On 5 December 2019 the Senate referred the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (the bill) to the Legal and Constitutional Affairs Legislation Committee (the committee) for inquiry and report by 19 February 2020. On 10 February 2020 the Senate extended the committee's reporting date to 17 March 2020.
The referral followed a recommendation of the Selection of Bills Committee. The report of the Selection of Bills Committee noted:
The Bill contains a range of measures ostensibly related to combatting corporate crime, some of which may in fact make it easier for corporate criminals to avoid prosecution, thereby reducing deterrence and increasing the incidence of corporate crime. It is important that stakeholders, including legal experts and those dealing with corporate criminals, have an opportunity to provide feedback on this bill.
Previous bill and committee inquiry
Schedules 1 and 2 of the bill are almost identical to another bill of a similar name: the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (the 2017 bill). However, the current bill also contains a third schedule (which would amend the definition of 'dishonest' in the Criminal Code Act 1995 (the Criminal Code)) that was not part of the 2017 bill.
The 2017 bill was introduced into the Senate on 6 December 2017 by the Assistant Minister to the Prime Minister, Senator the Hon James McGrath. It lapsed at the end of the 45th Parliament on 1 July 2019.
On 7 December 2017 the Senate referred the 2017 bill to the committee for inquiry and report by 20 April 2018. The committee received eight submissions and did not conduct any public hearings. The committee presented its report on 20 April 2018 with four recommendations, including that the bill be passed. Senator Rex Patrick presented additional comments with further recommendations.
Conduct of this inquiry
Details of the inquiry were advertised on the committee's webpage. The committee also invited a number of organisations and individuals to submit to the inquiry. The committee received eight submissions, which are listed at Appendix 1.
The committee held one public hearing on 12 February 2020 in Canberra. The witnesses who appeared at that hearing are listed at Appendix 2.
The committee thanks all submitters and witnesses for their participation in this inquiry.
Structure of this report
This report consists of two chapters:
This chapter provides a brief background to and outlines the key provisions of the bill, as well as administrative details relating to the inquiry.
Chapter 2 examines the key issues raised and provides the committee's view.
Purpose of the bill
The bill seeks to address challenges associated with detecting and addressing serious corporate crime by:
amending the existing offence of bribery of a foreign public official in the Criminal Code;
introducing a new offence of failure of a body corporate to prevent foreign bribery by an associate;
implementing a Commonwealth deferred prosecution agreement (DPA) scheme; and
repealing the existing definition of 'dishonest' in the Criminal Code and inserting a new definition of 'dishonest' into the Code's Dictionary.
The bill was introduced into the Senate on 2 December 2019 by the Assistant Minister for Forestry and Fisheries and Assistant Minister for Regional Tourism, Senator the Hon Jonathon Duniam. In his second reading speech, Senator Duniam stated:
Corporate crime is estimated to cost Australia billions of dollars every year. It hurts business, our international reputation and our economic wellbeing...The opaque and sophisticated nature of corporate crime can make it difficult to identify and easy to conceal through complicated structures and transactions. Investigations into corporate misconduct can be hampered by the need to process large amounts of complex data, including evidence that may be held overseas. Court proceedings can be protracted, expensive, and involve well-resourced corporate defendants. The measures in the Bill seek to address these challenges and remove undue impediments to the successful investigation and prosecution of foreign bribery cases.
Key provisions of the bill
The bill would amend the Criminal Code, the Director of Public Prosecutions Act 1983 (the DPP Act), the A New Tax System (Goods and Services Tax) Act 1999, the Income Tax Assessment Act 1997, the Administrative Decisions (Judicial Review) Act 1977, and the Crimes Act 1914.
The bill comprises three schedules.
Amendments to the existing offence of bribery of a foreign public official
Schedule 1 of the bill would amend the existing offence of bribery of a foreign public official in the Criminal Code in several ways, including the following.
First, the current definition of 'foreign public official' in section 70.1 of the Criminal Code does not include candidates for office. Item 4 of schedule 1 would amend section 70.1 to broaden this definition to include an individual standing, or nominated, as a candidate to be a foreign public official. The explanatory memorandum provides reasoning for doing so:
Law enforcement experience indicates that individuals or companies may seek to bribe candidates for public office, with the intent of obtaining an advantage once the candidate takes office. It is appropriate to criminalise this conduct given that it equally undermines good governance and free and fair markets.
Second, the current foreign bribery offence at section 70.2 of the Criminal Code requires the prosecution to show that a benefit or business advantage was 'not legitimately due'. Item 6 of schedule 1 would repeal the existing offence and replace it with a new offence. The effects of this would include replacing the 'not legitimately due' requirement with the concept of 'improperly influencing' a foreign public official to obtain or retain business or an advantage. The explanatory memorandum states:
Challenges relating to the existing foreign bribery offence include difficulty proving the intention elements and the need to show that both the bribe and the business or personal advantage sought were not legitimately due. In some cases, the threshold of 'not legitimately due' can present challenges. For example, bribe payments can be concealed as agent fees, making it difficult to show, beyond a reasonable doubt, that the payments were not legitimately due.
The explanatory memorandum further states that the new concept of 'improperly influencing' a foreign public official 'does not require proof that a person actually has been or will be influenced, only that a person intended that this occur'.
Third, the current foreign bribery offence applies to bribery of foreign public officials to obtain or retain business or business advantages. However, the new offence inserted by item 6 of schedule 1 would also apply where the bribe was to obtain or retain a personal advantage. The explanatory memorandum provides a rationale for this amendment:
Law enforcement experience has shown, in some cases, that foreign bribery can occur where the advantage sought is personal...The term 'personal' is intended to ensure that the provision captures a broad range of personal advantages, including (but not limited to) the granting of visas or other residency benefits, and the bestowing of scholarships, personal titles or other honours.
New offence of failure to prevent foreign bribery
Schedule 1 of the bill would introduce a new offence into the Criminal Code of failing to prevent bribery of a foreign public official. Under the new offence, a body corporate would be liable where an associate of the body corporate commits foreign bribery for the profit or gain of the body corporate. However, the offence would not apply if the body corporate had in place 'adequate procedures' designed to prevent the commission of the foreign bribery by any associate. The bill would require the Attorney‑General to publish guidance on the steps that body corporates can take to prevent an associate from bribing foreign public officials.
The explanatory memorandum states that the definition of 'associate' is 'intended to have broad application to a person who provides services for or on behalf of another person', including but not limited to an officer, employee, agent, contractor, subsidiary or controlled entity.
The proposed maximum penalty for the new offence is the same as that for the existing foreign bribery offence.
A deferred prosecution agreement scheme
Schedule 2 of the bill would amend the DPP Act to implement a DPA scheme that would enable the Commonwealth Director of Public Prosecutions (CDPP) to invite a corporation (not a person) that has engaged in serious corporate crime to negotiate an agreement to comply with a range of specified conditions.
The terms of a DPA may require the corporation to cooperate with an investigation, pay a financial penalty, admit to agreed facts detailing its misconduct, and implement or improve a compliance program. If the terms of a DPA are complied with, then the corporation would not subsequently be prosecuted in relation to the offences specified in the DPA.
The bill prescribes mandatory terms for all DPAs and provides a non‑exhaustive list of terms and features that may be included in a DPA. The bill also outlines the process by which a DPA must be approved. This includes that all DPAs must be considered by an 'approving officer' (who must be a former judicial officer). The approving officer must approve a DPA if satisfied that its terms are in the interests of justice, fair, reasonable and proportionate.
The DPA scheme limits the admissibility in proceedings of specific documents that are likely to be generated or provided to Commonwealth agencies during the course of DPA negotiations, or in compliance with a DPA.
Should a DPA be breached, the CDPP may commence prosecution or renegotiate the terms of the DPA.
Amending the definition of dishonesty in the Criminal Code
Schedule 3 of the bill would insert a new definition of 'dishonest' into the Criminal Code's dictionary. The new definition provides that 'dishonest' means 'dishonest according to the standards of ordinary people'.
The explanatory memorandum explained that this proposed definition:
…will align the Criminal Code definition of 'dishonest' with the test for dishonesty endorsed by the High Court in Peters v The Queen (1998) 192 CLR 493. Under the test adopted in Peters, there is no requirement to prove that the defendant was aware that their knowledge, belief or intent was dishonest according to the standards of ordinary people.
On 31 March 2017 the Hon Michael Keenan MP, then Minister for Justice, released a public consultation paper on a proposed model for a DPA scheme in Australia. Submissions to this consultation closed in May 2017 and 18 submissions are published on the Attorney‑General's Department's website.
On 4 April 2017 the then Minister for Justice released a public consultation paper on proposed reforms to Australia's foreign bribery regime. Submissions to this consultation closed in May 2017 and 16 submissions are published on the department's website.
Financial implications of the bill
The explanatory memorandum states that the bill is unlikely to have a significant financial impact. However, with reference to the proposed DPA scheme in schedule 2 of the bill, it notes that:
...parties to a DPA will typically be required to pay a financial penalty to the Commonwealth under the terms of that DPA. This may lead to the recovery of penalties in cases that might not have otherwise proceeded to prosecution. Where appropriate, a party to a DPA may also be required to compensate Commonwealth agencies for any costs associated with the negotiation and administration of a DPA.
The explanatory memorandum also notes, with regard to schedule 3 of the bill, that as a result of the proposed definition of 'dishonesty':
…the prosecution will no longer [be] required to satisfy the second limb of the current test for dishonesty. This may result in an increased recovery of penalties for dishonesty offences under the Code.
Consideration by other committees
Senate Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills (scrutiny committee) commented on both the 2017 bill and the current bill.
Comments on the 2017 bill
The scrutiny committee raised two issues and sought advice from the Attorney‑General on each of them.
First, the bill would insert an offence-specific defence to the existing foreign bribery offence in section 70.2 of the Criminal Code. The defence relates to whether a law in the relevant foreign jurisdiction would permit the provision of the relevant benefit to the foreign public official. The scrutiny committee highlighted that this offence-specific defence would reverse the evidential burden of proof.
The Attorney-General provided a rationale for this offence-specific defence, including that the defendant would be in a 'better position' to show evidence of the foreign law that they relied upon when providing the benefit. However, the scrutiny committee emphasised that 'a defendant being in a "better position" to point to evidence of a matter is not equivalent to the matter being peculiarly within the defendant's knowledge'.
The scrutiny committee requested that:
…the key information provided by the minister be included in the explanatory memorandum, noting the importance of this document as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).
The scrutiny committee also drew its scrutiny concerns to the attention of senators and left to the Senate as a whole the appropriateness of placing the evidential burden of proof on the defendant.
Second, the scrutiny committee noted that the bill would require the minster to publish guidance on the steps that a body corporate can take to prevent an associate from bribing a foreign public official. The scrutiny committee's concerns included that:
…because the exception to the offence does not clearly articulate what would constitute 'adequate procedures', it has been left to ministerial guidance to clarify the limits of criminal liability with respect to the offence. This concern is compounded by the fact that the guidance will not be a legislative instrument.
The scrutiny committee requested advice from the Attorney-General as to:
whether it is possible that a body corporate that complies with ministerial guidance published pursuant to proposed section 70.5B might nevertheless be convicted of an offence of failing to prevent the bribery of a foreign public official; and
why the guidance published pursuant to proposed section 70.5B is not considered to be legislative in character and therefore not classified as a legislative instrument and subject to the usual disallowance process.
The Attorney-General's advice provided some explanation, including that the guidance is intended to be principles‑based. The scrutiny committee also noted:
…the Attorney-General's advice that, because the application of steps to prevent foreign bribery will differ substantially between corporations of different types and sizes, it is proposed to provide only guidance, rather than a legislated checklist of compliance, so as to leave to the courts the determination of the limits of criminal liability for the offence, taking into account the circumstances of each case.
In concluding the matter, the scrutiny committee stated:
The [scrutiny] committee requests that the key information provided by the Attorney-General be included in the explanatory memorandum, noting the importance of this document as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).
In light of the detailed information provided, the committee makes no further comment on this matter.
Comments on the current bill
The scrutiny committee drew senators' attention to its comments regarding the 2017 bill, which are discussed above.
The scrutiny committee also stated that it appears the proposed definition of 'dishonesty', contained in schedule 3 of the bill, would:
…remove the subjective aspect of the definition of dishonesty. The committee considers that a significant shift in the framing of a number of offences in the Criminal Code, that has the potential to unduly trespass on personal rights and liberties, should be thoroughly justified in the explanatory memorandum.
The scrutiny committee sought advice from the Attorney-General on this matter.
The scrutiny committee noted various elements of the Attorney‑General's advice, including advice that:
…law enforcement and prosecutorial experience has shown that it can be difficult to obtain sufficient admissible evidence to establish that the defendant was aware or knew that they were dishonest according to the standards of ordinary people and that this means that even if a person was aware their conduct fell short of community standards, practical difficulties in finding and adducing evidence means a person may too readily escape liability.
The scrutiny committee concluded as follows:
The [scrutiny] committee requests key information provided by the Attorney-General be included in the explanatory memorandum, noting the importance of this document as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).
In light of the detailed information provided, the committee makes no further comment on this matter.
Parliamentary Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights considered both the 2017 bill and the current bill, but made no comment on either of them.
Note on references
In this report, references to Committee Hansard are to proof transcripts. Page numbers may vary between proof and official transcripts.