Historic foreign bribery crackdown faces further Senate delay

Historic reforms to strengthen Australia’s inadequate foreign bribery laws are set to be debated this week, but there are fears the proposed legislation could be delayed again – more than six years after a similar bill was first introduced to federal parliament.

The Senate is scheduled to debate, and pass, legislation this week, drawn up in response to warnings from the OECD for Australia to ramp up prosecutions of those paying bribes overseas by cracking down on local businesses that do not have adequate anti-foreign bribery safeguards.

The Combatting Foreign Bribery Bill, introduced to Parliament by Attorney-General Mark Dreyfus, is likely to be delayed again. Credit: Alex Ellinghausen

When enacted, the Combatting Foreign Bribery Bill will make it an indictable offence for an organisation to fail to prevent bribery of a foreign official, placing the onus on businesses to demonstrate they had put in place processes and procedures to stave off graft.

If convicted, the body corporate would be fined either $27.5 million, three times the value of the benefit directly or indirectly obtained, or 10 per cent of the annual turnover during a 12-month period (whichever is greater).

But as the federal parliament draws to a close this week, the Albanese government will be forced to deal with contentious immigration and industrial relations laws, putting the status of the foreign bribery bill, scheduled for debate on Thursday, at risk.

“Foreign bribery is the most damaging form of corruption,” Transparency International chief executive Clancy Moore said.

“It corrupts government decision-making, diverts investment for public services and enables other serious crimes like human trafficking and money laundering. It also brings major reputational risks for Australian companies, trade and investments as we’ve seen recently, with Australian mining companies in hot water over allegations of foreign bribery.

“The previous government left important foreign bribery reforms hanging in the Senate in 2017 and 2019, so it’s disappointing to see the Albanese government [could] delay debate of the legislation.”

A 2019 OECD report on Australia’s implementation of its anti-bribery convention said it was “concerned about the continued low level of foreign bribery enforcement ... given the size of Australia’s economy and the high-risk regions and sectors in which its companies operate”.

The intergovernmental organisation’s working group on bribery in international business transactions, which is responsible for monitoring the implementation and enforcement of the anti-bribery convention, is meeting between Tuesday and Friday.

Although Australia’s foreign bribery laws have been strengthened over the years, prosecutions and enforcement remain low, according to the OECD. Only seven individuals and two companies in Australia have been convicted of paying kickbacks to foreign officials in the past 25 years.

“On corporate liability, the working group finds Australia’s low level of cases against legal persons very concerning and hopes that Australia will address its long-standing challenges in attributing wrongdoing to corporate entities,” the 2019 report stated.

Australia’s first successful foreign bribery prosecution was against Securency and Note Printing Australia, which in 2018 pleaded guilty to bribing overseas officials to win banknote printing contracts. The Australian Federal Police launched its investigation only after The Age and Sydney Morning Herald 2009 expose.

The AFP case against former Leighton Holdings (the construction group now known as CIMIC) executives remains ongoing, more than 10 years after this masthead revealed Leighton Offshore funnelled bribes through entities associated with Unaoil to guarantee approvals for the Iraq Crude Oil Export contracts.

The Age and Sydney Morning Herald this month also revealed ASX-listed AVZ Minerals offered to pay up to $US6 million ($9 million) to a middleman to secure the backing of high-ranking officials in the Democratic Republic of Congo for one of the world’s biggest lithium deposits.

The [OECD] working group finds Australia’s low level of cases against legal persons very concerning.

OECD report

The success fee was never paid on advice from lawyers that it could expose the company to potential breaches of corporations laws.

Earlier this year, this masthead also revealed that Australia’s Home Affairs Department oversaw the payment of millions of taxpayer dollars to Pacific Island politicians through a chain of suspect contracts as it sought to maintain controversial offshore asylum seeker processing centres.

Moore said the proposed legislation was long overdue, adding the resources, construction and infrastructure sectors, of which there are 800 listed on the Australian sharemarket operating in 100 countries, were particularly vulnerable to foreign bribery, and exposed due to Australia’s weak laws.

“Overall, it’s a good bill but what it doesn’t have is a debarment scheme, so if a company is found guilty of foreign bribery they’re not allowed to get government contracts for a period of time,” he said.

“It also doesn’t include a deferred prosecutions agreement ... which incentivises companies to come forward and admit someone in their company was paying bribes, kickbacks, [and] settle before it goes to court with fines or remediation.”

A spokesman for the attorney-general said the Albanese government would finally deliver on the reforms twice promised by the former Coalition government.

“The Albanese government has no tolerance for corruption of any kind”, the spokesman said, describing foreign bribery as “an insidious problem” that “harms communities, impedes economic development and undermines the rule of law”.

The federal opposition has moved amendments to allow for deferred prosecutions, but it is unlikely to gain the support of the government.

Senator Michaelia Cash said evidence showed the agreement would lead to more prosecutions for foreign bribery and other criminal offences, and achieve better outcomes.

“That is why we will move to introduce a deferred prosecution arrangement when this bill is debated in parliament. We hope the government will support this sensible and constructive amendment.”

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