Legal development

A long time coming – Australia's new 'failure to prevent' foreign bribery offence

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    What you need to know

    • The Government has passed legislation to reform Australia's foreign bribery offences. The legislation:

    (a) introduces a new corporate offence of failing to prevent foreign bribery. The new offence makes companies liable for foreign bribery by their 'associates' (defined to include employees and contractors), unless they can show they had 'adequate procedures' in place to prevent such activity from occurring; and

    (b) simplifies and expands some aspects of the existing foreign bribery offence.

    • The legislation comes into effect six months after royal assent.

    What you need to do

    • Consider whether and how to update your existing anti-bribery and corruption policies, procedures and training to make sure they pass muster as 'adequate procedures'.
    • Watch out for the Government's updated guidance on what constitutes 'adequate procedures'.


    On 29 February 2024, the Australian Parliament enacted legislation which introduces a new corporate offence of failure to prevent foreign bribery and simplifies aspects of the existing foreign bribery offence in the Criminal Code 1995 (Cth).

    In our previous publication, we outlined the key features of the Bill as introduced to the House on 22 June 2023. Since then, the Senate Legal and Constitutional Affairs Legislation Committee handed down its report, recommending that the Bill be passed. Its recommendations adopted Ashurst's submission about clarifying the operation of the 'adequate procedures' defence (discussed below).

    The Coalition unsuccessfully sought to introduce amendments to the Bill to include a deferred prosecution agreement (DPA) scheme to apply to various offences, including foreign and domestic bribery. A DPA is a voluntary settlement between a criminal prosecutor and a defendant company, where the defendant agrees to comply with certain requirements (which can include compensating victims and paying a financial penalty) in exchange for prosecution being deferred and, if the agreed requirements are met, discontinued.

    Earlier versions of the Bill introduced by the then Coalition Government in 2017 and 2019 had included a DPA scheme. However the Labor Government took the position that including a DPA scheme was premature and that it "should only be entertained after the measures in this bill have been enacted and given time to work".

    The Coalition did manage to include a mechanism for review of the operation of the legislation after 18 months, providing an opportunity to again consider introduction of a DPA regime at that point.

    In the rest of this article, we provide a brief overview of the legislation as passed.

    The new failure to prevent bribery offence

    Perhaps the most significant aspect of the legislation is its introduction of a new corporate offence of failing to prevent bribery, similar to the 'failure to prevent bribery' offence under section 7 of the UK Bribery Act. A company will be criminally liable where an 'associate' of the company (meaning its officers, employees, agents, contractors, other service providers, or other associates) has committed bribery for the profit or gain of the company. The company does not need to have been involved in or have authorised the offending conduct for it to be liable. However, the company will have a defence if it can show that it had ‘adequate procedures’ in place to prevent the commission of foreign bribery by its associates.

    The Government adopted a recommendation made by Ashurst to the Senate Committee reporting on the Bill, making clear (via an update to the Explanatory Memorandum) that the fact that foreign bribery has occurred does not, in itself, mean that adequate procedures were not implemented. That is, the 'adequate procedures' defence is focused on a company's processes for seeking to prevent bribery (including whether they align with guidance on adequate procedures), rather than outcomes focused.

    The Attorney General's Department had issued draft guidance on 'adequate procedures' in 2019. We expect that the Department will issue refreshed draft guidance for comment, prior to the legislation coming into effect, and prior to issuing guidance in final form as required by the legislation.

    The maximum penalty for the new offence is the greatest of the following:

    • 100,000 penalty units (currently $31.3 million);
    • if the court can determine the value of the benefit obtained from the conduct, three times that value;
    • if the court cannot determine the value of that benefit, 10% of the company's annual turnover for the 12 month period prior to the commission of the offence.

    The High Court in The King v Jacobs Group (Australia) Pty Ltd [2023] HCA 23 clarified that the "value of the benefit" is the gross benefit obtained from the conduct, not the net benefit (see our previous publication on this topic for more detail).

    Simplifying the existing foreign bribery offence

    The new legislation also amends the existing foreign bribery offence in the Criminal Code to introduce a series of extensions and refinements, intended to simplify and broaden the prosecution of foreign bribery.

    Following the changes, section 70.2(1) of the Criminal Code provides that a person commits an offence if:

    (a) the person provides, causes or offers to provide a benefit to another person, and

    (b) does so with the intention of improperly influencing a foreign public official in order to obtain or retain business or a business or personal advantage.

    For the purposes of determining (b), the offender does not need to intend to influence a particular foreign public official; does not need to intend to obtain or retain particular business or personal advantage; and business or personal advantage does not need to be actually obtained or retained. This makes it easier to prove the offence.

    The changes to the legislation involve:

    i. extending the offence to include bribery of candidates for public office (not just current holders of public office);

    ii. extending the offence to include bribery conducted to obtain a personal advantage, not only a business advantage;

    iii. removing the existing requirement that the benefit or business advantage be 'not legitimately due' and replacing it with the concept that the promise or benefit is provided with the intention of 'improperly influencing' a foreign public official. The previous threshold of showing the promise or benefit was 'not legitimately due' presented evidentiary challenges for prosecutors;

    iv. removing the existing requirement that the foreign public official be influenced in the exercise of their official duties;

    v. making it clear that it is not necessary that the person providing the bribe had a specific business, or personal advantage in mind; and

    vi. outlining the factors that may be considered when determining whether or not there has been 'improper influence' such as who was the recipient of the benefit; the nature of the benefit and how it was provided; whether the benefit is documented; and if it was provided in the absence of any legal obligation to do so.

    Review mechanism

    The responsible Minister is required to review the operation of the amendments contained in the new legislation, after it has been in effect for 18 months.

    This review offers an opportunity to assess at that point, whether to amend the Act to provide for a DPA scheme.

    Commencement date

    The legislation will become law within six months of royal assent.

    Authors: Rani John, Partner; Phimister Dowell, Lawyer; and Jacqui Turner, Lawyer.

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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