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Clifford Chance

Clifford Chance

Regulatory Investigations and Financial Crime Insights

Waiting, waiting, waiting… when will Australia's new foreign bribery and DPA legislation come into effect?

Legislative reforms first proposed in Australia in 2017 covering a raft of significant amendments to corporate criminal liability for foreign bribery and other offences appears to have been put on the backburner again, leading the Australian corporate world to wonder when – or if – they will ever be passed.

Australia has historically been criticised by global bodies, like the OECD, for falling short of international standards in preventing and prosecuting foreign bribery offences. This was all set to change for Australian companies when the Australian Government began talking about the introduction of a raft of legislative amendments to simplify prosecutions along with the introduction of long-awaited Deferred Prosecution Agreements (DPAs). The introduction of a "failure to prevent" bribery offence drew significant attention from corporates as they readied themselves for the legislative changes.

How long have we been talking about this?
In 2017, the federal Government introduced the Crimes Legislation Amendment (Combatting Corporate Crime) Bill ("2017 Bill"). The Federal Minister for Justice initiated a consultation process seeking comments from stakeholders about the proposal to reform Australia's foreign bribery legislation by extending the definitions of foreign public official and foreign bribery, and creating an offence of failure to prevent foreign bribery. The proposal included introducing DPAs in Australia. At that time, DPAs had already been in use in the UK for three years and in the US for significantly longer.

There was significant public interest, with the corporate world anticipating that the introduction of these changes would have a significant impact on the policies and procedures a prudent company would need to have in place in order to meet Australian and international best practice standards.

In 2018, a consultation process was introduced by the Attorney-General's Department, seeking input from stakeholders on a draft DPA Code of Practice.

The 2017 Bill however ultimately lapsed on 1 July 2019, with the prorogation of Parliament.

The Recent Legislation
In late 2019, a new draft bill was introduced, titled the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019 ("2019 Bill"). The 2019 Bill is substantially similar to the 2017 Bill; in that it proposes to extend the scope of the bribery of a foreign public official offence (as set out in the Commonwealth Criminal Code) by amending the definition of foreign public official to include candidates for office, removing the requirement that the official be influenced whilst exercising their official duties, replacing the requirement that a benefit and business advantage must "not be legitimately due" with a requirement of "improperly influencing" a foreign public official, as well as extending the offence to encapsulate the receipt of personal advantages and to introduce a new "failure to prevent" foreign bribery offence on the part of a company in respect of one of its associates. Guidance from the Attorney-General's Department as to what constitutes "adequate procedures" is eagerly awaited, with a consultation process on draft guidance closing in February 2020 and nothing further has been provided by the Government.

The 2019 Bill does differ from the 2017 Bill in some respects, in particular by introducing amendments to the definition of "dishonesty" under the Commonwealth Criminal Code, proposing to re-define "dishonest" as "dishonest according to the standards of ordinary people" in order to ensure that the statutory definition aligns with the objective test for dishonesty endorsed by the High Court of Australia in Peters v The Queen (1998) 192 CLR 493 and found in other federal legislation.

The 2019 Bill also contains Australia's DPA regime. If passed, DPAs will allow companies to negotiate terms of settlement for allegations of serious corporate crime (e.g. setting the penalty for contravention), but will require approval by an "approving officer" (a former judge with relevant expertise in business or corporate law) before they can be finalised. Not all corporate crimes are covered in the proposed legislation and DPAs will not be available to individuals. The Australian model will be most closely aligned to the US-style DPAs.

So, what's happening with the legislation?
The 2019 Bill received the green light from the Senate Legal and Constitutional Affairs Legislation Committee (Committee) in March 2020, which recommended it be passed by the Senate, where it was introduced.

Theoretically, this should have triggered a further reading in the Senate and the passing of the 2019 Bill in that house. Instead of this happening, and the 2019 Bill then introduced to the House of Representatives, the bill has sat in the Senate since March 2020.

Understandably, the progress of the legislation appears to have been impacted by the global COVID-19 pandemic which also hit Australia in earnest in March 2020 with the closure of its borders.

The Government eventually published its response to the Committee's report and the dissenting report from the opposition in February this year.1 The Government has reiterated that DPAs will be an additional tool for law enforcement, and that they will not be a substitute for prosecution if prosecution would be in the public interest and consistent with the Prosecution Policy of the Commonwealth. To strengthen the transparency of the DPA scheme, the Government has indicated that it will look to introduce amendments to the 2019 Bill to explicitly require the approving officer to provide reasons for their approval to the Commonwealth Director of Public Prosecutions (CDPP) and the corporation, and, if the DPA is approved, require the CDPP to publish the approving officer’s reasons on the CDPP’s website within 10 business days.

The Government has also indicated that it will provide an Addendum to the Explanatory Memorandum (Addendum) to the 2019 Bill to incorporate additional explanation and justification for the proposed amendment to the Criminal Code definition of "dishonest". The Addendum will further explain how the new definition of "dishonest" will operate and clarify that the new definition, while defining dishonesty by reference to a single objective standard, will still require a subjective assessment of the defendant’s state of mind.

Presently, the Government's amendments to the 2019 Bill have not yet been published and the Addendum is yet to be seen. Just how long Australia will wait for the introduction of this legislation is unknown with commentators speculating its passage is imminent. For now, corporate Australia will need to continue to watch this space.

1. https://www.ag.gov.au/crime/publications/government-response-senate-committee-report-combatting-corporate-crime-bill-2019 (accessed as at 26 July 2021).