New criminal offences concerning false dealing with accounting documents have been introduced into Australia’s Commonwealth Criminal Code (Criminal Code). The changes address Australia’s obligations under the OECD Foreign Bribery Convention and reflect the fact that corporate bribery is often concealed by the falsification of corporate books and records. The offence creates for the first time in Australia a U.S. Foreign Corrupt Practices Act (FCPA)-style “books and records” offence.
Background
The OECD and Transparency International, among others, have long criticised Australia’s enforcement of foreign bribery laws as well as the lack of an offence of false accounting for the purposes of concealing or enabling bribes to foreign public officials.
The creation of an FCPA-style books and records offence follows other important anti-bribery developments in Australia in 2015. These include a Senate Foreign Bribery Inquiry and amendments to the existing foreign bribery offence to clarify that prosecutors do not need to identify a particular foreign public official to whom a bribe was offered.
False dealing with accounting documents
The new offences prohibit an individual or company from, intentionally or recklessly, making, altering, destroying or concealing an accounting document, or failing to make or alter an accounting document where there is a duty to do so, in order to facilitate, conceal or disguise the giving or receiving of a benefit not legitimately due.
Accounting documents are broadly defined to include any account, any record or document made or required for any accounting purpose, or any register under the Corporations Act 2001 (Corporations Act), or any financial report or financial records within the meaning of the Corporations Act. This definition could capture an invoice, a receipt, or an employee expense reimbursement request that is used to facilitate, disguise or conceal the giving or receiving of a bribe or kickback.
There is no materiality or de minimis threshold below which these new offences do not apply. Fraudulent employee reimbursement requests of any value that are submitted to generate funds to pay bribes or which incorrectly characterise an activity for which an employee is requesting reimbursement in order to conceal illegal activities, are just some of the avenues by which these new offences could capture illegal activity.
It is not necessary to prove that bribery has actually occurred in order to establish one of these new offences. This means that in instances where not all the elements of a violation of the primary foreign bribery offence in the Criminal Code (Division 70) are met, companies or individuals nonetheless may be liable if the improper payments are inaccurately recorded in a company’s accounting documents. This is similar to the U.S. where the FCPA’s books and records offences stand independently of the primary foreign bribery offence.
It is also important to note that the offences apply not just to bribery of foreign public officials. They can also apply to domestic and foreign-targeted bribery in the private sector and efforts taken to conceal such activities in a company’s books and records.
Large fines and lengthy prison terms (for individuals) may be imposed where an offence occurs.
Implications
The introduction of these offences continues a global trend of heightened anti-corruption awareness and enforcement. Companies who want to get ahead of the regulatory curve should ask themselves the following questions:
1. Where do we face the most corruption and bribery risk?
2. How do our book and record keeping procedures compare with international best practice? Do we have policies and procedures in place that provide reasonable assurances that our accounts, in reasonable detail, accurately and fairly reflect company transactions?
3. What can we do to improve our employees’ understanding of the growing risks in this area?
