The globalisation of business operations and an unprecedented focus by governments around the world to address bribery and corruption means that it is now essential that companies redouble their efforts to manage associated risk.

Australian businesses, especially those operating internationally, can now be subject not only to Australian anti-bribery laws, but also to the laws of other countries including the US and UK. The consequences of breaching anti-bribery regulations include significant civil and criminal penalties, possible jail for executives and loss of business and personal reputation.

International Regulations

In Australia, under the Criminal Code Act 1995 (Cth), any company incorporated in Australia, or anyone who is a citizen or domiciled in Australia can be prosecuted for corrupt conduct occurring overseas.   The first significant prosecution under this legislation involved bribery of public officials in Malaysia by staff of Securency International Pty Ltd (partly owned by the Reserve Bank of Australia) when negotiating bank note printing contracts. Leighton Holdings is also currently the subject of Australian Federal Police investigations into activities that occurred in connection with construction work in Iraq.

The Foreign Corrupt Practices Act 1977 in the US enables the US authorities to  prosecute conduct occurring outside the US which has some connection with the US.  The connection will include companies issuing shares on a US stock exchange, employing US citizens, or in its broadest form, using the instrumentalities of US commerce.   So for example, if a foreign national or company, in the furtherance of corrupt conduct, engages either directly or through an agent, uses a US bank account or sends an email which is carried by a US service provider, it will potentially be caught by the Foreign Corrupt Practices Act.

Arguably, the most onerous anti-corruption jurisdiction can be found in the UK under the Bribery Act 2010 (UK).   It is an offence to bribe a private person or a public official, whether the conduct occurs in the UK or outside the UK, if the offender is a UK resident or an entity incorporated or formed in the UK, or an entity that merely carries on any business in the UK.  The Act has the scope to capture a company incorporated and based in Australia where some part of the company’s business is carried on in the UK, no matter how limited those activities may be.  Importantly, the Act also includes the offence of “failure to prevent bribery”.  This offence applies to any company, regardless of its place of incorporation, where that company carries on part of its business in the UK.  This casts the net wide enough to catch many Australian companies with some operations in the UK.   It is a defence to the charge of failing to prevent bribery if the company can demonstrate that it had adequate procedures in place to prevent those persons engaging in bribery.

Recommended actions for Australian businesses

It is clear that Australian businesses must adopt and nurture an appropriate corporate culture that is supported by the Board, and understood by all levels of management. Appropriate anti-corruption policies must be prepared and promulgated and a compliance program should be implemented that:

  • reflects the specific needs of the company and addresses the issues that apply to the markets in which the company conducts business operations;
  • clearly communicates expectations; and
  • is regularly and systematically assessed.

For more information on anti-corruption laws or for assistance with anti-corruption compliance initiatives please contact Ian Newell at ian.newell@sourcelegal.com.au or Stanislav Roth at stanislav.roth@sourcelegal.com.au.

A copy of the article can be downloaded here.

By | Published On: 18th November, 2014 | Categories: Other legal services, Guides |