Australia Steps Up Foreign Bribery Prevention with New CFB Bill

The Combatting Foreign Bribery (CFB) Bill aims to reform Australia’s foreign bribery offences. It passed Federal Parliament on 29 February 2024 and will come into effect six months after the Governor-General formally accepts it and provides Royal Assent.

The Bill broadens the foreign bribery offences for body corporates and fundamentally changes how firms and corporations can be prosecuted for bribery. It also creates a new offence of failing to prevent bribery of a foreign official by an associate.

Key Takeaways

• The third attempt of the Combatting Foreign Bribery (CFB) Bill will come into effect six months after receiving Royal Assent.
• The CFB Bill does not include a deferred prosecution agreement (DPA) scheme.
• Under the new legislation, firms and corporations will be criminally liable if an “associate” commits an act of bribery for the company's profit or gain.

Recommended Next Steps

• Revisit your current anti-bribery and corruption policies, procedures, and training to ensure they are “adequate procedures.”
• Pay close attention to the Australian Government’s updated guidance on what constitutes “adequate procedures”.
• Consider using tools such as the MyComplianceOffice (MCO) Regulatory Change Manager module, which includes comprehensive horizon-scanning tools, to help compliance teams stay current with regulatory changes.

A Brief Explanation of the Combatting Foreign Bribery (CFB) Bill

The CFB Bill was previously introduced into Parliament twice—in 2017 and again in 2019. However, both attempts to implement the new legislation lapsed before being passed. In its third iteration, the CFB Bill will expand the range of offences under the banner of foreign bribery, including where legitimate transactions aim to conceal underlying misconduct.

Under current legislation, an act of foreign bribery occurs when Person A provides a benefit to Person B that is not legitimately due, and that action occurs as a means of influencing a foreign public official’s duties or to secure or retain an unfair business advantage.

The CFB Bill places a new focus on the intention to influence a foreign public official rather than the act itself. The reframing in this regard means that what constitutes an offence no longer relies on the benefit or business advantage to be “not legitimately due” or that the foreign public official was influenced in the execution of their official duties. Instead, a broader range of benefits will be examined, and it will be sufficient to take action on matters where the intent of the person providing the benefit is to influence the public official. 

What the CFB Bill Means for Firms and Corporations

Under current Australian law, a firm or corporation is not criminally liable for instances of bribery involving “associates” (officers, employees, agents, contractors, other service providers, or other associates) if it can prove it exercised due diligence to prevent the crime.

The CFB Bill, however, introduces absolute liability. Under the new legislation, firms and corporations will be criminally liable if an “associate” commits an act of bribery for the company’s profit or gain. The company does not need to be directly involved in or authorise the offending conduct to be deemed liable. 

However, if the firm or corporation can prove that it had “adequate procedures” in place to prevent acts of foreign bribery by its associates, it will have a defence against criminal liability. The anti-bribery and corruption programs, systems, and processes are a vital aspect in proving your firm has these “adequate procedures” in place.

The Attorney-General will be required to publish guidance on what constitutes “adequate procedures” under the CFB Bill, however this is expected to ultimately be determined by the courts on a case-by-case basis.

Such procedures are expected to involve:

• Ongoing risk assessments.
• Executive and director leadership in a zero-tolerance approach to bribery and corruption.
• Undertaking third-party due diligence and necessary controls.
• Effective communication and training in anti-bribery and corruption.
• Continuous monitoring, review, and reporting mechanisms.
  
  

Penalties Involved

The maximum penalty for committing the absolute liability offence is the greater of:

• 100,000 penalty units (now AU$31.3 million);
• three times the benefit received from the offence; or
• if the court cannot determine the benefit, 10% of the corporation’s annual turnover.

Additional Changes to the Existing Foreign Bribery Offence

The CFB introduces several extensions and improvements to the foreign bribery offence in the Criminal Code, including:

• Extending the offence to include bribery of candidates for public office rather than only current holders of public office.
  
  
• Extending the offence to include bribery conducted to obtain a personal advantage rather than only a business advantage.
  
  
• Moving from instances of a benefit or business advantage being “not legitimately due” being deemed as an offence to “improperly influencing” a foreign public official as creating an offence.
  
  
• Clarifying what constitutes a situation where “improper influence” has been exerted.
  
  
• Removing the requirement that the foreign official had to be influenced during the course of their official duties to be deemed an offence.

The CFB Bill Explanatory Memorandum explains that these and other changes were made in response to the challenges faced by Australian law enforcement when pursuing prosecutions under the existing offence, describing the existing offence as “overly prescriptive and difficult to use.”

The OECD’s Commentary on the CFB Bill

The Organization for Economic Co-operation and Development (OECD) establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions. It is the only international anti-corruption instrument focused on the ‘supply side’ of bribery transactions.

In December 2023, the OECD issued a commentary on the Bill, stating, “The Working Group on Bribery welcomes the introduction in Parliament of the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 but urges Australia to adopt it without delay.” It highlighted that the reforms contained in the Bill had already lapsed before Parliament on two previous occasions, adding, “The Working Group calls for its enactment at the earliest opportunity.”

The OECD went on to suggest that the inclusion of a deferred prosecution agreement (DPA) scheme may further help to drive enforcement and facilitate cross-country co-operation and co‑ordination of foreign bribery resolutions, as noted in the Working Group on Bribery’s Study on Resolving Foreign Bribery Cases with Non-trial Resolutions.

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.

Will a DPA Be Included in the CFB Bill?

The 2017 and 219 versions of the CFB Bill, introduced at the time by the Coalition Government, included a DPA scheme. The Coalition suggested that deferred prosecution agreement (DPA) regimes would incentivise self-reporting and increase investigation and prosecution of corporate offending. 

The 2023 Bill does not include a DPA in this iteration. The Labor Government initiating this Bill took the position of considering a DPA scheme only once the Bill had been enacted and given time to work, noting the existence of mechanisms already in place to allow companies to self-report suspected offences.

The Coalition has been unsuccessful in amending the CFB Bill to introduce a DPA. However, 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. At that point, there will be an opportunity to assess whether the Act should be amended to include a DPA scheme.

What Should Firms Do in the Lead-Up to the New Legislation?

The anticipated implementation of the CFB Bill brings a timely opportunity for firms to revisit current anti-bribery and corruption (ABC) policies, procedures and training. Firms should also pay close attention to the Australian Government’s updated guidance on what constitutes “adequate procedures”. It will be vital to consider whether current ABC policies and prevention measures will satisfy the new legislation’s definition of “adequate procedures” as more information comes to light.

Tools such as the MyCompliance (MCO) Regulatory Change Manager (RCM) module help firms stay current with regulatory changes. MCO uses Natural Language Processing (NLP) in our offering to read legislation and regulator’s rules to identify the obligations that apply to our clients and enable what is known as “Horizon Scanning”.

The RCM module uses AI to review and categorise critical sources of information, including regulatory news, legal documents and enforcement actions, delivering an automated approach to regulatory insight for our customers. RCM provides firms with: 

• Daily regulatory alerts and updates.
• A wide range of global regulatory coverage.
• Access to a regulatory reference library.
• The ability to set custom rules and preferences.
• Links to internal rules and policies.

Modules such as our Gifts, Entertainment and Hospitality (GEH) module deliver a robust solution for monitoring employee gifts, meals, entertainment, travel and hospitality activities. Firms can more easily record and detect risk within declared gifts and entertainment activities.

Additionally, MCO’s Know Your Third Party (KYTP) risk management module automates the end-to-end process to reduce the complexity of managing third-party contracts and relationships and significantly reduce the risk of corruption and bribery through vendor and third-party activities.

Learn more about how your firm can actively reduce the risk of bribery and corruption occurring. Gain instant access to your copy of Reducing Bribery and Corruption: Your Financial Firm's Playbook.