Foreign bribery offences and penalties

Overview

Bribing, or attempting to bribe, a foreign public official is a serious crime in Australia. Australian individuals and corporations can be prosecuted under Australian law and the laws of foreign countries for bribing foreign officials. The offences for foreign bribery carry significant penalties for individuals and companies.

The offences

For an individual

The offence of bribing a foreign public official is contained in section 70.2 of the Criminal Code. The offence has several elements, all of which must be present for the offence to apply. A person is guilty of the offence if the person intentionally:

  • provides, offers or promises a benefit to another person, or
  • causes a benefit to be provided, offered or promised to another person.

The person must act with the intention of improperly influencing a foreign public official in order to obtain or retain business or a business or personal (non-business) advantage (whether or not for the person). A personal advantage could include influencing a foreign public official to bestow a personal title or honour, the processing of visa or immigration requests or in relation to reducing personal tax liability.

The offence applies regardless of whether or not the person:

  • intended to influence a particular foreign public official, and
  • intended to obtain or retain the particular advantage, and
  • was successful in obtaining or retaining the advantages sought.

For a corporation

Under Division 12 of the Criminal Code, corporations can be liable for Commonwealth offences. This means that a corporation can be found guilty of foreign bribery as a result of the actions of its employees and agents. This can occur where:

  • The corporation’s top-level management or board of directors intentionally, knowingly or recklessly committed the foreign bribery offence
  • the corporation’s top-level management or board of directors expressly, tacitly or impliedly authorised, or permitted the commission of, the foreign bribery offence by an agent of the corporation.
  • the corporation’s top-level management or board of directors expressly, tacitly or impliedly authorised, or permitted the commission of, the foreign bribery offence by an agent of the corporation
  • an agent of the corporation offered a bribe and it is shown that a corporate culture existed within the corporation that directed, encouraged, tolerated or led to, the commission of the foreign bribery offence
  • an agent of the corporation offered a bribe and it is shown that the corporation failed to create and maintain a corporate culture that required compliance with the laws against bribing foreign public officials.

The offence above is separate from, and in addition to, the ‘failure to prevent’ offence contained in section 70.5A of the Criminal Code. The ‘failure to prevent’ offence in section 70.5A of the Code applies to a body corporate that is:

  • a constitutional corporation (a financial or trading corporation formed in Australia or a foreign corporation)
  • incorporated in a Territory, or
  • taken to be registered in a Territory under section 119A of the Corporations Act 2001 (Cth) (the Corporations Act).

A corporation may still be convicted of the ‘failure to prevent’ offence even if the associate has not been convicted of an offence under section 70.2 of the Criminal Code.

Associate

Section 70.1 of the Criminal Code defines ‘associate’. A person is an ‘associate’ if the first-mentioned person:

  • is an officer, employee, agent or contractor of the other person
  • is a subsidiary (within the meaning of the Corporations Act 2001) of the other person
  • is controlled (within the meaning of the Corporations Act 2001) by the other person, or
  • otherwise performs services for or on behalf of the other person.

Foreign public officials

Section 70.1 of the Criminal Code defines ‘foreign public official’. The definition is broad and includes:

  • an individual who performs official duties under a foreign law
  • an employee of a foreign public enterprise
  • an employee or official of a public international organisation
  • an employee or official of a foreign government
  • an authorised intermediary of a public official (or a person who represents themselves to be so)
  • a member of the executive, legislature or judiciary of a foreign country, including heads of state, ministers and their staff
  • an individual holding an official post as a result of a local custom
  • an individual standing or nominated as a candidate to be a foreign public official
  • an individual providing a public service as defined in the foreign country’s domestic law.

Jurisdictional reach

Australia’s foreign bribery laws have extra-territorial effect and apply to conduct not only occurring in Australia, but outside Australia where the offence is committed by an Australian citizen or resident, or by an Australian corporation (incorporated by or under a law of the Commonwealth or of a state or territory).

The corporate ‘failure to prevent’ offence will therefore apply to Australian corporations for conduct:

  • committed inside Australia by an associate (whether or not the associate is an Australian individual or other person) that constitutes an offence against 70.2 of the Criminal Code, or
  • committed outside Australia by an associate (whether or not the associate is an Australian individual or other person) that would constitute an offence against 70.2 of the Criminal Code if it had been engaged in in Australia.

The corporate ‘failure to prevent’ offence will apply to foreign corporations for conduct:

  • committed inside Australia by an associate (whether or not the associate is an Australian individual or other person) that constitutes an offence against 70.2 of the Criminal Code.

Penalties

The penalties for foreign bribery offences are found in section 70.2 of the Criminal Code. For an individual, the penalty is imprisonment for a maximum of 10 years, a maximum fine of 10,000 penalty units, or both. For a corporation, the maximum penalty is whichever is greater of the following:

  • 100,000 penalty units
  • if the value of the benefit can be determined – three times the value of the benefit obtained, or
  • if the value of the benefit cannot be determined – 10% of the company’s annual turnover.

Profits obtained through foreign bribery can be seized and forfeited as proceeds of crime under the Proceeds of Crime Act 2002 (Cth).

Defences

Under Australian law, there are two offence-specific defences available in relation to the foreign bribery offence at section 70.2 of the Criminal Code:

  • conduct lawful in foreign public official’s country (Section 70.3 of the Criminal Code), and
  • facilitation payments (Section 70.4 of the Criminal Code).

There is one offence-specific defence available in relation to the corporate ‘failure to prevent’ offence at section 70.5A of the Criminal Code:

  • adequate procedures (Subsection 70.5A(5) of the Criminal Code).

Other standard criminal law defences in Chapter 2 of the Criminal Code, including duress, may also apply as a defence to the foreign bribery offence. Ignorance of the law is not a defence.

Conduct lawful in foreign public official’s country

The defence applies where a written law in force in the foreign public official’s country permits or requires the benefit to be given. For example, the defence would be available to a person who provides payment to a foreign border official in exchange for a service whereby that payment is required under the written law in force in that foreign official’s country.

This defence does not apply in relation to local customs that are not evidenced by a written law.

This defence is appropriate as the defendant would be in a better position to adduce evidence of the written foreign law he or she relied on when offering or providing the benefit. The defendant could readily provide evidence of the existence of the foreign law and their reliance on it to support their case.

Facilitation payments

While permissible under Australian law, such payments are often illegal under the laws of foreign countries. Payments of this nature can also represent a serious business risk by exposing companies to bribe requests.

The facilitation payment defence is available where:

  • the value of the benefit is of minor value
  • the relevant conduct was ‘for the sole or dominant purpose of expediting or securing performance of a routine government action of a minor nature’
  • the person engaging in the conduct made a record of the payment as soon as practicable afterwards.

A routine government action does not include any decision to award or continue business or any decision related to the terms of new or existing businesses. If a payment is to qualify as a legitimate facilitation payment, detailed records must be kept.

Adequate procedures

The defence of adequate procedures applies in response to the corporate offence of failing to prevent foreign bribery under section 70.5A of the Criminal Code.

Corporations that have adequate procedures in place designed to prevent its ‘associates’ from committing foreign bribery have this defence available to them.

What constitutes ‘adequate procedures’ would be determined by the courts on a case-by-case basis. It is envisaged that this concept would be scalable – its requirements would depend on the circumstances, including the nature of the corporation concerned and the relevant sector and geographical sectors in which it operates.

The defendant (in this case, a corporation) bears the legal burden for this defence. This creates a strong, positive incentive for corporations to adopt measures to prevent foreign bribery. The standard of proof the defendant would need to discharge in order to prove the defence is the balance of probabilities.