The foreign bribery reforms are in: Is enforcement on the horizon in Australia?

In September 2024, the Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2024 came into effect. Importantly, this now means that there is absolute liability where a company fails to prevent bribery of a foreign public official by an “associate” (Failure to Prevent Offence). An associate includes anyone performing services on behalf of the company.

The Failure to Prevent Offence is closely modelled on the substantially broader offence which has been in place in the UK since mid-2011. As with the UK offence, companies may have a defence if they can show they had "adequate procedures" to prevent the foreign bribery from occurring. As required under the Amendment Act, the Attorney General published guidance on what “adequate procedures” requires. This is similar to the UK guidance in that it is centred around six principles:

• Fostering a control environment to prevent foreign bribery (which includes information on the proportionality and effectiveness of procedures)
• Responsibilities of top-level management
• Risk assessment (which includes details on due diligence)
• Communication and training
• Reporting foreign bribery
• Monitoring and review

We have previously published more detailed updates on the offences and what companies should be doing: see here and here.

What immediate steps have companies been taking and continue to take?

There is no grace period in the legislation, despite the guidance being published fewer than two weeks before the offence came into force. This means any conduct which occurs from 8 September 2024 will attract the Failure to Prevent Offence. Companies should therefore act quickly to conduct appropriate risk assessments, and to implement and test their ABC programs to maximise the likelihood that they can rely upon the “adequate procedures” defence.

Regulators expect Australian companies and those operating within Australia to develop and embed ABC programs, or, for those who already have an extensive program, ensure that they align with Australian requirements. While many companies with exposure to the UK will have already implemented relevant policies and procedures, differences between the two regimes mean that companies cannot assume that they can rely on what they already have in place.

What does this mean for future enforcement?

We expect that future investigations and prosecutions will rely heavily on the Failure to Prevent Offence, which has been the experience in the UK. Since the commencement of the UK Bribery Act, there have been 4 concluded corporate prosecutions and 10 deferred prosecution agreements for failing to prevent bribery.

While prosecutions may not commence immediately or in 2025 (given the complexities with, and time-consuming nature, of foreign bribery investigations), a greater number of potential breaches of law may be identified by companies given the broader scope of conduct for which they are now responsible.

The absolute liability nature of the offence also represents a step change in the ability for prosecutors to successful enforce foreign bribery offences. This may mean that companies are more willing to selfreport issues, and therefore obtain the potential benefits of doing so. The AFP and CDPP’s Best Practice Guideline on Self-Reporting of Foreign Bribery and Related Offending by Corporations outlines the way in which self-reporting may be treated (see here). In at least one recent case, the CDPP decided not to prosecute a company, having regard to the Guideline, and the fact that the company self-reported.

While the Australian reforms did not include the implementation of a deferred prosecution regime like the ones that exist in the UK and the US (effectively, a means of resolving a criminal matter without a guilty or not guilty result), the possibility of such a regime has been left open as part of future reforms. If such a regime was introduced, we expect that would provide some further incentive to companies to self-reporting.

Further, the UK has adopted the same “failure to prevent” model for two further offences following on from the Bribery Act: the failure to prevent the facilitation of tax evasion, under the Criminal Finances Act 2017 (see here), and more recently (though not yet in force), the failure to prevent fraud offence under the Economic Crime and Corporate Transparency Act 2023 (see our update on that here). If this model is shown to be as effective in Australia as it has been in the UK, it may similarly become a preferred mechanism for enforcing other forms of corporate financial crime.