‘If I should slip something into your pocket, what’s the harm?’


Well, apparently a lot. Corporate crime costs Australia an estimated $8.5 billion annually, as Attorney-General George Brandis told parliament last week.

Parliament has tabled a new bill designed to redress the corporate crime of foreign bribery. The proposed changes include the creation of a strict liability offence for failing to prevent foreign bribery as well as a deferred prosecution agreement (DPA) scheme.

The reform has significant implications for businesses. The enforcement of strict liability means that a company will be presumed liable for bribery committed by an associated entity or person (e.g., an employee, contractor, agent or subsidiary). The onus will then be cast on the corporation to prove that it had in place adequate procedures for the prevention of bribery. Just what is required of the company is not yet clear, but this will be elucidated early next year when government publishes guidelines on adequate procedures.

The proposed DPA scheme is designed to encourage the self-reporting of corporate crimes. The incentive is that a company who proactively reports its crime to the Federal Police or ASIC may then enter into negotiations with the prosecutor for reduced penalties.

If only bribery occurred as Hollywood portrays it. Enforcement agents would simply look for the trench-coated figure gripping a loaded briefcase and there would be no need for these amendments. The issue is that bribery is opaque and buried within legitimate business transactions. It is inherently difficult to detect, and the prosecution process is notoriously protracted (averaging over 7 years).

True, reform is needed. But is reform best achieved through corporate governance? We do not contest, on grounds moral or legal, that corporations should account for deals made under the mahogany desks of its upper-level workers. But what of the lower level workers, contractors and distant business associates? No system of corporate governance can be air tight- at least, not without inducing some sort of Orwellian nightmare and not without incurring exorbitant expense. Corporations will not be equally equipped to enforce adequate procedures for the prevention and detection of bribery.

The bill can be summarised as more stick than carrot. It can hardly be said to beef up the corporate crimes watchdog. Rather, it imputes onto businesses considerable liabilities and obligations. Rankin & Co urge business to seek legal counsel in reviewing corporate governance strategies.

 The content of this article is intended for general interest purposes only and does not constitute legal advice. Contact the commercial lawyers at Rankin & Co. for specialised advice.