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COVID-19 has had and will continue to have impacts on virtually every corporation in Canada and globally.
Australia is ranked 13 out of 168 on the TI CPI 2015.
Australia operates on both State/Territory and Federal legal systems.
At the Federal level, there is no offence of private bribery. The Criminal Code makes it an offence for an individual or corporation to intentionally or recklessly facilitate, conceal or disguise in their accounting documents an occurrence of bribery, corruption or loss to a person that was not legitimately incurred. Accounting documents are broadly defined.
The Criminal Code Act 1995 (Cth) provides that a corporation commits the offence if the concealment was undertaken by its officers, employees or agents in the actual or apparent scope of their authority and the requisite mental element is made out (ie. intention or recklessness, which can be proved by corporate culture). The provision binds Australian citizens and corporations and a person engaged to provide services to an Australian corporation and acting in the course of providing those services, wherever those services are provided.
Additionally, the Corporations Act 2001 can apply to bribery because it imposes duties of good faith on directors and officers of corporations (section 181) and prohibits them from improperly using information or their position to gain an advantage for themselves or for someone else (sections 182 and 183). The Competition and Consumer Act 2010 can also apply to bribery because it prohibits conduct such as price fixing, market sharing and other cartel conduct.
State and Territory legislation deals with private sector bribery. It criminalises both corruptly giving rewards to employees or agents, and employees or agents corruptly receiving rewards to show favour in their employer’s or principal’s business. There are also other bribery related offences which deal with conduct of trustees and others who have obligations because of their relative positions of power or close relationships with other parties.
Persons who aid, abet, counsel, procure, solicit or incite the commission of the offences are also guilty of an offence.
The wide definition of “agent” in most State and Territory crimes legislation includes government employees and officials, a police officer or a councillor. This means that State and Territory crimes legislation extend beyond bribery in the private sector and can apply to bribery in respect of State and Territory government officials.
On a Federal level, under the Criminal Code, bribery in the public sector can be broken down into bribery of a foreign public official and bribery of a Commonwealth public official.
Division 70 of the Criminal Code creates an offence of bribery of a foreign public official. For an offence to be committed, there must be an intention to provide a benefit (which includes not only an actual benefit, but also offers or promises to provide a benefit) with the intention of influencing a foreign public official in the exercise of their duties in order to obtain or retain business or a business advantage which is not legitimately due.
The category of persons who are considered to be foreign public officials is broad. It includes employees, contractors, officials or a person in the service of foreign governments and foreign government bodies, employees and individuals who are in the service of a public international organisation or individuals who are authorised intermediaries or hold themselves out to be an authorised intermediary of a foreign public official. A state owned enterprise is a foreign government body and an example of a public international organisation is the United Nations.
It is also an offence for a person or a corporation to attempt to commit the offence or to aid, abet, counsel, procure or incite the commission of the offence or conspire with another to commit the offence of bribing a foreign public official.
The accounting offence outlined above also catches public bribery.
Division 141 of the Criminal Code criminalises bribery in respect of Commonwealth public officials. It deals with both active and passive bribery. It is an offence for any person or corporation to dishonestly provide a benefit or offer or promise to provide a benefit with the intention of influencing a Commonwealth public official in the exercise of that official’s duties. It is also an offence for a person or corporation to attempt to commit the offence or to aid, abet, counsel, procure or incite the commission of the offence or conspire with another to commit the offence of bribing a Commonwealth public official.
Additionally, it is an offence for a Commonwealth public official to dishonestly ask for, receive or agree to receive or obtain a benefit with the intention of being influenced in the exercise of their duties.
The category of persons who are Commonwealth public officials is broad. It includes members of Parliament, administrators of Territories, Commonwealth judicial officers or public servants, persons who perform duties of an office established under the laws of the Commonwealth as well as employees of a Commonwealth Authority or individuals who are contracted to or are an officer or employee of a service provider contracted to the Commonwealth.
Under Division 142 of the Criminal Code there are also offences for giving, requesting, promising or receiving a corrupt benefit in respect of a Commonwealth public official. These involve similar elements to the offence of bribery of a Commonwealth public official except that they do not require an intention to influence. Instead they involve “the receipt or expectation of the receipt of the benefit” which “would tend to influence the public official” in the exercise of the official’s duties. It is also an offence for a person or corporation to attempt to commit the offence or to aid, abet, counsel, procure or incite the commission of the offence or conspire with another to commit the offence.
Most State and Territory laws can apply extra-territorially if the conduct constituting an element of the offence occurs partly in the State or Territory, or it would be an offence if the conduct occurred in the State or Territory or if the conduct occurs outside the State or Territory but has an effect on the State or Territory.
Under Division 70 of the Criminal Code, the offence of bribing a foreign public official applies to Australian citizens and residents, Australian corporations or any person who engages in conduct constituting the offence where that conduct occurs wholly or partly in Australia, on an Australian aircraft or ship, or occurs outside Australia but is committed by an Australian citizen or resident or an Australian corporation. The Attorney General’s written consent is required to prosecute if the person who committed the offence is an Australian resident but not an Australian citizen.
Bribery in respect of a Commonwealth public official under Division 141 is an offence whether the person charged with the offence is an Australian citizen or corporation or whether the conduct constituting the offence occurs in Australia, or whether the result of the conduct constituting the offence occurred in Australia. However, the Attorney General must give written consent to prosecute if the conduct occurs wholly outside Australia and the person is not an Australian citizen or an Australian corporation.
The same wide jurisdiction applies to an offence under Division 142 in respect of corrupting benefits involving a Commonwealth public official.
Under some State and Territory laws, a person will not be guilty of an offence if that person can show that the offence was carried out under duress (which involves having a reasonable belief that a threat will be carried out) or it is in response to circumstances of sudden or extraordinary emergency. In each case the conduct must be a reasonable response to the threat or emergency.
In most States and Territories, it is expressly stated that it is not a defence to claim that the receiving, soliciting, giving or offering of any valuable consideration is customary in any trade, business or calling. However, if the benefit is trivial, a prosecution may not be commenced.
At the Federal level, under the Criminal Code, where a corporation is prosecuted because the contravening conduct was authorised or permitted (whether expressly or tacitly) by a high managerial agent, the corporation will not be found guilty of an offence if it can prove that it exercised due diligence to prevent the conduct, the authorisation or permission. This will typically involve the corporation maintaining and implementing compliance programs and anti-corruption policies.
As with State and Territory legislation, a person is not criminally responsible for an offence if it is carried out under duress or is in response to circumstances of sudden or extraordinary emergency.
It is a defence to prosecution for bribery of a foreign public official if the benefit or advantage was permitted or required by the written laws that govern the foreign public official. It is not sufficient to demonstrate that the giving of that benefit or advantage was consistent with business culture.
The Criminal Code contains a facilitation payment defence in Division 70.4. A facilitation payment is a payment of a minor value to a foreign public official for the performance of a routine government action of a minor nature.
“Routine government action” does not include any decision to award or continue new business, and the person receiving the payment does not need to have a legal entitlement to the payment for this defence to be available.
A corporation or individual which makes a facilitation payment must record that payment as soon as practicable after the benefit was given, and the record must set out the value of the benefit, the date on which the conduct occurred, the identity of the relevant foreign public official, the particulars of the routine government action that was sought to be expedited or secured by the conduct and contain the signature or other means of verifying the identity of the foreign public official.
Failure to adhere to the exact requirements will result in the defence not being available.
Difficulties with this defence include identifying the exact recipient of the payment, as well as determining whether the payment was minor.
If the record of the facilitation payments is lost or destroyed because of the actions of a third party over whom the individual or the corporation does not have control, the individual or corporation will need to show that the loss or destruction of the record could not have been reasonably guarded against. If this cannot be shown the defence will not be available.
It is also a defence if the prosecution is commenced more than seven years after the conduct occurred.
By way of comment, in a consultation paper released in November 2011, the Australian Government outlined its proposal to remove the facilitation payment defence under Division 70.4 in order to align Australian anti-bribery laws more closely with the UK Bribery Act. It has been stated that this will bring the law into line with international best practice. This reform and others, which ensure both that bribery is an offence irrespective of the value or benefit offered, and that prosecutions can proceed where the recipient of a bribe cannot be identified, are being considered
State and Territory laws do not exempt gifts or gratuities to public officials from their anti-corruption provisions. Therefore any gift or gratuity may be considered a bribe. However it does not constitute an offence if it can be shown that the gift falls below the threshold for criminal conduct (the threshold being that it may influence the public official in the performance of their duties).
Additionally the acceptance of gifts is usually regulated by government department or agency policies. Generally these policies permit the acceptance of small or token gifts, but contain specific strict limits on the value of acceptable gifts.
At a Federal level, the definition of “benefit” in the Criminal Code includes any advantage and is not limited to property. The prohibition against bribing foreign public officials can therefore extend to the provision of gifts, travel expenses, meals and entertainment unless it can be demonstrated that the advantage or benefit was required or lawful in the foreign public official’s country or that it is a facilitation payment. However if a benefit such as travel expenses or meals is given in connection with an existing business relationship (such as on an existing project) it may not attract any liability. It is necessary to consider the individual circumstances.
The same definition of “benefit” applies to the offences relating to Commonwealth public officials. Therefore the provision of gifts, travel expenses, meals and entertainment could be a bribe if the promise, provision or receipt of the benefit would tend to influence a Commonwealth public official in his or her duties.
Under State and Territory laws the definition of “person” includes a corporation. This means that a corporation can be liable for the bribery offences committed by its employees, officers or agents (which could include a subsidiary) acting within the actual or apparent scope of their employment or authority.
A corporation can also be liable if any of its employees, officers or agents (acting within the actual or apparent scope of their employment or authority) aid, abet, counsel, procure, solicit or incite the commission of an offence. In some States and Territories a corporation can also be liable if its employees, officers or agents attempt to commit an offence.
At a Federal level, under the Criminal Code a corporation can commit an offence. Actions of a corporation’s employees, officers or agents (which could include a subsidiary) acting within the actual or apparent scope of their employment or authority can be attributed to a corporation.
Authorisation or permission can be established by proving that the board of directors intentionally, knowingly or recklessly carried out the conduct or expressly, tacitly or impliedly authorised or permitted the commission of the offence. A corporation also commits an offence if a high managerial agent intentionally, knowingly or recklessly engaged in the conduct or expressly, tacitly or impliedly authorised or permitted the commission of the offence, or if a corporate culture existed within the corporation that directed, encouraged, tolerated or led to the commission of the offence, or that the corporation failed to create and maintain a corporate culture that required compliance.
A corporation’s criminal liability also extends to situations where the corporation’s employees, officers or agents acting within the actual or apparent scope of their employment or authority attempt to commit an offence, or aid, abet, counsel, procure or incite the commission of the offence or conspire to commit an offence.
Under most State and Territory laws directors and officers of a corporation who have consented to or have been involved in the commission of an offence by the corporation can also be prosecuted. In addition, directors or officers can also be prosecuted if they aid, abet, counsel, procure, solicit or incite the commission of an offence. In some States and Territories it is also an offence to conspire or attempt to commit an offence.
At a Federal level, under the Criminal Code, a director or officer of a corporation can be prosecuted for an offence committed by the corporation if the director or officer aids, abets, counsels, procures or incites the commission of the offence or conspires to commit the offence. The director or officer must also have intended that his or her conduct would result in the offence. It will not be sufficient if that director or officer has failed to engender an appropriate corporate culture.
Additionally, the Corporations Act 2001 imposes duties of good faith on directors and officers of corporations (section 181) and prohibits them from improperly using information or their position to gain an advantage for themselves or for someone else (sections 182 and 183). If the actions of a director or officer of a corporation contravene those duties and obligations then they may be ordered to pay a civil penalty. Additionally, under section 184 of the Corporations Act 2001, if the actions of a director or officer of a corporation are reckless or intentionally dishonest, the director or officer can commit a criminal offence.
For completeness, the Competition and Consumer Act 2001 criminalises a range of conduct which includes price fixing, market sharing or other cartel conduct contravention of which can result in the imposition of substantial civil penalties.
Penalties under State and Territory laws are not uniform. However, individuals found guilty of bribery offences will generally be liable to a maximum of between three and 10 years imprisonment or fines. Corporations found guilty of bribery offences are liable to substantial fines the maximums of which are generally between A$1870,000 and A$750,000 (approximately US$143,036 and US$573,675), although in one State the penalty can be unlimited. Further, in some States and Territories individuals and corporations can also be ordered to repay the value of any benefit received.
Under Federal law, individuals who are found guilty under Division 70 of the Criminal Code of bribing a foreign public official will be liable to a maximum of 10 years imprisonment or a fine of not more than A$1.78million (approximately US$1.38 million) or both.
Corporations found guilty of bribing a foreign public official, false accounting, will be liable to penalties being the greater of:
Under Division 141 of the Criminal Code, individuals and corporations found guilty of dishonestly providing or offering to provide a benefit to a Commonwealth public official or a Commonwealth public official found guilty of obtaining or seeking a benefit will be subject to penalties which are the same as those in respect of bribing a foreign public official.
The penalties for attempting to commit an offence under Division 70 or Division 141 of the Criminal Code or aiding, abetting, counselling procuring or attempting the commission of those offences or conspiring to commit those offences are the same as the penalties for the primary offences, except in the case of incitement. For incitement (that is, persistently urging a person to commit an offence) the penalty is imprisonment for not more than five years, a fine of not more than A$54,000 (approximately US$41,304.60) or both. Corporations found guilty of this offence may be subject to a maximum fine of A$270,000 (approximately US$206,000).
Under Division 142, the penalty for giving, offering or promising or receiving a corrupting benefit in relation to a Commonwealth public official is a maximum of five years imprisonment or a fine of not more than A$54,000 (approximately US$41,304.60) or both. Corporations found guilty of this offence may be subject to a maximum fine of A$270,000 (approximately US$206,000).
The penalties for attempting to commit the offence under Division 142, or aiding, abetting, counselling, procuring or attempting the commission of that offence or conspiring to commit that offence are the same as the penalties for the primary offence, except in the case of incitement. For incitement the penalty for an individual is imprisonment for not more than three years, a fine of not more than A$32,40000 (approximately US$24,700) or both. Corporations found guilty of this offence may be subject to a maximum fine of A$162,000 (approximately US$123,930).
The agencies with the responsibility for investigating corruption offences under State and Territory legislation are the respective State and Territory police forces. On completion of an investigation, police refer the report of their investigation to the State prosecutor’s office which then decides whether to prosecute.
Some States and Territories also have Crimes Commissions which can investigate and interrogate witnesses. The Crimes Commissions’ findings are referred to the State prosecutor’s office, which then decides whether to prosecute.
For Federal bribery offences, the Australian Federal Police is the principal enforcement agency. It investigates bribery allegations and then reports on the investigations to the Director of Public Prosecutions, who decides whether to prosecute.
The Australian Crime Commission (ACC) can also work collaboratively with the Australian Federal Police to investigate bribery allegations. The ACC’s powers permit it to compel the production of documents and compel a person to attend an examination to answer questions.
The Australian Securities and Investments Commission (ASIC) will investigate and, if necessary, commence civil penalty proceedings where conduct may have contravened the Corporations Act 2001. For example where a director or officer breached his or her duties of good faith (section 181) or improperly used information or his or her position to gain an advantage for himself or herself or for someone else (sections 182 and 183).
The Australian Competition and Consumer Commission (ACCC) may commence civil penalty proceedings for conduct breaching the Competition and Consumer Act 2001.
The Australian Transaction Reports and Analysis Centre (ATRAC) is the primary regulator and compliance enforcement agency under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). ATRAC does not conduct investigations itself, instead it provides intelligence to agencies such as the Australian Federal Police. ATRAC does have a number of enforcement powers but usually only uses them in cases of serious noncompliance with the AML/CTF Act.
In Australia, money laundering legislation captures a wide range of conduct such as receiving, possessing or disposing of money or other property that is the proceeds of crime or may become an instrument of crime. Bribery offences can therefore also fall within anti-money laundering offences. Anti-money laundering offences are contained in both the AML/CTF Act and the Criminal Code.
The AML/CTF Act contains reporting requirements for suspicious matters and large transactions and creates offences for failing to comply with these requirements.
Division 400 of the Criminal Code creates an offence if a person deals with money or property that may be considered to be the proceeds of crime, or may become an instrument of crime.
The Criminal Code expands the ability of the Australian Federal Police to investigate and prosecute Australian companies suspected of involvement in foreign bribery. Under the Crimes Act 1914 and the Proceeds of Crimes Act 2002 Australian Federal Police have the power to apply for warrants to search property and, in some circumstances seize money or property. Additionally under the Proceeds of Crimes Act 2002, the Australian Federal Police can also apply for freezing orders, restraining orders or orders for forfeiture of money or property which is suspected of being the proceeds or instrument of an offence.
Under both the AML/CTF Act and the Criminal Code the penalties for the offences depend on the value involved. The Criminal Code deals with money of a higher value than the AML/CTF Act and it also deals with property. For example, the maximum penalty for an individual under the Criminal Code is 25 years imprisonment a fine of A$270,000 (approximately US$206,550) or both where the value involved is more than A$1 million (approximately US$765,000). For corporations the maximum penalty is A$1.35 million (approximately US$1.03 million). The penalties for attempting to commit the offence, or aiding, abetting, counselling or procuring the commission of an offence or conspiring to commit the offence are the same as the penalties for the primary offence. In the case of incitement, the maximum penalty for an individual is five years imprisonment, A$54,000 (approximately US$41,310) or both and the maximum penalty for a corporation is A$270,000 (approximately US$206,550).
Part 9.4AAA of the Corporations Act 2001 contains detailed whistleblowing provisions. Under Section 1317AA an officer, employee or contractor will be a protected whistleblower provided that he or she identifies himself or herself, that there are reasonable grounds for suspecting breaches of the Corporations Act 2001, or the Australian Securities and Investments Commission Act 2001 or that an officer or employee of the corporation has breached or will breach the law. The disclosure must be made in good faith and be made to ASIC, the corporation’s auditors, a director, secretary, or senior manager of the corporation or a person authorised by the corporation to receive disclosures.
A protected whistleblower has extensive protection against contractual and other civil or criminal remedies including defamation or retaliation for making the disclosure. This protection extends to cases where a worker is terminated for whistleblowing. In such cases, the worker is entitled to have his or her employment reinstated.
It is an offence to victimise a protected whistleblower and a protected whistleblower may be entitled to damages for victimisation or detriment suffered as a result of being a whistleblower.
Section 1317AE describes the confidentiality requirements for corporations, their officers, senior managers, auditors and persons authorised to receive a qualifying disclosure. It is an offence to disclose a qualifying disclosure or the identity of a whistleblower, unless it is to ASIC, the Australian Prudential Regulation Authority, the Australian Federal Police or someone else with the whistleblower’s consent.
ASIC has acknowledged that it must take reasonable measures to prevent the unauthorised disclosure of the information provided by a whistleblower and the identity of the whistleblower unless disclosure is specifically authorised by law.
Equivalent whistleblower protection is contained in Part 29A of the Superannuation Industry (Supervision) Act 1993 (Cth).
The Privacy Act 1988 (Privacy Act) regulates the collection, use, storage and disclosure of personal information in Australia. Under the Privacy Act “personal information means information or an opinion about an identified individual, or an individual who is reasonably identifiable, whether the information or opinion is true or not and whether the information or opinion is recorded in a material form or not”.
In the Privacy Act, the phrase “reasonably identifiable” deals with the concept of data matching. Data matching occurs where data about an unidentified individual is linked or matched with other data with the effect of causing the individual to become identified. This is sometimes called re-identification. The concept of “reasonably identifiable” is important and relevant to any organisation that intends to disclose anonymised or de-identified personal information (eg, to research or analytics organisations).
In addition to the Privacy Act, Australia has 13 Australian Privacy Principles which cover the collection of “sensitive information” (such as health information and criminal records) and the collection and management of personal information by private sector organisations that have a turnover of greater than A$3 million (approximately US$2.79 million) and Commonwealth Government agencies. The Australian Privacy Principles apply to any arrangements that are already in place concerning the use of personal information, including contractual arrangements between organisations and their service providers or any other parties to whom organisations disclose personal information. The Australian Privacy Principles have a retrospective effect on an organisation’s existing collections and databases of personal information and to an organisation’s contractual arrangements that existed before they came into effect.
In Australia legal professional privilege protects the disclosure in proceedings of confidential communications or documents between a lawyer and a client that are for the dominant purpose of obtaining legal advice or are for use in anticipated litigation. This can include communications and documents authored and received by in-house counsel or authored by third parties.
Under Australian law, a party can be required to give disclosure of documents under an order for discovery made in the course of proceedings. A party must give disclosure of documents that are relevant to the facts in issue in the proceedings and are not confidential or subject to a claim for privilege. The documents must be disclosed, regardless of whether they have the potential to adversely affect the disclosing party’s case, or support the case of the party to whom disclosure is made.
A document that is obtained through the process of discovery must not be disclosed or used except for the purposes of the conduct of the proceedings, without the leave of the court. An exception to this is when the party disclosing the documents has consented to disclosure or the document has been received into evidence in open court and as a result has become a public document. This is provided no order for confidentiality has been made in relation to the document.
Generally the same protection for privileged documents is available in respect of regulatory investigations, although there are some exceptions. Whilst regulators have quite wide powers for gathering information, unless the legislation which establishes their powers either expressly or by necessary implication removes an entitlement to claim privilege, documents are protected from disclosure. However, even though privilege protects the documents from disclosure, some regulators – such as is the case with ASIC when exercising its compulsory information and document gathering powers – require that details to identify the privileged materials and the basis for any claims for privilege are provided. The ACCC and the Australian Tax Office have similar requirements.
COVID-19 has had and will continue to have impacts on virtually every corporation in Canada and globally.
As business resumes in the workplace and circumstances change, American companies must be ready.