A guest blog by Ryan Carter, a law student at Arizona State University who is undertaking a legal research internship at the Basel Institute on Governance.

On 8 September 2024, significant amendments to Australia’s foreign bribery laws will take effect. These changes follow long-standing concerns expressed by both the OECD Working Group on Bribery and civil society about the low level of enforcement in this area in Australia.

These concerns are not unjustified. Since Australia first introduced foreign bribery laws, only four companies and fewer than a dozen individuals have been sanctioned. Many other investigations failed to result in sanctions since they fell short of the current law’s rigid requirements. The authors of the forthcoming amendments argue that the reforms will address these criticisms by overcoming the limitations of the currently “overly prescriptive and difficult to use” version of the law.

So, what changes do these amendments introduce? What issues do they address? And most importantly, what impact will they have?

The anticipated changes: expanding scope and reducing burden of proof

In a nutshell, the amendments significantly expand the scope of the law. Amongst other things, they:

• broaden the foreign bribery offence to include the bribery of a political “candidate” (and not just current holders of public office);
• extend the offence to cover bribery payments made to gain “personal” advantages, rather than only payments made for “business” advantages;
• remove the requirement to demonstrate that an advantage obtained through bribery is “not legitimately due”, and replace it with a requirement to demonstrate that the bribing party had an intention of “improperly influencing” the official in question;
• remove the requirement to demonstrate that an official was influenced in the exercise of their official duties; and
• clarify that it is not necessary for the prosecution to prove that the bribing party sought to obtain a specific advantage.

A new corporate liability offence

The most important amendment is arguably the creation of a new, absolute liability offence targeting companies that “fail to prevent bribery of a foreign public official”. Under this new provision, a company may be found to have committed an offence when “an associate” of the company has committed bribery to obtain a “profit or gain” for that entity.

This is a dramatic change to the current law. The current version of the law requires prosecutors to prove that either the company’s board or high-level managers committed the relevant bribery acts, or that the company had a corporate culture that tolerated non-compliance, for the company itself to be found liable. The new offence will significantly lower the prosecution’s burden of proof, in effect making it possible to hold companies liable under a much wider set of circumstances (e.g. where the company’s executives have turned a blind eye to the corrupt acts of their employees).

Notably, the amendments also provide companies with an avenue to rebut this offence if they can prove they had adequate procedures in place to prevent foreign bribery by their associates. In order to inform businesses about what constitutes “adequate procedures”, the Australian Minister of Justice now has a duty to publish guidance on the steps companies can take to prevent associates from bribing officials.

Anticipated effect: increased enforcement and stronger prevention

The authors of these amendments claim that the changes will ensure the law keeps pace with evolving foreign bribery schemes, and will overcome the challenges of establishing corporate criminal liability in cases of wilful blindness. They also argue that the removal of some of the prescriptive conviction requirements of the foreign bribery offence and the broadening of its scope will allow prosecutors to pursue foreign bribery charges in more cases.

The amendments are largely modelled on similar reforms made in the United Kingdom in 2010, which directly contributed to a substantial increase in enforcement actions. According to the OECD, before 2010 the UK had sanctioned only one individual and one company for foreign bribery. By 2021, the UK had criminally sanctioned 25 individuals and 16 companies. Of those 16 companies, eight were specifically sanctioned for failure to prevent bribery offences.

As in the UK, Australia’s amendments and new failure to prevent foreign bribery offence will broaden the jurisdictional scope of law and lower the prosecution’s evidentiary burdens. Therefore, it is not unreasonable to suggest that they will result in a similar increase in enforcement actions.

Incentivising compliance

In addition, these amendments are likely to enhance prevention efforts by incentivising companies to implement their own procedures to prevent foreign bribery. The UK reforms on which they changes were modelled also resulted in an increase in corporate compliance programmes. According to the OECD, the failure to prevent bribery offence and its “adequate procedures” defence in particular prompted the adoption of “well advanced” anti-corruption corporate compliance measures.

There is a strong argument that these amendments will encourage similar action in Australia, as companies that implement such programmes will effectively shield themselves from liability for failing to prevent foreign bribery committed by their associates.

A step forward

It is encouraging to see Australia adopting substantial reforms to enhance its enforcement of the OECD Anti-Bribery Convention. On paper, these amendments look as if they will enable the prosecution of foreign bribery in a broader range of circumstances. They should also encourage more Australian companies to implement effective anti-bribery programmes.

Ideally, these changes will noticeably improve Australia’s foreign bribery enforcement, and placate the ongoing concerns that Australia is not doing enough to fulfil its obligations under the OECD Anti-Bribery Convention.