that
the approving officer must give reasons for making a decision and those
reasons, together with the DPA (to the extent the Director does so without
prejudice to any other ongoing investigation) must both be published. This will
enhance the integrity of the process, it will ensure that Australia follows the
UK model with reasons, orders and the DPA being published) so the community can
see the system working transparently.
The AGD confirmed that in circumstances where a DPA is not
approved, the CCC bill does not require the 'approving officer' or any person
or authority to publish a notification or reasons. The AGD indicated that:
The terms of the approving officer's appointment would
specify that this information should not be disclosed by the approving officer
to anyone other than the parties to DPA negotiations. The non-disclosure of
this particular information is appropriate because the CDPP and corporation may
elect to continue to negotiate the DPA and submit a new draft DPA for the
approving officer's consideration. The parties should be able to continue
negotiations with the same level of confidentiality that attaches to DPA
negotiations before an approving officer has considered a draft DPA. This will
encourage corporations to continue to engage openly and honestly in DPA
negotiations. Further, corporations are unlikely to enter into DPA
negotiations if there is a risk that the existence and content of these
negotiations may be made public in the event that DPA negotiations fail.
Likewise, the AGD suggested that the CCC bill does not require
the reasons for approving a DPA to be published because:
It is proposed that the terms of the approving officer's
appointment and/or engagement will specify that this information may be
published if the parties to the DPA agree. This will ensure that an approving
officer may write and publish reasons where appropriate.
The consultation paper on the 2017 DPA model included discussion
around independent monitors and oversight of DPAs. Specifically, the
consultation paper stated:
A DPA would typically include commitments by the company to
reform its corporate culture to avoid re-offending. To ensure such commitments
are met, it will be important that there is appropriate external monitoring.
In the US, external independent monitors may be appointed at the
cost of the defendant to oversee the defendant's compliance with the DPA. In the UK, the Code of Practice for Prosecutors published jointly by the SFO and
Crown Prosecution Service sets out a framework for the appointment of monitors,
including that companies:
- will be responsible for all of the costs of the monitorship
(including the prosecutor's costs); and
- must give the monitor complete access to all relevant aspects of
The UK Code of Practice for Prosecutors also suggests that prior
to the approval of the DPA, the prosecutor and the company should agree between
them which monitor will be appointed, the cost and terms of the monitorship and
the scope of the first year work plan.
However, the proposed DPA scheme in the CCC bill does not provide
a legislative basis on which the authorities may impose monitors in the
appropriate circumstances. In their submission to the L and C committee's
inquiry into the
CCC bill, Morgan Lewis & Bockius LLP observed that 'monitors have become an
important tool for the UK SFO to make sure corporates implement necessary
improvements to their compliance programme, reduce the risk of corporate
re-offending and ensure compliance with the terms of the DPA'. In this context, they suggested that consideration be given to:
- the extent to which monitorships should be an available
term of a DPA in appropriate cases; and
- issuing guidance in relation to the appointment and
methodology of monitors.
In response to questions on notice regarding the government's
rationale for excluding monitorships from the DPA scheme, the AGD suggested
that the bill:
Does not limit the terms that might be included in a DPA, and
the government envisages that it will often be appropriate for DPAs to include
terms requiring the engagement of an independent monitor to carry out
particular functions in a manner that is adapted to the circumstances of the
case at hand. These functions may include assessing the effectiveness of a corporation's
existing compliance program, advising on how a corporation can develop an
effective (or more effective) compliance program and monitoring a corporation's
compliance with DPA terms.
The AGD went on to explain that they propose to include
information on the possible roles and appointment of independent monitors in
the DPA Code of Practice which is currently being developed. The DPA Code of Practice is discussed in more detail below.
The consultation paper on the 2017 DPA model included discussion
around the extent of judicial involvement in an Australian DPA scheme. The
consultation paper stated:
Judicial involvement in a DPA scheme helps to foster
confidence in the process. In the US, DPAs are entered into and conducted with
comparatively limited judicial involvement. While DPAs are filed with a court,
and a judge is required to approve the terms of the DPA, no judicial hearing is
required and the level of ongoing judicial involvement in the DPA varies from
case to case.
By contrast, the UK scheme involves a greater oversight role
for the judiciary throughout the life of the DPA. This includes two judicial
hearings to approve the DPA, as well as further judicial determinations to
identify whether a breach of a DPA has occurred, or to vary or discontinue a
However, the consultation paper also brought to attention the
arrangements for Australia's federal judicial system provided for in the Australian
Constitution. Specifically, the consultation paper stated:
...courts cannot merely 'rubber stamp' administrative processes
or penalties that have been 'agreed' in advance by the parties. To do so would
not be consistent with the role and function of courts under the Constitution.
In response to questions on notice by the L and C committee in
relation to the CCC bill, the AGD argued that:
The Bill ensures that DPAs in Australia are subject to
independent and expert scrutiny. All DPAs will need to be approved by a DPA
'approving officer' before entering into force. DPA approving officers will be
former judges, with relevant expertise and knowledge (for example, in business
or corporate law). Approving officers will bring expertise in fair and
impartial adjudication to the DPA process, and provide independent assurance
that all DPAs are in the interests of justice.
Guidance—The DPA Code of Practice
As noted above, a number of stakeholders emphasised the necessity
for clear public guidance to be provided in conjunction with any DPA scheme.
Indeed, the consultation paper on the 2017 DPA model stated:
...a successful DPA scheme will require clear and detailed
guidance on when a prosecutor is likely to offer DPA negotiations. This
information could be provided in the Prosecution Policy of the Commonwealth...and/or
in other public documents produced by Government.
The consultation paper on the 2017 DPA model went on to explain
that such documents would also 'detail the types of public interest
considerations' to guide the CDPP's decision-making as to whether to initiate
formal DPA negotiations. The consultation paper on the 2017 DPA model
Where a company has self-reported misconduct and has
genuinely cooperated with any investigation and pre-negotiation discussions,
this would be given considerable weight in favour of the initiation of formal
negotiations. Such cooperation may include providing the CDPP and any investigative
agency with complete and accurate details about corporate and individual
misconduct. Other considerations would include the likely success of
negotiations, and the company’s past conduct, role in the offending,
cooperation with any ongoing investigations, and apparent willingness to
cooperate once offending is brought to its notice.
Following the introduction of the CCC bill on 7 December 2017, on
8 December 2017 the AFP and the CDPP issued Best Practice Guidelines, Self-reporting of foreign bribery and related offending by corporations (Guidelines
These guidelines set out the principles and process that the AFP and the CDPP
will apply if a company self-reports conduct involving a suspected breach of
Division 70 if the Criminal Code Act 1995 (foreign bribery). In their submission to the L and C committee's inquiry into the CCC bill, the IBAACC
...these Guidelines are a good start for companies (and their
advisers) to understand how the CDPP will exercise its discretion in terms of
whether or not to initiate negotiations for a DPA.
The Guidelines for self-reporting are discussed in more detail in
Chapter 8. However, it is unclear how the Guidelines for self-reporting will
interact with the amendments proposed in the CCC bill, especially the
anticipated DPA scheme. The Guidelines state that:
AFP and the CDPP will review the operation of this Guideline
within two years or earlier in the event that a Deferred Prosecution Agreement
In addition to the Guidelines for self-reporting, the AGD has
indicated that it 'is currently developing a draft DPA Code of Practice (the
Code) for public consultation'. The AGD explained that:
The purpose of the Code is to provide detail on the practical
operation of the DPA scheme, including on the types of matters that might be
included in a DPA.
The AGD also indicated that the Code of Practice would include:
- information on how the CDPP would consult with other government
agencies throughout the DPA process to ensure relevant matters are included in
the DPA (either in the DPA's terms or in the DPA's statement of facts); and
- guidance on the level of cooperation expected from corporations
seeking a DPA, and on the steps corporations may be expected to take to meet the
required degree of cooperation.
The committee considers that Australian regulators should adopt
processes that would encourage companies to self-report instances of foreign
bribery. The committee is of the view that introducing a DPA scheme will foster
a greater willingness on the part of corporations to appropriately and
effectively investigate alleged bribery and self-report it to regulators when
there is evidence to support the alleged misconduct. The committee notes that
any such DPA scheme must be supported by a strong legislative framework, which
requires strict compliance and allows for adequate responses in the event of a
breach. The committee also notes that both the US and the UK have DPA schemes
in relation to serious corporate offences.
The committee considers that an effective DPA scheme will require
clear, public guidance outlining its operation to provide companies greater
certainty on DPA processes. The committee is also of the view that it is
essential for approved DPAs to be made public, in all but exceptional
circumstances, to allow companies to draw on these records as an additional
source of guidance on the DPA scheme. The committee is also of the opinion that
details on how a company has complied with the terms and conditions, as well as
details of any breach, variation or termination, should be published in all but
exceptional circumstances. These materials would provide assurance to members
of the public as to the transparency and consistency of the DPA scheme.
The committee notes concerns raised that the proposed DPA model in
the CCC bill does not provide a legislative basis on which the authorities may
impose monitors in appropriate circumstances. The committee believes that
including an avenue to appoint independent external monitors at a company's
expense to monitor compliance with a DPA and report to the CDPP is integral to
the success of a DPA scheme in Australia; in particular, where the agreed terms
of the DPA oblige the company to instigate organisational or cultural change to
avoid re-offending. However, the committee considers that providing for the
appointment and methodology of independent external monitors in the Code of
Practice is appropriate to ensure ongoing compliance with DPAs.
The committee believes that as the Draft Code of Practice will provide
detail on the practical operation of the DPA scheme (including on the types of
matters that might be included in a DPA), adequate public consultation on the
Draft Code is critical to promote a level of trust between regulators and the
The committee recommends that the government introduce a deferred
prosecution agreement scheme for corporations, supported by a strong
legislative framework which requires strict compliance and allows for adequate
responses in the event of a breach.
The committee recommends that, other than in exceptional
circumstances, deferred prosecution agreements be published, together with details
on how a company has complied with the terms and conditions, and any breach,
variation or termination.
The committee recommends that the Code of Practice make provision
for the appointment and methodology of independent external monitors at the
company's expense to monitor compliance with a deferred prosecution agreement.
The committee recommends that as part of the public consultation
on the draft Code of Practice, the government publish an exposure draft and allow
a period of no less than four weeks for stakeholders to provide comment.
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