Senate committee recommends passing Combating Corporate Crime Bill

Introduction

Last week, the Legal and Constitutional Affairs Legislation Committee recommended that the government pass the Crimes Legislation Amendment (Combating Corporate Crime) Bill 2019 (2019 Corporate Crime Bill). It is the latest development in the Australian government’s ongoing efforts to combat foreign bribery and corruption.

The 2019 Corporate Crime Bill is substantively similar to an identically titled bill introduced to Parliament in 2017, which lapsed due to the Australian Federal election. It is also consistent with key recommendations from the Foreign Bribery report released by the Senate Standing Committee on Economics in 2018. The key changes heralded by the 2019 Corporate Crime Bill are detailed below.

Key changes:

1. Broadening the offence of “bribery of a foreign public official”

The 2019 Corporate Crime Bill proposes to:

• extend the definition of “foreign public official” to include candidates for office;
• alter the requirement that a benefit was “not legitimately due”, to a requirement that a defendant sought to “improperly influence” a foreign government official;
• remove the requirement that foreign officials must be improperly influenced in their “official duties”; and
• extend the offence to include bribery to obtain a “personal advantage”, in addition to bribery to obtain a “business advantage”.

2. Introducing strict liability for corporations “failing to prevent” foreign bribery by their “associate”

A corporation is liable if an “associate” commits bribery for the profit or gain of the corporation, and the corporation did not have adequate procedures in place to prevent the offence.

An “associate” is an officer, employee, agent contractor or subsidiary of the corporation. What constitutes “adequate procedures” is to be determined on a case-by-case basis. However, the government has published draft guidance on the mechanisms that may be sufficient, which we will discuss below.

3. New definition for “dishonest”

“Dishonest” will mean “dishonest according to the standards of ordinary people.”

4. New Commonwealth Deferred Prosecution Agreement (DPA) scheme

Under the DPA scheme, the Commonwealth Director of Public Prosecutions (CDPP) can negotiate arrangement with corporations engaged in corporate crimes, where the CDPP agrees not to prosecute for those corporate crimes, in exchange for the corporation’s compliance with specified conditions. These conditions can include:

• cooperating with investigations;
• improving compliance policies;
• admitting to agreed facts describing the misconduct;
• paying financial penalties; and
• disgorging profits obtained as a result of the misconduct.

The DPA scheme aims to encourage corporations to self-report misconduct and enhance their corporate culture, by minimising the financial and reputational costs of litigation.

Our recommendations

In light of these imminent changes, we recommend that businesses evaluate their existing anti-bribery and corruption controls. Based on the government’s draft guidance on “adequate procedures” to prevent foreign bribery, we particularly suggest that businesses ensure that they have:

• training and policies in relation to bribery of public officials, charitable giving, political donations, and gifts and entertainment;
• risk assessment procedures, to identify, avoid and manage conflicts of interest;
• financial and commercial controls, such as auditing and expenditure approval measures;
• due diligence on employment arrangements and business relationships;
• confidential whistleblowing reporting mechanisms; and
• monitoring and review of compliance programs.

Norton Rose Fulbright is a global law firm, with 63 offices across Europe, the USA, Canada, Latin America, Asia Pacific, the Middle East and Central Asia. We advise corporates, financial institutions and senior executives extensively on the implications of international business ethics and anti-corruption best practice standards, wider developments in the legislative and corporate landscape, and in relation to internal and government-led investigations. A particular focus of our advice has been on the concept of adequate procedures and the broader issues of risk management and compliance.