Recent press coverage of the crackdown on corporate bribery in the US under the Foreign Corrupt Practices Act and, closer to home, the prosecution and continued investigations following the Stern Hu case in China, serve as a wake-up call for companies to review their domestic and cross-border anti-corruption compliance programmes.
Bribery of foreign public officials
International partner
head of China practice
Blake Dawson
Australia is a signatory to the Organisation for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the OECD Convention), signed in 1997 and ratified in 1999.
It is also a signatory to the United Nations Convention against Corruption, signed in 2003 and ratified in 2005.
It has endorsed the Asian Development Bank and OECD Anti-Corruption Action Plan for the Asia-Pacific region.
In December 1999, Australia incorporated the OECD Convention requirements in the Criminal Code Act 1995 (the Criminal Code). It is the only Australian law that addresses foreign bribery.
Offering or giving a benefit that is not legitimately due, with the intention to influence a foreign public official in the performance of their public duties in order to obtain or retain business or a business advantage, is prohibited unless the conduct can be proven to be lawful in the foreign public official’s country.
Australian public officials
Foreign Lawyer
Blake Dawson
The laws in all commonwealth and Australian state and territory jurisdictions prohibit both the giving of a bribe to a public official and the receipt or acceptance of a bribe by a public official.
The principal national law prohibiting the bribery of domestic public officials is set out in the Criminal Code. It is an offence to give or offer a bribe to Commonwealth public officials (broadly defined to include members of parliament, the judiciary and the defence force) in the exercise of their duties as public officials with the intention of influencing the exercise of those duties.
Commonwealth public officials are prohibited from soliciting bribes or inappropriately using their office to:
- obtain a benefit for themselves or for others; or
- dishonestly cause detriment to another person.
State public officials
Prohibitions against bribery of domestic public officials employed by an Australian state or territory are also contained in separate state and territory legislation (including criminal legislation).
Some Australian state and territory anti-corruption laws distinguish between public officials administrating justice and other public officials. In Western Australia, Queensland, Tasmania and the Northern Territory, harsher penalties tend to apply to corruption relating to state officers involved in the administration of justice than to other state public officials. Additionally, in Queensland, offences relating to ministers of the crown (who directly guide the reigning monarch or governor) are also subject to tougher penalties.
Prohibited benefits
Generally, providing domestic officials with gifts, travel expenses, meals or entertainment is prohibited by legislation and by government or agency policy documents such as codes of conduct.
In certain circumstances, government or agency policy may permit the receipt of benefits by domestic officials, subject to compliance with certain obligations. The main such obligations are that:
- the benefit must be of a minor value (the usual practice is that a single or cumulative benefit should not be worth more than A$100);
- the benefit must be made in connection with an existing business relationship (for instance, an executive manager of a company pays for a public official’s meal when they meet to discuss a current project) or it is a token or ceremonial gift; and
- the public official reports the details of any benefit offered or received (for example, many departments and agencies are required to maintain registers of the gifts their officials have been offered, have accepted or both).
Private commercial bribery
The Criminal Code applies only to conduct directed at or involving public officials. But where private commercial bribery occurs, such conduct may result in a breach of directors’, employees’ or officers’ duties in contravention of the Corporations Act 2001, or market sharing or price fixing in contravention of the Trade Practices Act 1974, Australia’s competition legislation. At the state and territory level, some jurisdictions prohibit corrupt payments in both the public and the private sectors.
Penalties and enforcement
The penalties vary depending on the law that has been violated, and in some cases, who has committed the offence. Under the Criminal Code, the penalty is between five and ten years’ imprisonment. A court may impose a fine instead of or in addition to a prison sentence. In the case of a company, a fine is imposed in place of imprisonment.
Under various Australian state and territory laws, penalties can range from three years to 21 years’ imprisonment for individuals. Some jurisdictions specifically impose fines on companies in place of imprisonment, whereas others make no specific provision for companies.
To date no bribery prosecution involving foreign companies or Australian companies operating overseas has been brought in an Australian court. However, the Australian Federal Police are investigating a number of allegations of corrupt conduct engaged in by certain Australian companies in their overseas operations.
Compliance
Companies engaging in cross-border as well as domestic activities should take the opportunity to review their:
risk profile – how reliant is the business on government approvals and are any of their business partners’ activities or practices likely to fall foul of the law?
anti-corruption policies – how well does the company understand the anti-corruption laws and government policies of the countries in which they operate and does it have appropriate governance policies in place? and training and implementation – how do the company’s employees deal with demands to pay bribes and is the corporate culture one that implicitly endorses or condones corrupt behaviour contrary to its policy?
Michael Wadley heads Blake Dawson’s China Practice
Lee I Ching is a foreign lawyer in the Shanghai office of Blake Dawson
Blake Dawson Shanghai office
Suites 3408-10, CITIC Square
1168 Nanjing Road West, Shanghai
Postal code: 200041
Tel: 86 21 5100 1796
Fax: 86 21 5292 5161
www.blakedawson.com
E-mail:
michael.wadley@blakedawson.co
