Views on the bill
Submitters to the inquiry acknowledged the difficulties faced in
investigating and prosecuting the foreign bribery offence, and welcomed the proposals
in the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (the
bill) to introduce reforms to effectively address foreign bribery and change
This chapter examines the proposed amendments to the foreign bribery offence
and the introduction of a new corporate offence of failing to prevent foreign
bribery. It then outlines the issues raised by submitters in relation to the
introduction of a deferred prosecution agreement scheme in Australia. In so
doing, it looks at the evidence received in this inquiry as well as submissions
made in relation to the government's 2017 consultations on the amendments
proposed in the bill.
Proposed amendments to the foreign bribery offence
Currently, for someone to be found guilty of the offence of foreign
bribery, the prosecution must prove that the accused engaged in the relevant
conduct (the offering of an illegitimate benefit) with a guilty intention
of influencing a foreign public official in order to gain or retain business or
a business advantage that is not legitimately due.
Extending the definition of foreign
public official to include a candidate for office
The current definition of 'foreign public official' in section 70.1 of
the Criminal Code Act 1995 (Criminal Code) does not include candidates
for office. As such, companies that bribe candidates for public office, with
the intent of obtaining business advantages once the candidate takes office,
are not captured by the current offence.
In line with the amendments proposed in the 2017 consultation, the bill seeks
to amend the definition of 'foreign public official' to include a person
standing or nominated as a candidate for public office.
The new offence would criminalise individuals or companies where they 'seek to
bribe candidates for public office, with the intent of obtaining an advantage
if the candidate takes office'.
Attorney-General's Department (AGD) highlighted that:
It is appropriate to criminalise this conduct given that it
has the potential to undermine good governance and free and fair markets and to
otherwise cause the same harm as bribery of a public official.
In their submission to the 2017 consultation, the Australian Institute
of Company Directors (AICD) supported the proposed extension of the definition,
emphasising that it would remove:
...a potential 'loophole' for an accused offender to avoid
prosecution, should the bribe have occurred before a public official's formal
appointment to office.
Allens Linklaters also highlighted that '[c]andidates for foreign public
office are vulnerable to influence in much the same way as foreign public
Allens Linklaters explained that in their experience:
...many multinational corporations already prohibit their
employees from engaging in such conduct and, as such, we do not consider that
this amendment would materially, if at all, increase the compliance burden
faced by Australian corporations.
BHP Billiton supported the amendments and explained that pursuant to
their current internal Code Of Business Conduct, they do not contribute funds
to any candidate for public office in any country.
While recognising the government's rationale—restricting and prosecuting
the bribery of individuals who are in the process of running for office and who
might in the future make political judgments and be influenced by the payments made
prior to their appointment—Morgan Lewis & Bockius LLP (ML & B) observed
that the definition of foreign public official in the United Kingdom's Bribery
Act 2010 does not include candidates for office.
ML & B went on to suggest that:
The challenge for the authorities will be considering how
broadly the term 'candidate' might be interpreted and, in particular, when an
individual is deemed to be a candidate for public office. During candidacy, it
may be that third party agents or representatives of the candidates are the
more likely target for bribes. Based on our experience, it may also be difficult
to determine when someone becomes a 'candidate' in some jurisdictions, where
the process for electing a public official may not be as transparent as in
By contrast, the definition of foreign officials in the United States' Foreign Corrupt
Practices Act 1977 includes candidates for office.
Removing the requirement that a
foreign official must be influenced in the exercise of the official's duties
The current foreign bribery offence requires that the bribe be provided,
promised or offered with the intention of influencing a foreign public official
'in the exercise of their duties as foreign public official' to obtain or
retain business or an advantage that is not legitimately due.
In line with the amendments proposed in the 2017 consultation, the bill removes
the requirement that the foreign official must be influenced in the exercise of
the official's duties.
The AGD explained that this requirement placed:
...an unnecessary burden on the prosecution to prove the scope
of a foreign public official's duties. Additionally, proof of foreign official
duties relies on international legal assistance processes, which can be
protracted or unsuccessful.
The AGD also indicated that the Australian Federal Police (AFP) had
noticed that foreign public officials can be bribed to act outside of their
official duties to secure business or an advantage:
For example investigations have identified instances where
senior ministers in foreign countries may have been bribed to act beyond their
official duties. The foreign public official’s position of power within the
foreign country, or candidacy for such a position, is the relevant
consideration in criminalising conduct amounting to foreign bribery.
The Law Council of Australia (the Law Council) also recognised that
foreign public officials can be bribed to act outside their official duty to
secure a business or an advantage, and that the proposed amendment would remove
the limitation imposed by the concept of 'in their official capacity'.
However, the Law Council suggested that widening the definition of the foreign
public official's capacity, similar to the formulation in the United Kingdom's Bribery
Act 2010, may be preferable to the omission currently proposed:
Subsection 6(4) of the UK Bribery Act provides that
references to influencing a foreign public official in their capacity as a
foreign public official includes any omission to exercise those functions and
any use of the foreign public official's position as such an official, even if
not within their authority. This wide definition permits prosecution without
needing evidence of fact from the jurisdiction concerned as to the precise
scope of the official's duties. As this need for evidence of fact is invariably
one of the difficulties in establishing the foreign bribery offence under the
current law in the Criminal Code, expanding the definition along the lines of
the UK Bribery Act formulation may be a more effective solution.
In their submission to the 2017 consultation the International Bar Association
Anti-Corruption Committee (IBAACC) also suggested that further consideration
should be given to removing the requirement of influencing a foreign public
official 'in their official capacity', and that widening the definition of the
foreign public officials capacity may be better a course of action.
In this context, IBAACC urged caution:
...to ensure that the criminal nature or otherwise of the bribe
in a personal or business matter does not depend on the status of the recipient
as a public official or private individual.
By comparison, ML & B and the Uniting Church in Australia welcomed
the proposed amendment to remove the requirement that the foreign public
official must be influenced in the exercise of the official's duties.
ML & B commented that:
The exact nature and scope of a foreign public official's
duties are often difficult to ascertain and prove and so the proposed amendment
should alleviate this evidentiary burden.
In submissions to the 2017 consultation, the Export Council of Australia
and Control Risks also supported the proposed amendment.
Control Risks explained that:
...it is irrelevant whether the official is improperly
influenced either within or beyond their official duties. The current wording
simply provides one more hurdle for the prosecution to overcome, which does not
contribute to the intention of the legislation.
Introducing the concept of
'improperly influencing' a foreign public official
The current foreign bribery offence requires the prosecution to show
that a benefit or business advantage was 'not legitimately due'.
The bill seeks to replace the 'not legitimately due' requirement with the
concept of 'improperly influencing' a foreign public official to obtain or
retain business or an advantage.
This was one of two alternative approaches considered by the AGD in the 2017
consultation to replace the 'not legitimately due' requirement; the other was
The AGD explained that introducing the concept of 'improperly
influencing' a foreign public official will ensure the offence more accurately
reflects the conduct of foreign bribery. AGD observed that:
In some cases, the threshold of 'not legitimately due'
presents challenges. Bribes can be concealed by disguising them as contractual
obligations (for instance, commissions pursuant to contractual arrangements
with third party agents) making it difficult to prove, beyond a reasonable
doubt, that the payments are not legitimately due.
The bill includes a non-exhaustive list of matters that a trier of fact
may have regard to when determining whether influence is improper.
The matters included in the list are based on the experience of foreign bribery
investigators and prosecutors, and provide the trier of fact with relevant
factors on which to inform his or her determination.
The AGD explained:
It will be a matter for the courts to determine whether there
has been improper influence on a case-by-case basis and the amendments set out
factors that are relevant. For example, a payment to a foreign public official
made through unofficial or undisclosed accounts, or a payment that is not
properly recorded in a company's records could indicate an intention to
improperly influence a foreign public official.
While supportive of a move away from the requirement of 'not legitimately
due', stakeholders were divided as to whether the concept of 'improperly
influence' as set out in the bill, or 'dishonesty' was preferable.
For example, the IBAACC preferred the use of the concept of 'dishonesty'
and was of the view that as a result of the introduction of the concept of
...there will continue to be uncertainty as to what that
concept will mean, as a matter of fact and of law, for some years until there
are authoritative appellate judgments which consider the phrase.
The AICD agreed, and suggested that 'the revised offence would be
improved by replacing its novel 'improperly influencing' test with a more
The AICD expressed concern that the non-exhaustive list of matters that a trier
of fact may have regard to when determining whether influence is improper:
...would, contrary to the intention of the drafters, add
additional complexity to the offence. This is because each individual matter
could be the subject of judicial interpretation and explanation. Each factor
would likely cause an expansion of the evidence required for a prosecution and
The Law Council was also of the view that 'introducing this novel and
undefined concept will serve only to create more uncertainty and unnecessary
complexity in the foreign bribery offence',
Absent statements from courts to clarify the concepts, which
will not be available for several years and only after concluded prosecutions,
effective advice and proper management of business dealings will be made more
difficult and costly.
ML & B observed that the concept of 'improper influence' introduced
by the bill was similar to that adopted in the United Kingdom's Bribery Act
2010, although 'it does not specify the non-exhaustive factors that should
be taken into account when considering whether improper influence has
ML & B went on to suggest that in addition to the non-exhaustive factors:
A high level definition of what constitutes improper influence
may be included in the legislation to provide the authorities with greater
flexibility when applying the law to the specific fact matrix of each case.
Consideration could be given to providing ancillary and
non-statutory guidance, which can provide insight for corporates and
prosecutors as to the factors which will be considered in determining whether
there has been 'improper influence'.
However, in addition to the non-exhaustive list of factors included in
the bill, the Explanatory Memorandum (EM) provides a number of examples to
assist corporates to understand how the factors will be applied.
The AGD informed the committee that, together with the AFP and CDPP the
proposed approach of 'improperly influence' is preferable because 'some bribery
does not involve dishonesty':
For instance, where a company provides an open 'scholarship'
to the child of a foreign public official. The scholarship is not necessarily
intended to have a 'dishonest' influence, if it is done transparently. However,
it could still be done with the intention of improperly influencing the foreign
public official in favouring the company when business is being awarded. The UK
Law Commission has observed that not all bribes are 'dishonest' in the sense
required. An advantage conferred may be 'illegitimate, unreasonable,
disproportionate or otherwise "improper" without being dishonest'.
The AGD also noted that while the offence is founded on the concept of
'improper influence', the non-exhaustive list of matters that a trier of fact
may have regard to when determining whether influence is improper includes
whether the benefit was provided, offered or promised dishonestly.
The AGD explained that:
...dishonesty in this context would be determined according to
the standards of ordinary people and whether the defendant must have realised
what they were doing was dishonest according to those standards.
Extending the offence to cover
bribery to obtain a personal advantage
The current foreign bribery offence applies to bribery of foreign public
officials to obtain or retain business or business advantages.
However, in line with the 2017 consultation, the proposed new offence in the bill
would also apply where the bribe was to obtain or retain a personal advantage.
The EM to the bill explains that:
Law enforcement experience has shown in some cases, foreign
bribery can occur where the advantage sought is personal. These could include
instances where a foreign official is improperly influenced in the bestowal of
personal titles or honours or in relation to the processing of visa or
By way of example, the AGD specified that:
Personal advantages could include influencing a foreign
public official to bestow a personal title or honour, or in relation to
reducing personal tax liability. It is appropriate to criminalise this conduct
given that it equally undermines good governance.
The 2017 consultation paper clarified that if the offence was extended
in this way, 'the existing defences would be available' and '[t]he CDPP would
retain the discretion to prosecute matters which are in the public interest'.
The Uniting Church in Australia welcomed the proposed change to the
existing offence to cover bribery to obtain a personal advantage 'so that the
bribery offence applies to where the bribe was paid to obtain or retain an
advantage of any kind'.
The majority of submissions to the 2017 consultation paper also supported
this proposed amendment.
For example, the IBAACC described the proposed amendment as:
...a sensible extension of liability to ensure that there is a
prohibition of payment of bribes to foreign public officials for personal as
well as business purposes.
The committee notes that in the main, the bill implements the proposed
changes to the offence as outlined in the AGD's March 2017 consultation paper.
The committee acknowledges the inherent difficulties in determining when
someone becomes a 'candidate for office' in other jurisdictions. However, it
considers that Australia's foreign bribery laws should operate to criminalise
individuals and companies who seek to bribe candidates for office, with the
intention of obtaining an advantage if the candidate takes office. The
committee is of the view that candidates for public office are vulnerable to
influence in a similar way to foreign public officials. Therefore, the
committee sees no reason why a bribe which occurred before a public official's
formal appointment to office should be treated any differently to a bribe
received at, or after, such appointment.
The committee agrees with stakeholders that in determining whether a
foreign public official is improperly influenced, it is irrelevant whether the
official is improperly influenced within or beyond their official duties. The
committee notes the suggestion that widening the definition of the foreign
public official's capacity similar to the formulation in the United Kingdom's Bribery
Act 2010 may be preferable to the omission currently proposed. However, the
committee believes that removing the requirement that the foreign public
official must be influenced in the exercise of the official's duties will ensure
that Australia's foreign bribery legislation is operating as intended, and that
prosecution of foreign bribery matters is not unnecessarily protracted.
The committee considers it essential that the challenges of proving the
current element of the foreign bribery offence that a benefit or business
advantage was 'not legitimately due' be eliminated. The committee observes that
stakeholder opinion was divided as to whether the current threshold of 'not
legitimately due' should be replaced with the concept of 'dishonesty' or to
provide that the benefit must be 'improper'. However, the committee is of the
view that because some foreign bribery does not involve dishonesty, introducing
the concept of 'improper influence' is appropriate. The committee also notes
that 'dishonesty' is included as a relevant factor for determining whether
influence is improper under the proposed new offence.
The committee recognises the importance of prohibiting all conduct that
undermines good governance, including foreign bribery where the advantage
sought is personal. The committee therefore agrees with stakeholders that
bribery of a foreign public official to obtain or retain business or business
advantage should be treated in the same manner as bribery of a foreign public
official to obtain or retain personal advantage.
Introducing a new corporate offence of failing to prevent foreign bribery
The Criminal Code currently provides for corporate criminal
responsibility at the federal level;
with liability usually only resulting where both the physical element (the
conduct) and the fault element (the intention, knowledge, recklessness or
negligence) of an offence are satisfied.
The physical element of an offence will be attributed to a corporation
where it was committed by an employee, agent or officer acting within the
actual or apparent scope of his or her employment.
The fault element of an offence (for foreign bribery, a guilty
intention) will be attributed to the corporation where it is proved that:
- the corporation's board of directors intentionally or
knowingly carried out the relevant conduct or expressly, tacitly or impliedly
authorised or permitted the commission of the offence;
- a high managerial agent of the corporation intentionally
or knowingly engaged in the relevant conduct or expressly, tacitly or impliedly
authorised or permitted the commission of the offence;
- a corporate culture existed within the body corporate
that directed, encouraged, tolerated or led to non-compliance with the offence
- the body corporate failed to create and maintain a
corporate culture that required compliance with the relevant provision.
'High managerial agent' is defined in the Criminal Code to mean an
employee, agent or officer of the body corporate with duties of such
responsibility that his or her conduct may fairly be assumed to represent the
body corporate's policy.
'Corporate culture' is defined in the Criminal Code to mean an attitude,
policy, rule or practice existing in the corporation generally or in the part
of the corporation where the relevant offence was committed.
The new offence
In line with the 2017 consultation proposal, the bill introduces a new
corporate offence of failing to prevent foreign bribery. Under the new offence,
a company will be criminally liable where, for the profit or gain of the
company, an 'associate':
commits an offence under section 70.2 (the intentional bribery of
a foreign public official); or
engages in conduct outside Australia that would constitute an
offence under section 70.2.
'Associate' is defined in the bill as an officer, employee, agent,
contractor, subsidiary or controlled entity of the person/company.
The EM explains that:
The definition of associate is also intended to have broad
application to a person who provides services for or on behalf of another
person. Such a person would not necessarily need to be an officer, employee,
agent, contractor, subsidiary or controlled entity.
'Subsidiary' is defined in Division 6 of the Corporations Act 2001 (Corporations
Act). Pursuant to section 46 of the Corporations Act, a subsidiary includes a
body corporate that is incorporated outside of Australia and otherwise meets
the definition of subsidiary in the Act. Control of a body corporate is also
defined in Division 6 of the Corporation Act. Section 50AA provides that an
entity controls a second entity if the first entity has the capacity to
determine the outcome of decisions about the second entity's financial and
Under the new offence, corporate criminal liability will be automatic,
regardless of whether the persons involved are convicted; and a defence will be
available where a company can prove it had adequate procedures to prevent and
detect foreign bribery.
The proposed maximum penalty for the new offence is the same as that for
the existing foreign bribery offence. The AGD clarified that:
This reflects the serious nature of bribery and corruption.
It will ensure that the offence serves as an appropriate deterrent to companies
being wilfully blind to corrupt practices within their business. The Guide
to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers recognises
that in some circumstances, a specified maximum penalty may not provide
sufficient deterrent. It reflects that, in such circumstances, a maximum
penalty expressed as a multiple of the gain obtained through wrongdoing may be
more appropriate. This rationale applies to foreign bribery, where wrongdoing
can lead to substantial financial benefits and could involve large
corporations, for whom a specified maximum penalty may be insufficient
deterrent. It is appropriate that all companies can be held accountable for bribery
by their associates where they do not take steps designed to prevent such
conduct from occurring.
The AGD also explained that the United Kingdom has successfully
implemented a failure to prevent foreign bribery offence, similar to that
proposed in the bill, and that it 'has reportedly had a significant positive
influence on the adoption of effective corporate compliance programs to prevent
The majority of submitters supported the introduction of the new
For example, in offering clear support for the new offence, Dr Vivienne Brand, an
Associate Professor of Law at Flinders University, commented that:
The difficulties inherent in bringing a successful
prosecution under Australia's existing foreign bribery provisions are well
known, and have been well documented. In this light the need for reform is
clear...Introduction of an offence of 'failing to prevent bribery of a foreign
public official' significantly enhances the likelihood of successful foreign
bribery prosecutions in the Australian context, and ought to be supported.
The Uniting Church in Australia also endorsed the new offence, and
suggested that it:
...will help deter those businesses that set up intermediaries
to make business arrangements through which bribes are paid. Under the current
law it is very difficult to gain a prosecution in such [a] case as the company
can always argue they did not know what their intermediary was doing.
However, while offering their in-principle support for the new offence,
some submitters raised concerns about the breadth of the definition of
'associate', the reversal of the onus of proof, and the imposition of absolute
AICD commended the policy intention of the proposed new failure to
prevent foreign bribery offence,
but recommended that the following amendments be implemented to improve the
fairness and proportionality of the bill:
Limit the definition of 'associates' so that it only captures
a corporation's officers, employees and agents. In this context it is important
to recognise that subsidiaries, independent contractors, and other entities 'controlled'
by the corporation may themselves be subject to the revised foreign bribery
offence and, if they are a corporation, the failure to prevent foreign bribery
Restore the onus of proof so that the prosecution needs to
prove the corporation failed to have adequate procedures in place to prevent
the commission of a foreign bribery offence by an associate. Given the
seriousness of the offence and penalties for breach, the onus of proof should
rest with the prosecution, as is ordinarily the case. Failing that, at the very
least, the standard of proof imposed on the defendant should be reduced from
the legal burden to the evidential burden. This would still require a
corporation to adduce or point to evidence that suggested a reasonable
possibility that it had adequate procedures in place to prevent an associate
committing an offence, but would diminish the likelihood of an unfair result.
Replace the 'absolute liability' nature of the offence with a
requirement that the prosecution prove that the corporation failed to prevent
foreign bribery intentionally, knowingly or recklessly.
Similarly, the Law Council suggested that the government reconsider the
definition of 'associate', the reversal of the onus of proof, and the
imposition of absolute liability.
While observing that there are strong reasons to support the inclusion
of the new failure to prevent foreign bribery offence, Professor Simon Bronitt
and Research Assistant, Ms Zoe Brereton, also raised concerns about the
imposition of absolutely liability. Professor Bronitt et al suggested
Framed as a form of absolute liability, the FPFB [failure to
prevent foreign bribery] offence is a blunt 'catch all' provision that does not
differentiate between different degrees of corporate culpability. There is a
risk that the FPFB offence undermines a fundamental tenet of criminalisation
that requires distinctions to be drawn between types of crime and penalties
based on different levels of culpability...there is a risk that this absolute
liability 'failure to prevent' offence will become the default Catch-All charge
for all cases of foreign bribery. As a broad 'fallback' offence, the FPFB
offence is likely to assume a key role in DPA negotiations in foreign bribery
cases. It is vital that negotiations over foreign bribery allegations do not
inappropriately divert away from criminal prosecution cases of serious bribery
(determined by assessing blameworthiness and harm) that would properly merit
investigation, prosecution and punishment through the criminal justice system.
The definition of 'associate', the reversal of the onus of proof, and
the imposition of absolute liability proposed in the bill are explored below.
Definition of 'associate'
The AGD made clear that it is appropriate for a corporation to consider
its associates as part of any foreign bribery risk assessment and to ensure
that any identified risk is mitigated appropriately. The AGD explained that:
....operational experience has demonstrated that associates not
controlled by the corporation (but that provide services for it) are still in a
position to commit foreign bribery for the profit or gain of the corporation.
Moreover, in the absence of this expanded definition, the AGD suggested that:
...corporations may be able to structure their affairs in ways
which allow them to improperly limit or avoid exposure to criminal liability.
Noting the serious nature of foreign bribery and the identified barriers to
successful prosecutions, the proposed broad definition of 'associate', balanced
by the limitations on corporate criminal liability, is reasonable and
The Uniting Church in Australia welcomed the definition of associate
contained in the bill because it 'is broad to capture any person who provides
services for or on behalf of another person, not limiting the definition to an
officer, employee, agent, contractor, subsidiary or controlled entity'.
Indeed, IBAACC went so far as to suggest 'that the definition of 'associate'
for the purposes of the new corporate offence might be seen as too limited'.
IBAACC was particularly concerned:
...to ensure that the legal status of an 'associate' is in no
way limited, and should clearly and unambiguously capture conduct by [a] natural
or incorporated person, including any association (incorporated or
unincorporated) or persons operating through a trust or any other structure
designed or created to facilitate the relevant conduct in a manner to shield
others from potential liability...the question of whether the payer of the bribe
performs services on behalf of a company should be determined by reference to
all the relevant circumstances rather than what appears to be an exclusive
However, the AGD considered that the proposed definition of 'associate'
which includes any person who 'otherwise performs services for or on behalf of
the other person [i.e. the corporation]':
...appropriately captures, in addition to the expressly listed
categories of person, any natural or legal person who is effectively acting for
or on behalf of the company.
Noting the United Kingdom's experience with a similar 'failure to
prevent foreign bribery' offence, ML & B suggested that further guidance
may be required in relation to how the term 'associate' will be applied in
The challenge for corporates subject to the UKBA [United
Kingdom's Foreign Bribery Act 2010], has been determining, without
further guidance or judicial commentary, the extent to which they may be liable
for parties down the 'contractual chain' from their direct counterparty. The UK
has issued guidance stating that the way in which commercial organisations may
decide to approach bribery risks, which arise as a result of a supply chain is
by: (i) employing anti-bribery procedures such as risk based due diligence and
using anti-bribery terms and conditions in its relationships with the
contracting counterparty; and (ii) requesting that the counterparty adopt a
similar approach with the next party in the chain.
The AGD indicated that it anticipates that guidance will be published
...will discuss the concept of 'associate' and its practical
application to measures that a body corporate can take to prevent foreign
bribery by its associates.
Imposition of absolute liability
As stated above, under the new offence of failing to prevent bribery, a
corporation will be automatically liable where an associate of the corporation
commits bribery for the profit or gain of the corporation. The AGD explained
Prescribing absolute liability with respect to the company's
state of mind towards the actions of its associate means the prosecution would
not need to prove a fault element, and removes the ability for a company to
avail itself of the honest and reasonable mistake of fact defence (section 9.2
of the Criminal Code) in relation to the associate's actions. This is designed
to capture circumstances where a company is wilfully blind towards the wrongful
conduct of its associates, and encourage companies to be proactive and
accountable and to adopt effective anti-bribery compliance measures. The only
way for them to avoid liability is to have adequate procedures in place...
The AGD informed the committee that attaching absolute liability to the
address the issues Australian prosecuting agencies have
previously experienced with the lack of written evidence to establish intention
in foreign bribery cases;
create a strong positive incentive for corporations to adopt
measures to prevent foreign bribery;
overcome challenges in establishing liability of corporate
entities for foreign bribery;
ensure that corporations are not able to avoid liability through
wilful blindness; and
bring about a shift in compliance culture across Australian
The AGD also noted that the objective of the bill is not 'to impose
criminal sanctions against corporations with well integrated compliance regimes
that experience an incident of corruption on their behalf', and that:
...to achieve an appropriate balance between the objectives of
the legislation and the burden placed on corporations, a full defence is
available to corporations with adequate procedures. 
With respect to adequate procedures, the AGD confirmed that the
Attorney-General will publish guidance:
...to assist corporations to implement appropriate mitigation
strategies, and support the development of adequate procedures to prevent
Adequate procedures are discussed in more detail below.
Reversal of the onus of proof
Ordinarily, the defendant should bear an evidential, not legal, burden
of proof. The new failing to prevent foreign bribery offence proposed in the
bill reverses the onus of proof, placing the 'legal burden' on the defendant
corporation to prove that it had adequate procedures in place to prevent an
associate's commission of the foreign bribery offence.
Corporations will only be able to avoid liability for this new offence
by proving that they had adequate procedures in place designed to prevent an
associate from committing foreign bribery. The corporation would bear a legal
burden in relation to this matter, and the standard of proof the defendant
would need to discharge in order to prove the defence is the balance of
The AGD emphasised to the committee that the policy intention of the new
...to encourage corporations to adopt adequate compliance
measures to prevent bribery and to more effectively address situations of
wilful blindness on the part of corporations' senior management.
Noting that foreign bribery often occurs in instances of
recklessness or wilful blindness by senior management to activities occurring
within their corporations and a lack of readily available written evidence to
establish intention, the AGD explained that:
The government considers it appropriate to require
corporations to prove existence of a robust and well-integrated compliance
regime, rather than to point to evidence that suggests a reasonable possibility
that such a situation exists (as would be the case if the 'evidential burden'
defence was prescribed instead)...Placing a legal burden on corporations to prove
the existence of adequate procedures will enable prosecuting authorities to
deal more appropriately with corporations where senior management turn a blind
eye to bribery occurring in their businesses.
As stated above, a company will not be liable under the new failure to
prevent foreign bribery offence where it can prove it had adequate procedures
in place to prevent and detect foreign bribery.
The bill provides that the minister must publish guidance on the steps a
body corporate can take to prevent an associate from bribing foreign public officials.
The Law Council emphasised the importance for detailed guidance to be
developed as to what constitutes an effective compliance program and the steps
that should be taken to properly implement such a program. The Law Council suggested
that 'alignment between international standards in this area would be important
to ensure effective compliance for those operating across jurisdictions' and
An adequate opportunity for review and consultation on any
proposed guidelines prior to publication and to the introduction of any new
corporate offence for 'failing to prevent' foreign bribery would be critical.
The AGD confirmed that it 'intends to publicly consult on the draft
and explained that the ministerial guidance:
...will be principles-based, aimed at helping corporations
understand the steps they can take to prevent bribery of a foreign public
official. The guidance will help corporations understand the policies and
procedures they may put in place to implement robust and effective steps to
prevent foreign bribery, according to their specific circumstances.
Corporations that are able to point to the existence of
well-integrated compliance regimes would be able to establish the defence in
proposed subsection 70.5A(5).D.
In addition, the AGD confirmed that, in line with the preference of
industry stakeholders to the 2017 consultation, the guidance will be informed
by the guidance issued by the United Kingdom's Ministry of Justice in relation
to section 9 of the Bribery Act 2010.
Further, the AGD advised that:
In preparing this guidance, the department will also have
regard to other existing guidance, including that published by the Australian
Trade Commission; United States Department of Justice; International
Organization for Standardization; and OECD, UNODC [United Nations Office on
Drugs and Crime] and World Bank.
The AGD suggested that, while it is reasonable to expect corporations of
all sizes to put in place appropriate and proportionate procedures to prevent
bribery from occurring within their business, the application of steps to
prevent foreign bribery will differ substantially from corporation to
It is not reasonable to expect small and medium-sized
enterprises to put in place a compliance program of the same size that would be
required of a large multi-national corporation. Similarly, a corporation with
limited exposure to foreign bribery risk should not be expected to take
mitigation measures as extensive as another corporation that has a
significantly greater risk profile. 
Dr Brand suggested that internal corporate whistleblowing systems should
form part of the adequate procedures designed to prevent foreign bribery.
Dr Brand argued that including clear guidance on the extent to which good
internal whistleblowing systems can be used as evidence of the taking of
'adequate steps' to prevent foreign bribery by an associate is important
whistleblowing activity is positively correlated with anticorruption
whistleblowing is a relevant factor under the United Kingdom's
analogous 'adequate steps' foreign bribery provisions; and
a significant reform of Australia's corporate whistleblowing
regime is currently underway that should lead to increased levels of corporate
whistleblowing activity, making this anti-corruption mechanism even more
The reforms to Australia's corporate whistleblowing regime which are
currently before the Parliament are contained in the Treasury Laws Amendment
(Enhancing Whistleblower Protections) Bill 2017.
The United Kingdom's guidance about procedures which relevant
corporations can put in place to prevent persons associated with them from
bribing, includes a non-exhaustive list of the topics that bribery prevention
procedures might embrace depending on the particular risks faced. This
non-exhaustive list includes 'the reporting of bribery including 'speak up' or
'whistle blowing' procedures.
In addition, the United Kingdom's guidance also provides that, as a 'top-level
commitment', commercial organisations should include 'internal and external
communication' of their 'commitment to zero tolerance to bribery'.
The guidance specifically provides that:
This could take a variety of forms. A formal statement
appropriately communicated can be very effective in establishing an
anti-bribery culture within an organisation. Communication might be tailored to
different audiences. The statement would probably need to be drawn to people's
attention on a periodic basis and could be generally available, for example on
an organisation's intranet and/or internet site.
The United Kingdom's guidance also provides examples of what effective
formal statements that demonstrate top level commitment are likely to include,
...reference to the range of bribery prevention procedures the
commercial organisation has or is putting in place, including any protection
and procedures for confidential reporting of bribery (whistle-blowing).
The AGD indicated that 'the department intends to consider' including
internal corporate whistleblowing systems as part of any recommended adequate
procedures 'designed to prevent the bribery of a foreign public official.'
The committee acknowledges the complex nature of foreign bribery and the
challenges faced by prosecutors to establish criminal liability for companies under
the current offence. In particular, the difficulties surrounding proving
The committee is of the view that the introduction of the new corporate
offence of failing to prevent foreign bribery will capture circumstances where
a company is wilfully blind towards the wrongful conduct of its associates. In
this context, the committee considers the reforms proposed in the bill will
also encourage companies to be proactive and accountable for the actions of
their associates and to adopt effective anti-bribery compliance measures. The
committee also believes it is reasonable to expect corporations of all sizes to
put in place appropriate and proportionate procedures to prevent foreign
bribery from occurring within their businesses, and to be required to prove the
existence of these procedures in instances of non-compliance.
The committee recognises that there is a risk that the new offence of
failing to prevent foreign bribery could become a broad 'catch all' offence for
all cases of foreign bribery. The committee considers it vital that the new
offence does not become the default charge, and encourages authorities to continue
to prosecute the primary foreign bribery offence where appropriate.
The committee acknowledges concerns raised by stakeholders about the
proposed definition of 'associate' in the bill. However, the committee
considers that the definition contained in the bill appropriately captures, any
natural or legal person who is effectively acting for or on behalf of the
company. Given the serious nature of foreign bribery and the identified
barriers to successful prosecutions, the committee suggests that that the proposed
broad definition of 'associate', balanced by the limitations on corporate
criminal liability, is reasonable and appropriate.
The committee recognises that the new offence places a heavy burden of
proof on corporations, but notes that the new offence simply brings Australia
into line with similar jurisdictions, such as the UK. In particular, the
committee considers it appropriate to require corporations to prove the
existence of an adequate compliance regime.
The committee notes that wrongdoing in the foreign bribery space can
lead to substantial financial benefits and could involve large and lucrative
corporations. With this in mind, the committee is of the opinion that the
available penalties for the new offence are appropriate, and will act as
The committee welcomes the AGD's advice that it intends to publicly
consult on the minister's guidance that is to be issued on adequate procedures.
In addition, the committee is encouraged by the advice that the AGD anticipates
that the minister's guidance will discuss the concept of 'associate' and its
practical application to measures that a body corporate can take to prevent foreign
bribery by its associates.
The committee also notes the AGD's evidence that the government will consider
including internal corporate whistleblowing systems as part of any recommended
adequate procedures designed to prevent the bribery of a foreign public
official. The committee fully supports the inclusion of internal corporate
whistleblowing systems as part of the adequate procedures a corporation can
take to prevent an associate from bribing foreign public officials. The
committee considers that such measures—together with the reforms to Australia's
corporate whistleblowing regime which are currently before the Parliament in
the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017—should
lead to increased levels of corporate whistleblowing activity.
The committee recommends that as part of the public consultation on the
minister's guidance that is to be issued on adequate procedures, the government
consider publishing an exposure draft which allows corporate stakeholders a
four week period to provide comment.
The committee recommends that the government include internal corporate
whistleblowing systems as part of any recommended adequate procedures designed
to prevent foreign bribery by its associates.
Introducing a deferred prosecution agreement scheme
Under a deferred prosecution agreement (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. DPA schemes
have been implemented in the United Kingdom and the United States.
The proposed scheme
The bill introduces a DPA scheme for companies (not individuals);
and applies only to listed Commonwealth 'serious corporate crime' offences,
such as: fraud, false accounting, foreign bribery, money laundering, dealing
with proceeds of crime, forgery and related offences, and the exportation
and/or importation of prohibited or restricted goods.
It also prescribes secondary liability offences under section 11 of the
Criminal Code to which a DPA may apply which are likely to arise out the same
conduct that constitutes or may constitute the primary 'serious corporate
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 bill prescribes the following mandatory terms 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, the bill 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 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
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.
Submitters to the inquiry, as well as the majority of responses to the
2017 and 2016 consultations endorsed the introduction of DPAs in Australia. For
example, ML & B observed that 'the DPA has become an established
regulatory tool in the US and is now an emerging tool for prosecutors in Europe
and, potentially, Asia, through which authorities have sanctioned corporate
criminal conduct'. In this context, ML &B suggested that:
By implementing a DPA framework, Australia is following the
international standards in providing its prosecution authorities with a
flexible tool to deal effectively with corporate crime while encouraging a
transformational shift in approach by corporates towards compliance, and all
the while retaining the option for the prosecution of corporates and
While cautioning the need to ensure that individuals or corporations do
not escape being held to account for serious criminal activity, the Uniting
Church in Australia also welcomed the introduction of a DPA scheme, explaining
..sees DPA’' as part of a suite of measures needed to deter,
detect and prosecute corporate criminal behaviour with additional measures
being whistleblower protection and reward in the private sector, a public
beneficial ownership register and making it easier to for law enforcement
agencies to prosecute money laundering offences. 
The IBAACC and the Law Council also supported the introduction of a DPA
scheme in Australia, and specifically endorsed the offences to which a DPA may
relate, and the identified mandatory and optional terms of a DPA proposed in
Simon Bronitt et al also supported the introduction of a DPA scheme in
Australia; however, recommended that the bill be amended to insert a
purpose/object clause into the relevant part of the Criminal Code. Simon Bronitt
et al argued that such a clause should expressly provide 'that the aims of the
DPA are preventive and restorative' and that 'the DPA is not intended to be a
vehicle for punishment or preliminary determination of criminal guilt'.
Content of DPAs
The Uniting Church in Australia, suggested that the following terms and
features should be included in the bill as mandatory terms for all DPAs:
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.
However, the non-exhaustive list of terms that may be included in a DPA
set out in the bill includes requiring a corporation to forfeit any likely
benefits (including profits) accrued as a result of the misconduct specified in
a DPA. The AGD also explained that as the bill requires the terms of a DPA to
be in the interests of justice, and to be fair, reasonable and proportionate:
[i]nformation 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.
In addition, the AGD drew the committee's attention to the fact that the
feedback in relation 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.
Similar to the approach taken by the UK,
the 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 approval process
ML & B observed that one of the main differences between the DPA
scheme in the United Kingdom, and that proposed in the bill, was that in the United
Kingdom approval of a DPA 'must come from a judge' not an 'approving officer'.
In this regard, the AGD assured the committee that under the scheme
proposed in the bill DPAs in Australia will be subject to independent and
expert scrutiny as all DPAs will need to be approved by a DPA 'approving
officer' before entering into force. The AGD explained that:
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
The IBAACC raised concerns about whether the decision (or reasons) of
the 'approving officer' of a DPA are going to be published.
IBAACC argued 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 explained that in circumstances where a DPA is not approved, the
bill does not require the 'approving officer' or any person or authority to
publish a notification or reasons.
The AGD emphasised 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 highlighted that the bill does not require the reasons
for approving a DPA to be published because:
[i]t 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.
ML & B observed that 'monitors' are an important tool in the United
Kingdom to ensuring compliance with the terms of the DPA and that corporates
implement necessary improvements to their compliance programmes (thereby reducing
the risk of corporate re-offending).
In this context, ML & B 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.
However, the AGD informed the committee 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 also advised that information on the possible roles and
appointment of independent monitors will be included in the DPA Code of
Practice which is currently being developed.
This is discussed in more detail below.
Guidance to assist corporates
The DPA model proposed in the 2017 consultation contemplated that
detailed guidance would be issued outlining when a prosecutor is likely to
offer DPA negotiations. A number of stakeholders to the consultation 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.
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.
With respect to self-reporting, following the introduction of this bill,
the AFP and the CDPP issued Best Practice Guidelines, Self-reporting of
foreign bribery and related offending by corporations (Guidelines for
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 (foreign bribery).
The IBAACC noted that:
...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 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
Further, in addition to the Guidelines for self-reporting, the AGD has
indicated that it 'is currently developing a draft DPA Code of Practice for
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);
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 notes that DPA schemes have been implemented in the United
Kingdom and the United States. The committee also notes that in the main, the
bill implements the DPA model as outlined in the government's public consultation
in March 2017. Evidence presented to the inquiry, as well as the majority of
responses to the March 2017 consultation endorsed the introduction of DPAs in
The committee recognises that the success of the DPA scheme is
contingent on striking an appropriate balance between the need to encourage
self-report serious offending and the need to hold corporations accountable for
serious corporate crime. The committee considers that the measures proposed in
the bill 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 endorses the offences to which a DPA may relate, and the
identified mandatory and optional terms of a DPA proposed in the bill.
The committee acknowledges stakeholders comments regarding the content
of DPAs. However, the committee considers that the bill provides adequate
detail in this regard, as it: specifies that the terms of all DPAs must be in
the interests of justice, fair, reasonable and proportionate; and requires that
a corporation admit to agreed facts detailing the nature and scope of their
offending, which, should they subsequently materially contravene the DPA, will
be taken to be the agreed facts for the purposes of the criminal proceeding.
The committee is of the view that as DPA approving officers will be
former judges with relevant knowledge, they will bring appropriate expertise in
fair and impartial adjudication to the DPA process.
The committee agrees with stakeholders that ensuring compliance with the
terms of a DPA (including that corporates implement necessary improvements to
their compliance programs and thereby reduce the risk of corporate
re-offending) is critical to the success of the scheme. In this context, the
committee is encouraged by the AGD's advice that information on the possible
roles and appointment of independent monitors will be included in the DPA Code
of Practice which is currently being developed.
The committee notes the Best Practice Guidelines issued by the AFP and
the CDPP—Self-reporting of foreign bribery and related offending by
corporations. The committee believes these guidelines are a positive step
toward encouraging corporates to self-report foreign bribery. However, in
addition to this guidance, the committee considers it essential that the DPA
Code of Practice (which is currently being developed) clearly set out when a
company may be invited to enter into DPA negotiations to give certainty to
those corporations who self-report. In this context, the committee encourages
the government to engage with the corporate sector on the Draft DPA Code of
Practice as part of the public consultation process.
The committee recommends that as part of the public consultation on the
draft Deferred Prosecution Agreement Code of Practice, the government consider
publishing an exposure draft which allows corporate stakeholders a four week
period to provide comment.
The committee recommends that the bill be passed.
Senator the Hon. Ian Macdonald
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