Tuesday, 29 November 2016

Australian criminal and civil consequences for bribery committed overseas

Local and international media are reporting that an Australian Rio Tinto executive has been suspended and subsequently dismissed amidst a scandal involving a multi-million dollar payment to an apparent associate of the Guinean president.  The exact nature of the payment is at this stage unclear, and investigations continue.

JP Morgan is also reportedly set to settle with US authorities following a long-running bribery investigation into the bank’s hiring practices in China.

It’s timely therefore to consider the potential consequences of overseas bribery.  What might happen if an Australian is caught in the act?

How serious is bribery?
Revelations of bribery call a company’s corporate governance into question.  It places at risk a company’s reputation and trustworthiness.

Further, foreign bribery carries significant criminal penalties and civil consequences in Australia (we explain these below).

It is important that companies take the risks posed by bribery seriously.  A quick, decisive response is often the best way for companies to limit the damage caused upon the discovery of potential bribery having been committed.

The criminal offence
Bribery by an Australian citizen is a serious crime that can be prosecuted in the Australian courts – even if the bribe was made overseas to a foreign government or official.

Section 70.2 of the Criminal Code Act 1995 (Cth) outlines the relevant offence of ‘bribing a foreign public official’.  It is a crime for an Australian citizen, resident or corporation to:
  • provide a benefit to another person
  • if that benefit is not ‘legitimately due’, and
  • where the payer provides the benefit with ‘the intention of influencing a foreign public official … in the exercise of the official’s duties as a foreign public official’. 

It is important to remember that:
  • the crime can be committed even if the relevant benefit is provided outside of Australia (e.g. payments made overseas)
  • a ‘benefit’ need not be a payment – it can be any advantage and is not limited to property, and
  • a foreign bribery offence can occur even if a foreign public official didn’t receive the money directly.

Criminal penalties for the perpetrators
The maximum penalty for an individual convicted of the offence of bribing a foreign public official is 10 years imprisonment, or a fine of up to A$1.8 million, or both.

If a corporation commits the offence, it can also be penalised in the maximum amount of:
  • $18 million, or
  • if the value of the benefit obtained from the bribe can be ascertained – 3 times that value, or
  • 10% of the corporation’s annual turnover. 

In addition to criminal penalties, the benefits obtained through bribery may be forfeited to the Australian Government under the Proceeds of Crime Act 2002 (Cth).

Possible civil action
In addition to criminal punishment, corporations may consider civil remedies against their officers or employees who made the bribe, if it can be shown that the payment caused loss and damage to the company, and the company has a cause of action against the relevant individual.

The employer potentially can claim any or all of the following causes of action against the employee:
  • breach of fiduciary duty
  • breach of statutory duties as set out in Part 2D.1 of the Corporations Act 2001 (Cth) (assuming that the person who made the bribe can be shown to be an ‘officer’ of the employer for the purposes of the Corporations Act), or
  • breach of employment contract – depending on the terms of the contract and whether any applicable corporate policies prohibiting bribery are held by a Court to have contractual force. 

As a member of the International Fraud Group McCullough Robertson is well-placed to assist clients with the international aspects of white collar crime, including matters involving potential foreign bribery offences and related issues considered above.

Peter Stokes

+61 7 3233 8714

Daniel MacKenzie

Senior Associate
+61 7 3233 8864

1 comment:

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