Other reform options
This chapter evaluates other possible 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 debarring companies or
individuals convicted of foreign bribery from public procurement contracts.
In light of the challenges of investigating and prosecuting
foreign bribery claims, and the weak enforcement record in Australia (discussed
in Chapter 3), this chapter 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 bribery.
Expansion of the register of beneficial ownership
Company structures can be used to disguise the identity of those
involved in illicit activities, including bribery. This is achieved through
mechanisms such as the use of: shell companies; complex ownership and control
structures; bearer shares and share warrants; and nominee shareholders where
the nominator is not disclosed. Such actions have the potential to endanger confidence in the tax system and
undermine the perceived legitimacy and validity of business and company
regulatory processes and requirements.
The importance of improving the collection and utilisation of
beneficial ownership information has been recognised by the government and a
consultation process has been undertaken by the Treasury with a view to
considering what action may be needed in this area. However, the consultation paper was silent on whether any potential register of
beneficial ownership information should be publicly available.
Delays and shortcomings
Submissions to the Treasury consultation on a register of
beneficial ownership closed in March 2017, and the Open Government Partnership
webpage notes the implementation is 'delayed'. Aside from silence on the issue of public access, the consultation explicitly
excludes the inclusion of trusts on the register. The Financial Action Task
Force found the Australian regime to be 'completely non-compliant' in regard to
trusts. This is confirmed by Treasury documents prepared for the government, available
through Freedom of information. There is little publically available evidence to demonstrate progress of the
beneficial ownership register, let alone the possibility of an expansion.
Support for a centralised public,
free and open register
Many stakeholders who contributed to this inquiry supported a
centralised, public, free and open data register and brought to the committee's
attention the numerous benefits such a register would provide.
In offering his support for a public register of beneficial
ownership of companies, Dr Mark Zirnsak, Director of the Justice and
International Mission, Synod of Victoria and Tasmania, Uniting Church in Australia,
stressed that a public register would 'help remove intermediaries where shell
companies are used to hide who is actually paying the bribe'.
Dr Zirnsak went on to explain that the advantage of having a
public register, as opposed to a register that only law enforcement authorities
can see, was that it would allow companies to look at whom they are dealing
...the advantage of having a public register for entities that
have a reporting obligation under the anti-money-laundering laws is that it
makes their due diligence efforts much easier to pursue...I think the benefits of
a public register, with the ability to apply for an exemption, far outweigh any
disadvantage to the public register, compared to keeping it for law enforcement
In evidence before the committee, Mr Nick McKenzie emphasised the
'need for more transparency around beneficial ownership', and suggested that a
public register of beneficial ownership of companies would be 'a terrific thing
to happen'. Mr McKenzie considered that:
...the reasons for secrecy are far outweighed by the reasons
for transparency. And if we had that, it would serve as a deterrent to
financial crime, to taxation and to all sorts of crime types that include
foreign bribery, and it should be looked at very, very seriously.
The majority of submissions to the Treasury consultation process
also argued for any register of beneficial ownership to be publicly available
and free to access. For example, Action Aid commented that:
...transparency of beneficial ownership has significant
benefits not just for Australia, but also for lower-income countries where
increased public revenue will allow governments to better meet their
development objectives. However these benefits will only be realised if
Australia ensures beneficial ownership information is centrally maintained and
publicly accessible, automatically exchanged between authorities, and collected
from trusts as well as companies.
Adequate accessibility by non-government stakeholders
requires that information is easily available to the public and access to this
information is not prohibitively expensive. ActionAid therefore recommends that
a central register is maintained by the government, and information held on the
register can be accessed free of charge.
Publish What You Pay Australia also raised concerns about the
approach being taken by the government:
The movement towards beneficial ownership registries is
towards open and accessible information. A closed registry demonstrates a lack
of leadership by Australia in the region, puts us out of step with the global
community, and threatens the success and sustainability of the numerous global
initiatives Australia has committed itself to.
The B Team highlighted numerous benefits for business of a
centralised, public, free and open data register, including:
- enabling business to efficiently access and use information on
who they are doing business with, reducing the costs and complexity of due
diligence and risk management; and
- facilitating broad scrutiny of information to identify
discrepancies and fraud, providing businesses with additional ways to identify
In a submission to the Treasury consultation, Associate Professor
David Chaikin, a Barrister and Chair of the Discipline of Business Law at the
University of Sydney Business School, argued that charging fees to access the
central register would undermine the basic goal of transparency:
If Australia continues to charge fees for accessing corporate
information, the potential benefits of a central registry will be more limited
than is the case, say in the United Kingdom, which permits the entire PSC [UK
Register of People with Significant Control] data set to be downloaded by the
public at no cost.
The UK Register of People with
The Register of People with Significant Control (PSC) requires UK
companies and limited liability partnerships (LLPs) to maintain a mandatory
statutory register of certain people with significant control (who are
generally individuals). Companies and LLPs must keep their PSC registers
publicly accessible. Anyone (an individual or organisation with a proper
purpose) may have access to a company's register free of charge. They must make
a request which sets out their name and their address. If they are an
organisation they must include a name and address of an individual responsible
for making the request on the organisation's behalf and their purpose in
seeking the information. A company must respond to the request within five
Transparency International Australia (TIA) also drew the
committee's attention to the UK's PSC, commenting that:
Very few companies have objected at all, and the ones that
did object seem to have shell company issues, with finding out who's behind
those. Who owns what in this country? We have made no progress towards an
initiative about that. It seems to me that the funding of ASIC [Australian
Securities and Investment Commission] would be essential to enable that to
The consultation paper on increasing the transparency of beneficial
ownership of Australian companies questioned who would be best placed to
operate and maintain such a register. It stated:
Such a register could be operated by ASIC in addition to or
as part of the register of company information which it already operates and
maintains. It could also be operated by a different government entity which is
already involved in maintaining registers of information, such as the
Australian Business Register. Alternatively, such a register could be privately
In considering which agency should have responsibility for
maintaining a public register of beneficial ownership in Australia, Dr Zirnsak suggested
to the committee that:
At this stage, it seems to make most sense to have it with
ASIC, given ASIC has the current corporate register. From an Australian point
of view, it's an expansion of the existing corporate register. We currently
have on the [public] record directors' names and their home addresses, which
need to be on the register. I'm unaware of any real evidence that it's created
any problems. 
TIA agreed, stating that:
ASIC ought to be funded with a system which enables the
determination of source of funds and who are the ultimate beneficial owners...
Indeed, a number of submitters to the consultation also suggested
that the central register would best be operated by ASIC given their role in
maintaining the existing register of company information.
Evidence presented to the committee established that there is a
need for more transparency around beneficial ownership, and the committee
believes that a centralised, public and open mandatory register will serve as a
deterrent to all sorts of crime types, including foreign bribery.
The committee is of the view that the benefits of a publicly
accessible central register of beneficial ownership for companies and other
corporate structures will be an invaluable resource for businesses interacting
with each other. In particular, the committee considers that the transparency
of a public register will make due diligence activities by companies easier and
help to identify who the intermediaries are, where shell companies may be being
used to hide who is actually involved in paying a bribe. Identifying a company's
intermediaries—which could be third party agents, such as local sales and
marketing agents, distributors and brokers; or corporate vehicles, such as
subsidiary companies, local consulting firms, companies located in offshore
financial centres or tax havens—is important to ensuring companies know exactly
who they are dealing with, and whether they have a history of bribery and
The committee believes that a publicly accessible central
register of beneficial ownership for companies will also benefit journalists,
academics, advocacy groups and other interested parties to identify links
Given ASIC has responsibility for the current corporate register,
the committee considers that it is best placed to establish and maintain this
information and to ensure it is publicly available.
The committee recommends that Australian Securities and
Investment Commission expand the register of beneficial ownership to require companies,
trusts and other corporate structures to disclose information regarding their
beneficial ownership; and that this information be maintained in a central
Integrity in public procurement
The Department of Finance (DoF) is responsible for financial accountability
in government spending, including grants and procurement policy.
Procurement by relevant Commonwealth authorities must follow the
Commonwealth Procurement Rules (Procurement Rules) issued by DoF. At a
high-level, the Procurement Rules govern the way in which relevant Commonwealth
authorities undertake their own procurement processes, while also allowing such authorities the discretion to:
...use Accountable Authority Instructions to set out
entity-specific operational rules to ensure compliance with the rules of the
With respect to ethical behaviour, the current Procurement Rules
Relevant entities must not seek to benefit from supplier
practices that may be dishonest, unethical or unsafe. This includes not
entering into contracts with tenderers who have had a judicial decision against
them (not including decisions under appeal) relating to employee entitlements
and who have not satisfied any resulting order. Officials should seek
declarations from all tenderers confirming that they have no such unsettled
orders against them.
However, while it is true that under the current Procurement
Rules, relevant authorities have the discretion to debar [preclude] companies
convicted of domestic or foreign bribery from public procurement contracts,
this is not clearly stated.
Ms Kelly Williams of the Attorney-General's Department (AGD)
confirmed that 'there aren't any specific debarment policies for procurement by
the Australian Government'. Mr Tom Sharp of AGD went on to confirm that:
The advice from Finance is that there is no change at this
point to the current policy position around the Commonwealth procurement
framework and there is no intention to introduce the debarment policy...
Government failure to implement OECD
public procurement recommendation
The 2012 Phase 3 OECD Report expressed concern about the lack of
transparent policies and guidelines for the debarment of persons convicted of
foreign bribery from public procurement contracts. In particular, the report
...that the absence of government-wide guidelines may lead
agencies to overlook foreign bribery in exercising their discretion to debar.
Without guidelines, agencies also may not verify whether a multilateral
development bank (MDB) has debarred a potential contractor.
Recommendation 16(a) of the 2012 Phase 3 OECD Report went on to reiterate
the 2006 Phase 2 OECD Report Recommendation 6(b), that:
Australian procuring agencies put in place transparent
policies and guidelines on the exercise of their discretion on whether to debar
companies or individuals that have been convicted of foreign bribery.
Indeed, one of the areas identified in the 2015 Phase 3 OECD Follow-Up
Report for further work was the introduction of transparent debarment processes
for government procurement agencies. However, the December 2017 Phase 4 OECD Report noted:
Australia states that, since Phase 3, it has not taken any
specific steps to implement recommendation 16a. Regarding procurement contracts
in relation to ODA [official development assistance], the evaluation team notes
that in 2016, following Australia's Phase 3 review, the OECD adopted the
Recommendation of OECD Council for Development Cooperation Actors on Managing
the Risk of Corruption which states that Member countries should "put in
place a sanctioning regime that is effective, proportionate and dissuasive"
that includes "clear and impartial processes and criteria for sanctioning,
with checks and balances in decision making to reduce the possibility of bias".
The December 2017 Phase 4 OECD report found that the 2012 Phase 3
OECD Report Recommendation 16(a) remained unimplemented and reiterated their recommendation that Australian
procuring agencies put in place transparent policies and guidelines on the
exercise of their discretion on whether to debar companies or individuals
convicted of foreign bribery.
Support for a debarment framework
Commentaries on the OECD Convention and the government's failure
to implement the Working Group's recommendations aside, submitters to the
inquiry also offered their support for companies found guilty of breaches under
foreign bribery laws being barred from entering into government contracts.
Following the lead of a number of countries, including the UK,
the US, Canada, and in connection with World Bank developments, Mr Neville
Tiffen called on the government to introduce a system which debars
organisations which have been guilty of integrity offences, including foreign
bribery, from being able to bid for government work. Arguing that the introduction
of a formal debarment system in Australia need not be codified in legislation,
Mr Tiffen suggested that:
The debarment prohibition should last for 10 years – this is
the debarment period adopted by Canada and by the World Bank. The period could
be pared back if the organisation enters into, and adheres to, some form of DPA
[deferred prosecution agreement] or if the organisation self reports and fully
cooperates with the regulators...The debarment provisions may need to have a very
limited exception for public interest, as per the Canadian policy.
TIA also supported debarment of companies from government work
for breach of integrity offences, including foreign bribery. However, TIA also
Debarment provisions may need to have a very limited
exception for public interest, for selfreported breaches but require subsequent
full cooperation with the ensuing regulatory investigation.
Mr Tiffen emphasised that such a debarment framework would act as
a major deterrent:
...a lot of companies fear debarment far more than the monetary
penalties, because they're being cut out of future work and future earnings,
and so in a lot of ways it's a much bigger incentive to avoid the crime in the
This opinion was shared by the International Bar Association
Anti-Corruption Committee, who commented:
In the Committee's experience, debarment is likely to have a
far greater impact on corporations than a fine (or conviction assuming a
company is ever criminally prosecuted).
Mr Kane Preston-Stanley, a former lead legal and policy officer
on Australia's anti-corruption program, also supported the idea of debarment.
Mr Preston-Stanley emphasised the need for Commonwealth authorities to
retain discretion as to whether a particular finding should preclude the
tenderer from being awarded the contract.
In firm contrast, Dr Zirnsak, Justice and International Mission,
Synod of Victoria and Tasmania, Uniting Church in Australia, was of the view
that 'if a company has engaged in foreign bribery, they should be denied access
to government contracts' and 'all government assistance...to act as a strong
TIA also took a strong stance, arguing that that companies who
engaged in foreign bribery 'should be debarred from obtaining incentives,
subsidies, grants or loans from government agencies'. TIA recommend that:
...it be a requirement for any organisation seeking government
contracts or to be included in government programs, to set out its anti-bribery
program, and this must be given effect in contractual provisions.
Other submitters to the inquiry commented that even if a
debarment system was not formally instituted in Australia, Commonwealth
authorities could 'blacklist' offenders on the basis of other well-established
foreign debarment systems, such as those used in the US or by the World Bank.
In the US, federal agencies operate under a common regulatory
framework set out in the Federal Acquisition Regulation 48 CFR Part 9 (FAR) which specifies causes for debarment. While FAR provides for agencies to
use discretion in deciding whether to debar contractors for specific conduct, it
specifically provides that: a conviction or civil judgment for foreign bribery;
or 'any other offense indicating a lack of business integrity' are legitimate
grounds for debarment. However, the existence of a cause for debarment will not require that the
contractor be debarred. Instead, the agency will look at the seriousness of the
contractor's acts or omissions and any remedial measures or mitigating factors.
Importantly, this includes an assessment of the suppliers 'present
responsibility' (for example, does the supplier have effective internal
controls in place, have they self-reported or cooperated with the government,
or taken disciplinary actions against individuals involved in the act which
caused the grounds for debarment, or implemented additional controls and
Under the World Bank's sanctions system, companies who are found
through an Integrity Vice Presidency investigation to have engaged in
fraudulent, corrupt, collusive, coercive or obstructive practices are excluded
from receiving World
Bank-financed contracts, either permanently or for a designated period of time. The World Bank Group reports that it's sanctions system:
...places emphasis on debarred parties meeting certain
integrity compliance conditions before they can once again participate in World
Group-financed projects. These conditions encourage debarred parties to focus
on rehabilitating their business practices.
The World Bank's website lists the firms and individuals
ineligible to be awarded a World Bank-financed contract because they have been
sanctioned under the World Bank's fraud and corruption policy as set forth in
the Procurement Guidelines or the Consultant Guidelines. This list is freely
accessible to the public and search friendly.
Publish What You Pay Australia and the Uniting Church in
Australia, Synod of Victoria and Tasmania submitted that:
Although generally governments are not bound by other
governments' or institutions' debarment decisions, governments may "take
note, and make informal enquiries, when another government or institution takes
action against a contractor." Cross-debarment has the potential to
anti-corruption efforts with minimal effort by allowing Australian authorities
to exclude offenders from public-sector procurement contracts.
Indeed the 2006 Phase 2 OECD Report on Australia indicated that
the Export Finance and Insurance Corporation (Efic) may also withhold or
withdraw support for a contract where there is evidence, or even a suspicion,
of bribery. The report stated:
Although they do not maintain a [blacklist], EFIC
representatives indicated that they do check the World Bank List of Debarred
Firms, and that any application for official export credit support from one of
the organisations listed therein would trigger particular scrutiny on the part
of EFIC. There is however no formal requirement that support must automatically
be refused or withdrawn where there has been a conviction for foreign bribery,
whether in an Australian or a foreign jurisdiction. EFIC retains discretion to
accept or refuse support, and each request is examined on a case-by-case basis.
To date, the EFIC has not had any practical experience dealing with applicants
or contractors convicted of foreign bribery.
Mr McKenzie alleged that 'Australian Governments have been known
to continue to award lucrative Commonwealth contracts to entities debarred from
World Bank projects', and argued that:
Implemented carefully, a debarment regime can give
authorities a powerful tool in the fight against bribery, providing an
incentive for companies to reform and ensuring a firm that is a repeat or
egregious offender is effectively punished.
The committee notes that since 2006 the OECD has continuously raised
the consideration of a debarment framework in Australia as an important issue.
The committee also notes that the December 2017 Phase 4 OECD Report found that
the 2012 Phase 3 OECD Report Recommendation 16a (2006 Phase 2 OECD Report
Recommendation 6(b)) remained unimplemented, and reiterated their
recommendation that Australian procuring agencies put in place transparent
policies and guidelines on the exercise of their discretion on whether to debar
companies or individuals convicted of foreign bribery.
The committee believes that the government has been remiss in failing
to adequately explore the notion of a foreign bribery debarment system for
corporations in Australia.
The committee considers that the government has failed to
implement the OECD recommendation that Australian procuring agencies put in
place transparent policies and guidelines on the exercise of their discretion
on whether to debar companies or individuals that have been convicted of
The committee agrees with submitters that authorities should be
able to preclude companies found guilty of breaches of foreign bribery laws
from entering into government contracts. The committee is of the view that
government agencies conducting procurement processes should require disclosure
of findings of liability for foreign bribery, after which the relevant agency
would have the discretion to preclude the tenderer from being awarded the
The committee suggests that the government consider the ways in
which it can utilise the lists of offenders on other well-established foreign
debarment systems, such as those used in the US or by the World Bank, and how
they would operate in conjunction with the implementation of Australia's own
The committee recommends that the government introduce a
debarment framework that would ensure companies are required to disclose if
they have been found guilty of foreign bribery offences and give agencies the
power to preclude the tenderer from being awarded a contract.
Building a culture of compliance
As stated in Chapter 4, the committee heard evidence about
various international guidance relating to foreign bribery, including the US
hallmarks, UK principles and International Standards Organisation Standard ISO
37001—Anti-bribery management systems.
In addition to the guidance that will be required in respect of the
new corporate offence of failing to prevent foreign bribery (also discussed in
Chapter 4), submitters suggested that more general domestic guidance was needed
to assist companies to identify their foreign bribery obligations and create
awareness of the risks associated with non-compliance. The 2017 Phase 4 OECD Report
also drew attention to the need for Australia to find additional ways to promote
and encourage companies to comply with Australia's foreign bribery laws; in
particular, small and medium-sized enterprises and those operating in the
resource sectors and high-risk jurisdictions.
Mr Tim Game of the Law Council of Australia told the committee that:
At a practical level, parties seeking to comply diligently
with foreign bribery obligations face significant hurdles in seeking to
identify their legal obligations and appropriately document their compliance
with these obligations.
Mr Tiffen agreed with Mr Game that 'one of the issues facing
companies is the different laws in different countries', and what different
'regulators expect from companies and whether they can be consistent'. Mr
Tiffen pointed out that:
It's all very well for every country to have their own
guidance and laws. What we want is some internationally accepted regime as to
what we think is a good compliance program...
Mr Tiffen went on to suggest to the committee that together with
strengthening our foreign bribery laws, the government needs to:
...give clear guidance to companies to do the right thing and
about what benefit there will be for them in doing those things...Australian
regulators need to set out clear guidance as to what we mean when we use terms
such as 'culture of compliance', and we need to encourage companies to
Mrs Rebecca Davies of TIA reflected on the lack of awareness
around foreign bribery in corporate Australia, and reminded the committee that 'we can't take it for granted that people are
massively concerned about' foreign bribery. Mrs Davies suggested that the
government needed to have guidance which focuses people's minds on the issue.
Mr David Lehmann of KordaMetha Forensic observed that the key
issue for corporations is the level of communication to all employees to create
awareness. Mr Lehmann considered that:
This gets to creating culture, and the key to it is
leadership, with communication training being cascaded down throughout the
organisation and, of course, leaders setting the example.
Commander Tim Crozier of the Australian Federal Police (AFP) explained
that the Fraud and Anti-Corruption Centre (FAC) and the AGD have material on
their websites around foreign bribery. However, the Phase 4 OECD Report stated that Australia itself noted that it
could do more to promote its existing guidance material, particularly to small
and medium sized enterprises.
In this context, the Phase 4 OECD Report found that, despite
awareness raising efforts by the government:
...for the most part, anti-corruption compliance is still
driven by the private sector itself, and that there was very little in the way
of accessible written guidance for businesses generally. One representative
noted that while there has been a substantial shift in corporate culture in
recent years, this was mainly due to the fear of enforcement action from other jurisdictions
(e.g. the United Kingdom and United States), rather than Australia.
In the context of discussing mechanisms to help foster a
willingness on the part of companies to self-report in the situation of foreign
bribery, ASIC explained that while they do not have a policy which relates
specifically to foreign bribery, they do have a published cooperation policy.
Mr Chris Savundra explained that the policy sets out ASIC's expectations around
cooperation and the benefits to both individuals and corporations from cooperating
with ASIC investigations.
Mr Savundra suggested that by incentivising self-reporting to
identify instances of foreign bribery, matters will be identified in a 'much
more timely fashion than has been the case so that, rather than emerging five
or six years after the event, it's much closer to the event'.
Mr Shane Kirne of the Commonwealth Director of Public
Prosecutions (CDPP) informed the committee at an October 2017 hearing that the
CDPP and the AFP had been working together for some time on a self-reporting
foreign bribery protocol directed at corporate entities. Mr Kirne suggested
that this protocol was 'reasonably close to finalisation', and further explained
The view is that we're conscious the enforcement level is
low, and has been. We can try to work on innovative ways to try to incentivise
corporations to come forward. That protocol is based largely on a very
factor—but this is not the only factor: whether the corporation has
self-reported the conduct. That would be a major factor we would have regard to
in weighing up the public interest and whether to prosecute.
However, Mr Kirne went on to draw attention to the need for any
self-reporting protocol to operate in concert with any implemented deferred
prosecution agreement (DPA) scheme. Mr Kirne stated:
...we don't want the deferred prosecution agreement scheme or
even that self-reporting guideline to be a means by which companies just
self-report and nothing happens to those who are most culpable. So part of one
of the public interest factors would not just be self reporting, it would be
willingness to cooperate.
Mr Kirne considered that any implemented DPA scheme would take
'some time' to be effective and therefore explained that the CDPP 'are looking
at some other means to try and incentivise, and work with industry and
companies to get companies to self-report'.
December 2017 developments
The December 2017 Phase 4 OECD Report highlighted the need for
Australia to issue guidance on voluntary reporting. The Report stated:
At the time of Phase 3, three companies had self-reported
foreign bribery to AFP. However, AFP did not have clear guidance for dealing
with such reports. The WGB [Working Group on Bribery] thus recommended that
Australia develop a clear framework to address matters such as the nature and
degree of cooperation expected of a company; whether and how a company is
expected to reform its compliance system and culture; the credit given to the
company's cooperation; measures to monitor the company's compliance with any
resulting plea agreement; and the prosecution of natural persons related to the
company (recommendation 9).
However, the Phase 4 OECD Report also noted that:
In late 2016, AFP and CDPP released a draft Best Practice
Guideline on Self-Reporting of Foreign Bribery and Related Offending by
Corporations. This draft Guideline explains the principles and processes that
AFP and CDPP will apply where a corporation self-reports conduct involving
suspected foreign bribery. The draft Guideline aims to incentivise companies to
self-report by giving them greater information about how such a report will be
handled by AFP and CDPP. The draft Guideline operates within the framework of
the Prosecution Policy of the Commonwealth and does not change existing policy.
It describes the public interest factors that CDPP will take into account in
deciding whether or not to prosecute a corporation that self-reports suspected
foreign bribery; and, if a prosecution is commenced, how the self-report will
be taken into account by a court when sentencing the corporation. Australia
intends to finalise the Guidelines by the end of 2017. However, until it is
published and Australia takes steps to raise awareness of it among the private
sector, it would appear that Australian companies remain in the same situation
Phase 3, and do not have a clear framework for voluntary reporting.
Phase 3, recommendation 9 is therefore only partially implemented. 
In addition to the continuing absence of clear guidance for
companies on the framework for voluntary reporting, the Phase 4 OECD Report
also observed that:
...at the on-site [visit], a major Australian company in the
extractives sector stated that more awareness was needed about where to go to
make a voluntary report. The same company stated that this kind of awareness is
essential to encourage voluntary reporting. AFP provides that there are a
number of ways that companies can self-report, including through AFP's
Operations Coordination Centre, FACC, or ASIC. Interestingly, five of the 57
cases of foreign bribery that had been the subject of enforcement actions were
detected through self-reporting, including one case that was reported to the law
enforcement authorities in another country.
Following the introduction of the Crimes Legislation (Combatting
Corporate Crime) Bill 2017 (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 for
DLA Piper suggested that the Guidelines for self-reporting
'appear to be a response to a criticism raised' in this inquiry 'about the
absence of such assistance'. DLA Piper commented that:
Many submissions were critical of the lack of formal guidance
available in relation to Australian bribery offences. There is a clear desire
for information based guidelines, such as those which have been produced in the
UK and United States, which set out how the bribery offences operate and detail
what practical steps can be taken to avoid being guilty of an offence.
Allens Linklaters observed that the Guidelines for self-reporting
will encourage more self-reporting and cooperation by corporates, noting that:
In particular, they (i) clarify that a 'self-report' can be
made by a corporation without admitting criminal responsibility; and (ii)
specify that self-reporting will be treated as a 'significant' public interest
factor against prosecution when applying the second stage of the CDPP
Prosecution Policy test (with further guidance around what, specifically, will
be taken into account when assessing the public interest in prosecuting a
self-reporting and cooperating corporate).
However, Allens Linklaters also observed that as the CDPP retains
its broad discretion to prosecute a corporate that self-reports and cooperates
with an AFP investigation, ultimately, the Guidelines for self-reporting:
...[offer] less certainty to self-reporting corporates than,
for example, the ACCC immunity and cooperation policy for cartel conduct (where
an offer of immunity is highly likely if the conditions set out in that policy
are fulfilled), and contrasts with the position in the US, where the new FCPA enforcement
section of the US Attorney's Manual provides a presumption of declination (ie a
decision not to prosecute) for self-reporting and cooperating corporates.
Herbert Smith Freehills explained how the Guidelines for
self-reporting may affect sentencing in a matter, where authorities decide to
prosecute a company that self-reports, and that company is willing to consider
making an early guilty plea:
Self-reporting and co-operation with an AFP investigation are
relevant to sentencing. Section 16A of the Crimes Act 1914 (Cth)
establishes factors which must be taken into account by a court during
sentencing. These include the degree to which the person has co-operated with
law enforcement agencies in the investigation of the offence or of other offences.
Significant discounts may be offered where that occurs. By
way of example, in Commonwealth Director of Public Prosecutions v Nippon
Yusen Kabushiki Kaisha  FCA 876, the defendant received a 40%
discount in recognition of their past cooperation, assistance, guilty plea,
contribution and remorse, and an additional 10% discount for future
While 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
For the new foreign bribery framework to succeed, the committee
considers that it is extremely important to develop a culture of risk awareness
across the corporate sector. The committee is of the view that this involves
developing understanding of the need for participation and ongoing cooperation
at all levels.
The committee understands that at a practical level, those
seeking to comply with foreign bribery obligations face significant hurdles in
seeking to identify their legal obligations. The committee therefore considers
that it is essential for the government to issue domestic guidance to provide
clarity and direction on the overarching intent of Australia's foreign bribery
framework. In order to be effective, the committee believes that it is important
that such guidance be practical and accessible.
While the committee acknowledges that the Guidelines for
self-reporting will be updated to accommodate the anticipated DPA scheme, the
issuance of such Guidelines ahead of pending legislation to expand Australia's
foreign bribery laws means it is unclear how the two will interact.
Given the challenges of investigating and prosecuting foreign
bribery, and the weak enforcement record in Australia, the committee considers
it is essential that the government act to encourage self-reporting and
cooperation by corporates, as well as the earlier resolution of proceedings.
However, the committee is concerned that
the government has rushed to issue the long-awaited Guidelines for
self-reporting in response to the OECD's feedback in the Phase 4 OECD report.
The committee understands that the Guidelines for self-reporting foreign
bribery and related offending are focussed only on corporations. The committee
is concerned that no guidance has been developed for individuals or smaller companies
about how and where they should go to make a voluntary report of foreign
bribery. The committee is therefore of the view that in addition to the
self-reporting by corporations, the government should publish practical
information which can be used by individuals or small companies who wish to
make a voluntary report of foreign bribery.
The committee recommends that the government provide practical
guidance to companies to draw attention to domestic and international guidance
relating to foreign bribery, and to increase awareness of the high-risk sectors
and regions in which Australian businesses commonly operate.
The committee recommends that clear information be provided in
the public domain about how and where an individual or a small company should
go to make a voluntary report of foreign bribery.
Senator Chris Ketter
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