Speed read

On 5 September 2016, the Commonwealth Government announced the establishment of a Perth-based specialised fraud and anti-corruption team that will focus on foreign bribery investigations. Justice Minister Michael Keenan has confirmed that similar teams will be set up in Melbourne and Sydney.  These developments put into action AUD15 million Government strategy announced in April to “tackle” complex fraud, foreign bribery and corruption cases.  They are the most significant indications to date that Australian companies will face increased enforcement of foreign bribery laws.

Background

The OECD and Transparency International have long criticised Australia’s enforcement of foreign bribery laws. The lack of enforcement action has attracted significant media and political attention. 

Last year, the Australian Senate announced an inquiry into foreign bribery with a view to strengthening the country’s foreign bribery laws. Similarly, in March 2016, the Attorney-General’s Department released a public consultation paper on the introduction of Deferred Prosecution Agreements (“DPAs”) for serious corporate crimes. DPAs involve a prosecutor agreeing not to prosecute a company in exchange for compliance with certain conditions (normally the company paying a fine, disgorging its ill-gotten profits, implementing internal remediation, and agreeing to cooperate with the Government’s investigation). They are commonly used by U.S. prosecutors when resolving U.S. Foreign Corrupt Practices Act (“FCPA”) cases, and were recently introduced in the United Kingdom as an additional tool to be used in the context of UK Bribery Act prosecutions.

The Government also expanded its legislative toolkit for prosecuting foreign bribery when it introduced new false accounting offences in March this year (discussed here). However, whilst these developments were generally welcomed, there remained questions regarding whether the Australian Federal Police (“AFP”) had the required resources and funding to investigate complex foreign bribery cases. The Government’s April strategy, of which the Perth team forms a part, goes someway towards answering those questions.

The new foreign bribery investigations team

On 23 April 2016, Prime Minister Malcolm Turnbull, Attorney-General George Brandis and Justice Minister Michael Keenan, announced that the Government would provide AUD15 million in additional funding to the AFP to “tackle” foreign bribery. The announcement (which can be found here) indicated that “three foreign bribery investigative teams” comprising 26 new positions within the AFP would be established. These teams would include investigators, forensic accountants and lawyers.  

On 5 September 2016, Justice Minister Michael Keenan announced that the first of these teams had been established in Perth. The team comprises six officers. Minister Keenan reaffirmed the Government’s commitment to adding 26 new positions in total, and confirmed that teams would be set up in Melbourne and Sydney. It is not yet clear what the timeline is for the establishment of the Melbourne and Sydney teams or how they will differ from the one in Perth. It is likely that Perth’s team will focus on cases involving the mining and resources sector. It is also unclear how the teams will go about their work. In the U.S., the Department of Justice and the Securities & Exchange Commission have specialist foreign bribery teams that proactively search for leads and approach companies operating in high risk markets to inquire as to whether they have encountered corruption issues. By contrast, Australian corporate crime investigations have traditionally been more reactive. If the new foreign bribery teams adopt the U.S. approach, this will place added regulatory pressure on business.   

Minister Keenan also indicated that the Government is looking at Australia’s legislative framework for tackling foreign bribery, and expressly cited DPAs as a reform that was under consideration.  Minister Keenan’s announcement can be found here.        

How does it affect you?

The new teams are a significant indication that the Government is serious about targeting overseas corruption. The Government has long talked a tough game on foreign bribery, but that rhetoric is now being matched with concrete investment. 

Whilst it remains to be seen if the additional resources will lead to more prosecutions, there will certainly be an increase in the number of foreign bribery investigations. For Australian companies operating in industries and jurisdictions with a high risk for bribery and corruption, it is an opportune time to get ahead of the regulatory curve by asking the following questions:

1. How strong is our company’s formal compliance program and culture?
2. Do we understand the risks our business faces in overseas markets?
3. Are there any instances of improper conduct within our business already?  If so, how are we managing and responding to these?