Bribery and corruption aren’t words that are usually associated with doing business in Australia, but several high profile cases and an international report have recently brought the issue into focus again.
The most notorious of these is the case of Russell Waugh, a former senior executive of infrastructure giant Leighton Holdings. In early 2021 he was charged with conspiring to pay up to $4 million in bribes to high-ranking Tanzanian officials to win an $84 million contract for the Australian company. These fresh charges came just a few months after Waugh was charged over separate allegations that he masterminded a bribery plot on behalf of Leighton in Iraq.
In 2020, the OECD and international NGO Transparency International also expressed concerns about the low level of foreign bribery enforcement in Australia and said that the sanctions imposed in the small number of cases taken to court were “remarkably low”.
The OECD Working Group on Bribery notes that a significant portion of Australia’s international economic activities are exposed to risks of foreign bribery. The Working Group estimates that 75% of the top 100 companies and 63% of the top 200 companies listed on the Australian Stock Exchange operate in a high risk sector, a high risk country, or both. And particularly Australia’s large mining and resource sector. The Leightons cases illustrate this point nicely, as does the case of foreign aid contractor Sinclair Knight Merz, a now-merged company which is fighting allegations it paid a series of bribes to secure work across south-east Asia.
With authorities focusing on allegations of Australia’s involvement with the corrupt practices in the Asia Pacific region there is renewed attention in the area of corruption, bribery and money laundering. It is a timely reminder to organisations of the true threat that corruption, bribery and money laundering pose to a business.
So, what does Australia’s legal framework say about bribery, corruption and money laundering?
Bribery and corruption
Who is at risk?
Organisations that operate in multiple jurisdictions and organisations that use third parties such as agents and intermediaries could be vulnerable to the threat of bribery and corruption.
Bribery and its consequences
Bribing or attempting to bribe a foreign public official is a serious crime. Australian companies or individuals who bribe an official in a foreign country can be prosecuted under Australian law and the laws of foreign countries.
In Australia, a person or corporation may be guilty of bribing a foreign public official under the Criminal Code Act 1995 (Cth) if they:
- provide a benefit, promise to provide a benefit or cause a benefit to be provided, offered or promised to another person; and
- the benefit is not legitimately due; and
- the provision of the benefit was carried out with the intention to influence a foreign public official in their official duties in order to obtain or retain business or obtain or retain a business advantage which is not legitimately due.
A person can be prosecuted in Australia where the conduct constituting the offence occurs wholly or partly in Australia. A person can also be prosecuted in Australia for conduct committed wholly outside Australia where, at the time of the alleged offence, the person who is alleged to have committed it is:
- an Australian citizen;
- a resident of Australia; or
- a body corporate incorporated by or under a law of the Commonwealth or of a State or Territory.
Companies need to be aware that they may be liable for the actions of their employees and agents under Australian law and foreign law.
Organisations must also be aware that they may also be liable under anti-corruption laws of third-party countries. For example, the extended jurisdiction of the United States Foreign Corrupt Practices Act of 1977 includes businesses that issue registered securities under US law, and the UK Bribery Act can be applied to any company carrying on a business or part of a business in the UK. This means a company which carries on a business in the UK could be prosecuted under UK law for conduct committed wholly outside the UK.
The other consequences of bribery to organisations include significant reputational damage and incurring substantial legal and professional fees.
Penalties under Australian law
The maximum penalty for an individual is 10 years’ imprisonment and/or a fine of 10,000 penalty units, which equates to $1.7 million.
For a company, if the value of benefits obtained through bribery can be ascertained, the penalty is 100,000 penalty units ($17 million) or three times the value of benefits obtained, whichever is greater. If the value of benefits obtained through bribery cannot be ascertained, the penalty is 100,000 penalty units or 10% of the ‘annual turnover’ of the body corporate, whichever is greater.
In addition to the above penalties, bribery by an Australian company or individual of an official in a foreign country may also give rise to liability under the laws of that country. Also under the Proceeds of Crime Act 2002 (Cth), any benefits obtained by foreign bribery can be forfeited to the Australian Government.
What should organisations do?
Organisations operating in Australia and/or multiple jurisdictions should take all appropriate steps to ensure that neither they nor their employees or agents engage in bribery. This includes putting in place a strict anti-bribery and corruption policy framework to prevent and detect such activity. An anti-bribery and corruption policy should include the following:
- a definition of what is considered a bribe;
- an outline of the organisation’s policy on facilitation payments;
- specifications of what must be reported;
- the reporting procedures depending on whom and what the report involves;
- the procedures for allegations made against a client of the organisation, a foreign company, a foreign public official or an employee or agent of the organisation; and
- general encouragement to employees to make others aware of their anti-bribery obligations under the law and to make clear to clients that the organisation’s staff will not assist, carry out, condone or ignore any act of bribery.
Additionally, when entering into contractual arrangements with third parties it is prudent to ensure that the third party has obligations to comply with Australian and foreign anti-bribery laws.
How we can help
ANDE + Co., in partnership with Dearin & Associates works with clients particularly in Australia and in the Asia Pacific region to identify and manage threats to foreign bribery and corruption law.
Australia's anti-money laundering framework
In Australia the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) provides the means to help detect and deter money laundering. It imposes obligations on the financial sector, gambling sector, bullion dealers and other professionals or businesses (‘reporting entities’) that provide particular ‘designated services’. The five main obligations required of these reporting entities are:
- Enrolment: all regulated businesses need to enrol with AUSTRAC and provide prescribed enrolment details.
- Establishing and maintaining an AML/CTF program: to help identify, mitigate and manage the money laundering and terrorism financing (ML/TF) risks a business faces.
- Customer due diligence: identifying and verifying the customer’s identity, and ongoing monitoring of transactions. These are often known as ‘Know Your Customer’ requirements.
- Reporting: notifying authorities of suspicious matters, threshold transactions and international funds transfer instructions.
- Record keeping: businesses are required to keep records of transactions, customer identification, electronic funds transfer instructions and details of AML/CTF programs.
We can help you with queries or problems, and advise you on your AML/CTF obligations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.