Adequate Procedures or Absolute Liability: Serious Shake-up Looms for Corporate Australia’s Foreign Bribery Prosecution Risk

June 2023
Region: Asia Pacific

On 22 June 2023, the federal government tabled the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023, which signals an impending, fundamental shift in the way that corporations may be prosecuted for foreign bribery in Australia and the way that Australian companies (or companies doing business in Australia) should seek to protect themselves from prosecution.

In addition to streamlining the existing foreign bribery offence, the amending legislation seeks to introduce a new “absolute liability” offence into the Commonwealth Criminal Code for a failure to prevent bribery of foreign public officials by a company’s “associates”, which is defined to include employees, contractors, agents and subsidiaries.

“Absolute liability” means that there is no requirement for a fault element (i.e. intention, knowledge, recklessness or negligence) to be established for the company to be criminally liable for the conduct of its associates. As with the existing offence, if passed, the new absolute liability offence will result in fines based on the greater of AU$27.5 million, three times the benefit received or (if the court cannot determine the benefit) 10% of the corporate group’s annual turnover.

The only way a company could avoid absolute liability for the conduct of its associates is to establish that it had in place “adequate procedures” to prevent the commission of the offence, which the company bears the legal onus of establishing. The new legislation requires the Attorney-General to publish guidance on the types of measures that are likely to constitute “adequate procedures”.

If passed by both houses of Parliament, the offence will come into force six months after royal assent, to allow sufficient time for government to publish finalised guidance, providing a “honeymoon period” for corporations to implement these procedures. The proposed new offence is modelled on section 7 of the Bribery Act 2010 (UK), the introduction of which has seen a significant uptick in successful prosecutions in the United Kingdom.