The Senate will commence an inquiry into foreign bribery, with a view to toughening Australia’s anti-bribery regime. The chair of the relevant Senate committee has indicated that various high profile business figures and companies will be called to appear before the committee in public session.

The inquiry continues the global trend of heightened anti-corruption awareness and enforcement, with BHP Billiton’s U.S. Foreign Corrupt Practices Act enforcement action and the FIFA scandal being recent examples.

Inquiry Scope

The OECD has long criticised Australia’s enforcement of foreign bribery laws – just 28 referrals and one prosecution in 13 years. The inquiry will look at why it has been so difficult for Australian authorities to prosecute foreign bribery offences.

Much of the discussion is likely to focus on increasing incentives for self-reporting and whistleblowers. In the U.S., whistleblowers can receive between 10 and 30% of any financial penalty collected over US$1 million. The SEC says 30% of their foreign bribery investigations now start with whistleblower tips.

A key issue will be whether to broaden the range of available offences. The Senate’s motion  specifically refers to an offence for ‘failure to create a corporate culture of compliance’, as well as false accounting violations in line with the U.S. Foreign Corrupt Practices Act’s books and records and internal controls provisions.

Wider enforcement options are also on the agenda, with plea bargains, deferred prosecution agreements and debarment from government contracts to be considered.

Company to company corruption, as well as bribery of foreign officials, will be reviewed.

Powers and Process

The inquiry will be conducted by a committee chaired by Senator Sam Dastyari. The committee will take submissions, hear evidence, and is due to report its findings to the Senate by July 2016. The purpose of the report is to recommend future action.

Although Senate committees normally operate by invitation, they can compel the attendance of witnesses and the production of documents. Failure to comply with a summons to appear can lead to a prison term and/or a fine.

Senator Dastyari has already indicated that many high profile business figures, such as former executives from Leighton Holdings and Thiess, will be called to appear. An appearance generally involves being examined in a public hearing by members of the committee.

Implications

The inquiry is a cautionary reminder to companies of the importance of a strong compliance and integrity culture. The push globally is towards greater enforcement in this area.

Companies wanting to get ahead of the regulatory curve should ask the following questions:

1. How strong is my company’s formal compliance program and culture?
2. How does our programme and culture compare with international best practice?
3. Should we make a submission to the committee, to help shape the outcome of the inquiry?