Blizzard of Oz action on bribery

Australian companies are having to pay more attention to their anti-corruption policies and procedures

Sean Hecker

Until recently, foreign bribery was not an issue high on the compliance radar of Australian companies, but a perfect storm of developments has changed this. Perhaps most notably, Australia’s first foreign bribery prosecution has been brought. Also, the implementation of the UK Bribery Act has resonated in Australia and penalties for foreign bribery have increased markedly.

Australia has become heavily dependent on high-risk industries and jurisdictions. Nonetheless, a recent study found that large companies still lag behind their international peers in prohibiting foreign bribery, and many lack effective compliance programmes.

Australia’s foreign bribery laws were enacted in 1999, but it took until July 2011 for the federal police to bring charges. These were brought against two companies – Securency International and Note Printing Australia (NPA) – and six individuals. Securency is a banknote technology specialist and the charges relate to alleged bribes paid to public officials via sales agents to secure contracts in a number of Asian countries. The Reserve Bank of Australia, the central bank, owns 50 per cent of Securency and all of NPA. What Reserve Bank officials knew and when has been the subject of press speculation and parliamentary questions.

Considerable attention has been focused on the UK act’s offence of the “failure of commercial organisations to prevent bribery”, a strict ­liability offence and the corresponding affirmative defence available to an organisation found to have “adequate procedures”. Little attention has been paid to existing principles of corporate criminal liability under the Commonwealth Criminal Code, which have similar effect.

The code provides that fault elements of “intention, knowledge or recklessness” may be established in a number of ways including by “proving that the body corporate failed to create and maintain a corporate culture that required compliance with the relevant provision”. Corporate culture is defined as an “attitude, policy, rule, course of conduct or practice”.

Consequently, effective anti-corruption and bribery procedures are not only critical in preventing breaches of the law, they also factor meaningfully in the determination of whether a company will be held liable should one of its employees engage in bribery.

Despite the importance of anti-corruption policies, a recent study found that only 59 per cent of ASX200 companies with international operations have corporate policies that prohibit bribery. The same study found that only 26 per cent of ASX100 companies have advanced systems to implement their codes of conduct.

All Australian companies with overseas operations should ensure their foreign bribery policies and procedures are robust, but they need not reinvent the wheel. They can draw on international best practice in designing compliance programmes that make sense for them.

Debevoise associate Rebecca Jenkin assisted with this article