Failure to prevent déjà vu: Australian Government re-enlivens Combatting Foreign Bribery reforms

Hot on the heels of the NACC, the Federal Government is now pursuing reforms to Australia’s foreign bribery landscape. The new Combatting Foreign Bribery Bill has re-enlivened some (but not all) previously lapsed reforms to strengthen Australia’s anti-bribery and corruption laws. A “failure to prevent” foreign bribery offence for corporates is back on the cards, but deferred prosecution agreements are no longer on offer. We cut through the déjà vu to tell you what’s different, what’s new and what’s missing.

In March, we asked, “whatever happened to the Combatting Corporate Crime Bill?” At the time, the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 (Cth) had lapsed, but various developments signalled foreign bribery law reform remained under consideration.  The introduction of the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 on 22 June 2023 confirmed our prediction that the Combatting Corporate Crime Bill was gone but not forgotten.

When introducing the new Bill, Attorney-General Mark Dreyfus announced the Labor Government “is cracking down on foreign bribery by Australian companies by removing barriers to investigations and prosecutions”. Sound familiar? It is consistent with statements from the previous two Governments, who introduced earlier iterations of similar legislation. It is also in-step with approaches to tackling economic crime in the UK.

But there is one notable difference in the new Bill - the absence of the proposed deferred prosecution agreement (DPA) scheme. In the Combatting Corporate Crime Bill, DPAs were included to encourage corporates to self-report serious misconduct in return for greater certainty of outcome when compared to litigation, as well as an opportunity to potentially avoid some of the reputational and financial costs associated with criminal law processes. This means the new Bill keeps the “stick” measures to make it easier to prosecute corporates for foreign bribery, but leaves out the “carrot” to incentivise pro-active cooperation and non-prosecution outcomes.

So, what does this all mean for business?

How does the new Bill compare?

Most of the key measures in the Combatting Foreign Bribery Bill appeared in the Combatting Corporate Crime Bill, but one key aspect of the previously proposed reforms is now off the table.

What happened to the DPA scheme?

Both of the previous two Coalition Governments introduced Combatting Corporate Crime Bills that included the foreign bribery amendments and provisions for the introduction of a DPA scheme. In both instances, the Bills were never put to a vote and lapsed when Parliament was prorogued ahead of a Federal election. This did not reflect a lack of support for the Bills – the main amendments largely had bipartisan support and were broadly endorsed by the Australian Law Reform Commission’s report on Corporate Criminal Responsibility.

The failure of the last iteration of the Bill has been attributed to a lack of momentum from both sides of politics, but the inclusion of the DPA scheme was likely another stumbling block. Labor Senators objected to DPAs in the 2019 Bill, including because the scheme effectively created a “two-tiered justice system” where corporates could negotiate an outcome while individuals were still subject to traditional criminal law processes, in the courts. The current Labor Attorney-General made similar comments about DPAs in the second reading speech for the new Bill, suggesting that companies should not be treated differently to “ordinary Australians” who, when they commit crimes, “feel the full force of the law”. Mr Dreyfus did flag that DPAs may still be considered in future, but that it is premature to introduce them in relation to foreign bribery offences now.

This is out of step with other jurisdictions. The new “failure to prevent” offence is consistent with the UK’s approach to economic crime, but the Government’s omission of the DPA regime is a departure from the UK model. The new offence in the Combatting Foreign Bribery Bill was originally modelled on provisions of the Bribery Act 2010 (UK) and the UK has recently proposed a new “failure to prevent” fraud offence. In the UK, however, these offences can be (or, in the case of the new fraud offence, is proposed to be) subject to the UK DPA regime. DPAs are also available in a number of other foreign jurisdictions, including the US, Canada, France and Singapore.  

Will this Bill pass?

The Opposition may seek amendments to the current Bill to re-introduce the DPA scheme, but at this stage it appears both major parties support the main foreign bribery amendments. It seems unlikely that this Bill will languish like its predecessors, especially in the wake of the commencement of the National Anti-Corruption Commission.

The current Government is clearly motivated to tackle corruption issues, evidenced by the establishment of the NACC, recent Public Interest Disclosure reforms and expressions of Australia’s commitment to the OECD Anti-Bribery Convention. As a signatory to the convention, Australia is required to ensure its laws are effective at holding natural and legal persons (i.e. corporations) to account for foreign bribery. All of these developments suggest this Bill will move faster than its predecessors.

What do you need to do now?

Happily, the new Bill indicates that any work undertaken to uplift a company’s anti-bribery and corruption framework in light of the Combatting Corporate Crime Bill was not wasted, and that it should remain a priority if that work has not been completed. If the Bill passes, corporates will have six months from Royal Assent to make any adjustments to reflect the new law. The amendments will only apply in relation to conduct engaged in on or after the law comes into effect.

To prepare, companies should revisit the Attorney-General’s Department’s Draft Guidance to ensure they have effective and proportionate procedures to prevent bribery, and monitor for any updates to that Guidance. As noted by the Department, there is no one size fits all approach, but appropriate measures could include:

• refreshing your ABC risk assessment, in particular in relation to any “associates”;
• ensuring effective due diligence procedures are applied to engaging third parties, in mergers and acquisitions and other relevant situations;
• regular and thorough assessments of whether existing ABC policies and procedures are effective and up-to-date; and
• providing updated ABC training and encouraging the reporting of concerns through whistleblower channels or other internal reporting lines.