Author: Michelle Isaac and Lindsay Houghton
The Australian Government recently launched a consultation paper discussing a proposal to remove the facilitation payments defence from Australia’s foreign bribery provisions and other changes to those provisions as well as changes to “domestic” bribery laws.
The government has asked that submissions in response to the consultation paper be provided by 15 December 2011.
What are the current provisions?
The Criminal Code 1 prohibits bribery of foreign public officials for the purpose of obtaining business or an undue business advantage. The offence applies to conduct in Australia or on board an Australian ship or aircraft and to conduct outside Australia, where the person committing the offence is an Australian citizen, a resident of Australia, or an Australian company.
Penalties for breaching the provisions are substantial.
In broad terms there are two defences:
- that the benefit was permitted or required by written law; or
- that the payment was a facilitation payment.
A payment is a facilitation payment, and therefore does not amount to unlawful bribery, if:
- the value of the benefit is minor
- the person’s conduct was engaged in for the sole or dominant purpose of expediting or securing the performance of a routine government action of a minor nature; and
- as soon as practicable afterwards, the person made a record of the conduct.
Arguments for and against facilitation payments
The main arguments for removing the defence include:
- increasing international pressure to reduce bribery, including facilitation payments
Australia is a party to the UN Convention against Corruption, which requires parties to criminalise bribery, including facilitation payments. Australia is also a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The OECD Working Group on Bribery recommends that member countries should review their policies on facilitation payments and encourage companies to prohibit making facilitation payments.
Facilitation payments are outlawed by the new Bribery Act 2010 (UK), which commenced on 1 July 2011. The Foreign Corrupt Practices Act (USA) also contains a similar defence to Australia which permits making facilitation payments, however the OECD has recommended that the US Government review its policy.
- regulatory certainty and consistency
The current defence can be hard to apply in practice, as it can be difficult to distinguish between a bribe and a facilitation payment. The Government suggests that an outright ban would remove this doubt and provide clear direction to those businesses who are implementing anti-bribery systems and training. Banning the payments would align Australian foreign bribery laws with the UK legislation and “international best practice” .
Arguments for retaining the defence include that this might place Australian business at a competitive disadvantage in those countries where facilitation payments are common place. It is also argued that facilitation payments may be paid under duress, and removing the defence may unduly penalise people in those circumstances.
Other proposed changes
The consultation paper also discusses the related issue which requires the Court to disregard the value of any benefit in determining if it is a bribe and also a change in the law which will enable a prosecution to proceed where the recipient of the bribe cannot be identified.
Finally, the paper also discusses a change to “domestic” bribery laws by removing the requirement to prove dishonesty.
The Government is seeking feedback from stakeholders about the merits of the proposal. Interested parties can make written or verbal submissions until 15 December 2011.
Australian companies with connections to the UK should have already addressed the issue of facilitation payments, and implemented adequate procedures to combat bribery because of the requirement of the UK Bribery Act. For other Australian companies which conduct business overseas, the increasing questions around facilitation payments suggest that it may be timely to review policies relating to facilitation payments in the context of the proposed changes.
Please contact us if you would like to discuss the consultation paper or you would like our assistance in preparing a submission.
1 Criminal Code Act 1995
(Cth) – Section 70.2 contains the offence of bribing a foreign public official